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STOCK EXCHANGE AGREEMENT
entered into by and among
SECURITY BIOMETRICS, INC.
a Nevada corporation,
BIOMETRICS SECURITY, INC.
a Nevada corporation,
and
IT'S SHAREHOLDERS
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Effective as of July 25, 2000
Vancouver, B.C.
STOCK EXCHANGE AGREEMENT
This STOCK EXCHANGE AGREEMENT (this Agreement") is made and entered into
on the dates set forth below, to be effective as of July 25, 2000, by and
among SECURITY BIOMETRICS, INC., a Nevada corporation and BIOMETRICS
SECURITY, INC., a Nevada corporation (the "Acquired Company Shareholders").
References herein to SBC are references to SBC solely in its capacity as a
legal entity under the laws of the State of Nevada, and not with respect to
its capacity as a shareholder or owner of Security Biometrics Inc.
BIOMETRICS SECURITY INC. are referred to collectively herein as the "Acquired
Company." SBC the Acquired Company Shareholders are referred to collectively
herein as the "Parties" and sometimes individually as a "Party."
RECITIALS
A. On July 25, 2000, SBC and the Acquired Company, signed a letter of
intent (the Letter of Intent')
B. The letter of Intent provides for SBC to (a) accomplish a 1:4
forward stock split (a) forward "Stock Split" of all of its currently issued
and outstanding common stock (b) complete any filings required to be made by
SBC with the SEC, (c) change its name and (d) issue 37,500,000 shares of post
common stock in exchange for 500,000 preferred shares converted at 75 common
shares for each 1 preferred share and convert any and all issued common
shares of Biometrics Security Inc. (up to a maximum 1,500,000 Shares) at a 1
Share of Biometrics Security Inc. in exchange for 1 Share of Security
Biometrics Inc. (the "Acquisition Stock"). The Acquisition Stock shall be
newly issued after the forward Stock Split to the Acquired Company
Shareholders, who collectively own all of the issued and outstanding stock of
the Acquired Company (the "Acquired Company Stock").
C. In the event of a reorganization as defined in this Section in which
BCS is not the surviving or acquiring company, or in which BCS is or becomes
a wholly-owned subsidiary of another company on or after the effective date
of the reorganization, the acquiring corporation will assume each Option
granted under BSC 2000 Stock Option Plan, and the Options granted under this
Agreement shall remain in effect. The term "Reorganization" as used in this
Section shall remain in effect. The term "Reorganization" as used in this
Section shall mean any statutory merger, statutory consolidation, sale of all
or substantially all of the assets of the Company, or sale, pursuant to an
agreement with BCS, of securities of the BCS pursuant to which BCS is or
becomes a wholly-owned subsidiary of another corporation after the effective
date of the reorganization.
D. The Letter of Intent provides for the Acquired Company Shareholders
to transfer to SBC, in exchange for the Acquisition Stock, all of the
Acquired Company Stock.
E. The Parties wish to enter into this Agreement to confirm and
definitively provide for the transactions comtemplated in the Letter of
Intent. When executed and delivered by the Parties as provided below, this
Agreement shall supersede and replace the Letter of Intent in its entirety.
AGREEMENT
THEREFORE, in consideration of the mutual covenants and conditions
herein contained, and for other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the Parties,
intending to be legally bound, hereby agree as follows.
ARTICLE
1
SHARE EXCHANGES
1.1 STOCK EXCHANGES. SBC hereby agrees to sell, convey, assign and
transfer the Acquisition Stock to the Acquired Company Shareholders in
exchange for sale, conveyance, assignment and transfer to SBC of the Acquired
Company Stock. The Acquired Company Shareholders and the Acquired Company
hereby agree to sell, convey, assign and transfer the Acquired Company Stock
to SBC in exchange for sale, conveyance, assignment and transfer to the
Acquired Company Shareholders of the Acquisition Stock.
1.2 ALLOCATION OF SHARES. The Acquisition Shares are allocated among
the Acquired Company Stock as follows:
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Allocated
Acquired Share Acquisition
Company Type Shares Percentage
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Biometrics 500,000 Preferred 37,500,000 96.1%
Security
Inc. 1,500,000 Common 1,500,000 Common 3.9%
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Total: 39,000,000 100%
1.3 CLOSING. Consummation of the transactions described in this
Agreement (the "Closing") will occur at 5:00 p.m. on or before July 25, 2000
(the "Closing Date") at the offices of Security Biometrics or at such other
location as is mutually agreeable to the Parties.
1.4 STOCK CONVEYED BY SBC. At the Closing, SBC shall convey to the
Acquired Company Shareholders good, valid and marketable title to the
Acquisition Stock, free and clear of encumbrances, claims, liens, security
interests, pledges or mortgages of any kind. Unless and until the Acquisition
Stock is registered under the Securities Exchange Act of 1934, no Acquired
Company Shareholder shall be entitled to transfer all or any share of the
Acquisition Stock unless the Acquired Company Shareholder first provides SBC
with an acceptable opinion of counsel that the proposed transfer will not
violate any applicable law, rule or regulation or any provision of this
Agreement. SBC shall be entitled to place a restrictive legend on all
certificates evidencing ownership of the Acquisition Stock that provides
notice of the provisions of this paragraph and other applicable provisions of
this Agreement.
1.5 STOCK CONVEYED BY THE ACQUIRED COMPANY SHAREHOLDERS. At the Closing
the Acquired Company Shareholders shall convey to SBC good, valid and
marketable title to the Acquired Company Stock free and clear of
encumbrances, claims, liens, security interests, pledges or mortgages of any
kind. Following delivery to SBC of the Acquired Company Stock the Acquired
Company shall deliver to SBC replacement certificates in the same number of
shares in the Acquired Company Stock as delivered above, in the name of SBC.
ARTICLE
2
DELIVERIES BY SBC AT THE CLOSING
2.1 DELIVERIES BY SBC. In addition to all other items required to be
delivered by SBC at the Closing under this Agreement, SBC shall deliver all
of the following items to each of the Acquired Company Shareholders, unless
an item described below is to be delivered to a single Party:
(a) the Acquisition Stock to the Acquired Company Shareholders, by
delivery to the acquired Company Shareholders of one or more share
certificates evidencing, ownership of the Acquisition Stock issued by SBC in
the name of the Acquired Companies' Shareholders;
(b) a certified copy of SBC articles of incorporation, amended as
necessary to authorize issuance of the Acquisition Stock together with a
certificate of SBC Secretary, confirming that the Acquisition Stock has been
duly issued as required in this Agreement;
(c) a current Certificate of Good Standing of SBC, issued by the
Secretary of State of the State of Nevada;
(d) corporate records of SBC consisting of at least the following:
certified copies of SBC's bylaws, complete minute books and a copy of SBC
stock transfer ledger;
(e) a balance sheet of SBC dated as of June 30, 2000, prepared by SBC's
controller or accountant in accordance with generally accepted accounting
principles consistently applied;
(f) certificates of the Secretary and the Vice President or the
President of SBC verifying the accuracy and authenticity of all corporate
records, other materials, disclosures or documents of SBC delivered or
provided by SBC at the Closing, and confirming the accuracy on the Closing
Date of all representations and warranties of SBC contained herein;
(g) resignations of all officers and members of the board of directors
of effective as of or prior to the Closing Date;
(h) certified copies of resolutions of the board of directors of SBC
authorizing execution and delivery of this Agrement by SBC and consummation
by SBC of all of the transactions that are comtemplated herein;
(i) a legal opinion of SBC's securities counsel Xxxxxxx Xxx addressed
to the Acquired Company in form mutually agreeable to the Parties;
(j) copies of all contracts loan agreements, memoranda and other
documents or instruments to which SBC is a party or by which it is bound or
to which it or any of its assets is subject.
2.2 OTHER DOCUMENTS AND INSTRUMENTS. SBC shall also deliver any and
all such other documents and instruments of conveyance, assignment and
transfer, and such other items, as may be reasonably requested or necessary
in order to vest good and marketable title to SBC's stock in the Acquired
Company Shareholders, on or prior to the date of the Closing. All instruments
and other documents or instruments exchanged by the Parties shall be in form
as needed to effectuate the transactions contemplated by this Agreement or to
evidence the same, and shall include any third party consents to the
transactions contemplated herein that may be required by the provisions of
any contracts, agreements or obligation, to which SBC is a party or pursuant
to which a change in the stock ownership of SBC is deemed to constitute an
assignment or transfer requiring such consent or approval. These additional
conveyances and transfers shall be made by SBC with a view toward placing the
Acquired Company Shareholders, on or prior to the date of the Closing in
actual possession and ownership of stock of SBC as provided herein.
ARTICLE
3
DELIVERIES BY THE ACQUIRED COMPANY'S SHAREHOLDERS
AT THE CLOSING
3.1 DELIVERIES BY THE ACQUIRED COMPANY SHAREHOLDERS. In addition to
all other items required to be delivered by the Acquired Company Shareholders
at the Closing under this Agreement, at the Closing the Acquired Company
Shareholders shall deliver all of the following items to SBC:
(a) the Acquired Company's Stock by delivery to SBC of one or more
share certificates evidencing ownership of the Acquired Company Stock endorsed
in blank by the Acquired Company Shareholders in the name of SBC.
(b) certified copies of the Acquired Company articles of
incorporation, together with certificates of the Acquired Company confirming
that the Acquired Company Stock has been duly transferred on the books and
records, and in the stock transfer ledgers of the Acquired Company, as
required in this Agreement;
(c) a current Certificate of Good Standing of the Acquired Company,
issued by the Secretary of State in the state of Nevada;
(d) corporate records of the Acquired Company Shareholders consisting
of at least the following: certified copies of the Acquired Company
Shareholders bylaws' complete minute books and a copy of the Acquired Company
Shareholders' stock transfer ledger;
(e) a balance sheet of Biometrics Security Inc. dated as of August
31, 2000, and prepared by the controller or accountant of the Acquired
Company in accordance with generally accepted accounting principles
consistently applied;
(f) certificates of the Secretary and the Vice President or the
President of the Acquired Company verifying the accuracy and authenticity of
all corporate records, other materials' disclosures or documents pertaining to
the Acquired Company delivered or provided by the Acquired Company
Shareholders at the Closing, and confirming the accuracy on the Closing Date
of all representations and warranties of the Acquired Company Shareholders
and the Acquired Company Shareholders as contained herein;
(g) certified copies of resolutions of the board of directors of the
Acquired Company authorizing execution and delivery of this Agreement by the
Acquired Company and consummation by the Acquired Company of all of the
transactions that are contemplated herein;
(h) a legal opinion of the Acquired Company's counsel addressed to
SBC in form mutually agreeable to the Parties; and
(i) copies of all contracts of $5,000 (U.S.) or more, loan agreements
memoranda and other documents or instruments to which the Acquired Company is
a party or by which it is bound or to which it or any of its assets is
subject
3.2 OTHER DOCUMENTS AND INSTRUMENTS. The Acquired Company, shall also
deliver to SBC any and all such other documents and instruments of conveyance,
assignment and transfer, and such other items, as may be reasonably requested
or necessary in order to vest good and marketable title to the Acquired
Company Stock by SBC on or prior to the date of the Closing. All instruments
and other documents or instruments exchanged by the Parties shall be in form
as needed to effectuate the transactions contemplated by this Agreement or to
evidence the same, and shall include any third party consents to the
transactions contemplated herein that may be required by the provisions of
any contracts, agreements or obligations to which the Acquired Company
Shareholders is a party or pursuant to which a change in the stock ownership
of any of the Acquired Company is deemed to constitute an assignment or
transfer shall be made by the Acquired Company with a view toward
placing SBC on, or prior to, the date of the Closing in actual possession and
ownership of all of the stock of the Acquired Company as provided herein.
ARTICLE
4
REPRESENTATION'S AND WARRANTIES OF SBC
SBC hereby represents and warrants to and covenants with, the Acquired
Company Shareholders that the representations and warranties provided below are
true, correct, accurate and complete in any and all respects as of the effective
date of this Agreement and that the same will be true, correct, accurate and
complete on and as of the date of the Closing (as though made then and as though
the Closing were substituted for the date of this Agreement throughout the
following), except as may be set forth in the Disclosure Schedule attached
hereto (the "SBC Disclosure Schedule"). The SBC Disclosure Schedule will be
arranged in paragraphs and subparagraphs that correspond to the designation of
subparagraphs below.
4.1 ORGANIZATION OF SBC. SBC is a corporation that is duly organized,
validly existing, and in good standing in all material respects under the laws
of the State of Nevada.
4.2 AUTHORIZATION OF TRANSACTION. SBC has full actual and legal
corporate power and corporate authority to execute and deliver this Agreement
and to perform its obligations hereunder.
4.3 ENFORCEABLE OBLIGATION. This Agreement constitutes the valid and
legally binding obligation of SBC, enforceable against SBC in accordance with
this Agreement's terms.
4.4 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby by
SBC will (i) to SBC knowledge, violate any statute, law, regulation, rule,
judgement, order, decree, stipulation, injunction, charge, or other
restriction of any government, governmental agency, or court of the States of
Nevada or of the United States to which SBC the Acquisition Stock are subject
or any provision of the articles of incorporation or bylaws or similar
governing rules or documents of SBC (ii) conflict with, result in a breach
of, constitute a default under result in the acceleration of, create in any
party the right to accelerate, terminate, modify or cancel, or require any
notice under any governmental rule, law or regulation of an court of the
States of Nevada or of the United States or under any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement, or
mortgage or instrument of indebtedness or under any other arrangement to
which SBC is a party or by which it or the Acquisition Stock are bound or to
which it or any of the Acquisition Stock is subject, (iii) nor result in the
imposition of any lien, encumbrance, claim or security interest in, to or
affecting any of the Acquisition Stock. To its knowledge, SBC does not need
to give any notice to make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency of the States
of Nevada or of the United States in order for the Parties to consummate the
transactions contemplated by this Agreement, except those that will be
obtained or made prior to Closing or those which would fail to have a
material adverse effect on the ability of SBC to consummate the transactions
contemplated by this Agreement.
4.5 THE ACQUISITION STOCK. As of the date of Closing, the Acquisition
Stock will constitute, in the aggregate, 74% percent of all of the issued and
outstanding common stock of SBC, with the rights, privileges and preferences
that are described in SBC's articles of incorporation. As of the date of
Closing the Acquisition Stock will have been duly and validly issued and is
and will be nonassessable. The Acquisition Stock will be restricted stock;
consistent with Section 1.5 of this Agreement. Title to the Acquisition Stock
will be in the name of the Acquired Company Shareholders in the official
records of SBC and in the records of SBC's stock transfer agent.
4.6 LITIGATION. To SBC's knowledge, SBC is not subject to any unsatisfied
judgement, order, decree, stipulation, injunction, or charge nor is it a party
or threatened to be made a party to any charge, complaint, action, suit,
proceeding, hearing or investigation of or in any court or quasi-judicial or
administrative agency of any federal, state or local jurisdiction or before any
arbitrator that relates in any way, directly or indirectly, to the transactions
contemplated in this Agreement. SBC has no actual reason to believe that any
charge, complaint, action, suit, proceeding, hearing, or investigation will or
may be brought or threatened against SBC in connection with the transactions
contemplated in this Agreement.
4.7 MATERIAL INFORMATION. As of the Closing no representation or
warranty by SBC nor any statement or certificate furnished or to be furnished
to the Acquired Company Shareholders pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact necessary
to make the representation, warranty, statement or certificate not misleading.
At or prior to the Closing SBC will deliver to the Acquired Company Shareholders
a Disclosure Document ("Disclosure Document") that provides the Acquired Company
Shareholders with all material information concerning SBC and the Acquisition
Stock as required by Rule 10b-5 of the Securities and Exchange Commission, and
SBC, the Acquired Company Shareholders will take all actions and steps that are
necessary, to cause the Acquired Company Shareholders acquisition of the
Acquisition Stock to be qualified under Regulation D of the Securities and
Exchange Commission as a private placement of securities and to be similarly
qualified under applicable provisions of the laws of the State of Nevada. The
Parties will cooperate with each other in signing documents and forms to be
filed with federal and state regulator agencies to accomplish the results
contemplated in this paragraph.
4.8 DOCUMENTATION. Prior to the Closing SBC will deliver to the Acquired
Company Shareholders, materially correct, accurate and complete copies of all of
the contracts, agreements and documents that comprise or relate to SBC or the
Acquisition Stock in any way. As to such contract, agreement, or document
(collectively, each "Contract"):
(a) the Contract is the legal, valid, binding, and enforceable obligation
of the parties thereto as of the Closing Date, and is in full force and effect
as of the Closing Date;
(b) to the extent permitted by applicable law, after the Closing, to the
best of SBC knowledge each Contract will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
Closing;
(c) to the knowledge of SBC no party to the Contract is in breach or
default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration of the Contract;
(d) to the knowledge of SBC no party to the Contract has repudiated,
breached or anticipatorily breached any provision thereof, nor is there any
reason to think that any such thing is likely to occur or may occur in the
future;
(e) to the knowledge of SBC there are no disputes, oral agreements, or
forbearance programs in effect as to the Contract; and
(f) to the knowledge of SBC, SBC has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
Contract.
4.9 LEGAL COMPLIANCE.
(a) To its knowledge, SBC has complied in all material respects with
all laws (including rules and regulations thereunder) of federal, state and
local governments of the States of Nevada and the United States (and all
agencies thereof), and no charge, complaint, action, suit, proceeding,
hearing investigation, claim, demand, or notice has been filed or commenced
against any of SBC alleging any failure to comply with any such law or
regulation.
(b) SBC has complied in all material respects with all applicable laws
(including rules and regulations thereunder) relating to the employment of
labor, employee civil rights, and equal employment opportunities.
4.10 RECEIPT OF DISCLOSURE SCHEDULE. Prior to Closing SBC received and
reviewed a copy of the Disclosure Schedule, if any, described in Section
5.10, had discussions with representatives of the Acquired Company and the
Acquired Company Shareholders, and received from such representatives such
additional documents and information as SBC requested.
4.11 RESTRICTED STOCK. SBC understands that the Acquired Company Stock
will not be registered with the Securities and Exchange Commission and that
transferability of the Acquired Company Stock will be subject to the
provisions and restrictions of state and federal securities laws.
4.12 RESTRICTED STOCK. SBC is the sole party in interest agreeing to
purchase the Acquired Company Stock by entering into this Agreement. SBC is
acquiring the Acquired Company Stock for SBC's own account, for investment
purposes only and not with a view to the resale or other distribution
thereof, in whole or in part. As stated in the previous paragraph, SBC is
aware that as of the date of Closing the Acquired Company Stock has not been
and will not be registered under the 0000 Xxx.
4.13 THIRD PARTY CONSENTS. All third parties, if any, whose consent to
the transactions contemplated in this Agreement are listed in the Disclosure
Schedule, if any. The Disclosure Schedule, if any, also indicates the
contract, agreement, permit or other relationship to the third party that
gives rise to the need for the third party's consent.
4.14 DUE DILIGENCE PERIOD. During the time period from the effective
date of this Agreement until the Closing date (the "Due Diligence Period"),
SBC shall be entitled to investigate the Acquired Company, review their
files, visit the Acquired Company business premises and to talk with officers
and employees of the Acquired Company and to meet with any and all other
third parties, public and private, and to perform such other due diligence
reviews and investigations pertaining to the transactions contemplated in
this Agreement as SBC determines is necessary or proper.
ARTICLE
5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE ACQUISITION SHAREHOLDERS
5.1 REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED COMPANY
SHAREHOLDERS. The Acquired Company Shareholders represent and warrant to, and
covenant with SBC that the representations and warranties provided below are
true, correct, accurate and complete in all respects as of the effective date
of this Agreement, and that the same will be true, correct, accurate and
complete on and as of the date of the Closing (as though made then and as
though the Closing were substituted for the date of this Agreement throughout
the following), except as may be set forth in the Disclosure Schedule
attached hereto (the "Acquired Company Shareholders Disclosure Schedule").
The Acquired Company Shareholders Disclosure Schedule will be arranged in
paragraphs and subparagraphs that correspond to the designation of
subparagraphs below.
5.2 ORGANIZATION OF THE ACQUIRED COMPANY. The Acquired Company is a
corporation that is duly organized, validly existing, and in good standing in
all material respects under the laws of the State of Nevada.
5.3 AUTHORIZATION OF TRANSACTION. The Acquired Company has full actual
and legal corporate power and corporate authority to execute and deliver this
Agreement and to perform its obligations hereunder.
5.4 ENFORCEABLE OBLIGATION. This Agreement constitutes the valid and
legally binding obligation of the Acquired Company and the Acquired Company
Shareholders, enforceable against each of them in accordance with this
Agreement's terms.
5.5 NONCONTRAVENTION. Neither the execution and deliver of this
Agreement by the Acquired Company and the Acquired Company Shareholders, nor
the consummation by any of them of the transactions contemplated hereby, will
(i) violate any statute, law, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which the Acquired Company or the Acquired
Company Shareholders or the Acquired Company Stock are subject, or any
provision of the articles of incorporation or bylaws or similar governing
rules or documents of any of the Acquired Company, (ii) conflict with, result
in a breach of constitute a default under, result in the acceleration of
create in any part, the right to accelerate, terminate, modify or cancel, or
require any notice under any governmental rule, law or regulation or under
any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage or instrument of indebtedness or
under any other arrangement to which any of the Acquired Company of the
Acquired Company Shareholders is a party or by which any of them is bound or
to which any of them is subject, (iii) nor result in the imposition of any
lien, encumbrance, claim or security interest in, to or affecting any assets
of the Acquired Company or any of the Acquired Company Stock. No Acquired
Company or Acquired Company Shareholder needs to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement. The description of the Acquired
Company Stock that is contained in 1.2 of this agreement is true, correct,
complete and accurate in any and all respects and constitutes 100% of all of
the issued and outstanding stock of the Acquired Company. There are no
warrants or other interests or rights to acquire the Acquired Company Stock
other than a conversion on the preferred stock (1 Preferred Share can be
converted to 75 Common Shares) to be exchanged for Common Shares and any
issued Common Shares of Biometrics Security Inc. (up to a maximum of
1,500,000 Common Shares) at 1 Share of Biometrics Security Inc. exchange for
1 Share of Security Biometrics Inc. and the 2000 Biometrics Security Inc.
Stock Option Plan outlined (Exhibit F).
5.6 DOCUMENTATION. Prior to the Closing, the Acquired Company and/or
the Acquired Company Shareholders will deliver to SBC true, correct, accurate
and complete copies of all of the contracts, agreements and documents that
comprise or relate to the Acquired Company or the Acquired Company Stock in
any way. As to each such contact, agreement or document (collectively, each
"Contract"):
(a) the Contract is the legal, valid, binding, and enforceable
obligation of the parties thereto as of the Closing Date, and is in full
force and effect as of the Closing Date;
(b) to the extent permitted by applicable law, after the Closing to the
best of the Acquired Company knowledge and the Acquired Company Shareholders
knowledge each Contract will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
Closing;
(c) to the best knowledge of each of the Acquired Company and the
Acquired Company Shareholders, no party, to the Contract is in breach or
default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration of the Contract;
(d) to the best knowledge of the Acquired Company and the Acquired
Company Shareholders, no party to the Contract has repudiated, breached or
anticipatorily breached any provision thereof, nor is there any reason to
think that any such thing is likely to occur or may occur in the future;
(e) there are no disputes, oral agreements, or forbearance programs in
effect as to the Contract; and
(f) no Acquired Company nor Acquired Company Shareholders have
assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered an
interest in the Contract.
5.7 LITIGATION. No Acquired Company or Acquired Company Shareholders
are subject to any unsatisfied judgement, order, decree, stipulation,
injunction, or charge nor is it a party or threatened to be made a party to
any charge, complaint, action, suit, proceeding, hearing, or investigation of
or in any court or quasi-judicial or administrative agency of any Canadian
federal, provincial or local jurisdiction or before any arbitrator that
relates in any way, directly or indirectly, to the transactions contemplated
in this Agreement. No Acquired Company or Acquired Company Shareholder has
any reason to believe that any charge, complaint, action, suit, proceeding,
hearing or investigation will or may be brought or threatened against the
Acquired Company in connection with the transactions contemplated in this
Agreement.
5.8 LEGAL COMPLIANCE.
(a) The Acquired Company has complied with all laws (including rules
and regulations thereunder) of Canadian federal, provincial and local
governments (and all agencies thereof), and no charge, complaint, action,
suit, proceeding, hearing, investigation, claim, demand, or notice has been
filed or commenced against the Acquired Company, alleging any failure to
comply, with any such law or regulation.
(b) The Acquired Company has complied in all material respects with all
applicable laws (including rules and regulations thereunder) relating to the
employment of labor, employee civil rights, and capital employment
opportunities.
5.9 MATERIAL INFORMATION. As of the Closing, no representation or
warranty by the Acquired Company or the Acquired Company Shareholders, nor
any statement or certificate furnished or to be furnished to any person or
Party pursuant hereto or in connection with the transactions contemplated
hereby: contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary to make the
representation, warranty, statement or certificate not misleading. At or
prior to the Closing The Acquired Company Shareholders will deliver to SBC a
Disclosure Document ("Disclosure Document") that provides SBC with all
material information concerning the Acquired Company, as required by Rule
10b-5 of the Securities and Exchange Commission, and the Acquired Company
Shareholders and SBC will take all actions and steps that are necessary to
cause the Acquired Company Shareholders acquisition of the Acquisition Stock
to be qualified under Regulation D of the Securities and Exchange Commission
as a private placement of securities and to be similarly qualified under
applicable provisions of the laws of the State of Nevada. The Parties will
cooperate with each other in signing documents and forms to be filed with
federal and state regulatory agencies to accomplish the results contemplated
in this paragraph
5.10 RECEIPT OF DISCLOSURE SCHEDULE. Prior to making the decision to
acquire the Acquisition Stock as provided herein, the Acquired Company and
the Acquired Company Shareholders received and reviewed a copy of the
Disclosure Schedule described in Section 4.10, had discussions with
representatives of SBC and received from such representatives such additional
documents and information as the Acquired Company Shareholders requested. The
Acquired Company Shareholders acknowledges that he or she is sophisticated
and experienced in matters relating to SBC and its planned business
activities as described in the Disclosure Schedule.
5.11 INVESTMENT COMPANY ACT OF 1940. The Acquired Company
Shareholders agrees that at no time will he or she increase the number of
beneficial owners of the Acquisition Stock (as that term is defined in
Section 3(c)(1) of the Investment Company of 1940, as amended).
5.12 RESTRICTED STOCK. The Acquired Company Shareholders understands
that the Acquisition Stock will be restricted stock, not registered with the
Securities and Exchange Commission. Unless and until the Acquisition Stock is
registered under the Securities Exchange Act of 1934, no Acquired Company
Shareholder shall be entitled to transfer all or any share of the Acquisition
Stock unless the Acquired Company Shareholder first provides with an
acceptable opinion of counsel that the proposed transfer will not violate any
applicable law, rule or regulation or any provision of this Agreement. SBC
shall be entitled to place a restrictive legend on all certificates
evidencing ownership of the Acquisition Stock that provides notice of the
provisions of this paragraph and other applicable provisions of this
Agreement.
5.13 REGISTRATION REPRESENTATIONS. Acquired Company Shareholders is
the sole party in interest agreeing to purchase the Acquisition Stock by
entering into this Agreement. The Acquired Company Shareholders are acquiring
the Acquisition Stock for the Acquired Company Shareholder's own account,
for investment purposes only and not with a view to the resale or other
distribution thereof, in whole or in part. As stated above, the Acquired
Company Shareholders is aware that as of the date of Closing the Acquisition
Stock has not been and will not be registered under the 1933 Act and that SBC
provides no assurance that the Acquisition Stock will ever be registered
under such act. Each of the Acquired Company Shareholders is willing and
able and agrees to bear the economic risk of investment in the Acquisition
Stock for an indefinite period of time, and each is capable of bearing that
risk. The Acquired Company Shareholders is knowledgeable with respect to the
financial, tax and business aspects of ownership of the Acquisition Stock and
of the business operations conducted by SBC, or the Acquired Company has been
represented by a person with such knowledge and expertise in connection with
acquisition of the Acquisition Stock.
5.14 THIRD PARTY CONSENTS. All third parties, if any, whose consent
to the transactions contemplated in this Agreement are listed in the
Disclosure Schedule, if any. The Disclosure Schedule, if any, also indicates
the contract, agreement, permit or other relationship to the third party that
gives rise to the need for the third party's consent.
5.15 DUE DILIGENCE PERIOD. During the time period from the effective
date of this Agreement until the Closing date (the "Due Diligence Period"),
The Acquired Company Shareholders shall be entitled to investigate, review
its files, to visit SBC business premises and to talk with officers and
employees of SBC and to meet with any and all other third parties, public and
private, and to perform such officer due diligence reviews and investigations
pertaining to the transactions contemplated in this Agreement as any Acquired
Company Shareholder determines is necessary or proper. The Acquired Company
Shareholders have received the financial statements of SBC dated through
March 31, 2000, and deems them sufficient for purposes of entering into this
transaction.
5.16 FINANCIAL STATEMENTS. Attached to this Agreement as Exhibit D
are balance sheets (the "Financial Statements") of the Acquired Company. The
Financial Statements
have been prepared in accordance with generally accepted accounting
principles consistently applied, and are true and accurate. Since the date of
the Financial Statements, there has been no change in the financial condition
of the Acquired Company. The Acquired Company have no liabilities,
commitments or obligations, contingent or otherwise not shown on the
Financial Statements.
ARTICLE
6
CONDITIONS PRECEDENT
6.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SBC. The following are
conditions precedent to the obligation of SBC to sell and convey the
Acquisition Stock to the Acquired Company Shareholders and to receive an
assignment of the Acquired Company Stock at the Closing. Any condition listed
below may be waived by SBC at or prior to the Closing Date.
(a) Delivery to SBC of all information and materials required to be
delivered to SBC under any provision of this Agreement;
(b) Receipt of all necessary third party consents;
(c) Performance by each Acquired Company Shareholder of all of his or
her or its obligations under this Agreement that are required to be performed
prior to Closing;
(d) True and correct representations and warranties by the
Acquired Company and the Acquired Company Shareholders in connection with
this Agreement; and
(e) Discovery of no material adverse information at or prior to
the Closing concerning the Acquired Companies.
6.12 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE ACQUIRED COMPANY
SHAREHOLDERS. The following are conditions precedent to the obligations of
Acquired Company Shareholders to sell and transfer the Acquired Company,
Stock to SBC and to acquire the Acquisition Stock from SBC at the Closing.
Any condition listed below may be waived by the Acquired Company Shareholders
at or prior to the Closing.
(a) Delivery to the Acquired Company Shareholders of all
information and materials required to be delivered by SBC under any provision
of this Agreement;
(b) Receipt of all necessary third party consents;
(c) Performance by SBC of all of its obligations under this Agreement
that are required to be performed prior to Closing; and
(d) Discovery of no materially adverse information at or prior to the
Closing concerning SBC.
6.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Parties contained in this Agreement shall survive the
Closing and shall continue to be the obligations of the Parties for a period
of two years after the date of the Closing.
ARTICLE
7
GENERAL PROVISIONS
7.1 COSTS AND FEES. If any Party breaches any term of this Agreement,
the breaching Party agrees to pay the non-breaching Party all reasonable
attorneys' fees, expert witness fees, investigation costs, costs of tests and
analysis, travel and accommodation expenses, deposition and trial transcript
costs, court costs and other costs and expenses incurred by the non-breaching
Party in enforcing this Agreement or preparing for legal or other
proceedings, at the trial or appellate level, whether or not such proceedings
are instituted. If any legal or other proceedings are instituted, the Party
prevailing in any such proceeding shall be paid all of the aforementioned
costs, expenses and fees by the other Party, and if any judgment is secured
by such prevailing Party, all such costs, expenses, and fees shall be
included in such judgment, attorneys fees to be set by the court and not by
the jury. References in this paragraph to "legal proceedings" refer to
litigation as well as arbitration proceedings and any other similar or related
proceedings.
7.2 WAIVER. No delay by a Party in exercising any right or remedy
shall constitute a waiver of a Party's rights under this Agreement, and no
waiver by either Party of the breach of any covenant of this Agreement by the
other shall be construed as a waiver of any preceding or succeeding breach of
the same or any other covenant or condition of this Agreement.
7.3 INDEMNIFICATION. Each Party (the "Indemnifying Party") shall
protect, indemnify and hold harmless the other Party and its directors,
officers, employees, agents, affiliates and representatives (each an
"Indemnified Party") against any and all costs, expenses, damages (whether
such damages are general, special consequential, limited, direct or indirect
or incidental), liabilities or losses, including attorneys' fees, caused by,
for or on account of the Indemnifying Party's negligence, gross negligence or
willful misconduct or failure to perform its obligations under this
Agreement or the negligence, gross negligence or willful misconduct of the
Indemnifying Party's directors, officers, employees, agents affiliates or
representatives.
(a) If an Indemnified Party intends to seek indemnification under this
paragraph from any Indemnifying Party with respect to any action or claim,
the Indemnified Party shall give the Indemnifying Party notice of such claim
or action upon the receipt of actual knowledge or information by the
Indemnified Party of any possible claim or of the commencement of such claim
or action, which period shall in no event be later than the earlier of (i)
fifteen business days prior to the last day of responding to such claim or
action or (ii) one half of the period allowed for responding to such claim or
action or, if no time period for responding exists, as soon as reasonably
possible. The Indemnifying Party shall have no liability, under this
paragraph for any claim or action for
which such notice is not provided, unless the failure to give such notice
does not prejudice the Indemnifying Party.
(b) The Indemnifying Party shall have the right to assume the defense
of any such claim or action, at its sole cost and expense, with counsel
designated by the Indemnifying Party and reasonably satisfactory to the
Indemnified Party provided, however, that if the defendants in any such
action include both the Indemnified Party and the Indemnifying Party, and the
Indemnified Party shall have reasonably concluded that there may be legal
defenses available to it which are different from or additional to those
available to the Indemnifying party, the Indemnified Party shall have the
right to select separate counsel, at the Indemnifying Party's expense, to
assert such legal defenses and to otherwise participate in the defense of
such action on behalf of such Indemnified Party.
(c) Should any Indemnified Party, be entitled to indemnification under
this Section as a result of a claim by a third party, and should the
Indemnifying Party fail to assume the defense of such claim or action the
Indemnified Party may, at the expense of the Indemnifying Party, contest or,
(with the prior consent of the Indemnifying Party; which consent shall not be
unreasonably withheld) settle such claim or action. Except to the extent
expressly provided herein, no indemnified Party shall settle any claim or
action with respect to which it has sought or intends to seek indemnification
pursuant to this Section without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld or delayed.
(d) If an Indemnifying Party is obligated to indemnify and hold any
Indemnified Party harmless under this Agreement, the amount owing to the
Indemnified Party shall be the amount of such Indemnified Party's actual out
of pocket loss, net of any insurance or other recovery.
(e) The duty to indemnify under this Agreement will continue in full
force and effect for a period of two years with respect to any loss,
liability damage or other expense based on facts or conditions which
occurred prior to such termination.
7.4 NOTICES. No notice, consent, approval or other communication
provided for herein or given in connection herewith shall be validly given,
made, delivered or served unless it is in writing and delivered personally,
sent by overnight courier, or sent by rapstered or certified United States
mail postage prepaid, with return receipt requested, to the addresses for
each Party set forth below. Any Party hereto may from time to time change its
address by notice to the other Parties given in the manner provided herein.
Notices, consents, approvals, and communications by mail shall be deemed
delivered upon the earlier of forty-eight (48) hours after deposit in the
United States mail in the manner provided above or upon delivery to the
respective addresses set forth above if delivered personally or sent by
overnight courier. Addresses of the Parties are the following:
To SBC: Attn: Xxxxxx Xxxxx
#000 - 0000 Xxxxx Xx.
Xxxxxxxxx, XX X0X 0X0
with a copy to: Xxxxxxx Xxx
Suite #333 - 0000 Xxxxxx Xxx Xxx
Xxxxx Xxx Xxxxx, Xxxxxxxxxx 00000 1789
To BSC: Attn: Xxxxxxx Xxxxx
#000 - 0000 Xxxxx Xx.
Xxxxxxxxx, XX X0X 0X0
with a copy to: Xxxxxxx X. Xxxxxx & Barrister & Solicitor
#415 South Tower, 0000 Xxxxxx Xx.
Xxxxxxxx, XX X0X 0X0
To the Acquired Companies Shareholders:
Xxxxxxx Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX X0X 0X0
Gesture Recognition Technologies (GRT) International
Limited
c/o CIBC Trust and Merchant Bank (Barbados) Limited
Warrens, St. Xxxxxxx
Barbados, W.I.
Shareholders through the Reg S and Reg D private
placement of stock listed as Exhibit G "attached"
7.5 INTERPRETATION AND TIME. The captions of the paragraphs of this
Agreement are for convenience only and shall not govern or influence the
interpretation hereof. This Agreement is the result of negotiations between
the Parties and, accordingly, shall not be construed for or against either
Party regardless of which Party drafted this Agreement or any portion
thereof. Time is of the essence under this Agreement.
7.6 SUCCESSORS AND ASSIGNS. All of the provisions hereof shall inure to
the benefit of and be binding upon the successors and assigns of the Parties.
7.7 NO PARTNERSHIP. This Agreement is not intended to, and nothing
contained in this Agreement shall create any partnership, joint venture or
other similar arrangement between the Parties.
7.8 FURTHER DOCUMENTS. Each of the Parties shall execute and deliver
all such other and additional documents and perform all such acts, in addition
to execution and delivery of this Agreement and performance of the Party's
obligations hereunder, as are reasonably required from time to time in order
to carry out the purposes, matters and transactions that are contemplated in
this Agreement.
7.9 INCORPORATION OF EXHIBITS. All exhibits attached to this Agreement
are by this reference incorporated herein.
7.10 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Nevada without giving effect to the conflict of law provisions or
principles of the State of Nevada.
7.11 DATE OF PERFORMANCE. If the date of performance of any obligation
or the last day of any time period provided for herein should fall on a
Saturday, Sunday or legal holiday, then said obligation shall be due and
owing, and said time period shall expire, on the first day, thereafter which
is not a Saturday, Sunday or legal holiday. Except as may otherwise be set
forth herein, any performance provided for herein shall be timely made if
completed no later than 5:00 p.m., Vancouver, BC time, on the day of
performance.
7.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts. This Agreement may be signed by original signatures or by fax
signatures. Any set of counterparts of this Agreement, whether faxed or
originals or both, showing signatures by all Parties, taken together, shall
constitute a single copy of this Agreement.
7.13 RESOLUTION OF DISPUTES. In the event of any dispute between the
Parties as to their rights and obligations under this Agreement, including
but not limited to, any question as to whether or not a Party has performed
its obligations fully or remedied an alleged breach, and any and all other
disputes arising under this Agreement, shall be resolved as follows:
(a) The Parties shall submit their dispute to at least four (4) hours
of mediation in accordance with the mediation procedures of American
Arbitration Association ("AAA").
(b) In the event the dispute does not then settle within 15 calendar
days after the first mediation session, the Parties agree to submit the
dispute to binding arbitration in accordance with the arbitration procedures
of the AAA except as modified in this Agreement. The arbitration hearing
shall be conducted no later than 45 calendar days after the first mediation
session.
(c) The arbitrator or arbitrators conducting the arbitration hearing
shall render the arbitration decision in writing which writing shall explain
the reasoning and bases for the decision.
(d) The Parties agree to share equally the costs of mediation.
However, if the dispute is settled through arbitration, the prevailing Party
shall be entitled to recover all costs incurred, including reasonable attorneys
fees, to enforce its rights hereunder, in addition to any damages recovered,
as provided in "Costs and Fees" above.
7.14 SEVERABILITY. If any term or provision of this Agreement shall, to
any extent, be determined by a court of competent jurisdiction to be invalid
or unenforceable, the remainder of this Agreement shall not be affected
thereby, and each term and provision of this Agreement shall be valid and be
enforceable to the fullest extent permitted by law.
7.15 ASSIGNMENT. No Party shall assign this Agreement, nor any interest
arising herein, without the written consent of the other Parties.
7.16 RECITALS. The recitals set forth above are a part of this
Agreement.
7.17 JURISDICTION AND VENUE. Venue for and jurisdiction over any
legal proceedings is available to the Parties hereunder shall lie in the
appropriate courts of the State of Nevada, located in Las Vegas, Nevada.
IN WITNESS WHEREOF, the Parties hereto have hereunder affixed their
signatures on the dates set forth below to be effective as of the date first
set forth above.
SECURITY BIOMETRICS INC.
corporation.
Date: July 24, 2000 By: /s/ Xxxxx Xxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxx
---------------
Its: Secretary
----------
BIOMETRICS SECURITY INC.
a Nevada corporation,
Date: July 24, 2000 By: /s/ Xxxxxxx Xxxxx
-----------------------------
Name: Xxxxxxx Xxxxx
---------------
Its: President
----------
BIOMETRICS SECURITY INC.
Shareholders
Date: July 24, 2000 By: /s/ Xxxxxxx Xxxxx
-----------------------------
Name: Xxxxxxx Xxxxx
---------------
Date: July 24, 2000 By: /s/ Xxx Xxxxxxxx
-----------------------------
Name: Gesture Recognition Technologies
---------------------------------
(GRT) International Limited, Xxx Xxxxxxxx
-----------------------------------------
Its: Director
---------
EXHIBIT A
SBC Disclosure Statement
CONTENTS:
N/A
EXHIBIT B
BSC Disclosure Statement
CONTENTS:
N/A
EXHIBIT C
1) SBC Financial Statement
Period Ending June 30, 2000 "Audited" attached.
EXHIBIT D
1) BSC Financial Statement
Period Ending September 15, 2000 "Audited" attached.
EXHIBIT E
1) Letter of Intent dated July 21, 2000 ATTACHED.
EXHIBIT E
LETTER OF INTENT
This letter of intent made this 21st day of July 2000 between Great Bear
Investments Inc. (G.B.I.V.) and Biometrics Security Inc. (B.S.I.) will cover
the intent of each party fully.
G.B.I.V. will do its best to complete the following.
1. Complete a consent resolution to approve the following
a. Approve a 1 old share for 4 new share forward split;
b. Approve the addition of Xxxxxx Xxxxx to the board of directors;
c. Accept the resignation of Xxxxxxx Xxxxxxxxx as a director;
d. Approve a change of name from Great Bear Investments Inc. to Security
Biometrics Inc.
e. Secure a new cusip number and trading symbol;
f. Approve an exchange of shares whereby G.B.I.V. issues 38,500,000
share of its common in exchange for all of the issued and outstanding
share in B.S.I.
2. Complete any and all delinquent regulatory filings and update audits.
3. Provide all requested diligence material to B.S.I.
BIOMETRICS SECURITY INC. will do their best to complete the following
sequence of events.
a. Complete financial audit on B.S.I. on or before 60 days of execution
of this letter of intent;
b. Advise G.B.I.V. of the outstanding shares issued in B.S.I.
c. Deliver a certificate of good standing, copy of articles and by-laws
covering the corporation
d. Deliver resumes on all of the new directors and officers of the new
corporation
e. Provide all requested diligence material on B.S.I.
NATURE OF B.S.I. BUSINESS
Biometrics Security was created to specifically develop, market under license
and sell static and dynamic biometric technologies specific to the security
applications of banking and financial transactions. These include, but are
not limited to: dynamic gesture recognition technology (GRT), static
biometric finer or palm prints, retinal scans, and voice recognition systems.
GRT is a dynamic system that interprets hand gestures or signatures using
sophisticated software algorithms and performed on proprietary touchpads.
Gesture recognition technology is deemed superior to existing pen input and
signature recognition technologies.
Biometrics Security is positioning itself as a key provider of biometric
security interfaces that will offer a wide array of "end-to-end" solutions
targeted to the
Biometrics Security is positioning itself as a key provider of biometric
security interfaces that will offer a wide array of "end-to-end" solutions
targeted to the specific multi-trillion dollar banking and financial
transaction markets.
Despite the rise in electronic transactions, little has been done to bring
the user security interface up to par with the current state of biometric
technologies.
This provides Biometrics Security with an exceptional opportunity. The
Company's mission, "TO MAKE SECURITY APPLICATIONS FOR BANKING AND FINANCIAL
TRANSACTIONS SIMPLE, NATURAL, AND EFFECTIVELY SECURE" -- addresses precisely
the present gap in security technology.
GREAT BEAR INVESTMENTS INC. POST ROLL FORWARD "SHARE STRUCTURE"
1 Authorized and issued share capital
Before Roll Forward 3,125,000
After Roll Forward 12,500,000
2 Reg S offering up to a max of 1,000,000
3 Share exchange (Licensing agreement for banking and all financial
transactions)
Post 37,500,000
----------
TOTAL POST ROLLFORWARD ISSUED AND OUTSTANDING SHARES 51,000,000
IN WITNESS WHEREOF the parties agree by executing this letter of intent
subject to approval by the shareholders of each corporation.
Great Bear Investments Inc. Biometrics Security Inc.
By /s/ Xxxx X. Xxxxxx By /s/ Xxxxxxx Xxxxx
------------------------ ---------------------
Its President Its President
/s/ Xxxxx Xxxxxxxx
---------------------------
Its Secretary
EXHIBIT F
1) 2000 Stock Option Plan Attached.
EXHIBIT F
BIOMETRICS SECURITY INC.
2000 STOCK OPTION PLAN
1. INTERPRETATION
1.1 DEFINED TERMS - For the purposes of this Plan, the following terms shall
have the following meanings:
(a) "AFFILIATE" means a Parent Corporation or a Subsidiary
Corporation of a corporation;
(b) "ASSOCIATE" means, where used to indicate a relationship with any
Person,
(i) any relative of that Person,
(ii) any person of the opposite sex to whom that Person is
married or with whom that Person is living in a conjugal
relationship outside marriage,
(iii) any relative of a Person mentioned in clause (ii) who has
the same home as that Person,
(iv) any partner of that Person,
(v) any trust or estate in which such Person has a substantial
beneficial interest or as to which such Person serves as
trustee or in a similar capacity, or
(vi) any corporation of which such Person beneficially owns,
directly or indirectly, voting securities carrying more than
ten percent of the voting rights attached to all outstanding
voting securities of the corporation;
(c) "BENEFICIAL OWNER" of a security includes any Person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise has voting power over
the security or the power to dispose or direct the disposition
of the security, and any Person who uses a trust or other
arrangement with the purpose or effect of divesting such Person of
beneficial ownership as part of a plan to evade the reporting
requirements of section 13 of the Exchange Act shall be deemed
to be the Beneficial Owner of the security;
(d) "BOARD" means the Board of Directors of the Company;
(e) "CODE" means the United States Internal Revenue Code of 1986, as
amended from time to time;
(f) "COMMITTEE" means a committee of the Board appointed in
accordance with this Plan, or if no such committee is appointed,
the Board itself;
(g) "COMPANY" means Biometrics Security Inc. and its Affiliates;
(h) "DATE OF GRANT" means the date on which a grant of an Option is
effective;
(i) "DIRECT OR INDIRECT OWNERSHIP" of securities by a Person is
calculated in accordance with the following rules:
(i) the Person shall be deemed to own stock owned, directly
or indirectly, by or for his brothers and sisters (including
half-brothers and half-sisters), spouse, ancestors and
lineal descendants, and
(ii) stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust, shall be deemed to be owned
proportionately by or for its shareholders, partners or
beneficiaries;
(j) "DISABILITY" means a medically determinable physical or mental
impairment expected to result in death or to last for a
continuous period of not less than 12 months which causes an
individual to be unable to engage in any substantial gainful
activity;
(k) "DISINTERESTED PERSON" means a director who qualifies as a
"Disinterested Person" as defined in subclause
240.16b-3(b)(2)(i) of Title 17 of the Code of Federal
Regulations of the United States; meaning a director who has not
been granted or awarded equity securities pursuant to the Plan
or any other plan of the Company for one year prior to the
initiation of his service as an administrator of the Plan, other
than securities received pursuant to an annual retainer fee;
(l) "DISPOSITION" includes a sale, exchange, gift, or transfer of
legal title, but does not include a pledge, hypothecation,
transfer from a descendent to an estate, transfer by bequest or
inheritance, or the other excepted circumstances referred to in
section 424(c) of the Code;
(m) "DOMESTIC RELATIONS SUCCESSOR" means a person entitled to
receive transfer of ownership of an Option pursuant to a
Qualified Domestic Relations Order;
(n) "EFFECTIVE DATE" means the effective date of this Plan, which is
August 21, 2000;
(o) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended;
(p) "FAIR MARKET VALUE" means:
(i) where the Shares are listed for trading on the OTC BB and
or NQB, the closing price of the Shares on the OTC BB and
or NQB,
(ii) where the Shares are not publicly traded, the value which
is determined by the Committee to be the fair value of the
Shares at the Date of Grant, taking into consideration all
factors that the Committee deems appropriate, including,
without limitation, recent sale and offer prices of the
Shares in private transactions negotiated at arm's length;
(q) "GUARDIAN" means the guardian, if any, appointed for an Optionee;
(r) "ISO" means an Option granted to an employee of the Company that
qualifies as an "incentive stock option" for purposes of section
422 of the Code and is therefore subject to favourable tax
treatment under the Code;
(s) "ISO OPTIONEE" means an Optionee to whom an ISO has been granted;
(t) "MODIFICATION" means any change in the terms of an Option which
gives the Optionee additional benefits under the Option, but
such change shall not include a change in the terms of an Option:
(i) to make the Option not transferable other than by will or
the laws of descent and distribution,
(ii) to make the Option exercisable only by the Optionee during
his lifetime,
(iii) in the case of an Option not immediately exercisable in
full, to accelerate the time within which the Option may be
exercised, or
(iv) attributable to the issuance or assumption of an Option by
reason of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation
if the new Option or assumption of the old Option does not
give the Optionee additional benefits which he did not have
under the old Option;
(u) "NON-ISO" means an Option that is not an "incentive stock option"
for purposes of section 422 of the Code, and is therefore not
subject
to favourable tax treatment under the Code;
(v) "NON-ISO OPTIONEE" means an Optionee to whom a Non-ISO has been
granted;
(w) "OPTION" means an option to purchase Shares granted pursuant to the
terms of this Plan;
(x) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionee, specifying the terms of the Option being granted to the
Optionee under the Plan;
(y) "OPTION PRICE" means the price at which an Option is exercisable to
purchase Shares;
(z) "OPTIONEE" means a person to whom an Option has been granted;
(aa) "PARENT CORPORATION" means any corporation in an unbroken chain of
corporations ending with the Company if, at the Date of Grant, each
corporation other than the Company owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain;
(bb) "PERSON" means a natural person, company, government, or political
subdivision or agency of a government; and where two or more
Persons act as a partnership, limited partnership, syndicate or
other group for the purpose of acquiring, holding or disposing of
securities of an issuer, such syndicate or group shall be deemed
to be a Person;
(cc) "PLAN" means this Stock Option Plan of the Company;
(dd) "QUALIFIED DOMESTIC RELATIONS ORDER" means a judgement or order
which relates to the provision of child support, alimony payments
or marital property rights to a spouse, former spouse, child or
other dependent of an Optionee, made pursuant to domestic
relations law of a state of the United States, and which meets all
the requirements of section 414(p) of the Code;
(ee) "QUALIFIED SUCCESSOR" means a person who is:
(i) entitled to wonership of an Option upon the death of an ISO
Optionee, pursuant to a will or the applicable laws of descent
and distribution upon death, or
(ii) a Domestic Relations Successor of an Optionee;
(ff) "SHARES" means the common shares without par value in the capital of
the Company;
(gg) "SUBSIDIARY CORPORATION" means any corporation in an unbroken
chain of corporations beginning with the Company if, at the Date
of Grant, each of the corporations other than the last corporation
owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain;
(hh) "TERM" means the period of time during which an Option is
exercisable;
(ii) "TERMINATING EVENT" means:
(i) the dissolution or liquidation of the Company,
(ii) a merger or consolidation of the Company with one or more
corporations as a result of which, immediately following such
merger or consolidation, the shareholders of the Company as
a group will hold less than a majority of the outstanding
capital stock of the surviving corporation,
(iii) the sale or other disposition of all or substantially all of
the assets of the Company,
(iv) the occurrence of an event whereby any Person or entity
becomes the Beneficial Owner of Shares representing 50% or
more of the combined voting power of the voting securities
of the Company, or
(v) a material change in the capital structure of the Company
that is deemed to be a Terminating Event by virtue of the
last sentence of Section 11.1 of this Plan or by virtue of
section 11.4 of this Plan;
(jj) "OTC BB" means the Over The Counter "Bulletin board", NQB is the
National Quotation Bureau
2. STATEMENT OF PURPOSE
2.1 PRINCIPAL PURPOSES - The principal purposes of the Plan are to provide
the Company with the advantages of the incentive inherent in stock ownership
on the part of employees, officers, directors, and consultants responsible
for the continued success of the Company; to create in such individuals a
proprietary interest in, and a greater concern for, the welfare and success
of the Company; to encourage such individuals to remain with the Company; and
to attract new employees, officers, directors and consultants to the Company.
2.2 ISO AND NON-ISOS - Under this Plan, the Company may grant either ISOs or
Non-ISOs. Each ISO granted hereunder is intended to constitute an "incentive
stock option", for the purposes of section 422 of the Code, and this Plan and
each such ISO is intended to comply with all of the requirements of Section
422 of the Code and of all other provisions of the Code applicable to
"incentive stock options" and to plans issuing the same. Each Non-ISO granted
hereunder is intended to constitute an Option that is not an "incentive stock
option" for the purposes of section 422 of the Code, and that does not comply
with the requirements of Section 422 of the Code.
2.3 BENEFIT TO SHAREHOLDERS - The Plan is expected to benefit shareholders
by enabling the Company to attract and retain personnel of the highest
caliber by offering them an opportunity to share in any increase in value of
the Shares resulting from their efforts.
3. ADMINISTRATION
3.1 BOARD OR COMMITTEE - The Plan shall be administered by the Board or by a
Committee appointed in accordance with Section 3.2 or 3.4(b) below.
3.2 APPOINTMENT OF COMMITTEE - The Board may at any time appoint a
Committee, consisting of not less than two of its members, to administer the
Plan on behalf of the Board in accordance with such terms and conditions as
the Board may prescribe, consistent with this Plan. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board. From
time to time, the Board may increase the size of the Committee and appoint
additional members, remove members (with or without cause) and appoint new
members in their place, fill vacancies however caused, or remove all members
of the Committee and thereafter directly administer the Plan.
3.3 QUORUM AND VOTING - A majority of the members of the Committee shall
constitute a quorum, and, subject to the limitations in this Section 3, all
actions of the Committee shall require the affirmative vote of members who
constitute a majority of such quorum. Members of the Committee who are not
Disinterested Persons may vote on any matters affecting the administration of
the Plan or the grant of Options pursuant to the Plan, except that no such
member shall act upon the granting of an Option to himself (but any such
member may be counted in determining the existence of a quorum at any meeting
of the Committee during which action is taken with respect to the granting of
Options to him).
3.4 ADMINISTRATION OF PLAN UPON REGISTRATION OF EQUITY SECURITIES -
Notwithstanding the foregoing provisions of this Section 3, if the Company
registers any class of any equity security pursuant to section 12 of the
Exchange Act the Plan shall, from the effective date of such registration
until six months after the termination of such registration, be administered
as follows:
(a) the Plan shall be administered by the Board so long as each member
of the Board is a Disinterested Person; and,
(b) if at any time not all members of the Board are Disinterested
Persons, then the board shall appoint a Committee consisting of
two or more
of its members, all whom are Disinterested Person, to
administer the Plan on behalf of the Board in accordance with
such terms and conditions as the Board may prescribe,
consistent with this Plan. Once appointed, the Committee shall
continue to serve until otherwise directed by the Board. From
time to time the Board may increase the size of the Committee
and appoint additional members (all of whom shall be
Disinterested Persons), remove members (with or without cause)
and appoint new members in their place, fill vacancies however
caused, or remove all members of the Committee and thereafter
directly administer the Plan so long as all members of the
Board are Disinterested Person. At no time shall a person who
is not a Disinterested Person serve on the Committee appointed
under this Section 3.4(b), nor shall such Committee at any
time consist of less than two members of the Board.
3.5 POWERS OF COMMITTEE - Any Committee appointed under Section 3.2 or
3.4(b) above shall have the authority to do the following:
(a) administer the Plan in accordance with its express terms;
(b) determine all questions arising in connection with the
administration, interpretation, and application of the Plan,
including all questions relating to the value of the Shares;
(c) correct any defect, supply any information, or reconcile any
inconsistency in the Plan in such manner and to such extent as
shall be deemed necessary to advisable to carry out the
purposes of the Plan;
(d) prescribe, amend, and rescind rules and regulations relating
to the administration of the Plan;
(e) determine the duration and purposes of leaves of absence from
employment which may be granted to Optionees without
constituting a termination of employment for purposes of the
Plan;
(f) do the following with respect to the granting of Options:
(i) determine the employees, officers, directors, or
consultants to whom Options shall be granted, based on
the eligibility criteria set out in this Plan,
(ii) determine whether such Options shall be ISOs or
Non-ISOs,
(iii) determine the terms and provisions of the Option
Agreement to be entered into with any Optionee (which
need not be identical with the terms of any other
Option Agreement),
(iv) amend the terms and provisions of Option Agreements,
provided the Committee obtains:
(A) the consent of the Optionee; and
(B) the approval of any stock exchange on which the
Company is listed,
(v) determine when Options shall be granted,
(vi) determine the number of Shares subject to each Option,
and
(g) make all other determinations necessary or advisable for
administration of the Plan.
3.6 OBTAIN REGULATORY APPROVALS - In administering this Plan the Committee
will obtain any regulatory approvals which may be required pursuant to
applicable securities laws or the rules of any stock exchange on which the
Company is listed.
3.7 ADMINISTRATION BY COMMITTEE - The Committee's exercise of the
authority set out in Section 3.5 shall be consistent with the intent that
ISOs issued under the Plan be qualified under the terms of Section 422 of the
Code, and that Non-ISOs shall not be so qualified. All determinations made by
the Committee in good faith on matters referred to in Section 3.5 shall be
final, conclusive, and binding upon all Person. The Committee shall have all
powers necessary or appropriate to accomplish its duties under this Plan. In
addition, the Committee's administration of the Plan shall in all respects be
consistent with the policies and rules of the VSE governing the granting of
stock options for so long as the Shares are listed on the VSE and any other
regulatory authorities having jurisdiction.
4. ELIGIBILITY
4.1 ELIGIBILITY FOR ISOS - ISOs may be granted to any employee of the
Company, including directors or officers of the Company who are employees of
the Company. An Optionee who is not an employee of the Company is not
eligible to receive an ISO under the Plan.
4.2 ELIGIBILITY FOR NON-ISOS - Non-ISOs may be granted to any employee,
officer, director or consultant of the Company.
4.3 NO VIOLATION OF SECURITIES LAWS - No Option shall be granted to any
Optionee unless the committee has determined that the grant of such Option
and the exercise thereof by the Optionee will not violate the securities law
of the jurisdiction where the Optionee resides.
4.4 LIMIT ON MAXIMUM GRANT TO ANY OPTIONEE - Notwithstanding anything in
this Plan to the contrary, no officer or employee of the Company shall
receive Options exercisable for more than 1,875,000 Shares over any three
year period.
5. SHARES SUBJECT TO THE PLAN
5.1 NUMBER OF SHARES - The Committee, from time to time, may grant
Options to purchase an aggregate of up to 3,750,000 Shares, subject to the
Board of Directors approval, to be made available from authorized, but
unissued or reacquired, Shares, provided that not more than 1,875,000 options
may be granted to directors and officers in management, administration and
investor relations and the remaining options may be granted to employees and
consultants and members of any advisory board working in the marketing and
commercialization of the Company products. In calculating the foregoing
3,750,000 Shares, the Committee shall include all Shares subject to options
outstanding prior to the Effective Date of the Plan. The foregoing number of
Shares shall be adjusted, where necessary, to take account of the events
referred to in Section 11 thereof.
5.2 DECREASE IN NUMBER OF SHARES SUBJECT TO PLAN - Upon exercise of an
Option, the number of Shares thereafter available under the Plan and under
the Option shall decrease by the number of Shares as to which the Option was
exercised.
5.3 EXPIRY OF OPTION - If an Option expires or terminates for any reason
without having been exercised in full, the unpurchased Shares subject thereto
shall again be available for the purposes of the Plan.
5.4 RESERVATION OF SHARES - The Company will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
6. OPTION TERMS
6.1 OPTION AGREEMENT - With respect to each Option to be granted to an
Optionee, the Committee shall specify the following terms in the Option
Agreement between the Company and the Optionee:
(a) whether such Option is an ISO or an Non-ISO;
(b) the number of Shares subject to purchase pursuant to such
Option, provided that so long as the Shares are listed on the
VSE, the number of Shares reserved for issuance to any one
person pursuant to Options does not exceed 5% of the
outstanding Shares;
(c) the Date of Grant;
(d) the Term, provided that:
(i) the Term shall in no event be more than five years
following the Date of Grant provided that while the
Company is listed on the OTC BB, the Term shall be not
more than two years from the Date of Grant; and
(ii) if an ISO Option is granted to an Optionee who on the
Date of
Grant has Directo ro Indirect Ownership of more than 10% of
the total combined voting power of all classes of stock of the
Company, the Term of the Option shall not exceed two years;
(e) the Option Price, provided that,
(i) so long as the Shares are listed on the OTC BB, the Option
Price can be less than the Fair Market Value of the Shares on
the trading day preceding the Date of Grant; and
(ii) if an ISO Option is granted to an Optionee who on the Date of
Grant has Director or Indirect Ownership of more than 10% of
the total combined voting power of all classes of stock of the
Company, then the Option Price shall be the Fair Market Value
of the Shares on the Date of Grant;
(f) any vesting schedule upon which the exercise of an Option is
contingent provided that each Option must be subject to a vesting
schedule under which not more than 25% of the initial aggregate
number of Shares which may be purchased under the Option may
best in any six month period, on a cumulative basis; and
(g) such other terms and conditions as the Committee deems advisable and
are consistent with the purposes of this Plan.
6.2 NO GRANT AFTER FIVE YEARS FROM EFFECTIVE DATE - No Option shall be
granted under the Plan later than five years from the Effective Date of the
Plan. Except as expressly provided herein, nothing contained in this Plan
shall require that the terms and conditions of Options granted under the Plan
be uniform.
6.3 NO DISPOSITION FOR SIX MONTHS - An Optionee who is subject to section 16
of the Exchange Act shall not make a Disposition of any Shares issued upon
exercise of an Option unless at least six months has elapsed between the Date
of Grant of the Option and the date of Disposition of the Shares issued upon
exercise of such Option.
7 LIMITATION ON GRANTS OF OPTIONS
7.1 NON-ISO IF EXCEED $100,000 (US) - If the aggregate Fair Market Value of:
(a) Shares underlying ISOs which have been granted to an Optionee
under this Plan and which are exercisable for the first time during a
calendar year, and
(b) Shares underlying incentive stock options which have been granted to
such Optionee under any other plan of the Company and which are
exercisable for the first time during that calendar year,
exceeds $100,000 (US), as such amount may be adjusted from time to time under
Section 422(d) of the code, then to the extent of such excess such Options
shall be treated as Non-ISOs.
7.2 ISO OPTIONEE OWNING GREATER THAN 10% OF VOTING SECURITIES - The
Committee may grant an ISO to an employee of the Company who, at the Date of
Grant, owns securities of the Company representing more than 10% of the total
combined voting power of all classes of stock of the Company only if:
(a) the Option Price is at least Fair Market Value of the Shares at the
Date of Grant; and
(b) the Term is five years or less.
8. EXERCISE OF OPTION
8.1 METHOD OF EXERCISE - Subject to any limitations or conditions imposed
upon an Optionee pursuant to the Option Agreement or Section 6 above, an
Optionee may exercise an Option by giving written notice thereof to the
Company at its principal place of business or as otherwise indicated by the
Company in writing.
8.2 PAYMENT OF OPTION PRICE - The notice described in Section 8.1 shall be
accompanied by full payment of the aggregate Option Price to the extent the
Option is so exercised, and full payment of any amount the Company determines
must be withheld for tax purposes from the Optionee pursuant to the Option
Agreement. Such payment shall be:
(a) in lawful money (US funds) in cash or by check;
(b) at the discretion of the Committee and if such form of payment is
permitted under the corporate laws then governing the Company, by
delivery of the Optionee's personal recourse note bearing interest
at a rate deemed appropriate by the Committee;
(c) at the discretion of the Committee, and subject to all applicable
securities laws, through delivery by the Optionee and/or withholding
by the Company, of Shares having a market value as of the date of
exercise equal to the cash exercise price of the Option plus any
amounts that the Company determines must be withheld from the
Optionee for US or Canadian tax purposes. The market value of each
of the Shares on the date of delivery shall be determined in good
faith by the committee, which determination shall be binding for
all purposes hereunder; or
(d) at the discretion of the Committee, by any combination of Sections
8.2(a) to 8.2(c) above.
8.3 ISSUANCE OF STOCK CERTIFICATE - As soon as practicable after exercise of
an Option in accordance with Sections 8.1 and 8.2 above, the Company shall
issue a stock certificate evidencing the Shares with respect to which the
Option has been
exercised. Until the issuance of such stock certificate, no right to vote or
receive dividends or any other rights as a shareholder shall exist with
respect to such Shares, notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other right for which the record
date is prior to the date the stock certificate is issued, except as provided
in Section 11 below.
9. TRANSFERABILITY OF OPTIONS
9.1 NON-TRANSFERABLE - Except as provided otherwise in this Ectin 9, Options
are non-assignable and non-transferable.
9.2 DEATH OF OPTIONEE - If the employment of an Optionee as an employee or
consultant of the Company, or the position of an Optionee as a director of the
Company, terminates as a result of his or her death, any Options held by such
Optionee shall pass to the Qualified Successor of the Optionee, and
(a) in the case of an ISO, shall be exercisable by the Qualified
Successor for a period of six months following such death, and
(b) in the case of a Non-ISO, shall be exercisable by the Qualified
Successor for a period of 12 months following such death.
9.3 DISABILITY OF OPTIONEE - If the employment of an Optionee as an employee
or consultant of the Company, or the position of an Optionee as a director of
the Company, is terminated by the Company by reason of such Optionee's
Disability, any Option held by such Optionee that could have been exercised
immediately prior to such termination of employment shall be exercisable by
such Optionee, or by his Guardian, for a period of one year following the
termination of employment of such Optionee.
9.4 DISABILITY AND DEATH OF OPTIONEE - If an Optionee who has ceased to be
employed by the Company by reason of such Optionee's Disability dies within
six months after the termination of such employment, any Option held by such
Optionee that could have been exercised immediately prior to his or her death
shall pass to the Qualified Successor of such Optionee, and shall be
exercisable by the Qualified Successor
(a) in the case of an ISO, for a period of six months following the
death of such Optionee, and
(b) in the case of a Non-ISO, for a period of 12 months following the
death of such Optionee.
9.5 QUALIFIED DOMESTIC RELATIONS ORDER - In the event that a Qualified
Domestic Relations Order mandates the transfer of any Option that could have
been exercised immediately prior to the issuance of such order, such Option
shall pass to the Domestic Relations Successor, and shall be exercisable by
such person or persons in accordance with the terms of the applicable Option
Agreement.
9.6 VESTING - Options held by a Qualified Successor or Exercisable by a
Guardian shall, during the period prior to their termination, continue to
vest in accordance with any vesting schedule to which such Options are
subject.
9.7 UNANIMOUS AGREEMENT - If two or more persons constitute the Qualified
Successor or the Guardian of an Optionee, the rights of such Qualified
Successor or such Guardian shall be Exercisable only upon the unanimous
agreement of such persons.
9.8 DEEMED NON-INTERRUPTION OF EMPLOYMENT - Employment shall be deemed to
continue intact during any military or sick leave or other bona fide leave of
absence if the period of such leave does not exceed 90 days or, if longer,
for so long as the Optionee's right to reemployment with the Company is
guaranteed either by statute or by contract. If the period of such leave
exceeds 90 days and the Optionee's reemployment is not so guaranteed, then
his or her employment shall be deemed to have terminated on the ninety-first
day of such leave.
10. TERMINATION OF OPTIONS
10.1 TERMINATION OF OPTIONS - To the extent not earlier exercised or
terminated in accordance with section 9 above, an Option shall terminate at
the earliest of the following dates:
(a) the termination date specified for such Option in the Option
Agreement;
(b) where the Optionee's position as an employee, consultant or director
of the Company is terminated for just cause, the date of such
termination for just cause;
(c) where the Optionee's position as an employee, consultant or director
of the Company terminates for a reason other than the Optionee's
Disability, death, or termination for just cause, 30 days after such
date of termination, or upon the Optionee making written application
to the Committee and receiving the written consent of the Committee,
which consent may be given at the discretion of the Committee, up to
90 days after such date of termination.
(d) the date of any sale, transfer, assignment or hypothecation, or any
attempted sale, transfer, assignment or hypothecation, of such Option
in violation of Section 9.1 above; and
(e) the date specified in Section 11.2 below for such termination in the
event of a Terminating Event.
11. ADJUSTMENTS TO OPTIONS
11.1 ALTERATION IN CAPITAL STRUCTURE - If there is a material alteration in
the capital structure of the Company resulting from a recapitalization,
stock split, reverse
stock split, stock dividend, or otherwise, the Committee shall make such
adjustments to this Plan and to the Options then outstanding under this Plan
as the Committee determines to be appropriate and equitable under the
circumstances, so that the proportionate interest of each holder of any such
Option shall, to the extent practicable, be maintained as before the
occurrence of such event. Such adjustments may include, without limitation (a)
a change in the number of kind of shares of stock of the Company covered by
such Options, and (b) a change in the Option Price payable per share;
provided, however, that the aggregate Option Price applicable to the
unexercised portion of existing Options shall not be altered, it being
intended that any adjustments made with respect to such Options shall apply
only to the price per share and the number of shares subject thereto. For
purposes of this Section 11.1, neither (I) the issuance of additional shares
of stock of the Company in exchange for adequate consideration (including
services, nor (ii) the conversion of outstanding preferred shares of the
Company into Shares shall be deemed to be material alterations of the capital
structure of the Company. If the Committee determines that the nature of a
material alteration in the capital structure of the Company is such that it
is not practical or feasible to make appropriate adjustments to this Plan or
to the Options granted hereunder, such event shall be deemed a Terminating
Event for the purposes of this Plan.
11.2 TERMINATING EVENTS - Subject to Section 11.3, all Options granted under
the Plan shall terminate upon the occurrence of a Terminating Event.
11.3 NOTICE OF TERMINATING EVENT - The Committee shall give notice to
Optionees not less than thirty days prior to the consummation of a
Terminating Event. Upon the giving of such notice, all Options granted under
the Plan shall become immediately exercisable, notwithstanding any contingent
vesting provision to which such Options may have otherwise been subject.
11.4 CORPORATE REORGANIZATION - In the event of a reorganization as defined
in this Section 11.4 in which the company is not the surviving or acquiring
corporation, or in which the Company is or becomes a wholly-owned subsidiary
of another corporation after the effective date of the reorganization, then
unless provision is made by the acquiring corporation for the assumption of
each Option granted under this Plan, or the substitution of an option
therefor, such that no Modification of any such Option occurs, all Options
granted under this Plan shall terminate and such event shall be deemed
a Terminating Event. For purposes of this Section 11.4, reorganization
shall mean any statutory merger, statutory consolidation, sale of all or
substantially all of the assets of the Company, or sale, pursuant to an
agreement with the Company, of securities of the Company pursuant to which
the company is or becomes a wholly-owned subsidiary of another corporation
after the effective date of the reorganization.
11.5 ACCELERATION OF DATE OF EXERCISE - The committee shall have the right to
accelerate the date of exercise of any installment of any Option; provided
that, without the consent of the Optionee with respect to any Option, the
committee shall not accelerate the date of any installment of any Option
granted to an
employee as an ISO (and not previously converted into a Non-ISO pursuant to
Section 13 below) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in Section
7.1 above.
11.6 DETERMINATIONS TO BE MADE BY COMMITTEE - Adjustments and determinations
under this Section 11 shall be made by the Committee, whose decisions as to
what adjustments or determination shall be made, and the extent thereof,
shall be final, binding, and conclusive.
12. TERMINATION AND AMENDMENT OF PLAN
12.1 TERMINATION OF PLAN - Unless earlier terminated as provided in Section
11 above or in Section 12.2 below, the Plan shall terminate on, and no Option
shall be granted under the Plan, after five years has passed from the
Effective Date of the Plan.
12.2 POWER OF COMMITTEE TO TERMINATE OR AMEND PLAN - Subject to the approval
of any stock exchange on which the Company is listed, the Committee may
terminate, suspend or amend the terms of the Plan; provided, however, that,
except as provided in Section 11 above, the Committee may not do any of the
following without obtaining, within 12 months either before or after the
Committee's adoption of a resolution authorizing such action, approval by the
affirmative votes of the holders of a majority of the voting securities of
the Company present, or represented, and entitled to vote at a meeting duly
held in accordance with the applicable corporate laws, or by the written
consent of the holders of a majority of the securities of the Company
entitled to vote:
(a) increase the aggregate number of Shares which may be issued under
the Plan;
(b) materially modify the requirements as to eligibility for
participation in the Plan, or change the designation of the
employees or class of employees eligible to receive ISOs under
the Plan;
(c) materially increase the benefits accruing to participants under
the Plan; or
(d) make any change in the terms of the Plan that would cause the
ISOs granted hereunder to lose their qualification as "incentive
stock options" under Section 422 of the Code.
12.3 NO GRANT DURING SUSPENSION OF PLAN - No Option may be granted during any
suspension, or after termination, of the Plan. Amendment, suspension, or
termination of the Plan shall not, without the consent of the Optionee, alter
or impair any rights or obligations under any Option previously granted.
13. CONVERSION OF ISOS INTO NON-ISOS
13.1 CONVERSION OF ISOS INTO NON-ISOS - At the written request of any ISO
Optionee, the Committee may in its discretion take such actions as may be
necessary to convert such exercised on the date of conversion into Non-ISOs
at any time prior to the expiration of such ISOs, regardless of whether the
Optionee is an employee of the Company at the time of such conversion. Such
actions include, but shall not be limited to, extending the exercise period
of such ISOs. At the time of such conversion, the Committee, with the consent
of the Optionee, may impose such conditions on the exercise of the resulting
Non-ISOs as the Committee in its discretion may determine, provided that such
conditions are consistent with this Plan. Nothing in the Plan shall be deemed
to give any Optionee the right to have such Optionee's ISOs converted into
Non-ISOs, and no such conversion shall occur until and unless the Committee
takes appropriate action. The Committee, with the consent of the Optionee,
may also terminate any portion of any ISO that has not been exercised at the
time of such conversion.
14. CONDITIONS PRECEDENT TO ISSUANCE OF SHARES
14.1 COMPLIANCE WITH SECURITIES LAWS - Shares shall not be issued pursuant to
the exercise of any Option unless the exercise of such Option and the
issuance and delivery of such Shares comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, any applicable state or provincial securities law, the
rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the Shares may then be listed or otherwise traded.
14.2 REPRESENTATIONS BY OPTIONEE - As a condition precedent to the exercise
of any Option, the Company may require the Optionee to represent and warrant,
at the time of exercise, that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such representations
and warranties are required by any applicable law.
14.3 REGULATORY APPROVAL TO ISSUANCE OF SHARES - The Company's inability to
obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability with respect to the failure to issue or sell such Shares.
15. USE OF PROCEEDS
15.1 USE OF PROCEEDS - Proceeds from the sale of Shares pursuant to the
Options granted and exercised under the Plan shall constitute general funds
of the Company and shall be used for general corporate purposes.
16. NOTICES
16.1 NOTICES - All notices, requests, demands and other communications
required or permitted to be given under this Plan and the Options granted
under this Plan shall be in writing and shall be either served personally on
the party to whom notice is to be given, in which case notice shall be deemed
to have been duly given on the date of such service; telefaxed, in which case
notice shall be
deemed to have been duly given on the date the telefax is sent; or mailed to
the party to whom notice is to be given, by first class mail, registered or
certified, return receipt requested, postage prepaid, and addressed to the
party at his or its most recent known address, in which case such notice
shall be deemed to have duly given on the tenth postal delivery day following
the date of such mailing.
17. MISCELLANEOUS PROVISIONS
17.1 NO OBLIGATION TO EXERCISE - Optionees shall be under no obligation to
exercise Options granted under this Plan.
17.2 NO OBLIGATION TO RETAIN OPTIONEE - Nothing contained in this Plan shall
obligate the Company to retain an Optionee as an employee, officer, director,
or consultant for any period, nor shall this Plan interfere in any way with
the right of the Company to reduce such Optionee's compensation.
17.3 BINDING AGREEMENT - The provisions of this Plan and each Option
Agreement with an Optionee shall be binding upon such Optionee and the
Qualified Successor or Guardian of such Optionee.
17.4 USE OF TERMS - Where the context so requires, references herein to the
singular shall include the plural, and vice versa, and references to a
particular gender shall include either or both genders.
18. SHAREHOLDER APPROVAL TO PLAN
18.1 SHAREHOLDER APPROVAL TO PLAN - this Plan must be approved by a majority
of the votes cast at a meeting of the shareholders of the Company, other than
votes attaching to securities beneficially owned by:
(a) insiders of the Company, meaning directors, officers and greater
than 10 percent shareholders; and
(b) Associates of persons referred to in (a).
19. EFFECTIVE DATE OF PLAN
19.1 EFFECTIVE DATE OF PLAN - this Plan was adopted by the Board of Directors
on August 21, 2000, and will be submitted to the shareholders of the Company
for approval via action by written consent of the shareholders of the
Company. The Effective Date of the Plan is August 21, 2000, provided that any
Options granted pursuant to the Plan prior to the date on which shareholder
approval to the Plan is given may not be exercised until the Plan and any
such Options receive shareholder approval.
EXHIBIT G
1) Reg S Shareholder list
EXHIBIT G
REG. S CANADIAN SHAREHOLDERS
--------------------------------------------------------------------------------
Name Shares Amount
--------------------------------------------------------------------------------
1. Xxxxxx, Xxxx 1,000- $1,000.00
000 Xxxxxxxx Xxxxx
Xxxxxxxx, X.X
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
2. Barrington-Foot, Xxxx 2,000- $2,000.00
0000 Xxxxxxxxx Xxx,
Xxxxx Xxxxxxxxx, X.X
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
3. Xxxxxxx, Xxxx 25,000- $2,000.00
X.X Xxx 000 Xxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxx
000X 0X0
Phone#(000) 000-0000
Fax# (000) 000-0000
--------------------------------------------------------------------------------
4. Xxxxxx, Xxxxx 50,000- $50,000.00
00000 X. Xxxxx Xx.
Xxxxxxxxxx, X.X
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
5. Xxxx, Xxxxx 1,000- $1,000.00
0000 Xxxx 0xx Xxx
Xxxxxxxxx, X.X
X0X 0X0
Phone#(000) 000-0000
(000) 000-0000
--------------------------------------------------------------------------------
6. Chaudhary, Fazilat 6,500- $6,500.00
#000-0000 Xxxxxxx Xx.
Xxxxxxxxx, X.X
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
7. Xxxx, Xxxx 20,000- $20,000.00
0000 Xxxxxxxxxx
Xxxxxxxx, Xxxxxx
114A 3K9
Phone#(000) 000-0000
--------------------------------------------------------------------------------
REG. S CANADIAN SHAREHOLDERS
--------------------------------------------------------------------------------
Name Shares Amount
--------------------------------------------------------------------------------
8. Xxxx, Xxxx 30,000- $30,000.00
0000 Xxxxxxxx Xx.
Xxxxxxxx, Xxxxxx
113P 2R2
Phone# (000) 000-0000
--------------------------------------------------------------------------------
9. Xxxx, Xxxxxxxxx 5,000- $5,000.00
0000 Xxxxxxxx Xx.
Xxxxxxxx, Xxxxxx
113P 2R2
Phone# (000) 000-0000
--------------------------------------------------------------------------------
10. Combrink, J Xxxxxx 4,000- $4,000.00
C/o C&S Insurance
#200-4170 Stillcreek Dr.
Burnaby, B.C
V5C 606
Phone# (000) 000-0000
(000) 000-0000
--------------------------------------------------------------------------------
11. Cocham Inc. 55,000- $55,000.00
0000 Xxxxxxxx Xx.
Xxxxxxxx, Xxxxxx
113P 2R2
Phone# (000) 000-0000
--------------------------------------------------------------------------------
12. Xxxxxxxx, Xxxx Andre 5,000- $5,000.00
0000 Xxxx Xxxxxxxx
Xxxxxxxx, Xxxxxx
145B 3V2
--------------------------------------------------------------------------------
13. Xxxxx, Xxxxx 25,000- $25,000.00
000-000 Xxxx Xxxxxxxx
Xxxxxxxxx, X.X
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
REG. S CANADIAN SHAREHOLDERS
--------------------------------------------------------------------------------
Name Shares Amount
--------------------------------------------------------------------------------
14. Din, Sabra 2,000- $2,000.00
0000 X. 00xx Xxx.
Xxxxxxxxx, X.X
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
15. Dupont, Steff 2,500- $2,500.00
X.X. Xxx 000
Xxxxxxxxxx Xxxxxxx
Xxxxxx
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
16. Xxxxxx, Maccullinen 5,000- $5,000.00
X000 00X Xxx.
Xxxxx, B.C
Phone# (000) 000-0000
--------------------------------------------------------------------------------
17. Ginaneswaran, Thangarajah 1,000- $1,000.00
#000 0000 Xxxx Xxxx
Xxxxxxxxx, X.X
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
18. Xxxxxxxx, Xxxxx 7,000- $7,000.00
#205-2225 Xxxx 0xx Xxx.
Xxxxxxxxx, X.X
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
19. Xxxxxxx, Xxxxxxx 2,0000- $20,000.00
Xxx 000
Xxxxxxxxx, X.X
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
20. Xxxxxxx, Xxxxx 10,000- $10,000
#0000-0000 Xxxxxxxxxx Xx. X
Xxxxxxxx, Xxxxxx
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
REG. S CANADIAN SHAREHOLDERS
--------------------------------------------------------------------------------
Name Shares Amount
--------------------------------------------------------------------------------
21. Xxxxx, Xxx 5,000- $5,000.00
000 Xx xx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
Phone# (000) 000-0000
--------------------------------------------------------------------------------
22. Xxxxxx, Xxxxxx 10,000- $10,000.00
00 Xxxxxxxx xxx.
Xxxxxxxx, Xxxxxx
000X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
23. Xxxxx Xxxxxxx Inc. 10,000- $10,000.00
0000 Xxxx Xxxxxxxx Xxxx Xxxx 000
Xxxxxxxx, Xxxxxx
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
24. Xxxxxx, Xxxxx 50,000- $50,000.00
0000 Xxxx 00xx Xxx.
Xxxxxxxxx, X.X
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
25. Xxxxxxx, Xxxx 50,000- $50,000.00
Pent.1 0000 Xxxx 00xx Xxx.
Xxxxxxxxx, X.X
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
26. Melanor Ltd 150,000- $150,000.00
000-0000 Xxxxx Xx.
Xxxxxxxxx, X.X
X0X 0X0
Xxxxx# (000) 000-0000
(000) 000-0000
--------------------------------------------------------------------------------
27. Xxxxx, Xxxxx 5,000- $5,000.00
#000-0000 Xxxx Xxxx Xxx
Vancouver, B.C
VSP 287
Phone# (000) 000-0000
--------------------------------------------------------------------------------
REG. S CANADIAN SHAREHOLDERS
--------------------------------------------------------------------------------
Name Shares Amount
--------------------------------------------------------------------------------
28. X'Xxxxxxxx, Xxxx 10,000- $10,000.00
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx
XXX 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
29. X'Xxxxxxxx, Xxx 5,000- $ 5,000.00
000 Xxxxxxxxxx Xx.
Xxxxxxxxx, Xxxxxxx
LIV 6B8
Phone# (000) 000-0000
0-000-000-0000
--------------------------------------------------------------------------------
30. Xxxx, Xxxxx 25,000- $25,000.00
710-1268 West 9th
Vancouver, B.C
V611 1G6
Phone# (000) 000-0000
--------------------------------------------------------------------------------
31. Pasnak, Al 5,000- $ 5,000.00
0000 Xx. Xxxxx Xxx.
Xxxxx Xxxxxxxxx, X.X
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
32. Xxxxxxxx, Xxxxxx 10,000- $10,000.00
00 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxx
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
33. Xxxxxxx, Xxxx 1,000- $ 1,000.00
00000-00X Xxx.
Xxxxxxxxxx, X.X
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
REG. S CANADIAN SHAREHOLDERS
--------------------------------------------------------------------------------
Name Shares Amount
--------------------------------------------------------------------------------
34. Xxxxx, Xxxx 9,500- $ 9,500.00
00000-00xx Xxx.
Xxxxxxx, X.X
X0X X00
Phone# (000) 000-0000
--------------------------------------------------------------------------------
35. Sigurdur, Xxx 10,000- $10,000.00
0000 - 00 Xxxxxx Xxx.
Xxx Xxxxxxxxxxx, XX
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
36. Stephani, June 10,000- $10,000.00
0000 Xxxxxxx Xxxx.
Xxxxxxxxx, XX
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
37. Sunquest Inv. Corp. 20,000- $20,000.00
0000 Xxxxxx Xxxxx
Xxxxx Xxxxxxxxx, XX
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
38. Shearar, Xxxxxxx 4,000- $ 4,000.00
Seymour Xxxxx Xxxxx
Xxxxx Xxxxxxxxx, XX
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
39. Xxxxx, Xxxxxx 1,000- $ 1,000.00
#000-000 Xxxx 0xx Xx.
Xxxxx Xxxxxxxxx, XX
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
40. Xxxxxx, Xxx & Xxxxx 25,000- $25,000.00
8th Xxx-0000 Xxxxxxxx Xxx
Xxxxxxxxx, Xxxxxxxxx
Xxxxxxx, XX
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
REG. S CANADIAN SHAREHOLDERS
--------------------------------------------------------------------------------
Name Shares Amount
--------------------------------------------------------------------------------
41. Tomozer-Xxxx, Xxxxxx 1,000- $ 1,000.00
Xxxxxxxxx Xxxx
0000 Xxxxxxxx Xxx 00,
Xxxxxxx, XX
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
42. Xxxxxxx, Xxxxx 3,000- $ 3,000.00
0000 00 Xx.
Xxxxx, XX
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
43. Xxxxxx, Xxxxx 10,000- $10,000.00
000-0000 Xxxx Xxxxx Xx
Xxxx Xxxxxxxxx, XX
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
44. Xxxxxx, Xxx 1,000- $ 1,000.00
0000 Xxxxxxx Xx
Xxxxxxxx, XX
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
45. Xxxxxxxx, Xxxxxxxx 16,000- $16,000.00
Gundy Co-Intrust for RRSP 4,000- $ 4,000.00
0 Xxxxxx Xxx Xxxx
Xxxxxx, XXX
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
46. Xxxxx, Xxxxxx 10,000- $10,000.00
000-000 Xxxx Xxx
Xxxxxxxxx, XX
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
47. In Touch Com. 5,000- $ 5,000.00
000-0000 Xxxxx Xx.
Xxxxxxxxx, XX
X0X 0X0
Phone# (000) 000-0000
--------------------------------------------------------------------------------
REG. S U.S. SHAREHOLDERS
--------------------------------------------------------------------------------
Name Shares Amount
--------------------------------------------------------------------------------
1. Xxxxxxx Xxxxxxx 15,000 $15,000.00
00 Xxxxxxxxx Xxxxx
Xxxxxxxxx- XX
00000
Phone# (000) 000-0000
Fax# (000) 000-0000
--------------------------------------------------------------------------------
