Exhibit 10.3
ARRANGEMENT AGREEMENT
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THIS ARRANGEMENT AGREEMENT dated as of the 21st day of April,
2000 is
AMONG:
ABSTRACT ENTERPRISES CORP., a corporation incorporated pur-
suant to the provisions of the COMPANY ACT (British Columbia)
("Abstract")
AND:
AUTEO MEDIA INC., a corporation incorporated pursuant to the
laws of the State of Nevada
("AMI")
AND:
ABSTRACT OIL & GAS INC., a corporation incorporated pursuant
to the provisions of the COMPANY ACT (British Columbia)
("Newco")
WHEREAS:
A. By a Letter of Intent dated April 3, 2000 between Abstract and
AMI, Abstract agreed, among other things, to proceed with a proposed corporate
restructuring by way of a Plan of Arrangement whereby Abstract will reorganize
its capital, certain assets of Abstract will be transferred from Abstract to
Newco, a series of share exchanges will take place with the result that the
Shareholders of Abstract will have equivalent shareholdings in Abstract and
Newco, and Abstract will merge with AMI based on a share exchange between the
Abstract Shareholders and AMI;
B. Abstract proposes to convene a meeting of its shareholders
to consider the Arrangement under section 252 of the BCCA, on the terms and
conditions set forth in the Plan of Arrangement annexed as Exhibit I hereto;
C. Each of the parties to this Agreement has agreed to partici-
xxxx in and support the Arrangement.
NOW THEREFORE, in consideration of the premises and the
respective covenants and agreements herein contained, and for other good and
valuable consideration, the receipt and
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sufficiency of which are hereby acknowledged by each of the parties hereto, the
parties hereto hereby covenant and agree as follows:
ARTICLE 1
DEFINITIONS, INTERPRETATION AND EXHIBIT
1.1 DEFINITIONS: In this Agreement, unless there is something in
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the subject matter or context inconsistent therewith, the following capitalized
words and terms shall have the following meanings:
(a) "AMI" means Auteo Media Inc., a company incorporated under the
laws of the State of Nevada;
(b) "AMI COMMON SHARES means the common shares without par value
which AMI is authorized to issue;
(c) "ABSTRACT" means Abstract Enterprises Corp., a company
incorporated under the provisions of the BCCA;
(d) "ABSTRACT COMMON SHARES" means the common shares without par
value which Abstract is authorized to issue;
(e) "ABSTRACT MEETING" means the annual and extraordinary general
meeting of the Shareholders of Abstract and any adjournments
thereof to be held to, among other things, consider and, if
deemed advisable, approve the Arrangement;
(f) "ABSTRACT PREFERRED SHARES" means the preferred shares which
are to be issued under the Arrangement partly in exchange for
Exchangeable Shares which are immediately thereafter to be
exchanged on a one to one basis for Newco Common Shares;
(g) "AGREEMENT" means this agreement including the exhibit
attached hereto as the same may be supplemented or amended
from time to time in writing signed by the parties;
(h) "ARRANGEMENT" means the arrangement pursuant to section 252
of the BCCA as contemplated by the provisions of this Agree-
ment and the Plan of Arrangement;
(i) "BCCA" means the COMPANY ACT, R.S.B.C. 1996, Chapter 62, as
amended;
(j) "BUSINESS DAY" means a day which is not a Saturday, Sunday or
statutory holiday;
(k) "CHARTER DOCUMENTS" means memorandum and articles;
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(l) "CLOSING DATE" means the later of July 31, 2000, the closing
of the Financing (as defined below), or such other date as
may be mutually agreed upon by the parties;
(m) "COURT" means the Supreme Court of British Columbia;
(n) "EFFECTIVE DATE" means the date on which a certified copy
of the Final Order is accepted by the Registrar;
(o) EXCHANGEABLE SHARES" means the Abstract Common Shares as
renamed and redesignated under paragraph 3.1 of the Plan of
Arrangement;
(p) "FINAL ORDER" means the final order of the Court approving the
Arrangement;
(q) "INFORMATION CIRCULAR" means the information circular of
Abstract to be sent to the shareholders of Abstract in connec-
tion with the Abstract Meeting;
(r) "INTERIM ORDER" means the interim order of the Court providing
advice and directions in connection with the Abstract Meeting
and the Arrangement;
(s) "NEWCO" means Abstract Oil & Gas Inc., incorporated under the
provisions of the BCCA to facilitate the Arrangement;
(t) "NEWCO COMMON SHARES" means the common shares which Newco is
authorized to issue;
(u) "NEWCO PREFERRED SHARES" means the preferred shares of Newco
which are to be issued under the Arrangement in exchange for
the Non-Internet Assets of Abstract (as defined in the Plan
of Arrangement attached as Exhibit I hereto);
(v) "PERSON" means and includes an individual, sole
proprietorship, partnership, unincorporated association,
unincorporated syndicate, unincorporated organization, trust,
body corporate, a trustee, executor, administrator or other
legal representative and the Crown or any agency or
instrumentality thereof;
(w) "PLAN OF ARRANGEMENT" means the plan of arrangement attached
to this Agreement as Exhibit I as the same may be amended
from time to time in writing signed by the parties;
(x) "RECORD DATE" means the close of business on that day which
is four Business Days prior to the Effective Date for the
purpose of determining the Shareholders of Abstract entitled
to receive share certificates representing AMI Common Shares
and Newco Common Shares under the Arrangement;
(y) "REGISTRAR" means the Registrar of Companies under the BCCA;
and
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(z) "SHAREHOLDERS" means the shareholders of Abstract.
1.2 CURRENCY: All amounts of money which are referred to in this
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Agreement are expressed in lawful money of Canada unless otherwise specified.
1.3 INTERPRETATION NOT AFFECTED BY HEADINGS: The division of this
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Agreement into articles, sections, subsections, paragraphs and subparagraphs and
the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of the provisions of this Agree-
ment. The terms "this Agreement", "hereof", "herein", "hereunder" and similar
expressions refer to this Agreement and the exhibits hereto as a whole and not
to any particular article, section, subsection, paragraph or subparagraph hereof
and include any agreement or instrument supplementary or ancillary hereto.
1.4 NUMBER AND GENDER: In this Agreement, unless the context other
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wise requires, words importing the singular number only shall include the plural
and vice versa and words importing the use of either gender shall include both
genders and neuter.
1.5 DATE FOR ANY ACTION: In the event that any date on which
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any action is required to be taken hereunder by Abstract, AMI or Newco is not a
Business Day in the place where the action is required to be taken, such action
shall be required to be taken on the next succeeding day which is a Business Day
in such place.
1.6 MEANING: Words and phrases used herein and defined in the
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BCCA shall have the same meaning herein as in the BCCA unless the context other-
wise requires.
1.7 EXHIBIT: Attached hereto and deemed to be incorporated into
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and form part of this Agreement as Exhibit I is the Plan of Arrangement.
ARTICLE 2
ARRANGEMENT
2.1 ARRANGEMENT: The parties agree to effect the Arrangement
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pursuant to the provisions of section 252 of the BCCA on the terms and subject
to the conditions contained in this Agreement and the Plan of Arrangement.
2.2 EFFECTIVE DATE OF ARRANGEMENT: The Arrangement shall become
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effective on the Effective Date as set out in the Plan of Arrangement.
2.3 COMMITMENT TO EFFECT: The parties shall each use all reason-
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able efforts and do all things reasonably required to cause the Plan of
Arrangement to become effective within two weeks of the Closing Date, or by such
other date as the parties may mutually determine, and in conjunction therewith
to cause the transactions and conditions contemplated by sections 5.1 and 6.1 to
be completed prior to the Effective Date. Without limiting the generality of the
foregoing, the parties
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shall proceed forthwith to apply for the Interim Order and, upon obtainment
thereof, Abstract shall call the Abstract Meeting and mail the Information
Circular to the Shareholders.
2.4 FILING OF FINAL ORDER: Upon the Shareholders approving the
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Arrangement by special resolution in accordance with the provisions of the
Interim Order and the BCCA, Abstract obtaining the Final Order and the other
conditions contained in Article 6 hereof being complied with or waived, Abstract
shall file a certified copy of the Final Order with the Registrar pursuant to
subsection 252(3) of the BCCA on its behalf and on behalf of AMI and Newco
together with such other documents as may be required in order to effect the
Arrangement and shall request that such certified copy of the Final Order be
accepted for filing by the Registrar. Upon such filing by the Registrar, the
documents held in escrow in accordance with section 6.2 hereof shall be
automatically released and the parties shall exchange such other documents as
may be necessary or desirable in connection with the completion of the
transactions contemplated by this Agreement and the Plan of Arrangement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES: Each of the parties hereby
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represents and warrants to each of the other parties that:
(a) it is a corporation duly incorporated and validly subsisting
under the laws of its jurisdiction of incorporation, and has
full capacity and authority to enter into this Agreement and
to perform its covenants and obligations hereunder;
(b) subject to receipt of the approval of the shareholders of AMI,
it has taken all corporate actions necessary to authorize the
execution and delivery of this Agreement and this Agreement
has been duly executed and delivered by it;
(c) neither the execution and delivery of this Agreement nor the
performance of any of its covenants and obligations hereunder
will constitute a material default under, or be in any
material contravention or breach of (i) any provision of its
Charter Documents or other constating or governing corporate
documents, (ii) any judgment, decree, order, law, statute,
rule or regulation applicable to it, or (iii) any agreement or
instrument to which it is a party or by which it is bound; and
(d) no dissolution, winding up, bankruptcy, liquidation or
similar proceedings have been commenced or are pending or
proposed in respect of it.
ARTICLE 4
COVENANTS
4.1 COVENANTS: Each of the parties covenants with the others that
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it will do and perform all such acts and things, and execute and deliver all
such agreements, assurances, notices and other
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documents and instruments, as may reasonably be required to facilitate the
carrying out of the intent and purpose of this Agreement.
4.2 INTERIM ORDER AND FINAL ORDER: The parties acknowledge that
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Abstract will apply to and obtain from the Court, pursuant to section 252 of the
BCCA, the Interim Order providing for, among other things, the calling and
holding of the Abstract Meeting for the purpose of considering and, if deemed
advisable, approving and adopting the Arrangement. The parties each covenant and
agree that if the approval of the Arrangement by the Shareholders of Abstract as
set out in subsection 6.1(b) hereof is obtained, Abstract will thereafter
(subject to the exercise of any discretionary authority granted to Abstract's
directors by the Shareholders) take the necessary actions to submit the
Arrangement to the Court for approval and apply for the Final Order in such
fashion as the Court may direct and, subject to compliance with any of the other
conditions provided for in Article 6 hereof and to the rights of termination
contained in Article 7 hereof, file with the Registrar, as soon as practicable
thereafter, pursuant to subsection 252(3) of the BCCA, a certified copy of the
Final Order to give effect to the Arrangement.
ARTICLE 5
ABSTRACT REORGANIZATION TRANSACTIONS
5.1 ABSTRACT REORGANIZATION TRANSACTIONS: On or before the Closing
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Date, the parties shall enter into such agreements as may be required confirming
the basis on which Abstract shall effect the reorganization of its capital and
transfer its Non-Internet Assets (as defined in the Plan of Arrangement attached
as Exhibit I hereto) to Newco, and establishing procedures for dealing with
transitional matters arising out of the Arrangement.
ARTICLE 6
CONDITIONS
6.1 CONDITIONS PRECEDENT: The respective obligations of the
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parties to complete the transactions contemplated by this Agreement and the
obligation of Abstract to file a certified copy of the Final Order on its behalf
and on behalf of AMI and Newco with the Registrar pursuant to subsection 252(3)
of the BCCA required to give effect to the Arrangement with the Registrar shall
be subject to the satisfaction of the following conditions:
(a) the Interim Order shall have been granted in form and sub-
stance satisfactory to Abstract;
(b) the Arrangement and this Agreement, with or without
amendment, shall have been approved at the Abstract Meeting
by the Shareholders of Abstract in accordance with the
provisions of the BCCA, the Charter Documents of Abstract,
the Interim Order and the requirements of any applicable
regulatory authorities;
(c) the Final Order shall have been obtained in form and substance
satisfactory to
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Abstract;
(d) the Canadian Venture Exchange shall have conditionally
approved the Arrangement;
(e) all other consents, orders, regulations and approvals,
including regulatory and judicial approvals and orders
required or necessary or desirable for the completion of
the transactions provided for in this Agreement and the
Plan of Arrangement shall have been obtained or received
from the Persons, authorities or bodies having jurisdiction
in the circumstances;
(f) there shall not be in force any order or decree restraining or
enjoining the consummation of the transactions contemplated by
this Agreement and the Arrangement;
(g) the parties shall have entered into such agreements as
required pursuant to section 5.1 of this Agreement;
(h) the parties shall have obtained all necessary approvals for
the Arrangement including approval by the directors and
shareholders of each of AMI and Abstract and all necessary
court and regulatory approvals;
(i) except for the conversion of any currently outstanding conver-
tible preferred shares or debentures or the exercise of any
currently outstanding options or warrants or similar rights,
except for AMI's planned issuance of 1,000,000 additional
shares via a Registration 506 offering, except for the
Financing, and except for the issue and exercise of the addi-
tional stock options permitted to be issued by AMI in an
amount not to exceed 10% of the number of outstanding common
shares of AMI after completion of the transactions comprising
the Arrangement, and by Abstract in an amount not to exceed
200,000 stock options, no additional shares of any class in
the capital of Abstract or AMI (or any securities including
convertible debentures, warrants, options or other rights to
acquire any shares in the capital of Abstract or AMI) shall be
issued prior to the completion of the Arrangement;
(j) there shall not have occurred any material adverse change
in the finances, operations or business of Abstract or AMI
and the audited financial results of their respective
operations, for the fiscal years ended January 31, 2000 and
December 31, 1999, respectively, shall not vary materially
adversely from the draft financial results as set out in
the form attached as Schedule A, and the actual financial
results for the period up to the date of the Arrangement
shall not vary materially adversely from the pro forma
financial plans as set out in Schedule A;
(k) if required as a result of its due diligence, Abstract
shall have received from its financial advisors, on or
before the Effective Date, or such other date as is
acceptable to Abstract, a satisfactory valuation/fairness
opinion with respect to the
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Arrangement;
(l) AMI and Abstract shall have received from their respective
tax and legal advisors satisfactory opinions with respect
to the Arrangement.
(m) neither of Abstract nor AMI nor any of their subsidiaries
shall be a party to any actions, suits or proceedings which
could materially adversely affect their business or
financial condition, and no such actions, suits or
proceedings shall be contemplated or shall have been
threatened; and
(n) AMI shall have completed a financing of approximately
US$3-5 Million, but not less than US$3 Million (the
"Financing"), on or before September 30, 2000; provided
however that the September 30, 2000 date may be extended by
the mutual agreement of the parties, for no additional
consideration.
Except for the conditions set forth in subsections (a), (b), (c) and (d) above
any of the foregoing conditions may be waived at the discretion of any party
whose interests are affected by such condition.
6.2 PRE-CLOSING: Unless this Agreement is terminated earlier
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pursuant to the provisions hereof, the parties shall on the Closing Date deliver
to the other of them:
(a) the documents required to be delivered by it hereunder to
complete the transactions contemplated hereby, provided that
each such document required to be dated the Effective Date
shall be dated as of, or become effective on, the Effective
Date and shall be held in escrow to be released upon the
acceptance for filing by the Registrar of the Final Order; and
(b) written confirmation as to the satisfaction or waiver by it
of the conditions in its favour contained in this Agreement;
6.3 MERGER OF CONDITIONS: The conditions set out in section 6.1
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hereof shall be conclusively deemed to have been satisfied, waived or released
upon the acceptance for filing by the Registrar of a certified copy of the Final
Order under subsection 252(3) of the BCCA.
6.4 MERGER OF REPRESENTATIONS, WARRANTIES AND COVENANTS: The
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provisions of sections 3.1 and 4.1 hereof shall be conclusively deemed to have
been satisfied in all respects by the filing with the Registrar of a certified
copy of the Final Order required to give effect to the Arrangement, and shall
accordingly merge in and not survive the effectuation of the Arrangement by
filing of the Final Order with the Registrar giving effect to the Arrangement.
ARTICLE 7
AMENDMENT AND TERMINATION
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7.1 AMENDMENT: Subject to any mandatory applicable restrictions
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under the BCCA or the Final Order, this Agreement including the Plan of
Arrangement may, at any time and from time to time before or after the holding
of the Abstract Meeting, but prior to the Effective Date, be amended by the
written agreement of the parties hereto without, subject to applicable law,
further notice to or authorization on the part of the Shareholders of Abstract.
7.2 CESSATION OF RIGHT: The right of Abstract or any other party
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to amend the Plan of Arrangement pursuant to section 7.1 shall be extinguished
at the time at which the certified copy of the Final Order is filed with the
Registrar pursuant to subsection 252(3) of the BCCA.
ARTICLE 8
GENERAL
8.1 NOTICE: All notices which may or are required to be given
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pursuant to any provision of this Agreement shall be given or made in writing
and shall be delivered or telecopied, addressed as follows:
(a) in the case of Abstract or Newco: (b) in the case of AMI:
Xxxxx 0000 - 000 Xxxxxxx Xxxxxx 00000 - 000xx Xxxxxx X.X.
Xxxxxxxxx, XX Xxxxxxxxxxx, XX 00000
X0X 0X0 ATTENTION: Xxxxxx Xxx Xxxxxxx,
ATTENTION: Xx. Xxxxxxx Xxxxxx, President
President Telecopy number (000) 000-0000
Telecopy number: (000) 000-0000
with a copy to: with a copy to:
Xxxx & Company Foster Swift Xxxxxxx & Xxxxx
1040 - 0000 Xxxx Xxxxxxxx Xxxxxx 000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX Xxxxxxx, Xxxxxxxx X.X.X.
X0X 0X0 48933-2193
ATTENTION: R.S. (Rob) Xxxxx ATTENTION: Xx. Xxxxx X. Xxxx
Telecopy number (000) 000-0000 Telecopy number (000) 000-0000
8.2 ASSIGNMENT: None of the parties may assign its rights or
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obligations under this Agreement or the Arrangement without the prior written
consent of the others of them.
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8.3 BINDING EFFECT: This Agreement and the Arrangement shall
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be binding upon and shall ensure to the benefit of the parties and their
respective successors and permitted assigns.
8.4 WAIVER: Any waiver or release of the provisions of this
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Agreement, to be effective, must be in writing and executed by the party
granting such waiver or release.
8.5 GOVERNING LAW: This Agreement shall be governed by and be
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construed in accordance with the laws of the Province of British Columbia and
the laws of Canada applicable therein and shall be treated in all respects as a
British Columbia contract.
8.6 COUNTERPARTS: This Agreement may be executed in one or more
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counterparts and by facsimile, each of which shall be deemed to be an original
but all of which together shall constitute one and the same instrument.
8.7 EXPENSES: All expenses incurred in connection with this
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Agreement, the Arrangement and the transactions contemplated hereby and thereby
shall be borne entirely by Abstract.
8.9 TIME OF ESSENCE: Time is of the essence of this Agreement.
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IN WITNESS WHEREOF the parties have executed this Agreement as
of the date first above written.
ABSTRACT ENTERPRISES CORP.
Per:
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AUTEO MEDIA INC.
Per:
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ABSTRACT OIL & GAS INC.
Per:
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EXHIBIT I
TO THE ARRANGEMENT AGREEMENT
DATED THE 17TH DAY OF APRIL, 2000 BETWEEN
ABSTRACT ENTERPRISES CORP.,
AUTEO MEDIA INC.
AND
NEWCO
PLAN OF ARRANGEMENT
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ARRANGEMENT UNDER SECTION 252 OF
THE COMPANY ACT (BRITISH COLUMBIA)
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS: In this plan of arrangement, unless there is
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something in the subject matter or context inconsistent therewith, the following
capitalized words and terms shall have the following meanings:
(a) "AMI" means Auteo Media Inc., a company incorporated under the
laws of the State of Nevada;
(b) "AMI COMMON SHARES" means the common shares in the capital of
AMI which AMI is authorized to issue;
(c) "ABSTRACT" OR THE "CORPORATION" means Abstract Enterprises
Corp.,a company incorporated under the provisions of the BCCA;
(d) "ABSTRACT COMMON SHARES" means the common shares without par
value which Abstract is authorized to issue;
(e) "ABSTRACT MEETING" means the annual and extraordinary general
meeting of the Abstract Shareholders and any adjournments
thereof to be held to, among other things, consider and, if
deemed advisable, approve the Arrangement;
(f) "ABSTRACT NON-INTERNET ASSETS" means all of Abstract's assets
and obligations other than Abstract's 5% interest in Tysa
Corporation, and its option to acquire a further 12.5%
interest in Tysa Corporation;
(g) "ABSTRACT PREFERRED SHARES" means the preferred shares which
are to be issued
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under the Arrangement partly in exchange for the Exchangeable
Shares which are immediately thereafter to be exchanged on a
one to one basis for Newco Common Shares;
(h) "ABSTRACT REDEMPTION AMOUNT" means the amount for which each
Abstract Preferred Share is redeemable, as referred to in
paragraph 3.1(g) of the Plan of Arrangement, as determined by
the directors of Abstract in accordance with the redemption
provisions of the Abstract Preferred Shares;
(i) "ABSTRACT SHAREHOLDERS" means the shareholders of Abstract;
(j) "ARRANGEMENT" means the arrangement pursuant to section 252 of
the BCCA on the terms and conditions set out herein;
(k) "ARRANGEMENT AGREEMENT" means the arrangement agreement dated
as of April 21, 2000 between Abstract, AMI and Newco
including the exhibits attached thereto, as may be
supplemented or amended from time to time in writing signed
by the parties;
(l) "BCCA" means the COMPANY ACT, R.S.B.C. 1996, Chapter 62, as
amended;
(m) "BUSINESS DAY" means a day which is not a Saturday, Sunday or
statutory holiday;
(n) "COURT" means the Supreme Court of British Columbia;
(o) "DEPOSITORY" means the Transfer Agent;
(p) "EFFECTIVE DATE" means the date on which the Arrangement
becomes effective in accordance with the provisions of the
Arrangement Agreement;
(q) "EFFECTIVE TIME" means 5:00 p.m. (Vancouver time) on the
Effective Date;
(r) "EXCHANGEABLE SHARES" means the Abstract Common Shares as
renamed and redesignated pursuant to subsection 3.1(a) of
this Plan of Arrangement;
(s) "FINAL ORDER" means the final order of the Court approving the
Arrangement;
(t) "ITA" means Income Tax Act (Canada);
(u) "INTERIM ORDER" means the interim order of the Court providing
advice and directions in connection with the Abstract Meeting
and the Arrangement;
(v) "NEWCO" means Abstract Oil & Gas Inc., incorporated under the
provisions of the BCCA to facilitate the Plan of Arrangement;
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(w) "NEWCO COMMON SHARES" means the common shares without par
value which Newco is authorized to issue as the same are
constituted on the date hereof;
(x) "NEWCO PREFERRED SHARES" means the preferred shares of
Newco which are to be issued under the Arrangement in exchange
for the Abstract Non-Internet Assets;
(y) "NEWCO REDEMPTION AMOUNT" means the amount for which each
Newco Preferred Share is redeemable, as referred to in
paragraph 3.1(f) of the Plan of Arrangement, as determined by
the directors of Newco in accordance with the redemption
provisions of the Newco Preferred Shares;
(z) "PLAN OF ARRANGEMENT" means this Plan of Arrangement, as the
same may be amended from time to time in writing signed by the
parties;
(aa) "RECORD DATE" means the close of business on that day which
is four Business Days prior to the Effective Date for the
purpose of determining the Abstract Shareholders entitled to
receive share certificates representing AMI Common Shares and
Newco Common Shares under the Arrangement;
(bb) "REGISTRAR" means the Registrar of Companies under the BCCA;
and
(cc) "TRANSFER AGENT" means Montreal Trust Company at its principal
office in Vancouver, British Columbia.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS: The division of
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this Plan of Arrangement into articles, sections, subsections, paragraphs and
subparagraphs and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation of this Plan of
Arrangement. Unless otherwise specifically indicated, the terms "this Plan of
Arrangement", "hereof", "hereunder" and similar expressions refer to this Plan
of Arrangement as a whole and not to any particular article, section,
subsection, paragraph or subparagraph and include any agreement or instrument
supplementary or ancillary hereto.
1.3 NUMBER AND GENDER: Unless the context otherwise requires,
words importing the singular number only shall include the plural and vice
versa, words importing the use of either gender shall include both genders and
neuter and words importing persons shall include firms and corporations.
1.4 MEANING: Words and phrases used herein and defined in the
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BCCA shall have the same meaning herein as in the BCCA, unless the context
otherwise requires.
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ARTICLE 2
ARRANGEMENT AGREEMENT
2.1 ARRANGEMENT AGREEMENT: This Plan of Arrangement is made
----------------------
pursuant and subject to the provisions of the Arrangement Agreement.
ARTICLE 3
THE ARRANGEMENT
3.1 THE ARRANGEMENT: On the Effective Date, the following shall
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occur and be deemed to occur in the following order, without any further act or
formality, and with each transaction or event being deemed to occur immediately
after the occurrence of the transaction or event next preceding it, but subject
to the provisions of Article 4:
Effective as of the Effective Time:
REORGANIZATION OF ABSTRACT AND SHARE EXCHANGE WITH NEWCO:
(a) The Memorandum and Articles of Abstract will be amended as set
out in Appendix I, so as to include the share provisions set
forth in Section 3 thereof, and the Memorandum and Articles of
Newco will be created as set out in Appendix II, so as to
create the share provisions set forth in Section 3 thereof;
(b) Each Exchangeable Share issued and outstanding at the Effec-
tive Time (including any treasury shares held by the Corpora-
tion in itself) shall be exchanged for one Abstract Common
Share and one Abstract Preferred Share. Each Abstract Share-
holder will cease to be the holder of the Exchangeable Shares
so converted and shall become the holder of the number of
Abstract Common Shares and Abstract Preferred Shares issued to
such Abstract Shareholder. The name of such Abstract Share-
holder (including the Corporation, to the extent that it holds
any treasury shares in itself) will be removed from the regis-
ter of shareholders of Exchangeable Shares with respect to the
Exchangeable Shares so converted and will be added to the
registers of shareholders of Abstract Common Shares and
Abstract Preferred Shares as the holder of the number of
Abstract Common Shares and Abstract Preferred Shares, respec-
tively, so issued to such Abstract Shareholder. The Corpora-
tion may elect to have the provisions of subsection 85(1) of
the ITA apply to the exchange of any treasury shares which the
Corporation holds in itself immediately prior to the Arrange-
ment for Abstract Common Shares and Abstract Preferred Shares.
Should any competent taxing authority at any time issue or
propose to issue any assessment or assessments that impose
or would impose any liability for tax on the basis that the
fair market value of the Exchangeable Shares is other than
the amount approved by the Directors of the Corporation
and if the directors of the Corporation or a competent Court
or tribunal agree with such revaluation and all appeal rights
have been exhausted or all times for appeal have expired
without appeals having been taken or should the
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Directors of the Corporation otherwise determine that the fair
market value of the Exchangeable Shares is other than the
amount previously approved by the Directors, then the Abstract
Redemption Amount of the Abstract Preferred Shares shall be
adjusted NUNC PRO TUNC to reflect the agreed upon fair market
value and all necessary adjustments, payments and repayments
as may be required shall forthwith be made between the proper
parties. Notwithstanding the foregoing and in spite of such
adjustment, the Abstract Shareholders shall in any event still
end up holding, at the conclusion of the reorganization of
the Corporation and share exchange with Newco, one Abstract
Common Share and one Newco Common Share for each Abstract
Common Share held immediately prior to the Arrangement, and
any intercorporate debt shall still be cancelled pursuant to
subsection 3.1(h);
(c) The Exchangeable Shares which were exchanged for Abstract
Common and Abstract Preferred Shares shall be cancelled and
the Exchangeable Shares shall be cancelled as a class of
shares of the Corporation, with the appropriate entries being
made in the register of shareholders and with the Memorandum
of the Corporation being amended to delete the Exchangeable
Share provisions there from;
BUTTERFLY DIVISION OF BUSINESS/ REORGANIZATION PURSUANT TO
PARAGRAPH 55(3)(B) OF THE ITA:
(d) The Abstract Shareholders (including the Corporation, to the
extent that it holds any treasury shares in itself) shall
transfer to Newco their Abstract Preferred Shares in exchange
for the issuance by Newco to the holders of such Abstract
Preferred Shares of one Newco Common Share for each Abstract
Preferred Share acquired. The names of such shareholders shall
be removed from the register of shareholders of Abstract
Preferred Shares with respect to the Abstract Preferred
Shares so exchanged and will be added to the register of
shareholders of Newco Common Shares as the holders of the
number of Newco Common Shares so issued to such shareholders.
Newco's name shall be added to the register of shareholders of
Abstract Preferred Shares as the holder of the Abstract
Preferred Shares so acquired by Newco;
(e) Abstract shall transfer the Abstract Non-Internet Assets to
Newco in consideration of which (i) Newco shall issue to
Abstract such number of Newco Preferred Shares as determined
by its directors based on the value of the Abstract Non-
Internet Assets; (ii) Newco shall assume responsibility for
all of Abstract's existing debts and obligations with respect
to the Abstract Non-Internet Assets; and (iii) Newco shall
jointly elect with Abstract to have the provisions of subsec-
tion 85(1) of the ITA apply to such transfer. Abstract's name
shall be added to the register of shareholders of Newco Pre-
ferred Shares as the holder of the Newco Preferred Shares so
issued to Abstract and, to the extent that any Abstract Common
Shares or Newco Common Shares held by the Corporation as a
result of the steps set out at subsections 3.1(b) and (d) form
part of the Abstract Non-Internet Assets, Abstract's name
shall be deleted from and Newco's name shall be added to the
registers of shareholders of Abstract Common
-17-
Shares and Newco Common Shares as the holder of the number of
Abstract Common Shares and Newco Common Shares, respectively,
so transferred to Newco;
(f) Newco shall redeem all of the issued and outstanding Newco
Preferred Shares for an aggregate redemption amount equal to
the aggregate of the Newco Redemption Amounts for all such
Newco Preferred Shares, and shall effect the payment of such
aggregate redemption amount by issuing to Newco a demand
promissory note (the "Newco Redemption Note") in a principal
amount equal to such aggregate redemption amount and bearing
interest at a rate equal to the Canadian dollar commercial
loan prime rate of the Bank of Montreal from the date of
demand to the date of payment, whereupon all of the Newco
Preferred Shares will be cancelled, with the appropriate entry
being made in Newco register of shareholders;
(g) Abstract shall redeem all of the issued and outstanding
Abstract Preferred Shares for an aggregate redemption amount
equal to the aggregate of the Abstract Redemption Amounts for
all such Abstract Preferred Shares, and shall effect the
payment of such aggregate redemption amount by issuing to
Newco a demand promissory note (the "Abstract Redemption
Note") in a principal amount equal to such aggregate
redemption amount and bearing interest at a rate equal to the
Canadian dollar commercial loan prime rate of the Bank of
Montreal from the date of demand to the date of payment,
whereupon all of the Abstract Preferred Shares will be
cancelled, with the appropriate entry being made in Abstract's
register of shareholders;
SATISFACTION OF NOTES:
(h) Abstract shall pay out and satisfy the Abstract Redemption
Note by transferring the Newco Redemption Note to Newco,
whereupon both the Abstract Redemption Note and the Newco
Redemption Note shall be cancelled.
MERGER WITH AMI:
(i) AMI shall purchase from each Abstract Shareholder all Abstract
Common Shares held by such Abstract Shareholder in
consideration of the issuance by AMI to each Abstract
Shareholder of one (1) AMI Common Share for each four (4)
Abstract Common Shares held by such shareholder. The names of
such Abstract Shareholders shall be removed from the register
of shareholders of Abstract Common Shares so transferred and
will be added to the register of shareholders of AMI Common
Shares as the holders of the number of AMI Common Shares so
issued to such shareholders.
3.2 DEEMED FULLY PAID AND NON-ASSESSABLE SHARES: All Abstract
---------------------------------------------
Common Shares, Abstract Preferred Shares and Newco Common Shares and Newco
Preferred Shares shall be deemed to be validly issued and outstanding as fully
paid and non-assessable shares for all purposes of the COMPANY ACT.
-18-
3.3 ARRANGEMENT EFFECTIVENESS: The Arrangement shall become
--------------------------
finally and conclusively binding on the Abstract Shareholders and each of the
corporations referred to in section 3.1 upon the Effective Date.
3.4 SUPPLEMENTARY ACTIONS: Notwithstanding that the transactions
---------------------
and events set out in section 3.1 shall occur and shall be deemed to occur in
the chronological order therein set out without any act or formality, each of
Abstract, AMI and Newco shall be required to make, do and execute or cause and
procure to be made, done and executed all such further acts, deeds, agreements,
transfers, assurances, instruments or documents as may be required to give
effect to, or further document or evidence, any of the transactions or events
set out in section 3.1, including, without limitation, any resolutions of
directors authorizing the issue, transfer or redemption of shares, any share
transfer powers evidencing the transfer of shares and any receipt therefor, and
any necessary additions to or deletions from share registers.
ARTICLE 4
CERTIFICATES
4.1 ABSTRACT PREFERRED SHARE CERTIFICATES AND NEWCO PREFERRED SHARE
---------------------------------------------------------------
CERTIFICATES:
------------
Recognizing that all of the Abstract Preferred Shares issued to the Abstract
Shareholders will immediately be acquired by Newco in exchange for Newco Common
Shares, Abstract will not issue Abstract Preferred Share certificates to the
Abstract Shareholders, but will issue to Newco a certificate for all such
Abstract Preferred Shares upon Newco's acquisition thereof. Notwithstanding the
foregoing, the parties acknowledge that the issuance of share certificates in
this manner is being done for administrative convenience only and is not
intended to and does not detract from the beneficial ownership that the
Shareholders will have in the Abstract Preferred Shares pursuant to subsection
3.1(b) of this Plan of Arrangement. In addition, Newco will issue to Abstract a
certificate for the Newco Preferred shares referred to in subsection 3.1(e) upon
Abstract's acquisition thereof.
4.2.1 NEWCO COMMON SHARE CERTIFICATES: From and after the Effective
-------------------------------
Time share certificates representing Abstract Common Shares held by Abstract
Shareholders not deemed to have been cancelled pursuant to subsection 3.1(a)
shall for all purposes be deemed to be share certificates representing Newco
Common Shares, and as soon as practicable following the Effective Date new share
certificates shall be issued holders of Newco Common Shares with respect to
Newco Common Shares issued in connection with the Arrangement.
4.3 AMI COMMON SHARE CERTIFICATES: As soon as practicable
--------------------------------
following the Effective Date, certificates representing the AMI Common Shares
issuable in connection with the Arrangement will be delivered to the Abstract
Shareholders.
ARTICLE 5
REFERENCE DATE
-19-
5.1 REFERENCE DATE: This plan of arrangement is dated for refe-
--------------
rence April 21, 2000.
-20-
APPENDIX I
TO THE
PLAN OF ARRANGEMENT
ALTERED MEMORANDUM
------------------
(As altered by a Plan of Arrangement under section
252 of the COMPANY ACT approved by Special Resolution passed
on July 14, 2000)
FORM 1
(Section 5)
COMPANY ACT
MEMORANDUM
OF
ABSTRACT ENTERPRISES CORP.
1. The name of the Company is "Abstract Enterprises Corp."
2. The authorized capital of the Company consists of 250,000,000
shares divided into:
(a) 50,000,000 Exchangeable Shares without par value;
(b) 100,000,000 Common shares without par value; and
(c) 100,000,000 Preferred shares without par value.
3. The Exchangeable shares, the Common Shares and the Preferred
shares shall have the following special rights and restrictions:
3.1 DEFINITIONS
In these Special Rights and Restrictions:
(a) "ARRANGEMENT" means the arrangement pursuant to section 252
of the COMPANY ACT (British Columbia) as contemplated by the
Arrangement Agreement dated April 21, 2000 among the Company,
Auteo Media Inc. and Abstract Oil & Gas Inc.;
(b) "COMMON SHARE" or "COMMON SHARES" means one or more issued
Common shares in the capital of the Company without par value;
-21-
(c) "EXCHANGEABLE SHARE" means one or more issued Exchangeable
Common Share in the capital of the Company without par value;
and
(d) "PREFERRED SHARE" or "PREFERRED SHARES" means one or more
issued Preferred shares in the capital of the Company
without par value.
3.2 VOTING RIGHTS
The holders of the Common shares and the Exchangeable Common shares are entitled
to receive notice of and to attend and vote at any general meeting of the
shareholders of the Company. The holders of the Preferred shares are not
entitled to receive notice of nor to attend any general meeting of the
shareholders of the Company and, if in attendance, will not be entitled to vote
at such meeting. A holder of Preferred shares will only be entitled to notice of
and to attend and vote at meetings of the holders of Preferred shares.
3.3 DIVIDENDS
The Common shares, the Preferred shares and the Exchangeable shares
(collectively, the "shares") have the following special rights and restrictions
attached to them with respect to dividends:
(a) subject to paragraphs 3.3(b), (c), (d) and (e), the Directors
may, in their discretion, declare and pay dividends on the
Common shares and the Exchangeable shares but no dividends may
be declared or paid on the Preferred shares;
(b) if the Directors declare or pay dividends on the Common
shares, then the Directors must, at the same time, also
declare or pay, as the case may be, dividends on the
Exchangeable shares;
(c) if the Directors declare or pay dividends on the Exchangeable
shares, then the Directors must, at the same time, also
declare or pay, as the case may be, dividends on the Common
shares;
(d) the holders of Common shares are entitled to payment of
dividends, as and when declared, in the same proportion of the
total amount of dividends as the ratio of the number of
outstanding Common shares to the aggregate number of
outstanding Common shares and Exchangeable shares; and
(e) the holders of Exchangeable shares are entitled to payment of
dividends, as and when declared, in the same proportion of the
total amount of dividends as the ratio of the number of
outstanding Exchangeable shares to the aggregate number of
outstanding Common shares and Exchangeable shares; and
-22-
3.4 CONVERSION OF EXCHANGEABLE SHARES
Pursuant to the Arrangement, each Exchangeable share held will be exchangeable
by each holder for one Common share and one Preferred share.
3.5 REDEMPTION AMOUNT
The "Redemption Amount" in respect of each Preferred share shall be such amount
as may be determined by the Directors at the time such Preferred Share is
issued.
3.6 RIGHTS OF REDEMPTION
(a) On the Effective Date and subject to the provisions of the
COMPANY ACT (BRITISH COLUMBIA), each Preferred share will be
redeemed, without any notice or other act or formality
required by the Company or the holder, and the holder shall
cease to be entitled to any right in respect of such share
except to receive the Redemption Amount, unless the transfer
of the Redemption Amount is not made by the Company in
accordance with this paragraph 3.6, in which case the rights
of the holder of such share shall remain unimpaired. Forthwith
after the redemption, the Company will take and cause to be
taken all necessary steps to transfer the Redemption Amount to
the holder for each Preferred share redeemed, all in
accordance with the Arrangement.
(b) For greater certainty, the Redemption Amount of the preferred
share shall be the amount of consideration determined by the
Directors of the Company and adjusted by the Directors at any
time or times so as to ensure that the Redemption Amount of
such Preferred Shares issued as partial or total consideration
for the purchase by the Company of any assets or the
conversion or exchange of any shares (the "Purchased Assets")
shall equal the difference between the fair market value of
the Purchased Assets as at the date of purchase, conversion or
exchange by the Company and the aggregate value of non-share
consideration, if any, issued by the Company as partial or
total consideration for the Purchased Assets.
(c) Such fair market value shall be determined by the Directors
of the Company upon such expert advice as they deem necessary.
Should, however, any competent taxing authority at any time
issue or propose to issue any assessment or assessments that
impose or would impose any liability for tax on the basis
that the fair market value of the Purchased Assets is other
than the amount approved by the Directors and if the Direc-
tors or a competent Court or tribunal agree with such revalu-
ation and all appeal rights have been exhausted or all times
for appeal have expired without appeals having been taken or
should the Directors of the Corporation otherwise determine
that the fair market value of the Purchased Assets is other
than the amount previously approved by the Directors, then
the Redemption Amount of the Preferred Shares shall be
adjusted NUNC PRO TUNC pursuant to the provisions of this
paragraph to reflect the agreed upon fair market value and all
necessary adjustments, payments and repayments as may be
required shall forthwith be made between the proper parties.
-23-
3.7 LIQUIDATION, DISSOLUTION OR WINDING-UP
In the event of liquidation, dissolution or winding-up of the Company or other
return of capital by the Company, whether voluntary or involuntary:
(a) the holders of the Preferred shares are entitled to receive,
before any distribution of any part of the profits and assets
of the Company among the holders of any other shares, the
Redemption Amount, and no other assets or property;
(b) once the prior distributions have been made to the holders of
Preferred shares described in paragraphs 3.7(a), the holders
of the Common shares are entitled to all further distributions
of the profits and assets of the Company.
3.8 MODIFICATION OF RIGHTS AND RESTRICTIONS
Preferences, qualifications, limitations, restrictions and rights attached to
shares in any class may be altered, amended or changed only by a resolution
passed by a majority of not less than three-quarters of the then registered
holders of shares in such class, together with a Special resolution passed by
the Company, and not otherwise.
----------------------------------------
Xxxxxxx X. Xxxxxx, President
Abstract Enterprises Corp.
-24-
APPENDIX II
TO THE
PLAN OF ARRANGEMENT
MEMORANDUM
----------
(As altered by a Plan of Arrangement under section
252 of the COMPANY ACT approved by Special Resolution passed
on April 17, 2000)
FORM 1
(Section 5)
COMPANY ACT
MEMORANDUM
OF
ABSTRACT OIL & GAS INC.
1. The name of the Company is "Abstract Oil & Gas Inc.".
2. The authorized capital of the Company consists of 200,000,000 shares
divided into:
(a) 100,000,000 Common shares without par value; and
(b) 100,000,000 Preferred shares without par value.
3. The Common shares and the Preferred shares shall have the following
special rights and restrictions:
3.1 DEFINITIONS
In these Special Rights and Restrictions:
(a) "ARRANGEMENT" means the arrangement pursuant to section 252
of the COMPANY ACT (British Columbia) as contemplated by the
Arrangement Agreement dated April 17, 2000 among the Company,
Auteo Media Inc. and Abstract Enterprises Corp.;
-25-
(b) "COMMON SHARE" or "COMMON SHARES" means one or more issued
Common shares in the capital of the Company without par value;
and
(c) "PREFERRED SHARE" or "PREFERRED SHARES" means one or more
issued Preferred shares in the capital of the Company
without par value.
3.2 VOTING RIGHTS
The holders of the Common shares are entitled to receive notice of and to attend
and vote at any general meeting of the shareholders of the Company. The holders
of the Preferred shares are not entitled to receive notice of nor to attend any
general meeting of the shareholders of the Company and, if in attendance, will
not be entitled to vote at such meeting. A holder of Preferred shares will only
be entitled to notice of and to attend and vote at meetings of the holders of
Preferred shares.
3.3 DIVIDENDS
The Directors may, in their discretion, declare and pay dividends on the Common
shares but no dividends may be declared or paid on the Preferred shares;
3.4 REDEMPTION AMOUNT
The "Redemption Amount" in respect of each Preferred share shall be such amount
as may be determined by the Directors at the time such Preferred Share is issued
3.5 RIGHTS OF REDEMPTION
(a) On the Effective Date and subject to the provisions of the
COMPANY ACT, each Preferred share will be redeemed, without
any notice or other act or formality required by the Company
or the holder, and the holder shall cease to be entitled to
any right in respect of such share except to receive the
Redemption Amount, unless the transfer of the Redemption
Amount is not made by the Company in accordance with this
paragraph 3.5, in which case the rights of the holder of such
share shall remain unimpaired. Forthwith after the redemption,
the Company will take and cause to be taken all necessary
steps to transfer the Redemption Amount to the holder for each
Preferred share redeemed, all in accordance with the
Arrangement.
(b) For greater certainty, the Redemption Amount of the preferred
share shall be the amount of consideration determined by the
Directors of the Company and adjusted by the Directors at any
time or times so as to ensure that the Redemption Amount of
such Preferred Shares issued as partial or total consideration
for the purchase by the Company of any assets or the
conversion or exchange of any shares (the "Purchased Assets")
shall equal the difference between the fair market value of
the Purchased Assets as at the date of purchase, conversion or
exchange by the Company and the
-26-
aggregate value of non-share consideration, if any, issued
by the Company as partial or total consideration for the
Purchased Assets.
(c) Such fair market value shall be determined by the Directors
of the Company upon such expert advice as they deem necessary.
Should, however, any competent taxing authority at any time
issue or propose to issue any assessment or assessments that
impose or would impose any liability for tax on the basis
that the fair market value of the Purchased Assets is other
than the amount approved by the Directors and if the Directors
or a competent Court or tribunal agree with such revaluation
and all appeal rights have been exhausted or all times for
appeal have expired without appeals having been taken or
should the Directors of the Corporation otherwise determine
that the fair market value of the Purchased Assets is other
than the amount previously approved by the Directors, then
the Redemption Amount of the Preferred Shares shall be
adjusted NUNC PRO TUNC pursuant to the provisions of this
paragraph to reflect the agreed upon fair market value and all
necessary adjustments, payments and repayments as may be
required shall forthwith be made between the proper parties.
3.6 LIQUIDATION, DISSOLUTION OR WINDING-UP
In the event of liquidation, dissolution or winding-up of the Company or other
return of capital by the Company, whether voluntary or involuntary:
(a) the holders of the Preferred shares are entitled to receive,
before any distribution of any part of the profits and assets
of the Company among the holders of any other shares, the
Redemption Amount, and no other assets or property;
(b) once the prior distributions have been made to the holders of
Preferred shares described in paragraphs 3.6(a), the holders
of the Common shares are entitled to all further distributions
of the profits and assets of the Company.
3.7 MODIFICATION OF RIGHTS AND RESTRICTIONS
Preferences, qualifications, limitations, restrictions and rights attached to
shares in any class may be altered, amended or changed only by a resolution
passed by a majority of not less than three-quarters of the then registered
holders of shares in such class, together with a Special resolution passed by
the Company, and not otherwise.
-------------------------------------------
Xxxxxxx X. Xxxxxx, President
Abstract Oil & Gas Inc.
