Exhibit 7(a)(3)
STOCK OPTION AGREEMENT
BY AND BETWEEN
TSX CORPORATION
AND
TCI TSX, INC.
GRANTING PREEMPTIVE RIGHTS STOCK OPTIONS ON ACCOUNT
OF EMPLOYEE STOCK OPTIONS GRANTED PURSUANT TO
LONG-TERM INCENTIVE COMPENSATION PROGRAM
DATED AS OF OCTOBER 6, 1995
TABLE OF CONTENTS
1. Grant of Option.......................................................2
2. Exercise of Option....................................................3
2.1 Method of Exercise..............................................3
2.2 Payment of Exercise Price.......................................3
2.3 Fair Market Value...............................................3
3. Nun-Transferability...................................................3
4. Representations, Warranties and Covenants of the Company..............3
4.1 Organization, Good Standing, Authority and Approval.............3
4.2 Authorization of Shares of Option Stock.........................4
4.3 Company's Obligations...........................................4
5. Representations, Warranties and Covenants of Optionee.................4
5.1 Organization, Good Standing, Authority and Approval.............4
5.2 Acquisition for Own Account.....................................4
6. Conditions to Issuance of Shares......................................5
7. Transfer Restrictions; Legend on Certificate..........................5
8. Registration Rights...................................................5
9. Adjustments Upon Changes in Capitalization............................6
10. The Optionee's Rights as Shareholder..................................6
11. Applicability of Section 16(b) of the 1934 Act........................6
12. General...............................................................7
12.1 Entire Agreement................................................7
12.2 Waiver..........................................................7
12.3 Notices.........................................................7
12.4 Specific Performance............................................8
12.5 Survival of Representations and Warranties......................8
12.6 Amendments......................................................8
12.7 Certain Rules of Construction...................................8
12.8 Benefits of Agreement...........................................8
12.9 Attorneys' Fees.................................................8
12.10 Counterparts....................................................9
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STOCK OPTION AGREEMENT
GRANTING PREEMPTIVE RIGHTS STOCK OPTIONS ON ACCOUNT
OF EMPLOYEE STOCK OPTIONS GRANTED PURSUANT TO
LONG-TERM INCENTIVE COMPENSATION PROGRAM
STOCK OPTION AGREEMENT (this "Agreement") dated as of September 1, 1995,
by and between TSX Corporation, a Nevada corporation with its principal office
at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Company") and TCI TSX,
Inc., a Colorado corporation with its principal office at Terrace Tower II, ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (the "Optionee").
PRELIMINARY STATEMENT
(A) The Optionee is an affiliate of TCI Communications, Inc.
(formerly known as Tele-Communications, Inc.), a Delaware corporation
("TCIC").
(B) The Company and TCIC are parties to an Investment Agreement dated as
of March 14, 1994 (the "Investment Agreement") pursuant to which TCIC purchased
2,109,000 shares of TSX Common Stock, par value $.01 per share (the "Common
Stock"). Contemporaneously therewith, the Company and TCIC entered into a
Registration Rights Agreement dated as of March 14, 1994 (the "Registration
Rights Agreement") affording TCIC certain registration rights with respect to
such shares and any additional shares of Common Stock held by TCIC from time to
time during the term thereof.
(C) TCIC transferred and assigned its rights arid obligations under the
Investment Agreement and the Registration Rights Agreement to Optionee.
(D) Section 4.04 of the Investment Agreement granted certain preemptive
rights to TCIC with respect to the issuance by the Company of, among other
things, any Additional Common Shares (as defined in the Investment Agreement) or
options to subscribe for or to purchase Additional Common Shares.
(E) The Company granted stock options to qualified employees under the
terms of the Company's Long Term Incentive Plan ("LTIP") on March 13, 1995, and
March 30, 1995, aggregating to 24,000 shares, and on May 22, 1995, for 47,000
shares, at prices set forth in Exhibit A and Exhibit B, included herein. In
accordance with Section 4.04 of the Investment Agreement, by virtue of the grant
of such options by the Company, TCIC is entitled to preemptive right to purchase
options with the terms set forth below:
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Per Share
Number of Shares Exercise
Subject to Option Price Expiration Date
------------------- ---------- -----------------
14,220 $17.25 Mar. 12, 2005
6,399 $16.13 Jan. 23, 2005
33,473 $17.58 May 21, 2005
(F) Upon receipt by TCIC from the Company of notice, pursuant to Section
4.04 of the Investment Agreement, of the grant of the aforesaid employee stock
options, TCIC by letter dated August 24, 1995, the Company of its intention to
acquire options in accordance with its preemptive rights under Section 4.04 of
the Investment Agreement and instructed the Company to issue such options to the
Optionee. Accordingly, the parties have entered into this Agreement for the
purpose of granting to the Optionee the options to purchase Common Stock in
accordance with such preemptive rights.
AGREEMENT
NOW, THEREFORE , in consideration of the premises and covenants herein
contained, the parties hereby agree as follows:
1. GRANT OF OPTION.
The Company grants to Optionee, on the terms herein provided, the options
(the "Options") to purchase:
a) Fourteen thousand two hundred twenty shares (14,220) of Common
Stock at an exercise price per share of $17.25, with an Option term such that
the Option shall be exercisable by the Optionee in whole or in part, AT ANY TIME
OR TIMES, for a period commencing on the date hereof and expiring at the close
of business March 12, 2005, and for
b) Six thousand three hundred ninety-nine (6,399) shares of Common
Stock at an option price per share of $16.13. with an Option term such that the
Option shall be exercisable by the Optionee in whole or in part, AT ANY TIME OR
TIMES, for a period commencing on the date hereof and expiring at the close of
business January 23, 2005, and for
c) Thirty-three thousand four hundred seventy-three (33,473) shares
of Common Stock at an option price per share of $17.58, with an Option term such
that the Option shall be exercisable by Optionee in whole or in part, AT ANY
TIME OR TIMES, for a period commencing on the date hereof and expiring at the
close of business May 21, 2005.
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The shares of Common Stock issuable upon exercise of the Options are
referred to herein as "Option Stock." The purchase price of the shares of Option
Stock referred to above in each case is referred to as the "Exercise Price".
2. EXERCISE OF OPTION.
2.1 METHOD OF EXERCISE.
The Options shall be exercisable, in whole or in part, by written notice
to the Company stating the number of shares of Common Stock to be purchased and
accompanied by full payment of the Exercise Price for the shares of Common Stock
issuable upon such exercise.
2.2 PAYMENT OF EXERCISE PRICE.
The Exercise Price for the shares of Common Stock issuable upon exercise
of the Option shall be paid (i) in cash, by uncertified check, certified check
or bank draft, or (ii) by the surrender, in whole or in part, of issued and
outstanding shares of Common Stock of the Company (not including the shares of
Common Stock issuable upon exercise of the Option), which shall be credited
against the Exercise Price at the Fair Market Value (as defined below) of the
shares surrendered on the date of the written notice of exercise of the Option.
2.3 FAIR MARKET VALUE.
For purposes of this Agreement, "Fair Market Value" of the Common Stock
shall be the closing sale price of a share of Common Stock as published by the
national securities exchange on which the shares are traded on the applicable
date (provided, that if the shares of Common Stock are traded on more than one
national securities exchange, Fair Market Value shall be the closing sale price
on the applicable date published by the exchange selected by the Company). If
the exchange is closed for trading on such date, or if the Common Stock does not
trade on such date, then Fair Market Value shall be the closing sale price on
the date the Common Stock last traded on such exchange prior to the applicable
date.
3. NON-TRANSFERABILITY.
The Option granted hereby may not be transferred by the Optionee other
than to a corporation, partnership or other entity controlling, controlled by or
under common control with TCIC (collectively, the "TCIC Affiliates").
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
The Company represents and warrants to and agrees with Optionee as
follows:
4.1 ORGANIZATION, GOOD STANDING, AUTHORITY AND APPROVAL.
The Company is duly organized as a corporation and is validly existing and
in good standing under the laws of Nevada. The Company has the corporate power
and authority to execute and deliver this Agreement. The execution and delivery
of this Agreement by the Company and the consummation of the transactions
contemplated by this Agreement (including
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the issuance of the shares of Option Stock) have been duly authorized and
approved by all necessary corporate action of the Company, and this Agreement is
a valid and binding obligation of the Company, enforceable in accordance with
its terms. This Agreement and its execution and delivery by the Company do not,
and the consummation of the transaction contemplated by this Agreement and the
issuance of the shares of Option Stock will not, constitute a violation of or a
default (whether with notice or the lapse of time or both) under the Articles of
Incorporation or Bylaws of the Company, any law to which the Company is subject,
any provision of any agreement, instrument, order, judgment or decree to which
the Company is a party or to which the Company or any of its assets is subject,
or any rule of, or any provision of the Company's Listing Agreement with, the
American Stock Exchange.
4.2 AUTHORIZATION OF SHARES OF OPTION STOCK.
Upon delivery of stock certificates by the Company and receipt by the
Company of the full amount of the Exercise Price therefor, the shares of Option
Stock, when issued and delivered in accordance with the provisions of this
Agreement, will be duly authorized, validly issued, fully paid and nonassessable
outstanding shares of Common Stock of the Company.
4.3 COMPANY'S OBLIGATIONS.
The Company shall (1) at all times during the term of the Option reserve
and keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirements of this Agreement, (2) pay all original issue and
transfer taxes with respect to the issue and transfer to the Optionee of shares
of Option Stock pursuant to the Option and all other fees and expenses
necessarily incurred by the Company in connection therewith, and (3) from time
to time use its best efforts to comply with all laws and regulations which shall
be applicable thereto.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF OPTIONEE.
Optionee represents and warrants to and agrees with the Company as
follows:
5.1 ORGANIZATION, GOOD STANDING, AUTHORITY AND APPROVAL.
Optionee is duly organized as a corporation and is validly existing and in
good standing under the laws of Delaware. Optionee has the corporate power and
authority to execute and deliver this Agreement. The execution and delivery of
this Agreement by Optionee and the consummation of the transactions contemplated
by this Agreement have been duly authorized and approved by all necessary
corporate action of Optionee, and this Agreement is a valid and binding
obligation of Optionee.
5.2 ACQUISITION FOR OWN ACCOUNT.
The shares of Option Stock to be issued and delivered to the Optionee
pursuant to this Option (unless such shares have first been registered under the
Securities Act of 1933, as amended (the "1933 Act")) shall be acquired by the
Optionee for investment for the Optionee's own account and not with a view to,
or for, sale or other distribution thereof, and that the Optionee has no present
intention to sell or otherwise distribute any shares of Option Stock to be
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issued or delivered to the Optionee pursuant to this Option, except in a manner
which will not violate the provisions of any applicable federal or state
securities laws, rules or regulations.
6. CONDITIONS TO ISSUANCE OF SHARES.
If at the time of exercise of an Option, there does not exist either (a)
an effective registration statement under the 1933 Act, with respect to the
shares of Option Stock subject to the Option, (b) an opinion of counsel,
satisfactory to the Company, to the effect that such registration is not
required under one or more of the exemptions provided under the 1933 Act, or (c)
a "no action" letter, with respect to the proposed issuance of such shares,
issued by the staff of the Securities and Exchange Commission and delivered to
the Company, then such shares of Option Stock may only be issued with an
appropriate restrictive legend in accordance with Section 8 hereof.
7. TRANSFER RESTRICTIONS; LEGEND ON CERTIFICATE.
The Optionee acknowledges that the Option Stock must be held indefinitely
unless subsequently registered under the 1933 Act and the securities laws of
every jurisdiction applicable to such resale or unless exemptions from such
registration requirements are available. The Company will be entitled to place
conspicuously upon each certificate representing shares of Option Stock a legend
as required by Article 15 of the Articles of Incorporation of the Company and a
legend substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUT REGISTRATION
OF SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES FEDERAL OR STATE
SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH
COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE EVIDENCED BY AN OPINION OF
THE HOLDER'S COUNSEL, IN FORM REASONABLY ACCEPTABLE TO THE CORPORATION, THAT NO
VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED
TRANSFER OR ASSIGNMENT.
Notwithstanding the foregoing, the Optionee may transfer the shares of
Option Stock to any TCIC Affiliate.
8. REGISTRATION RIGHTS.
The provisions of the Registration Rights Agreement shall be applicable to
the shares of the Option Stock, and the Optionee shall be entitled to exercise
all of the rights granted to TCIC under the Registration Rights Agreement with
respect to the shares of Option Stock.
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9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
The Exercise Price and the number or kind of shares subject to the Option
are subject to adjustment in case the Company should at any time issue
additional shares of its Common Stock as a stock dividend, or in case the shares
of its Common Stock should at any time be subdivided into a greater number of
shares, or in case the outstanding shares of its Common Stock should be combined
by reclassification or otherwise into a lesser number of shares, or in case the
Company shall merge, consolidate with or into another corporation or entity, or
another corporation or entity merges into the Company, or in the case of any
sale or transfer of all or substantially all of the assets of the Company, or in
the case of a capital reorganization or recapitalization not involving a merger,
consolidation or sale or transfer of all or substantially all of the assets of
the Company. The adjustment will entitle the Optionee to receive, for the same
aggregate Exercise Price, in lieu of securities receivable upon the exercise of
any part of the Option prior to any such dividend, subdivision,
reclassification, combination, sale, transfer or reorganization, the securities
to which the Optionee would have been entitled if the Optionee had exercised any
part of the Option immediately prior to the record date or effective date of the
stock dividend, subdivision, reclassification, combination, sale, transfer or
reorganization. Neither the issuance of stock for consideration, the issuance of
stock on the exercise of stock rights, options or warrants, nor the issuance of
stock on the conversion of a debenture or of a share of capital stock shall be
considered a change in the Company's capital structure.
No fractional shares of Option Stock shall be issued upon any exercise of
the Option following an adjustment made pursuant to this Section 10, and the
aggregate Exercise Price paid shall be appropriately adjusted on account of any
fractional share not issued upon such an exercise.
10. THE OPTIONEE'S RIGHTS AS SHAREHOLDER.
The Optionee shall have no rights as a shareholder with respect to any
shares of Option Stock until the date of the exercise of the Option and the
issuance of the shares of Option Stock and then only to the extent that there
has been issued one or more certificates for such shares of Option Stock to said
Optionee upon the due exercise in whole or in part of the Option. No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the
record date precedes the date such stock certificates are issued.
11. APPLICABILITY OF SECTION 16(B) OF THE 1934 ACT.
The grant of the Option may, under Section 16 of the 1934 Act, be
considered a "purchase" of an equity security subject to the "short-swing"
profit rules of Section 16(b). The Optionee is urged to consult its legal
advisor regarding the applicability of Section 16 to its transactions in equity
securities of the Company, including the granting to the Optionee of the Option.
In this connection, the Optionee agrees not to sell, during the six month period
immediately following the date of this Agreement, any shares of Option stock
which may be acquired during such period upon exercise of the Option.
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12. GENERAL.
12.1 ENTIRE AGREEMENT.
This Agreement, subject to the matters described in the Preliminary
Statement, contains all of the agreements and understandings between the parties
hereto, and no oral agreements or written correspondence shall be held to affect
the provisions hereof.
12.2 WAIVER.
No waiver by any party hereto of any breach of any covenant, condition or
agreement hereof on the part of the parties hereto to be kept and performed
shall be considered to constitute a waiver of any other covenant, condition or
provision, or of any subsequent breach thereof.
12.3 NOTICES.
Any notice, demand, request, waiver or other communication under this
Agreement must be in writing and will be deemed to have been duly given (i) on
the date of delivery if delivered to the address of the party specified below
(including delivery by courier), (ii) on the fifth day after mailing if mailed
to the party to whom notice is to be given to the address specified below, by
first class mail, certified or registered, return receipt requested, postage
prepaid, or (iii) on the date of transmission if sent by facsimile transmission
to the facsimile number given below and if telephonic confirmation of receipt is
obtained promptly after completion of transmission, as follows:
If to Optionee: TCI TSX, Inc.
c/o Tele-Communications, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy similarly addressed: Attn: Legal Department
If to the Company: TSX Corporation
▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Kemp, Smith, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇
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Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may from time to time change its address or facsimile number for
the purpose of notices to that party by a similar notice specifying a new
address or facsimile number, but no such change will be deemed to have been
given until it is actually received by the party sought to be charged with its
contents.
12.4 SPECIFIC PERFORMANCE.
The parties acknowledge that there will be no adequate remedy at law for a
violation by the Company of its obligations set forth in this Agreement and its
obligations to issue and sell the shares of option Stock pursuant to this
Agreement and that, in addition to any other remedies which may be available to
Optionee for a violation of those obligations, those obligations will be
specifically enforceable by Optionee in accordance with their terms.
12.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties set forth in this Agreement will
survive the Closing.
12.6 AMENDMENTS.
This Agreement may not be amended, modified, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement thereof is sought.
12.7 CERTAIN RULES OF CONSTRUCTION.
This Agreement shall be construed in accordance with, and shall be
governed by, the laws of the State of Texas. In the event any court of competent
jurisdiction shall declare any portion of this Agreement to be invalid, the
remainder of this Agreement shall not be invalidated thereby, but shall remain
in full force and effect. The captions in this Agreement are for reference
purposes only and will not in any way affect the meaning or interpretations of
the text of this Agreement. Where the context requires, words in the singular
shall be deemed to include the plural and vice versa.
12.8 BENEFITS OF AGREEMENT.
Subject to the provisions of Section 4, this Agreement will be binding
upon and will inure to the benefit of the parties and their respective
successors and assigns. Neither this Agreement nor any of the right or
obligations of a party hereunder may be assigned without the consent of the
other party, provided that the Optionee may assign its rights and delegate its
obligations to any TCIC Affiliate.
12.9 ATTORNEYS' FEES.
In the event of any action or suit based upon or arising out of any
alleged breach by any party of any representation, warranty, covenant or
agreement contained in this Agreement, the
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prevailing party will be entitled to recover reasonable attorneys' fees and
other costs of such action or suit from the other party.
12.10 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
will be deemed an original.
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IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement.
TSX CORPORATION
By:
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
and Chief Financial Officer
TCI TSX, Inc.
By:
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President Finance and Treasurer
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EXHIBIT A
TSX
LTIP TCI/TSX
NEW OPTIONS # OF OPTIONS
ISSUED: EXERCISE OR RIGHT TO EXPIRATION DATE
GRANTEE DATE GRANTED QTY.: PRICE: PURCHASE: OF TCI OPTION*
------------------ ---------------- --------- ------------ ---------------- -----------------
▇▇▇▇▇▇▇▇ MARCH 13, 1995 20,000 $17.25 14,220 MAR. 12, 2005
WOLSTEIN MARCH 30, 1995 5,000 $16.13 3,555 JAN. 23, 2005
GILINDO MARCH 30, 1995 4,000 $16.13 2,844 JAN. 23, 2005
TOTALS: 29,000 20,619
*=SHOULD TCI ELECT TO EXERCISE ITS RIGHT TO OBTAIN SUCH OPTIONS FROM TSX
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EXHIBIT B
TSX
LTIP TCI/TSX
NEW OPTIONS # OF OPTIONS
ISSUED: EXERCISE OR RIGHT TO EXPIRATION DATE
GRANTEE: DATE GRANTED: QTY.: PRICE: PURCHASE: OF TCL OPTION*
------------------ ---------------- --------- ------------ ---------------- -----------------
▇▇▇▇▇▇▇▇ MAY 22, 1995 10,000 $17.58 7,122 MAY 21, 2005
▇▇▇▇▇▇▇▇ MAY 22, 1995 7,500 $17.58 5,341 MAY 21, 2005
▇▇▇▇▇▇▇▇ ▇▇▇ 22, 1995 5,000 $17.58 3,561 MAY 21, 2005
▇▇▇▇▇▇ MAY 22, 1995 4,000 $17.58 2,849 MAY 21, 2005
▇▇▇▇▇ MAY 22, 1995 4,000 $17.58 2,849 MAY 21, 2005
PASTIE MAY 22, 1995 3,000 $17.58 2,137 MAY 21, 2005
▇▇▇▇▇▇ MAY 22, 1995 2,500 $17.58 1,780 MAY 21, 2005
▇▇▇▇▇▇ MAY 22, 1995 2,500 $17.58 1,780 MAY 21, 2005
▇▇▇▇▇▇▇ MAY 22, 1995 2,000 $17.58 1,424 MAY 21, 2005
▇▇▇▇▇▇ MAY 22, 1995 2,000 $17.58 1,424 MAY 21, 2005
SCHOTTEN MAY 22, 1995 2,000 $17.58 1,424 MAY 21, 2005
▇▇▇▇▇▇▇▇ MAY 22, 1995 1,500 $17.58 1,068 MAY 21, 2005
▇▇▇▇▇▇▇▇ MAY 22, 1995 1,000 $17.58 712 MAY 21, 2005
TOTALS: 47,000 33,471
* = SHOULD TCl ELECT TO EXERCISE ITS RIGHT TO OBTAIN SUCH OPTIONS FROM TSX
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