: Change of Business/Reverse Takeover
THIS AGREEMENT, dated July 6,1999 is made:
AMONG:
GLOBAL SECURITIES CORPORATION, a member of the Vancouver Stock Exchange (the
"Exchange"), of 11th Floor, Three Bentall Centre, 000 Xxxxxxx Xxxxxx, X.X. Xxx
00000, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0;
(the "Member")
OF THE FIRST PART
AND:
CARTA RESOURCES LTD., a company incorporated under the laws of the Province of
British Columbia, of #1488 - 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx, X0X 0X0;
(the "Issuer")
OF THE SECOND PART
AND:
QUOTES CANADA FINANCIAL NETWORK LTD., a company incorporated under the laws of
the Province of British Columbia, of #1409 - 000 Xxxx Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(the "Target")
OF THE THIRD PART
WHEREAS:
A. The Issuer's common shares are listed on the Vancouver Stock Exchange
(the "Exchange");
B. The Issuer and certain shareholders of the Target have agreed that the
Issuer will acquire all or substantially all of the issued and outstanding
shares of the Target (the "Transaction");
C. The Transaction will constitute a change of business of the Issuer within
the meaning of Exchange Policy No. 18;
D. Pursuant to Exchange Policy No. 4 ("Policy No. 4"), the Exchange requires
that the Issuer obtain a member to act as its sponsor within the meaning of
Policy No. 4 as. a condition of approval of the Transaction;
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
(a) "Act" means the Securities Act, (British Columbia), R.S.B.C. 1996, as
amended, the regulations and rules made thereunder and all administrative policy
statements, blanket orders, notices, directions and rulings issued by the
Commission;
(b) "Approval Date" means the date the Exchange gives notice of approval of
the Transaction;
(c) "Business" means the corporate undertaking of the Issuer on completion
of the Transaction, which will consist substantially of the corporate
undertaking of the Target as presently constituted;
(d) "Commission" means the British Columbia Securities Commission;
(e) "Control Block" means a holding of Shares or other securities of the
Issuer or both held by a person or combination of persons acting jointly or in
concert to which are attached more than 20% of the voting rights attached to all
outstanding Voting Securities;
(f) "Exchange Policy" means a policy, as amended, contained in the
Exchange's Corporate Finance Services Policy and Procedures Manual;
(g) "Issuer" has the meaning defined above, and includes any wholly-owned
or, partially-owned subsidiaries of the Issuer (and will include the Target upon
completion of the Transaction);
(h) "Material Change" has the meaning defined in the Act;
(i) "Member" has the meaning defined above;
(j) "Proceeds" means the proceeds from the Public Offering, if any;
(k) "Public Offering" means the offering of the Issuer's securities
contemplated to be made by the Member as agent, contemporaneously with or after
closing, of the Transaction, if any;
(1) "Quarterly Report" means a report of the Issuer prepared on Form 61
to the Act;
(m) "Reports" means any business plans, engineering reports, geological
reports, technical reports, valuation opinions or similar documents, concerning
the Business;
(n) "Shares" means common shares in the capital of the Issuer;
(o) "Target" has the meaning assigned above;
(p) "Transaction" has the meaning assigned in Recital B; and
(q) "Voting Security" means a security of the Issuer that carries a voting
right under all circumstances.
2. INVESTIGATION BY MEMBER
2.1 The Issuer and the Target shall each at all times afford full
access to the Member and its authorized representatives to all, of their
respective properties, books, contracts, commitments and other corporate
records, and shall furnish the Member with copies thereof and. such other
information concerning the Business as the Member may request, in order that the
Member may undertake an investigation of the Business.
2.2 The Issuer and the Target shall each forthwith provide the Member
with their most recent audited financial statements, and unaudited financial
statements, prepared as of a date satisfactory to the member.
2.3 The Issuer or Target, as the case may be, shall forthwith provide
the Member with:
(a) a draft Pre-Listing Application and Fact Sheet or a draft disclosure
document appropriate to the Transaction, in the form required by the Exchange,
together with all required schedules or attachments;
(b) a draft disclosure document appropriate to the Transaction and any
financing which may be contemplated to be undertaken concurrently therewith
(e.g. a prospectus or filing statement);
(c) fully completed and executed personal information forms in Form 4B to
the Act for all proposed directors and officers of the Issuer on completion of
the Transaction;
(d) copies of all Reports which are available, in final form or in draft if
such Reports have not been finalized;
(e) questionnaires, in the form provided by the Member, completed in full by
each of the directors and each member of senior management of the Issuer and the
Target; and
(f) copies of all material contracts to which it is a party.
3. TERM
This Agreement shall be effective from the date hereof until:
(a) the date such notice is given if the Member gives notice to the Issuer
that it has decided not to act as the Issuer's sponsor with regard to the
Transaction; or
(b) the close of business on the Approval Date if the Member gives notice to
the Issuer that it has decided to act as the Issuer's sponsor with regard to the
Transaction.
4. SPONSORSHIP DUTIES
If the Member gives notice to the Issuer that it will act as sponsor with
regard, to, the Transaction, the Member will undertake the sponsorship duties
prescribed by Policy No. 4 relating to the sponsorship.
5. FEE
5.1 The Issuer will pay the Member a fee of $15,000.00, (plus 7%
G.S.T.) in consideration of the Member's acting as the Issuer's sponsor with
regard to the Transaction, payable:
(a) as to 50% + GST upon execution of this Agreement; and
(b) as to 50% + GST upon the receipt of notice from the Exchange that the
Transaction has cleared the Pre-Assessment Stage.
5.2 The Issuer's obligation to pay the above fee earned by the Member
up to the date of termination of this Agreement shall survive the termination of
this Agreement.
6. COVENANTS OF THE ISSUER AND THE TARGET
6.1 If, during the term of this Agreement, a Material Change in the
assets, liabilities (contingent or otherwise), business, operations or capital
of the Issuer or the Target should occur, or be anticipated or threatened, the
Issuer or the Target, as the case may be, shall notify the Member immediately,
in writing, with full particulars of the change.
6.2 If the Issuer or the Target is not certain as to whether a Material
Change has occurred, the Issuer or the Target, as the case may be, shall
promptly notify the Member, in writing, of the full particulars of the event
giving rise to the uncertainty, and shall consult with the Member as to whether
such event constitutes a Material Change.
6.3 The Issuer and the Target shall each provide the Member with copies
of all Reports forthwith upon preparation or receipt of the same.
6.4 The Issuer shall notify the Member of:
(a) any chance proposed to be made in the Business;
(b) any proposed issuance of a Control Block;
(c) any proposed sale or other disposition of any of the outstanding shares
in the capital of any subsidiaries wholly or partially owned by the Issuer or
the Target;
forthwith upon the proposal of such change, issuance, sale or other disposition.
6.5 The Issuer shall notify the Member of any proposed change to the,
constitution of the Board of Directors of the Issuer, or to the membership of
senior management of the Issuer, forthwith upon the proposal of such a change.
Forthwith after giving such notification, the Issuer shall provide the Member
with a questionnaire in the form provided by the Member, completed in full by
the proposed candidate. The Issuer shall promptly notify the Member, in
writing, of any resignations, terminations or departures of any of its directors
or senior management.
6.6 The Member reserves its right to terminate this Agreement, resign
as sponsor and to notify the Exchange of its decision to resign should it object
to any of the proposed changes set forth in Subsections 6.4 and 6.5.
6.7 The Issuer shall provide the Member with copies of all Quarterly
Reports, press releases, promotional materials, material change reports,
materials prepared in correction with the Issuer's annual general meeting or any
special meetings of shareholders, annual reports and financial statements
prepared by or for the Issuer, forthwith upon preparation or receipt of the
same.
6.8 The Issuer shall notify the member of any circumstances where it
does not expect to comply with a filing deadline imposed by regulatory
authorities. Such notification shall be provided at least 10 business days
before the deadline.
6.9 The Issuer and the Target shall each at all times use their best
efforts to assist the Member in carrying out its duties as sponsor.
6.10 The Issuer acknowledges that it has appointed Xxxxxx Xxxxxxx as
its officer responsible for carrying out its obligations to the Member
hereunder, and agrees that the Member may direct and address all inquiries and
submit all notices hereunder to the attention of Xxxxxx Xxxxxxx.
6.11 The Target acknowledges that it has appointed Xxxxxx Xxxxxxx as
its officer responsible for carrying out its obligations to the Member
hereunder, and agrees that the Member may direct and address all inquiries, and
submit all notices hereunder to the attention of Xxxxxx Xxxxxxx.
6.12 Nothing, in this Agreement is or shall be construed as a xxxxxx on
the discretion of the directors of the Issuer or the Target.
6.13 All information relating to the Issuer and the Target provided by
the Issuer and the Target to the Member shall be directed to the corporate
finance department of the Member, and neither the Issuer nor the Target will
disclose to any other person associated with the Member any information relating
to the Issuer or the Target which is not publicly available.
7. ACKNOWLEDGEMENTS OF ISSUER AND TARGET
7.1 Each of the Issuer and the Target acknowledges that the Member has
informed the, Issuer, the Target and their respective directors and management
of their responsibilities concerning continuous and timely disclosure under the
Act and, in particular, without limitation, of the Issuer's responsibility to
issue a press release and file a material change report in the event of a
Material Change in the business, operations, assets or ownership of the Issuer.
Each of the Issuer and the Target further acknowledges in this regard that each
has been made aware by the Member of the services offered by commercial news
disseminators.
7.2 Each of the Issuer and the Target acknowledges that the Member has
advised the Issuer, the Target and their respective directors about the
Exchange's on-going requirements concerning the minimum distribution of the
Shares on completion of the Transaction.
8. REPRESENTATIONS, WARRANTIES AND
INDEMNIFICATIONS OF THE ISSUER AND THE TARGET
8.1 Each of the Issuer and the Target severally warrants and represents
to the Member and acknowledges that the Member has relied on such warranties and
representations in entering into this Agreement, that:
(a) the responses in all questionnaires completed by its directors and
senior management personnel and provided to the Member pursuant to this
Agreement shall be accurate and complete;
(b) the descriptions of its assets and liabilities set out in its balance
sheets, including the notes thereto, to be provided to the Member will be true
and correct, will accurately and fairly present its financial position and
condition as at the dates thereof, will reflect all liabilities (absolute,
accrued, contingent or otherwise) as at the dates thereof and will be prepared
in accordance with generally accepted accounting principles, applied on a
consistent basis;
(c) its statements of earnings, retained earnings and chances in financial
position, including the notes thereto, to be provided to the Member will in each
case accurately and fairly present the results of operations for the periods
covered thereby and will be prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout such periods;
(d) its financial position as at the date hereof is no less favourable than
that disclosed in the latest balance sheets provided to the Member, except as
has been disclosed to the Member;
(e) the information concerning the Business which will be provided to the
authors of the Reports will be accurate., complete and fair, and the Reports, to
the best of its knowledge, will be fair and accurate in all particulars;
(f) to the extent that they are required to do so, the authors of the
Reports will possess all of the qualifications required by the Exchange and the
Commission. of authors of such reports;
(g) the information contained in the sources and uses of funds statements to
be provided to the Member hereunder will be accurate and complete;
(h) the execution of this Agreement does not and will not conflict with, and
does not and will not result in a breach of, or constitute a default under, any
agreement or instrument to which it is a party, or by which it is bound, or the
terms of its incorporating documents;
(i) the execution of this Agreement has been authorized by all necessary
corporate action on its part;
(j) as of the date hereof:
(i) there has not been any Material Chancre in its assets, liabilities or
obligations (absolute, accrued, contingent or otherwise);
(ii) there has not been any Material Change in its capital or long-term
debt;
(iii) there has not been any Material Change in its business prospects,
condition (financial or otherwise) or the results of its operations;
from those disclosed in the most recent [consolidated] financial statements
provided to the Member of which the Member has not been notified;
(k) since the date of the most recent financial statements provided to the
Member, it has carried on business in the ordinary course;
(l) it is duly registered and licensed to carry on business in the
jurisdictions which it carries on business or owns property;
(m) no order suspending the sale of or ceasing, the trading in any of its
securities has been issued and not rescinded, revoked or withdrawn by any
securities commission, regulatory authority or stock exchange in any
jurisdiction, and no proceedings for that purpose have been instituted or are
pending or are, to the knowledge of its directors or senior management,
contemplated or threatened by any securities commission, regulatory authority or
stock exchange; and
(n) no enquiry or investigation, formal or informal, in relation to it or
its directors or senior management, has been commenced or threatened by any
official or officer of any securities commission, regulatory authority or stock
exchange.
8.2 The representations and warranties of the Issuer and the Target set
forth herein shall continue to be true and accurate throughout the term of this
Agreement.
8.3 The Issuer and the Target shall each indemnity and save harmless
the Member, and each director, officer, employee or agent of the Member
(collectively, the "Indemnified Parties"), from and against all losses, claims,
damages, liabilities, costs or expenses caused or incurred by the Indemnified
Party, arising or resulting from any breach by the Issuer or the Target of any
of the terms of this Agreement.
8.4 If any action or claim is brought against an Indemnified Party in
respect of which indemnity may be sought from the Issuer or the Target pursuant
to this Agreement, the Indemnified Party will promptly notify the Issuer or the
Target, as the case may be, in writing.
8.5 The Issuer or the Target, as the case may be, will assume the
defence of the action or claim, including the employment of counsel and the
payment of all expenses.
8.6 The Indemnified Party will have the right to employ separate
counsel, and the Issuer or the Target, as the case may be, will pay the fees and
expenses of such counsel.
8.7 The indemnities provided for in this Section will not be limited or
otherwise affected by any other indemnity obtained by the Indemnified Party from
any other person in respect of any matters specified in this Agreement and will
continue in full force and effect until all possible liability of the
Indemnified Party arising out of this Agreement has been extinguished by the
operation of law.
8.8 If indemnification under this Agreement is found in a final
judgment (not subject to further appeal) by a court of competent jurisdiction
not to be available for reason of public policy, the Issuer, the Target and the
Indemnified Parties will contribute to the losses, claims, damages, liabilities
or expenses (or actions in respect thereof) for which such indemnification is
held unavailable in such proportion as is appropriate to reflect the relative
benefits to and fault of the Issuer and the Target, on the one hand, and the
Indemnified Parties on the other hand, in connection with the matter giving rise
to such losses, claims, damages, liabilities or expenses (or actions in respect
thereof). No person found liable for a fraudulent misrepresentation (within the
meaning of applicable securities laws) will be entitled to contribution from any
person who is not found liable for such fraudulent misrepresentation.
8.9 To the extent that any Indemnified Party is not a party to this
Agreement, the Member will obtain and hold the right and benefit of this section
in trust for and on behalf of such Indemnified Party.
9. RIGHT OF FIRST REFUSAL
9.1 The Issuer will notify the Member of the terms of any equity
financing that it requires or proposes to obtain during, the term of this
Agreement, and the Member will have the right of first refusal to provide any
such financing.
9.2 The right of first refusal must be exercised by the Member within 15
days following the receipt of the notice referred to in Subsection 9.1 by
notice), the Issuer that it will provide the financing on the terms set out in
the notice.
9.3 If the Member falls to give notice within the time provided for in
Subsection 9.2 hereof, the Issuer shall then be free to make other arrangements
to obtain the financing from another source on the same terms or on terms no
less favourable to the Issuer.
9.4 The Member's right of first refusal will not terminate if, on
receipt of any notice from the Issuer under this Section, the Member fails to
exercise the right.
9.5 The right of first refusal granted under this Section shall
terminate one year from the Approval Date.
10. TERMINATION
10.1 The Member may terminate this Agreement in any of the following
events:
(a) if an adverse Material Change (actual, anticipated or threatened) in the
assets, liabilities (contingent or otherwise), business operations or capital of
the Issuer or the Target should occur;
(b) if any order is made suspending trading in the Shares on the Exchange,
or any order to cease or suspend trading in the Shares or other securities of
the Issuer or the Target is made pursuant to any of the Canadian Securities Acts
or is made by any other regulatory authority and is not rescinded, revoked or
withdrawn within 30 days of the making thereof,
(c) if any enquiry or investigation (whether formal or informal) in relation
to the Issuer or the Issuer's or the Target's directors or senior management, is
commenced or threatened by an officer or official of any securities regulatory
authority in Canada or by any officer or official of any other competent
authority;
(d) if the Issuer or the Target shall at any time be in breach of any of the
terms of this Agreement;
(e) if the Issuer or the Target determines to take a course of action
referred to in Subsections 6.4 or 6.5, to which the Member has notified the
Issuer in writing it objects; and
(f) if the Member determines that any representation or warranty made by the
Issuer or the Target in this Agreement is false or has become false.
10.2 Any termination by the Member hereunder shall be made by notice in
writing to the Issuer and the Target. Notwithstanding the giving of any notice
of termination hereunder, the expenses and fees agreed to be paid by the Issuer
incurred up to the time of the giving of such notice shall be paid by the Issuer
as herein provided.
10.3 The Issuer and the Target acknowledge and agree that, if the
Member terminates this Agreement, the member shall comply with all applicable
provisions of Policy No. 4 relating to termination, including the filing of a
letter explaining the termination with the Exchange. In such event, the Member
may disclose to the Exchange such information concerning the Issuer or the
Target as the Member in its sole discretion considers to be necessary to fulfill
its obligations to the Exchange and the requirements of Policy No. 4, including,
information which the Issuer or the Target has disclosed to the Member on a
privileged or confidential basis.
10.4 The rights of the Member to terminate this Agreement are in
addition to such other remedies as it may have in respect of any default,
misrepresentation, act or failure of the Issuer or the Target in respect of any
of the matters contemplated by this Agreement.
10.5 The Issuer or the Target may terminate this Agreement upon giving
10 days' written notice to the Member.
11. EXPENSES OF MEMBER
11.1 The Issuer will pay all of the expenses reasonably incurred by the
Member in connection herewith, including, without limitation, the fees and
expenses of any solicitors which might be retained by the Member in connection
herewith.
11.2 The Member may, from time to time, render accounts for such
expenses to the Issuer for payment on the dates set out in such accounts.
11.3 The Issuer's covenant to pay the Member's expenses shall survive
termination of this Agreement.
12. NOTICE
12.1 Any notice under this Agreement will be given in writing and must
be delivered, sent by facsimile transmission or mailed by prepaid post and
addressed to the party to which notice is to be given at the address indicated
above, or at another address designated by such party in writing.
12.2 If notice is sent by facsimile transmission or is delivered, it
will be deemed to have been given at the time of transmission or delivery.
12.3 If notice is mailed, it will be deemed to have been received 48
hours following the, date of mailing of the notice.
12.4 If there is an interruption in normal mail service due to strike,
labour unrest or other cause at or prior to or within 48 hours of the time a
notice is mailed, the notice will be sent by facsimile transmission or will be
delivered.
12.5 All notices to the Issuer or the Target shall be sent to the
attention of Xxxxxx Xxxxxxx and Xxx Xxxxxxxxxxxx respectively.
13. TIME
Time is of the essence of this Agreement and will be calculated in accordance
with the provisions of the Interpretation Act (British Columbia).
14. LANGUAGE
Wherever the singular or masculine expression is used in this Agreement, that
expression is deemed to include the plural, feminine or body corporate where
required by the context.
15. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and cancels and supersedes any prior
understandings and agreements between the parties hereto with respect thereto.
16. COUNTERPARTS
This Agreement may be executed in two or more counterparts and delivered by
telecopier. Each executed counterpart will be deemed to be an original and all
of them will constitute one agreement, effective as of the reference date given
above.
17. HEADINGS
The headings in this Agreement are for convenience of reference only and do not
affect the interpretation of this Agreement.
18. ENUREMENT
This Agreement enures to the benefit of and is binding upon the parties hereto
and their respective administrators, successors and assigns.
19. LAW
This Agreement is governed by the law of British Columbia, and the parties
hereto irrevocably attorn and submit to the jurisdiction of the courts of
British Columbia with respect to any dispute related to this Agreement.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of
the day and year first above written.
THE CORPORATE SEAL OF GLOBAL SECURITIES )
CORPORATION was hereunto affixed )
in the presence of: )
)
)
Authorized Signatory )
)
)
Authorized Signatory ) C/S
THE CORPORATE SEAL OF CARTA RESOURCES )
LTD. was hereunto affixed )
in the presence of: )
)
)
Authorized Signatory )
)
)
Authorized Signatory ) C/S
THE CORPORATE SEAL OF QUOTES CANADA )
FINANCIAL NETWORK LTD. was hereunto affixed )
in the presence of: )
)
)
Authorized Signatory )
)
)
Authorized Signatory ) C/S
Schedule of Appendix 2: Share Ownership Reverse Takeovers (RTOs), Change of
Business (COBs) or Qualifying Transactions (QTs) - Direct Share Issuances
Category # Name of Person Before RTO, COT or QT After RTO, COB or QT
(show share-
holding from
fully diluted
issuances on Number $amount Percentage Price Number $amount Percentage Price
separate of shares paid of total paid of shares paid of total paid
schedule acquired shares per acquired shares per
share share
---------------------------------------------------------------------------------------------------
3 X.X. Xxxxxxxxxxxx 162,823 4.36% 75,000 $11,025 3.72% $0.15
3 X.X. Xxxxxxxxxxxx 199,600 $ 2,500. 65.35 $ 0.01 4.96%
Total . . . . . . . 362,423 9.71% 437,423 8.68%
3 Xxxxxx Xxxxxxx. . 409,823 10.99% 75,000 $11,025 8.62% $0.15
3 Xxxxxx Xxxxxxx. . 199,600 $ 2,500 5.35% $ 0.01 4.96%
Total:. . . . . . . 609,423 16.34% 684,423 13.58%
3 H. Xxx Xxxx . . . 55,400 1.48% Nil .10%
3 H. Xxx Xxxx . . . 199,600 $ 2,500. 5.35% $ 0.01 4.96%
Total:. . . . . . . 255,000 6.83$ 255,000 5.01%
3 Xxxx Xxxxxxx. . . Nil 500,000 $ 95,000 9.92% $0.19
3 Xxxx Xxxxxxx. . . Nil 80,000 $ 12,000 1.59% $0.15
Total:. . . . . . . 580,000 11.51%
3 Xxxx Xxxxxxx. . . Nil 500,000 $ 95,000 9.92% $.019
3 Xxxx Xxxxxxx. . . Nil 80,000 $ 12,000 1.59% $0.15
Total:. . . . . . . 580,000 11.51%
Schedule of Appendix 2: Share Ownership Reverse Takeovers (RTOs), Change of
Business (COBs) or Qualifying Transactions (QTs) - Fully Diluted Share Issuances
(excluding direct issuances)
Category # Name of Person Before RTO, COT or QT After RTO, COB or QT
(show share- o/s 4,086,142 o/s 9,432,284
holding from
fully diluted
issuances on Number $amount Percentage Price Number $amount Percentage Price
separate of shares paid of total paid of shares paid of total paid
schedule acquired shares per acquired shares per
share share
---------------------------------------------------------------------------------------------------
3 X.X. Xxxxxxxxxxxx 362,423 8.86% 75,000* $0.15
X.X. Xxxxxxxxxxxx 75,000** $0.30
3 Xxxxxx Xxxxxxx 609,423 14.91% 150,000* $0.15
Xxxxxx Xxxxxxx 74,000** $0.30
3 H. Xxx Xxxx 255,000 6.83% 60,000* $0.15
3 Xxxx Xxxxxxx 80,000** $0.30
3 Xxxx Xxxxxxx 80,000** $0.30
* Stock Options
** Share purchase warrants
