SECURITIES EXCHANGE AGREEMENT
-----------------------------
THIS AGREEMENT made the 12th day of November, 1999.
A M O N G :
STORIMIN RESOURCES LIMITED,
----------------------------
a corporation governed by the laws of Ontario
("Storimin")
- and -
THE PERSONS LISTED ON SCHEDULE A HERETO,
---------------------------------------------
(each of such Persons a "Vendor" and collectively the "Vendors")
- and -
WEB DREAM INC.,
----------------
a corporation incorporated under the laws of Ontario
("Web Dream")
WITNESSETH THAT:
WHEREAS the Vendors own of record and beneficially all of the Purchased Shares
(as hereinafter defined);
AND WHEREAS the Vendors have agreed to sell to Storimin, and Storimin has agreed
to purchase from the Vendors, the Purchased Shares pursuant to the terms hereof;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the mutual
covenants and agreements contained herein and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto covenant and agree with each other as follows:
ARTICLE 1
---------
DEFINED TERMS AND INTERPRETATION
--------------------------------
1.1 DEFINITIONS. In this Agreement, unless there is something in the
------------
subject matter or context inconsistent therewith, the following words and terms
shall have the following meanings, respectively:
(a) "AGREEMENT" means this Agreement and any instrument supplemental or
ancillary hereto; and the expressions "Article", "section",
"subsection", "paragraph" and "subparagraph" followed by a number
means and refers to the specified Article, section, subsection,
paragraph, or subparagraph of this Agreement.
(b) "ASSETS" means all the undertaking, property and assets of Web Dream
whether owned, licensed or leased, of every kind and description
wheresoever situated.
(c) "BALANCE SHEET DATE" means Xxxxx 00, 0000
(x) "BUSINESS" means the business carried on by Web Dream as described in
the Proxy Circular.
(e) "BUSINESS DAY" means a day other than a Saturday, Sunday or any day
other than Saturday or Sunday on which the principal commercial banks
located at Toronto, Ontario are not open for business during normal
banking hours.
(f) "CLOSING" means the completion of the sale to and purchase by Storimin
of the Purchased Shares contemplated herein.
(g) "CLOSING DATE" means the later of December 15, 1999, or such other
date as may be mutually acceptable to Web Dream and Storimin.
(h) "CONSENTS" means consents, approvals, authorizations, orders,
registrations and filings.
(i) "CONTRACTUAL OR OTHER RIGHT OR OBLIGATION" means any form of
agreement, contract, instrument, license, permit, registration,
judgment, order, decree, indenture, lease, engagement, commitment and
franchise.
(j) "EFFECTIVE DATE" means the date first above written.
(k) "ENCUMBRANCE" means any form of agreement, option, understanding,
commitment, equity, covenant, mortgage, charge, security interest,
lien, adverse claim, pledge, restriction, encumbrance or right or
privilege affecting or capable of affecting the title or right of
ownership or ability to transfer or convey any property or asset.
(l) "EXTRAORDINARY BUSINESS COMBINATION" means, with respect to any
corporation, the acquisition or disposition of all or any substantial
amount of its issued share capital, or any amalgamation, merger, sale
of all or any substantial part of its assets, takeover bid,
reorganization, recapitalization, liquidation, winding-up of, or other
business combination or similar transaction, involving such
corporation.
(m) "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means at any time,
accounting principles, practices and procedures generally accepted in
Canada, applied on a basis consistent with those applied in previous
years, as authorized by the Canadian Institute of Chartered
Accountants.
-2-
(n) "INTERIM PERIOD" means the period between the close of business on the
Effective Date and the Time of Closing on the Closing Date.
(o) "ITA" means the Income Tax Act (Canada).
(p) "PARTIES" means, collectively, the parties to this Agreement and
"Party" means any one of them.
(q) "PERSON" means an individual, corporation, partnership, unincorporated
syndicate, unincorporated organization, trust, trustee, executor,
administrator, or other legal representative, government or
governmental agency, department or instrumentality, or any group or
combination thereof.
(r) "PROXY CIRCULAR" means the Management Information Circular of Storimin
dated November 12, 1999.
(s) "PURCHASE PRICE" has the meaning ascribed thereto in Section 2.2.
(t) "PURCHASED SHARES" means the issued and outstanding shares of Web
Dream as shown opposite the names of the Vendors on Schedule A hereto.
(u) "SHARES" means the post-consolidated common shares in the capital of
Storimin.
(v) "STORIMIN" means Storimin Resources Limited, a corporation governed by
the laws of Ontario.
(w) "STORIMIN FINANCIAL STATEMENTS" has the meaning given in Section 4.10.
(x) "STORIMIN SOLICITORS" means Xxxxxxxxxx Xxxxxxxx Xxxxxx X'Xxxxx XXX,
Xxxxxxx, Xxxxxxx.
(y) "TAXES" means any and all income, profits, use, occupancy, transfer,
franchise, withholding, payroll, employment, corporate, capital,
stamp, business, realty, sales, fuel, excise or other taxes, duties,
fees, surtaxes, assessments, levies, imposts or charges payable to or
exigible by any governmental agency, authority or instrumentality,
domestic or foreign.
(z) "TIME OF CLOSING" means 11:00 a.m. (Toronto time) on the Closing Date
or such other time as may be mutually acceptable to the Parties.
-3-
(aa) "VENDORS" means, collectively, the Persons listed on Schedule A hereto
and any other persons who may subscribe for shares of Web Dream
between November 12, 1999 and the Closing Date (the "Additional
Vendors"). It will be a condition of issuance of additional shares of
Web Dream that such Additional Vendors agree to enter into and be
bound by the terms and conditions of this Agreement.
(bb) "WEB DREAM" means Web Dream Inc., a corporation incorporated under the
laws of Ontario.
(cc) "WEB DREAM FINANCIAL STATEMENTS" has the meaning given in Section
3A.7.
(dd) "WEB DREAM SOLICITORS" means Xxxxxx & Associates, Toronto, Ontario.
1.2 EXTENDED MEANINGS. In this Agreement, words importing number
-------------------
include the singular and the plural and words importing gender include the
feminine, masculine and neuter genders.
1.3 HEADINGS, ETC. The division of this Agreement into Articles,
---------------
Section, Subsections and other subdivisions and the insertion of headings are
for convenience of reference only and shall not affect or be utilized in the
construction or interpretation hereof.
1.4 CURRENCY. All references in this Agreement to dollars, unless
---------
otherwise specifically indicated, are expressed in Canadian currency.
1.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
------------------
between the parties hereto pertaining to the subject matter hereto and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions whether oral or written, of the parties, and there
are no warranties representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein. No supplement, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the party to be bound thereby.
ARTICLE 2
---------
PURCHASE AND SALE OF PURCHASED SHARES
-------------------------------------
2.1 PURCHASED SHARES. Subject to the terms and conditions hereof, the
------------------
Vendors jointly and severally covenant and agree to sell, assign and transfer to
Storimin the Purchased Shares free and clear of all Encumbrances and Storimin
covenants and agrees to purchase from the Vendors the Purchased Shares.
2.2 PURCHASE PRICE. The Purchase Price payable by Storimin to the
----------------
Vendors for the Purchased Shares shall be $0.25 in respect of each Web Dream
Share up to a maximum of $7,000,000.
-4-
2.3 PAYMENT OF PURCHASE PRICE. The Purchase Price payable by Storimin
---------------------------
to the Vendors for the Purchased Shares shall be paid and satisfied at Closing
by Storimin issuing two (2) Shares for every one (1) Purchased Share up to a
maximum of 28,000,000 Shares for the Purchased Shares outstanding on the Closing
Date.
2.4 SHAREHOLDER APPROVAL.
----------------------
(1) The transactions provided for herein are subject to the prior
approval of the shareholders of Storimin. Storimin agrees to forthwith call a
special meeting of shareholders to seek to obtain such approval. The Vendors
agree to, and to cause Web Dream to, provide such information with respect to
the Vendors and Web Dream as Storimin may reasonably require for insertion into
the Proxy Circular to be sent to the shareholders of Storimin in connection with
such meeting.
(2) At the special shareholders' meeting, Storimin will also seek
shareholder approval to change the name of Storimin to "Digital Xxxxxxx.xxx
Inc." and to consolidate every twelve (12) existing common shares into one (1)
new Share. Storimin shall also seek shareholder approval to any other matters as
may be reasonably requested by the Vendors. The transactions provided for herein
are subject to the completion of the consolidation of the existing common shares
prior to the Closing Date in form satisfactory to Web Dream Solicitors.
2.5 CONFIDENTIALITY. Notwithstanding any other provision of this
----------------
Agreement, in the event of the termination of this Agreement, Web Dream shall
keep confidential any information obtained with respect to the property and
operations of Storimin and Storimin shall keep confidential any information
obtained relating to the Business and the Vendors (unless, in each case, the
information is readily ascertainable from public or published information or
until the same becomes so ascertainable) and shall return to the other party all
copies of any schedules, statements or other written information obtained in
connection herewith.
2.6 TAX ELECTION. Storimin agrees to execute such election with
--------------
respect to the sale of the Purchased Shares pursuant to section 85 of the Income
Tax Act (Canada), in prescribed time as any of the Vendors may request prior to
Closing. Where any Vendor requests Storimin to execute such election such
Vendor shall be solely responsible for the preparation and filing of such
election and Storimin shall execute such election specifying such agreed amount
in respect of the Purchased Shares acquired from such Vendor as the Vendor shall
specify provided such agreed amount is on its face within the limitations set
out in subsection 85(1) of the Income Tax Act (Canada). Where any Vendor
delivers an election in prescribed form to Storimin for execution pursuant to
this section 2.6, Storimin shall execute such election form and deliver the same
to such Vendor at the address specified by such Vendor within seven business
days of receipt of such election form.
-5-
ARTICLE 3A
----------
REPRESENTATIONS AND WARRANTIES OF WEB DREAM AND THE VENDORS
-----------------------------------------------------------
REPRESENTATION AND WARRANTIES OF WEB DREAM AND THE VENDORS. Web Dream
-----------------------------------------------------------
and each of the Vendors jointly and severally represent and warrant to Storimin
as follows and acknowledge that Storimin is relying upon such representations
and warranties in connection with the entering into of this Agreement and the
consummation of the transactions contemplated hereby:
3A.1 DUE INCORPORATION AND SUBSISTENCE OF WEB DREAM. Web Dream is a
--------------------------------------------------
corporation duly incorporated, organized and validly subsisting and in good
standing under the laws of the Province of Ontario. Web Dream has all necessary
corporate power and authority to own or lease its property and assets and to
carry on its business as now being conducted by it and is duly qualified,
licensed or registered to carry on the business as now being conducted and is in
good standing in all jurisdictions in which the nature of the business conducted
by it or the property owned or leased by it makes such qualification, licensing
or registration necessary.
3A.2 AUTHORIZED CAPITAL OF WEB DREAM. The authorized capital of Web
-----------------------------------
Dream consists of an unlimited number of Web Dream Shares and an unlimited
number of Class A preference shares, an unlimited number of Class B preference
shares and an unlimited number of Class C preference shares of which 13,706,436
Web Dream Shares have been validly issued and are outstanding as fully paid and
non-assessable as of the date hereof, and no Person has any agreement or option
or any right or privilege (whether by law, pre-emptive or contractual) capable
of becoming an agreement or option, including convertible securities, warrants
or convertible obligations of any nature for the purchase, subscription,
allotment or issuance of any of the unissued shares or securities convertible
into unissued shares in the capital of Web Dream except as set forth in the
Proxy Circular.
3A.3. VALIDITY OF AGREEMENT. The entry into, execution and delivery of
----------------------
this Agreement and all other agreements and documents required to be delivered
by each of the Vendors hereunder, the performance by each of the Vendors of
their respective obligations hereunder and the consummation of the transactions
contemplated hereby do not or will not conflict with or constitute a breach of
or a default under or create any Encumbrance under (or would not with the
passage of time or the giving of notice, or both, conflict with or constitute a
breach of or a default under or create any Encumbrance under) any of the terms
or provisions of the constating documents, by-laws or resolutions of Web Dream,
of any contractual or Other Right or Obligation to which Web Dream is a party or
by which Web Dream or any of the Assets is bound or of any laws or regulations
applicable to Web Dream or any of the Assets.
3A.4 CHANGE SINCE DATE OF WEB DREAM FINANCIAL STATEMENTS. Except as
-------------------------------------------------------
otherwise contemplated or permitted by this Agreement, since the date of the Web
Dream Financial Statements:
-6-
(a) there has not been any material adverse change in the financial
condition, business, business organization or personnel of Web Dream;
(b) there has not been any acquisition or retirement by Web Dream of any
of its capital stock or any dividend or other distribution declared,
paid or made on or with respect to its capital stock;
(c) there has not been any sale, mortgage, pledge or other disposition of
any Asset;
(d) Web Dream has not merged or consolidated with any other corporation;
(e) Web Dream has not altered or amended its corporate charter or other
instrument governing its corporate existence or powers, or by-laws;
and
(f) Web Dream has not entered into, materially amended or terminated any
material contract, agreement, franchise, permit or license.
3A.5 TITLE TO PURCHASED SHARES. Each of the Vendors is the registered
--------------------------
and beneficial owner of that number of Web Dream Shares (comprising part of the
Purchased Shares) registered in such Vendor's name on the books of Web Dream and
has good and marketable title thereto, free and clear of any and all
Encumbrances of any kind whatsoever. No Person, other than Storimin, has any
interest, direct or indirect, beneficial or otherwise, in such Purchased Shares.
3A.6 LITIGATION. Web Dream has complied in all significant respects
----------
with all applicable laws and orders, and all other requirements and rules of
governmental authorities. Web Dream is not presently subject to any court or
administrative order, judgment, or decree. No suit, action, investigation,
governmental proceeding, administrative proceeding or other litigation of any
kind or nature to which Web Dream may be a party or by which any of the Assets
may be affected is now pending, threatened or, to the knowledge of any of the
Vendors, contemplated, other than as disclosed in the Proxy Circular.
3A.7 FINANCIAL STATEMENTS. Web Dream has furnished Storimin with the
---------------------
annual audited financial statements of Web Dream for the years ended August 31,
1999 and 1998, copies of which are attached as Schedule B hereto. Web Dream's
Financial Statements have been prepared in accordance with Generally Accepted
Accounting Principles, are true, complete and correct in all material respects
and present fairly:
(a) the assets and liabilities (whether accrued, absolute, contingent or
otherwise) of and all claims against Web Dream as at the date of the
statements; and
(b) the financial position and condition of Web Dream as at the date of
the statements.
The financial position of Web Dream is now and will at the Time of Closing be at
least as good as that shown by or reflected in Web Dream's Financial Statements.
-7-
3A.8 BOOKS AND RECORDS. All accounts, books, ledgers and other
--------------------
financial and accounting records of Web Dream have been fully, properly and
accurately kept and completed and are up-to-date and there are no material
inaccuracies or discrepancies of any kind contained or reflected therein. Web
Dream does not have any of its records, systems, controls, data or information
recorded, stored, maintained, operated or otherwise wholly or partly dependent
upon or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) which (including all means of access
thereto and therefrom) are not under the exclusive ownership and direct control
of Web Dream. The books and records of Web Dream fairly and correctly set out
and disclose in all material respects, in accordance with Generally Accepted
Accounting Principles and all applicable laws and regulations, the financial
position of Web Dream as at the date hereof and all material financial
transactions relating to the business of Web Dream have been accurately recorded
in such books and records.
3A.9 ASSETS.
-------
(a) Web Dream has good and marketable title to:
(i) all of its Assets (real and personal, tangible and intangible,
including leasehold interests), including, without limitation,
all the properties and assets reflected in the balance sheet
forming part of Web Dream's Financial Statements, and
(ii) all the Assets purchased by it since the Balance Sheet Date,
in each case subject to no Encumbrance of any kind or character.
(b) The Assets are adequate and sufficient for the conduct of the Business
substantially in the manner presently carried on and include all proprietary
rights, trade secrets and other property and assets, real and personal,
applicable to or used in connection with the Business.
3A.10 REAL PROPERTY. Web Dream is not the owner of, or under any
---------------
agreement or option to own, any real property or any interest therein.
3A.11 CONTRACTS. All of the material contracts, agreements,
----------
engagements or commitments to which Web Dream is a party or by which it is bound
are described in the Proxy Circular.
3A.12 NO BREACH OF CONTRACTS. Each contract or agreement to which Web
-------------------------
Dream is a party is in full force and effect and unamended, Web Dream is
entitled to all rights and benefits thereunder (including the right to receive
royalties and other payments thereunder) and there exists no default or event of
default or event, occurrence, condition or act (including the purchase of the
Purchased Shares hereunder) which, with the giving of notice, the lapse of time
or the happening of any other event or condition, would become a default or
event of default thereunder and the terms and conditions of such contracts and
agreements will not be affected by the completion of the transactions
contemplated hereunder. Web Dream has not violated or breached, in any material
respect, any of the terms or conditions of any contract or agreement and, to the
best of the knowledge of each of the Vendors, all the covenants to be performed
by any other party thereto have been fully performed.
-8-
3A.13 RESTRICTIVE DOCUMENTS. Web Dream is not subject to, or a party
-----------------------
to, any charter or by-law restriction, Encumbrance, Contractual or Other Right
or Obligation, law, rule, ordinance, regulation, or any other restriction of any
kind or character which would prevent the consummation of the transactions
contemplated by this Agreement or the continued operation of the Business after
the date hereof or the Closing Date on substantially the same basis as
heretofore operated.
3A.14 TAXES. For all periods prior to the date of this Agreement,
------
(a) all federal, provincial and foreign tax returns and tax reports
required to be filed by Web Dream have been timely filed with the
appropriate governmental agencies in all jurisdictions in which such
returns and reports are required to be filed, and all of the foregoing
are true, correct and complete;
(b) all Taxes (including interest and penalties) due from Web Dream have
been fully paid or, adequate provisions made therefor; and
(c) to the best knowledge of each of the Vendors, no claim or liability is
pending or has been assessed or asserted or threatened against Web
Dream in connection with any such Taxes, and each of the Vendors knows
of no basis for any such claim or liability.
3A.15 SUBSIDIARIES. Web Dream has no subsidiaries, nor are there any
-------------
agreements of any nature to acquire any subsidiary or to acquire or lease any
other business operations.
3A.16 CORPORATE RECORDS. The minute books and corporate records of Web
-------------------
Dream from its date of incorporation to the date hereof are the original minute
books and corporate records of Web Dream, are true, correct and complete in all
respects, and contain all minutes and resolutions of all proceedings of the
shareholders and the board of directors (including all committees thereof) of
Web Dream or certified copies thereof from the date of incorporation to the date
hereof which are true and correct in form and substance and, to the best of the
knowledge of each of the Vendors, there have been no other meetings, resolutions
or proceedings of the shareholders or of the board of directors (including any
committees thereof) of Web Dream from its date of incorporation to the date
hereof, not reflected in such minute books and the corporate records. All such
meetings were duly called and held. The share certificate books, register of
shareholders, register of transfers and register of directors of Web Dream are
true, correct and complete.
3A.17 POWERS OF ATTORNEY. There are no Persons holding a general or
---------------------
special power of attorney from Web Dream.
3A.18 LIABILITIES. Web Dream has no material liabilities except:
------------
-9-
(a) liabilities fully reflected or reserved against in Web Dream's
Financial Statements; and
(b) liabilities contemplated by this Agreement and costs associated with
the transactions contemplated hereby.
Except and to the extent reflected in Web Dream's Financial Statements, Web
Dream is not now directly or indirectly liable upon or in respect to, or
obligated in any other way to provide funds in respect of any contingent
liabilities, including without limitation obligations to guarantee or assume any
debt, dividend or other material liability or obligation of any Person (by
discount, repurchase agreement or otherwise) except for endorsements made in the
ordinary and regular course of business in connection with the deposit of items
for collection.
3A.19 INSOLVENCY. Web Dream is not insolvent, nor has it committed an
-----------
act of bankruptcy, proposed a compromise or arrangement to its creditors
generally, taken any proceeding with respect to a compromise or arrangement,
taken any proceeding to have itself declared bankrupt or wound-up, taken any
proceeding to have a receiver appointed over any part of its assets, had any
encumbrancer or receiver take possession of any of its property, had an
execution or distress become enforceable or levied upon any of its property or
had any petition for a receiving order in bankruptcy filed against it.
3A.20 PROXY CIRCULAR. All information pertaining to Web Dream
----------------
contained in the Proxy Circular is true, complete and correct in all material
respects (as defined in the Securities Act (Ontario)), constitutes full, true
and plain disclosure of all material facts, does not contain a misrepresentation
and does not omit therefrom any material fact which is required to be stated or
which is necessary to make the statements contained therein not false or
misleading in the light of the circumstances in which they are made, and each of
the Vendors will promptly advise Web Dream of any such information in the Proxy
Circular which deviates from the foregoing until the Closing.
ARTICLE 3B
----------
REPRESENTATIONS AND WARRANTIES OF OTHER VENDORS
-----------------------------------------------
REPRESENTATIONS AND WARRANTIES. Each of the Vendors severally
---------------------------------
represents and warrants to Storimin, with respect to such Vendor and not the
other Vendors as follows and acknowledges that Storimin is relying upon such
representations and warranties in connection with the entering into of this
Agreement and the consummation of the transactions contemplated hereby:
3B.1 CAPACITY OF THE VENDORS.
---------------------------
(a) If the Vendor is a corporation, it is duly incorporated and validly
subsisting and in good standing under the laws of the jurisdiction of its
incorporation.
-10-
(b) If the Vendor is an individual, the Vendor has attained the age of
majority and has the legal capacity and competence to execute this Agreement and
to take all actions required pursuant hereto.
(c) If the Vendor is a corporation, the Vendor has the legal capacity
and competence to execute this Agreement and to take all actions required
pursuant hereto and all necessary approvals by directors and shareholders of the
Vendor, or otherwise, have been given to authorize it to execute and deliver
this Agreement and to take all actions required pursuant hereto.
3B.2 VALIDITY OF AGREEMENT.
------------------------
(a) If the Vendor is a corporation, the entry into, execution and
delivery of this Agreement and all other agreements and documents required to be
delivered by it hereunder, the performance by it of its obligations hereunder
and the consummation of the transactions contemplated hereby do not or will not
conflict with or constitute a breach of or a default under or create any
Encumbrance under (or would not with the passage of time or the giving of
notice, or both, conflict with or constitute a breach of or a default under or
create any Encumbrance under) any of the terms or provisions of its constating
documents, by-laws or resolutions or of any Contractual or Other Right or
Obligation to which it is a party or by which it is bound or of any laws or
regulations applicable to it.
(b) Each of this Agreement and all other agreements and documents
required to be delivered by it hereunder constitutes, or on delivery will
constitute, a legal, valid and binding obligation of it enforceable against it
in accordance with its terms subject however to limitations with respect to
enforcement imposed by law in connection with bankruptcy, insolvency and
creditors' rights generally and to general principles of equity, including the
availability of equitable remedies such as specific performance and injunctive
relief which are in the discretion of the court from which they are sought.
3B.3 LITIGATION AFFECTING THE PURCHASED SHARES. There are no suits,
---------------------------------------------
actions or other legal proceedings of any sort or claims or demands pending or
threatened which would refrain or otherwise prevent it, in any manner, from
effectively and legally transferring the Purchased Shares owned by it to
Storimin free and clear of any and all Encumbrances nor are there any suits,
actions or other legal proceedings pending or threatened, the effect of which
would be to cause an Encumbrance to attach to such Purchased Shares, to divest
title to such Purchased Shares or make any of the Parties liable for damages and
it has no knowledge of any claims which should give rise to such a suit, action
or legal proceeding.
3B.4 NO OPTIONS, ETC. Except for Storimin under this Agreement, no
------------------
Person has any agreement or option, or any right or privilege (whether by law,
pre-emptive or contractual) capable of becoming an agreement or option for the
purchase from it of any of the Purchased Shares owned by it.
-11-
3B.5 CONSENTS. There are no Consents or filings that should be
---------
obtained or made in order to complete the transactions contemplated by this
Agreement.
3B.6 RESTRICTIVE DOCUMENTS. It is not subject to, or a party to, any
-----------------------
charter or by-law restriction, Encumbrance, Contractual or Other Right or
Obligation, law, rule, ordinance, regulation, or any other restriction of any
kind or character which would prevent the consummation of the transactions
contemplated by this Agreement or compliance by it with the terms, conditions
and provisions hereof.
ARTICLE 4
---------
REPRESENTATIONS AND WARRANTIES OF STORIMIN
------------------------------------------
REPRESENTATIONS AND WARRANTIES OF STORIMIN. Storimin represents and
---------------------------------------------
warrants to Web Dream and to the Vendors as follows and acknowledges that the
Vendors are relying upon such representations and warranties in connection with
the entering into of this Agreement and the consummation of the transactions
contemplated hereby.
4.1 DUE INCORPORATION AND SUBSISTENCE OF STORIMIN. Storimin is a
---------------------------------------------------
corporation duly incorporated and validly subsisting and in good standing under
the laws of the Province of Ontario. Storimin has all necessary corporate power
and authority to own or lease its property and assets and to carry on its
business as now being conducted by it.
4.2 VALIDITY OF AGREEMENT.
------------------------
(a) Storimin has all necessary right, power and authority to enter
into, execute and deliver this Agreement and to perform its obligations
hereunder.
(b) The entry into, execution and delivery of this Agreement and all
other agreements and documents required to be delivered by Storimin hereunder,
the performance by Storimin of its obligations hereunder and the consummation of
the transactions contemplated hereby: (i) have been and will be duly authorized
by all necessary action, corporate or otherwise, on the part of Storimin and
(ii) do not or will not conflict with or constitute a breach of or a default
under or create any Encumbrance under (or would not with the passage of time or
the giving of notice, or both, conflict with or constitute a breach of or a
default under or create any Encumbrance under) any of the terms or provisions of
the constating documents, by-laws or resolutions of Storimin or of any
Contractual or Other Right or Obligation to which Storimin is a party or by
which Storimin is bound or of any laws or regulations applicable to Storimin.
(c) Each of this Agreement and all other agreements and documents
required to be delivered by Storimin hereunder constitute, or on delivery will
constitute, a legal, valid and binding obligation of Storimin enforceable
against it in accordance with its terms.
-12-
4.3 REPORTING ISSUER. Storimin is a reporting issuer, as such term is
-----------------
defined under the provision of the Securities Act (Ontario) and the Securities
Act (Alberta) and has been a reporting issuer for not less than two years prior
to the date hereof. Storimin is not listed on the list of defaulting reporting
issuers maintained by the Ontario and Alberta Securities Commissions.
4.4 SHARES. The Shares to be issued to the Vendors hereunder will be
-------
validly issued and outstanding as fully paid and non-assessable shares of
Storimin upon issuance and delivery to the Vendors.
4.5 AUTHORIZED AND ISSUED CAPITAL. On the Closing Date, the authorized
------------------------------
capital of Storimin will consist of an unlimited number of common shares of
which 24,851,191 common shares will be issued and outstanding as fully paid and
non-assessable, excluding any common shares issuable upon the exercise of
outstanding stock options as contemplated by Section 4.9.
4.6 CONSENTS. Other than the approval of the shareholders of Storimin,
---------
there are no Consents or filings that should be obtained or made in order to
complete the transactions contemplated by this Agreement (including without
limitation any Consents of or filings with any securities commission or stock
exchange).
4.7 RESTRICTIVE DOCUMENTS. Storimin is not subject to, or a party to,
-----------------------
any charter or by-law restriction, Encumbrance, Contractual or Other Right or
Obligation, law, rule, ordinance, regulation, or any other restriction of any
kind or character which would prevent the consummation of the transactions
contemplated by this Agreement or compliance by Storimin with the terms,
conditions and provisions hereof.
4.8 SUBSIDIARIES. Except for Pizay Investments Inc. and 1032142
-------------
Ontario Inc., Storimin does not have any subsidiaries.
4.9 STORIMIN'S OPTIONS. Other than options to purchase common shares
--------------------
of Storimin pursuant to Storimin's stock option plan which options shall be
cancelled if not exercised prior to the Time of Closing, no Person has or at the
Time of Closing will have any agreement or option or any right or privilege
(whether by law, pre-emptive or contractual) capable of becoming an agreement or
option, including convertible securities, warrants or convertible obligations of
any nature for the purchase, subscription, allotment or issuance of any of the
unissued shares or securities convertible into unissued shares in the capital of
Storimin, other than the rights of the Vendors hereunder and the rights of the
holders of the remaining securities of Web Dream to exchange such securities for
securities of Storimin.
4.10 FINANCIAL STATEMENTS. Storimin has furnished Web Dream with the
----------------------
annual audited consolidated financial statements of Storimin for the years ended
March 31, 1999 and 1998, and the interim unaudited consolidated financial
statements of Storimin for the interim periods ended June 30, 1999 and September
30, 1999 (collectively, the "Storimin Financial Statements"), copies of which
are attached as Schedule C. Storimin's Financial Statements have been prepared
in accordance with Generally Accepted Accounting Principles applied on a basis
consistent with those of previous years, are true, complete and correct in all
material respects and present fairly:
-13-
(a) the assets and liabilities (whether accrued, absolute, contingent or
otherwise) of and all claims against Storimin as at the respective
dates of the statements; and
(b) the financial position and condition of Storimin as at the respective
dates of the statements.
The financial position of Storimin is now and will at the Time of Closing be at
least as good as that shown by or reflected in Storimin's Financial Statements,
except for expenses incurred in the normal course of business.
4.11 LIABILITIES. Storimin has no material liabilities or obligations
------------
except:
(a) liabilities fully reflected or reserved against in Storimin's
Financial Statements, including a contingent liability of
approximately $90,000 alleged to be owing by Storimin and Pizay
Investments Inc. to ProAm Explorations Corporation; and
(b) liabilities contemplated by this Agreement and costs associated with
the transactions contemplated hereby.
Except and to the extent reflected in Storimin's Financial Statements, Storimin
is not now directly or indirectly liable upon or in respect to, or obligated in
any other way to provide funds in respect of any contingent liabilities,
including without limitation obligations to guarantee or assume any debt,
dividend or other material liability or obligation of any Person (by discount,
repurchase agreement or otherwise) except for endorsements made in the ordinary
and regular course of business in connection with the deposit of items for
collection.
4.12 TAXES. For all periods prior to the date of this Agreement,
------
(a) all federal, provincial and foreign tax returns and tax reports
required to be filed by Storimin have been timely filed with the
appropriate governmental agencies in all jurisdictions in which such
returns and reports are required to be filed, and all of the foregoing
are true, correct and complete;
(b) all Taxes (including interest and penalties) due from Storimin have
been fully paid or, adequate provisions made therefor; and
(c) to the best knowledge of Storimin, no claim or liability is pending or
has been assessed or asserted or threatened against Storimin in
connection with any such Taxes, and Storimin knows of no basis for any
such claim or liability.
-14-
4.13 LITIGATION, COMPLIANCE WITH LAWS.
------------------------------------
(a) Storimin has complied in all significant respects with all
applicable laws and orders, and all other requirements and rules of governmental
authorities. Storimin is not presently subject to any court or administrative
order, judgment, or decree. No suit, action, investigation, governmental
proceeding, administrative proceeding or other litigation of any kind or nature
to which Storimin may be a party is now pending, threatened or, to the knowledge
of Storimin, contemplated, except as otherwise disclosed in the Proxy Circular
and this Agreement.
(b) As contemplated in the Storimin Financial Statements and section 4.11,
an action has been commenced against Storimin and Pizay Investments Inc. in the
British Columbia Superior Court by ProAm Explorations Corporation. The parties
are currently in settlement negotiations and an offer has been made to settle
the action, the particulars of which have been previously disclosed to Web
Dream.
4.14 SUBSEQUENT EVENTS. Except as otherwise disclosed, contemplated or
------------------
permitted by this Agreement, since the Balance Sheet Date:
(a) there has not been any material adverse change in the financial
condition, business, business organization or personnel of Storimin;
(b) there has not been any acquisition or retirement by Storimin of any of
its capital stock or any dividend or other distribution declared, paid
or made on or with respect to its capital stock;
(c) there has not been any sale, mortgage, pledge or other disposition of
any asset owned by Storimin;
(d) Storimin has not merged or consolidated with any other corporation;
(e) Storimin has not altered or amended its corporate charter or other
instrument governing its corporate existence or powers, or by-laws
(other than as described in the Proxy Circular); and
(f) Storimin has not entered into, materially amended or terminated any
material contract, agreement, franchise, permit or license.
4.15 BOOKS AND RECORDS. All accounts, books, ledgers and other
--------------------
financial and accounting records of Storimin have been fully, properly and
accurately kept and completed and are up-to-date and there are no material
inaccuracies or discrepancies of any kind contained or reflected therein.
Storimin does not have any of its records, systems controls, data or information
recorded, stored, maintained, operated or otherwise wholly or partly dependent
upon or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) which (including all means of access
thereto and therefrom) are not under the exclusive ownership and direct control
of Storimin. The books and records of Storimin fairly and correctly set out and
disclose in all material respects, in accordance with Generally Accepted
Accounting Principles and all applicable laws and regulations, the financial
position of Storimin as at the date hereof and all material financial
transactions relating to the business of Storimin have been accurately recorded
in such books and records.
-15-
4.16 ASSETS. Except as disclosed in the Storimin Financial Statements,
-------
Storimin has no material assets.
4.17 LEASED PREMISES. Storimin is not a party to any lease, agreement
-----------------
to lease or agreement in the nature of a lease, whether as lessor or lessee,
respecting real property.
4.18 LEASES OF PERSONAL PROPERTY. Storimin is not a party to any
-------------------------------
lease, sublease, conditional sales contract, franchise, license or other
agreement respecting personal property.
4.19 CONTRACTS. Storimin is not a party to or bound by any material
----------
contracts, agreements, engagements or commitments.
4.20 POWERS OF ATTORNEY. There are no Persons holding a general or
---------------------
special power of attorney from Storimin.
4.21 INSOLVENCY. Storimin is not insolvent, nor has it committed an
-----------
act of bankruptcy, proposed a compromise or arrangement to its creditors
generally, taken any proceeding with respect to a compromise or arrangement,
taken any proceeding to have itself declared bankrupt or wound-up, taken any
proceeding to have a receiver appointed over any part of its assets, had any
encumbrancer or receiver take possession of any of its property, had an
execution or distress become enforceable or levied upon any of its property or
had any petition for a receiving order in bankruptcy filed against it.
4.22 PROXY DISCLOSURE. All information pertaining to Storimin
------------------
contained in the Proxy Circular is true, complete and correct in all material
respects (as defined in the Securities Act (Ontario) and Securities Act
(Alberta)), constitutes full, true and plain disclosure of all material facts,
does not contain a misrepresentation and does not omit therefrom any material
fact which is required to be stated or which is necessary to make the statements
contained therein not false or misleading in the light of the circumstances in
which they are made, and Storimin will promptly advise the Vendors of any such
information in the Proxy Circular which deviates from the foregoing until the
Closing.
ARTICLE 5
----------
CONDITIONS PRECEDENT
--------------------
5.1 STORIMIN'S CONDITIONS PRECEDENT. The obligation of Storimin to
----------------------------------
complete the purchase of the Purchased Shares hereunder shall be subject to the
satisfaction of, or compliance with, at or before the Time of Closing, each of
the following conditions precedent each of which is separate, is provided for
the exclusive benefit of Storimin and may be waived by Storimin in accordance
with Section 5.4:
-16-
(a) all corporate, legal and regulatory proceedings, approvals and
consents as are reasonably considered necessary by Storimin's
solicitors shall have been taken or obtained to permit the
consummation of the transactions contemplated herein;
(b) Web Dream shall not have any material assets other than those relating
to the Business and shall not have any material liabilities (whether
or not absolute, contingent or otherwise) other than those liabilities
incurred in the ordinary course of operation of the Business from and
after the Web Dream Financial Statements;
(c) all of the representations and warranties of the Vendors contained
herein or in any certificate or other document delivered or given
pursuant to this Agreement shall be true and correct and with the same
effect as if made and as of the Time of Closing (except as such
representations and warranties may be affected by the occurrence of
events or transactions expressly contemplated and permitted hereby or
described in the Proxy Circular) and Storimin shall have received a
certificate from each of the Vendors confirming, to the best of each
of the Vendors knowledge, information and belief, the truth and
correctness in all material respects of such representations and
warranties (except as such representations and warranties may be
affected by the occurrence of events or transactions expressly
contemplated and permitted hereby), provided that the receipt thereof
and the closing of the transactions contemplated herein shall not
constitute a waiver of the representations and warranties of the
Vendors which are contained in this Agreement;
(d) the Vendors shall have fulfilled and/or complied with all terms,
conditions, covenants and agreements herein contained to be performed
or caused to be performed by each of them, including, without limiting
the generality of the foregoing, the covenants contained in Article 6
to the extent the same are to be performed at or prior to the Time of
Closing and each of the Vendors shall have delivered a certificate
executed by a senior officer to that effect, provided that the receipt
thereof and the closing of the transactions contemplated herein shall
not constitute a waiver of the covenants and agreements of the Vendors
which are contained in this Agreement;
(e) all documentation relating to the due authorization (including,
without limitation, the due authorization by the directors and
shareholders of the Vendors) and completion of the sale and purchase
hereunder of the Purchased Shares and all actions and proceedings
taken on or prior to the Time of Closing in connection with the
performance by the Vendors of their obligations under this Agreement
shall be satisfactory to Storimin and its counsel, both acting
reasonably, and Storimin shall have received copies of all such
documentation or other evidence as it may reasonably request in order
to establish the consummation of the transactions contemplated hereby
and the taking of all corporate proceedings in connection therewith in
compliance with these conditions, in form (as to certification and
otherwise) and substance satisfactory to Storimin, acting reasonably,
and its counsel;
-17-
(f) there shall have been no material adverse change in the business,
affairs and conditions of Web Dream, whether financial or otherwise;
(g) all Consents, licences, permits and certificates of any Persons
(including securities regulatory bodies having jurisdiction) and all
filings and notifications to any Persons required in connection with
the completion of the transactions contemplated by this Agreement, the
execution and delivery of this Agreement, the Closing or the
performance of any of the terms and conditions hereof shall have been
obtained on or before the Time of Closing;
(h) Storimin shall have completed its investigation into the books,
records and affairs of Web Dream and such investigation shall not have
disclosed any matter which Storimin, acting reasonably, considers to
be material to its decision to acquire the Purchased Shares;
(i) the approval of the proposed acquisition involving the acquisition of
all the Web Dream Shares (the "Proposed Acquisition"), the
consolidation of the common shares of the Storimin and the change of
name by the shareholders of the Storimin;
(j) no adverse material change in the business, affairs, financial
condition or operations of either Storimin or Web Dream shall occur
between the date of the latest available financial statements for each
of Storimin and Web Dream and the date of closing;
(k) no act, action, suit or proceeding shall have been threatened or taken
before or by any domestic or foreign court or tribunal or governmental
agency or other regulatory authority or administrative agency or
commission by any elected or appointed public official or private
person (including, without limitation, any individual, corporation,
firm, group or other entity) in Canada or elsewhere, whether or not
having the force of law;
(l) Web Dream will not have issued or acquired or committed itself to
acquire any share in its capital;
-18-
(m) Storimin shall have determined in its sole judgment that, since the
announcement by Storimin of the proposed acquisition of the Web Dream
Shares, Web Dream has not taken or proposed to take any action, or
publicly disclosed that it intends to take any action, and Storimin
shall not have otherwise learned of any previous action taken by Web
Dream which had not been publicly disclosed prior to the announcement
by Storimin of its intention to make the Proposed Acquisition, which,
in the sole judgment of Storimin, might make it inadvisable for
Storimin to proceed with the Proposed Acquisition, or that would be
materially adverse to the business of Web Dream or to Storimin;
including, without limiting the generality of the foregoing, any
action with respect to any agreement, proposal, offer or understanding
relating to any material sale, disposition or other dealing with any
of the assets or contracts of Web Dream, any issue of shares, options
or other securities of Web Dream to any person other than a
wholly-owned subsidiary of Web Dream, any material acquisition from a
third party of assets or securities by Web Dream, or any amalgamation,
statutory arrangement, capital reorganization, merger, business
combination or similar transaction involving Web Dream, or any
material capital expenditure not in the ordinary course of business;
(n) Storimin shall have determined in its sole judgment that: (i) no
material right, franchise or licence of Web Dream has been or may be
impaired (which impairment has not been cured or waived) or otherwise
adversely affected, whether as a result of the Proposed Acquisition or
otherwise which might make it inadvisable for Storimin to proceed with
the Proposed Acquisition, and (ii) no covenant, term or condition of
any instruments or agreements of Web Dream exists which might make it
inadvisable for the Storimin to proceed with the Proposed Acquisition
(including without limitation, any default, acceleration or other
adverse event that may ensue as a result of the Proposed Acquisition);
(o) all of the outstanding Web Dream Shares shall have been properly
tendered to Storimin;
(p) Storimin shall have completed to its satisfaction its due diligence
investigation of Web Dream, including satisfactory investigation of
the $2,000,000 action commenced against Web Dream as disclosed in the
Proxy Circular, and the Vendors shall have completed to their
satisfaction their due diligence investigation of Storimin;
(q) transitional arrangements between Storimin and its directors, officers
and employees shall have been resolved to the satisfaction of both
Storimin and Web Dream, each acting reasonably;
(r) there shall not have occurred, developed or come into effect or
existence any event, action, state, condition or major financial
occurrence of national or international consequence or any law,
regulation, action, government regulation, enquiry or other occurrence
of any nature whatsoever which, in the sole judgment of Storimin,
materially adversely affects or involves, or may materially adversely
affect or involve, the financial markets in Canada or elsewhere
generally, or the financial condition, business, operations, assets,
affairs or prospects of Web Dream to Storimin; and
-19-
(s) the Vendors shall have executed and delivered such conveyances,
assurances, assignments, transfers and other instruments of conveyance
necessary or reasonably required effectively to transfer the Purchased
Shares to Storimin with a good marketable title free and clear of all
Encumbrances of any kind whatsoever.
5.2 VENDORS' CONDITIONS PRECEDENT. The obligations of the Vendors to
--------------------------------
complete the sale of the Purchased Shares hereunder shall be subject to the
satisfaction of, or compliance with, at or before the Time of Closing, each of
the following conditions precedent each of which is separate, is provided for
the exclusive benefit of the Vendors and may be waived by the Vendors in
accordance with Section 5.5:
(a) all corporate, legal and regulatory proceedings, approvals and
consents as are reasonably considered necessary by the Vendors'
solicitors shall have been taken or obtained to permit the
consummation of the transactions contemplated herein;
(b) all of the representations and warranties of Storimin contained herein
or in any certificate or other document delivered or given pursuant to
this Agreement shall be true and correct and with the same effect as
if made and as of the Time of Closing (except as such representations
and warranties may be affected by the occurrence of events or
transactions expressly contemplated and permitted hereby or described
in the Proxy Circular) and the Vendors shall have received a
certificate from an officer of Storimin confirming, to the best of his
knowledge, information and belief, the truth and correctness in all
material respects of such representations and warranties (except as
such representations and warranties may be affected by the occurrence
of events or transactions expressly contemplated and permitted
hereby), provided that the receipt thereof and the closing of the
transactions contemplated herein shall not constitute a waiver of the
representations and warranties of Storimin which are contained in this
Agreement;
(c) Storimin shall have fulfilled and/or complied with all terms,
conditions, covenants and agreements herein contained to be performed
or caused to be performed by it, including, without limiting the
generality of the foregoing, its covenants contained in Article 7 to
the extent the same are to be performed at or prior to the Time of
Closing and Storimin shall have delivered a certificate executed by a
senior officer to that effect, provided that the receipt thereof and
the closing of the transactions contemplated herein shall not
constitute a waiver of the covenants and agreements of Storimin which
are contained in this Agreement;
-20-
(d) all documentation relating to the due authorization (including,
without limitation, the due authorization by the directors and
shareholders of Storimin) and completion of the sale and purchase
hereunder of the Purchased Shares and all actions and proceedings
taken on or prior to the Time of Closing in connection with the
performance by Storimin of its obligations under this Agreement shall
be satisfactory to the Vendors and their counsel, acting reasonably,
and the Vendors shall have received copies of all such documentation
or other evidence as they may reasonably request in order to establish
the consummation of the transaction contemplated hereby and the taking
of all corporate proceedings in connection therewith in compliance
with these conditions, in form (as to certification and otherwise) and
substance satisfactory to the Vendors, acting reasonably, and their
counsel;
(e) there shall have been no material adverse change in the business,
affairs and conditions of Storimin, whether financial or otherwise;
(f) all Consents, licences, permits and certificates of any Persons
(including securities regulatory bodies having jurisdiction) and all
filings and notifications to any Persons required in connection with
the completion of the transactions contemplated by this Agreement, the
execution and delivery of this Agreement, the Closing or the
performance of any of the terms and conditions hereof shall have been
obtained on or before the Time of Closing;
(g) other than disclosed in the Storimin Financial Statements, Storimin
shall not have any material assets and shall not have any material
liabilities (whether or not absolute contingent or otherwise) other
than those liabilities incurred in the ordinary course of operation of
its business from and after the Storimin Financial Statements; and
(h) the Vendors shall have completed their investigation into the books,
records and affairs of Storimin and such investigation shall not have
disclosed any matter which the Vendors, acting reasonably, consider to
be material to their decision to sell the Purchased Shares.
5.3 CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES. The obligations of
-----------------------------------------------
all parties to complete the transactions contemplated herein shall be subject to
the satisfaction of, or compliance with, at or before the Time of Closing, each
of the following, each of which is a true condition precedent and may not be
waived:
(a) the Ontario and Alberta Securities Commissions shall not have objected
to any of the transactions contemplated hereby;
(b) the shareholders of Storimin shall have approved the transactions
contemplated hereby;
(c) no action or proceeding, at law or in equity, and no investigation
shall be pending or threatened by any Person to restrain, restrict or
prohibit or materially adversely affect the consummation of any of the
transactions contemplated hereby, or the right of Storimin or Web
Dream to carry on the Business in the same manner as it has been
carried on in the past; and
-21-
(d) all of the matters to be considered by the shareholders of Storimin
set out in the Proxy Circular shall have been approved by such
shareholders.
5.4 NON-FULFILMENT OF STORIMIN'S CONDITIONS. In case any of the
-------------------------------------------
conditions set forth in Section 5.1 shall not be satisfied or complied with at
or before the Time of Closing, Storimin may:
(a) refuse to complete the transactions contemplated herein by notice to
the Vendors, and in such event Storimin shall be released from all its
obligations hereunder, it being expressly understood and agreed that
Storimin may thereafter pursue any rights or remedies which it may
have at law or in equity arising from the breach or default of any of
the Vendors, including any claim for breach of representation,
warranty or covenant hereunder (provided that any claims for losses
shall be limited to the claimant's direct out-of-pocket costs and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby), or
(b) complete the transactions contemplated herein, it being expressly
understood and agreed that Storimin may rely, notwithstanding such
completion, upon any representations, warranties or covenants and
conditions contained in this Agreement;
provided that any of such conditions may be waived in whole or in part, any such
waiver to be binding on Storimin only if the same is in writing. No waiver by
Storimin of a condition, in whole or in part, shall operate as a waiver of any
other condition or part of a condition.
5.5 NON-FULFILMENT OF VENDORS' CONDITIONS. In case any of the
-----------------------------------------
conditions set forth in Section 5.2 shall not be satisfied or complied with at
or before the Time of Closing, the Vendors may:
(a) refuse to complete the transactions contemplated herein by notice to
Storimin, and in such event the Vendors shall be released from all
their obligations hereunder, it being expressly understood and agreed
that the Vendors may thereafter pursue any rights or remedies which
they may have at law or in equity arising from the breach or default
of Storimin, including any claim for breach of representation,
warranty or covenant hereunder (provided that any claims for losses
shall be limited to the claimant's direct out-of-pocket costs and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby), or
(b) complete the transactions contemplated herein, it being expressly
understood and agreed that the Vendors may rely, notwithstanding such
completion, upon any representations, warranties or covenants and
conditions contained in this Agreement;
-22-
provided that any of such conditions may be waived in whole or in part, any such
waiver to be binding on the Vendors only if the same is in writing. No waiver by
the Vendors of a condition, in whole or in part, shall operate as a waiver of
any other condition or part of a condition.
ARTICLE 6
----------
OTHER COVENANTS OF THE VENDORS
------------------------------
6.1 INTERIM PERIOD. During the Interim Period, the Vendors shall,
----------------
except as otherwise herein contemplated, cause Web Dream:
(a) to conduct the Business in, and only in, the ordinary and normal
course thereof in substantially the same manner as heretofore
conducted and to preserve intact the Assets, the Business, the present
business organization and the clients and customers connected
therewith and keep available the services of its present officers and
employees and others having business dealings with it to the end that
its goodwill and business shall be maintained;
(b) not to, without the prior written consent of Storimin, enter into any
transaction, undertake any action or refrain from taking any action
which, if had been effected or had occurred before the date of this
Agreement, would constitute a breach of the representations,
warranties, or agreements of the Vendors contained herein (provided
that Web Dream shall be entitled to enter into agreements and
arrangements and otherwise carry out Web Dream's business plan and
marketing strategy);
(c) to comply with all laws affecting the operation of the Business;
(d) not to create, assume or incur any debt or liability (contingent or
otherwise) outside of the ordinary course of the Business;
(e) not knowingly take or cause to be taken any steps, directly or
indirectly which may in any way adversely affect the completion of the
transactions contemplated herein;
(f) not to cancel or waive any material claim or right;
(g) not to sell, lease or otherwise dispose of any of the Assets, other
than in the ordinary course of business;
(h) to pay, satisfy and discharge its obligations and liabilities in the
ordinary course of business;
-23-
(i) not to declare, pay or authorize any dividends or make or authorize
any distributions or repayments of capital in respect of its
outstanding shares;
(j) not to amend its constating documents or by-laws;
(k) to disclose or cause to be disclosed to Storimin in writing, forthwith
upon occurrence, any material change or change in a material fact or
new material fact (within the meaning of the securities legislation of
Ontario and Alberta and/or applicable national policies of securities
administrators in relation to the condition, affairs or operations of
Web Dream);
(l) not to solicit, initiate or encourage or cause to be solicited,
initiated or encouraged submissions of proposals or offers from any
other Person, relating to, or facilitate or encourage or cause to be
facilitated or encouraged any effort or attempt with respect to any
Extraordinary Business Combination involving Web Dream and any other
party (other than Storimin). Each of the Vendors will not participate
in any negotiations regarding, or (except as required by law) furnish
to any other Person, any information with respect to, or otherwise
co-operate in any way with, or assist or participate in any
Extraordinary Business Combination. If any of the Vendors receives any
such enquiry or proposal, it will promptly notify Storimin in writing
of all relevant details relating thereto;
(m) not to agree, whether or not in writing, to do any of the foregoing;
and
(n) not to issue any additional securities without the prior consent of
Storimin.
6.2 DISCLOSURE BY WEB DREAM AND THE VENDORS. Web Dream and the Vendors
----------------------------------------
agree to make or cause to be made full disclose to Storimin of the financial
position and condition, business, operations, assets and liabilities of Web
Dream and the Business and of such other matters or information as may be
material or relevant to the transactions contemplated herein. Web Dream and the
Vendors agree to cause Web Dream to permit Storimin and its employees, agents,
counsel and accountants or other representatives, between the date hereof and
the Time of Closing, to have free and unrestricted access during normal business
hours to the books, accounts, records and other data and documents of Web Dream
(including, without limitation, all corporate, accounting and tax records of Web
Dream) and to the Assets and premises of Web Dream and to have access to and
consultation with Web Dream's advisors, and to furnish to Storimin such
financial and operating data and other information with respect to the Business,
the Assets and Web Dream as Storimin shall from time to time reasonably request
to enable confirmation of the matters warranted in Article 3A hereof and to
enable Storimin to familiarize itself with Web Dream, the Business and the
Assets. No investigations made by or on behalf of Storimin at any time shall
have the effect of waiving, diminishing the scope of or otherwise affecting any
representation or warranty made by the Vendors herein or pursuant hereto.
-24-
6.3 WEB DREAM AND THE VENDORS TO USE BEST EFFORTS. Web Dream and the
-----------------------------------------------
Vendors hereby agree to take all such actions as are within their power to
control and to use their respective best efforts to cause other actions to be
taken which are not within their power to control, so as to ensure compliance
with any conditions set forth in Article 5 hereof which are for the benefit of
Storimin.
6.4 EXTRAORDINARY BUSINESS COMBINATIONS. The Vendors hereby covenant
--------------------------------------
and agree to instruct their and Web Dream's advisors and representatives not to
take or refrain from taking and (subject to their fiduciary duties) Web Dream's
directors and senior officers not to take or to refrain from taking, any action
which, if taken or not taken by Web Dream would contravene subsection 6.1(1).
ARTICLE 7
---------
OTHER COVENANTS OF STORIMIN
---------------------------
7.1 INTERIM PERIOD. During the Interim Period, Storimin shall, except
----------------
as otherwise herein contemplated:
(a) not, without the prior written consent of the Vendors, enter into any
transaction, undertake any action or refrain from taking any action
which, if had been effected or had occurred before the date of this
Agreement, would constitute a breach of the representations,
warranties, or agreements of Storimin contained herein;
(b) comply with all laws affecting the operation of its business;
(c) not create, assume or incur any debt or liability (contingent or
otherwise);
(d) not knowingly take or cause to be taken any steps, directly or
indirectly which may in any way adversely affect the completion of the
transactions contemplated herein;
(e) not cancel or waive any material claim or right;
(f) pay, satisfy and discharge its obligations and liabilities in the
ordinary course of business;
(g) not declare, pay or authorize any dividends or make or authorize any
distributions or repayments of capital in respect of its outstanding
shares;
(h) not amend its constating documents or by-laws other than in the manner
described in the Proxy Circular;
(i) not issue, authorize or propose the issuance of, or purchase or
propose the purchase of, any of its shares or securities;
-25-
(j) not incur or authorize any expenditure of any nature;
(k) disclose or cause to be disclosed to the Vendors in writing, forthwith
upon occurrence, any material change or change in a material fact or
new material fact (within the meaning of the securities legislation of
Ontario and/or applicable national policies of securities
administrators) in relation to the condition, affairs or operations of
Storimin;
(l) not solicit, initiate or encourage or cause to be solicited, initiated
or encouraged submissions of proposals or offers from any other
Person, relating to, or facilitate or encourage or cause to be
facilitated or encouraged any effort or attempt with respect to any
Extraordinary Business Combination involving Storimin and any other
party (other than the Vendors and other security holders of the Web
Dream). Storimin will not participate in any negotiations regarding,
or (except as required by law) furnish to any other Person, any
information with respect to, or otherwise co-operate in any way with,
or assist or participate in any Extraordinary Business Combination. If
Storimin receives any such enquiry or proposal, it will promptly
notify the Vendors in writing of all relevant details relating
thereto; and
(m) not agree, whether or not in writing, to do any of the foregoing.
7.2 STORIMIN TO USE BEST EFFORTS.
---------------------------------
(a) Storimin hereby agrees to take all such actions as are within its
power to control and to use its best efforts to cause other actions to be taken
which are not within its power to control, so as to ensure compliance with any
conditions set forth in Article 5 hereof which are for the benefit of the
Vendors.
(b) After Closing, Storimin hereby agrees to use its reasonable best
efforts to obtain a quotation for the Shares on the Canadian Dealing Network
Inc. or a listing for the Shares on the Montreal Exchange.
7.3 DISCLOSURE BY STORIMIN. Storimin agrees to make or cause to be
-------------------------
made full disclosure to Web Dream and the Vendors of the financial position and
condition, business, operations, assets and liabilities of Storimin and of such
other matters or information as may be material to the transactions contemplated
herein. Storimin agrees to permit Web Dream and its employees, agents, counsel
and accountants or other representatives, between the date hereof and the Time
of Closing, to have free and unrestricted access during normal business hours to
the books, accounts, records and other data and documents of Storimin
(including, without limitation, all corporate, accounting and tax records of
Storimin) and the assets of Storimin and to furnish to Web Dream such financial
and operating data and other information with respect to Storimin and its assets
as Web Dream shall from time to time reasonably request and to enable Web Dream
to familiarize itself with Storimin and its assets. No investigations made by
or no behalf of the Vendors or Web Dream at any time shall have the effect of
waiving, diminishing the scope of or otherwise affecting any representation or
warranty made by Storimin herein or pursuant hereto.
-26-
7.4 FILINGS AND AUTHORIZATIONS. Storimin, as promptly and as
-----------------------------
practicable after the execution thereof, (i) will make, or cause to be made, all
such filings and submissions under laws, rules and regulations applicable to it,
as may be required for it to consummate the purchase and sale of the Purchased
Shares in accordance with the terms of this Agreement; (ii) will use all
reasonable efforts to obtain, or cause to be obtained, all authorizations,
approvals, consents and waivers from all Persons and governmental authorities
necessary or advisable to be obtained by it in order to consummate such
transfer; and (iii) will use all reasonable efforts to take, or cause to be
taken, all other actions necessary, proper or advisable in order for it to
fulfil its obligations hereunder. Storimin will co-ordinate and co-operate with
the Vendors and Web Dream in exchanging such information and supplying such
reasonable assistance as may be reasonably requested by the Vendors and Web
Dream in connection with the foregoing.
ARTICLE 8
---------
SURVIVAL OF REPRESENTATIONS
---------------------------
AND WARRANTIES; INDEMNIFICATION
-------------------------------
8.1 SURVIVAL. All covenants, representations and warranties made
---------
herein or in any agreement, certificate or other document delivered or given
pursuant to this Agreement (other than those which are expressly waived in
writing as part of the Closing herein) shall survive the execution and delivery
of this Agreement and the completion of the transactions contemplated by this
Agreement and, notwithstanding such completion or any investigation made by or
on behalf of the Party to whom or in whose favour such covenants,
representations and warranties were made, shall continue in full force and
effect for the respective benefit of Storimin and the Vendors, as the case may
be, for a period of two years following the Closing Date, after which period the
respective Parties shall be released from their respective obligations and
liabilities hereunder, except in respect of claims made in writing prior to
expiry of such period, provided that:
(a) all covenants, representations and warranties relating to Taxes, tax
liability or other tax matters for any period ending prior to or on
the Closing Date shall survive the Closing for any period during which
any taxing authority may make any claim or assessment based on any
return filed or failed to be filed plus a period of six months, after
which period Storimin and the Vendors shall be released from their
respective obligations and liabilities hereunder, except in respect of
claims made in writing prior to the expiry of such period;
(b) any claim based on or with respect to the inaccuracy or
non-performance or non-fulfilment or breach of any representation,
warranty or covenant of a Party respecting Taxes, tax liability or
other tax matters set out herein may be brought by Storimin or the
Vendors, as the case may be, at any time, if such claim is based upon
any failure or omission to file a return or any misrepresentation made
or fraud committed in filing a return or in supplying information
under any legislation pursuant to which a Tax is imposed;
-27-
(c) any claim based upon any misrepresentation, or breach or inaccuracy in
any of the representations and warranties of a Party set out herein
may be brought against such Party at any time if such Party knew of
such misrepresentation, breach or inaccuracy at the time such
representation or warranty was made by such Party; and
(d) any claim based upon a defect in title of or the inability of
theVendors to sell all or any of the Purchased Shares may be brought
by Storimin at any time.
8.2 INDEMNIFICATION BY WEB DREAM AND THE VENDORS. Web Dream and each
-----------------------------------------------
of the Vendors jointly and severally agree to indemnify and save Storimin and
its shareholders, directors, officers, employees, agents and representatives
(and Storimin shall be deemed to be a trustee and agent with respect thereto)
harmless of and from any liability, obligation, cost, expenses, damage or loss
whatsoever arising out of, under, or pursuant to:
(a) any incorrectness in, or breach of, or default under, any
representation or warranty or covenant of such Vendor given to
Storimin hereunder or in any certificate or other document delivered
by such Vendor pursuant hereto, subject, to the extent applicable, to
the limitations set forth in Section 8.1 with respect thereto;
(b) any assessment for Taxes, interest and/or penalties of or relating to
Web Dream, subject, to the extent applicable, to the limitations set
forth in Section 8.1 with respect thereto;
(c) all claims, demands, suits, causes of action, proceedings, judgments,
costs and expenses or other liabilities of any kind whatsoever in
respect of the foregoing, including reasonable legal fees and
disbursements in connection with the foregoing; and
(d) the nonfulfillment of any condition contained herein for which it is
solely responsible (excluding therefrom the conditions precedent
contained in Section 5.3 except to the extent such condition(s) are
not met by reason of its default).
8.3 INDEMNIFICATION BY STORIMIN. Storimin agrees to indemnify and save
----------------------------
the Vendors, their respective shareholders, directors, officers, employees,
agents and representatives (and the Vendors shall be deemed to be a trustee and
agent with respect thereto) harmless of and from any liability, obligation,
cost, expense, damage or loss whatsoever arising out of, under, or pursuant to:
(a) any incorrectness in, or breach of, or default under, any
representation, warranty or covenant of Storimin given to the Vendors
hereunder or in any certificate or other document delivered by
Storimin pursuant hereto, subject to the limitations set forth in
Section 8.1 with respect thereto;
-28-
(b) any assessment for Taxes, interest and/or penalties of or relating to
Storimin, subject, to the extent applicable, to the limitations set
forth in Section 8.1 with respect thereto;
(c) all claims, demands, suits, causes of action, proceedings, judgments,
costs and expenses or other liabilities of any kind whatsoever in
respect of the foregoing, including reasonable legal fees and
disbursements in connection with the foregoing; and
(d) the nonfulfillment of any condition contained herein for which it is
solely responsible (excluding therefrom the conditions precedent
contained in Section 5.3 except to the extent such condition(s) are
not met by reason of its default).
8.4 INDEMNIFICATION PROCEEDINGS.
-----------------------------
(a) Any Party seeking indemnification under this Article Eight (the
"indemnified party") shall forthwith notify the Party against whom a claim for
indemnification is sought hereunder (the "indemnifying party") in writing, which
notice shall specify, in reasonable detail, the nature and estimated amount of
the claim. If a claim by a third party is made against an indemnified party,
and if the indemnified party intends to seek indemnity with respect thereto
under this Article Eight, the indemnified party shall promptly (and in any case
within 30 days of such claim being made) notify the indemnifying party of such
with reasonable particulars. The indemnifying party shall have 30 days after
receipt of such notice to undertake, conduct and control, through counsel of its
own choosing and at its expense, the settlement or defense thereof, and the
indemnified party shall co-operate with it in connection therewith; provided,
however, that with respect to settlements entered into by the indemnifying party
(i) the consent of the indemnified party shall be required if the settlement
provides for equitable relief against the indemnified party, which consent shall
not be unreasonably withheld or delayed; and (ii) the indemnifying party shall
obtain the release of the indemnified party. If the indemnifying party
undertakes, conducts and controls the settlement or defense of such claim (i)
the indemnifying party shall permit the indemnified party to participate in such
settlement or defense through counsel chosen by the indemnified party, and (ii)
the indemnifying party shall promptly reimburse the indemnified party for the
full amount of any loss resulting from any claim and all related expenses (other
than the fees and expenses of counsel as aforesaid) incurred by the indemnified
party. The indemnified party shall not pay or settle any claim so long as the
indemnifying party is reasonably contesting any such claim in good faith on a
timely basis. Notwithstanding the two immediately preceding sentences, the
indemnified party shall have the right to pay or settle any such claim, provided
that in such event it shall waive any right to indemnity therefor by the
indemnifying party.
(b) With respect to third party claims, if the indemnifying party does
not notify the indemnified party within 30 days after the receipt of the
indemnified party's notice of a claim of indemnity hereunder that it elects to
undertake the defense thereof, the indemnified party shall have the right, but
not the obligation, to contest, settle or compromise the claim in the exercise
of its reasonable judgment at the expense of the indemnifying party.
-29-
(c) In the event of any claim by a third party against an indemnified
party, the defense of which is being undertaken and controlled by the
indemnifying party, the indemnified party will use all reasonable efforts to
make available to the indemnifying party those employees whose assistance,
testimony or presence is necessary to assist the indemnifying party in
evaluating and in defending any such claims; provided that the indemnifying
party shall be responsible for the expense associated with any employees made
available by the indemnified party to the indemnifying party hereunder, which
expense shall be equal to an amount to be mutually agreed upon per person per
hour or per day for each day or portion thereof that such employees are
assisting the indemnifying party and which expenses shall not exceed the actual
cost to the indemnified party associated with such employees.
(d) With respect to third party claims, the indemnified party shall
make available to the indemnifying party or its representatives on a timely
basis all documents, records and other materials in the possession of the
indemnified party, at the expense of the indemnifying party, reasonably required
by the indemnifying party for its use in defending any claim and shall otherwise
co-operate on a timely basis with the indemnifying party in the defence of such
claim.
8.5 LIMITATION OF LOSSES. No claim for indemnity under this Article 8
---------------------
may be made for loss of profits or consequential losses or damages, it being the
intention of the Parties to limit such claims to direct liabilities,
obligations, costs, expenses, damages or losses suffered as a result of any
breach, default or non-fulfilment contemplated by Sections 8.2 and 8.3.
ARTICLE IX
-----------
CLOSING ARRANGEMENTS AND TERMINATION.
-------------------------------------
9.1 CLOSING. The Closing of the purchase and sale of the Purchased
--------
Shares shall take place at the Time of Closing on the Closing Date at the
Offices of Storimin, Suite 1800, 0 Xxxx Xxxxxx Xxxx, Xxxxxxx, or at such other
place and/or time as the Parties may mutually agree upon.
9.2 CLOSING DELIVERY. At the Time of Closing, the Vendors shall
------------------
deliver to Storimin:
(a) certificates representing the Purchased Shares duly endorsed in blank
for transfer;
(b) the certificates referred to in Subsection 5.1(c) together with the
documentation referred to in Subsection 5.1(e); and
(c) all other assurances, transfers, assignments, consents, legal opinions
and other documents as Storimin's solicitors consider reasonably
necessary or desirable to validly and effectively complete the
transactions contemplated hereby, and upon the fulfilment of the
foregoing provisions of this Section 9.2, Storimin shall deliver to
the Vendors:
-30-
(d) the certificate referred to in Subsection 5.2(b) together with the
documentation referred to in Subsection 5.2(d);
(e) certificates representing the Shares registered in the respective
names of the Vendors in the amounts necessary to satisfy the Purchase
Price; and
(f) all other assurances, transfers, assignments, consents, legal opinions
and other documents as the Vendors's solicitors consider reasonably
necessary or desirable to validly and effectively complete the
transactions contemplated hereby.
9.3 CONDITIONS PRECEDENT. Without limiting the generality of the
----------------------
provisions of this Agreement, all conditions precedent to Storimin's obligations
and the conditions precedent to the Vendors' obligations provided for in Article
5 of this Agreement, must be satisfied on or before the Time of Closing.
ARTICLE 10
-----------
MISCELLANEOUS
-------------
10.1 PUBLICITY. Except as is required by law or by any stock exchange,
----------
none of the Parties shall issue any press release or make any other public
statement or announcement relating to or connected with or arising out of this
Agreement or the matters contained herein without obtaining the prior written
approval of the other parties, which approval shall not be unreasonably
withheld.
10.2 KNOWLEDGE OF PARTIES. Where any representation or warranty
-----------------------
contained in this Agreement is expressly qualified by reference to the knowledge
of a Party, it shall be deemed to refer to the knowledge of such Party and such
Party shall confirm that it has made due and diligent inquiry of such Persons
(including without limitation appropriate officers of such Party) as it
considers necessary as to the matters that are the subject of such
representations and warranties.
10.3 FURTHER ASSURANCES. To the extent reasonably practicable in the
--------------------
circumstances or permitted by law each of the Parties upon the request of the
other shall do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged or delivered all such further acts, deeds, documents, assignments,
transfers, conveyances, and assurances as may be reasonably necessary or
desirable to effect complete consummation of the transactions contemplated by
this Agreement. Without limiting the generality of the foregoing, each of the
Vendors covenants and agrees to execute and deliver such documents, make such
filings and do all such things as are required by, and to comply with the
provisions of the Securities Act (Ontario) and the Securities Act (Alberta) and
any other applicable securities legislation and any orders, policies, rules or
regulations of the Ontario and Alberta Securities Commissions or other relevant
regulatory authorities concerning the issuance by Storimin and the acquisition,
holding and resale by the Vendors of the Shares.
-31-
10.4 TIME. Time shall be of the essence hereof.
-----
10.5 SUCCESSORS IN INTEREST. This Agreement and the provisions hereof
------------------------
shall enure to the benefit of and be binding upon the Parties and their
respective successors and permitted assigns.
10.6 NOTICES. Any notice, document or other communication required or
--------
permitted by this Agreement to be given by a party hereto shall be in writing
and is sufficiently given if delivered personally, or if sent by prepaid
ordinary mail posted in Canada to such party at the last known address provided
to Web Dream. Notice so mailed shall be deemed to have been given on the third
business day after deposit in a post office or public letterbox. Neither party
shall mail any notice, request or other communication hereunder during any
period in which Canadian postal workers are on strike or if such strike is
imminent and may reasonably be anticipated to affect the normal delivery of
mail. Any Party may from time to time notify the others in the manner provided
herein of any change of address which thereafter, until changed by like notice,
shall be the address of such party for all purposes hereof.
10.7 EXPENSES. Each of Storimin, Web Dream and the Vendors will pay
---------
for their respective costs and expenses (including without limitation, the fees
and disbursements of legal counsel, investment advisers and auditors) incurred
pursuant to this Agreement.
10.8 ASSIGNMENT. This Agreement may not be assigned by the Vendors
-----------
without the prior written consent of Storimin which consent will not be
unreasonably withheld. This Agreement may not be assigned by Storimin without
the prior written consent of the Vendors.
10.9 EXECUTION IN COUNTERPARTS. This Agreement may be executed by the
---------------------------
parties hereto in separate counterparts or duplicates each of which when so
executed and delivered shall be an original, but all such counterparts or
duplicates shall together constitute one and the same instrument.
10.10 AMENDMENTS. No supplement, modification, waiver or termination of
-----------
this Agreement shall be binding unless executed in writing by the Party to be
bound thereby.
10.11 WAIVER. No delay or failure of any party in exercising any right
-------
or remedy hereunder and no partial exercise of any such right or remedy shall be
deemed to constitute a waiver of such right or remedy or any other rights or
remedies of such party hereunder. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
(whether or not similar) nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided. Any consent by a party to or any waiver by
a Party of any breach of any provision of this Agreement shall not constitute a
consent to or waiver of any subsequent, further or other breach of the
provisions of this Agreement.
-32-
10.12 GOVERNING LAW. This Agreement shall be construed in accordance
---------------
with the laws of the Province of Ontario and in respect thereof, all parties
hereto hereby irrevocably attorn to the jurisdiction of the courts of the
Province of Ontario.
10.14 THIRD PARTY BENEFICIARIES. Each Party intends that this Agreement
--------------------------
or any agreement entered into pursuant to this Agreement shall not benefit or
create any right or cause of action in or on behalf of any Person, other than
the Parties, and no Person, other than the Parties, shall be entitled to rely on
the provisions hereof or any agreement entered into pursuant hereto in any
action, proceeding, hearing, or other forum.
10.15 INVALIDITY OF PROVISIONS. The invalidity or unenforceability of
--------------------------
any provision of this Agreement shall not affect the validity or enforceability
of any other provision hereof and any such invalid or unenforceable provisions
shall be timed to be severable.
10.16 COUNTERPARTS. This Agreement may be signed counterparts and
-------------
each such counterpart shall constitute an original document and such
counterparts taken together, shall constitute one and the same instrument.
10.17 FACSIMILE TRANSMISSION. The parties hereto agree that the
------------------------
Agreement and all closing documents may be executed and delivered by facsimile
transmission which shall be binding upon the parties and that original executed
copies of the Agreement and all closing documents shall be circulated for
signature forthwith after Closing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
STORIMIN RESOURCES LIMITED
Per: ________________________________
WEB DREAM INC.
Per: ________________________________
SIGNED, SEALED AND DELIVERED )
in the presence of ) /s/ XXX XXX XXXX
) ------------------------------
) XXX XXX XXXX
)
) /s/ XXXXXXX KORCULANIC
) ------------------------------
) XXXXXXX KORCULANIC
)
-33-
) /s/ XXXXXX XXXXXXXX
) ------------------------------
) XXXXXX XXXXXXXX
)
) /s/ XXXXXXXX XXX XXXX
) ------------------------------
) XXXXXXXX XXX XXXX
)
) /s/ XXXX XXXXXXX
) ------------------------------
) XXXX XXXXXXX
)
) /s/ XXXX XXXXXXXXXX
) ------------------------------
) XXXX XXXXXXXXXX
)
) /s/ XXXXXX XXXXXX
) ------------------------------
) XXXXXX XXXXXX
)
) /s/ XXXXX SAA
) ------------------------------
) XXXXX SAA
)
) /s/ XXXXX XXXXXXX
) ------------------------------
) XXXXX XXXXXXX
)
) /s/ XXXXXXX XXXXX
) ------------------------------
) XXXXXXX XXXXX
)
) /s/ XXX XXXXX
) ------------------------------
) XXX XXXXX
)
) /s/ XXXXXX XXXXX
) ------------------------------
) XXXXXX XXXXX
)
) /s/ XXXXXXXXXX XXXXXXXXX
) ------------------------------
) XXXXXXXXXX XXXXXXXXX
)
) /s/ XXX XXXX
) ------------------------------
) XXX XXXX
)
) /s/ XXXX XXXXXXX
) ------------------------------
) XXXX XXXXXXX
)
) /s/ XXXXX XXXXXX
) ------------------------------
) XXXXX XXXXXX
)
-34-
) /s/ XXXXXX XXXXXX
) ------------------------------
) XXXXXX XXXXXX
)
) /s/ XXXXXX FTOMOVICH
) ------------------------------
) XXXXXX FTOMOVICH
)
) /s/ XXXXX XXXXXXXX
) ------------------------------
) XXXXX XXXXXXXX
)
) /s/ XXXXX XXXXXX
) ------------------------------
) XXXXX XXXXXX
)
) /s/ XXXXXX XXXXXXX
) ------------------------------
) XXXXXX XXXXXXX
)
) /s/ XXXXX XXXXXXX
) ------------------------------
) XXXXX XXXXXXX
)
) /s/ KONAN XXXX
) ------------------------------
) KONAN XXXX
)
) /s/ XXXXXX XXXXXX
) ------------------------------
) XXXXXX XXXXXX
)
) /s/ XXXXX XXXXX
) ------------------------------
) XXXXX XXXXX
)
) /s/ XXXX XXXXXX
) ------------------------------
) XXXX XXXXXX
)
) /s/ XXXXXXX XXXXXXX
) ------------------------------
) XXXXXXX XXXXXXX
)
) /s/ XXXXXXXX XXXXXX
) ------------------------------
) XXXXXXXX XXXXXX
)
) /s/ XXXXX XXXXXX
) ------------------------------
) XXXXX XXXXXX
)
) /s/ XXXXX XXXXXX
) ------------------------------
) XXXXX XXXXXX
)
-35-
) /s/ XXXXX MALYNYK
) ------------------------------
) XXXXX MALYNYK
)
) /s/ XXXX XXXXXX
) ------------------------------
) XXXX XXXXXX
)
) /s/ XXXX XXXXXXX
) ------------------------------
) XXXX XXXXXXX
)
) /s/ XXXXXXX XXXXXXX
) ------------------------------
) XXXXXXX XXXXXXX
)
) /s/ XXXXXXX XXXXX
) ------------------------------
) XXXXXXX XXXXX
)
) /s/ XXXXX XXXXX
) ------------------------------
) XXXXX XXXXX
)
) /s/ JAN HARPES
) ------------------------------
) JAN HARPES
)
) /s/ XXXXX XXXXXX
) ------------------------------
) XXXXX XXXXXX
)
) /s/ XXXXX XXXXXXX
) ------------------------------
) XXXXX XXXXXXX
)
) /s/ XXXXXX XXXXXX
) ------------------------------
) XXXXXX XXXXXX
)
) /s/ XXXXX XXXX
) ------------------------------
) XXXXX XXXX
)
) /s/ XXXXXX XXXXXX
) ------------------------------
) XXXXXX XXXXXX
)
) /s/ XXXXXXX XXXXXXX
) ------------------------------
) XXXXXXX XXXXXXX
)
) /s/ XXXXX XXXXXX
) ------------------------------
) XXXXX XXXXXX
)
-36-
) /s/ XXXX XXXXX
) ------------------------------
) XXXX XXXXX
)
) /s/ XXXXXX XXXX
) ------------------------------
) XXXXXX XXXX
)
) /s/ XXXX RAPPITT
) ------------------------------
) XXXX RAPPITT
)
) /s/ XXXX WYCRAFT
) ------------------------------
) XXXX WYCRAFT
)
) /s/ XXXXXXXX XXXXXXXXX
) ------------------------------
) XXXXXXXX XXXXXXXXX
)
) /s/ XXXXXX XXXXXXXX
) ------------------------------
) XXXXXX XXXXXXXX
)
) /s/ XXXXX X. XXXXXXX
) ------------------------------
) XXXXX X. XXXXXXX
)
) /s/ XXXX XXXXXX
) ------------------------------
) XXXX XXXXXX
)
) /s/ XXXXX XXXXXX
) ------------------------------
) XXXXX XXXXXX
)
) /s/ XXXX FORTH
) ------------------------------
) XXXX FORTH
)
) /s/ XXXXXXX XXXXXXXX
) ------------------------------
) XXXXXXX XXXXXXXX
)
) /s/ XXXXXX XXXXXXXXX
) ------------------------------
) XXXXXX XXXXXXXXX
)
) /s/ XXXXX XXXXX-XXXXX
) ------------------------------
) XXXXX XXXXX-XXXXX
)
-37-
)
) ------------------------------
) XXXX XXXXX
THE PHONE CARD COMPANY INC.
PER: ----------------------------
TORY, XXXX & CO. INC.
/s/
PER: ----------------------------
SHIBUMI INC.
/s/
PER: ----------------------------
GALAXY MEDIA LTD.
/s/
PER: ----------------------------
STRATEGIC INVESTORS GROUP
/s/
PER: ----------------------------
BENDIX
/s/
PER: ----------------------------
PEANNAMI INVESTMENTS INC.
/s/
PER: ----------------------------
XXXXXX'X LADIES WEAR (ORILLIA)
LIMITED
/s/
PER: ----------------------------
1047275 ONTARIO INC.
/s/
PER: ----------------------------
1329365 ONTARIO INC.
/s/
PER: ----------------------------
-38-
SCHEDULE A
NAME OF SHAREHOLDER NUMBER OF SHARES
Xxx xxx Xxxx 4,800,000
Xxxxxxx Korculanic 4,000,000
Tory, Xxxx & Co. Inc. 800,000
Xxxxxx Xxxxxxxx 473,750
Xxxxxxxx xxx Xxxx 197,396
Xxxx Xxxxxxx 98,698
Xxxx Xxxxxxxxxx 98,698
Xxxxxx Xxxxxx 40,000
Shibumi Inc. 1,347,852.5
Galaxy Media Ltd. 856,105.5
Xxxxx Saa 15,000
Xxxxx Vinceent 15,000
Xxxxxxx Xxxxx 15,000
Xxx Xxxxx 8,750
Xxxxxx Xxxxx 7,500
Aleksandra 3,750
Xxx Xxxx 2,500
Xxxx Xxxxxxx 2,500
Xxxxx Xxxxxx 2,000
Xxxxxx Xxxxxx 1,875
Xxxxxx Ftomovich 1,500
Xxxxx Xxxxxxxx 1,500
Xxxxx Xxxxxx 1,250
Xxxxxx Xxxxxxx 500
Xxxxx Xxxxxxx 500
Konan Xxxx 375
Xxxxxx Xxxxxx 375
Xxxxx Xxxxx 375
Xxxx Xxxxxx 375
Xxxxxxx Xxxxxxx 375
Xxxxxxxx Xxxxxx 375
Xxxx Xxxxxx 000
Xxxxx Xxxxxx 000
Xxxxx Xxxxxxx 375
Xxxxxx Xxxxx 375
Xxxx Xxxxxx 375
Xxxx Xxxxxxx 375
Xxxxxxx Xxxxxxx 375
Xxxxxxx Xxxxx 375
Xxxxx Xxxxx 000
-00-
Xxx Xxxxxx 000
Xxxxx Xxxxxx 000
Xxxxx Xxxxxxx 250
Xxxxxx Xxxxxx 250
Xxxxx Xxxx 250
Xxxxxx Xxxxxx 375
Xxxxxxx Xxxxxxx 250
Xxxxx Xxxxxx 375
Xxxx Xxxxx 250
Xxxxxx Xxxx 4,000
Xxxx Rappitt 5,000
Xxxx Wycraft 10,000
Xxxxxxxx Xxxxxxxxx 10,000
Strategic Investors Group 20,000
Xxxxxx Xxxxxxxx 10,000
The Phone Card Company Inc. 17,436
Xxxxx X. Xxxxxxx 40,000
Bendix 30,000
1329365 Ontario Inc. 300,000
Pennami Investments Inc. 20,000
Xxxx Xxxxxx 30,000
Xxxxxx'x Ladies Wear (Orillia) Limited 50,000
Xxxxx XxXxxx 20,000
Xxxx Forth 30,000
1047275 Ontario Inc. 70,000
Xxxxxxx Xxxxxxxx 40,000
Xxxxxx XxxXxxxxx 70,000
Xxxxx Xxxxx-Xxxxx 70,000
Xxxx Xxxxx 60,000
TOTAL 13,706,436
-40-
SCHEDULE C
-41-
