EXHIBIT 10.1
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SHARE EXCHANGE AGREEMENT
THIS AGREEMENT is made and dated for reference the 1st day of March, 1999.
BETWEEN:
A.R. RULE INVESTMENTS B.C. LTD.
c/o 2900 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(hereinafter called the "Vendor")
OF THE FIRST PART
AND:
CORNUCOPIA RESOURCES LTD.
#000 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(hereinafter called the "Purchaser")
OF THE SECOND PART
AND:
STOCKSCAPE TECHNOLOGIES LTD.
#000 - 000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(hereinafter called the "Company")
OF THE THIRD PART
WHEREAS:
A. The Vendor is the registered and beneficial owner of all of the issued
and outstanding shares in the capital of the Company (the "Shares");
B. The Vendor has agreed to sell the Shares to the Purchaser and the
Purchaser has agreed to buy 100% of the Shares from the Vendor, on and
subject to the terms and conditions hereof.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises
and the covenants and agreements contained herein, the parties agree as
follows:
1. PURCHASE AND SALE
1.01 Subject to the terms and conditions hereof and on the basis of
the representations and warranties of the parties set forth herein, the
Vendor hereby agrees to sell and the Purchaser hereby agrees to purchase all
of the Shares on the Closing Date (as defined in section 2.02).
1.02 The purchase price for the Shares (the "Purchase Price") shall
be C$5,000,000 and shall be satisfied by the issuance of 10,000,000 fully
paid and non-assessable post-consolidation common shares (the "Payment
Shares") in the capital of the Purchaser at a deemed price of C$0.50 per
share.
1.03 The Payment Shares will be issued to the Vendor or as the
Vendor may otherwise direct in writing, on or before the Closing Date (as
defined in section 2.02), provided that the Purchaser may decline to issue or
register any of the Payment Shares in the name of any person other than the
Vendor if to do so would result in a violation of any applicable law or
regulation.
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1.04 The Payment Shares may be subject to resale restrictions under
applicable securities laws and Share Certificates issued by the Purchaser and
representing the Payment Shares will bear a legend to that effect.
2. CLOSING
2.01 Subject to the provisions of section 18.03 and section 18.06,
and the satisfaction (or waiver by the Purchaser) of the conditions described
in section 8.01, and the satisfaction (or waiver by the Vendor) of the
conditions described in section 8.02, the consummation of the purchase and
sale contemplated by this agreement (the "Closing") shall be held at 9:00
A.M. (local time) on the third business day following the date on which the
last of the conditions precedent in sections 8.01(a),(b) and (c), 8.02(a) and
8.05 has been satisfied or waived, at the offices of the Purchaser or the
Purchaser's counsel in Vancouver, British Columbia as specified by the
Purchaser, unless some other time or location is agreed to by the parties.
2.02 The date on which the Closing occurs is herein called the
"Closing Date".
3. EFFECTIVE DATE
3.01 The "Effective Date" for the purchase and sale herein shall be
March 31, 1999. The Vendor covenants and agrees that it will cause the
Company to carry on the business of the Company in the ordinary course and
will not deviate from the business plan for the Company during the period
from the Effective Date to the Closing Date, without the written consent of
the Purchaser which shall not be unreasonably withheld, so long as this
agreement remains in effect.
4. REPRESENTATIONS AND WARRANTIES OF THE VENDOR AND THE COMPANY
4.01 The Vendor and the Company jointly and severally warrant and
represent to the Purchaser that:
STATUS, AUTHORITY, CAPITAL STRUCTURE
(a) The Shares are validly issued and outstanding as fully paid and
non-assessable, free and clear of all liens, charges and
encumbrances and represent all of the issued and outstanding
shares of the Company;
(b) the Vendor has good and sufficient title, right and authority to
enter into this agreement on the terms and conditions hereof and
to transfer to the Purchaser the legal and beneficial title to and
ownership of the Shares;
(c) the Vendor is not a 'non-resident' of Canada, within the
meaning of the INCOME TAX ACT (Canada) or, if the Vendor is a
'non-resident' within the meaning of that Act the Vendor shall
have obtained a Clearance Certificate from Revenue Canada
(Taxation) in respect of the transactions contemplated herein,
prior to Closing;
(d) there are no options, warrants, rights or agreements outstanding
with respect to the purchase or acquisition of the Shares or which
entitle any person other than the Purchaser to acquire shares in
the capital of the Company, including without limiting the
generality of the foregoing, any securities convertible into or
exchangeable for shares of the Company;
(e) the entering into and performance of this agreement will not
conflict with or result in breach of any covenants or agreements
contained in, or constitute a default under or result in or the
creation of any encumbrance pursuant to the provisions of, any
agreement to which any of the Vendor or the Company is a party or
by which the Vendor or the
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Company may be bound or to which the Vendor or the Company may
be subject or any judgment, decree, order, rule or regulation
of any court or administrative body by which the Vendor or the
Company is bound or, to the knowledge of the Vendor, any
statute or regulation applicable to the Vendor or the Company;
(f) the entering into and the performance of this agreement and the
transactions contemplated herein will not result in the violation
of any of the terms and provisions of the constating documents of
either of the Vendor or the Company, any shareholders' or
directors' resolutions, or any indenture or other agreement,
written or oral, to which the Vendor or the Company may be bound
or to which the Vendor or the Company may be subject;
(g) the Company is a company duly incorporated, validly existing and
in good standing under the laws of the Province of British
Columbia and the Company is duly qualified to do business in every
jurisdiction in which it carries on business;
(h) the Company is a "private issuer" as that term is defined in the
SECURITIES ACT (British Columbia);
(i) the Vendor is duly incorporated under the laws of its jurisdiction
of incorporation and all necessary corporate acts of the Vendor
have been performed in order to authorize this agreement;
(j) as of the date of this agreement the authorized capital of the
Company consists of 1,000,000 common shares without par value, of
which 950,000 shares are issued as fully paid and non-assessable
in the name of the Vendor. As of the Closing Date the authorized
capital of the Company will be 100,000,000 common shares without
par value of which 10,000,000 shares will be issued and
outstanding as fully paid and non-assessable shares beneficially
owned by and registered in the name of the Vendor;
(k) the corporate records of the Company, the share certificate books,
register of directors and shareholders and minute book of the
Company contain complete and accurate minutes of all meetings of
the directors and shareholders of the Company which were duly
called and held since incorporation of the Company;
(l) the Company is an Internet investment research provider and is not
and has not, since the date of its incorporation, been engaged in
any other business;
(m) the Company does not have any subsidiaries or any agreement of any
kind to acquire by lease, purchase or otherwise, any other entity;
(n) this agreement has been duly executed and delivered by the Vendor
and the Company and creates valid and binding obligations of the
Vendor and the Company enforceable against each of them in
accordance with its terms;
FINANCIAL MATTERS
(o) the draft audited financial statements of the Company as at
September 30, 1998, (the "SS Financial Statements") attached
hereto as Schedule "A" have been prepared in accordance with
generally accepted accounting principles, applied on a consistent
basis and fairly and accurately represent the financial condition
of the Company as at the dates thereof and for the periods
covered;
(p) there are no material liabilities of the Company of any kind
whatsoever, whether or not accrued and whether or not determined
or determinable, in respect of which the
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Company or the Purchaser may become liable as a result of the
transactions contemplated herein;
(q) other than as disclosed in the SS Financial Statements:
(i) there are no outstanding debts, liabilities, arrangements
or financial obligations (written or oral, fixed or
contingent, liquidated or unliquidated) of the Company
other than those incurred in the ordinary course of
business;
(ii) there are no material litigation, proceedings or
investigations pending or threatened against the Company
except those disclosed with pertinent details in Schedule
"B" nor do the Vendor or the Company know, or have any
grounds to know, of any basis for any litigation,
proceeding or investigation against the Company which would
materially affect the Company or its business;
(iii) the Company has not made, declared or authorized any
dividends or other distributions of any kind whatsoever in
respect of its outstanding share capital;
(iv) the Company has not guaranteed, or agreed to guarantee, any
debt, liability or other obligation of any person, firm or
corporation; and
(v) except pursuant to the agreement between the Company and
A.R. Rule Investments B.C. Ltd. dated as of December 31,
1998 and titled the "Indebtedness Agreement", there are no
loans or indebtedness outstanding between the Company and
the Vendor or any "associate" of the Vendor as that term is
defined in the SECURITIES ACT (British Columbia);
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(r) since the date of the SS Financial Statements the Company has not:
(i) transferred, assigned, sold or otherwise disposed of any of
the assets shown on the SS Financial Statements or
cancelled, waived or forgiven any debts, claims or rights
of material value;
(ii) incurred or assumed any obligation or liability (fixed or
contingent), except unsecured current obligations and
liabilities incurred in the ordinary and usual course of
the business of the Company;
(iii) issued or sold any shares in its capital or any warrants,
bonds, debentures or other securities or issued, granted or
delivered any right, option or other commitment for the
issuance of any such or other securities, other than
800,000 common shares issued to the Vendor at $0.25 per
share and 8,250,000 common shares issued to the Vendor at a
deemed price of $0.10 per share in satisfaction of
indebtedness of the Company to the Vendor;
(iv) discharged or satisfied any lien or encumbrance, or paid
any obligation or liability (fixed or contingent) other
than current liabilities or the current portion of long
term liabilities disclosed in the SS Financial Statements
or current liabilities incurred since the date thereof in
the ordinary and usual course of business of the Company;
(v) declared or made, or committed itself to make, any payment
or any dividend or other distribution in respect of any of
its shares or purchased or redeemed any of its shares;
(vi) consolidated, subdivided, changed or reclassified any of
its shares or otherwise altered its capital, other than the
increase of its authorized capital from 1,000,000 common
shares without par value to 100,000,000 common shares
without par value effected by special resolution dated
March 9, 1999 and filed with the Registrar of Companies on
March 26, 1999;
(vii) except as specifically disclosed herein, suffered any
material extraordinary loss or entered into any material
commitment or transaction not in the ordinary and usual
course of its business;
(viii) made any gift of money or of any property or assets to any
person;
(ix) purchased any fixed assets;
(x) increased or agreed to increase the compensation of, or
paid or agreed to pay any pension, bonus, share of profits
or other similar benefit to, any director, employee or
officer or former director, employee or officer of the
Company; or
(xi) made payments of any kind to or on behalf of the Vendor or
any "affiliate" or "associate" of the Vendor (as those
terms are respectively defined in the COMPANY ACT and the
SECURITIES ACT (British Columbia)) or under any management
agreement with the Vendor save and except business-related
expenses and salaries in the ordinary and usual course of
the business of the Company and at the regular rates
payable to them;
(s) since September 30, 1998:
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(i) there has not been any occurrence or event which has had,
or might reasonably be expected to have, individually or in
the aggregate, a materially adverse effect on the Company's
business or the results of its operations;
(ii) there has not been any damage, destruction or loss, network
infrastructure disruption or other event, development or
condition of any character which has or may materially and
adversely affect the business, assets or future prospects
of the Company;
(iii) the business of the Company has been carried on in the
ordinary course; and
(iv) the Company has withheld from any payments made to any of
its current and former directors, officers and employees
the amount of all taxes including but not limited to,
income tax and other deductions required to be withheld
therefrom and has paid the same to the proper tax and other
receiving authorities within the time required under any
applicable legislation;
(t) the Company has filed within the time periods prescribed by the
applicable legislation all necessary federal, provincial and local
tax returns and reports including all reports respecting income,
sales, GST, corporation capital tax, employee/source deductions
and remittances, which returns and reports are true, complete and
correct and all taxes, assessments and other governmental charges
of any kind whatsoever applicable to the Company have been paid or
accrued in the SS Financial Statements, provision has been made
for adequate reserves for all periods covered thereby, and such
reserves, if applicable, are reflected in the SS Financial
Statements;
(u) the Company has not received any notice of default, readjustment
or reassessment and is not aware of any contingent liability in
respect of taxes or any ground for reassessment, there are no
agreements, waivers or any other arrangements providing for an
extension of time with respect to the filing of any tax return by,
or the payment of any tax, governmental charge or deficiency by
the Company and the Company will have provided to the Purchaser on
or before the Closing Date all documents and information necessary
for future tax filings for the Company;
ASSETS
(v) the Company holds all permits, licenses, registrations and
authorizations required to own its assets and to carry on its
business;
(w) all of the personal property with a value in excess of $5,000
which is an asset of the Company, both tangible and intangible
(collectively, the "Assets"), is listed on Schedule "C1" hereto
and the Company is the absolute beneficial owner of or has the
exclusive right to the use of, and has good and marketable title
to and possession of all of its personal property, free and clear
of all liens, charges and encumbrances;
(x) without limiting any other representation or warranty of the
Vendor or of the Company herein, with respect to those contracts,
agreements, purchase orders or other instruments (collectively
referred to in this section as "contracts") listed on Schedule C2:
(i) the contracts represent all of the material
contracts of the Company and to the knowledge of the
Vendor and the Company, all such contracts are valid
and subsisting contracts enforceable in accordance
with their respective terms;
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(ii) the Company has not received notice of and is not
aware of any default, breach or other
non-performance on the part of any party of any
of the terms or provisions of such contracts and
there exists no state of facts which after notice
or lapse of time or both could constitute a
default or breach on the part of the Company
thereunder;
(iii) the Company is not restricted under such contracts
from performing fully its obligations under this
agreement and such performance will not entitle any
other party thereto to rescind, cancel or otherwise
terminate any such contract; and
(iv) except as disclosed in Schedule "C2" hereto, the
Company is not party to any contract under which its
obligations cannot be terminated at the option of
the Company without penalty;
(y) without limiting the generality of the foregoing, with respect to
those Assets which are proprietary information, trade marks, trade
secrets, service marks, patents or copyright, including without
limitation information of a technical or technological nature,
computer programs, software, software development tools,
methodologies, processes, techniques or know-how, in whatever form
or medium maintained, expressed or stored, whether tangible or
intangible, and regardless of whether the same is protected by or
entitled to protection under patent, trade xxxx, copyright or
similar laws of any jurisdiction (collectively the "intellectual
property"), the Company is either the sole beneficial owner of
such intellectual property or has an exclusive license to use such
intellectual property and:
(i) to the Company's and the Vendor's knowledge, none of the
Company's business, operations or intellectual property
infringes the intellectual property rights of any other
person;
(ii) all of the intellectual property which is owned by the
Company was developed either by employees of the Company or
by independent contractors for and on behalf of the
Company; and
(iii) the Company has taken precautions consistent with industry
practice to protect its intellectual property;
(z) the Company holds all licenses permits and registrations which are
required for carrying on its business in the manner in which such
business has been carried on and to the Company's and the Vendor's
knowledge, is in compliance with any and all rules, regulations
and policies of any and all regulatory authorities, agencies and
commissions having jurisdiction over of the Company or to which
the Company or its business may be subject;
(aa) the Assets comprise all of the assets, property and rights
required by the Company to operate its business;
EMPLOYEES
(bb) Schedule "D" sets out the material terms of any contract or
arrangement, written or oral, between the Company and those
persons who provide services to the Company, whether as dependent
or independent contractors, consultants or otherwise, which are
material to the operations and business of the Company;
(cc) except as disclosed on Schedule "D" hereto:
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(i) the Company has not paid or agreed to pay, any benefits
and has no obligations or liabilities (fixed, contingent,
liquidated or non-liquidated) under a pension, profit
sharing, bonus or other similar plan, and no obligation to
pay benefits or other liabilities under a pension, profit
sharing or other similar plan survives termination of the
applicable service or employment contract; and
(ii) the Company is not a party to any written or oral
employment, service or pension agreement and except as
disclosed in Schedule "D" the Company does not have any
employees who cannot be dismissed on not more than the
minimum notice required under common law or by the
EMPLOYMENT STANDARDS ACT, R.S.B.C. 1996, c.113, without
further liability;
(dd) the Company is not a party to and no collective agreement is under
negotiation with respect to any of the employees of the Company
and to their knowledge no application for certification of a
bargaining unit has been made in respect of any of the employees
of the Company;
GENERAL
(ee) the representations and warranties of the Vendor and the Company
contained in this agreement disclose all material facts known to
the Vendor or the Company and specifically relating to the
transactions contemplated by this agreement which materially and
adversely affect or which in the future may materially and
adversely affect the Vendor's ability to perform its obligations
under this agreement; and
(ff) to the best of their knowledge having made due inquiry, all of the
Company's networking infrastructure, including the Company's
server, networking software and hardware and software licensed
from third parties is Year 2000 compliant and all third party
systems critical to the Company's operations will interact and
operate properly with the Company's server and networking hardware
and software infrastructure in the Year 2000.
4.02 All representations, warranties, covenants and agreements of
the Vendor and the Company will survive the Closing of this agreement and
will continue in full force and effect for a period of two (2) years
following Closing.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.01 The Purchaser hereby warrants and represents to the Vendor and the
Company that:
STATUS, AUTHORITY, CAPITAL STRUCTURE
(a) It is a company duly amalgamated, validly existing and in good
standing under the laws of its jurisdiction of amalgamation;
(b) the authorized capital of the Purchaser consists of 200,000,000
common shares without par value and 100,000,000 preferred shares
without par value, of which as at March 1, 1999, 41,591,834 shares
are issued as fully paid and non-assessable;
(c) the common shares of the Purchaser are quoted on the NASD
over-the-counter bulletin board (OTCBB);
(d) except for the shares referred to in paragraph (b) of this section
5.01, the Payment Shares, unexercised options, warrants, and any
option shares issued or to be issued pursuant to arrangements with
retiring Directors and Officers and Glencoe Management Ltd., full
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details of which have been disclosed in writing to the Vendor,
there are no options, warrants, rights or agreements outstanding
which entitle any person to acquire shares in the capital of the
Company;
(e) the prospectuses, offering circulars, filing statements, press
releases and other disclosure documents of the Purchaser,
including but not limited to financial statements, (collectively,
the "Public Disclosure Record") contain no untrue statement of a
material fact as at the date thereof nor do they omit to state a
material fact which, at the date thereof, was required to have
been stated or was necessary to prevent a statement that was made
therein from being false or misleading in the circumstances in
which it was made;
(f) the Purchaser has full corporate power and capacity to enter into
this agreement, all necessary corporate acts have been performed
in order to authorize this agreement and this agreement has been
duly executed and delivered by the Purchaser and creates a valid
and binding obligation of the Purchaser enforceable against it in
accordance with its terms;
(h) upon their issuance the Payment Shares will be validly issued and
outstanding, fully paid and non-assessable common shares of the
Company free and clear of all voting restrictions, trade
restrictions (except as may be imposed by applicable securities
laws), liens, charges or encumbrances of any kind whatsoever;
(i) the entering into and performance of this agreement and the
transactions contemplated herein will not conflict with or result
in the violation of, or result in or the creation of any
encumbrance pursuant to the provisions of, any of the terms and
provisions of the constating documents of the Purchaser, any
shareholders' or directors' resolution, or of any indenture or
other agreement written or oral, to which the Purchaser may be a
party or by which the Purchaser may be bound or to which it may be
subject or any judgment, decree, order, rule or regulation of any
court or administrative body by which the Purchaser is bound or to
the knowledge of the Purchaser, any statute or regulation
applicable to the Purchaser;
(j) the Purchaser is up to date with respect to all required filings
with provincial and U.S. securities commissions;
(k) to the knowledge of the Purchaser, after all due inquiry, the
corporate records of the Purchaser, the transfer registers,
register of directors and minute book of the Purchaser contain
complete and accurate minutes of all meetings of the directors and
shareholders of the Purchaser which were duly called and held
since amalgamation of the Purchaser;
(l) except as disclosed in its Public Disclosure Record, the Purchaser
does not have any subsidiaries or any agreement of any kind to
acquire by lease, purchase or otherwise, any other entity;
FINANCIAL MATTERS
(m) the audited financial statements of the Purchaser for the fiscal
year ended December 31, 1998 (the "Purchaser's Financial
Statements"), a copy of which appear as Schedule E to this
agreement, are true and correct in all material respects and
present fairly and accurately the financial position and the
results of operations of the Purchaser for the period then ended
and the Purchaser's Financial Statements have been prepared in
accordance with generally accepted accounting principles applied
on a consistent basis;
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(n) there are no material liabilities of the Purchaser of any kind
whatsoever, whether or not accrued and whether or not determined
or determinable, in respect of which the Purchaser may become
liable as a result of the transactions contemplated herein;
(o) other than as disclosed in the Purchaser's Financial Statements:
(i) there are no outstanding debts, liabilities, arrangements
or financial obligations (written or oral, fixed or
contingent, liquidated or unliquidated) of the Purchaser,
other than those incurred in the ordinary course of
business;
(ii) there are no material litigation, proceedings or
investigations pending or threatened against the Purchaser
nor does the Purchaser know, or have any grounds to know,
of any basis for any litigation, proceeding or
investigation against the Purchaser which would materially
affect the Purchaser or its business;
(iii) the Purchaser has not made, declared or authorized any
dividends or other distributions of any kind whatsoever in
respect of its outstanding share capital;
(iv) the Purchaser has not guaranteed, or agreed to guarantee,
any debt, liability or other obligation of any person, firm
or corporation;
(v) the Purchaser is not indebted to any director, officer, or
employee of the Purchaser on any account whatsoever; and
(vi) no director, officer or employee of the Purchaser is
indebted or under any financial obligation to the
Purchaser;
(p) since the date of the Purchaser's Financial Statements, other than
as disclosed in the Purchaser's Public Disclosure Record, the
Purchaser has not:
(i) transferred, assigned, sold or otherwise disposed of any of
the assets shown on the Purchaser's Financial Statements or
cancelled, waived or forgiven any debts, claims or rights
of material value;
(ii) incurred or assumed any obligation or liability (fixed or
contingent), except unsecured current obligations and
liabilities incurred in the ordinary and usual course of
the business of the Purchaser;
(iii) issued or sold any shares in its capital or any warrants,
bonds, debentures or other securities or issued, granted or
delivered any right, option or other commitment for the
issuance of any such or other securities, other than
options granted or to be granted prior to Closing to
certain directors, officers and employees of the Purchaser,
full details of which have been disclosed in writing to the
Vendor;
(iv) discharged or satisfied any lien or encumbrance, or paid
any obligation or liability (fixed or contingent) other
than current liabilities or the current portion of long
term liabilities disclosed in the Purchaser's Financial
Statements or current liabilities incurred since the date
thereof in the ordinary and usual course of business of the
Purchaser;
(v) declared or made, or committed itself to make, any payment
or any dividend or other distribution in respect of any of
its shares or purchased or redeemed any of its shares;
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(vi) consolidated, subdivided, changed or reclassified any of
its shares or otherwise altered its capital;
(vii) suffered any material extraordinary loss or entered into
any material commitment or transaction not in the ordinary
and usual course of its business;
(viii) made any gift of money or of any property or assets to any
person;
(ix) purchased any fixed assets;
(x) increased or agreed to increase the compensation of, or
paid or agreed to pay any pension, bonus, share of profits
or other similar benefit to, any director, employee or
officer or former director, employee or officer of the
Purchaser; or
(xi) made payments under any management agreement save and
except business-related expenses and fees in the ordinary
and usual course of the business of the Purchaser and at
the regular rates payable thereunder;
(q) since December 31, 1998:
(i) there has not been any occurrence or event which has had,
or might reasonably be expected to have, individually or in
the aggregate, a materially adverse effect on the
Purchaser's business or the results of its operations;
(ii) there has not been any damage, destruction or loss, or
other event, development or condition of any character
which has or may materially and adversely affect the
business, assets or future prospects of the Purchaser;
(iii) the business of the Purchaser has been carried on in the
ordinary course; and
(iv) the Purchaser has withheld from any payments made to any of
its current and former directors, officers and employees
the amount of all taxes including but not limited to,
income tax and other deductions required to be withheld
therefrom and has paid the same to the proper tax and other
receiving authorities within the time required under any
applicable legislation;
(r) the Purchaser has filed within the time periods prescribed by the
applicable legislation all necessary federal, provincial and local
tax returns and reports including all reports respecting income,
sales, GST, corporation capital tax, employee/source deductions
and remittances, which returns and reports are true, complete and
correct and all taxes, assessments and other governmental charges
of any kind whatsoever applicable to the Purchaser have been paid
or accrued in the Purchaser's Financial Statements, provision has
been made for adequate reserves for all periods covered thereby,
and such reserves, if applicable, are reflected in the Purchaser's
Financial Statements;
(s) the Purchaser has not received any notice of default, readjustment
or reassessment and is not aware of any contingent liability in
respect of taxes or any ground for reassessment, there are no
agreements, waivers or any other arrangements providing for an
extension of time with respect to the filing of any tax return by,
or the payment of any tax, governmental charge or deficiency by
the Purchaser and the Purchaser will have provided to the
Purchaser on or before the Closing Date all documents and
information necessary for future tax filings for the Purchaser;
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ENVIRONMENTAL MATTERS
(t) to the best of the knowledge of the Purchaser, after all due
inquiry, the Purchaser has been and is in compliance with all
applicable federal, provincial, state, municipal and local laws,
statutes, ordinances, bylaws, and regulations and orders,
directives and decisions rendered by any ministry, department or
administrative or regulatory agency ("Environmental Laws")
relating to the protection of the environment, occupational health
and safety or the manufacture, processing, distribution, use,
treatment, storage, disposal, discharge, transport, or handling of
any pollutants, contaminants, chemicals, or industrial, toxic or
hazardous wastes or substances ("Hazardous Substances");
(u) except in compliance with Environmental Laws or pursuant to a
license, permit, approval, consent, certificate, registration, or
other authorization issued under an Environmental Law, the
Purchaser has not used and has not, to its knowledge, after all
due inquiry, permitted to be used, any of its properties
(including any leased properties) or facilities or any property or
facility that it previously owned, leased or occupied to generate,
manufacture, process, distribute, use, treat, store, dispose of,
transport, or handle any Hazardous Substance;
(v) except for the reclamation obligations described in Schedule "F"
in respect of the properties described in Schedule "F", there are
no orders or directions relating to environmental matters
requiring any environmental remediation, work, repairs,
construction or capital expenditures with respect to the business
of the Purchaser or any property of the Purchaser, nor has the
Purchaser received any notice of any of the same;
(w) except as described in Schedule "F", the Purchaser has not
received any notice that it is potentially responsible for a
federal, provincial, state, municipal or local clean-up site or
correction or remediation action under any Environmental Laws, nor
any request for information in connection with any federal,
provincial, state, municipal or local inquiries as to disposal
sites;
(x) except in connection with activities on the properties described
in Schedule "F", the Purchaser has not caused or permitted, nor
does it have any knowledge of, the release, in any manner
whatsoever, of any Hazardous Substance on or from any of its
properties (including any leased properties) or assets or any
property or facility that it previously owned or leased, or any
such release on or from a facility owned or operated by third
parties but with respect to which the Purchaser is or may
reasonably be alleged to have liability. All Hazardous Substances
and all other wastes and other materials and substances used in
whole or in part by the Purchaser or resulting from the
Purchaser's business have been
16
used, documented, disposed of, treated and stored in compliance
with all Environmental Laws;
ASSETS
(y) the Purchaser holds all permits, licenses, registrations and
authorizations required to own its assets and to carry on its
business;
(z) the Purchaser is the absolute beneficial owner of or has the
exclusive right to the use of, and has good and marketable title
to and possession of all of its personal property, other than
leased office equipment, free and clear of all liens, charges and
encumbrances;
(aa) without limiting any other representation or warranty of the
Purchaser herein, all contracts and agreements to which the
Purchaser is a party and which are material to the business and
operations of the Purchaser have been disclosed in the Public
Disclosure Record and, except as disclosed in the Public
Disclosure Record:
(i) to the knowledge of the Purchaser, all such contracts are
valid and subsisting contracts enforceable in accordance
with their respective terms;
(ii) other than a dispute with Stardata Systems Inc., details of
which have been provided to the Vendor, the Purchaser has
not received notice of and is not aware of any default,
breach or other non-performance on the part of any party of
any of the terms or provisions of such contracts and there
exists no state of fact which after notice or lapse of time
or both could constitute a default or breach on the part of
the Purchaser thereunder;
(iii) the Purchaser is not restricted under such contracts from
performing fully its obligations under this agreement and
such performance will not entitle any other party thereto
to rescind, cancel or otherwise terminate any such
contract; and
(iv) the Purchaser is not party to any contract under which its
obligations cannot be terminated at the option of the
Purchaser without penalty;
(bb) the Purchaser has no assets which are proprietary information,
trade marks, trade secrets, service marks, patents or copyright
including without limitation information of a technical or
technological nature, computer programs, software, software
development tools, methodologies, processes, techniques or
know-how, in whatever form or medium maintained, expressed or
stored, whether tangible or intangible;
(cc) the Purchaser holds all licenses permits and registrations which
are required for carrying on its business in the manner in which
such business has been carried on and to the best of the
Purchaser's knowledge, after due inquiry, is in compliance with
any and all rules, regulations and policies of any and all
regulatory authorities, agencies and commissions having
jurisdiction over of the Purchaser or to which the Purchaser or
its business may be subject;
EMPLOYEES
(dd) the material terms of any contract or arrangement, written or
oral, between the Purchaser and those persons who provide services
to the Purchaser, whether as dependent or independent contractors,
consultants or otherwise, which are material to the operations and
business of the Purchaser are disclosed in the Public Disclosure
Record;
17
(ee) except as disclosed in the Public Disclosure Record:
(i) the Purchaser has not paid or agreed to pay, any benefits
and has no obligations or liabilities (fixed, contingent,
liquidated or non-liquidated) under a pension, profit
sharing, bonus or other similar plan, and no obligation to
pay benefits or other liabilities under a pension, profit
sharing or other similar plan survives termination of the
applicable service or employment contract; and
(ii) other than agreements with its current Chief Financial
Officer and Corporate Secretary which have been disclosed
to the Vendor, the Purchaser is not a party to any written
or oral employment, service or pension agreement and the
Purchaser does not have any employees who cannot be
dismissed on not more than the minimum notice required by
common law or the EMPLOYMENT STANDARDS ACT, R.S.B.C. 1996,
c.113, without further liability;
(ff) the Purchaser is not a party to and no collective agreement is
under negotiation with respect to any of the employees of the
Purchaser and to the best of its knowledge no application for
certification of a bargaining unit has been made in respect of any
of the employees of the Purchaser;
GENERAL
(gg) the representations and warranties of the Purchaser contained in
this agreement and the Public Disclosure Record disclose all
material facts known to the Purchaser and specifically relating to
the transactions contemplated by this agreement which materially
and adversely affect or which in the future may materially and
adversely affect the Purchaser's ability to perform its
obligations under this agreement; and
(hh) to the best of its knowledge having made due inquiry, all of the
Purchaser's software and hardware is Year 2000 compliant and all
third party systems critical to the Purchaser's operations will
interact and operate properly with the Purchaser's hardware and
software in the Year 2000.
5.02 All representations, warranties, covenants and agreements of
the Purchaser herein will survive the closing of this agreement and will
continue in full force and effect for a period of two (2) years following
Closing.
6. COVENANTS OF THE VENDOR AND THE COMPANY
6.01 The Vendor and the Company jointly and severally covenant and
agree with the Purchaser that from and after the date hereof to and including
the Closing Date they will:
(a) cooperate with the Purchaser and will take such steps and
proceedings as may be reasonably required to assist the Purchaser
to obtain all consents and approvals (if any) which the Purchaser
may require to obtain from regulatory authorities having
jurisdiction over the Purchaser or from shareholders of the
Purchaser with respect to the transactions contemplated hereunder
and to comply with all applicable statutes and regulations;
(b) take such steps and proceedings as may be reasonably required to
obtain a Clearance Certificate for the Vendor, if required;
(c) use reasonable best efforts to obtain commitments for a private
placement financing by the Purchaser of up to four million
(4,000,000) units of the Purchaser at $0.50 per unit, each unit to
consist of one post-consolidation common share of the Purchaser
and two common share purchase warrants each entitling the holder
to acquire one additional
18
common share in the capital of the Purchaser, one for a period
of one year at $0.65 per share and the other for a period of
two years at a price of $0.95 per share with forced conversion
features (referred to herein as the "Financing");
(d) operate the business of the Company in the usual and ordinary
course and take all necessary steps to preserve relationships with
suppliers, licensors, customers, employees and others having
dealings with the Company;
(e) give the Purchaser prompt notice of any third party claims against
the Company;
(f) not enter into or agree to enter into any agreement, commitment or
other arrangement pursuant to which the Company makes or becomes
obliged to make capital expenditures in excess of $50,000 in any
thirty day period, without the prior written consent of the
Purchaser, which shall not be unreasonably withheld; and
(g) forthwith notify the Purchaser in writing of any occurrence or
event which has, or might reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the
Company, its business or the results of its operations.
7. COVENANTS OF THE PURCHASER
7.01 The Purchaser covenants and agrees with the Vendor and the
Company that it will:
(a) take, at its cost, all such steps and proceedings as may be
reasonably required to obtain all necessary consents or approvals
from the regulatory authorities having jurisdiction over the
Purchaser or from the shareholders of the Purchaser with respect
to the transactions contemplated hereunder and to comply with all
applicable statutes and regulations prior to the Closing Date; and
(b) cause the following individuals and no others, except as directed
by the Vendor, to be named as management nominees for election as
directors at the next annual and extraordinary general meeting of
the Purchaser:
NAME
Xxxxxx X.X. Xxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxxxx
X. Xxxxxx Xxxxxxxx
Xxxx X. Xxxxx
(c) use reasonable best efforts to assist the Vendor in obtaining
irrevocable commitments for the Financing;
(d) forthwith notify the Vendor in writing of any occurrence or event
which has, or might reasonably be expected to have, individually
or in the aggregate, a material adverse effect on the Purchaser,
its business or the results of its operations;
(e) subject to shareholder approval, complete the disposition of its
interest in the Ivanhoe Project, Nevada pursuant to its agreement
with Great Basin Gold Ltd.; and
(f) the Purchaser will make available upon request of the Vendor a
true and complete copy of all environmental audits, evaluations,
assessments, studies or tests relating to the Purchaser or the
Purchaser's business.
19
8. CONDITIONS PRECEDENT TO THE CLOSING
8.01 The Purchaser's obligation to carry out the terms of this
agreement and to complete the purchase referred to in section 1 is subject to
the provisions of section 8.03, and to the following additional conditions:
(a) The Purchaser shall have obtained a fairness opinion respecting
the transaction contemplated herein which is satisfactory to the
Purchaser;
(b) the Purchaser's shareholders shall have approved the transactions
contemplated hereunder which require shareholder approval;
(c) the purchase of the Shares shall have been approved by the Board
of Directors of the Purchaser following completion of the
Purchaser's due diligence investigations;
(d) all outstanding indebtedness of the Company to its shareholders
and any affiliated entities shall have been forgiven or converted
into shares of the Company and, if converted, such shares shall be
added to and constitute part of the "Shares" for the purposes of
this agreement and any other persons becoming shareholders of the
Company as a result thereof shall become parties to and be bound
by the terms of this agreement;
(e) on the Closing Date, the warranties and representations of the
Vendor and the Company as set forth in section 4 hereof will be
true in every material respect as if such warranties and
representations were made by the Vendor and the Company on the
Closing Date;
(f) all covenants and agreements to be performed by the Vendor and the
Company hereunder shall have been performed;
(g) the Vendor will have delivered to the Purchaser:
(i) resignations in writing of all directors and officers of
the Company requested by the Purchaser;
(ii) all corporate records, files and books of account of the
Company;
(iii) the common seal of the Company;
(iv) share certificates representing the Shares duly endorsed
for transfer to the Purchaser; and
(v) such other documents as the Purchaser may reasonably
request including but not limited to incumbency
certificates of the Vendor, certified copies of resolutions
of the directors of the Vendor and the Company authorizing
the transaction, good standing certificates of the Vendor
and the Company in forms reasonably satisfactory to the
Purchaser;
(h) on or before the Closing Date no federal, provincial state,
regional or municipal government or agency thereof has enacted any
statute or regulation or announced any policy that will materially
and adversely affect the business or assets of the Company or the
right of the Purchaser to the full enjoyment thereof; and
(i) delivery on or before the Closing Date of such other documents as
the Purchaser may reasonably request, including a certificate of
the officers of the Vendor confirming the
20
matters referred to in section 8.01(e), and an opinion from
counsel for the Vendor in the form attached as Schedule "G"
hereto.
8.02 The Vendor's obligation to carry out the terms of this
agreement and to complete the sale referred to in section 1 is subject to the
provisions of section 8.04, and to the following additional conditions:
(a) the common share capital of the Purchaser shall have been
consolidated on a ten (10) old for one (1) new basis and the name
of the Purchaser shall have been changed to "Stockscape
Technologies Ltd." or other name satisfactory to the Vendor;
(b) on the Closing Date, the warranties and representations of the
Purchaser as set forth in section 5 hereof will be true in every
material respect as if such warranties and representations have
been made by the Purchaser on the Closing Date;
(c) on the Closing Date, the Purchaser will have performed all of the
terms of this agreement to be performed by it;
(d) the Purchaser will have delivered to the Vendor certificates
representing the Payment Shares;
(e) delivery on or before the Closing Date of such other documents as
the Vendor may reasonably request including but not limited to an
incumbency certificate of the Purchaser, a certified copy of
resolutions of the directors of the Purchaser authorizing the
transactions, a good standing certificate of the Purchaser, a
certificate of the officers of the Purchaser confirming the
matters referred to in section 8.02(b), and an opinion from
counsel for the Purchaser in the form attached as Schedule "H"
hereto;
(f) the election as directors of the Purchaser the individuals set out
in section 7.01(b);
(g) completion of the sale of the Purchaser's interest in the Ivanhoe
Project, Nevada; and
(h) an insignificant number of shares shall have been tendered to the
Purchaser pursuant to the rights of its shareholders to dissent to
the sale of the Ivanhoe Project.
8.03 The terms and conditions set forth in section 8.01, are for the
exclusive benefit of the Purchaser and may be waived by the Purchaser in
writing, in whole or in part, but, except as so waived, the completion of the
purchase referred to in section 1 by the Purchaser will not prejudice or
affect any of the rights of the Purchaser in respect of the warranties and
representations of the Vendor and the Company set forth in section 4.01 and
such representations and warranties shall survive the Closing Date.
8.04 The terms and conditions set forth in section 8.02, are for the
exclusive benefit of the Vendor and the Company and may be waived by the
Vendor in writing, in whole or in part, but, except as so waived, the
completion of the purchase referred to in section 1 by the Vendor will not
prejudice or affect any of the rights of the Vendor in respect of the
warranties and representations of the Purchaser set forth in section 5.01 and
such representations and warranties shall survive the Closing Date.
8.05 The obtaining of irrevocable commitments for the Financing is a
condition precedent to the respective obligations of both the Vendor and the
Purchaser to complete the sale and purchase referred to in section 1 hereof
and may not be waived by either party without the consent of the other.
8.06 If the conditions precedent in sections 8.01, 8.02 and 8.05 are
not waived or fulfilled on or before August 31, 1999, the respective
obligations of the Purchaser and the Vendor to complete the purchase and sale
referred to in section 1 hereof shall terminate.
21
9. INDEMNITY
9.01 The Vendor will indemnify the Purchaser for a period of two (2)
years following Closing against any loss or damage sustained by the Purchaser,
directly or indirectly, by reason of a breach of any of the warranties or
representations set forth in section 4.01 or the covenants set forth in
section 6.01. The Vendor acknowledges that the Purchaser has entered into this
agreement relying on these warranties and representations.
9.02 The Purchaser will indemnify the Vendor for a period of two (2)
years following Closing against any loss or damage sustained by the Vendor,
directly or indirectly, by reason of a breach of any of the warranties or
representations set forth in section 5.01 or the covenants set forth in
section 7.01. The Purchaser acknowledges that the Vendor has entered into this
agreement relying on these warranties and representations.
10. FURTHER ASSURANCES
10.01 The parties hereto agree to execute such further and other
assurances or documents as may be necessary to carry out this agreement in
accordance with its true intent.
11. NOTICE
11.01 All notices, requests, demands and other communications required
or permitted hereunder, or desired to be given with respect to rights or
interests herein, will be in writing and must be mailed, delivered or sent by
telecopier to the parties at the respective addresses set out below. Any such
notice will be deemed to have been given, if mailed, three (3) days following
the date of posting; provided that if there is, between the time of mailing and
the actual receipt of the notice, a mail strike, slow down or other labour
dispute which might affect delivery of such notice by mail, then such notice
will be effective only if delivered; and, if given by personal delivery or
telecopier, when delivered or transmitted.
If to the Vendor:
A.R. Rule Investments B.C. Ltd.
c/o 2900 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
Attention: Xxxx X. Xxxxx
Telecopier No.: (000) 000-0000
if to the Purchaser:
Cornucopia Resources Ltd.
Attention: Xxxxxx X.X. Xxxxxxxx, President
#000 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
Telecopier No.: (000) 000-0000
and if to the Company:
Stockscape Technologies Ltd.
Attention: Xxxx X. Xxxxx
#000 - 000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
Telecopier No.: (000) 000-0000
22
12. GOVERNING LAW AND CURRENCY
12.01 This agreement will be construed and enforced in accordance with
the laws of the Province of British Columbia, excluding British Columbia
conflicts of laws principles that would require the application of the laws of
any other jurisdiction.
12.02 Unless otherwise specifically provided, any references to currency
herein are deemed to mean lawful money of Canada and all amounts to be paid or
calculated pursuant to this agreement are to paid or calculated in lawful money
of Canada.
13. ENTIRE AGREEMENT, AMENDMENTS AND SEVERABILITY
13.01 This agreement contains the entire agreement by and between the
parties and no oral agreement, promise, statement or representation which is not
contained herein will be binding on the Vendor, the Company, or the Purchaser.
13.02 No amendment or modification of this agreement will become
effective unless and until the same will have been reduced in writing and duly
signed and executed by all of the parties.
13.03 If any provision of this agreement or any part hereof shall be
found or determined to be invalid, it shall be severable from this agreement and
the remainder of this agreement shall be construed as if such invalid provision
or part has been deleted from this agreement.
14. SUPERSEDES
14.01 This agreement supersedes all previous agreements, written or
oral, in respect of the subject matter hereof.
15. HEADINGS, SECTIONS AND SCHEDULES
15.01 The headings are for convenience only and do not form a part of
this agreement and are not intended to interpret, define or limit the scope,
extent or intent of this agreement or any provision hereof.
15.02 The words "section", "hereof", "hereto" and "hereunder" refer to
this agreement. The words "this agreement" or "the agreement" include every
Schedule attached hereto.
16. TIME OF ESSENCE
16.01 Time will be of the essence of this agreement.
17. ENUREMENT AND ASSIGNMENT
17.01 This agreement will enure to the benefit of and be binding upon
the parties hereto, and their respective successors and assigns.
17.02 It is expressly acknowledged and understood that neither the
Purchaser nor the Vendor may assign any of its right, title and interest in and
to this agreement to any other person without the prior written consent of the
other party.
17.03 It is expressly acknowledged and understood that the obligations
of the Vendor and the Company hereunder are joint and several.
23
18. DUE DILIGENCE AND PURCHASER'S RIGHT OF TERMINATION
18.01 The Purchaser shall have until April 15, 1999 (the "Due Diligence
Period"), to carry out its due diligence investigations relating to the Company,
provided that if the Vendor or the Company neglect or fail to provide the
Purchaser with the information, documents or access contemplated by 18.02 in
sufficient time to permit the Purchaser to complete its due diligence
investigations within the Due Diligence Period, or at all, the Purchaser shall
be entitled to an extension of the Due Diligence Period, such extension not to
exceed five business days following the date on which the last of the
information, documents or access requested by the Purchaser, is provided.
18.02 During the Due Diligence Period, the Vendor agrees:
(a) At all reasonable times and upon reasonable advance notice from
the Purchaser, to arrange for the Purchaser and its
representatives to have full and continuing access to all
accounting, financial and operating data, books and records, tax,
engineering, title, licensing, advertising sales and other
information and matters that relate to, or are otherwise deemed
material by the Purchaser, in connection with the business and
assets of the Company;
(b) at all reasonable times and upon reasonable advance notice from
the Purchaser, to make available to the Purchaser and its
representatives for discussions, such of the directors, officers,
employees, advisors, counsel and other agents as are knowledgeable
about any of the foregoing;
(c) to use its reasonable best efforts to make available to the
Purchaser and its representatives such information relating to the
foregoing as may be in the possession or control of third parties;
and
(d) to permit the Purchaser and its representatives to make extracts
from and copies of all or any part of any documents relating to
the foregoing.
18.03 In the event that the Purchaser's due diligence investigations
disclose information that, in the Purchaser's opinion, adversely affects the
value of the Shares, the Purchaser may elect at any time prior to the end of the
Due Diligence Period to terminate this agreement, by notice in writing to the
Vendor. Upon such termination, neither the Vendor, the Company nor the
Purchaser shall have any further obligations or liability under this agreement.
18.04 The Vendor shall have the Due Diligence Period to carry out its
due diligence investigations relating to the Purchaser, provided that if the
Purchaser neglects or fails to provide the Vendor with the information,
documents or access contemplated by 18.05 in sufficient time to permit the
Vendor to complete its due diligence investigations within the Due Diligence
Period, or at all, the Vendor shall be entitled to an extension of the Due
Diligence Period, such extension not to exceed five business days following the
date on which the last of the information, documents or access requested by the
Vendor, is provided.
18.05 During the Due Diligence Period, the Purchaser agrees:
(a) At all reasonable times and upon reasonable advance notice from
the Vendor, to arrange for the Vendor and its representatives to
have full and continuing access to all accounting, financial and
operating data, books and records, tax, engineering, title,
licensing, advertising sales and other information and matters
that relate to, or are otherwise deemed material by the Vendor, in
connection with the business and assets of the Purchaser;
24
(b) at all reasonable times and upon reasonable advance notice from
the Vendor, to make available to the Vendor and its
representatives for discussions, such of the directors, officers,
employees, advisors, counsel and other agents as are knowledgeable
about any of the foregoing;
(c) to use its reasonable best efforts to make available to the Vendor
and its representatives such information relating to the foregoing
as may be in the possession or control of third parties; and
(d) to permit the Vendor and its representatives to make extracts from
and copies of all or any part of any documents relating to the
foregoing.
18.06 In the event that the Vendor's due diligence investigations
disclose information that, in the Vendor's opinion, adversely affects the value
of the Payment Shares, the Vendor may elect at any time prior to the end of the
Due Diligence Period to terminate this agreement, by notice in writing to the
Vendor. Upon such termination, neither the Vendor, the Company nor the
Purchaser shall have any further obligations or liability under this agreement.
19. NEWS RELEASES
19.01 The Purchaser has issued a news release prior to the execution of
this agreement. Thereafter, until Closing, each party will endeavour to consult
with the other prior to issuing any further news releases with respect to this
agreement or matters
25
relating thereto, and will provide the other party with an opportunity to review
and comment upon any such news release prior to its issuance.
IN WITNESS WHEREOF the parties hereto have executed this agreement as of the day
and year first above written.
A.R. RULE INVESTMENTS B.C. LTD.
by its authorized signatory:
"XXXX X. XXXXX"
-------------------------
Xxxx X. Xxxxx, President
The Corporate Seal of CORNUCOPIA RESOURCES LTD. ))
was hereunto affixed in the presence of: ))
))
))
"XXXXXX X. X. XXXXXXXX" ))
-----------------------
"XXXXXXX X. XXXXXX"
-----------------------
STOCKSCAPE TECHNOLOGIES LTD.
by its authorized signatory:
"XXXX X. XXXXX"
-------------------------
Xxxx X. Xxxxx, President
26
