EXHIBIT 4.3
ARRANGEMENT AGREEMENT
THIS AGREEMENT dated the 28th day of March, 2003.
BETWEEN:
VERB EXCHANGE INC., a corporation incorporated under the laws of
Canada
("Verb")
AND:
MILLENNIUM VENTURES LTD., a corporation incorporated under the laws of
British Columbia
("Millennium")
AND:
LATTICE CAPITAL CORPORATION, a corporation incorporated under the laws
of British Columbia
("Lattice")
WHEREAS:
A. Verb wishes to acquire all of the issued and outstanding securities of
Millennium and Lattice (collectively, the "CPC's") in order to acquire the
net cash held by the CPC's, by issuing common shares of Verb in exchange
therefor;
B. The CPC's wish to effect same by proposing to the holders of their
respective securities a plan of arrangement under the provisions of
section 252 of the Company Act (British Columbia) on the terms and
conditions set forth herein;
C. Verb is a party to this agreement, and the proposed arrangement and plan of
arrangement, but is not itself conducting an arrangement for purposes of
corporate law;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the respective
premises, covenants, representations and warranties of the parties herein
contained and for other good and valuable consideration (the receipt and
sufficiency of which are acknowledged by each party), the parties agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 In this Agreement and in the Plan of Arrangement:
(a) "Agreement" means this agreement, and all Schedules affixed hereto;
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(b) "Approving CPC's" means the CPC's whose respective Securityholders,
and such other persons involved with the CPC as may be required
pursuant to the Interim Order, have passed all necessary special
resolutions to approve the Arrangement, this Agreement, the Plan of
Arrangement, and the transactions contemplated herein and therein;
(c) "Arrangement" means, collectively, the arrangement between
Millennium and its respective Securityholders and Lattice and its
respective Securityholders under the provisions of section 252 of
the B.C. Act, pursuant to the terms and conditions set forth in this
Agreement and in the Plan of Arrangement;
(d) "B.C. Act" means the Company Act (British Columbia), R.S.B.C. 1996,
C-62, as amended;
(e) "Business Day" means a day which is not a Saturday, Sunday or
statutory holiday in the Province of British Columbia;
(f) "Closing" means the completion of the Arrangement into escrow
pursuant to the terms and conditions set forth in this Agreement and
in the Plan of Arrangement;
(g) "Closing Date" means the date of the Closing;
(h) "Court" means the Supreme Court of British Columbia;
(i) "CPC's" means, collectively, Millennium and Lattice;
(j) "CPC's Liabilities" means any and all debts, liabilities,
obligations and cash commitments of such CPC of every nature and
kind, whether absolute or contingent, whether accrued or unaccrued,
or whether arising in contract or otherwise;
(k) "CPC Securities" means, collectively, the Millennium Shares,
Millennium Options, Lattice Shares and Lattice Options;
(l) "Depository" means, Pacific Corporate Trust Company;
(m) "Dissenting Shareholders" means the Securityholders who have
properly exercised rights of dissent in connection with the
Arrangement and become entitled to require a CPC to purchase all of
the Securityholders' respective CPC Securities in respect of which a
valid notice of dissent was given as provided for in the Plan of
Arrangement, the B.C. Act or the Interim Order;
(n) "Effective Time" means the point in time when a certified copy of
the Final Order has been accepted for filing by the Registrar;
(o) "Exchange" means the TSX Venture Exchange;
(p) "Final Order" means the final order of the Court approving the
Arrangement and the Plan of Arrangement, in form and substance
satisfactory to Verb acting reasonably;
(q) "Information Circular" means the information circular to be jointly
prepared by the CPC's in connection with the Meetings;
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(r) "Interim Order" means the interim order of the Court relating to the
convening of the Meetings and such other matters relating to the
Arrangement and the Plan of Arrangement as may properly be brought
before the Court, in form and substance satisfactory to Verb acting
reasonably;
(s) "Lattice Holders" means, collectively, the registered holders of the
Lattice Shares and Lattice Options;
(t) "Lattice Options" means, collectively, the issued and outstanding
options of Lattice entitling the holders hereof to acquire an
aggregate of 335,000 common shares of Lattice at a price of $0.15
per common share until April 18, 2006;
(u) "Lattice Shares" means, collectively, the issued and outstanding
common shares of Lattice;
(v) "Letter of Intent" means the letter of intent between Verb and the
CPC's with respect to the transactions set forth herein;
(w) "Meetings" means the general meetings of the Securityholders, and
any adjournments thereof, to be convened and held to consider and,
if thought fit, to approve, among other matters, the Arrangement,
this Agreement, the Plan of Arrangement, and the transactions
contemplated herein and therein;
(x) "Merging CPC's" means the Approving CPC's who have satisfied, or
have had waived by the party entitled to the benefit thereof, all of
the conditions set out in Article 8 herein on or before the Closing
Date;
(y) "Millennium Holders" means, collectively, the registered holders of
the Millennium Shares and the Millennium Options;
(z) "Millennium Options" means, collectively, the issued and outstanding
options of Millennium entitling the holders thereof to acquire an
aggregate of 266,666 common shares of Millennium at a price of $0.15
until September 7, 2005;
(aa) "Millennium Shares" means, collectively, the issued and outstanding
common shares of Millennium;
(bb) "Net Cash" means such CPC's cash on hand less such CPC's Liabilities
at said referenced point in time;
(cc) "Optionholders" means, collectively, the registered holders of the
Millennium Options, and Lattice Options;
(dd) "Plan of Arrangement" means the plan of arrangement attached as
Schedule "A" to this Agreement;
(ee) "Registrar" means the Registrar of Companies for British Columbia;
(ff) "Schedules" means, collectively, the following schedules to this
Agreement:
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- Schedule "A": Plan of Arrangement
- Schedule "B": Verb Convertible Securityholders
(gg) "Securityholders" means collectively, the Millennium Holders and the
Lattice Holders;
(hh) "Shareholders" means, collectively, the registered holders of the
Millennium Shares and the Lattice Shares;
(ii) "Vend-In Shares" means the common shares of Verb to be delivered to
the respective Shareholders of the Merging CPC's in accordance with
the Arrangement on the terms and conditions set forth herein and the
Plan of Arrangement;
(jj) "Verb Financial Statements" means the most recent audited and
unaudited financial statements of Verb in the public record, being,
as at the date hereof, Verb's audited financial statements for the
year ended December 31, 2001 and Verb's unaudited financial
statements for the third quarter ended September 30, 2002;
(kk) "Verb Public Record" means all press releases of Verb which have
been disseminated to the public and all disclosures, filings,
documents and other information which has been filed by Verb with
the Securities Commissions, the Exchange and like regulatory
authorities which are available to the public; and
(ll) "Verb Subsidiaries" means (i) Verb Exchange (Management) Inc., a
wholly controlled subsidiary of Verb, and (ii) Cadium Systems Inc.,
a wholly owned subsidiary of Verb;
1.2 In this Agreement, words importing the singular number shall include the
plural and vice versa; words importing gender shall include all genders;
and words importing individuals shall include corporations, partnerships,
associations, trusts, unincorporated organizations, governmental bodies
and other legal or business entities of any kind whatsoever and vice
versa.
1.3 Unless otherwise indicated, all references to currency herein are to the
lawful currency of Canada.
1.4 The division of this Agreement into articles, sections and subsections and
the insertion of headings are for convenience of reference only and shall
not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to an article, section,
subsection or schedule refers to the specified article, section,
subsection or schedule to this Agreement.
ARTICLE 2
ARRANGEMENT
2.1 The parties hereto agree to effect the Arrangement pursuant to the terms
and conditions set forth in this Agreement and in the Plan of Arrangement.
Such transactions will be completed in accordance with the applicable
provisions of their constating documents, the B.C. Act and applicable
securities legislation, and the requirements of the Interim Order, the
Final Order, the Exchange and all other applicable legislation and
regulatory authorities.
2.2 Subject to the satisfaction of the terms and conditions set forth in this
Agreement and in the Plan of Arrangement, at the Effective Time:
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(a) the Merging CPC's shall be merged with and into Verb, such that Verb
shall continue as the surviving corporation;
(b) all outstanding securities of the Merging CPC's (other than those
held by Dissenting Shareholders) shall be exchanged into common
shares of Verb and warrants evidencing the right to purchase common
shares of Verb, on the basis set forth in Article 4 of the Plan of
Arrangement;
(c) all outstanding securities of the Merging CPC's (other than those
held by Dissenting Shareholders) shall be cancelled without any
repayment of capital in respect thereof;
(d) all outstanding securities of the Merging CPC's held by Dissenting
Shareholders shall be cancelled and such Dissenting Shareholders
shall become, and may assert and exercise all rights of, a creditor
of Verb until paid in full for the fair value thereof as may be
determined by the Court;
(e) the Merging CPC's shall be wound-up and dissolved in accordance with
the Final Order; and
(f) the Certificate of Incorporation, Memorandum and Articles of Verb in
effect immediately prior to the Effective Time shall continue,
uninterrupted and unaffected, upon completion of the merger of the
Merging CPC's with and into Verb as contemplated above.
2.3 On completion of all of the matters contemplated in Section 2.2 herein:
(a) Verb shall be seized of and hold and possess all the property,
rights and interests of each of the Merging CPC's and shall be
subject to all the debts, liabilities and obligations of each of the
Merging CPC's, including any obligations to the Dissenting
Shareholders of the Merging CPC's pursuant to the applicable
provisions of this Agreement, the Plan of Arrangement and the B.C.
Act, and the requirements of the Final Order and all other
applicable legislation and regulatory authorities;
(b) any existing cause of action, claim or liability for prosecution of
any of the Merging CPC's may be continued or enforced by or against
Verb;
(c) any civil, criminal or administrative action or proceeding pending
by or against any of the Merging CPC's may be continued to be
prosecuted by or against Verb; and
(d) any conviction against, or ruling under a judgment in favour of or
against, any of the Merging CPC's may be enforced by or against
Verb.
ARTICLE 3
COVENANTS OF THE CPC'S
3.1 As soon as reasonably practicable after the execution of this Agreement,
the CPC's shall jointly apply to the Court for the Interim Order and shall
thereafter use their best efforts to obtain the Interim Order in form and
substance satisfactory to Verb acting reasonably.
3.2 As soon as reasonably practicable after the receipt of the Interim Order,
the CPC's shall mutually agree upon a date for the Meeting and shall
thereafter convene and hold same in accordance with
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the applicable provisions of their constating documents, the B.C. Act and
applicable securities legislation, and the requirements of the Interim
Order, the Exchange and all other applicable legislation and regulatory
authorities.
3.3 Each of the CPC's shall recommend to their respective Securityholders that
they approve the Arrangement pursuant to the terms and conditions set
forth in this Agreement and in the Plan of Arrangement, and thereafter use
their best efforts to obtain such approval.
3.4 For purposes of preparing the Information Circular, each CPC shall
promptly submit to Verb all required disclosures (including but not
limited to the appropriate financial statements) in respect of the CPC
which are required for the due preparation thereof, and shall do all such
other acts and things as may be required to prepare the Information
Circular in accordance with the provisions of the B.C. Act and applicable
securities legislation, and the requirements of the Interim Order, the
Exchange and all other applicable legislation and regulatory authorities.
Upon the filing of the Information Circular with the Exchange, each CPC
shall promptly submit to Verb all additional disclosures and shall do all
such other acts and things as may be required to rectify any deficiencies
identified therein and finalize same for delivery to their respective
Securityholders.
3.5 As soon as reasonably practicable after the Meeting, the Approving CPC's
shall jointly apply to the Court for the Final Order and shall thereafter
use their best efforts to obtain the Final Order in form and substance
satisfactory to Verb acting reasonably.
3.6 After the date hereof and at all times until the Effective Time, each of
the CPC's shall not, without the expressed written consent of Verb:
(a) alter or amend its constating documents;
(b) allot and issue any shares of its capital or enter into any
agreement or issue any instrument granting the right, whether by
purchase, conversion, exchange or otherwise, to acquire any of its
unissued capital;
(c) declare any dividends or make any other distributions to its
shareholders;
(d) redeem, purchase or offer to purchase any of its shares or
securities;
(e) sell or otherwise dispose of or encumber any or all of its assets
other than in the ordinary course of its business as presently
conducted;
(f) directly or indirectly solicit, discuss, encourage or accept any
offer for the purchase of the CPC or the business and/or the assets
of the CPC, whether as a primary or back-up offer to the
Arrangement, or take any other action with the intention or
reasonably foreseeable effect of leading to any commitment or
agreement to sell the CPC or the business and/or the assets of the
CPC, nor will they permit any of their respective officers,
employees or agents (including without limitation, investment
bankers, attorneys and accountants) to do same;
(g) make or otherwise incur any expenditures, liabilities or obligations
or otherwise enter into any transactions or negotiations, other than
in the ordinary course of its business as presently conducted, which
could reasonably be expected to interfere with or be inconsistent
with the intent, provisions and consummation of the Arrangement; and
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(h) engage in any business, enterprise or activity materially different
from that carried on by it at the date of this Agreement, other than
in the ordinary course of its business as presently conducted.
3.7 After the date hereof and at all times until the Effective Time, each of
the CPC's shall use its reasonable best efforts:
(a) to conduct its affairs so that its representations and warranties
made herein shall remain true and correct at all times;
(b) to obtain all consents, approvals and authorizations, including but
not limited to the approval of the Court, the Exchange, and its
respective directors and Securityholders, as may be necessary or
desirable to cause the completion of the Arrangement on the terms
and conditions set forth herein and the Plan of Arrangement;
(c) to perform, observe and satisfy all other conditions to be
performed, observed and satisfied by it herein to cause the
completion of the Arrangement on the terms and conditions set forth
herein and the Plan of Arrangement; and
(d) to take such other measures as may be necessary or desirable to
cause the completion of the Arrangement on the terms and conditions
set forth herein and in the Plan of Arrangement.
ARTICLE 4
COVENANTS OF VERB
4.1 For purposes of preparing the Information Circular, Verb shall draft the
Information Circular and make all required disclosures (including but not
limited to the appropriate financial statements) in respect of Verb which
are required for the due preparation thereof, and shall do all such other
acts and things as may be required to prepare the Information Circular in
accordance with the provisions of the B.C. Act and applicable securities
legislation, and the requirements of the Interim Order, the Exchange and
all other applicable legislation and regulatory authorities. Upon the
filing of the Information Circular with the Exchange, Verb shall promptly
make all additional disclosures and do all such other acts and things as
may be required to rectify any deficiencies identified therein and
finalize same for delivery to the Securityholders.
4.2 After the date hereof and at all times until the Effective Time, Verb
shall not, without the expressed written consent of each of the CPC's:
(a) alter or amend its constating documents;
(b) allot and issue any shares of its capital or enter into any
agreement or issue any instrument granting the right, whether by
purchase, conversion, exchange or otherwise, to acquire any of its
unissued capital, except pursuant to the exercise of existing
convertible securities as set forth in Schedule "B" hereto, or in
furtherance of the private placement announced on February 18, 2003;
(c) declare any dividends or make any other distributions to its
shareholders;
(d) redeem, purchase or offer to purchase any of its shares or
securities;
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(e) sell or otherwise dispose of or encumber any or all of its assets
other than in the ordinary course of its business as presently
conducted;
(f) make or otherwise incur any expenditures, liabilities or obligations
or otherwise enter into any transactions or negotiations, other than
in the ordinary course of its business as presently conducted, which
could reasonably be expected to interfere with or be inconsistent
with the consummation of the Arrangement; and
(g) engage in any business, enterprise or activity materially different
from that carried on by it at the date of this Agreement, other than
in the ordinary course of its business as presently conducted.
4.3 After the date hereof and at all times until the Effective Time, Verb
shall use its reasonable best efforts:
(a) to conduct its affairs so that its representations and warranties
made herein shall remain true and correct at all times;
(b) to obtain all consents, approvals and authorizations, including but
not limited to the approval of the Court, the Exchange, and its
directors, as may be necessary or desirable to cause the completion
of the Arrangement on the terms and conditions set forth herein and
the Plan of Arrangement;
(c) to perform, observe and satisfy all other conditions to be
performed, observed and satisfied by it herein to cause the
completion of the Arrangement on the terms and conditions set forth
herein and the Plan of Arrangement; and
(d) to take such other measures as may be necessary or desirable to
cause the completion of the Arrangement on the terms and conditions
set forth herein and in the Plan of Arrangement.
ARTICLE 5
MUTUAL REPRESENTATIONS AND WARRANTIES
5.1 Each of the parties hereto represents and warrants to the other parties
hereto, and acknowledges that each of the other parties hereto are relying
upon such representations and warranties in connection with this
Agreement, that as of the date hereof, the Closing Date and the Effective
Time:
(a) ORGANIZATION. The respective party is a corporation duly
incorporated, organized, validly subsisting and in good standing
under the laws of British Columbia or Canada. The respective party
has the corporate power and authority to own or lease its property,
to carry on its business as now being conducted by it, and to enter
into this Agreement and perform its obligations hereunder. The
respective party is duly registered, licensed or otherwise qualified
as a company to own or lease its property and to do business in
jurisdictions where the failure to be so qualified would have a
material adverse effect on its business or property. The respective
party is duly registered, licensed or otherwise qualified as an
extra-provincial or foreign corporation and is in good standing in
any jurisdiction where the failure to be so registered, licensed or
otherwise qualified or in good standing would have a material
adverse effect on its business or property.
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(b) AUTHORIZATION. This Agreement has been duly authorized, executed and
delivered by the respective party and is a legal, valid and binding
obligation of the respective party enforceable against the
respective party by the other parties hereto in accordance with its
terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting creditors generally and except
that equitable remedies may be granted only in the discretion of a
court of competent jurisdiction.
(c) NO VIOLATION. The execution and delivery of this Agreement by the
respective party and the consummation of the transactions herein
provided for will not result in:
(i) the breach, violation or termination of any of the
provisions of, or constitute a default under, or conflict
with or cause the acceleration of any obligations of the
respective party under:
1. any material contract to which the respective party is
a party or by which the respective party is, or any of
its properties are, bound;
2. any provision of the constating documents, by-laws or
resolutions of the board of directors (or any
committee thereof) or shareholders of the respective
party, or any provision of any trust indenture or
amendment thereof;
3. any judgment, decree, order, injunction or award of
any court, governmental body or arbitrator having
jurisdiction over the respective party or any of its
assets;
4. any licence, permit, approval, consent or
authorization held by the respective party and
necessary to the operation of its business; or
5. to the best of the respective party's knowledge, any
applicable law, statute, ordinance, regulation, rule
or by-law of Canada, British Columbia or any
municipality; the violation of which would have a
material adverse effect on its business, or
(ii) the creation or imposition of any encumbrance on any of the
property or assets of the respective party.
(d) PERSONAL PROPERTY. The personal property of the respective party, as
and to the extent disclosed in the most recent of its publicly
released financial statements, is beneficially owned by the
respective party as the beneficial owner thereof with good and
marketable title thereto, free and clear of all encumbrances except
for leases, mortgages and other encumbrances on specific items of
capital equipment and property entered into in the normal course of
business and affairs of the respective party and general security
agreements securing the property and assets pursuant to the general
borrowing of monies. All material encumbrances affecting assets and
property necessary to the operation of its business have been
disclosed.
(e) REAL PROPERTY. The respective party does not own and has not agreed
to acquire any real property and does not lease and has not agreed
to lease any real property or interest in real property except as
disclosed.
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(f) ACCOUNTS RECEIVABLE. Except as disclosed, all accounts receivable,
book debts and other debts due or accruing to the respective party
are bona fide and good and, subject to an allowance for doubtful
accounts that has been reflected on the books of the respective
party in accordance with Canadian generally accepted accounting
principles, are collectible without set-off or counterclaim.
(g) INTELLECTUAL PROPERTY. Except as disclosed, the respective party is
the beneficial owner of its intellectual property, free and clear of
all encumbrances except those which may attach pursuant to general
security agreements granted in the ordinary course of its business
and affairs, and is not a party to or bound by any contract or other
obligation whatsoever that limits or impairs its ability to sell,
transfer, assign or convey, or that otherwise affects, its
intellectual property. Except as disclosed, no person has been
granted any interest in or right to use all or any portion of its
intellectual property. To the best of the respective party's
knowledge, the conduct of the its business does not infringe upon
the patents, trade marks, licenses, trade names, business names,
copyright or other industrial or intellectual property rights,
domestic or foreign, of any other person. The respective party is
not aware of any state of facts that casts doubt on the validity or
enforceability of any of its intellectual property. The respective
party has provided to the other parties hereto a true and complete
copy of all material contracts and amendments thereto that comprise
or relate to its intellectual property.
(h) INSURANCE AND BONDS. Except as disclosed, the respective party has
all of its property and assets insured against loss or damage by all
reasonable insurable hazards or risks on a replacement cost basis.
The respective party has not received notice from any insurer
denying or disputing any claim made by the respective party under
any insurance policy or denying or disputing the amount of any such
claim or any coverage for such claim.
(i) NO EXPROPRIATION. Except as disclosed, no property or asset of the
respective party has been taken or expropriated by any federal,
provincial, municipal or other authority nor has any notice or
proceeding in respect thereof been given or commenced nor is the
respective party aware of any intent or proposal to give any such
notice or commence any such proceeding.
(j) AGREEMENTS AND COMMITMENTS. Except as disclosed, the respective
party is not a party to or bound by any material contract outside
the ordinary course of its business or affairs relating to the
property, assets, business or operations of the respective party,
including, without limiting the generality of the foregoing, any
material contract outside of the ordinary course of business and
affairs relating to:
(i) any continuing contract for the purchase of materials,
supplies, equipment or services;
(ii) any distributor, sales, advertising, agency or
manufacturer's representative contract;
(iii) any collective bargaining agreement or other contract with
any labour union;
(iv) any employment or consulting contract or any other written
contract with any officer, employee or consultant other than
oral contracts of indefinite hire terminable with cause or
upon reasonable notice;
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(v) any profit sharing, bonus, stock option, pension,
retirement, disability, stock purchase, medical, dental
hospitalization, insurance or similar plan or agreement
providing benefits to any current or former director,
officer, employee or consultant;
(vi) any trust indenture, mortgage, promissory note, loan
agreement, guarantee or other contract for the borrowing of
money or a leasing transaction of the type required to be
capitalized in accordance with Canadian generally accepted
accounting principles;
(vii) any commitment for charitable contributions;
(viii) any ongoing contract for capital expenditures;
(ix) any contract for the sale of any assets outside of the
ordinary course of its business, other than inventory;
(x) any contract pursuant to which the respective party is a
lessor of any machinery, equipment, motor vehicles, office
furniture, fixtures or other personal property;
(xi) any confidentiality, secrecy or non-disclosure contract
(whether the respective party is a beneficiary or obligor
thereunder) relating to any proprietary or confidential
information or any non-competition or similar contract;
(xii) any license, franchise or other agreement that relates in
whole or in part to any intellectual property;
(xiii) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any other similar
commitment with respect to, the obligations, liabilities
(whether accrued, absolute, conditional, contingent or
otherwise) or indebtedness of any other person (except for
cheques endorsed for collection); or
(xiv) any other material contract entered into by respective party
other than in the ordinary course of its business,
and the respective party has performed all of the obligations
required to be performed by it and is entitled to all benefits
under, and is not in default or alleged to be in default in
respect of, any material contract necessary to the operation
of its business to which it is a party or by which it is
bound, and all such material contracts are in good standing
and in full force and effect, and no event, condition or
occurrence exists that, after notice or lapse of time or both,
would constitute a default under any of the foregoing. The
respective party has provided the other parties hereto a true
and complete copy of each material contract listed or to be
listed in the Information Circular and all amendments thereto.
(k) COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATION. To the best of the
respective party's knowledge, the respective party has complied with
all laws, statutes, ordinances, regulations, rules, judgments,
decrees or orders applicable to its business or the respective
party. To the best of the respective party's knowledge, the
respective party holds all necessary licences, permits,
accreditation, approvals, consents, certificates, registrations
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and authorizations (collectively, the "Licenses"), whether
governmental, regulatory or otherwise (as well as all bonds and
security provided in connection therewith), and there are no other
Licenses, whether governmental, regulatory or otherwise (as well as
bonds and security in connection therewith) necessary, to carry on
its business or to own or lease any of the property or assets
utilized by the respective party where the failure to hold such
license would have a material adverse effect on the its business.
Each such Licence is valid, subsisting and in good standing and the
respective party is not in default or breach of any such Licence and
no proceeding is pending or threatened to revoke or limit any such
Licence. The respective party has provided the other parties hereto
a true and complete copy of each Licence and all amendments thereto.
There is no undisclosed Licence ever held by or granted to the
respective party that has been suspended, revoked, terminated, put
on probation or in any manner qualified, where such fact may have a
material adverse effect on the respective party's future business.
(l) CONTRACTUAL CONSENTS AND APPROVALS. There is no requirement under
any contract relating to the related party's business to which the
related party is a party or by which it is bound to give any notice
to, or to obtain the consent or approval of, any party to such
agreement, instrument or commitment relating to the consummation of
the transactions contemplated by this Agreement where the failure to
obtain same will have a material adverse effect on the business of
the related party.
(m) FINANCIAL STATEMENTS AND FINANCIAL POSITION. The respective party's
financial statements which have been publicly disclosed have been or
will be prepared in accordance with Canadian generally accepted
accounting principles applied on a basis consistent with those used
by the respective party in the past, are materially correct and
complete, and fairly and materially present the assets, liabilities
(whether accrued, absolute, conditional, contingent or otherwise)
and financial condition of the respective party as at the respective
dates of said financial statements and the sales, earnings and
results of operations of the respective party for the respective
periods covered by said financial statements. The financial position
of the respective party is now and, at Closing, will be reasonably
comparable to that shown on or reflected in the most recent of the
respective party's financial statements which have been publicly
disclosed prior to the date hereof, except that the parties
acknowledge that Verb has, since the date of such financial
statements, had and continues to have incurred debts, expenses,
liabilities, obligations, net losses, and depleting working capital
in the ordinary course of its business and affairs.
(n) BOOKS AND RECORDS. The books and records of the respective party
fairly and correctly set out and disclose, in accordance with
Canadian generally accepted accounting principles, the financial
position of the respective party as at the date hereof and all
financial transactions of the respective party have been accurately
recorded in such books and records. The corporate records and minute
books of the respective party contain complete and accurate minutes
of all material meetings of the directors and shareholders of the
respective party, all such meetings were duly called and held, and
to the best of the respective party's knowledge, the share
certificate books, securities register and register of transfers
(being kept by a duly appointed registrar and transfer agent), and
register of directors of the respective party are materially
complete and accurate. To the extent that the respective party
maintains such documents, the said corporate records, books and
registers completely and accurately reflect all issuances and
transfer of shares in the capital of the respective party, and such
corporate records, books and registers are complete and accurate to
and including the date hereof.
-13-
(o) UNDISCLOSED LIABILITIES. The respective party has no liabilities
(whether accrued, absolute, conditional, contingent or otherwise) of
any kind except:
(i) liabilities disclosed or provided for in the most recent of
its financial statements which have been publicly disclosed
prior to the date hereof; and
(ii) liabilities incurred in the ordinary course of business
since the applicable time period set out in subsection (i)
above, which are not inconsistent with past practice and
which do not violate, in any respect, the intent of or any
covenants contained in this Agreement, or constitute a
breach of any representation or warranty made in or pursuant
to this Agreement.
(p) ABSENCE OF CERTAIN CHANGES. Since the most recent of its financial
statements which have been publicly disclosed prior to the date
hereof, the respective party has carried on its business and
conducted its operations and affairs only in the ordinary and normal
course consistent with past practice and there has not been:
(i) any undisclosed material adverse change in the condition
(financial or otherwise), assets, liabilities, operations,
earnings, business or prospects of the respective party, and
it is further acknowledged by the CPC's that Verb has
continued to incur debts, expenses, liabilities,
obligations, net losses and depleted working capital since
the most recent of said financial statements in the ordinary
course of its business and affairs;
(ii) any undisclosed material damage, destruction or loss
(whether or not covered by insurance) affecting the property
or assets of the respective party which would have a
material adverse effect on the respective party's business;
(iii) any undisclosed material obligation or liability (whether
absolute, accrued, contingent or otherwise, and whether due
or to become due) incurred by the respective party, and
provided that same has been incurred in the ordinary and
normal course of its business and consistent with past
practice and recorded in the books and records of the
respective party;
(iv) any undisclosed declaration, setting aside or payment of any
dividend or other distribution with respect to any shares in
the capital of the respective party, any direct or indirect
redemption, purchase or other acquisition of any such
shares, or any split, combination or reclassification of any
such shares, and provided that same has been incurred in the
ordinary and normal course of its business and consistent
with past practice and recorded in the books and records of
the respective party;
(v) any general increase in the annual compensation of the
employees of the respective party or any increase in any
such compensation or bonus payable or to become payable by
the respective party to any present or former director,
officer, employee, consultant or agent thereof (other than
normal annual increases in accordance with past practices of
respective party or as may be specifically mandated by any
agreement with respect to same) or the execution of any
employment contract with any officer or employee containing
terms which, taken as a whole, exceed the industry norm for
a company in the respective party's
-14-
industry and at the respective party's stage of development,
or the making of any loan to, or engagement in any
transaction with, any employee, officer or director of the
respective party other than on terms no less advantageous to
the respective party than generally available to it from
third parties;
(vi) any undisclosed change in the accounting or tax practices
followed by the respective party; or
(vii) any undisclosed change adopted in the depreciation or
amortization policies of the respective party or the rates
thereof, or any change in the credit terms offered to
customers of, or by suppliers to, the respective party.
(q) TAXES. Except as disclosed herein, the respective party has duly
filed on a timely basis all tax returns required to be filed by it
and has paid all taxes, and all assessments, reassessments,
governmental charges, penalties, interest and fines due and payable
by it. The respective party has made adequate provision for taxes
payable by it for the current period and any previous period for
which tax returns are not yet required to be filed. There are no
actions, suits, proceedings, investigations or claims pending or
threatened against the respective party in respect of taxes,
governmental charges or assessments, nor are any matters under
discussion with any governmental authority relating to taxes,
governmental charges or assessments asserted by any such authority.
To the best of its knowledge, the respective party has withheld from
each payment made to any of its past or present employees, officers
or directors, and to any non-resident of Canada, the amount of all
taxes and other deductions required to be withheld therefrom and has
paid the same to the proper tax or other receiving officers within
the time required under any applicable legislation. The respective
party has remitted to the appropriate tax authority when required by
law to do so all amounts collected by it on account of GST. The
Canadian federal income tax liability and the provincial tax
liability of the respective party has been assessed by Revenue
Canada and the British Columbia Ministry of Finance, respectively,
for all fiscal years up to and including the most recently completed
fiscal year, and except as disclosed there are no agreements,
waivers or other arrangements providing for an extension of time
with respect to the filing of any tax return by, or payment of any
tax, governmental charge or deficiency against the respective party.
The respective party has provided the other parties here a true copy
of all tax returns filed by it in respect of the past three fiscal
years (or such shorter period as the respective party has been in
existence). Verb has not filed any tax returns, and accordingly its
tax liability has not been assessed by Revenue Canada or the British
Columbia Ministry of Finance; notwithstanding the foregoing, to the
best of Verb's knowledge, there are no assessments, reassessments,
governmental charges, penalties interest and fines are due and
payable by it.
(r) LITIGATION. Except as disclosed, there are no actions, suits or
proceedings (whether or not purportedly on behalf of the respective
party) pending or threatened against, or affecting, the respective
party at law or in equity, or by or before any federal, provincial,
municipal or other governmental department, court, commission,
board, bureau, agency or instrumentality, domestic or foreign, or by
or before an arbitrator or arbitration board. The respective party
is not aware of any ground on which any such action, suit or
proceeding might be commenced with any reasonable likelihood of
success. Except as disclosed, there are no judgments, decrees,
orders or awards of any court, governmental body or arbitration
affecting the respective party at law or in equity.
-15-
(s) RESIDENCY. The respective party is a resident of Canada for the
purposes of the Income Tax Act.
(t) DIVIDENDS. The respective party has not, directly or indirectly,
declared or paid any dividends or declared or made any other
distribution on any of its shares of any class and has not, directly
or indirectly, redeemed, purchased or otherwise acquired any of its
outstanding shares of any class or agreed to do so.
(u) NON-ARM'S LENGTH TRANSACTIONS. The respective party will not at
Closing have made any payment or loan to, or borrowed any moneys
from or be otherwise indebted to, any officer, director or employee
of the respective party or any other person not dealing at arm's
length with the respective party (within the meaning of the Income
Tax Act), except as disclosed and except for usual employee
reimbursements and compensation paid, or accruals therefor, in the
ordinary and normal course of its business and affairs and
consistent with past practice. Except as disclosed, the respective
party is not a party to any contract with any officer, director or
employee of the respective party or any other person not dealing at
arm's length with Verb (within the meaning of the Income Tax Act)
outside the ordinary course of its business and on terms no less
advantageous to the respective party than generally available to it
from third parties.
(v) CONFLICTS. Except as disclosed, no officer or director of the
respective party:
(i) owns, directly or indirectly, any interest in, or is an
officer, director, employee or consultant of any person
which is or is engaged in business as, a competitor of Verb
or its business;
(ii) is a lessor, lessee, supplier, distributor, sales agent or
customer of Verb or its business on terms no less
advantageous to the respective party than generally
available to it from third parties;
(iii) owns, directly or indirectly, in whole or in part, any
property that Verb uses in the operation of its business; or
(iv) has any cause of action or other claim whatsoever against,
or owes any amount to, the respective party in connection
with its business, except for any liabilities reflected in
the most recent of its financial statements, and claims in
the ordinary and normal course of business, such as for
accrued salary, vacation pay and accrued benefits under the
employee plans.
(w) ENVIRONMENTAL. Except as disclosed:
(i) to the best of its knowledge, the respective party has been
and is in compliance with all applicable federal,
provincial, state, municipal and local laws, statutes,
ordinances, by-laws, regulations, 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;
(ii) to the best of its knowledge, the respective party has not
used or permitted to be used, except in compliance with all
Environmental Laws, any of its property or
-16-
facilities or any property or facility that it previously
owned or leased, to generate, manufacture, process,
distribute, use, treat, store, dispose of, transport or
handle any Hazardous Substance;
(iii) there are no orders or directions relating to environmental
matters requiring any work, repairs, construction or capital
expenditures with respect to the respective party's business
on property, nor has it received any notice of the same; and
(iv) to the best of its knowledge, no building, structure or
improvement located on the real property owned, leased or
rented by the respective party is insulated with urea
formaldehyde insulation, nor do such buildings or structures
contain any aluminium wiring or friable asbestos or any
other substance containing asbestos.
(x) EMPLOYEE PLANS. Except as disclosed, each retirement, pension,
bonus, stock purchase, profit sharing, stock option, deferred
compensation, severance or termination pay, insurance, medical,
hospital, dental, vision care, drug, sick leave, disability, salary
continuation, legal benefits, unemployment benefits, vacation,
incentive or other compensation plan or arrangement or other
employee benefit that is required to be maintained or otherwise
contributed to by the respective party for the benefit of its
employees or former employees of the respective party has been
maintained in compliance with its terms and with the requirements
prescribed by any applicable statutes, orders, rules and
regulations, and except as disclosed, all contributions to, and
payments from, each of the foregoing that may have been required to
be made in accordance with its terms or any applicable statutes,
orders, rules and regulations, have been made in a timely manner.
Verb has ceased to make payments on all third party benefit plans,
which fact has been acknowledged in writing by Verb's employees. In
addition, Verb is in arrears with respect to its Medical Service
Plan payments, although it has reached an agreement with the
responsible Ministry for the continuing coverage of its employees as
part of a structured repayment plan.
(y) COLLECTIVE AGREEMENTS. Except as disclosed, the respective party has
not made any contracts with any labour union or employee association
nor made commitments to or conducted negotiations with any labour
union or employee association with respect to any such contracts in
the future. The respective party is not aware of any current
attempts to organize or establish any labour union or employee
association with respect to any employees of the respective party,
nor is there any certification of any such union with regard to a
bargaining unit.
(z) EMPLOYEES. Except as disclosed, no notice has been received by the
respective party of any complaints filed by any of the employees
against the respective party claiming that the respective party has
violated the Employment Standards Act (British Columbia) or the
Human Rights Code (British Columbia), or of any complaints or
proceedings of any kind involving the respective party or any of its
employees before any labour relations board. There are no
outstanding orders or charges against the respective party under the
Occupational Health and Safety Act (British Columbia). All levies,
assessments and penalties made against the respective party pursuant
to the Workers' Compensation Act (British Columbia) have been paid
by the respective party, and the respective party has not been
reassessed under any such legislation.
(aa) EMPLOYEE ACCRUALS. All accruals for unpaid vacation pay, premiums
for unemployment insurance, health premiums, Canada Pension Plan
premiums, accrued wages, salaries and commissions and employee
benefit plan payments have been reflected in the books and
-17-
records of the respective party and the most recent of its publicly
filed financial statements.
(bb) FULL DISCLOSURE. Neither this Agreement nor any document delivered
or to be delivered pursuant to this Agreement by the respective
party nor any certificate, report, statement or other document
furnished by the respective party in connection with the negotiation
of this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not
misleading. There has been no event, transaction or information that
has come to the attention of the respective party that has not been
disclosed to the other parties hereto in writing that could
reasonably be expected to have a material adverse effect on the
assets, business, earnings, prospects, properties or condition
(financial or otherwise) of the respective party.
ARTICLE 6
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF VERB
6.1 Verb represents and warrants to the CPC's, and acknowledges that each of
the CPC's are relying upon such representations and warranties in
connection with this Agreement, that as of the date hereof, the Closing
Date and the Effective Time:
(a) AUTHORIZED AND ISSUED CAPITAL. The authorized capital of Verb
consists of an unlimited number of common shares without par value
of which 10,383,956 are issued and outstanding as at the date
hereof. All of the issued and outstanding common shares of Verb are
fully paid and non-assessable.
(b) OPTIONS. Except for incentive stock options and warrants summarized
in Schedule "B" hereto, 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 any warrants,
convertible securities or convertible obligations of any nature, for
the purchase, subscription, allotment or issuance of any of the
unissued shares or other securities of Verb.
(c) NO SUBSIDIARIES. Other than the Verb Subsidiaries, Verb does not own
and does not have any agreement to acquire, directly or indirectly,
any shares in the capital of or any other equity or proprietary
interests in any person, and Verb does not have any agreement to
acquire or lease any other business operations other than in the
ordinary course of business as presently conducted.
(d) BUSINESS OF VERB. Except as disclosed, the property and assets owned
or leased by Verb are sufficient to carry on its business at its
present stage of development, all of the property and assets owned
and used by Verb are in good operating condition and are in a state
of good repair and maintenance, having been operated, repaired and
maintained to the standard of care of a reasonable and prudent
owner. Except as disclosed, during the two years preceding the date
of this Agreement, there has not been any significant interruption
of its operations (being an interruption of more than one day) due
to inadequate maintenance of any of the property and assets owned or
used by Verb.
-18-
ARTICLE 7
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE CPC'S
7.1 Millennium represents and warrants to the other parties hereto, and
acknowledges that each of the other parties hereto are relying upon such
representations and warranties in connection with this Agreement, that as
of the date hereof, the Closing Date and the Effective Time:
(a) AUTHORIZED AND ISSUED CAPITAL. The authorized capital of Millennium
consists of 100,000,000 common shares without par value of which
2,799,999 are issued and outstanding as at the date hereof. All of
the issued and outstanding common shares are fully paid and
non-assessable.
(b) OPTIONS. Except for the Millennium Options, no person has any
agreement or option, or any right or privilege (whether by law,
pre-emptive right or contractual) capable of becoming an agreement
or option, including any warrants, convertible securities or
convertible obligations of any nature, for the purchase,
subscription, allotment or issuance of any of the unissued shares or
other securities of Millennium.
(c) NO SUBSIDIARIES. Millennium does not own and does not have any
agreement to acquire, directly or indirectly, any shares in the
capital of or any other equity or proprietary interests in any
person, and Millennium does not have any agreement to acquire or
lease any other business operations other than in the ordinary
course of business as presently conducted.
(d) BUSINESS OF MILLENNIUM. Millennium is a "capital pool company"
pursuant to the policies of the Exchange and has not conducted any
business activity other than the identification of potential assets
or businesses for acquisition, nor has it entered into any
agreements or otherwise become liable in any manner whatsoever to
acquire or operate any assets or businesses. Millennium has no
debts, liabilities, obligations or cash commitments of any nature or
kind, whether absolute or conditional, whether accrued or unaccrued,
or whether arising in contract or otherwise, other than as disclosed
in the Letter of Intent, or incurred in the ordinary course of
business.
7.2 Lattice represents and warrants to the other parties hereto, and
acknowledges that each of the other parties hereto are relying upon such
representations and warranties in connection with this Agreement, that as
of the date hereof, the Closing Date and the Effective Time:
(a) AUTHORIZED AND ISSUED CAPITAL. The authorized capital of Lattice
consists of 100,000,000 common shares without par value of which
3,350,000 are issued and outstanding as at the date hereof. All of
the issued and outstanding common shares are fully paid and
non-assessable.
(b) OPTIONS. Except for the Lattice Options, no person has any agreement
or option, or any right or privilege (whether by law, pre-emptive
right or contractual) capable of becoming an agreement or option,
including any warrants, convertible securities or convertible
obligations of any nature, for the purchase, subscription, allotment
or issuance of any of the unissued shares or other securities of
Lattice.
(c) NO SUBSIDIARIES. Lattice does not own and does not have any
agreement to acquire, directly or indirectly, any shares in the
capital of or any other equity or proprietary
-19-
interests in any person, and Lattice does not have any agreement to
acquire or lease any other business operations other than in the
ordinary course of business as presently conducted.
(d) BUSINESS OF LATTICE. Lattice is a "capital pool company" pursuant to
the policies of the Exchange and has not conducted any business
activity other than the identification of potential assets or
businesses for acquisition, nor has it entered into any agreements
or otherwise become liable in any manner whatsoever to acquire or
operate any assets or businesses. Lattice has no debts, liabilities,
obligations or cash commitments of any nature or kind, whether
absolute or conditional, whether accrued or unaccrued, or whether
arising in contract or otherwise, other than as disclosed in the
Letter of Intent, or incurred in the ordinary course of business.
ARTICLE 8
CONDITIONS PRECEDENT
8.1 The obligations of Verb and each of the CPC's to complete the Arrangement
as between Verb and the respective CPC shall be conditional upon the
satisfaction of the following conditions for the mutual benefit of Verb
and the respective CPC, which may be waived in whole or in part by mutual
consent of said parties at any time on or before Closing:
(a) all necessary special resolutions shall have been passed by the
respective CPC's Securityholders, and such other persons involved
with the CPC as may be required pursuant to the Interim Order, in
form and substance satisfactory to Verb acting reasonably, duly
approving the Arrangement, this Agreement, the Plan of Arrangement,
and the transactions contemplated herein and therein, in accordance
with the applicable provisions of the respective CPC's constating
documents, the B.C. Act and applicable securities legislation, and
the requirements of the Interim Order, the Exchange, and all other
applicable legislation and regulatory authorities;
(b) Verb and the respective CPC shall have obtained all other consents,
approvals and authorizations, including but not limited to the
approval of the Court, the Exchange, and its respective directors,
on terms and conditions satisfactory to Verb and the respective CPC
acting reasonably, as may be necessary or desirable to effect the
Arrangement pursuant to the terms and conditions set forth in this
Agreement and in the Plan of Arrangement; and
(c) the Final Order shall have been granted by the Court in form and
substance satisfactory to Verb acting reasonably.
8.2 The obligations of Verb to complete the Arrangement as between Verb and
each of the CPC's shall be conditional upon the satisfaction of the
following conditions for the sole benefit of Verb, which may be waived in
whole or in part by Verb at any time on or before Closing:
(a) the representations and warranties made by the respective CPC to
Verb herein shall be true and correct in all material respects as of
the Closing Date as if made on such date;
(b) the covenants to be performed and the continuing covenants to be
observed by the respective CPC herein shall have been performed and
observed as at the Closing Date;
-20-
(c) there shall be no material adverse change in the business,
operations, affairs, assets, property, liabilities, financial
condition or capital structure of the respective CPC as at the
Closing Date from that as at the effective date of the Letter of
Intent;
(d) there shall be no material adverse change in the amount of Net Cash
held by the respective CPC as at the Closing Date from that as at
the effective date of the Letter of Intent;
(e) the holders of the respective CPC's common shares and convertible
securities, and any other applicable stakeholders in the affairs of
the CPC, shall not have exercised rights of dissent in connection
with the Arrangement to materially effect, in Verb's sole
discretion, acting reasonably, the benefits to Verb of the
transactions contemplated herein;
(f) each of the directors and officers of the respective CPC shall have
tendered their written resignations as directors and officers of the
CPC to be effective on the Effective Time, together with a written
release of all claims and causes of action against Verb and the
respective CPC;
(g) there shall be no action taken under any existing or future law,
regulation, rule, order or policy that imposes any material
limitation on the ability of Verb to effectively exercise full and
exclusive rights of ownership over the assets of the respective CPC
as at the Closing Date;
(h) the Final Order shall have been granted by the Court in form and
substance satisfactory to Verb acting reasonably, on or before June
30, 2003; and
(i) the respective CPC shall have delivered to Verb at the Closing, in
escrow pursuant to the terms hereof, all of the documents required
herein to be delivered to Verb.
8.3 The obligations of each of the CPC's to complete the Arrangement as
between Verb and the respective CPC shall be conditional upon the
satisfaction of the following conditions for the sole benefit of the
respective CPC, which may be waived in whole or in part by the respective
CPC at any time on or before Closing:
(a) the representations and warranties made by Verb to the respective
CPC herein shall be true and correct in all material respects as of
the Closing Date as if made on such date;
(b) the covenants to be performed and the continuing covenants to be
observed by Verb herein shall have been performed and observed as at
the Closing Date;
(c) there shall be no material adverse change in the business,
operations, affairs, assets, property, liabilities, financial
condition or capital structure of Verb as at the Closing Date from
that as at the effective date of the Letter of Intent;
(d) there shall be no action taken under any existing or future law,
regulation, rule, order or policy that imposes any material
limitation on the ability of Verb to effectively issue the Vend-In
Shares or the warrants issuable in exchange for the Millennium
Options and Lattice Options (the "Vend-In Warrants") in accordance
with the Arrangement on the terms and conditions set forth herein
and the Plan of Arrangement;
-21-
(e) Verb shall have negotiated agreements acceptable to the CPC's,
acting reasonably, for the settlement of all outstanding payables;
(f) agreements acceptable to the CPC's will be negotiated, which shall
provide for a more meaningful equity position (including incentive
stock options and/or private options with existing Verb
securityholders) to be held by Verb's Chief Executive Officer and
other identified members of management;
(g) each CPC participating in the Plan of Arrangement shall be entitled
to appoint one new nominee to the Board of Directors of Verb;
(h) and
(i) Verb shall have delivered to the respective CPC at the Closing, in
escrow pursuant to the terms hereof, all of the documents required
herein to be delivered to the respective CPC.
ARTICLE 9
CLOSING
9.1 Upon receipt of the Final Order, the parties shall determine the Closing
Date.
9.2 The Closing shall be held on the Closing Date at such time and place as
may be determined by the parties.
9.3 At the Closing, Verb shall deliver the following documents, to be placed
in escrow pending the Effective Time, to each of the Merging CPC's:
(a) a certified copy of the resolutions of its directors duly approving
the Arrangement, this Agreement, the Plan of Arrangement, and the
transactions contemplated herein and therein, including but not
limited to the execution and delivery of all the documents and the
performance and completion of all transactions contemplated herein
and therein;
(b) an irrevocable treasury order to Pacific Corporate Trust Company,
Verb's registrar and transfer agent, to issue the respective Vend-In
Shares to the respective Shareholders of the Merging CPC who are
entitled to receive such securities in accordance with the
Arrangement on the terms and conditions set forth herein and the
Plan of Arrangement;
(c) certificates representing the respective Vend-In Warrants,
registered to the respective Optionholders of the Merging CPC who
are entitled to receive such securities in accordance with the
Arrangement on the terms and conditions set forth herein and the
Plan of Arrangement; and
(d) such other instruments and documents as may be appropriate or
necessary to give effect to the transactions contemplated herein.
9.4 At the Closing, each of the Merging CPC's shall deliver the following
documents, to be placed in escrow pending the Effective Time, to Verb:
(a) a certified copy of the resolutions of its directors duly approving
the Arrangement, this Agreement, the Plan of Arrangement, and the
transactions contemplated herein and
-22-
therein, including but not limited to the execution and delivery of
all the documents and the performance and completion of all
transactions contemplated herein and therein;
(b) the minute books of the respective Merging CPC;
(c) all financial information relating to the respective Merging CPC and
its business, including but not limited to all tax filings,
accounting records, books of account, ledgers, invoices, purchase
orders, bills of lading and receipts;
(d) written resignations from all of the directors and officers of the
Merging CPC, to be effective on the Effective Time, together with a
written release of all claims and causes of action against Verb and
the respective CPC; and
(e) such other instruments and documents as may be appropriate or
necessary to give effect to the transactions contemplated herein.
9.5 Immediately upon the completion of the Closing, Verb shall file a
certified copy of the Final Order for acceptance by the Registrar. At the
Effective Time, being the acceptance of the Final Order by the Registrar,
escrow shall be broken and the documents subject thereto shall be
delivered to the parties entitled to same.
9.6 In the event that the Closing does not occur on or before June 30, 2003,
or on such other date as may be mutually agreed upon by Verb and the
Merging CPC's, then this Agreement shall terminate and be of no further
force and effect.
ARTICLE 10
GENERAL
10.1 NOTICES. All notices which may be or are required to be given hereunder
shall be given in writing and shall be delivered in person or by facsimile
transmission with confirmed receipt at:
(a) if to Verb:
Verb Exchange Inc.
Xxxxx 000 - 0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX, X0X 0X0
Attention: Xxxxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to a respective CPC:
Millennium Ventures Ltd.
Xxxxx 0000 - 000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX, X0X 0X0
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
-00-
Xxxxxxx Xxxxxxx Xxxxxxxxxxx
Xxxxx 0000 - 000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX, X0X 0X0
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) with a copy, in all cases, to:
Anfield Xxxxx Xxxxxxx & Durno
Suite 1600 - 000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX, X0X 0X0
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as any one of the parties may, from time to time,
advise the other parties by notice in writing in accordance with the
foregoing. Notices shall be deemed received on the date of delivery or
facsimile, provided that if such is not a Business Day, receipt shall be
deemed on the first Business Day following.
10.2 ENTIRE AGREEMENT AND AMENDMENT. This Agreement, together with the
Schedules hereto, constitutes the entire agreement between the parties
relating to the subject matter hereof. Any amendment of the terms and
conditions hereof shall only be effective if in writing and signed by the
parties affected by the amendment.
10.3 WAIVERS. Any waiver of the terms and conditions hereof shall only be
effective if given in writing and signed by the party giving the waiver.
No waiver of any provision of this Agreement shall constitute a waiver of
any other provision hereof nor shall any waiver constitute a continuing
waiver unless so provided in the terms thereof.
10.4 FURTHER ASSURANCES. Each of the parties will, from time to time both
before and after the Effective Time, promptly execute and deliver any and
all such further instruments and documents and do any and all such further
acts and things as may be reasonably required by another party to carry
out the provisions and intent of this Agreement.
10.5 ASSIGNMENT, SUCCESSORS AND ASSIGNS. This Agreement is personal in nature
and may not be assigned by any party hereto without the prior written
consent of the other parties hereto. This Agreement shall enure to the
benefit of and be binding upon the parties and their respective successors
and permitted assigns.
10.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the province of British Columbia and the
federal laws of Canada applicable therein. The parties agree to attorn to
the jurisdiction of the courts of British Columbia with respect to any
dispute relating to this Agreement.
10.7 COSTS AND EXPENSES. Each of the parties hereto shall be responsible for
its own costs and expenses incurred in connection with the preparation of
this Agreement and the consummation of the transactions contemplated
hereby.
10.8 TIME. Time shall be of the essence in this Agreement and shall be
interpreted in accordance with the provisions of the Interpretation Act
(British Columbia).
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10.9 COUNTERPARTS AND DELIVERY. This Agreement may be signed in counterparts
and delivered by facsimile. Each counterpart, when signed and delivered,
shall be deemed an original and together shall constitute one and the same
instrument bearing the date first noted above, notwithstanding the actual
date of execution.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of
the date first noted above.
VERB EXCHANGE INC.
Per: /s/ Xxxxxxxxx Xxxxxxx
-----------------------------------
Authorized Signatory
MILLENNIUM VENTURES LTD.
Per: /s/ Xxxx Xxxxx
-----------------------------------
Authorized Signatory
LATTICE CAPITAL CORPORATION
Per: /s/ Xxxx Xxxxxx
-----------------------------------
Authorized Signatory
SCHEDULE "A"
to the Arrangement Agreement between Verb Exchange Inc.,
Millennium Ventures Ltd. and Lattice Capital Corporation
* * * * *
PLAN OF ARRANGEMENT
-------------------
Under Section 252 of the Company Act (British Columbia)
ARTICLE 1
ARRANGEMENT AGREEMENT
1.1 This Plan of Arrangement is made pursuant and subject to the provisions of
the Arrangement Agreement among Verb Exchange Inc., Millennium Ventures
Ltd. and Lattice Capital Corporation dated the 28th day of March, 2003
(the "Agreement").
ARTICLE 2
DEFINITIONS
2.1 Unless otherwise defined, all capitalized terms used herein shall have the
meaning ascribed thereto in the Agreement.
ARTICLE 3
BINDING EFFECT
3.1 Upon being approved by the requisite majority of all a respective CPC's
respective Securityholders in accordance with the terms of the Interim
Order, and upon the granting of the Final Order and the satisfaction or
waiver of all the other conditions required to obligate a CPC to fulfill
its obligations hereunder, the Plan of Arrangement will be binding on such
CPC and all of the holders of its securities.
ARTICLE 4
THE ARRANGEMENT
4.1 At the Effective Time, the following events and transactions will occur.
Such events and transactions will be deemed to occur in the following
order, without any further act or formality on the part of any of the
parties to the Arrangement and notwithstanding any provisions contained
in, or attached to, the constating documents or any outstanding securities
of Verb, Millennium, and Lattice:
(a) the Merging CPC's shall merge with and into Verb pursuant to section
252 of the Company Act (British Columbia), such that Verb shall
continue as the surviving corporation and such that Verb shall be
seized of and hold and possess all the property, rights and
interests of each of the Merging CPC's and shall be subject to all
the debts, liabilities and obligations of each of the Merging CPC's,
including any obligations to the Dissenting Shareholders of the
Merging CPC's pursuant to the applicable provisions of the
Agreement, this Plan of Arrangement and the B.C. Act, and the
requirements of the Final Order and all other applicable legislation
and regulatory authorities;
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(b) all outstanding securities of the Merging CPC's (other than those
held by Dissenting Shareholders) shall be exchanged into common
shares of Verb and warrants evidencing the right to purchase common
shares of Verb, as provided for in section 4.2 herein;
(c) all outstanding securities of the Merging CPC's (other than those
held by Dissenting Shareholders) shall be cancelled without any
repayment of capital in respect thereof;
(d) all outstanding securities of the Merging CPC's held by Dissenting
Shareholders shall be cancelled and such Dissenting Shareholders
shall become, and may assert and exercise all right of, a creditor
of Verb until paid in full for the fair value thereof as may be
determined by the Court;
(e) the Merging CPC's shall be wound-up and dissolved in accordance with
the Final Order; and
(f) the Certificate of Incorporation, Memorandum and Articles of Verb in
effect immediately prior to the Effective Time shall continue,
uninterrupted and unaffected, upon completion of the merger of the
Merging CPC's into Verb as contemplated above.
4.2 At the Effective Time, the number of Vend-In Shares and the number and
terms of the Vend-In Warrants to be issued to a Merging CPC's respective
Securityholders will be based upon the amount of Net Cash of the
respective Merging CPC as at the Effective Time. Subject to the
adjustments set out below, the following Vend-In Shares and Vend-In
Warrants will be issued:
(a) Based on the amount of Net Cash of Millennium as at the time of the
execution of the Letter of Intent, the holders of Millennium Shares
on the Effective Date will be entitled to receive an aggregate of
approximately 1,369,500 Vend-In Shares, on a pro rata basis;
(b) Based on the amount of Net Cash of Millennium as at the time of the
execution of the Letter of Intent, the holders of Millennium Options
on the Effective Date will be entitled to receive an aggregate of
130,428 Vend-In Warrants, on a pro rata basis exercisable at $0.31
per share until December 20, 2004;
(c) Based on the amount of Net Cash of Lattice as at the time of the
execution of the Letter of Intent, the holders of Lattice's Shares
on the Effective Date will be entitled to receive an aggregate of
approximately 1,216,545 Vend-In Shares, on a pro rata basis;
(d) Based on the amount of Net Cash of Lattice as at the time of the
execution of the Letter of Intent, the holders of Lattice Options on
the Effective Date will be entitled to receive an aggregate of
121,655 Vend-In Warrants on a pro rata basis exercisable at $0.41
per share until December 20, 2004;
always provided that the aggregate number of Vend-In Shares issued to a
Merging CPC's respective Shareholders will be reduced or increased by one
(1) Vend-In Share for each $0.18 decrease or increase, respectively, in
Net Cash held by the Merging CPC at the Effective Time as compared to the
Net Cash held by the CPC at the time of execution of its Letter of Intent
(and provided that a Merging CPC may expend cash on certain permitted
expenditures and up to $2,500 on non-permitted expenditures, as set forth
in the Letter of Intent, without triggering the aforementioned
adjustment), including but not limited to a downward adjustment in Net
Cash to
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represent the cash value of the obligations owed to the Dissenting
Shareholders of the Merging CPC.
Likewise, the aggregate number of Vend-In Warrants and the exercise price
thereof, to be issued to a Merging CPC's respective Optionholders, will be
adjusted in the same manner.
ARTICLE 5
CERTIFICATES EXCHANGE AND PAYMENTS
5.1 After the Effective Time, certificates representing a Merging CPC's
respective former CPC Securities, other than those to which Article 6
herein applies, shall represent only the right to receive certificates
representing the Vend-In Shares and Vend-In Warrants which the former
holder of such former CPC Securities is entitled to receive pursuant to
the Arrangement and, with respect to Vend-In Shares, upon compliance with
the requirements of Section 5.4 herein.
5.2 After the Effective Time, certificates representing a Merging CPC's
respective former CPC Securities to which Article 6 herein applies shall
represent only the right to receive payment, or Vend-In Shares and Vend-In
Warrants (should the demand for purchase be subsequently withdrawn with
the expressed consent of Verb), which the Dissenting Shareholders are
entitled to receive pursuant to Article 6 herein.
5.3 No fractional Vend-In Shares or Vend-In Warrants will be issued pursuant
to this Arrangement, and a Securityholder who would otherwise be entitled
to a fractional share or warrant which is 0.5 or more will be issued one
additional whole Vend-In Share or Vend-In Warrant, as applicable, in lieu
of such fractional share or warrant, but a fractional share or warrant
which is less than 0.5 will be ignored.
5.4 As soon as reasonably practicable after the Effective Time, Verb shall
forward or cause to be forwarded to each of the Merging CPC's respective
former Shareholders, other than those to which Article 6 applies, a Letter
of Transmittal containing instructions for the obtaining of certificates
representing the appropriate Vend-In Shares to be issued pursuant to the
Arrangement.
Upon the later of (i) the Effective Time and (ii) the date of deposit by a
Merging CPC's respective former Shareholder, other than those to which
Article 6 applies, with the Depository of a duly completed Letter of
Transmittal together with the certificates representing the Merging CPC's
former common shares held by such former Shareholder, Verb shall:
(a) forward or cause to be forwarded, by first class mail (postage
prepaid) to the address specified in such former Shareholder's
Letter of Transmittal; or
(b) if requested by such former Shareholder in the Letter of
Transmittal, make available or cause to be made available at the
Depositary for pickup by such holder,
certificates representing the requisite number of Vend-In Shares as
determined pursuant to Article 4 herein, registered in the name of the
person specified in such former Shareholder's Letter of Transmittal.
5.5 As soon as reasonably practicable after the Effective Time, Verb shall
forward or cause to be forwarded to each of the Merging CPC's respective
former Optionholders, other than those to whom Article 6 applies, by first
class mail (postage prepaid) to the address of the former Optionholder as
shown in the appropriate register maintained by the Merging CPC,
certificates
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representing the requisite number of Vend-In Warrants as determined
pursuant to Article 4 herein, registered in the name of the former
Optionholder.
5.6 The former holders of each of the Merging CPC's respective former CPC
Securities shall not be entitled to any interest, dividend, premium or
other payment on or with respect to such former CPC Securities, other than
the delivery of Vend-In Shares, Vend-In Warrants or the fair value of such
CPC Securities in connection with the valid exercise of dissent rights, as
applicable, which they are entitled to receive pursuant to the
Arrangement.
5.7 Any certificate representing a Merging CPC's former common shares that is
not deposited as provided for in section 5.4 herein on or before the sixth
anniversary of the Closing Date shall cease to represent a right or claim
of any kind or nature, and the right and claim of the former holder of
such former common shares to receive the Vend-In Shares as provided for
herein and the certificates representing same shall be deemed to be
surrendered to and for the benefit of Verb together with all dividends or
distributions thereon held for the former holder of such former common
shares.
5.8 All dividends paid or distributions made in respect of Vend-In Shares to
be issued to a former holder of a Merging CPC's former common shares for
which a certificate representing the Vend-In Shares has not been delivered
to such former holder in accordance with section 5.4 herein (an
"Untendered Share") shall be paid or delivered to such Depositary, to be
held in trust for such former holder for delivery to such former holder
(subject to section 5.6 herein), net of all withholding and other taxes,
upon delivery of the certificate representing such Vend-In Shares in
accordance with section 5.4 herein.
In the event there shall be (i) a reclassification of Verb's outstanding
common shares, a change in Verb's common shares into other shares or
securities, a subdivision or consolidation of Verb's common shares into a
greater or lesser number of common shares, or any other capital
reorganization of Verb, or (ii) a consolidation, amalgamation or merger of
Verb with or into any other corporation other than a consolidation,
amalgamation or merger which does not result in any reclassification of
Verb's outstanding common shares or a change in Verb's common shares into
other shares or securities (any of such events being called a "Capital
Reorganization"), any persons entitled to Untendered Shares shall be
entitled to receive, at no additional cost, and shall accept in lieu of
the number of Untendered Shares to which such person was theretofore
entitled to acquire, the aggregate number of shares, other securities or
other property which such person should have been entitled to receive as a
result of such Capital Reorganization if, on the effective date or record
date thereof as the case may be, such person had held the number of
Untendered Shares to which such person was theretofore entitled to acquire
pursuant to the Arrangement. If determined appropriate by Verb acting
reasonably, appropriate adjustments shall be made in the application of
the provisions set forth herein with respect to the rights and interests
of such person in respect of a Capital Reorganization, to the end that the
provisions set forth herein shall correspond as nearly as may be
reasonably possible to the effect of the Capital Reorganization with
regard to the Untendered Shares pursuant to the Arrangement. Any such
adjustment made by and approved by the directors of Verb shall for all
purposes be conclusively deemed to be an appropriate adjustment.
ARTICLE 6
RIGHTS OF DISSENT
6.1 Notwithstanding Article 4, Shareholders of a Merging CPC may exercise a
right of dissent (the "Right of Dissent") pursuant to the provisions of
the Interim Order and this Article 6.
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6.2 A Shareholder who wishes to exercise his or her Right of Dissent must give
written notice of his or her dissent (a "Notice of Dissent") to the
applicable Merging CPC by depositing such Notice of Dissent with the
Merging CPC, or mailing it by registered mail, c/o Anfield Xxxxx Xxxxxxx &
Durno at 1600 - 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X
0X0, marked to the attention of Xxxx Xxxxx, or by personally serving it on
any director or officer of the respective Merging CPC, in all cases not
later than 48 hours before the Meetings. To be valid, a Notice of Dissent
must:
(a) state that the Shareholder is exercising its Right of Dissent; and
(b) specify the number of Millennium Shares or Lattice Shares (which
must not be less than all of the Millennium Shares or Lattice Shares
held by such person) in respect of which such Shareholder is
exercising its Right of Dissent.
6.3 The giving of a Notice of Dissent does not deprive a Shareholder of its
right to vote at the applicable Meeting against the resolution approving
the Arrangement. A vote against such resolution or the execution or
exercise of a proxy does not constitute a Notice of Dissent.
6.4 A Shareholder is not entitled to exercise a Right of Dissent with respect
to any Millennium Shares or Lattice Shares, as the case may be, if the
Shareholder votes (or instructs or is deemed, by submission of any
incomplete proxy, to have instructed its proxyholder to vote) in favour of
the resolution approving the Arrangement. A Shareholder, however, may vote
as proxy for a Shareholder whose proxy requires an affirmative vote,
without affecting his or her right to exercise the Right of Dissent.
6.5 If the resolution approving the Arrangement is passed by the applicable
CPC, the applicable Merging CPC will give each Shareholder that has
delivered a valid Notice of Dissent (being the "Dissenting Shareholders")
prior notice of its intention to act (a "Notice of Intention to Act") on
such resolution.
6.6 On receiving a Notice of Intention to Act in accordance with Section 6.5,
the Dissenting Shareholder is entitled to require the applicable Merging
CPC to purchase all of the Millennium Shares or Lattice Shares in respect
of which the Notice of Dissent was given.
6.7 The Dissenting Shareholder may only exercise the right under Section 6.6
by delivering to the applicable Merging CPC, at the address specified in
Section 6.2 within 14 days after the Merging CPC gives the Notice of
Intention to Act in accordance with Section 6.5:
(a) a notice that he or she requires the Merging CPC to purchase all the
Millennium Shares or Lattice Shares referred to in Section 6.6; and
(b) the share certificate(s) representing all the Millennium Shares or
Lattice Shares referred to in Section 6.6,
and thereupon the Dissenting Shareholder is bound to sell those Millennium
Shares or Lattice Shares, as applicable, to the applicable Merging CPC and such
Merging CPC is bound to purchase them.
6.8 The price to be paid to the Dissenting Shareholder for his or her
Millennium Shares or Lattice Shares will be their fair value as of the day
before the date on which the resolution referred to in
-6-
Section 6.4 was passed and every Dissenting Shareholder who has complied
with Section 6.7 will be paid the same price.
6.9 The fair value of the Millennium Shares or the Lattice Shares, as the case
may be, shall be determined in accordance with the provisions of the
Interim Order and the Company Act (British Columbia).
6.10 Any notice required to be given by a Merging CPC or a Dissenting
Shareholder to the other in connection with the exercise of the Right of
Dissent will be deemed to have been given and received, if delivered, on
the day of delivery, or, if mailed, on the earlier of the date of receipt
and the fifth business day after the day of mailing, or, if sent by
telecopier or other similar form of transmission, the first business day
after the date of transmittal.
6.11 A holder of Millennium Shares or Lattice Shares who:
(a) properly exercises the Right of Dissent by complying with all of the
procedures (the "Dissent Procedures") required to be complied with
by a Dissenting Shareholder, will
(i) be bound by the provisions of this Section 6.11;
(ii) be deemed not to have participated in the Arrangement;
(iii) as of the Effective Date, cease to have any right as a
Shareholder other than the right to be paid the fair value
of the Millennium Shares or Lattice Shares by the applicable
Merging CPC in accordance with the Dissent Procedures; or
(b) seeks to exercise the Right of Dissent, but
(i) who for any reason does not properly fulfill each of the
Dissent Procedures required to be completed by a Dissenting
Shareholder; or
(ii) subsequent to giving his or her Notice of Dissent acts
inconsistently with such dissent;
will be deemed to have participated in the Arrangement on the same basis as each
non-dissenting Shareholder and will be issued, as of the Effective Date, such
Vend-In Shares as it is entitled to on the basis determined in accordance with
Article 4.
ARTICLE 7
AMENDMENTS
7.1 Verb and each of the CPC's may, at any time and from time to time before
the Effective Time, vary, amend, modify or supplement this Plan of
Arrangement (including the Schedules hereto), provided the Court approves
the Plan of Arrangement as so varied, amended, modified or supplemented.
SCHEDULE "B"
VERB CONVERTIBLE SECURITYHOLDERS
to the Arrangement Agreement between Verb Exchange Inc.,
Millennium Ventures Ltd. and Lattice Capital Corporation
OUTSTANDING WARRANTS
--------------------
132,000 warrants exercisable at $0.35 until March 27, 2004
990,138 warrants exercisable at $0.80 until April 23, 2003; Verb Exchange Inc.
has made application to amend the terms of these warrants to reduce their
exercise price to $0.35 and to extend their expiry date for an additional year.
The amendment of these warrants remains subject to regulatory approval.
200,000 warrants exercisable at $0.75 until November 11, 2003
25,000 warrants exercisable at US$5.00 until November 15, 2003
30,000 warrants exercisable at $1.25 until November 30, 2003
1,000,000 warrants exercisable at $1.25 until May 11, 2004
748,700 warrants exercisable at $0.80 until September 30, 2003
843,530 warrants exercisable at $0.80 until November 11, 2003
149,200 warrants exercisable at $0.80 until November 11, 2003
OUTSTANDING STOCK OPTIONS
-------------------------
An aggregate of 1,642,000 options exercisable at $0.50 until November 12, 2007.
