-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HkTWbrHEb0aR1Jw27iLmyf0Pc8ZkPcnTaMRHEXECeb9/1PPU2F+HzT7eyFE8lKFW FTVH7TNtWPCcpmJ7f5JsUA== 0001032210-99-001663.txt : 19991125 0001032210-99-001663.hdr.sgml : 19991125 ACCESSION NUMBER: 0001032210-99-001663 CONFORMED SUBMISSION TYPE: 10SB12G PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19991124 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXO WEB COM CENTRAL INDEX KEY: 0001083739 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 870575120 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10SB12G SEC ACT: SEC FILE NUMBER: 000-28273 FILM NUMBER: 99764000 BUSINESS ADDRESS: STREET 1: 355 BURRARD STREET #820 STREET 2: VANCOUVER V6C 2G8 CITY: BRITISH COLUMBIA BUSINESS PHONE: 6044880022 MAIL ADDRESS: STREET 1: 355 BURRARD STREET #820 STREET 2: VANCOUVER BRITISH COLUMBIA V6C2G8 CITY: CANADA FORMER COMPANY: FORMER CONFORMED NAME: HARTCO LTD DATE OF NAME CHANGE: 19991118 10SB12G 1 FORM 10SB12G SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________ FORM 10-SB GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b) OR 12(g) EXO-WEB.COM (Name of small business issuer as specified in its charter) Nevada 87-0575120 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) #820-355 Burrard Street, Vancouver, British Columbia, Canada V6C2G8 (Address, including postal code, of registrant principal executive offices) (604) 488-0022 (Telephone number including area code) Securities to be registered under Section 12(b) of the Exchange Act: None Securities to be registered under Section 12(g) of the Exchange Act: Common Stock _________________________________________________________________________ EXO-WEB.COM, Inc. FORM 10-SB TABLE OF CONTENTS
PART I Page ---- Item 1. Description of Business.......................................... 3 Item 2. Management's Discussion and Analysis or Plan of Operations............................................... 8 Item 3. Property......................................................... 13 Item 4. Security Ownership of Certain Beneficial Owners and Management.... 13 Item 5. Directors, and Executive Officers of EXO-WEB.COM.................. 15 Item 6. Executive Compensation............................................ 17 Item 7. Certain Relationships and Related Transactions.................... 17 Item 8. Description of Capital Stock...................................... 18 PART II Item 1. Market Price of and Dividends on EXO-WEB.COM's Common Equity and Other Stockholder Matters......................................... 19 Item 2. Legal Proceedings................................................. 19 Item 3. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.......................................... 20 Item 4. Recent Sales of Unregistered Securities........................... 20 Item 5. Indemnification of Directors and Officers......................... 20 PART F/S Index to Financial Statements.................................................... 22 PART III Item 1. Index to Exhibits................................................. 31
2 PART I Item 1. Description of Business EXO-WEB.COM is a development stage company that intends to develop and market Internet and intranet software applications. EXO-WEB.COM was incorporated in Nevada in June, 1977 as Hartco Ltd. It changed its name to EXO-WEB.COM on August 4, 1999. EXO-WEB.COM had been in the development stage since its inception. It was initially formed for the purpose of investing in projects to develop mineral properties. Its activities in that regard were limited, and EXO-WEB.COM did not generate any revenues. In August, 1988, EXO-WEB.COM's only interest in a mineral development project was terminated. Between 1988 and 1999, EXO-WEB.COM did not actively engage in any business, and earned no revenues. In March, 1999, EXO-WEB.COM sold 6,500,000 shares of common stock, principally to shareholders of MAC Multimedia Accelerator Corp., pursuant to a plan to acquire certain software rights from MAC Multimedia Accelerator Corp., and to enter the business of developing and licensing software. On June 10, 1999, EXO-WEB.COM entered into an agreement to acquire the rights to an Internet and intranet software product and related technology from MAC Multimedia Accelerator Corp. upon payment of $722,000 Canadian dollars. The software was developed for MAC Multimedia Accelerator Corp. by Mindquake Software, Inc. As part of the software acquisition agreement, MAC Multimedia Accelerator Corp. agreed to assign to EXO-WEB.COM its interest in its agreement with Mindquake for the software's development. EXO-WEB.COM has not yet paid the purchase price to MAC Multimedia Accelerator Corp. EXO-WEB.COM currently does not have the funds to make the payment called for under the agreement. It has entered into an agreement with MAC Multimedia Accelerator Corp. under which it can extend the time for paying the purchase price to March 23, 2000. To date, EXO-WEB.COM's only activities have been organizational, directed at acquiring its principal asset, raising its initial capital and developing its business plan. EXO-WEB.COM has not commenced commercial operations. EXO-WEB.COM has no full time employees other than its president and executive vice president, and owns no real estate. EXO-WEB.COM's Business EXO-WEB.COM is in the process of establishing itself as a seller of software applications for organizations that transmit information via the Internet and intranet, including website operators, independent service providers, and organizations operating an intranet for employees or other selected groups. An intranet is a private network that 3 uses Internet software and protocols, and thus functions as a private version of the Internet. Industry Background - The Internet The Internet is a global collection of thousands of interconnected computer networks that enables commercial organizations, educational institutions, governmental agencies and individuals to communicate electronically, access and share information and conduct commerce. Unlike other public and private telecommunications networks that are managed by businesses, governmental agencies or other entities, the Internet is a cooperative interconnection of many such public and private networks. Open communications on the Internet are enabled by TCP/IP, the common Internet communications protocol, which enables communication and data transfers across the Internet regardless of the hardware and software used. Use of the Internet has been accelerated by increases in cost-effective processing power and data storage capabilities in personal computers, as well as widespread availability of multimedia, fax/modem, and networking capabilities to the home and business computing markets. Much of the recent growth in Internet use by businesses and individuals has been driven by the emergence of a network of servers and information available on the worldwide web. The worldwide web, which is based on a client/server model and a set of standards for information access and navigation, can be accessed using software that allows non-technical users to exploit the capabilities of the Internet. The worldwide web enables users to find, retrieve and link information on the Internet easily and consistently. The development of worldwide web technology and associated easy- to-use software has made the Internet easier to navigate and accessible to a larger number of users and for a broad range of applications. Organizations of all kinds are increasingly using the Internet for communicating with key constituents and conducting business. Web sites provide a forum for businesses to advertise goods and services, and for customers to purchase them electronically. Web-based applications for suppliers and distributors permit electronic business-to-business procurement, payment systems, and logistics planning. Internally, many organizations have adopted intranets to improve communications and data transfers among employees. Need For Information Management and Analysis Software for Internet-Based Systems Users of the Internet and intranets need to be able to search for and locate relevant information from a large database rapidly and easily. However, a user's ability to do so may become more difficult as the volume of data that users can access increases. Similarly, organizations that administer, or provide information to users through, such sites need to determine if, and to what extent, their investments in Internet technology, content, and infrastructure are furthering their strategic goals. These organizations are looking for ways to measure the effectiveness of their Internet-based systems by monitoring performance, and determining usage patterns. 4 EXO-WEB.COM's Initial Product EXO-WEB.COM's initial product is a software application suite for organizations that transmit data, information and content via the Internet, intranets or wide area networks. Such content providers include website operators, Internet service providers, and firms operating an intranet or other type of network for use by their employees or other selected groups. EXO-WEB.COM's software delivers information to network users through "Narrowcasting," a process which combines demographic information, statistical analysis, and push technology to customize the information and present it in a channel format that is easy to use. EXO-WEB.COM's product allows content providers to organize the information into channels for presentation to users, which provides convenient, TV-like viewing. The software delivers a unique combination of channels to each user on the basis of demographic information provided by that user. The software also creates and maintains a unique history of the information requested by each user, and makes a statistical analysis of that history to identify which categories of information each user is most likely to want in the future. The software then automatically delivers the channels with those categories of information to the user. This reduces the time and effort required for the user to search through multiple categories of information in order to locate and retrieve the portion relevant to its needs. It can also reduce downloading delays by reducing the amount of information that must be loaded on the user's screen. The software features a generic, plug-in architecture, which allows the content provider to deliver third party software features, such as video or voice streaming, to users, and to upgrade them automatically or at the user's request. EXO-WEB.COM believes that this combination of targeted information, software download options, and TV-like viewing will be attractive to Internet and intranet users. The software's tracking and statistical analysis of user histories permits content providers to match the appropriate content to each user. The software also contains reporting engines that can be used to generate reports containing precise information about what various groups of users are looking at and requesting. This enhanced understanding of users' viewing patterns allows the content provider to maximize its investment in the website or network. The information can also be used to generate reports allowing similar evaluations to be made by third parties who advertise or otherwise provide some of the content provided by a particular website, independent service provider, or intranet operator. The software also contains features to allow the establishment of a secure network, and to allow the conduct of secure electronic commerce transactions via the Internet. Once it has acquired its initial product, EXO-WEB.COM intends develop and carry out a marketing plan for the sale of the product. These activities will include marketing studies to identify target customers, to position the product in the marketplace, and to select 5 media outlets for advertising. EXO-WEB.COM intends to market its product through the Internet, trade shows, and direct sales. It also intends to expand its corporate website into a meta portal to support its marketing, sales, and customer support activities. EXO-WEB.COM plans to open its first sales office in Seattle, Washington. If its initial product gains market acceptance, it intends to open additional sales offices within the United States, and then overseas. In addition to selling its product directly to end-users, EXO-WEB.COM plans to pursue establishing arrangements for distributing its product through organizations possessing distribution channels for complementary products, such as Nortel, Microsoft, Novell, and AOL. Initial marketing and sales efforts by EXO-WEB.COM's will be directed towards local and regional Internet Service Providers and selected high volume web sites. EXO-WEB.COM plans to market its product to intranet content providers after it has established a base among Internet customers. If its initial product gains market acceptance, EXO-WEB.COM intends to pursue expansion of its product line beyond its initial product. EXO-WEB.COM intends to pursue further arrangements with Mindquake Software, Inc. to develop updates of its initial product, and to develop new, complementary software products. EXO- WEB.COM also intends to pursue arrangements with other parties for the development and acquisition of additional software products that can be integrated with its initial product. EXO-WEB.COM may seek to purchase such technology outright or, alternatively, to acquire an exclusive license to use the software. EXO-WEB.COM may also consider entering into collaborative partnerships to bundle its software with other parties' software for marketing and distribution purposes. Competitive Conditions The market for Internet technology is rapidly evolving and intensely competitive. EXO-WEB.COM will be competing with numerous other companies, some of whom currently offer products containing one or more of the features that EXO-WEB.COM's products will have. EXO-WEB.COM expects competition to intensify in the future. Barriers to entry may not be significant. There can be no assurance that EXO-WEB.COM will be able to compete successfully with existing or new products and enhancements introduced by existing competitors and new companies entering the market. Many of EXO-WEB.COM's competitors, as well as potential entrants into its markets, have longer operating histories, larger customer or user bases, greater brand recognition and significantly greater financial, marketing and other resources that EXO-WEB.COM. Many of the current and potential competitors can devote substantially greater resources to product development and promotion than EXO-WEB.COM can. Governmental Regulation As Internet commerce continues to evolve, increasing regulation by federal, state, or foreign agencies becomes more likely. Such regulation is likely in the areas of user privacy, pricing, content, and quality of products and services. Taxation of Internet use, 6 or other charges imposed by government agencies or by private organizations for accessing the Internet, may also be imposed. Laws and regulations applying to the solicitation, collection, or processing of personal or consumer information could affect EXO-WEB.COM's activities. Furthermore, any regulation imposing fees for Internet use could result in a decline in the use of the Internet and the viability of Internet commerce, which could have a material adverse effect on EXO-WEB.COM's business, results of operations, and financial condition. Environmental Regulation EXO-WEB.COM does not believe that environmental laws have or will have a significant effect on its business. Year 2000 Issue Year 2000 issues arise because many computerized systems use two digits rather than four digits to identify a year. Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using the year 2000 date is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. The effects of the Year 2000 issue may be experienced before, on, or after January 1, 2000,and, if not addressed, the impact on operations and financial reporting may range from minor errors to significant systems failure which could affect an entity's ability to conduct normal business operations. It is not possible to be certain that all aspects of the Year 2000 Issue affecting EXO- WEB.COM, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved. EXO-WEB.COM has verbally confirmed with Mindquake Software, Inc., which developed the software EXO-WEB.COM intends to acquire and market as its initial product, that that software has been tested to assure that it is Year 2000 compliant. EXO-WEB.COM intends to obtain written confirmation. However, the software has not been tested in every possible computer environment, and therefore it may not be fully year 2000 compliant. Failure of EXO-WEB.COM's product to be Year 2000 compliant could prevent EXO-WEB.COM's product from gaining market acceptance, and require an increase in allocation of resources to remedy those problems for its customers, and could lead to legal liability for defective software. EXO-WEB.COM has verbally confirmed the Year 2000 readiness of Mindquake Software, Inc., with whom it may contract for software support and development in the future. EXO-WEB.COM intends to obtain written certifications of readiness from Mindquake and any other third party with whom it enters into a relationship. EXO-WEB.COM's business plan and profitability could be jeopardized if Year 2000 problems disrupt the provision of goods or services by third parties on whom it depends. 7 At present, due to EXO-WEB.COM's developmental stage, it has no critical systems that it must test for Year 2000 compliance. However, EXO-WEB.COM cannot be certain that it will not experience unanticipated negative consequences from Year 2000 problems, or that it will be able to make any such modifications as may become necessary in a timely, cost-effective and successful manner, and the failure to do so could interfere with EXO-WEB.COM's ability to do business. If EXO-WEB.COM discovers that certain of its services need modification, or certain of its third-party hardware and software is not year 2000 compliant, it will try to make modifications to its services and systems on a timely basis. EXO- WEB.COM cannot provide assurance that it will be able to modify these products, services and systems in a timely, cost-effective and successful manner, and the failure to do so could have a material adverse effect on its business and operating results. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This Form 10-SB contains forward-looking statements. The words, "anticipate", "believe", expect", "plan", "intend", "estimate", "project", "could", "may", "foresee", and similar expressions are intended to identify forward-looking statements. The following discussion and analysis should be read in conjunction with EXO-WEB.COM's Financial Statements and Notes thereto and other financial information included elsewhere in this Form 10-SB which contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. EXO-WEB.COM's actual results could differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below, as well as those discussed elsewhere in this Form 10-SB. Plan of Operation for the Next Twelve Months EXO-WEB.COM has no cash or other liquid assets with which to fund its business plan. Accordingly, it will be necessary for EXO-WEB.COM to sell additional common stock in order for it to put its business plan into operation. Specifically, EXO-WEB.COM must raise the funds necessary to acquire and launch its initial product, to upgrade its initial product, and pursue the acquisition of complementary products. If it can raise the funds to do so, EXO-WEB.COM anticipates cash expenditures of between $3 million and $5 million. There can be no guarantee that EXO-WEB.COM will be able to raise funds on acceptable terms, or at all. If EXO-WEB.COM succeeds in raising additional funds through the sale of common stock, the ownership interest of holders of existing shares of EXO- WEB.COM's common stock will be diluted. The principal aspects of its business plan for the next 12 months include the following: Acquisition and Copyright of Initial Product: EXO-WEB.COM and MAC Multimedia Accelerator Corp. have entered into an acquisition agreement, under which EXO- WEB.COM will purchase the software product it intends to market as its initial product. Under the agreement, EXO-WEB.COM has until December 30, 1999 to make the required payment, but the agreement permits that date to be extended to as late as March 8 23, 2000. Once it acquires the software, EXO-WEB.COM will incur expenses to copyright the software's source codes. Organizational Expenses: EXO-WEB.COM has incurred and will continue to incur organizational expenses, including legal and accounting fees, in connection with corporate matters, the acquisition of its principal asset, and raising the capital necessary to carry out its business plan. Marketing and Sales expenses: In order to market and sell its initial product, EXO-WEB.COM will incur expenses for salary for marketing and sales personnel, for renting and furnishing an initial sales office, for acquiring computers and software, and for telephone lines, Internet access, travel, and advertising. EXO-WEB.COM will also incur expenses to expand its corporate website in order to support its marketing, sales, and customer support activities. These expenses will include the cost of fees for consulting services and for purchasing additional server hardware. Product Support Expense: EXO-WEB.COM will incur expenses to hire personnel to provide technical support for customers who purchase its initial product. Administrative Expense: EXO-WEB.COM will also incur expenses for hiring personnel and acquiring equipment for processing sales orders, and for routine administrative support of its operations. Product Development/Acquisition: Once EXO-WEB.COM has acquired its initial product, and begun selling it, EXO-WEB.COM intends to pursue the acquisition of new, complementary software products. EXO-WEB.COM will incur expenses principally for fees paid to third parties for development upgrades of its initial product, or for the acquisition of the rights to other products. If EXO-WEB.COM cannot raise the funds necessary to implement all of this plan, it has contingency plans that permit it to scale back some of its acquisition, launch, product development, and general and administrative expenses. Such steps include deferring product upgrades and new product acquisition; reducing the number of marketing, sales, and administrative employees it hires; and reducing expenditures to develop its website. Outlook: Issues and Uncertainties EXO-WEB.COM's success is dependent on a number of factors which should be considered by prospective investors. EXO-WEB.COM is a development stage company that does not have a history of earnings or profit, and there is no assurance that it will operate profitably in the future. As such there is no assurance that EXO-WEB.COM will provide a return on investment in the future. Business Risks 9 EXO-WEB.COM operates in a highly competitive business environment that has a number of inherent risks. These risks may be summarized as follows: 1. Need for Capital to Acquire Software Rights and Carry Out Business Plan: EXO-WEB.COM has only recently entered into an agreement to acquire from MAC Multi Accelerator Corp. the software and related technology that will be EXO- WEB.COM's principal asset. EXO-WEB.COM does not currently have the funds to complete that acquisition, and may not be able to raise sufficient funds to do so. If EXO-WEB.COM is unable to complete the purchase of the software, it will be unable to implement its business plan. If EXO-WEB.COM is able to raise the necessary funds and acquire the software, it will still require additional capital to hire employees to establish marketing channels and undertake sales and support activities. There is no guarantee that EXO-WEB.COM will be able to do so. 2. Reliance on New Products: EXO-WEB.COM intends to sell newly developed products, which may not sell in sufficient quantities to make EXO-WEB.COM profitable. As a result of EXO-WEB.COM's limited operating history, it is difficult to accurately forecast its potential revenue, and there is no meaningful historical financial data upon which to base planned operating expenses. Its revenue and income potential is unproven and its business model is still emerging. As such, there is no assurance that EXO-WEB.COM will provide a return on investment in the future. Any evaluation of EXO-WEB.COM's business and EXO-WEB.COM's prospects must be made in light of the risks and uncertainties often encountered by companies in their early stages of development. These risks and uncertainties are particularly significant for companies in rapidly evolving markets, such as the market for Internet and intranet products. 3. Competition: The market for Internet and intranet software products is intensely competitive. There can be no assurance that EXO-WEB.COM will be able to compete successfully with existing products, or with new products and enhancements introduced by existing competitors and new companies entering the market. EXO-WEB.COM's products will compete against those of established companies, who have financial, marketing, and other resources greater than those of EXO-WEB.COM. These competitors may be able to institute and sustain lower pricing, or imitate the features of EXO-WEB.COM's products, resulting in a EXO- WEB.COM failing to achieve a significant share of the market. 4. Development of Brand Name Awareness: Developing and maintaining awareness of the "EXO-WEB.COM" brand name is critical to achieving widespread acceptance of EXO-WEB.COM's products. Successfully promoting and positioning the EXO- WEB.COM brand will depend largely on the effectiveness of EXO-WEB.COM's marketing efforts and its ability to offer attractive products at competitive prices. If EXO-WEB.COM fails to develop awareness and acceptance of its brand name or if it incurs significant expenses in doing so, it could limit its profitability and decrease the value of its stock. 10 5. Need For Product Innovation: If EXO-WEB.COM is able to establish a customer base, its success may be at risk if EXO-WEB.COM does not continue to upgrade and improve its products. Typically, the high technology industry is characterized by a consistent flow of new improved products that renders existing products obsolete. EXO-WEB.COM's sales may decline if it is unable to adapt its products to changes in Internet technology. It may incur significant expenses in developing new products. It may not be successful in either developing such products or timely introducing them to the market. 6. Growth in Market for EXO-WEB.COM's Products: EXO-WEB.COM's success also depends on continued use and expansion of the Internet and intranets. The Internet infrastructure may not be able to support the demands placed on it by continued growth. The growth in volume of Internet traffic may create instabilities in its structure such as shortages in Internet addresses and overworked search engines. Such instabilities may have an adverse affect on EXO- WEB.COM' s operations and business if they are not addressed. The Internet could also lose its viability due to delays in the development or adoption of new standards and protocols to handle increased levels of Internet activity, security, reliability, cost, ease of use, accessibility, and quality of service. 7. Government Regulation and Taxation. As Internet commerce continues to evolve, increasing regulation by federal, state, or foreign agencies becomes more likely. Regulation could be imposed in the areas of user privacy, pricing, content, and quality of products and services. Taxes or other fees could be imposed for Internet use. Any such regulations or fees could reduce the use of the Internet, which, in turn, could reduce demand for EXO-WEB.COM's products. 8. Management. EXO-WEB.COM is dependent on a relatively small number of key employees to implement its business plan, the loss of any of whom may affect its ability to provide the required quality service and technical support to achieve and maintain a competitive market position. EXO-WEB.COM does not have an employment agreement with any of the key employees, and, as a result, there is no assurance that they will continue to manage EXO-WEB.COM's affairs in the future. EXO-WEB.COM has not obtained any key man insurance with respect to such employees. 9. Third Parties. EXO-WEB.COM intends to utilize the services of third party contractors to provide software development, customer support, and other services. Therefore, its performance will be affected by the quality of the goods and services provided by, and the reputations of, such third parties. 10. Intellectual Property Rights. The software products that EXO-WEB.COM intends to develop and license are proprietary in nature, and EXO-WEB.COM may attempt to protect them by relying on patent, trademark, service mark, trade dress, copyright, and trade secret laws and restrictions, as well as confidentiality procedures and contractual provisions. Any steps EXO-WEB.COM may take to protect its intellectual property may be inadequate, time consuming, and expensive. Furthermore, despite EXO-WEB.COM's efforts, it may be unable to prevent third-parties from infringing upon or misappropriating 11 its intellectual property. Similarly, technology that EXO-WEB.COM may purchase or develop may infringe on third parties' intellectual property rights and such third parties may bring claims against it alleging infringement of their intellectual property rights. Such claims and any resulting litigation could subject EXO-WEB.COM to significant liability for damages and invalidation of EXO-WEB.COM's proprietary rights. Such litigation, regardless of its success, would likely be time-consuming and expensive to defend and would divert management time and attention. 11. General Factors: EXO-WEB.COM's business may be affected by such matters as changes in general economic conditions, changes in laws and regulations, prices and costs, and other similar factors. Risks Related to EXO-WEB.COM's Securities 1. Issuance of Additional Shares. The vast majority of the 100,000,000 authorized shares of common stock of EXO-WEB.COM are unissued. The Board of Directors has the power to issue such shares without shareholder approval. EXO- WEB.COM intends to issue additional shares of common stock if necessary in order to acquire products, capital, to compensate service providers, to compensate its senior executives, marketing and sales personnel, or directors, with stock options, or for other corporate purposes. Any such stock issuance would dilute ownership interests of shareholders. 2. No Foreseeable Dividends: EXO-WEB.COM has not paid dividends on its common stock and does not anticipate paying dividends in the foreseeable future. 3. Possibility of Securities Prices. The market for EXO-WEB.COM's stock is highly volatile and will likely continue to behave in this manner in the future. Stock prices for many companies in the technology and emerging growth sector have experienced wide fluctuations that have often been unrelated to the operating performance of such companies. In particular, the stock markets with respect to Internet companies have recently experienced stock price and volume volatility that has affected companies' stock prices. The stock markets may continue to experience volatility that may inflate or deflate the market price of EXO-WEB.COM's common stock. 4. Requirements of SEC With Regard to Penny Stocks. EXO-WEB.COM's securities are subject to the SEC "penny stock" regulations which may limit the ability of broker-dealers to sell EXO-WEB.COM's securities and shareholders' ability to sell their shares in the secondary market. The Securities and Exchange Commission has adopted a number of rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934. The rules require broker-dealers to make certain disclosures regarding penny stocks to potential buyers, and make a determination based upon information provided by the potential buyer about such buyer's suitability for investing in penny stocks. There may be a limited market for penny stocks, due to the regulatory burdens on broker-dealers. The market among dealers may not be active. Investors in penny stock often are unable 12 to sell stock back to the dealer that sold them the stock. The mark ups or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor. In some cases, the stock may fall quickly in value. Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all. Item 3. Property EXO-WEB.COM owns no property. It subleases office space on a monthly basis in Vancouver, British Columbia. Item 4. Security Ownership of Certain Beneficial Owners and Management The following table sets forth as of November 5, 1999 EXO-WEB.COM's outstanding common stock owned of owned of record or beneficially by each executive officer and director and by each person who owned of record, or was known to EXO-WEB.COM to own beneficially, more than 5% of its common stock, and the shareholdings of all executive officers and directors as a group.
- -------------------------------------------------------------------------------------------------- Percentage of Name and Address Shares Owned Shares Owned - -------------------------------------------------------------------------------------------------- Randall Currey, President, Director /1/ 1,144,367 10.85% Suite 820 - 355 Burrard Street, Marine Building Vancouver, B.C. V6C 2G8 - -------------------------------------------------------------------------------------------------- Bottom Line Management Inc./2/ 570,994 5.41% B-66 East Bay Center Nassau, Bahamas - -------------------------------------------------------------------------------------------------- Number 3 Corporate Ventures, Inc./3/ 573,373 5.44% 414 N. Commercial Street Bellingham, WA 98227 - -------------------------------------------------------------------------------------------------- Ronald Condly, Executive Vice President, Director/4/ 968,934 9.18% Suite 820 - 355 Burrard Street, Marine Building Vancouver, B.C. V6C 2G8 - -------------------------------------------------------------------------------------------------- Rockaway Resources Inc./5/ 631,066 5.98% B-66 East Bay Center Nassau, Bahamas - -------------------------------------------------------------------------------------------------- Number 1 Corporate Ventures, Inc./6/ 337,868 3.20% 414 N. Commercial Street Bellingham, WA 98227 - -------------------------------------------------------------------------------------------------- Ken Chaboter/7/ 666,469 6.32% 665-6th Ave. #210 Vancouver, B.C., V5T 4J3 - -------------------------------------------------------------------------------------------------- Number 4 Corporate Ventures, Inc./8/ 35,836 .34% - --------------------------------------------------------------------------------------------------
13 - ------------------------------------------------------------------------------------------ 414 N. Commercial Street Bellingham, WA 98227 - ------------------------------------------------------------------------------------------ Everhart Enterprises Ltd./9/ 630,633 5.98% B-66 East Bay Center Nassau, Bahamas - ------------------------------------------------------------------------------------------ James Ferguson/10/ 680,710 6.45% 2218 Mountain Drive Abbotsford, B.C. - ------------------------------------------------------------------------------------------ John George Ens/11/ 680,709 6.45% 35360 Sandyhill Road Abbotsford, B.C. - ------------------------------------------------------------------------------------------ Number 7 Corporate Ventures, Inc./12/ 605,075 5.74% 415 N. Commercial Street Bellingham, WA 98227 - ------------------------------------------------------------------------------------------ Levert Development Ltd./13/ 75,635 .72% B-66 East Bay Center Nassau, Bahamas - ------------------------------------------------------------------------------------------ Newthan Fund Investment Ltd./14/ 75,634 .72% B-66 East Bay Center Nassau, Bahamas - ------------------------------------------------------------------------------------------ AHF Ventures Inc./15/ 667,317 6.33% 28128 Redondo Drive South Des Moines, WA 98198 - ------------------------------------------------------------------------------------------ Grant MacDonald/16/ 952,163 9.03% 3860 Bayridge Ave. West Vancouver, British Columbia - ------------------------------------------------------------------------------------------ Media Resources International Inc./17/ 347,087 3.29% B-66 East Bay Center Nassau, Bahamas - ------------------------------------------------------------------------------------------ Number 8 Corporate Ventures, Inc. /18/ 605,075 5.74% 416 N. Commercial Street Bellingham, WA 98227 - ------------------------------------------------------------------------------------------ ALL EXECUTIVE OFFICERS & DIRECTORS AS A GROUP (4 Individuals) 2,113,301 20.03% - --------------------------------------------------------------------------------------------------
/1/Randall Currey is the beneficial owner of shares held by Bottom Line Management Inc. and Number 3 Corporate Ventures, Inc. /2/Randall Currey is the beneficial owner of shares held by Bottom Line Management Inc. /3/Randall Currey is the beneficial owner of shares held by Number 3 Corporate Ventures, Inc. /4/Ronald Condly is the beneficial owner of shares held by Rockaway Resources Inc and Number 1 Corporate Ventures, Inc. /5/Ronald Condly is the beneficial owner of shares held by Rockaway Resources Inc. /6/Ronald Condly is the beneficial owner of shares held by Number 1 Corporate Ventures, Inc. 14 /7/Ken Chaboter is the beneficial owner of shares held by Number 4 Corporate Ventures, Inc. and Everhart Enterprises Ltd. /8/Ken Chaboter is the beneficial owner of shares held by Number 4 Corporate Ventures, Inc. /9/Ken Chaboter is the beneficial owner of shares held by Everhart Enterprises Ltd. /10/James Ferguson is the beneficial owner of shares held by Levert Development Ltd. and Number 7 Corporate Ventures, Inc. See Note (10) above. Mr. Ferguson disclaims beneficial ownership of the shares owned by Number 7 Corporate Ventures, Inc. beyond the extent of his pecuniary interest. /11/John George Ens is the beneficial owner of shares held by Newthan Fund Investment Ltd. and Number 7 Corporate Ventures, Inc. See Note (10) above. Mr. Ens disclaims beneficial ownership of the shares owned by Number 7 Corporate Ventures, Inc. beyond the extent of his pecuniary interest. /12/Number 7 Corporate Ventures, Inc. is owned 50% by James Ferguson and 50% by John George Ens. Under Rule 13d-3 of the Securities Exchange Act of 1934, both Messrs. Ferguson and Ens could be considered the beneficial owners of the shares registered in the name of Number 7 Corporate Ventures, Inc. Number 7 Corporate Ventures, Inc. /13/James Ferguson is the beneficial owner of shares held by Levert Development Ltd. /14/John George Ens is the beneficial owner of shares held by Newthan Fund Investment Ltd. /15/Alan Findlayson is the beneficial owner of shares held by AHF Ventures Inc. /16/Grant MacDonald is the beneficial owner of shares held by Number 8 Corporate Ventures, Inc. and Millenium Crescent Corp. /17/Grant MacDonald is the beneficial owner of shares held by Media Resources International Inc. /18/Grant MacDonald is the beneficial owner of shares held by Number 8 Corporate Ventures, Inc. All shares are held of record and each record shareholder has sole voting and investment power, except as discussed above. EXO-WEB.COM knows of no one who has the right to acquire beneficial ownership in EXO-WEB.COM common stock. Other than the sale of EXO-WEB.COM stock contemplated by this prospectus, there are no arrangements known to EXO-WEB.COM the operation of which may at a subsequent date result in a change of control of EXO-WEB.COM. Item 5. Directors and Executive Officers The following table sets forth the name, age and position of each director and executive officer of EXO-WEB.COM.:
- ---------------------------------------------------------------------------- NAME AGE POSITION - ---------------------------------------------------------------------------- Randall Currey 43 President, Director - ----------------------------------------------------------------------------
15 - ---------------------------------------------------------------------------- Ronald Condly 43 Executive Vice President, Director - ---------------------------------------------------------------------------- Robert Harrison 56 Chief Financial Officer, Director - ---------------------------------------------------------------------------- Anthony Gardiner 63 Chief Technology Officer, Director - ----------------------------------------------------------------------------
Mr. Currey has served as the President and a Director of EXO-WEB.COM since March 8, 1999. Prior to joining EXO-WEB.COM, Mr. Currey was a director and the Vice President of Marketing for MAC Multimedia Accelerator Corp. from December, 1997 to June 10, 1999. As Vice President of Marketing for MAC Multimedia Accelerator Corp., he was in charge of strategic planning, business development, and financing. Prior to that, he served as the Vice President of Infinitron International Inc., a private company in Vancouver, British Columbia, which develops digital compression software. During this time the company grew from 12 to 120 employees. Mr. Currey was instrumental in negotiating licensing agreements and mergers with several technology companies during this time. For the past five years, Mr. Currey has also served as a director of Emerald Hill Shoreline Estates Ltd., a land development company formed to build waterfront condominiums in Comox, British Columbia. Mr. Condly has served as the Executive Vice President and a Director of EXO- WEB.COM since March 8, 1999. Prior to joining EXO-WEB.COM, Mr. Condly was a director and the Chief Operating Officer of MAC Multimedia Accelerator Corp. from December, 1997 to June 10, 1999. As Chief Operating Officer, he was in charge of product development, business operations, and development and implementation of corporate logistics and communications systems. Prior to that, he served as the Vice President of Operations for Infinitron International Inc., a private company in Vancouver, British Columbia, which develops digital compression software. Prior to that, Mr. Condly served as Project Manager for Emerald Hill Shoreline Estates Ltd., a land development company formed to build waterfront condominiums in Comox, British Columbia. Mr. Harrison has served as the Chief Financial Officer and a Director of EXO- WEB.COM since October 15, 1999. Prior to joining EXO-WEB.COM, Mr. Harrison was a principal with Trilennium, Vancouver, B.C., which offers focused strategic advice and tactical marketing implementation for a select few of Canada's larger manufacturers and professional service companies. Prior to that, he served as Senior Director of The Business Exchange, Vancouver, B.C., which serves as a intermediary for public and large private companies in business sales, divestitures, mergers and acquisitions, strategic alliances, equity and debt financings, and business valuations. Prior to that, he served as President of Hybor Consulting, a firm that offered consulting services to larger corporate clients, assisting these clients with strategic planning and implementation. Prior to that, Mr. Harrison was a Senior Partner at Deloitte Touche and President of the Board of Trade Montreal. 16 Mr. Gardiner has served as the Chief Technology Officer and a Director of EXO- WEB.COM since October 15, 1999. Mr. Gardiner has been with Deloitte & Touche's consulting group since Deloitte & Touche acquired his company, Teleconsult, in the mid-1980s. Over the past decade, Mr. Gardiner has worked extensively with venture capitalists, merger and acquisition specialists, and commercial and developmental bankers. Mr. Gardiner has completed developmental projects in over 20 countries and worked with many client organizations including Canadian International Development Agency (CIDA), The Asian Development Bank, World Bank, CRTC, Telecom Canada, Telesat and Teleglobe. Most recently, he was retained by CIDA as Team Leader for a three-person mission to Ecuador to evaluate its overall telecommunications sector and identify funding mechanisms. Prior to that, Mr. Gardiner provided similar services to Bolivia, Tanzania, Indonesia, Columbia and the Philippines. Each director named above will serve until the next annual meeting of EXO- WEB.COM's shareholders and the election and qualification of his successors. Item 6. Executive Compensation No officer or director has received any remuneration from EXO-WEB.COM. Although there is no current plan in existence, it is possible that EXO-WEB.COM will adopt a plan to pay or accrue compensation to its officers and directors for services related to the implementation of EXO-WEB.COM's business plan. EXO- WEB.COM has no stock option, retirement, incentive, defined benefit, actuarial, pension or profit-sharing programs for the benefit of directors, officers or other employees, but the board of directors may recommend adoption of one or more such programs in the future. EXO-WEB.COM has no employment contract or compensatory plan or arrangement with any executive officer of EXO-WEB.COM. No director currently receives any cash compensation from EXO-WEB.COM for his service as a member of the board of directors. There is no compensation committee, and no compensation policies have been adopted. Item 7. Certain Relationships and Related Transactions Other than as discussed below, no director, executive officer or nominee for election as a director of EXO-WEB.COM, and no owner of five percent or more of EXO-WEB.COM's outstanding shares or any member of their immediate family has entered into or proposed any transaction in which the amount involved exceeds $60,000. Messrs. Currey and Condly previously served as officers and directors of MAC Multimedia Accelerators Corporation, the company from which EXO-WEB.COM plans to acquire the proprietary technology which is the basis for EXO-WEB.COM's business plan. Pursuant to the purchase and sale agreement between EXO-WEB.COM and MAC Multimedia Accelerators Corporation, EXO-WEB.COM will acquire the Client Server Software Suite technology for $722,00 Canadian. Messrs. Currey and Condly resigned from their positions with MAC Multimedia Accelerators Corporation on June 10, 1999, 17 the day EXO-WEB.COM signed an agreement to purchase the technology from MAC Multimedia Accelerators Corporation. Although Messrs. Currey and Condly will receive no direct remuneration from the purchase by EXO-WEB.COM of the technology from MAC Multimedia Accelerators Corporation, their relationships with EXO-WEB.COM as employees, officers and directors result from their previous relationships with MAC Multimedia Accelerators Corporation and their knowledge of the technology. Item 8. Description of Capital Stock The following description of EXO-WEB.COM's capital stock is a summary of the dividend, voting, and preemption rights of EXO-WEB.COM's capital stock. This description is subject to and qualified in its entirety by EXO-WEB.COM's articles of incorporation and bylaws, which are included as exhibits to the registration statement, and by the applicable provisions of Nevada law. EXO-WEB.COM's authorized capital consists of 100,000,000 shares of common stock, par value $.001 per share. Immediately prior to this offering, 10,549,500 shares were issued and outstanding. Each record holder of common stock is entitled to one vote for each share held on all matters properly submitted to the shareholders for their vote. The articles of incorporation do not permit cumulative voting for the election of directors, and shareholders do not have any preemptive rights to purchase shares in any future issuance of EXO-WEB.COM's common stock. Because the holders of shares of EXO-WEB.COM's common stock do not have cumulative voting rights, the holders of more than 50% of EXO-WEB.COM's outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose. In such event, the holders of the remaining shares will not be able to elect any of EXO-WEB.COM's directors. The holders of shares of common stock are entitled to dividends, out of funds legally available therefor, when and as declared by the board of directors. The board of directors has never declared a dividend and does not anticipate declaring a dividend in the future. In the event of liquidation, dissolution or winding up of the affairs of EXO-WEB.COM, shareholders are entitled to receive, ratably, the net assets of EXO-WEB.COM available to shareholders after payment of all creditors. All of the issued and outstanding shares of common stock are duly authorized, validly issued, fully paid, and non-assessable. To the extent that additional shares of EXO-WEB.COM's common stock are issued, the relative interests of existing shareholders may be diluted. In June, 1999, the holders of 6,100,000 shares of EXO-WEB.COM common stock entered into a pooling agreement, also commonly known as a "lock-up" agreement. Under the agreement, the shareholders delivered to the pooling agent the certificates for their shares of EXO-WEB.COM common stock, to be held by the pooling agent. Pursuant to a 18 schedule contained in the agreement, the pooling agent will release the shares, on a pro rata basis, 25% on December 1, 1999, 25% March 1, 2000, 25% June 1, 2000, and 25% September 1, 2000. The agreement permits EXO-WEB.COM's board of directors, in its discretion, to allow shares to be released earlier than called for under the schedule, if they deem it to be in the best interest of EXO- WEB.COM and all of the shareholders. PART II Item 1. Market Price of and Dividends on EXO-WEB.COM's Common Equity and Other Shareholder Matters. There is a limited public market for the Common Stock of EXO-WEB.COM. The stock traded on the OTC Bulletin Board under the symbol "HRRO" from June, 1998 through August, 1999, and has traded under the symbol "EXWB" since August, 1999. Nasdaq Reporting and Market Services had no record of any trading activity on the stock in 1998. The high and low bid prices for EXO-WEB.COM's stock each quarter, through September 30, 1999, as reported by NASDAQ Trading and Market Services, are as follows:
Bid Price High Low ---- --- Quarter ended March 31, 1999 0.00 0.00 Quarter ended June 30, 1999 5.00 0.00 Quarter ended September 30, 1999 6.00 5.00
These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. As of November 5, 1999, there were 10,549,500 shares of Common Stock outstanding, held by 41 shareholders of record and by various broker/dealers on behalf of an indeterminate number of street name shareholders. To date EXO-WEB.COM has not paid any dividends on its Common Stock and does not expect to declare or pay any dividends on such Common Stock in the foreseeable future. Payment of any dividends will be dependent upon future earnings, if any, the financial condition of EXO-WEB.COM, and other factors as deemed relevant by EXO-WEB.COM's Board of Directors. Item 2. Legal Proceedings 19 To the knowledge of EXO-WEB.COM's executive officers and directors, EXO-WEB.COM is not a party to any legal proceeding or litigation and none of its property is the subject of a pending legal proceeding. Further, the officers and directors know of no other threatened or contemplated legal proceedings or litigation. Item 3. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 4. Recent Sales of Unregistered Securities. Set forth below is information regarding the issuance and sales of securities of EXO-WEB.COM without registration during the past three years. No such sales involved the use of an underwriter and no commissions were paid in connection with the sale of any securities. On March, 30, 1999, EXO-WEB.COM sold 6,500,000 shares of common stock at a price of $0.001 per share for total proceeds of $6,500. The offer and the sale of the stock were exempt from registration under Rule 504 of Regulation D under Section 3(b) of the Securities Act of 1933, as amended. If the exemption under Rule 504 of Regulation D is not available, then EXO-WEB.COM believes that this offering is also exempt under Rule 506 under and Section 4(2) of the Securities Act of 1933, as amended. EXO-WEB.COM furnished to purchasers in a timely manner an offering memorandum and financial information, limited the manner of the offering, promptly filed notices of sales, and limited the number of non- accredited investors to 28. If the foregoing exemptions are not available, then EXO-WEB.COM believes that these sales were also exempt under Regulation S due to due to the foreign nationality of the relevant purchasers. On June 20, 1999, EXO-WEB.COM sold 4,000,000 shares of common stock at a price of $0.001 per share for total proceeds of $4,000. The sale of these shares was exempt from registration under Rule 506 under and Section 4(2) of the Securities Act of 1933, as amended. EXO-WEB.COM furnished to purchasers in a timely manner an offering memorandum and financial information, limited the manner of the offering, promptly filed notices of sales, and limited the number of non- accredited investors to 21. If the foregoing exemptions are not available, EXO- WEB.COM believes that these sales were also exempt under Regulation S under the Securities Act of 1933, as amended, due to the foreign nationality of the relevant purchasers. Item 5. Indemnification of Directors and Officers. EXO-WEB.COM's Articles of Incorporation provide that EXO-WEB.COM must indemnify its directors and officers, to the fullest extent permitted under the Chapter 78 Nevada Revised Statutes against all liabilities incurred by reason of the fact that the 20 person is or was a director or officer or agent of EXO-WEB.COM or a fiduciary of an employee benefit plan, or is or was serving at the request of EXO-WEB.COM as a director or officer, or fiduciary of an employee benefit plan, of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The effect of these provisions is potentially to indemnify EXO- WEB.COM's directors and officers from all costs and expenses of liability incurred by them in connection with any action, suit or proceeding in which they are involved by reason of their affiliation with EXO-WEB.COM. 21 Part F/S Index to Financial Statements EXO-WEB.COM (Formerly Hartco, LTD.) (A Development Stage Company) Financial Statements Years Ended December 31, 1998, 1997 and 1996 (Audited) and Nine Months Ended September 30, 1999 (Unaudited) (U.S. Dollars)
INDEX Page ----- ---- Report of Independent Chartered Accountants 1 Financial Statements Balance Sheets 2 Statements of Operations 3 Statements of Changes in Stockholders' Equity 4 Statements of Cash Flows 5 Notes to Financial Statements 6-8
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF EXO-WEB.COM (Formerly Hartco, LTD.) We have audited the accompanying balance sheet of EXO-WEB.COM Inc. (formerly Hartco, LTD.) (a development stage company) at December 31, 1998 and the related statements of operations, stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, these financial statements present fairly, in all material respects, the financial position of EXO-WEB.COM as at December 31, 1998 and the results of its operations and cash flows for the year then ended in conformity with generally accepted accounting principles in the United States. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 1 to the financial statements, the Company has been in the development stage since its inception and has suffered recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. Financial statements at December 31, 1997 and the statements of operations, stockholders' equity and cash flows for the two years ended December 31, 1997 were reported on by other independent certified public accountants who expressed an unqualified opinion thereon in their report dated April 21, 1998 and the concern referred to in the preceding paragraph. "Pannell Kerr Forster" Chartered Accountants Vancouver, Canada November 18, 1999 1 EXO-WEB.COM (Formerly Hartco, LTD.) (A Development Stage Company) Balance Sheets December 31 and September 30 (U.S. Dollars)
=============================================================================================================================== September 30 December 31, - ------------------------------------------------------------------------------------------------------------------------------- 1999 1998 1998 1997 - ------------------------------------------------------------------------------------------------------------------------------- (Unaudited) Current Cash $ 484 $ 0 $ 0 $ 10,000 Subscription receivable 3,821 0 0 0 - ------------------------------------------------------------------------------------------------------------------------------- 4,305 0 0 10,000 Proprietary Technology 498,000 0 0 0 - ------------------------------------------------------------------------------------------------------------------------------- Total Assets $ 502,305 $ 0 $ 0 $ 10,000 =============================================================================================================================== Liabilities Current Accounts payable $ 34,912 $ 0 $ 0 $ 0 Accrued liabilities 75,000 Loan payable 1,380 Agreement payable March 31, 2000 496,620 - ------------------------------------------------------------------------------------------------------------------------------- Total Liabilities 607,912 0 0 0 - ------------------------------------------------------------------------------------------------------------------------------- Stockholders' Equity (Deficit) Common Stock, 100,000,000 shares authorized at $0.001 par value; 10,995 495 495 495 10,549,500 shares issued and outstanding September 30, 1999 (495,000 at December 31, 1998 and 1997 and September 30, 1998) Additional Paid-In Capital 98,505 98,505 98,505 98,505 Deficit Accumulated During the Development Stage (215,107) (99,000) (99,000) (89,000) - ------------------------------------------------------------------------------------------------------------------------------- Total Stockholders' Equity (Deficit) (105,607) 0 0 10,000 - ------------------------------------------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $ 502,305 $ 0 $ 0 $ 10,000 ===============================================================================================================================
See notes to financial statements 2 EXO-WEB.COM (Formerly Hartco, LTD.) (A Development Stage Company) Statements of Operations Years Ended December 31, 1998, 1997 and 1996 and Nine Months Ended September 30, 1999 and 1998 (U.S. Dollars)
- ------------------------------------------------------------------------------------------------------------------------------------ June 16, 1977 (Date of Years Ended December 31, Inception) to 1998 1997 1996 December 31, 1998 Expenses Professional fees $ 10,000 $ 10,000 $ 0 $ 99,000 - ------------------------------------------------------------------------------------------------------------------------------------ Net Loss $ 10,000 $ 10,000 $ 0 $ 99,000 - ------------------------------------------------------------------------------------------------------------------------------------ Net Loss Per Common Share $ 0.02 $ 0.02 $ 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ Weighted Average Number of Shares Outstanding 493,779 495,000 395,000 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------
June 16, 1977 (Date of Nine Months Ended September 30, Inception) to 1999 1998 September 30, 1999 --------------- (Unaudited) Expenses Executive compensation $ 75,000 $ 0 $ 75,000 Professional fees 33,054 0 38,054 Office and general 3,219 0 97,249 Transfer agent fees 1,789 0 1,789 Publications 1,600 0 1,600 Telephone 1,415 0 1,415 Net Loss 116,077 0 215,107 Net Loss Per Common Share $ (0.03) $ 0.00 Weight Average Number of Shares Outstanding 4,523,585 495,000 - ------------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements. 3 EXO-WEB.COM (Formerly Hartco, LTD.) (A Development Stage Company) Statements of Changes in Stockholders' Equity Years Ended December 31, 1998, 1997 and 1996 and the Period June 16, 1977 (Date of Inception) to December 31, 1998 (U.S. Dollars)
- ------------------------------------------------------------------------------------------------------------------------------------ Additional Total Common Stock Paid-In Accumulated Stockholders' Shares Amount Capital Deficit Equity Balance June 16, 1977 (date of inception) 0 $ 0 $ 0 $ 0 $ 0 Issuance of common stock 395,000 395 78,605 0 79,000 Net loss for the period ended December 31, 0 0 0 (29,000) (29,000) 1987 Net loss for the year ended December 31, 0 0 0 (50,000) (50,000) 1988 - ------------------------------------------------------------------------------------------------------------------------------------ Balance December 31, 1996 395,000 395 78,605 (79,000) 0 Issuance of common stock for services at 50,000 50 9,950 0 10,000 $0.20 - 1997 Issuance of common stock for cash at $0.20 50,000 50 9,950 0 10,000 - - 1997 Net loss for the year ended December 31, 0 0 0 (10,000) (10,000) 1997 - ------------------------------------------------------------------------------------------------------------------------------------ Balance December 31, 1997 495,000 495 98,505 (89,000) 10,000 Net loss for the year December 31, 1998 0 0 0 (10,000) (10,000) - ------------------------------------------------------------------------------------------------------------------------------------ Balance December 31, 1998 495,000 $ 495 $ 98,505 $ (99,000) $ 0 - ------------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements. 4 EXO-WEB.COM (Formerly Hartco, LTD.) (A Development Stage Company) Statements of Cash Flows Years Ended December 31, 1998, 1997 and 1996 and the Period June 16, 1977 (Date of Inception) to December 31, 1998 (U.S. Dollars)
- ------------------------------------------------------------------------------------------------------------------------------------ September 30 December 31, - ------------------------------------------------------------------------------------------------------------------------------------ 1999 1998 1998 1997 - ------------------------------------------------------------------------------------------------------------------------------------ (Unaudited) Operating Activities Net loss $(116,107) $0 $(10,000) $ 0 Adjustments for accounts payable and accrued liabilities to reconcile net loss to net cash used in operating activities 109,912 0 0 0 Capital stock issued for services 0 0 0 10,000 - ------------------------------------------------------------------------------------------------------------------------------------ Net Cash Provided By (Used In) Operating Activities (6,195) 0 (10,000) 10,000 Financing Activity Proceeds from issuance of common stock 6,679 0 0 10,000 - ------------------------------------------------------------------------------------------------------------------------------------ Inflow of Cash 484 0 (10,000) 20,000 Cash, Beginning of Period 0 0 10,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Cash, End of Period $ 484 $0 $ 0 $ 20,000 - ------------------------------------------------------------------------------------------------------------------------------------ Supplemental Disclosure for Non-Cash Transactions Issuance of common stock for services $ 0 $0 $ 0 $ 10,000 - ------------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements 5 EXO-WEB.COM (Formerly Hartco, LTD.) (A Development Stage Company) Notes to Financial Statements Year Ended December 31, 1998, 1997 and 1996 and the Period June 16, 1977 (Date of Inception) to December 31, 1998 (Information Pertaining to the Nine Months Ended September 30, 1999 and 1998 is Unaudited) (U.S. Dollars) - -------------------------------------------------------------------------------- 1. NATURE OF OPERATIONS The Company was incorporated under the laws of the State of Nevada on June 16, 1977, under the name Hartco, LTD. On August 4, 1999 the Company changed its name to EXO-WEB.COM. The Company had been in the development stage since its inception and had been primarily engaged in the business of developing mineral properties. During 1988 the Company disposed of its remaining assets and liabilities and became inactive. On June 10, 1999 the Company purchased proprietary technology and is now in the business of information technology marketing and licensing for internet and intranet use. 2. SIGNIFICANT ACCOUNTING POLICIES (a) Accounting methods The Company recognizes income and expenses based on the accrual method of accounting. (b) Income taxes At December 31, 1998 the company has a net operating loss carry forward of approximately $100,000. The tax benefit from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is undeterminable since the Company does not yet have income. The loss carry forward will expire starting in the year 2003 through 2014. (c) Management estimates and assumptions Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported income and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements. (d) Earnings (loss) per share Earnings (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. (e) Revenue recognition Revenue will be generated from each customer through several sources, namely, licensing; royalties and maintenance; and customizing costs. The revenue recognition policy for each source is: (i) Revenue from licensing, royalties and maintenance will be recognized as earned over the term of each customer's agreement; (ii) Revenue from customizing costs will be recognized as earned through the provision of personnel expertise in the Company's technology. 6 EXO-WEB.COM (Formerly Hartco, LTD.) (A Development Stage Company) Notes to Financial Statements Year Ended December 31, 1998, 1997 and 1996 and the Period June 16, 1977 (Date of Inception) to December 31, 1998 (Information Pertaining to the Nine Months Ended September 30, 1999 and 1998 is Unaudited) (U.S. Dollars) - -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) (f) Unaudited interim financial statements The unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. These financial statements are condensed and do not include all disclosures required for annual financial statements. In the opinion of the Company's management, these unaudited financial statements reflect all adjustments necessary to present fairly the Company's financial position at September 30, 1999 and 1998 and the results of operations and the cash flows for the nine months then ended. The results of operations for the nine months ended September 30, 1999 are not necessarily indicative of the results to be expected for the entire fiscal year. 3. RELATED PARTY TRANSACTIONS The officers and directors of the Company are involved in other business activities and may, in the future, become involved in additional business ventures requiring their attention. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has formulated no policy for the resolution of such conflicts. 4. CAPITAL STOCK The Company originally had authorized common stock of 100,000 shares with a par value of $0.25 per share. On March 23, 1998, the authorized common capital stock was increased to 100,000,000 common shares with a par value of $0.001 per share. On March 23, 1998, the Company completed a forward stock split of one share of its outstanding common stock for five shares. 5. GOING CONCERN The Company intends to license technology which, in the opinion of management, will provide earnings to the Company. Continuation of the Company as a going concern is dependent upon obtaining additional working capital. Management has developed a strategy which it believes will accomplish this objective. 6. SUBSEQUENT EVENTS (a) On June 10, 1999 the Company acquired proprietary property from MAC Multimedia Accelerator Corp. for $722,000 CDN. The Company was also assigned the Development Agreement from MAC Multimedia Accelerator Corp. and Mindquake Software Inc. (b) On March 30, 1999 the Company received 445,000 of its then outstanding shares for cancellation. (c) On March 31, 1999 the Company issued 6,500,000 shares for cash of $6,500. (d) On June 20, 1999 the Company issued 4,000,000 shares for cash of $4,000. 7 EXO-WEB.COM (Formerly Hartco, LTD.) (A Development Stage Company) Notes to Financial Statements Year Ended December 31, 1998, 1997 and 1996 and the Period June 16, 1977 (Date of Inception) to December 31, 1998 (Information Pertaining to the Nine Months Ended September 30, 1999 and 1998 is Unaudited) (U.S. Dollars) - -------------------------------------------------------------------------------- 7. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE The Year 2000 Issue arises because many computerized systems use two digits rather than four to identify a year. Date sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using year 2000 dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. The effects of the Year 2000 Issue may be experienced before, on, or after January 1, 2000 and, if not addressed, the impact on operations and financial reporting may range from minor errors to significant systems failure which could affect an entity's ability to conduct normal business operations. It is not possible to be certain that all aspects of the issue affecting the Company, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved. 8 PART III Item 1. Index to Exhibits
Exhibit Number Name 2.1 Articles of Incorporation, restated as amended on March 23, 1988 and August 4, 1999 2.2 Bylaws 3.1 Specimen Share Certificate for Common Stock 3.2 Sample Pooling Agreement 6.1 Asset Purchase Agreement between EXO-WEB.COM and MAC Multimedia Accelerator Corp. dated June 10, 1999 6.2 First Amending Agreement to Asset Purchase Agreement, dated June 21, 1999 6.3 Second Amending Agreement to Asset Purchase Agreement, dated August 6, 1999 6.4* Software Development Agreement Between MAC Multimedia Accelerator Corp. and Mindquake Software, Inc. 6.5* Supplemental Agreement Between MAC Multimedia Accelerator Corp. and Mindquake Software, Inc. 27.1* Financial Data Schedule
* To be filed by amendment. SIGNATURES Pursuant to the requirements Section 12 of the Securities Exchange Act of 1934,the Registrant has duly caused this report or amendment to be signed on its behalf by the undersigned, thereunto duly authorized. EXO-WEB.COM By: /s/ Randall Currey ---------------------------------- Randall Currey, President and Director Dated: November 23, 1999 Index to Exhibits
Exhibit Number Name 2.1 Articles of Incorporation, restated as amended on March 23, 1988 and August 4, 1999 2.2 Bylaws 3.1 Specimen Share Certificate for Common Stock 3.2 Sample Pooling Agreement 6.1 Asset Purchase Agreement between EXO-WEB.COM and MAC Multimedia Accelerator Corp. dated June 10, 1999 6.2 First Amending Agreement to Asset Purchase Agreement, dated June 21, 1999 6.3 Second Amending Agreement to Asset Purchase Agreement, dated August 6, 1999 6.4* Software Development Agreement Between MAC Multimedia Accelerator Corp. and Mindquake Software, Inc. 6.5* Supplemental Agreement Between MAC Multimedia Accelerator Corp. and Mindquake Software, Inc. 27.1* Financial Data Schedule
* To be filed by amendment. EX-2.1 2 ARTICLES OF INCORPORATION Exhibit 2.1 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF EXO-WEB.COM For the purpose of forming this corporation under the laws of the State of Nevada, the undersigned incorporators hereby state: ARTICLE FIRST NAME The name of the corporation is: EXO-WEB.COM ARTICLE SECOND PURPOSES AND DURATION The purposes for which the corporation is formed are: (a) To engage in any lawful business activity from time to time authorized or approved by the board of directors of this corporation; (b) To act as principal, agent, partner or joint venturer or in any other legal capacity in any transaction; (c) To do business anywhere in the world; and (d) To have and exercise all rights and powers from time to time granted to a corporation by law. The above purpose clauses shall not be limited by reference to or inference from one another, but each purpose clause shall be construed as a separate statement conferring independent purposes and powers upon the corporation. The duration of this corporation shall be perpetual. ARTICLE THIRD LOCATION The county in the State of Nevada where the principal office for the transaction of the business of the corporation is located is the County of Clark, and the address of the principal office is: 3890 South Swenson, Suite 1009 Las Vegas, Nevada, 89109. ARTICLE FOURTH DIRECTORS The Directors are hereby granted the authority to do any act on behalf of the Corporation as may be allowed by law. Any action taken in good faith, shall be deemed appropriate and in each instance where the Business Corporation Act provides that the Directors may act in certain instances where the Articles of Incorporation so authorize, such action by the Directors, shall be deemed to exist in these Articles and the authority granted by said Act shall be imputed hereto without the same specifically having been enumerated herein. The Board of Directors may consist of from one (1) to nine (9) directors, as determined, from time to time, by the then existing Board of Directors. ARTICLE FIFTH NAMES OF FIRST DIRECTORS AND INCORPORATORS The names and addresses of the persons who are appointed to act as first directors of the corporation, who are also the Incorporators, am Joseph R. Laird, Jr. 3990 South Swenson, Suite 100 Las Vegas, Nevada 99109 Kenneth J. Fisher 3990 South Swenson, Suite 100 Las Vegas, Nevada 89109 Patricia J. Laird 3890 South Swenson Suite 100 Las Vegas, Nevada 89109 ARTICLE SIXTH AUTHORIZED CAPITAL STOCK The total authorized capital stock of the Corporation is 100,000,000 shares of Common Stock, with a par value of $0.001 (1 mil). All stock when issued shall be deemed fully paid and non-assessable. No cumulative voting, on any matter to which Stockholders shall be entitled to vote, shall be allowed for any purpose. The authorized stock of this corporation may be issued at such time, upon such terms and conditions and for such consideration as the Board of Directors shall, from time to time, determine. Shareholders shall not have pre-emptive rights to acquire unissued shares of the stock of this Corporation. ARTICLE SEVENTH COMMON DIRECTORS As provide by Nevada Revised Statutes 78.140, without repeating the section in full here, the same is adopted and no contract or other transaction between this Corporation and any of its officers, agents or directors shall be deemed void or voidable solely for that reason. The balance of the provisions of the code section cited, as it now exists, allowing such transactions, is hereby incorporated into this Article as though more fully set-forth, and such Article shall be read and interpreted to provide the greatest latitude in its application. ARTICLE EIGHTH INDEMNIFICATION The corporation shall indemnify its directors and officers to the full extent permitted by Chapter 78 of the Nevada Revised now or hereafter in force, including without limitation NRS 78.7502 through 78.752. The Board of Directors may take such action as is necessary to carry out the indemnification and advancement of expenses contemplated by this Article. The Board of Directors is expressly empowered to adopt, approve, and amend from time to time such Bylaws, resolutions, contracts, or further indemnification and expense advancement arrangements as may be permitted by law, implementing these provisions. Such Bylaws, resolutions, contracts or further arrangements shall include but not be limited to implementing the manner in which determinations as to any indemnity or advancement of expenses shall be made. ARTICLE NINTH ELECTION REGARDING NRS 78.378 - 78.3793 This corporation hereby elects to be governed by the provisions of NRS 78.378 through and including 78.3793 ("Acquisition of Controlling Interest Statutes"), and the corporation is hereby deemed to be an "Issuing Corporation" as defined in NRS 78.3788, and the Acquisition of Controlling Interest Statutes shall apply to the corporation regardless of whether the corporation satisfies the definition of "Issuing Corporation" contained in NRS 78.3788. EX-2.2 3 BYLAWS Exhibit 2.2 BY-LAWS OF EXO-WEB.COM ARTICLE I - OFFICES ------------------- The principal office of the corporation in the State of Nevada shall be located in the State of Nevada County of Clark. The corporation may have such other offices, either within or without the State of Incorporation as the board of directors may designate or as the business of the corporation may from time to time require. ARTICLE II - STOCKHOLDERS ------------------------- 1. ANNUAL MEETING. The annual meeting of the stockholders shall be held on the twentieth day of March in each year, beginning with the year 1998 at the hour 10:00 o'clock A.M., for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday such meeting hall be held on the next succeeding business day. 2. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the president or by the directors, and shall be called by the president at the request of the holders of not less than per cent of all the outstanding shares of the corporation entitled to vote at the meeting. 3. PLACE OF MEETING. The directors may designate any place, either within or without the State unless otherwise prescribed by statute, as the place of meeting for any annual meeting or for any special meeting called by the directors. A waiver of notice signed by all stockholders entitled to vote at a meeting may designate any place either within or without the state unless otherwise prescribed by statute, as the place for holding such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal office of the corporation. 4. NOTICE OF MEETING. Written or printed notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 30 nor more than 60 days before the date of the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officer or persons calling the meeting to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid. By-Laws 1 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or stockholders entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the directors of the corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, 15days. If the stock transfer books shall be closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least 15 days immediately preceding such meeting. In lieu of closing the stock transfer books, the directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than 15 days and, in case of a meeting of stockholders, not less than 3 days prior to the date on which the particular action requiring such determination of stockholders is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders, or stockholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the directors declaring such dividend is adopted, as the case may beg, shall be the record date for such determination of stockholders. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof. 6. VOTING LISTS. The officer or agent having charge of the stock transfer books for shares of the corporation shall make, at least 14 days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, or any adjournment thereof 0 arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of 7 days prior to such meeting, shall be kept on file at the principal office of the corporation and shall be subject to inspection by any stockholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder during the whole time of the meeting. The original stock transfer book shall be prima facie evidence as to who are the stockholders entitled to examine such list or transfer books or to vote at the meeting of stockholders. 7. QUORUM. At any Meeting of stockholders 51% of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. If less than said number of the outstanding shares are represented at a meeting, a majority of the shares so represented 'may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. 8. PROXIES. At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or by his duly authorized attorney in fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. By-Laws 2 9. VOTING. Each stockholder entitled to vote in accordance with the terms and provisions of the certificate of incorporation and these by-laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholders. Upon the demand of any stockholder, the vote for directors and upon any question before the meeting shall be by ballot. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation or the laws of this State. 10. ORDER OF BUSINESS. The order of business at all meetings of the stockholders, shall be as follows: 1. Roll Call. 2. Proof of notice of meeting or waiver of notice. 3. Reading of minutes of preceding meeting. 4. Reports of officers. 5. Reports of Committees. 6. Election of Directors. 7. Unfinished Business. 8. New Business. 11. INFORMAL ACTION BY STOCKHOLDERS. Unless otherwise provided by law, any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. ARTICLE III - BOARD OF DIRECTORS -------------------------------- 1. GENERAL POWERS. The business and affairs of the corporation shall be managed by its board of directors. The directors shall in all cases act as a board, and they may adopt such rules and regulations for the conduct of their meetings and the management of the corporation, as they may deem proper, not inconsistent with these by-laws and the laws of this State. 2. NUMBERS TENURE AND QUALIFICATIONS. By-Laws 3 The number of directors of the corporation shall be one to nine (1-9). Each director shall hold office until the next annual meeting of stockholders and until his successor shall have been elected and qualified. 3. REGULAR MEETINGS. A regular meeting of the directors, shall be held without other notice than this by-law immediately after, and at the same place as, the annual meeting of stockholders. The directors may provide, by resolution, the time and place for the holding of additional regular meetings without other notice than such resolution. 4. SPECIAL MEETINGS. Special meetings of the directors may be called by or at the request of the president or any-two directors. The person or persons authorized to call special meetings of the directors may fix the place for holding any special meeting of the directors called by them. 5. NOTICE. Notice of any special meeting shall be given at least days previously thereto by written notice delivered personally, or by telegram or railed to each director at his business address. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. 6. QUORUM. At any meeting of the directors 50% shall constitute a quorum for the transaction of business, but if less than said number is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. 7. MANNER OF ACTING. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the directors. 8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the board for any reason except the removal of directors without cause may be filled by a vote of a majority of the directors then in office, although less than a quorum exists. Vacancies occurring by reason of the removal of directors without cause shall be filled by vote of the stockholders. A director elected to fill a vacancy caused by resignation, death or removal shall be elected to hold office for the unexpired term of his predecessor. 9. REMOVAL OF DIRECTORS. By-Laws 4 Any or all of the directors may be removed for cause by vote of the stockholders or by action of the board. Directors may be removed without cause only by vote of the stockholders. 10. RESIGNATION. A director may resign at any time by giving written notice to the board, the president or the secretary of the corporation. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the board or such officer, and the acceptance of the resignation shall not be necessary to make it effective. 11. COMPENSATION. No compensation shall be paid to directors, as such, for their services, but by resolution of the board a fixed sum and expenses for actual attendance at each regular or special meeting of the board may be authorized. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor. 12. PRESUMPTION OF ASSENT. A director of the corporation who is present at a meeting of the directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. 13. EXECUTIVE AND OTHER COMMITTEES. The board, by resolution, may designate from among its members an executive committee and other committees, each consisting of three or more directors. Each such committee shall serve at the pleasure of the board. ARTICLE IV - OFFICERS --------------------- 1. NUMBER. The officers of the corporation shall be a president, a vice-president, a secretary and a treasurer each of whom shall be elected by the directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the directors. 2. ELECTION AND TERM OF OFFICE. The officers of the corporation to be elected by the directors shall be elected annually at the first meeting of the directors held after each annual meeting of the stockholders. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. 3. REMOVAL. By-Laws 5 Any officer or agent elected or appointed by the directors may be removed by the directors whenever in their judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. 4. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the directors for the unexpired portion of the term. 5. PRESIDENT. The president shall be the principal executive officer of the corporation and, subject to the control of the directors shall in general supervise and control all of the business and affairs of the corporation. He shall, when present, preside at all meetings of the stockholders and of the directors. He may sign, with the secretary or, any other proper officer of the corporation thereunto authorized by the directors, certificates for shares of the corporation, any deeds, mortgages, bonds, contracts, or other instruments which the directors have authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the directors or by these by-laws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the directors from time to time. 6. VICE-PRESIDENT. In the absence of the president or in event of his death, inability or refusal to act, the vice-president shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-president shall perform such other duties as from time to time may be assigned to him by the President or by the directors. 7. SECRETARY. The secretary shall keep the minutes of the stockholders, and of the directors' meetings in one or more books provided for that purpose, see that all notices are duly given in accordance with the provisions of these by-laws or as required, be custodian of the corporate records and of the seal of the corporation and keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder, have general charge of the stock transfer books of the corporation and in general perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him by the president or by the directors. 8. TREASURER. If required by the directors, the treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the directors shall determine. He shall have charge and custody of and be responsible for all funds and securities of the corporation; receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with these By-Laws 6 by-laws and in general perform all of the duties incident to the office of treasurer and such other duties as from time to time may be assigned to him by the president or by the directors. 9. SALARIES. The salaries of the officers shall be fixed from time to time by the directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation. ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS ------------------------------------------------- 1. CONTRACTS. The directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. 2. LOANS. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the directors. Such authority may be general or confined to specific instances. 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the directors. 4. DEPOSITS. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as the directors may select. ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER ------------------------------------------------------- 1. CERTIFICATES FOR SHARES. Certificates representing shares of the corporation shall be in such form as shall be determined by the directors. Such certificates shall be signed by the president and by the secretary or by such other officers authorized by law and by the directors. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the stockholders, the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the corporation as the directors may prescribe. 2. TRANSFERS OF SHARES. By-Laws 7 (a) Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, and cancel the old certificate; every such transfer shall be entered on the transfer book of the corporation which shall be kept at its principal office. (b) The corporation shall be entitled to treat the holder of record of any share as the holder in fact thereof, and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof I except as expressly provided by the laws of this state. ARTICLE VII - FISCAL YEAR ------------------------- The fiscal year of the corporation shall begin on the 31/st/ day of December in each year. ARTICLE VIII - DIVIDENDS ------------------------ The directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law. ARTICLE IX - SEAL ----------------- The directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name incorporation, and the words, "Corporate Seal". ARTICLE X - WAIVER OF NOTICE ---------------------------- Unless otherwise provided by law, whenever any notice is required to be given to any stockholder or director of the corporation under the provisions of these by-laws or under the provisions of the articles of incorporation, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. ARTICLE XI - AMENDMENTS ----------------------- These by-laws may be altered, amended or repealed and new by-laws may be adopted by a vote of the stockholders representing a majority of all the shares issued and outstanding, at any annual stockholders' meeting or at any special stockholders' meeting when the proposed amendment has been set out in the notice of such meeting. By-Laws 8 EX-3.1 4 SPECIMEN SHARE CERTIFICATE FOR COMMON STOCK Exhibit 3.1 NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA NUMBER SHARES EXO-WEB.COM AUTHORIZED COMMON STOCK: 100,000,000 SHARES PAR VALUE: $.001 THIS CERTIFIES THAT SAMPLE IS THE RECORD HOLDER OF --Shares of EXO-WEB.COM. Common Stock-- transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar. THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, THE TRANSFER QUALIFIES FOR AN EXEMPTION FROM OR EXEMPTION TO THE REGISTRATION PROVISIONS THEREOF.* Witness the facsimile seal of the Corporation and the facsimile signature of its duly authorized officers. Dated: /s/ Randall Currey --------------------- President [CORPORATE SEAL] s/ Ronald Condley --------------------- Secretary NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT Countersigned & Registered: INTERWEST TRANSFER CO., INC. P.O. BOX 17136 SALT LAKE CITY, UTAH 84117 Authorized Signature By ___________________ * As Applicable EX-3.2 5 SAMPLE POOLING AGREEMENT Exhibit 3.2 POOLING AGREEMENT ----------------- THIS AGREEMENT (the "Agreement") dated as of this _____ day of May, 1999, by and among HARTCO LTD, a Nevada corporation, (the "Issuer"), INTERWEST TRANSFER COMPANY, INC. (the "Pooling Agent") and the undersigned shareholders of the Issuer (the "Shareholders"). WITNESSETH: WHEREAS the Shareholders are the holders of, have subscribed for, or have agreed to purchase shares (the "Shares") of the Issuer as set forth on Schedule A attached hereto and incorporated herein by reference ("Schedule A"); and WHEREAS the Shareholders deem it to be in their best interests and that of the Issuer to place the Shares in a pool with the Pooling Agent on the terms and conditions herein contained. NOW THEREFORE, in consideration of the mutual covenants and conditions hereinafter contained, the parties hereto agree as follows: 1. This Agreement shall be effective as of the date hereof (the "Effective Date") and shall continue until terminated according to the provisions hereof. 2. The Shareholders agree with the Issuer and the Pooling Agent that they will deliver or cause to be delivered to the Pooling Agent the certificates for their Shares as set out in Schedule A to be held by the Pooling Agent and released on a pro-rata basis as provided in Schedule A. 3. The Shareholders agree that the Board of Directors of the Issuer, may in its absolute and sole discretion, revise the release provisions of Schedule A to permit an early release of the Shares from the pool on a pro rata basis if the Board of Directors deems it to be in the best interests of the Issuer and all of the Shareholders. The decision of the Board of Directors in this regard shall be final and deemed to be in the best interests of all of the shareholders of the Issuer. 4. The Shareholders further agree that the 400,000 shares of the Issuer held by Gatham Properties S.A., a Bahamian International Business Corporation ("Gatham") are not subject to the terms and conditions of this Agreement and may be disposed of at any time. 5. The Shareholders shall be entitled to a letter or receipt from the Pooling Agent stating the number of Shares represented by certificates held for them by the Pooling Agent subject to the terms of this Agreement, but such letter or receipt shall not be assignable. 6. The Shareholders shall not sell, deal in, assign, transfer in any manner whatsoever or agree to sell, deal in, assign or transfer in any manner whatsoever any of the Shares or beneficial ownership of or any interest in them; and the Pooling Agent shall not accept or acknowledge any transfer, assignment, declaration of trust or any other document evidencing a change in legal or beneficial ownership of or interest in the Shares, except as may be required by reason of the death or bankruptcy of any one or more of the Shareholders, in which case the Pooling Agent shall hold the certificates for these shares subject to this Agreement for whatever person or -1- persons, firm or corporation that may become legally entitled thereto. 7. The Shareholders agree that the Shares are being pooled in the best interests of the Issuer and its Shareholders and have not been pooled due to duress or undue influence. 8. This Agreement shall enure to the benefit of and be binding upon the parties hereto, and each of their heirs, executors, administrators, successors and permitted assigns. 9. This Agreement may be executed in several parts in the same form and such parts so executed shall together constitute one original Agreement and such parts, if more than one, shall be read together and construed as if all the signing parties hereto had executed one copy of this Agreement. 10. Each of the signatories hereby agree that new shareholders of the Issuer may agree to be bound as parties to this Agreement from time to time and pool their shareholdings in the Issuer from time to time by amendments hereto which need only be signed by the Issuer, the Pooling Agent and the shareholders joining the Agreement from time to time. 11. The parties hereto agree that in consideration of the Pooling Agent agreeing to act as Pooling Agent as aforesaid, the Issuer and the Shareholders do hereby covenant and agree from time to time and at all times hereafter, to save, defend and keep harmless and fully indemnify the Pooling Agent, its successors and assigns, from and against all loss, costs, charges, damages and expenses which the Pooling Agent, its successors and assigns may at any time or times hereafter bear, sustain, suffer or be put to for or by reason or on account of its acting as Pooling Agent pursuant to this Agreement. 12. It is further agreed by and between the parties hereto and, without restricting the foregoing indemnity, that in case proceedings should hereafter be taken in any Court respecting the Shares hereby pooled, the Pooling Agent shall not be obliged to defend any such action or submit its rights to the Court until it shall have been indemnified by other good and sufficient security in addition to the indemnity given against its costs of such proceedings. 13. This Agreement shall be construed in accordance with the laws of the State of Washington. 14. In any action brought to enforce this Agreement, or to seek damages for breach thereof, the prevailing party shall be entitled to recover a reasonable attorney's fee (including a reasonable attorney's fee on any appeal thereof) and reasonable costs of litigation in addition to any other award or decree granted or given by the court. 15. This Agreement supersedes all prior agreements of the parties, constitutes the entire agreement and understanding between the parties and may only be modified or amended by a subsequent written agreement executed by all parties. -2- IN WITNESS WHEREOF the Issuer, the Pooling Agent, and the Shareholders, have executed this Agreement as of the day and year first above written. SIGNED, SEALED AND DELIVERED by the HARTCO LTD. Issuer in the presence of: ___________________________________ ______________________________________ Witness Signature Per:__________________________________ ___________________________________ Address ___________________________________ City and Postal Code SIGNED, SEALED AND DELIVERED by the Issuer in the presence of: ______________________________________ ___________________________________ Signature Witness Signature ______________________________________ ___________________________________ Print Name of Shareholder Address ______________________________________ ___________________________________ Address City and Postal Code ______________________________________ City and Postal Code SIGNED, SEALED AND DELIVERED by the Issuer in the presence of: ______________________________________ ___________________________________ Signature Witness Signature ______________________________________ ___________________________________ Print Name of Shareholder Address ______________________________________ ___________________________________ Address City and Postal Code ______________________________________ City and Postal Code SIGNED, SEALED AND DELIVERED by the Issuer in the presence of: ______________________________________ ___________________________________ Signature Witness Signature ______________________________________ ___________________________________ Print Name of Shareholder Address ______________________________________ ___________________________________ Address City and Postal Code ______________________________________ City and Postal Code SIGNED, SEALED AND DELIVERED by the Issuer in the presence of: ______________________________________ ___________________________________ Signature Witness Signature ______________________________________ ___________________________________ Print Name of Shareholder Address ______________________________________ ___________________________________ Address -3- City and Postal Code ______________________________________ City and Postal Code SCHEDULE "A" ------------ The Shares shall be released as to: a. 1/4 of the Shares on December 1, 1999 (the "First Release Date"); b. 1/4 of the Shares three months following the First Release Date; c. 1/4 of the Shares six months following the First Release Date; and d. 1/4 of the Shares nine months following the First Release Date; except that where the number of pooled shares of any Shareholder as at a Release Date are less than or equal to 50,000, then all such shares of that Shareholder shall be released.
- -------------------------------------------------------------------------------- NAME OF SHAREHOLDER # OF SHARES POOLED - -------------------------------------------------------------------------------- Antiqua Bay Holdings Ltd. 231,066 - -------------------------------------------------------------------------------- Rockaway Resources Inc. 631,066 - -------------------------------------------------------------------------------- Bottom Line Management Inc. 570,994 - -------------------------------------------------------------------------------- Everhart Enterprises Ltd. 630,633 - -------------------------------------------------------------------------------- Media Resources International Inc. 347,088 - -------------------------------------------------------------------------------- Millennium Crescent Corp. 347,087 - -------------------------------------------------------------------------------- Number 2 Corporate Ventures 400,000 - -------------------------------------------------------------------------------- Newthan Fund Investment Ltd. 75,634 - -------------------------------------------------------------------------------- Levert Development Ltd. 75,635 - -------------------------------------------------------------------------------- Number 4 Corporate Ventures Inc. 7,167 - -------------------------------------------------------------------------------- Number 5 Corporate Ventures Inc. 5,734 - -------------------------------------------------------------------------------- Number 6 Corporate Ventures Inc. 50,000 - -------------------------------------------------------------------------------- Number 9 Corporate Ventures Inc. 33,011 - -------------------------------------------------------------------------------- Los Cabos Land Company 373,463 - -------------------------------------------------------------------------------- Number 11 Corporate Ventures Inc. 160,204 - -------------------------------------------------------------------------------- Number 12 Corporate Ventures Inc. 5,734 - -------------------------------------------------------------------------------- Number 13 Corporate Ventures Inc. 5,734 - -------------------------------------------------------------------------------- Number 14 Corporate Ventures Inc. 28,669 - -------------------------------------------------------------------------------- Number 15 Corporate Ventures Inc. 18,676 - --------------------------------------------------------------------------------
-4- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Number 16 Corporate Ventures Inc. 41,125 - -------------------------------------------------------------------------------- Number 17 Corporate Ventures Inc. 41,125 - -------------------------------------------------------------------------------- Number 18 Corporate Ventures Inc. 41,125 - -------------------------------------------------------------------------------- Number 19 Corporate Ventures Inc. 41,125 - -------------------------------------------------------------------------------- Atlas Software Production Inc. 32,142 - -------------------------------------------------------------------------------- Number 21 Corporate Ventures Inc. 15,000 - -------------------------------------------------------------------------------- Number 22 Corporate Ventures Inc. 5,734 - -------------------------------------------------------------------------------- Mindquake Software Inc. 48,249 - -------------------------------------------------------------------------------- AHF Ventures Inc. 373,463 - -------------------------------------------------------------------------------- Zao Enterprises Inc. 43,003 - -------------------------------------------------------------------------------- Marie-Rose LTD. 400,000 - -------------------------------------------------------------------------------- Denali Foundation 370,000 - -------------------------------------------------------------------------------- Exeter Management & Trading Ltd. 500,000 - -------------------------------------------------------------------------------- Round Rock Management Inc. 150,314 - -------------------------------------------------------------------------------- 6,500,000 ---------------------------------
-5- FORM OF POOLING AMENDMENT AGREEMENT THIS AGREEMENT (the "Agreement") dated as of this _____ day of ______, ____, by and among HARTCO LTD, a Nevada corporation, (the "Issuer"), INTERWEST TRANSFER COMPANY, INC. (the "Pooling Agent") and the undersigned shareholders of the Issuer (the "Shareholders"). WHEREAS: A. The Shareholder has agreed to purchase _________ shares (the "Shares") of the Issuer; B. The Issuer together with the Pooling Agent have entered into a Pooling Agreement dated May ____, 1999, with certain shareholders of the Issuer (the "Pooling Agreement") providing for the pooling of the shares of the Issuer owned by those shareholders and their subsequent release in accordance with the following release provisions: a. 1/4 of the Shares on December 1, 1999 (the "First Release Date"); b. 1/4 of the Shares three months following the First Release Date; c. 1/4 of the Shares six months following the First Release Date; and d. 1/4 of the Shares nine months following the First Release Date; subject to amendment by the Board of Directors of the Issuer to permit earlier release on a pro-rata basis, except that where the number of pooled shares of any Shareholder as at a Release Date are less than or equal to 50,000, then all such shares of that Shareholder shall be released; and C. The Shareholder desires to place the Shares in pool with the Pooling Agent on the terms and conditions of Pooling Agreement which provides that new shareholders of the Issuer may agree to be bound as parties to the Pooling Agreement from time to time and pool their shareholdings in the Issuer from time to time by amendments to the Pooling Agreement which need only be signed by the Issuer, the Pooling Agent and the shareholders joining the Pooling Agreement from time to time. NOW THEREFORE in further consideration of the mutual covenants and conditions hereinafter contained, the parties hereto agree as follows: 1. The Shareholder hereby agrees with the Issuer and the Pooling Agent to be bound as a party to the Pooling Agreement and to pool the Shares thereunder and for this purpose to deliver or cause to be delivered to the Pooling Agent certificates for his or her Shares in the Issuer to be held by the Pooling Agent and released as provided in the Pooling Agreement. 2. This Agreement shall enure to the benefit of and be binding upon the parties hereto, their and each of their heirs, executors, administrators, successors and permitted assigns. 3. This Agreement may be executed in several parts in the same form and such parts so executed shall together constitute one original Agreement and such parts, if more than one, shall be read together and construed as if all the signing parties hereto had executed one copy of this Agree- -6- ment. 4. The parties hereto agree that in consideration of the Pooling Agent agreeing to act as Pooling Agent as aforesaid, the Issuer and the Shareholder do hereby covenant and agree from time to time and at all times hereafter, well and truly to save, defend and keep harmless and fully indemnify the Pooling Agent, its successors and assigns, from and against all loss, costs, charges, damages and expenses which the said Pooling Agent, its successors and assigns may at any time or times hereafter bear, sustain, suffer or be put to for or by reason or on account of its acting as Pooling Agent pursuant to this Agreement and the Pooling Agreement. IN WITNESS WHEREOF the Issuer, the Pooling Agent, and the Shareholder, have executed these presents as of the day and year first above written. SIGNED, SEALED AND DELIVERED by the HARTCO LTD. Issuer in the presence of: ___________________________________ __________________________________ Witness Signature Per:______________________________ ___________________________________ Address ___________________________________ City and Postal Code SIGNED, SEALED AND DELIVERED by the Issuer in the presence of: __________________________________ ___________________________________ Signature Witness Signature __________________________________ ___________________________________ Print Name of Shareholder Address __________________________________ ___________________________________ Address City and Postal Code __________________________________ City and Postal Code -7- EX-6.1 6 ASSET PURCHASE AGREEMENT Exhibit 6.1 ASSET PURCHASE AGREEMENT THIS AGREEMENT FOR PURCHASE AND SALE is made as of the 7th day of June, 1999 BETWEEN: MAC MULTIMEDIA ACCELERATOR CORP., a company incorporated -------------------------------- under the laws of the Province of British Columbia with a registered and records office at 1500-1040 West Georgia Street, Vancouver, British Columbia V6E 4H8, Facsimile No. (604) 669-3069 (the "Vendor") AND: HARTCO, LTD., a corporation incorporated under the laws of ------------ the State of Nevada with a registered and records office at 1 Union Square, Suite 2424, 600 University Street, Seattle, Washington, 98101-1192, USA, Facsimile No. (206) 464-0484 (the "Purchaser") WHEREAS: A. The Vendor is the owner of, and carries on the business of developing and commercially exploiting, the Program (as hereinafter defined); B. The Purchaser has agreed to buy from the Vendor, and the Vendor has agreed to sell to the Purchaser, all rights, title and interest in and to the Program and other aspects of the Work (as hereinafter defined) which Work constitutes substantially the whole of the undertaking of the Vendor, on the terms and subject to the conditions hereinafter provided; NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the covenants, agreements, representations, warranties and payments hereinafter set forth and provided for, the parties hereto covenant and agree as follows: 1.0 INTERPRETATION -------------- 1.1 Definitions ----------- In this Agreement, the following terms shall have the following meanings: (a) "Business Day" means any day, other than a Saturday or Sunday, on which chartered banks in Vancouver are open to the public for business; (b) "Closing" means the completion of the purchase and sale of the Work as described in Section 10.1; (c) "Closing Date" means June 29, 1999 or such other day as may be determined under the provisions of section 6.2 or as may otherwise be mutually agreed upon in writing by the parties hereto; (d) "Closing Documents" has the meaning ascribed thereto in Section 10.2; (e) "Development Agreement" means the software development agreement dated as of May 1, 1998 between the Vendor and Mindquake, as amended by an agreement dated as of March 24, 1999, pursuant to which Mindquake has agreed to design, develop and implement the Program on behalf of the Vendor; (f) "Effective Time" means 10 a.m. on the Closing Date; (g) "Mindquake" means Mindquake Software Inc., a company having an office at 300-1168 Hamilton Street, Vancouver, British Columbia, V6B 2S2; (h) "Program" means certain application software currently being developed by Mindquake pursuant to, and as described in, the Development Agreement, to be used as a broadcasting tool to narrowcast data on networks, such software referred to as the "Net Viewer"; (i) "Purchase Price" has the meaning ascribed thereto in Section 2.2; (j) "Purchaser's Solicitors" means Vandeberg, Johnson & Gandera; (k) "Vendor's Solicitors" means Fraser Milner, Barristers and Solicitors; and (l) "Work" means: (i) the Program; (ii) all derivatives of the Program including any Program improvements, enhancements, modifications and updates; (iii) all trade-secrets, know-how, patents and copyrights in the Program, and all intellectual property registrations and applications relating to the Program and all its derivatives; (iv) all Program design specifications, source code, user manuals, and training and marketing materials in support of the Program and all its derivatives; and (v) all rights with respect to the development, licensing, sale, support, maintenance, distribution, supply or exploitation of the Program and all its derivatives. 1.2 Designations and Number ----------------------- In this Agreement, words importing the singular or masculine shall include the plural, feminine or neutral gender and vice versa, where the context so requires. 1.3 Currency -------- Unless otherwise indicated, all dollar amounts referred to in this Agreement are in lawful money of Canada. 2.0 PURCHASE AND SALE ----------------- 2.1 Purchase and Sale of Work ------------------------- Relying on the representations and warranties set forth herein and upon and subject to the terms and conditions hereof, the Vendor shall sell, assign and transfer to the Purchaser and the Purchaser shall purchase the Work from the Vendor on the Closing Date. The transfer of legal and beneficial ownership of the Work shall be effective as at the Effective Time. 2.2 Purchase Price -------------- The total purchase price payable for the Work shall be Seven Hundred and Twenty-two Thousand ($722,000.00) Dollars (the "Purchase Price"), such sum to be paid by the Purchaser to the Vendor by way of cash, certified cheque or bank draft as follows: (a) $2,000.00 upon Closing or within two Business Days following the execution and delivery of this Agreement, whichever occurs first; and (b) the balance of the Purchase Price upon Closing. 2.3 Continued Support of the Development of the Program --------------------------------------------------- The Vendor agrees that, following the purchase and sale of the Work to the Purchaser at the Closing, the Vendor shall reasonably assist the Purchaser to continue development of the Program, under the Development Agreement, as described in Section 2.4. 2.4 Assignment of Development Agreement ----------------------------------- The Vendor hereby assigns, transfers and conveys to the Purchaser all of the Vendor's right, title and interest in and to the Development Agreement and all benefits and advantages thereof, with full power and authority to exercise and enforce any right of the Vendor in respect thereof, in the name of the Vendor or the Purchaser, as determined from time to time by the Purchaser in the Purchaser's sole discretion. Such assignment shall be effective as of the Effective Time. The Vendor covenants and agrees to observe and perform prior to the Effective Time, all covenants, agreements and obligations to be observed or performed under the Development Agreement (the "Prior Obligations"), and agrees to indemnify and hold harmless the Purchaser from and against any loss, cost, damage, claim, demand, action or cause of action, including all actual legal costs, on a solicitor and own client basis, in any way resulting from, connected with or arising out of any breach or non-observance by the Vendor of any Prior Obligation. As of the Effective Time, the Purchaser shall assume all covenants, agreements and obligations of the Vendor under the Development Agreement to be observed or performed at or after the Effective Time (the "Assumed Obligations"). The Purchaser shall indemnify and hold harmless the Vendor from and against any loss, cost, damage, claim, demand, action or cause of action, including all actual legal costs on a solicitor and own client basis in any way resulting from, connected with or arising out of any breach or non-observance by the Purchaser of any Assumed Obligations. The parties hereto agree to enter into an agreement (the "Assignment Agreement"), on such terms and conditions as the parties hereto may agree, to further evidence the assignment of the Vendor's interest in the Development Agreement to the Purchaser, such Assignment Agreement to be executed and delivered at Closing. The parties hereto will use all reasonable efforts to cooperate in respect of any matter in connection with the subject matter hereof. Each party will give the other party prompt written notice of any matter for which such party seeks indemnity hereunder, together with all particulars of the matter then known to such party. Each party will cooperate with the other and keep the other informed on a timely basis in respect of its response to or defence of any such matter. 3.0 REPRESENTATIONS AND WARRANTIES ------------------------------ 3.1 Representations and Warranties of the Vendor -------------------------------------------- The Vendor hereby represents and warrants to the Purchaser as follows, with the intent that the Purchaser shall rely thereon in entering into this Agreement and in concluding the purchase of the Work: (a) Status of Vendor. The Vendor is duly incorporated under the ---------------- provisions of the Company Act (British Columbia), and is validly subsisting, in good standing and properly licensed to do business in each jurisdiction where such licensing is required for the conduct of Vendor's business; (b) Capacity to Own and Dispose of Work. The Vendor has the power and ----------------------------------- capacity to own and dispose of the Work, to enter into this Agreement and to carry out the terms of this Agreement to its full extent; (c) Power to Carry on Business. The Vendor has the power, capacity and -------------------------- authority to carry on the business of developing the Program; (d) Authority to Sell. The execution and delivery of this Agreement and ----------------- the completion of the transactions contemplated hereby have been or will, prior to the Closing Date, be duly and validly authorized by all necessary corporate action on the part of the Vendor, including, without limitation, approval of Vendor's shareholders, and this Agreement constitutes a legal, valid and binding obligation of the Vendor enforceable against the Vendor in accordance with its terms; (e) Sale Not to Cause Default. Neither the execution and delivery of this ------------------------- Agreement nor the completion of the transactions contemplated hereby will: (i) violate any of the terms and provisions of the constating documents of the Vendor or any agreement to which the Vendor is a party or, to the best of the Vendor's knowledge, any order, decree, statute, bylaw, regulation, covenant or restriction applicable to the Vendor or the Work; (ii) give any person the right to terminate or cancel any instrument relating to the Work; or (iii) result in any fees, duties, taxes, assessments or other amounts relating to any of the Work becoming due and payable by the Purchaser other than sales taxes (if any) payable by the Purchaser in connection with the purchase and sale of the Work; (f) Work. At the Effective Time the Vendor shall own and possess and have ---- good and marketable title to the Work, existing as at such date, free and clear of all liens, charges, security interests or encumbrances whatsoever; (g) Intellectual Property. --------------------- (i) the Vendor has the exclusive right to use of the Program and has not granted any license or other rights to any other person in respect of the Program outside its normal business operations, is not required to pay any royalty or other fee to any person in respect of the use of the Program (excluding under the Development Agreement), and there is no restriction on the ability of the Vendor to use or exploit all of the rights in the Program; (ii) to the best of the Vendor's knowledge, the use of the Program does not infringe, and the Vendor has not received any notice, complaint, threat or claim alleging infringement of, any copyright, patent, trade-mark, trade name, industrial design, trade secret or other intellectual property or proprietary right of any other person; (iii) any and all of the trade secrets, copyrights, patents and other intellectual property rights applying to or incorporated in the Work shall, upon the Closing, vest in and become the sole property of the Purchaser, and the Vendor shall not, directly or indirectly, at any time after the Closing in any way dispute any such rights; (iv) any moral rights that the Vendor may have to the Program are waived as of the Closing Date; (v) all necessary consents or licences to or for the use of any products, proprietary information or software incorporated into the Work by the Vendor have been obtained by the Vendor; (vi) the Work's trade secrets and its source code have not been disclosed to any person except on a confidential basis in the Vendor's normal course of business; and (vii) no ownership interest in the Work has been sold, transferred, assigned or optioned to any third party; (h) Litigation. There is no litigation or administrative or governmental ---------- proceeding or inquiry pending or, to the knowledge of the Vendor, threatened against or relating to the Work or against the Vendor which, if successful, could result in a lien or charge against the Work, and the Vendor does not know of or have reasonable grounds for believing that there is any basis for any such litigation, proceeding or inquiry; without limiting the foregoing, the Vendor represents that it has performed all of its obligations which were required to be performed by it up to the date hereof and will perform all of its obligations required to be performed by it up to the Closing Date by the terms of any agreement, contract or commitment, that all obligations are expected to be paid in the ordinary course of the Vendor's business, and that the Vendor has filed all federal, provincial and local tax returns required by law to be filed by it, and that all taxes, penalties and interest due such tax authorities for all periods covered by such returns have been paid in full; (i) Accuracy of Representations. All representations and warranties --------------------------- contained herein shall be true and correct at and as of the Effective Time as if such representations and warranties were made at and as of such time; (j) Residency. The Vendor is not a non-resident of Canada within the --------- meaning of the Income Tax Act (Canada); and (k) No Omissions. To the best of the Vendor's knowledge, no ------------ representation or warranty by the Vendor contained in this Agreement, and no statement contained in any instrument furnished or to be furnished by the Vendor pursuant to this Agreement or in connection with the transactions contemplated hereby, contains or will contain any untrue statement of fact, or knowingly omits or will omit to state a fact necessary in order to make the statements contained herein and therein not misleading. Without limiting the generality of the foregoing, to the best of the Vendor's knowledge, there is no fact known to the Vendor or any officer, director or employee of the Vendor who has any responsibility for the management of the Work or rights thereto which has not been disclosed to the Purchaser and which materially or adversely affects the value of the Works or rights thereto. 3.2 Representations and Warranties of the Purchaser ----------------------------------------------- The Purchaser represents and warrants to the Vendor as follows, with the intent that the Vendor shall rely thereon in entering into this Agreement and in concluding the sale of the Work: (a) Status of Purchaser. The Purchaser is duly incorporated under the ------------------- laws of the State of Nevada, is validly subsisting and in good standing under its statute of incorporation, and has the power and capacity to enter into this Agreement and carry out its terms; (b) Share Capital of Purchaser. All of the issued and outstanding shares -------------------------- of common stock of the Purchaser have been duly authorized and are validly issued and outstanding as fully paid and non-assessable shares of the Purchaser; (c) Compliance with Securities Law. The shares of common stock of the ------------------------------ Purchaser are listed and posted for trading on the over-the-counter bulletin board market in the United States, there are not currently any cease trade orders outstanding against the Purchaser or other restrictions on resale of shares of common stock of the Purchaser and the Purchaser is not in default of any requirements of the Securities Act, 1933 (United States), the Securities Exchange Act, 1934 (United States), the rules and regulations of the Securities and Exchange Commission, applicable state securities laws or the rules and policies of the over-the-counter bulletin board market; (d) Accuracy of Financial Statements. To the best of the Purchaser's -------------------------------- knowledge, the audited financial statements of the Purchaser for the financial periods ended March 31, 1998, December 31, 1997 and December 31, 1996 are, as of their respective dates, accurate in all material respects and do not contain any misstatement of facts or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (e) Authority to Purchase. The execution and delivery of this Agreement --------------------- and the completion of the transactions contemplated hereby have been or will, prior to the Closing Date, be duly and validly authorized by all necessary corporate action on the part of the Purchaser and this Agreement constitutes a legal, valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms; (f) Power to Carry on Business. The Purchaser has the power, capacity and -------------------------- authority to exploit the commercial application of the Program; (g) Purchase Not to Cause Default. Neither the execution and delivery of ------------------------------ this Agreement nor the completion of the transactions contemplated hereby will violate any of the terms and provisions of the constating documents of the Purchaser or to the best of the Purchaser's knowledge, any order, decree, statute, bylaw, regulation, covenant or restriction applicable to the Purchaser; (h) Litigation. There is no litigation or governmental proceeding or ---------- inquiry pending or, to the knowledge of the Purchaser, threatened against or relating to the Purchaser and the Purchaser does not know of or have reasonable grounds for believing that there is any basis for any such litigation, proceeding or inquiry; (i) No Liabilities. The Purchaser does not have any liabilities or -------------- obligations of any kind, contingent or otherwise, other than liabilities to arm's length parties incurred by the Purchaser in the ordinary course of business not exceeding $25,000 in the aggregate; (j) No Agreements. The Purchaser is not a party to or bound by any ------------- agreement, indenture, contract, lease, deed of trust, license, option, instrument or other commitment, written or oral, other than, upon the execution hereof, this Agreement; and (k) Accuracy of Representations. All representations and warranties --------------------------- contained herein shall be true and correct at and as of the Effective Time as if such representations and warranties were made at and as of such time. 4.0 COVENANTS OF THE PARTIES ------------------------ 4.1 Conduct of the Business Prior to the Effective Time --------------------------------------------------- From the date hereof until the Effective Time, and subject to reasonable events beyond the Vendor's control, the Vendor covenants to deal with the Work diligently and only in the ordinary course and shall use its best efforts to preserve for the Purchaser the Work free and clear of any charges or claims. 4.2 Vendor to Provide Access by Purchaser ------------------------------------- The Vendor shall give or cause to be given to the Purchaser and to the Purchaser's Solicitors, the Purchaser's accountants and other representatives full access, during normal business hours throughout the period prior to the Closing to all books, contracts, commitments and records of the Vendor relating to the Work, and the Vendor shall furnish to the Purchaser during such period all such information and copies of such books, contracts, commitments and records as the Purchaser may reasonably request. 4.3 Procure Consents ---------------- The Vendor and the Purchaser shall diligently take all reasonable steps required to obtain all consents and approvals necessary for the sale of the Work hereunder before the Closing. 4.4 Sales Tax --------- The Purchaser shall pay all sales taxes and registration charges and transfer fees properly payable in connection with the sale and transfer of the Work by the Vendor to the Purchaser. 4.5 Goods and Services Tax Exemption -------------------------------- The Vendor and the Purchaser will jointly execute in the prescribed form, and the Vendor will, if required, file within the required time, an election under s. 167(1) of the Excise Tax Act (Canada) that no tax be payable pursuant to Part IX of the Excise Tax Act (Canada) with respect to the purchase and sale of the Work hereunder. 4.6 Equity Financing ---------------- The Purchaser shall use its best efforts to complete an equity financing to raise sufficient funds, on or before the Closing Date, to meet the Purchase Price and to thereafter complete an equity financing to raise sufficient funds to carry out the commercial exploitation of the Work. 4.7 Vendor's Covenants of Indemnity ------------------------------- The Vendor shall indemnify and hold harmless the Purchaser from and against: (a) any and all damage or deficiencies resulting from any misrepresentation, breach of warranty or non-fulfillment of any covenant on the part of the Vendor herein contained or from any misrepresentation in or omission from any certificate or other instrument furnished or to be furnished to the Purchaser hereunder; (b) any and all actions, suits, proceedings, demands, assessments, judgments, costs and legal and other expenses incident to any of the foregoing; and (c) all costs and damages incurred by the Purchaser pursuant to any action or claims by any person for infringement of such person's intellectual property or proprietary rights, by the Work as it existed as of the Closing Date, including all costs and damages arising from any and all actions, suits, proceedings, demands, assessments, judgements and legal and other expenses incident to any such action or claim. 4.8 Purchaser's Covenant of Indemnity --------------------------------- The Purchaser shall indemnify and hold harmless the Vendor from and against: (a) any and all damage or deficiencies resulting from any misrepresentation, breach of warranty or non-fulfillment of any covenant on the part of the Purchaser herein contained or from any misrepresentation in or omission from any certificate or other instrument furnished or to be furnished to the Vendor hereunder; and (b) any and all actions, suits, proceedings, demands, assessments, judgments, costs and legal and other expenses incident to any of the foregoing. 5.0 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS ----------------------------------------------------- 5.1 Survival of Representations, Warranties and Covenants of the Vendor ------------------------------------------------------------------- All representations, warranties, covenants and agreements made by the Vendor in this Agreement or pursuant hereto shall survive the completion of the transactions contemplated by this Agreement and, notwithstanding such completion or any investigation at any time made by or on behalf of the Purchaser, and to the extent relevant and applicable, shall continue in full force and effect for the benefit of the Purchaser until a date 18 months from the Closing Date. 5.2 Survival of Representations, Warranties and Covenants of the Purchaser ---------------------------------------------------------------------- All representations, warranties, covenants and agreements made by the Purchaser in this Agreement or pursuant hereto shall survive the completion of the transactions contemplated by this Agreement and, notwithstanding such completion or any investigation at any time made by or on behalf of the Vendor, and to the extent relevant and applicable, shall continue in full force and effect for the benefit of the Vendor until a date 18 months from the Closing Date, except for the Purchaser's covenants contained in Section 8.0, which covenants shall continue in full force and effect until a date two years from the Closing Date. 6.0 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER -------------------------------------------------------- 6.1 Conditions for the Benefit of the Purchaser ------------------------------------------- All obligations of the Purchaser under this Agreement are subject to the fulfilment at or prior to the Closing, or at such other time as may be specified below, of each the following conditions: (a) Representations and Warranties of the Vendor. The representations and -------------------------------------------- warranties of the Vendor contained in this Agreement and in any certificate or document delivered pursuant to the provisions hereof or in connection with the transactions contemplated hereby shall be true and correct in all material respects at and as of the Effective Time as if such representations and warranties were made at and as of such time; (b) Covenants of the Vendor. The Vendor shall have performed and complied ----------------------- with all agreements, covenants and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing; (c) Vendor's Certificate. The Vendor shall have delivered to the -------------------- Purchaser a certificate of the president of the Vendor, dated the Closing Date, certifying in such detail as the Purchaser may specify acting reasonably, to the fulfillment of the conditions set forth in Sections 6.1(a) and 6.1(b); (d) Consents. The Purchaser shall, on or before June 21, 1999, have -------- received duly executed copies of all consents and approvals referred to in Section 4.3; (e) Equity Financing. The Purchaser shall have completed an equity ---------------- financing and shall have raised sufficient funds, on or before June 28, 1999 or such later date as may be determined under the provisions of Section 6.2, to meet the Purchase Price; and (f) Opinion of the Vendor's Solicitors. The Purchaser shall have ----------------------------------- received an opinion of the Vendor's Solicitor in respect of the validity of the consents referred to in Section 6.1(d) in form and content reasonably satisfactory to the Purchaser. The foregoing conditions are for the exclusive benefit of the Purchaser and the Purchaser may waive, in whole or in part any of the conditions contained in Sections 6.1(a) or 6.1(b) at or prior to the Closing by delivering to the Vendor a written waiver to that effect executed by the Purchaser. 6.2 Extension of Closing Date. The Purchaser may, upon provision of prior ------------------------- written notice to the Vendor, given at least one Business Day prior to the date provided for satisfaction of the condition contained in Section 6.1(e), together with evidence satisfactory to the Vendor, acting reasonably, that the Purchaser is making progress towards completion of the conditions contained in Section 6.1(e), extend the Closing Date, together with the date specified in Section 6.1(e) each by the same period of up to two weeks. The Purchaser may not, without the written consent of the Vendor, exercise the rights of extension provided in this Section 6.2 more than three times, and for each extension, provide such satisfactory evidence. 7.0 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE VENDOR ----------------------------------------------------- 7.1 Conditions for the Benefit of the Vendor ---------------------------------------- All obligations of the Vendor under this Agreement are subject to the fulfilment at or prior to the Closing, or at such other time as may be specified below, of each of the following conditions: (a) Purchaser's Representations and Warranties. The Purchaser's ------------------------------------------ representations and warranties contained in this Agreement shall be true and correct in all material respects at and as of the Effective Time as though such representations and warranties were made at and as of such time; (b) Purchaser's Covenants. The Purchaser shall have performed and --------------------- complied with all covenants, agreements and conditions required by this Agreement to be performed or complied with by it at or prior to the Closing; (c) Purchaser's Certificate. The Purchaser shall have delivered to the ----------------------- Vendor a certificate of the president of the Purchaser, dated the Closing Date, certifying in such detail as the Vendor may specify acting reasonably, to the fulfillment of the conditions set forth in Sections 7.1(a) and 7.1(b); (d) Consents. All consents and approvals required to be obtained by the -------- Vendor for the purpose of selling, assigning or transferring the Work have been obtained on or before June 21, 1999; (e) Equity Financing. The Purchaser shall have completed an equity ---------------- financing and shall have raised sufficient funds, on or before June 28, 1999 or such later date as may be determined under the provisions of Section 6.2, to meet the Purchase Price, and (f) Opinion of Purchaser's Solicitor. The Vendor shall have received -------------------------------- an opinion of the Purchaser's Solicitors in respect of the validity of the consents referred to in Section 7.1(d) in form and substance reasonably satisfactory to the Vendor. The foregoing conditions are for the exclusive benefit of the Vendor and the Vendor may waive, in whole or in part, any of the conditions contained in any of Sections 7.1(a) or 7.1(b) at or prior to the Closing by delivering to the Purchaser a written waiver to that effect executed by the Vendor. 8.0 MANAGEMENT OF PURCHASER ----------------------- 8.1 Nomination of Directors ----------------------- Following the Closing Date and for a period of two years thereafter, the Vendor shall have the right to have a director nominee nominated to the board of directors of the Purchaser as provided herein. The Vendor shall provide notice to the Purchaser of the name of its nominee and the Vendor shall have the right to have its nominee appointed to the board of directors of the Purchaser at the first meeting of the board of directors of the Purchaser following receipt by the Purchaser of notice of the name of the Vendor's nominee. Thereafter, management of the Purchaser shall name such nominee as a nominee of management of the Purchaser in the Purchaser's proxy circular or equivalent document and form of proxy for each meeting of shareholders of the Purchaser held to elect directors. If at any time the board of directors of the Purchaser is comprised of more than five directors, including the nominee of the Vendor, the Vendor shall thereafter be entitled to maintain one additional nominee on the board of directors of the Purchaser for each two directors on the board of directors of the Purchaser beyond five. The Purchaser shall provide notice to the Vendor at the time at which the Vendor is entitled to nominate additional directors to the board of directors of the Purchaser in accordance with the immediately preceding sentence. The Vendor shall provide the name of any further nominees to be appointed to the board of directors of the Purchaser, and the Purchaser shall use its best efforts to ensure that such nominees are promptly appointed to the board of directors of the Purchaser in accordance with the provisions of this Section 8.1. 8.2 Vacancies Between Meetings -------------------------- If a director (the "Retiring Director") nominated under Section 8.1 ceases to be a director for any reason, the Purchaser shall use its best efforts to ensure that the Retiring Director is promptly replaced in accordance with the provisions of Section 8.1 so as to maintain the representation of the Vendor on the board of directors of the Purchaser contemplated hereunder. 8.3 Meetings of the Board of Directors ---------------------------------- The board of directors of the Purchaser shall meet at least quarterly at such places and times as the board of directors of the Purchaser may determine. Until such time as the Vendor's first nominee is appointed as a director of the Purchaser, the Purchaser shall provide written notice to the Vendor of any planned meetings of the board of directors of the Vendor in the form and at the time at which such notice is otherwise required to be given to a director of the Purchaser, pursuant to applicable law, and the Vendor shall be entitled to have a representative attend such meetings and receive copies of all material circulated to the directors of the Purchaser with respect to such meetings. 8.4 Indemnity for Directors ----------------------- Subject to the limitations set forth in the laws of the jurisdiction governing the Purchaser or otherwise at law, and in addition to any existing provisions which may be contained in the Purchaser's organisation documents, the Purchaser shall to the fullest extent possible indemnify any director, alternate director, former director or former alternate director nominated by the Vendor and his heirs and other personal representatives, against all costs, charges and expenses, including any amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him in a civil, criminal or administrative action or proceeding to which he was made a party by reason of being or having been a director or alternate director of the Purchaser nominated by the Vendor and any costs related thereto, including legal costs and disbursements on a solicitor and his own client basis, if: (a) he has acted honestly and in good faith with a view to the best interests of the Purchaser; and (b) in the case of any criminal or administrative action or proceeding, he had reasonable grounds for believing that his conduct was lawful. Nothing in this Section shall limit the right of any person entitled to claim any indemnity apart from the provisions of this Section. If under applicable law, any payment by the Purchaser under such indemnity requires the approval of any court, then the Purchaser at its own expense shall promptly take all necessary proceedings to obtain such approval. 9.0 RISK ---- 9.1 Risk ---- From the date of this Agreement until the Effective Time the Work shall be and remain at the risk of, the Vendor. If any of the Work shall be lost, damaged or destroyed prior to the Effective Time, the Purchaser may, at its sole option, in lieu of not completing the purchase of the Work, elect by notice in writing to the Vendor to complete the purchase to the extent possible without reduction of the Purchase Price, in which event all proceeds of any insurance or compensation in respect of such loss, damage or destruction shall be payable to the Purchaser and all right and claim of the Vendor to any such amounts shall be assigned to the Purchaser. 10.0 CLOSING ARRANGEMENTS -------------------- 10.1 Closing ------- Subject to the terms and conditions hereof, the purchase and sale of the Work shall be completed at a closing (the "Closing") to be held in the offices of the Vendor's Solicitors, at Suite 1500, 1040 West Georgia Street, Vancouver, British Columbia at 10:00 a.m. Vancouver Time on the Closing Date, or such other time and place as may be mutually agreed upon by the Vendor and the Purchaser. 10.2 Documents to be Delivered by the Vendor at the Closing ------------------------------------------------------ At the Closing and concurrently with the payment of the Purchase Price, the Vendor shall deliver or cause to be delivered to the Purchaser each of the following documents (collectively, the "Vendor's Closing Documents"): (a) all deeds of conveyance, bills of sale, transfers and assignments in form and content satisfactory to the Purchaser's Solicitors, appropriate to effectively vest good and marketable title to the Program in the Purchaser to the extent contemplated by this Agreement, and immediately registrable in all places where registration of such instruments is permitted or required; (b) all consents and approvals referred to in Section 4.3, if any; (c) certified copies of such resolutions of the shareholders and directors of the Vendor as are required in the reasonable opinion of the Purchaser's Solicitors to authorize the execution, delivery and implementation of this Agreement; (d) copies of all books, contracts, commitments and records of the Vendor referred to in Section 4.2; (e) the certificate of the President of the Vendor contemplated in Section 6.1(c); (f) the assignment of the Development Agreement, in form and content to the reasonable satisfaction of the Purchaser; (g) an assignment of the copyright in the Program, in form and content to the reasonable satisfaction of the Purchaser; and (h) a copy of the Assignment Agreement contemplated in Section 2.4, duly executed by the Vendor. 10.3 Documents to be Delivered by the Purchaser at the Closing --------------------------------------------------------- At the Closing, the Purchaser shall deliver or cause to be delivered to the Vendor each of the following documents (collectively the "Purchaser's Closing Documents"): (a) certified copies of such resolutions of the shareholders and directors of the Purchaser as are required in the reasonable opinion of the Vendor's Solicitors to authorize the execution, delivery and implementation of this Agreement; (b) the certificate of the president of the Purchaser contemplated in Section 7.1(c); (c) the balance due of the Purchase Price, as provided in Section 2.2; and (d) a copy of the Assignment Agreement contemplated in Section 2.4, duly executed by the Purchaser. 11.0 GENERAL PROVISIONS ------------------ 11.1 Further Assurances ------------------ Upon completion of the Closing, this Agreement shall without further act or formality operate as an actual transfer and conveyance to the Purchaser of title to all of the Work as of the Effective Time, to the extent then created, but the Vendor and the Purchaser hereby covenant and agree that they shall from time to time thereafter execute and do all such further acts, deeds, transfers, assurances, matters and things as may be necessary to transfer to and vest in the Purchaser all or any of the Work and to give to the Vendor and the Purchaser the full benefit of this Agreement. For greater certainty, it is hereby agreed that, after the Effective Time, the Vendor shall hold all of the Work, to the extent that the same shall not have been effectually transferred to the Purchaser by or pursuant to this Agreement, in trust for and as the property of the Purchaser. After the Closing, the Vendor shall not, directly or through a third party, develop or supply any services or products which use or incorporate the Program or any of the Work, except as permitted by any other agreement between the parties hereto. 11.2 Time of the Essence ------------------- Time shall be of the essence of this Agreement. 11.3 No Assignment ------------- This Agreement and the rights and obligations of any party hereunder may not be assigned without the express written consent of the other parties, except that the Purchaser may assign this Agreement and its rights and obligations hereunder in writing to an affiliate or associate (as such terms are defined in the Securities Act (British Columbia)) of the Purchaser provided that the Purchaser delivers a duly executed copy of such assignment to the Vendor not later than four Business Days prior to the Closing Date. In the event that the Purchaser assigns this Agreement pursuant to this Section 11.3, the Purchaser shall remain bound by the provisions of this Agreement and shall not be relieved of its obligations hereunder. 11.4 Amendments ---------- This Agreement may only be modified or amended by written agreement duly executed by the parties. 11.5 Notices ------- Except as otherwise provided herein, any notice required or permitted to be given hereunder by any party shall be deemed to have been well and sufficiently given if mailed by prepaid registered mail, or sent by facsimile machine ("faxed") to, or delivered at, the address of the party to whom it is directed hereinbefore set out, or at such other reasonable address at which personal delivery may be effected as such party may from time to time give notice of, and any such notice shall be deemed to have been received, if mailed, 72 hours after the time of mailing, and if delivered or faxed, upon the date of delivery or faxing with confirmation of receipt provided that such delivery or faxing occurs between 9:00 a.m. and 5:00 p.m. on a Business Day, failing which it shall be given or deemed to have been given on the next Business Day. If normal mail service or fax service is impaired by strike, slowdown, force majeure or other cause, then a notice sent by the impaired means of communication will be deemed not to be received until actually received, and the party sending the notice shall utilize another unimpaired means of communication or shall deliver such notice in order to ensure prompt receipt thereof. 11.6 Headings and Division --------------------- The division of this Agreement into Parts, paragraphs and subparagraphs and the insertion of headings are for convenience of reference only and shall not affect the structure or interpretation of this Agreement. 11.7 Governing Law ------------- This Agreement shall be construed and enforced in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein and shall be treated in all respects as a British Columbia contract. 11.8 Severability ------------ In the event that any provision of this Agreement or any part of any provision shall be held to be invalid, illegal or unenforceable, it shall not affect the validity, legality or enforceability of any other provision or portion of a provision of this Agreement. 11.9 Entire Agreement ---------------- This Agreement and the instruments referred to herein constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, between the parties, and there are no warranties, conditions, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth herein. 11.10 Successors and Assigns ---------------------- Subject to the provisions of Section 11.3, this Agreement and everything contained herein shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns. 11.11 Counterpart Execution --------------------- This Agreement may be executed in counterparts, including by facsimile, and such counterparts together shall constitute a single agreement. IN WITNESS WHEREOF the parties have duly executed this Agreement as of the day first above written. MAC MULTIMEDIA ACCELERATOR CORP. Per: ______________________________ Authorized Signatory Per: ______________________________ Authorized Signatory HARTCO INC. Per: ______________________________ Authorized Signatory EX-6.2 7 FIRST AMENDING AGREEMENT Exhibit 6.2 AMENDING AGREEMENT THIS AMENDING AGREEMENT is made as of the 21/st/ day of June, 1999. BETWEEN: MAC MULTIMEDIA ACCELERATOR CORP., a company incorporated -------------------------------- under the laws of the Province of British Columbia with a registered and records office at 1500-1040 West Georgia Street, British Columbia, V6E 4H8, Facsimile No. (604) 669- 3069. (the "Vendor") AND: HARTCO, LTD., a corporation incorporated under the laws of ------------ the State of Nevada with a registered and records office at 1 Union Square, Suite 2424, 600 University Street, Seattle, Washington, 98101-1192, USA, Facsimile No. (206) 464-0484. (the "Purchaser") WHEREAS: A. The Vendor and Purchaser have entered into an Asset Purchase Agreement made as of the 10/th/ day of June, 1999 (the "Agreement"); B. The Vendor and Purchaser wish to amend the Agreement; NOW THEREFORE THIS AMENDING AGREEMENT WITNESSES that, in consideration of the covenants, agreements, representations and warranties hereinafter set forth and provided for, the parties hereto covenant and agree as follows: 1. The date limited for fulfilment of the Purchaser's condition precedent contained in Section 6.1(d) of the Agreement shall be changed from June 21, 1999 to June 28, 1999. 2. The date limited for fulfilment of the Vendor's condition precedent contained in Section 7.1(d) of the Agreement shall be changed from June 21, 1999 to June 28, 1999. 3. Time shall continue to be of the essence of the Agreement. 4. All other terms and conditions of the Agreement shall remain unchanged. IN WITNESS WHEREOF the parties have duly executed this Amending Agreement as of the day first above written. MAC MULTIMEDIA ACCELERATOR CORP. Per:______________________________ Authorized Signatory Per:______________________________ Authorized Signatory HARTCO, LTD. Per:______________________________ Authorized Signatory Per:______________________________ Authorized Signatory EX-6.3 8 SECOND AMENDING AGREEMENT Exhibit 6.3 SECOND AMENDING AGREEMENT THIS SECOND AMENDING AGREEMENT is made as of the 6th day of August 1999. BETWEEN: MAC MULTIMEDIA ACCELERATOR CORP., a company incorporated -------------------------------- under the laws of the Province of British Columbia with a registered and records office at 1500-1040 West Georgia Street, Vancouver, British Columbia, V6E 4H8. (the "Vendor") AND: EXO-WEB.COM, a corporation incorporated under the laws of ----------- the State Nevada with a registered and records office at 1 Union Square, Suite 2424, 600 University Street, Seattle, Washington, 98101-1192, USA. (the "Purchaser") WHEREAS: A. The Purchaser changed its name from Hartco, Ltd. to Exo-Web.Com on August 4, 1999; B. The Vendor and Hartco, Ltd. entered into an Asset Purchase Agreement made as of June 10, 1999 and an Amending Agreement made as of June 21, 1999 (collectively, the "Agreement"); and C. The Vendor and the Purchaser wish to further amend the Agreement. NOW THEREFORE, THIS AMENDING AGREEMENT WITNESSES that, in consideration of the covenants, agreements, representations and warranties hereinafter set forth and provided for, the parties hereto covenant and agree as follows: 1. Section 1.1(c) of the Agreement shall be deleted and be replaced with the following: " "Closing Date" means December 30, 1999 or such other day as may be determined under the provisions of Section 6.2 or as may otherwise be mutually agreed upon in writing by the parties hereto;" 2. Section 1.1 (e) of the Agreement shall be deleted and be replaced with the following: " "Development Agreement" means the software development agreement dated as of May 1, 1998 between the Vendor and Mindquake, as amended by an agreement dated as of March 24, 1999, pursuant to which Mindquake has agreed to design, develop and implement the Program on behalf of the Vendor and the lease agreements (collectively the "Leases") for hardware and software, used by Mindquake in carrying out such duties, between the Vendor and Newcourt Financial Ltd. (lease numbers 546493, 546495 & 547559) and between the Vendor and Copelco Capital Ltd. (lease numbers 0853240 & 0877320);" 3. Section 2.2 of the Agreement shall be deleted and replaced with the following: "The total purchase price payable for the Work shall be the sum of Seven Hundred and Twenty-two Thousand ($722,000.00) Dollars and the costs, if any, incurred by the Vendor pursuant to Section 4.1 (the "Purchase Price"), such sum to be paid by the Purchaser to the Vendor by way of cash, certified cheque or bank draft as follows: (a) $2,000.00 upon Closing or within two Business Days following the execution and delivery of this Agreement, whichever occurs first; (b) amounts paid to the Vendor from time to time as a result of licenses of the Program obtained by the Purchaser, if any, as provided for in Section 4.9; and (c) the balance of the Purchase Price upon Closing." 4. Section 4.1 of the Agreement shall be modified by adding the following after the first paragraph thereof: "The Vendor may, at its option, engage Mindquake or others to improve or enhance the Work, including customisation for licensees, beyond that specified in the Development Agreement, to engage third parties to provide a standard form of license agreement and/or beta test agreement or to engage third parties to copyright the Program and the cost of any of the foregoing shall be included in the Purchase Price as provided in Section 2.2 provided that the Purchaser has first approved any such costs in writing. The Purchaser shall reimburse the Vendor monthly for all amounts due under the Leases from and after August 10, 1999 until the Closing Date at which time the Leases shall be assigned to the Purchaser by the Vendor." 2 5. Section 4.6 of the Agreement shall be modified by adding the following after the first paragraph thereof: "The Purchaser shall from time to time advise the Vendor of its progress in raising funds and shall forthwith advise the Vendor in writing as soon as the Purchaser has obtained a commitment for equity or debt financing sufficient to meet the Purchase Price. The parties shall thereafter co-operate to complete the transaction contemplated by this agreement as soon as reasonably possible after the Purchaser has completed such equity or debt financing." 6. A new Section 4.9 shall be added to the Agreement immediately following Section 4.8 as follows: "4.9 Beta Testing and Licensing -------------------------- The Purchaser shall use its best efforts to obtain beta test partners for the Program and to obtain commitments to license the Program. The Vendor hereby authorises the Purchaser, as Licensor, to enter into license agreements of the Program with third parities provided that: (a) the Vendor has first approved in writing both the licensee and the terms of the license agreement, which approval may be arbitrarily withheld; (b) the licensee is directed to pay all proceeds required to be made by it under the license directly to the Vendor (net of any bona fide third party costs incurred by the Purchaser in obtaining such licenses which have been previously approved by the Vendor) which proceeds shall be credited towards the Purchase Price pursuant to Section 3(b); and (c) In the event that the Purchaser is unable to complete the transaction contemplated by this Agreement, the Purchaser shall, immediately upon the termination of this Agreement, assign to the Vendor the licenses that the Purchaser entered into under this Section 4.9, if any." 7. Section 6.1(e) and Section 7.1(e) of the Agreement shall both be deleted and both be replaced with the following: "The Purchaser shall have completed an equity or debt financing and shall have raised sufficient funds, on or before December 29, 1999 or such later date as may be determined under the provisions of Section 6.2, to meet the Purchase Price; and" 3 8. Section 6.2 of the Agreement shall be deleted and be replaced with the following: "The Purchaser may, upon provision of prior written notice to the Vendor, given at least one Business Day prior to the date provided for satisfaction of the condition contained in Section 6.1(e) and Section 7.1(e), together with evidence satisfactory to the Vendor, acting reasonably, that the Purchaser is making progress towards the completion of the conditions contained in Section 6.1(e) and Section 7.1(e), extend the Closing Date, together with the date specified in Section 6.1(e) and Section 7.1(e), all by the same period of up to four weeks. The Purchaser may not, without the written consent of the Vendor, exercise the rights of extension provided in this Section 6.2 more than three times, and for each extension, shall provide such satisfactory evidence." 9. Time shall continue to be of the essence of the Agreement. 10. All other terms and conditions of the Agreement shall remain unchanged. IN WITNESS WHEREOF the parties have duly executed this Second Amending Agreement as of the day first above written. MAC MULTIMEDIA ACCELERATOR CORP. Per:______________________________ Authorised Signatory Per:______________________________ Authorised Signatory EXO-WEB.COM Per:______________________________ Authorised Signatory Per:______________________________ Authorised Signatory 4 -----END PRIVACY-ENHANCED MESSAGE-----