-----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, GdymlzUfA+0aGbssQ6QClLxFhPYQ5sdghpGPS5sQYmbHWBlGLWhax+l4itUF941z r/ZM6/0Wy8RtvIxlgHQKIw== 0000921895-99-000651.txt : 19990916 0000921895-99-000651.hdr.sgml : 19990916 ACCESSION NUMBER: 0000921895-99-000651 CONFORMED SUBMISSION TYPE: 10-12G PUBLIC DOCUMENT COUNT: 52 FILED AS OF DATE: 19990915 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INFOCAST CORP /NV CENTRAL INDEX KEY: 0001093682 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 841460887 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-12G SEC ACT: SEC FILE NUMBER: 000-27343 FILM NUMBER: 99712267 BUSINESS ADDRESS: STREET 1: 1 RICHMOND STREET WEST, STREET 2: SUITE 901 CITY: TORONTO BUSINESS PHONE: 2127537200 MAIL ADDRESS: STREET 1: 1 RICHMOND STREET WEST STREET 2: SUITE 901 CITY: TORONTO, ONTARIO 10-12G 1 10-12G SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 --------------------------- FORM 10 GENERAL FORM FOR REGISTRATION OF SECURITIES PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934 INFOCAST CORPORATION - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Nevada 84-1460887 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 1 Richmond Street West, Suite 902, Toronto, Ontario M5H3W4 - ------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (416) 867-1681 Securities to be registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which to be so Registered Each Class is to be Registered NONE NONE Securities to be registered under Section 12(g) of the Act: Common Stock, $0.001 par value - -------------------------------------------------------------------------------- (Title of class) Unless otherwise indicated, all information contained in this Registration Statement gives effect to a 2 for 1 stock split effected on October 19, 1998. ITEM 1. BUSINESS. General InfoCast Corporation (the "Company"), a development stage company, is an Application Service Provider ("ASP") in the business of electronic content delivery and information management on multiple communication platforms to meet the growing global needs of high speed corporate information consumers. The Company's content will be delivered through a North American network of strategically placed information hubs ("i-Hubs"). These hubs will be implemented on Sun Microsystems servers and based on Sun Solaris, Netscape and Java related technologies, providing a high level of reliability, scalability and performance. The Company's network and strategic alliances will provide the essential communication link between information sources and information users worldwide so that information can be delivered in real-time to anyone, anywhere, in any format - data, voice or animation using the Internet or private networks. An ASP provides services to implement, host and maintain packaged applications and information technology (IT) services for customers on commercial i-Hubs. The i-Hubs can be characterized as the core of an information utility, being large servers that host a variety of content and applications, and use the Internet as a primary distribution method. In general, the customer enters into a multi-year contract with the ASP where the application license and services are paid for on a monthly or per-transaction basis. Enterprises have traditionally sourced solutions from multiple vendors, application vendors, system integrators and hosting vendors or have created the components internally. The Company will provide an alternative to this approach by being a single source ASP with a highly scalable, reliable and secure information utility. The Company will use distributed architecture technology to offer device-to-device communication capability that is real-time, as well as independent of underlying network architecture, operating system, database or hardware. The Company has created software technology that will be applied to the vertical markets of distributed learning, call centers and teleworking. The Company has focused its technical expertise on taking legacy software and training content and moving it, not only to the World Wide Web, but to an ASP business model. The Company focuses on providing software which has the ability to work in a mission critical environment, regardless of time zone, network or geographical boundaries. The Company has considerable technical knowledge in creating multi-vendor Virtual Private Network ("VPN") solutions, multiple customer support from a single package of enterprise software and creating three-tier software from traditional client-server models. -2- History of the Company The Company was incorporated on December 23, 1997 as Grant Reserve Corporation, a junior mining company. During the year ended December 31, 1998, the Company issued 5,000,000 shares of Common Stock to Sheridan Reserve Incorporated for the acquisition of two mining interests and in April 1998 issued 1,000,000 units at a price of $0.50 per unit in a private placement financing. Each unit consisted of one share of Common Stock and one Common Stock purchase warrant with an exercise price of $0.50 per share before December 31, 1998. The $500,000 issue price of the units was satisfied through the receipt of cash proceeds of $260,000 and the settlement of a non-interest bearing note of $240,000 that was due from the Company. On October 13, 1998, the shareholders of the Company voted to effect a two-for-one stock split that increased the number of outstanding shares of Common Stock from 6,000,000 to 12,000,000 and increased the number of outstanding Common Stock purchase warrants from 1,000,000 to 2,000,000. Accordingly, the exercise price of the Common Stock purchase warrants was reduced to $0.25 per share. Subsequently, 1,580,000 of the Common Stock purchase warrants were exercised at $0.25 each for cash proceeds of $395,000. The remaining 420,000 Common Stock purchase warrants expired. Prior to 1999, the Company's sole business was in the natural resource sector and the Company held certain mineral interests in the United States. Due to changes in the United States regulatory environment, management determined that it would be appropriate for the Company to sell all of its mining assets, which represented substantially all of the Company's assets. The Company completed the sale of its mining assets in the fourth quarter of 1998. During 1998, the Company changed its name from Grant Reserve Corporation to InfoCast Corporation. Prior to changing its name and subsequent to the sale of its mining assets, the Company was a publicly-traded company whose common stock was quoted on the OTC Bulletin Board under the symbol ("GNRS") without any ongoing business operations. On January 29, 1999, the Company consummated the acquisition of all of the voting capital stock of Virtual Performance Systems, Inc., a Canadian corporation ("VPS"), for 1,500,000 shares of Common Stock of the Company. Pursuant to a letter of intent, dated February 10, 1999, as amended, between the Company and Applied Courseware Technology (ACT) Inc. ("ACT"), the Company intends to purchase a 100% interest in ACT in consideration of (i) 750,000 shares of Common Stock of the Company and (ii) the assumption of debt of ACT of approximately $670,000. The transaction is subject to satisfactory due diligence. From February to June 1999, the Company paid Cdn $140,000 of the ACT debt and made cash advances to ACT totaling Cdn $498,000 to fund certain development expenditures incurred on behalf of the Company. ACT develops enterprise-wide training and job task analysis application software. Such training and software enables ACT's customers to reduce costs associated with the analysis, design and maintenance of their training and performance management systems. -3- In March 1999, the Company consummated a private placement financing pursuant to which it issued 2,767,334 shares of Common Stock for an aggregate offering price of $4,151,001 pursuant to Regulation S of the Securities Act of 1933, as amended. In March 1999, the Company consummated a private placement financing pursuant to which it issued 265,002 shares of Common Stock for an aggregate offering price of $397,503 pursuant to Regulation D of the Securities Act of 1933, as amended. Pursuant to an agreement dated December 15, 1998, as amended by a letter agreement dated March 12, 1999, between the Company and ITC Learning Corporation ("ITC"), the Company purchased from ITC the distribution rights for certain education and training products in consideration for $975,000 in respect of the first 150,000 user licenses and based on a shared revenue formula for user licenses in excess of 150,000. The first $500,000 of the initial $975,000 purchase price was paid in March 1999 and the final $475,000 of the initial $975,000 purchase price was paid in April 1999. Pursuant to an agreement dated March 22, 1999, the Company issued 60,000 shares of Common Stock to a financial investment consulting firm for assistance in securing additional financing over the following year. In May 1999, the Company and Call Center Learning Solutions ("CCLS") formed a new company, Call Center Learning Solutions On-Line, Inc. ("CCLS OnLine"), which is owned 50/50 by both parties. CCLS Online will initially convert and market 11 browser-based interactive multimedia courses over a 12-month period. CCLS has developed 29 instructor-led courses that cover every aspect of call center operation. CCLS owns one of the most comprehensive call center training curriculums in the world. Their training programs have been delivered to over 5,000 businesses worldwide. The agreement between CCLS and the Company provides for courseware conversion, hosting on the InfoCast Digital Exchange Library ("DXL") and deployment of the courseware to the global market over a high speed and secure virtual private network ("VPN"). On May 13, 1999, the Company acquired all of the outstanding common shares of Homebase Work Solutions Ltd. ("Homebase"), a telework solution provider headquartered in Calgary, Alberta, Canada. The purchase price was satisfied by the issuance of 3,400,000 shares of Common Stock of the Company. The addition of Homebase gives the Company a unique ability to provide secure, reliable and high-quality information flow between either the nomadic or home-based employee and its corporate data resources. Homebase will work in conjunction with the Company's Distance Learning and Call Center divisions to assist companies seeking to use the Internet to grow their business while effectively managing their information technology expenditures. In June 1999, the Company issued warrants to purchase 25,000 shares of Common Stock at an exercise price of $7.00 per share to a consulting firm. -4- In June 1999, in return for services, the Company issued warrants to purchase an aggregate of 200,000 shares of Common Stock at an exercise price of $7.00 per share to four individuals. In June 1999, the Company entered into a memorandum of understanding with Willow CSN (Canada) Inc. ("Willow") to launch Canada's first commercial virtual call center ("VCC"). In June 1999, the Company entered into an agreement with ITC Learning Corporation ("ITC") pursuant to which the Company will become ITC's exclusive distance learning technology partner for the delivery of educational material for the state of California for consideration of $2,000,000, payable in three installments, the first of which was paid in August 1999 and the remaining of which will be paid in September and October 1999. On June 24, 1999, the Company consummated a private placement financing pursuant to which it issued 420,000 shares of Common Stock and warrants to purchase 70,000 shares of Common Stock at an exercise price of $7.00 per share for an aggregate offering price of $2,100,000 pursuant to Regulation D of the Securities Act of 1933, as amended. In July and August 1999, the Company issued 1,100,000 shares of Common Stock in a private placement financing for an aggregate offering price of $6,050,000 pursuant to Regulation S of the Securities Act of 1933, as amended. The Company may issue up to an additional 1,400,000 shares of Common Stock for an aggregate offering price of $7,700,000 pursuant to such offering. Background The ability to deliver information to anyone, at any time, at any place, remains the cornerstone objective of today's communications systems. This is the case whether that information is transmitted over a private or public network (including the Internet), via computers, telephone and/or satellite. The 48% combined annual growth rate (source: Gartner Group, 1998) of the Internet, electronic commerce and corporate intranets, means that companies and individuals are continuing to increase their use of corporate and home-based systems to send and receive ever more complex information. The dilemma facing suppliers of information, and those wanting to receive it, is the inability of the various networks, operating systems, communication protocols and communications systems to interface seamlessly. This situation is analogous to people from different countries with different languages all trying to communicate. The business opportunity in the near term is for the deployment of technology that links different network infrastructures so that information can be deployed and used from a remote central server or i-Hub which is at the core of the ASP business model. Information can then be accessed -5- in near real-time across dedicated networks or reduced with regard to the fidelity and resolution of its content and then accessed through the Internet. The Company seeks to position itself to take advantage of this opportunity. The Company's Initial Delivery Services Distance Learning. The Company's Distance Learning application is an end-to-end, highly interactive learning environment that enables corporate, academic and retail learners to access digital content through a standard browser interface. Learners interact with subject matter to enhance and support their learning endeavors. By having the tools to interact with career and instructional experts seven days a week, 24 hours a day, through e-mail, chat rooms and other real-time collaborative tools across the Internet or a dedicated network, the Company believes it can offer a higher level of service than any of its competitors. The Company's core software supports distance learning initiatives such as the "AT&T Canada Learning Partner Program(TM)" ("AT&T LLP"), a program designed for AT&T Canada to offer additional value to its existing and potential clients. The objective of the AT&T LPP is to be a leader for real-time interactive electronic delivery of distance learning to corporate and academic organizations and their respective end-users. The Company's technology will act as the enabling technology of the AT&T LPP to permit distance education over any electronic medium. The Company is currently in the progress of launching its distance learning beta testing program. An important component of the Company's learning environment is the Learning Management System ("LMS"). The LMS consists of proprietary software created by the Company to support multiple corporations and learning organizations that offer content in an ASP environment. The software was designed from the ground up with role-based security, multiple language support and multi-enterprise billing and tracking facilities. Acting as a "security blanket" around the content, the LMS permits other organizations to embed their web-based training content without fear of losing intellectual property over the Internet and still permits that organization's employees to telework for training. The Company has secured an agreement with College Boreal of Sudbury (Ontario) Canada to convert and make available current courses for distribution using the Company's real-time broadcast technology. The Company, AT&T Canada and College Boreal are working together to deliver a national distance learning program using AT&T Canada's coast-to-coast network. College Boreal, which currently services the needs of the francophone community in Northern Ontario, will provide access to interactive learning anywhere, anytime for both corporate and academic studies. This program will be delivered by blending real-time electronic learning and facilitated learning utilizing the Company's browser-enabled solutions and applications distributed over AT&T Canada's advanced fiber optic and digital microwave network. College Boreal, headquartered in Sudbury, Ontario, has seven campuses in Northern Ontario, each connected to the largest telecommunications network among academic institutions in Canada. -6- The AT&T LPP includes: o Learning COACH, a group of subject matter experts that give guidance to learners in real time. o Career COACH, a team that gives learners guidance with career development. o Digital Exchange Library lets learners access "best of class" content in single units or as part of a curriculum regardless of method of delivery. o Learning Activity Templates to help busy faculty members develop courses rapidly. The Company's objective as a participant in the AT&T LPP is to establish the AT&T LPP as the leader in distributed learning. By combining training and curriculum expertise of premier corporations and academic institutions with the Company's technology, the AT&T LPP is expected to deliver real-time distance learning over any electronic medium. o The Company's delivery software is expected to deliver skills-based interactive multimedia content to corporate, academic and retail learners. o The AT&T LPP will differentiate itself from other training methodologies by delivering an end-to-end interactive learning solution over any network together with the most comprehensive distance learning support. o The use of the Company's technology will also provide content vendors with confidence that their intellectual property will not be compromised. o The AT&T LPP will allow self-paced learning to maximize personal and career success of learners over their lifetime. o The AT&T LPP will support the learner with live on-line telephone coaching within a standard Internet browser (i.e., Netscape or Explorer). The learner will access a browser for interactive learning producing a more collaborative learning experience. o The AT&T LPP will enhance conventional classroom-based and current distance learning delivery methods. o The agreement with AT&T Canada's academic clients will provide the Company with premier academic partners to launch its distance learning program beginning in Canada. -7- o The Company believes that the experience and relationships acquired by the Company's management team in the telecommunications call center industry provide the necessary experience and resources to successfully launch and expand the LPP. Virtual Call Centers ("VCCs"). The Company's VCC solution will potentially allow any caller or customer to reach a trained agent at any time, from almost any place. The agent can, if necessary, also have secure access to a merchant's in-house databases. Customer data is protected by a multi-level secured dedicated network, yet is fully accessible via the AT&T Canada Digital Network or via the Company's Private Access System ("PAS"). The PAS is a dial-up solution that allows a VCC Customer Service Representative to process calls from remote locations via a toll-free service. It seeks to do away with the need for dedicated lines to the house or long-term relationships with internet service providers. The Company's VCC solution's reduced cost structure will potentially enable firms to enhance the quality of any customer contact and improve profitability without incurring large capital costs. The Company's VCC solution will permit any customer or prospect, any time, anywhere, in its language of choice, to connect to an electronic or live agent without unwarranted delay. The VCCs let call center agents work from home. Using the Company's technology, VCCs enjoy all the features of a traditional call center while reducing capital and human resource overhead. Call center agents are recruited, hired and trained using the Company's network. The Company's VCC application allows firms to service existing and new clients with better cost structures while both enhancing levels of service and reducing costly employee turnover. Unlike traditional call centers, with the Company's VCC solution: o Merchants can offer products to a worldwide audience. o Consumer sales and service inquiries can be routed to the advertiser, retailer or their agent. o Any caller or customer can reach any participating merchant at any time from any place. o Any customer can connect to a trained agent who understands the product, speaks the customer's language and has secure, real-time access to the merchant's customer database. The concept of the VCC is predicated on the Company's ability to provide the communication software that allows the VCC agent, the buyer and the vendor to be linked together in real-time. VCC is based upon a high volume of inbound customer calls that are routed transparently to a VCC representative who answers and services the call. The VCC operator is able to accept a buyer's call and immediately access the merchant's database, locate the appropriate product/service and process the buyer's request immediately. The Company's software programs -8- provide the necessary communications linkage and speed to allow all three parties to interact in real-time to the buyer's transaction. Customers will have the freedom to interact with merchants over any network. Accordingly, the buyer-seller can interface more often at the point in time when the buyer wants to complete the transaction, therefore, large companies can reduce marketing costs, while small companies can access channels of distribution that were not open to them before. The end result is that merchants' overall profit margins increase, while users get what they want, when they want it. Teleworking. Working through the use of remote access is no longer merely an option in many types of work. Instead, remote access has become a necessary feature in competitive sales, customer relationship management and flexible work programs. The Company and Homebase are creating a network infrastructure to connect individuals working from their homes with the corporate office. HomeBase's niche in the remote access market lies in its ability to deliver services that facilitate the implementation of teleworking solutions. The Company and Homebase will seek to make this system reliable, secure and highly accessible so that it can provide complete management and administration to individuals who need to connect to corporate data resources. The Company's teleworking application will involve: o The Company's high-speed and secure data and voice network to connect telecommuters with their offices. o Psychological assessment technology to access an individual's ability to work well from home. o A turnkey solution that supplies the hardware, software, ergonomic counseling and telecommuting training. o Ongoing monitoring and mentoring, evaluation, coaching and certification. The Company will offer a customized bundled solution that will provide all the components to implement a successful telework program. Strategic Alliances and Associations The Company has entered into, and is developing, a number of key strategic alliances in order to further its operations. Some of these relationships and the strengths of each partnership (with specific reference to the Company) are noted below: AT&T Canada ("AT&T"). The Company has entered into a letter of understanding with AT&T with respect to its distance learning and VCC services. AT&T will provide the Company with a Virtual Private Network for secure and global information delivery. AT&T is considered by -9- many industry analysts as the international call center telecommunications leader and hence will provide the Company with: o state-of-the-art call center technology; o an extensive call center Marketing & Alliance Program; o access to the Canadian toll-free (that is, call center) marketplace; o access to the United States call center market; o access to the international call centers. Sun Microsystems, Inc. ("Sun"). The Company has an oral arrangement with Sun whereby Sun will provide computer equipment, operating systems, applications software and servers in order to initiate the Company's distance learning program and the VCC. Sun servers and related operating systems (including Java tools) provide the Company with critical communication functions to link both private and public networks together. The Company has already ordered the first i-Hub server that will host the Company's applications. Sun provides the Company with: o A recognized network and Internet computer partner with worldwide service and support; o A stable operating system environment further enabled by the networking capability of its Java programming language and environment; o A clear and distinctive processing performance that will meet the challenges of network computing; o Solid communication tools and programs to support global network connectivity; o Internet firewall technology providing support users with transparent access; and o Professionals worldwide who can support complex network designs and problems. The Company's Technology As an Application Service Provider, the Company's focus is to enable customers to access the best software packages via a standard web browser and Internet access without regard to geographical point of origin, underlying network architecture or personal computer make or model. The Company's technological expertise lies in five key areas: o building fully-clustered server architecture for mission critical applications; o converting conventional client-server software to an N-Tier architecture that supports load-balancing and fail-over; o integrating VPN solutions from multiple vendors within a single client installation; o converting bandwidth intensive CD-ROM-based multimedia content into a streamable, variable speed-of-delivery format that is suitable to an Internet environment; and -10- o using Voice Over-IP ("VoIP") technology to reduce call center infrastructure costs while maintaining carrier-grade voice quality and service. As an example of its efforts to date, the Company has been using its expertise to turn up a four processor Sun Enterprise 10000 super computer installation, as well as a four machine clustered Intel solution. At the same time, the Company has been experimenting with various distributed technologies for pipelining web requests to increase handling capacity. These efforts will form the basis of InfoCast i-Hub technology, which the Company envisions as having a robust server architecture that can be repeatedly deployed in various geographic locations with a minimum of effort and a maximum of processing capacity. To further the growth of the ASP industry, the Company is focused on taking best-of-breed software from specific vertical markets and converting it to support e-commerce. One example of this is the Company's work with a leading oil and gas financial software vendor. The Company is in the process of taking this vendor's conventional client-server architecture and converting it to work in an N-Tier server-based environment, which is well suited to the ASP business model. The Company believes that this will result in a software system that is more robust and scalable than the vendor's existing architecture. The Company's VCC business model is based on supporting multiple customers with a single Customer Service Representative ("CSR") from any geographical location. Thus, the CSR would not be limited to a traditional brick-and-mortar call center building. To this end, the Company has developed considerable experience in enabling multiple vendor VPN solutions to work in a single client installation. This permits a single CSR to access corporate data from multiple clients, regardless of the firewall or VPN solution the client may have selected as its corporate standard. During the multimedia training boom of the early 1990's, CD-ROM was the de-facto standard for content delivery. The problem with CD-ROMs was that they did not permit the customization required by large, technologically sophisticated and globally oriented companies. CD-ROM was very much a "one-size-fits-all" solution. Additionally, CD-ROMs did not provide the sense of community and shared learning offered by the conventional classroom environment. The Company believes that these problems can be solved by the use of the World Wide Web. The Company intends to purchase ACT, which has considerable technological experience not only in translating CD-ROM based content to a format suitable for deployment over the World Wide Web, but also in creating the tools for customization and group learning that were missing from the CD-ROM format. ACT has developed a form of browser-based interaction format that contains full Java-based audio- recording capabilities but does not require the use of a browser "plug-in." Additionally, the use of training templates allows ACT to migrate content much more quickly to a World Wide Web environment. The Company believes that this will give it a competitive advantage over many existing "learning over-the-web" companies that ask their clients to completely redo their content to conform to the demands of the World Wide Web's format. -11- Finally, the Company has spent considerable effort in taking VoIP technology out of the hands of the hobbyist and into mainstream markets. The cost justification of using the Internet's network architecture for carrier-grade voice transmission has long been understood, but rarely achieved due to a lack of quality of service on the Internet. The Company's work with AT&T Canada, combined with an innovative business model and leading edge VoIP technology, makes it possible for the Company to offer a competitive voice network to any call center agents located near an i-Hub Point-of-Presence ("POP"). The Company's first POP is located in Markham, Ontario Canada and will service the Greater Toronto Area. Additional i-Hub installations will service this geographical area as well. All features of a regular call center, such as Automated Call Distribution, and Interactive Voice Response, as well as forward-looking call center technologies such as Unified Messaging and web-based help desks, are also supported by the Company's installation. While the Company does not develop the VoIP software itself, it has developed considerable experience in the technical issues surrounding VoIP's successful implementation and now believes it can successfully select best-of-breed vendors to meet the demand it anticipates in this market. Market Overview Education/Training Delivery The North American training market is approximately $74 billion in size, with $6 billion being spent in Canada and $68 billion being spent in the United States. The North American post-secondary education market spends approximately $225 billion annually on training and the K-12 market spends approximately $410 billion annually on training (AAHE Bulletin, 1998). The factors driving people and businesses to seek training include: (i) business requirements of staff to be certified in certain technologies in order to assure performance and productivity; (ii) corporate downsizing, resulting in increased training requirements for ex-staff as well as for employees who perform multiple job tasks that require knowledge of various jobs; (iii) the proliferation of computers and networks throughout all levels of organizations, increasing the number of employees who need training; and (iv) the continuous introduction and evolution of new technologies, contributing to the need for continuing education. Call Center Marketplace The Call Center marketplace is a collection of vertical industries that conduct inbound or outbound telemarketing practices. In total, there are some 95,000 Call Centers in North America. Outsourcing of call centers is gaining popularity in North America and Europe. There is an emerging number of large firms offering Call Center outsourcing and management. One of the best examples is MCI. MCI estimates that the market for Call Center outsourcing is more than $12 billion today and is growing at 25% annually, while the number of companies taking advantage of Call Center outsourcing is expected to double in the next five years. -12- Marketing and Sales Strategy The marketing and sales strategy for the Company will utilize the established businesses and proven products and services of the Company's strategic partners to allow the Company to generate revenues immediately through its Distance Learning and Virtual Call Center applications. Utilizing this strategy, the Company is positioning itself into a marketplace where the only constant is change; both industries and technologies are converging in order to maximize profits and reduce overhead. Customers in today's business environment are demanding integrated solutions that are transaction oriented and businesses perceive current technologies as a threat rather than an opportunity for enhancement. The success in this market for the Company will depend on its ability to generate competent, simple and flexible solutions for customers. The Company believes that it has positioned itself as a "single source" for on-line media delivery in the distance learning market and can offer an unbiased service to all major institutional and non-institutional educators through its multi-level alliance strategy. The VCC solution provides the environment to undertake any type of commercial transaction between seller and buyer. The Company's alliance partners will be provided with: o A new medium on which to promote products, advertise, recover data and interact with customers instantaneously. o An on-line media delivery system that will facilitate distribution of content to an unlimited number of users using the convenience of the Internet, cable, satellite or intranet networks. o A cost-effective VCC that offers buyers and sellers with a seamless network that is based on an architecture that is platform, database and operating system independent. This means that more people can use and access the system because it does not change the way they learn about a product today - the Company's solution simply makes buying the products/services simpler and faster. Through the new age of communications and technology, there are no geographical limitations to doing business in the next century. Therefore, the Company will have global reach for customers, leveraging the strengths of alliance partner services and their clients in a "sell with, sell to" strategy for both business to business and business to consumer applications. The Company's product and service offerings will be marketed with both "off the shelf" and customized applications. The Company will provide customers with a compelling strategy to do business by providing bundled offers including proven technology, content delivery, management, hosting and transaction based revenue. -13- Competition The market for the Company's products and services is highly competitive and subject to rapid technological change. The Company is using certain third-party technologies and products that, in different forms, have already been introduced and are being used in the marketplace. Competitors may quickly deploy products and e-commerce technology that could limit the Company's expansion. The Company expects competition to increase in the future. Many of the Company's potential competitors have substantially greater financial, technical and marketing resources than the Company. Increased competition could materially and adversely affect the Company's business, financial condition and results of operations. There can be no assurance that the Company will be able to compete successfully. Intellectual Property and Other Proprietary Rights The Company's success is dependent in part on intellectual property rights, including information technology, some of which is proprietary to the Company. The Company relies on a combination of nondisclosure and other contractual arrangements, technical measures, trade secret and trademark laws to protect its proprietary rights. The Company does not presently hold any patents for its existing products or services and presently has no patent applications pending. The Company generally enters into confidentiality agreements with its employees and attempts to limit access to and distribution of proprietary information. There can be no assurance that the steps taken by the Company in this regard will be adequate to deter misappropriation of proprietary information or that the Company will be able to detect unauthorized use or take appropriate steps to enforce intellectual property rights. In addition, there can be no assurance that the Company's competitors will not independently develop technologies that are substantially equivalent or superior to the Company's technology. Further, the laws of many foreign countries do not protect the Company's intellectual property rights to the same extent as the laws of the United States. The failure of the Company to protect its proprietary information could have a material adverse effect on the Company's business, financial condition and results of operations. From time to time, third parties may assert exclusive patent, copyright, trademark and other intellectual property rights to technologies that are used by the Company. Litigation may be necessary to defend against claimed infringements of the rights of others or to determine the scope and validity of the proprietary rights of others. Future litigation may also be necessary to enforce and protect trade secrets and other intellectual property rights owned by the Company. Any such litigation could be costly and cause diversion of management's attention, either of which could have a material adverse effect on the Company's business, financial condition and results of operations. Adverse determinations in such litigation could result in the loss of the Company's proprietary rights, subject the Company to significant liabilities (including possible indemnification of its customers), require the Company to secure licenses from third parties or prevent the Company from the manufacturing or selling its products or services, any one of which could have a material adverse effect on the Company's business, financial condition and results of operations. The Company has -14- not conducted a formal patent search relating generally to the technology used in its products or services. In addition, since patent applications in the United States are not publicly disclosed until the patent issues and foreign patent applications generally are not publicly disclosed for at least a portion of the time that they are pending, applications may have been filed which, if issued as patents, would relate to the Company's products or services. Software comprises a substantial portion of the technology in the Company's products. The scope of protection accorded to patents covering software-related inventions is evolving and is subject to a degree of uncertainty that may increase the risk and cost to the Company if the Company discovers the existence of third party patents related to its software products or if such patents are asserted against the Company in the future. Patents have been granted recently on fundamental technologies in software, and patents may issue which relate to fundamental technologies incorporated into the Company's products or services. While the Company employs proprietary software technology and algorithms and conducts ongoing research and development, the future success of the Company will depend in part upon its ability to keep pace with advancing technology, evolving industry and changing customer requirements in a cost-effective manner. There can be no assurance that the Company's proprietary software technology and algorithms will not be rendered obsolete by other technology incorporating technological advances designed by competitors that the Company is unable to incorporate into its products or services in a timely manner. The market for the Company's products and services is characterized by rapidly changing technologies. The rapid development of new technologies increases the risk that current or new competitors could develop products or services that would reduce the competitiveness of the Company's products or services. The Company's success will depend to a substantial degree upon its ability to respond to changes in technology and customer requirements. This will require the timely selection, development and marketing of new products or services and enhancements on a cost-effective basis. The development of new, technologically advanced products or services is a complex and uncertain process, requiring high levels of innovation. The introduction of new and enhanced products or services also requires that the Company manage transitions from older products or services in order to minimize disruptions. There can be no assurance that the Company will be successful in developing, introducing or managing the transition to new or enhanced products or services or that any such products or services will be responsive to technological changes or will gain market acceptance. The Company's business, financial condition and results of operations would be materially adversely affected if the Company were to be unsuccessful, or to incur significant delays, in developing and introducing such new products, services or enhancements. Employees At August 31, 1999, the Company had 32 full-time employees. None of the Company's employees is represented by a collective bargaining agreement nor has the Company experienced any work stoppage. The Company considers its relations with its employees to be good. -15- Risk Factors An investment in the Common Stock of the Company is highly speculative, involves a high degree of risk and should be considered only by those persons who are able to afford a loss of their entire investment. In evaluating the Company and its business, prospective investors should carefully consider the following risk factors in addition to the other information included in this Registration Statement. Risks Relating to the Financial Condition of the Company Environmental Liabilities. Prior to 1999, the Company's sole business was mining exploration and development. The mining and mineral processing industries are subject to extensive governmental regulations for the protection of the environment, including regulations relating to air and water quality, mine reclamation, solid and hazardous waste handling and disposal and the promotion of occupational safety. The Company could be held responsible for any environmental liabilities relating to the mining businesses that were sold by the Company which liabilities could have a material adverse effect on financial condition of the Company. Development Stage Company; Limited Operating History and Revenues; Historical and Anticipated Losses and Working Capital Deficits. The Company was organized in December 1997 and has a very limited operating history upon which an evaluation of the Company's future performance and prospects can be made. The Company is a development stage company and has not yet sold any products or services on a commercial basis. The Company's prospects must be considered in light of the risks, expenses, delays, problems and difficulties frequently encountered in the establishment of a new business in an emerging and evolving industry. Since inception, the Company has generated no revenues and has incurred significant losses resulting in a working capital deficit. Losses are continuing through the date of this Registration Statement. Inasmuch as the Company will continue to have a high level of operating expenses and will be required to make significant up-front expenditures in connection with the proposed development of its business, the Company may continue to incur losses for the next 12 months and until such time, if ever, as the Company is able to generate sufficient revenues to finance its operations and the costs of continuing expansion. There can be no assurance that the Company will be able to generate significant revenues or achieve profitable operations. See the financial statements and the notes thereto included elsewhere in this Registration Statement. Need for Additional Financing. The Company may determine, depending upon the opportunities available to it, to seek additional debt or equity financing to fund the cost of continuing expansion. To the extent that the Company incurs indebtedness or issues debt securities, the Company will be subject to risks associated with incurring substantial indebtedness, including the risks that interest rates may fluctuate and cash flow may be insufficient to pay principal and interest on any such indebtedness. There can be no assurance that additional financing will be available to the Company on commercially reasonable terms or at all. If the Company is unable to obtain -16- additional financing, its ability to meet its current plans for expansion could be materially adversely affected. Risks Relating to the Company's Business New Industry; Uncertainty of Market Acceptance. As is typically the case in an emerging industry, demand and market acceptance for newly introduced services and products are subject to a high level of uncertainty. Risks Associated with Growth Strategy and Rapid Expansion. The Company is a development stage company and has not yet sold any products or services on a commercial basis. Implementation of the Company's business plan will be substantially dependent on, among other things, the Company's ability to hire and retain skilled management, financial, marketing and other personnel and successfully manage growth (including monitoring operations, controlling costs and maintaining effective quality controls). The Company's plans are subject to change as a result of a number of factors, including progress or delays in the development of its technologies, changes in market conditions and competitive factors. There can be no assurance that the Company will be able to successfully implement its business strategy or otherwise expand its operations. Competition. The market for the Company's products and services is highly competitive and subject to rapid technological change. The Company is using third-party technologies and products that, in different forms, have already been introduced and are being used in the marketplace. Competitors may quickly deploy products and e-commerce technology that could limit the Company's expansion. The Company expects competition to increase in the future. Many of the Company's potential competitors have substantially greater financial, technical and marketing resources than the Company. Increased competition could materially and adversely affect the Company's business, financial condition and results of operations. There can be no assurance that the Company will be able to compete successfully. Attraction and Retention of Key Personnel. The Company's ability to continue to develop and market its services and products depends, in large part, on its ability to attract and retain qualified personnel. Competition for such personnel is intense and no assurance can be given that the Company will be able to retain and attract such personnel. Limited Intellectual Property Protection; Risk of Third Party Claims of Infringement. The Company's success is dependent in part on intellectual property rights, including information technology, some of which is proprietary to the Company. The Company relies on a combination of nondisclosure and other contractual arrangements, technical measures, trade secret and trademark laws to protect its proprietary rights. The Company does not presently hold any patents for its existing products or services and presently has no patent applications pending. The Company generally enters into confidentiality agreements with its employees and attempts to limit access to and distribution of proprietary information. There can be no assurance that the steps taken by the -17- Company in this regard will be adequate to deter misappropriation of proprietary information or that the Company will be able to detect unauthorized use or take appropriate steps to enforce intellectual property rights. In addition, there can be no assurance that the Company's competitors will not independently develop technologies that are substantially equivalent or superior to the Company's technology. Further, the laws of many foreign countries do not protect the Company's intellectual property rights to the same extent as the laws of the United States. The failure of the Company to protect its proprietary information could have a material adverse effect on the Company's business, financial condition and results of operations. From time to time, third parties may assert exclusive patent, copyright, trademark and other intellectual property rights to technologies that are used by the Company. Litigation may be necessary to defend against claimed infringements of the rights of others or to determine the scope and validity of the proprietary rights of others. Future litigation may also be necessary to enforce and protect trade secrets and other intellectual property rights owned by the Company. Any such litigation could be costly and cause diversion of management's attention, either of which could have a material adverse effect on the Company's business, financial condition and results of operations. Adverse determinations in such litigation could result in the loss of the Company's proprietary rights, subject the Company to significant liabilities (including possible indemnification of its customers), require the Company to secure licenses from third parties or prevent the Company from the manufacturing or selling its products or services, any one of which could have a material adverse effect on the Company's business, financial condition and results of operations. The Company has not conducted a formal patent search relating generally to the technology used in its products or services. In addition, since patent applications in the United States are not publicly disclosed until the patent issues and foreign patent applications generally are not publicly disclosed for at least a portion of the time that they are pending, applications may have been filed which, if issued as patents, would relate to the Company's products or services. Software comprises a substantial portion of the technology in the Company's products. The scope of protection accorded to patents covering software-related inventions is evolving and is subject to a degree of uncertainty that may increase the risk and cost to the Company if the Company discovers the existence of third party patents related to its software products or if such patents are asserted against the Company in the future. Patents have been granted recently on fundamental technologies in software, and patents may issue which relate to fundamental technologies incorporated into the Company's products or services. Impact of Technological Change. While the Company employs proprietary software technology and algorithms and conducts ongoing research and development, the future success of the Company will depend in part upon its ability to keep pace with advancing technology, evolving industry and changing customer requirements in a cost-effective manner. There can be no assurance that the Company's proprietary software technology and algorithms will not be rendered obsolete by other technology incorporating technological advances designed by competitors that the Company is unable to incorporate into its products or services in a timely manner. The market for the Company's products and services is characterized by rapidly changing technologies. The rapid development of new technologies increases the risk that current or new -18- competitors could develop products or services that would reduce the competitiveness of the Company's products or services. The Company's success will depend to a substantial degree upon its ability to respond to changes in technology and customer requirements. This will require the timely selection, development and marketing of new products or services and enhancements on a cost-effective basis. The development of new, technologically advanced products or services is a complex and uncertain process, requiring high levels of innovation. The introduction of new and enhanced products or services also requires that the Company manage transitions from older products or services in order to minimize disruptions. There can be no assurance that the Company will be successful in developing, introducing or managing the transition to new or enhanced products or services or that any such products or services will be responsive to technological changes or will gain market acceptance. The Company's business, financial condition and results of operations would be materially adversely affected if the Company were to be unsuccessful, or to incur significant delays, in developing and introducing such new products, services or enhancements. Other Risks Dividends Unlikely. The Company has not paid cash dividends on its Common Stock since its inception. The Company does not intend to pay cash dividend on its Common Stock in the foreseeable future so that it may reinvest earnings, if any, in the development of its business. No Assurance of Public Market; Possible Volatility of Market. There has been only a limited public trading market for the Common Stock on the OTC Bulletin Board. There can be no assurance that a regular trading market for the Common Stock will ever develop or that, if developed, it will be sustained. The market price of the Common Stock may be highly volatile as has been the case with the securities of many emerging companies. Factors such as the Company's operating results and announcements by the Company or its competitors of new products or services may significantly impact the market price of the Company's securities. In addition, in recent years, the stock market has experienced a high level of price and volume volatility and market prices for the securities of many companies have experienced wide fluctuations not necessarily related to the operating performance of such companies. Foreign Exchange. The Company receives the proceeds from its private placements in U.S. dollars. It is the Company's practice to maintain all excess cash in U.S. dollars and to invest these funds in short term, interest bearing, U.S. dollar deposits. The Company converts U.S. dollars to Canadian dollars on an as needed basis to meet Canadian dollar expenses. The Company incurs a significant portion of its expenses in Canadian dollars and therefore is exposed to fluctuations in the foreign exchange rate between the Canadian and U.S. dollar. Year 2000. 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 -19- 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, their impact on the Company's operations and financial reporting may range from minor errors to significant systems failure that could materially affect the Company's ability to conduct normal business operations. It is currently not possible to be certain that all aspects of the Year 2000 issue affecting the Company, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved. Corporate Governance Risks Substantial Shares of Common Stock Reserved for Issuance. The Company has reserved 2,250,000 shares of Common Stock for issuance pursuant to the Company's 1998 Stock Option Plan, pursuant to which options to purchase 2,075,000 shares of Common Stock at an exercise price of $1.00 per share are outstanding. The Company has also reserved 2,000,000 shares of Common Stock for issuance pursuant to the Company's 1999 Stock Option Plan pursuant to which options to purchase 1,180,500 shares of Common Stock at an exercise price of $7.00 per share have been granted. The Company has also issued options outside such plans to purchase 750,000 shares of Common Stock at an exercise price of $7.00 per share and warrants to purchase an additional 295,000 shares of Common Stock at an exercise price of $7.00 per share. The existence of the outstanding options and warrants may hinder future financings by the Company. In addition, the exercise of any such options or warrants in the future could dilute the net tangible book value of the Company's Common Stock. Further, the holders of such options and warrants may exercise them at a time when the Company would otherwise be able to obtain additional equity capital on terms more favorable to the Company. Authorization and Discretionary Issuance of Preferred Stock. The Company is authorized to issue up to 100,000,000 shares of preferred stock, $.001 par value per share (the "Preferred Stock"). The Preferred Stock may be issued in one or more series, on such terms and with such rights, preferences and designations as the Board of Directors of the Company may determine, without action by stockholders. No shares of Preferred Stock are currently outstanding. However, the issuance of any Preferred Stock could adversely affect the rights of the holders of Common Stock, and therefore reduce the value of the Common Stock. In particular, specific rights granted to future holders of Preferred Stock could be used to restrict the Company's ability to merge with or sell its assets to a third party, thereby preserving control of the Company by present owners. Forward Looking Statements. This Registration Statement contains forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this Registration Statement will prove to be accurate. In light of the significant uncertainties inherent in the forward- looking statements included herein, the inclusion of such information should not be regarded as a -20- representation by the Company or any other person that the objectives and plans of the Company will be achieved. ITEM 2 FINANCIAL INFORMATION. The selected financial data set forth below are derived from the financial statements of the Company included elsewhere in this Registration Statement and are qualified by reference to and should be read in conjunction with such financial statements, including the notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Registration Statement. The financial statements of the Company as of and for the three months ended March 31, 1999 and March 31, 1998, the year ended December 31, 1998 and the period from July 29, 1997 (inception) to December 31, 1997 have been audited by Ernst & Young LLP, independent certified public accountants. The information as of and for the three months ended June 30, 1999 and 1998 is unaudited and, in the opinion of management contains all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the Company's financial position and results of operations at such dates and for such periods. The results for the three months ended June 30, 1999 are not necessarily indicative of the results for the full year. The historical results for the periods ended December 31, 1997 and 1998, March 31, 1998 and June 30, 1998 are those of VPS. The historical results are not necessarily indicative of the results of operations to be expected in the future. Selected Financial Data
Period from July Year 29, 1997 ended (inception) December to Three months ended Three months ended 31, December June 30, 1999 June 30, 1998 March 31, 1999 March 31, 1998 1998 31, 1997 ------------- ------------- -------------- -------------- ---- -------- Statement of Operations Data: Revenues............. $ 23,157 $ 4,478 $ 102 $ 43,446 $ 43,446 $ 3,508 Expenses............. 9,151,954 3,088,399 47,672 63,067 467,318 99,669 Net loss for the 8,930,192 3,083,921 47,570 19,621 423,872 96,161 period............... Net loss per share... $0.45 $0.27 $0.16 $478.56 $0.55 $2,345 Dividends paid....... - - - - - - Balance Sheet Data: Total assets......... 28,936,817 4,025,076 15,708 47,510 143,467 28,604
-21- Management's Discussion and Analysis of Results of Operations and Financial Condition The consolidated financial statements of the Company are the continuing financial statements of VPS, a development stage company and an Ontario corporation incorporated on July 29, 1997. VPS had a 100% interest in, and subsequently merged with, Cheltenham Technologies Corporation ("Cheltenham Technologies"), an Ontario corporation. VPS has a 100% interest in Cheltenham Interactive Corporation ("Cheltenham Interactive"), an Ontario corporation, and Cheltenham Technologies (Bermuda) Corporation ("Cheltenham Bermuda"), a Barbados corporation. On January 29, 1999, VPS acquired the net assets of the Company (formerly known as Grant Reserve Corporation), a United States non-operating company traded on the Nasdaq OTC Bulletin Board, which had a 100% interest in InfoCast Canada Corporation ("InfoCast Canada"). After the acquisition, the accounting entity continued under the name of InfoCast Corporation. InfoCast Corporation, InfoCast Canada, VPS, Cheltenham Technologies, Cheltenham Interactive and Cheltenham Bermuda are collectively referred to in this section as the "Company." The following discussion should be read in conjunction with the Company's historical financial statements and notes thereto included elsewhere in this Registration Statement. All figures included in this Management's Discussion and Analysis of Results of Operations and Financial Condition are expressed in U.S. dollars unless otherwise noted. The following discussion includes forward looking statements. Such forward looking statements involve risks and uncertainties, including among other things, statements regarding the Company's anticipated costs and expenses. Such forward looking statements contain, but are not limited to, the words "expects," "anticipates," "intends," "predicts" and similar language. The Company's actual results may differ significantly from those projected in the forward looking statements. Factors that might cause future results to differ materially from those described in the forward looking statements include, but are not limited to, those discussed in the section entitled "Risk Factors." Overview The Company has incurred operating losses since its inception in July 1997. The Company has sustained itself through the sale of its Common Stock and warrants to purchase Common Stock in a series of private placements. There can be no assurance that such funds will be available in the future if additional capital is required. The Company is a development stage company engaged in the research and development of information delivery technologies. The Company, an application service provider ("ASP"), is in the business of electronic content delivery and information management to meet the high-speed information needs of global corporate consumers. The Company uses a sophisticated architecture technology that brings reliability and scalability to applications distributed across a network. The Company's network and strategic alliances will provide the essential communication link between -22- information sources and information users worldwide. The Company will link networks and infrastructures so that information can be delivered in real-time to anyone, anywhere, in any format - data, voice or video. This technology will provide the infrastructure that enables and enhances applications such as the Company's initiatives in Distributed Learning, Telework, VCC Solutions and Application Hosting. The Company has not yet sold any of these products or services on a commercial basis and thus has not generated any revenue to date from these products and services. The Company acquired HomeBase in May 1999 in exchange for 3,400,000 shares of InfoCast Canada, which shares are exchangeable into Common Stock of the Company. The Homebase acquisition provided the Company with the core technology for its network, the Information Hub, or i-Hub. The acquisition also provided the Telework and Application Hosting initiatives to the Company, both of which will be hosted on the i-Hub. The Company's VCC solution and Distance Learning library will also be hosted on the i-Hub platform The Company is in the process of completing the acquisition of ACT. This transaction is subject to satisfactory due diligence and is expected to close in second quarter of the Company's current fiscal year ending March 31, 2000. Consideration for this acquisition will be 750,000 shares of InfoCast Canada, which shares will be exchangeable into shares of Common Stock of the Company, and the assumption of approximately $670,000 of debt. The ACT acquisition will provide the Company with in-house technical expertise used in the conversion of traditional learning materials into an electronic format and Integrator-Pro, a software tool that manages performance improvement data and delivers analysis, design, decision support and resource management functionalities. ACT's operations are located in New Brunswick, Canada, which will allow the Company to benefit from various government research and development and employment grants and loans. The Company changed its fiscal year end from December 31 to March 31. Therefore financial statements have been prepared for the three month transition period ended March 31, 1999. Results of Operations Three months ended June 30, 1999 vs. three months ended June 30, 1998 Consulting income decreased from $102 for the three months ended June 30, 1998 to zero for the three months ended June 30, 1999. This decrease is due to the Company's decision to no longer provide computer programming services. Interest income increased from zero for the three months ended June 30, 1998 to $23,157 for the three months ended June 30, 1999. The proceeds received from the private placements in 1999 were invested in short term deposits, which generated interest income for the Company during the period ended June 30, 1999, consistent with the Company's investment policy discussed under "Risk Factors - Foreign Exchange" elsewhere in this Registration Statement. -23- General, administrative and selling expenses increased from $17,767 for the three months ended June 30, 1998 to $1,936,815 for the three months ended June 30, 1999. The consolidation of the operations of Homebase for the period May 13, 1999 to June 30, 1999 accounted for $233,000 of the increase. The Company incurred expenses of $286,000 related to the Homebase acquisition in the form of incentive compensation paid to three key officers of Homebase. The Company had approximately six more employees and 10 additional consultants in the three month period ended June 30, 1999 than for the same period ended June 30, 1998, contributing approximately $215,000 to the increase in expenses. Investor relations costs of $325,000 were incurred for the three month period ended June 30, 1999, $250,000 of which was spent on national media consulting services and financial community investor relations consulting services. Additional rent expenses of $36,000 were incurred for the two U.S. offices that were not open in June 1998 and the expanded Toronto office space. The Company expensed $449,998 for warrants issued for services during the three month period ended June 30, 1999 and expensed an additional $157,923 related to Common Stock issued for services during the three month period ended June 30, 1999. Stock option compensation expense increased from zero for the three months ended June 30, 1998 to $5,829,647 for the three months ended June 30, 1999. This increase is due to the amortization of the deferred compensation amount resulting from the grant of stock options to various individuals involved in the management of the Company. Options to purchase 2,250,000 shares of Common Stock were granted on February 8, 1999 at a price of $1.00 per share. These options expire three years from the date of grant and are subject to a vesting period of at least six months. At June 30, 1999, 2,075,000 of the options granted on February 8, 1999 were outstanding. On June 1, 1999, the Company granted options to purchase 1,180,500 shares of Common Stock at an exercise price of $7.00. These options are subject to vesting periods ranging from immediate vesting to six months and expire five years from the date of grant. Research and development expenses increased from $28,964 for the three months ended June 30, 1998 to $730,657 for the three months ended June 30, 1999. The majority of this increase is due to continued efforts to develop and expand the Company's product offerings. The Company incurred expenses of approximately $339,000 for services rendered by ACT for the distance learning project and the CCLS On-Line joint venture during the three months ended June 30, 1999. Amortization expenses increased from zero for the three months ended June 30, 1998 to $645,873 for the three months ended June 30, 1999. Amortization of the acquired intellectual property and goodwill resulting from the acquisition of Homebase accounted for the majority of the increase in the amortization expense for the period. Depreciation expenses increased from $941 for the three months ended June 30, 1998 to $8,962 for the three months ended June 30, 1999. This increase is a result of the acquisition of additional capital assets between July 1, 1998 and June 30, 1999. Deferred income taxes increased from zero for the three months ended June 30, 1998 to $198,605 for the three months ended June 30, 1999 as a result of the drawdown of the -24- deferred income tax liability created by the purchase of Homebase by the Company in respect of the difference in the tax and accounting basis of various intellectual property assets. Three months ended March 31, 1999 compared to three months ended March 31, 1998 The three month period ended March 31, 1999 is a transition period in respect of the change in the Company's fiscal year end from December 31 to March 31. Consulting income decreased from $43,446 for the three months ended March 31, 1998 to zero for the three months ended March 31, 1999. This decrease is due to the Company's decision to no longer provide computer programming services. Interest income increased from zero for the three months ended March 31, 1998 to $4,478 for the three months ended March 31, 1999. The proceeds received from the March 1999 private placement were invested in short term deposits, which generated interest income for the Company during the period ended March 31, 1999. It is the Company's policy to invest all excess cash in U.S. dollar short term interest bearing term deposits. General, administrative and selling expenses increased from $42,494 for the three months ended March 31, 1998 to $635,334 for the three months ended March 31, 1999. The majority of this increase is due to the expansion of the Company, including an increase in the number of employees and consultants providing services to the Company, additional rent expenses of approximately $40,000 for the two offices in the United States, opened in late 1998 and early 1999, and the additional space required in the Toronto office and additional travel expenses of approximately $85,000. As a result of the January 1999 reverse merger, the Company incurred investor relations costs of $151,000 during the three month period ended March 31, 1999. Stock option compensation expense increased from zero for the three months ended March 31, 1998 to $2,256,938 for the three months ended March 31, 1999. This increase is due to the amortization of the deferred compensation amount resulting from the grant of 2,250,000 stock options under the Company's 1998 Stock Option Plan to various individuals involved in the management of the Company. These stock options were granted on February 8, 1999 at a price of $1.00 per share, expire three years from the date of grant and are subject to a vesting period of at least six months. As of April 19, 1999, 175,000 of these stock options were canceled due to the termination of certain individuals and the renegotiation of employment terms, leaving a balance outstanding of 2,075,000 options. Research and development expenses increased from $19,703 for the three months ended March 31, 1998 to $162,914 for the three months ended March 31, 1999. The majority of this increase is due to the continued development of the Company's technology. Interest and loan fees expenses increased from zero for the three months ended March 31, 1998 to $23,562 for the three months ended March 31, 1999. The interest and loan fees resulted -25- from a short term loan received by the Company and repaid within the three month period ended March 31, 1999. Amortization expenses increased from zero for the three months ended March 31, 1998 to $4,144 for the three months ended March 31, 1999. This increase is due to the amortization of certain intellectual property rights related to remote banking software acquired from a company owned by a shareholder and former officer of the Company. Depreciation expenses increased from $870 for the three months ended March 31, 1998 to $5,507 for the three months ended March 31, 1999. This increase is a result of the acquisition of additional capital assets from April 1, 1998 to March 31, 1999. Year ended December 31, 1998 compared to the 156 day period ended December 31, 1997 Consulting income increased from $3,508 for the 156 day period ended December 31, 1997 to $43,446 for the year ended December 31, 1998. This increase is due to the timing of the provision of one-time computer programming services, as the Company began providing these services at the end of 1997 and continued to provided these services in the first calendar quarter of 1998. In early 1998 the Company discontinued providing these consulting services. General, administrative and selling expenses increased from $47,954 for the 156 day period ended December 31, 1997 to $375,302 for the year ended December 31, 1998. This increase is due to the expenses being incurred for the full year ended December 31, 1998 compared to a 156 day period ended December 31, 1997 and the continuing expansion of business operations. Consulting fees were higher in 1998 as the Company engaged additional consultants to assist in building the management team and enhancing the business model and infrastructure of the Company. The Company incurred higher legal costs in 1998 as a result of legal services rendered during 1998 for the reverse takeover transaction, as well as for the Homebase acquisition, both of which were completed in 1999. Research and development expenses increased from $51,257 for the 156 day period ended December 31, 1997 to $88,180 for the year ended December 31, 1998. This increase is due to the expenses being incurred for the full year ended December 31, 1998 compared to a 156 day period ended December 31, 1997 and the continuing expansion of the Company's research and development efforts. Depreciation expenses increased from $458 for the 156 day period ended December 31, 1997 to $3,836 for the year ended December 31, 1998. This increase is a result of depreciation being incurred for the full year ended December 31, 1998 compared to a 156 day period ended December 31, 1997 and the acquisition of additional capital assets during the year ended December 31, 1998. -26- Liquidity and Capital Resources Inception to June 30, 1999 As at June 30, 1999, the Company had cash and cash equivalents of $1,493,205 and had a working capital deficit of $84,352. The Company's cash and cash equivalent position has been generated through a series of equity offerings net of development stage expenditures. The Company has not yet generated any significant revenues. From its inception on July 29, 1997 to January 29, 1999, VPS issued 3,624,100 shares of Common Stock for cash proceeds of Cdn $3,732. Pursuant to the reverse takeover transaction on January 29, 1999, the shareholders of VPS sold their 100% interest in VPS to the Company in consideration for 1,500,000 shares of InfoCast Canada, which shares are exchangeable into Common Stock of the Company for no additional consideration. Such exchangeable shares have been deemed as shares of Common Stock of the Company because they are the economic equivalent of the Company's Common Stock. At the time of the reverse takeover, the Company (formerly Grant Reserve Corporation) had 13,580,000 shares of Common Stock outstanding which continued as shares of Common Stock of the continuing entity. Subsequent to the reverse takeover and up to June 30, 1999, the Company issued 3,023,333 shares of Common Stock at $1.50 per share in a private placement in March 1999, 60,000 shares of Common Stock in consideration for consulting services March 1999 and 420,000 shares of Common Stock at $5.00 per share in a private placement in June 1999. The Company has raised $6,398,000 from these private placements, net of share issuance costs. From its inception, the Company has used $3,328,000 for operating activities before changes in non-cash working capital balances mainly as a result of general and administrative and research and development expenditures, net of incidental revenues. The Company used a further $298,000 for the purchase of capital assets and software licenses, $975,000 on the purchase of distribution rights and $586,000 on the placement of deposits. The Company relied on term loans from shareholders, directors and officers during the period from its inception to the completion of the March 1999 private placement to fund its operations. These loans were repaid as at June 30, 1999 from the proceeds of the private placements. The Company is currently raising funds through a private placement of its shares of Common Stock. Gross proceeds from this private placement are expected to be approximately $13,750,000. Through August 31, 1999, the Company received $6,050,000 in consideration for 1,100,000 shares of Common Stock. The Company may issue up to an additional 1,400,000 shares of Common Stock for an aggregate offering price of $7,700,000 in such offering. The Company expects to use these proceeds for the following: o The Company plans to continue to invest in the research and development of its products and services related to the acquisition of Homebase and the pending -27- completion of the acquisition of ACT and anticipates spending approximately $4,800,000 and $2,400,000 respectively on these efforts over the next 12 months. The Company anticipates that it will begin earning revenue and collecting cash from sales of the Homebase and ACT products and services, namely application outsourcing, Telework and Distance Learning, in the third quarter of the current fiscal year which will help fund the cash requirements of these two divisions but there can be no assurance that it will do so. o Upon completion of the pending acquisition of ACT, the Company has agreed to service the outstanding debt of ACT, which will require approximately $670,000 over the next 12 months. o The Company entered into an agreement with ITC in June 1999 whereby the Company will become ITC's exclusive distance learning technology partner for the delivery of educational material for the state of California for consideration of $2,000,000, payable in three installments, the first of which was paid in August and the remaining of which will be paid in September and October 1999. o The Company will contribute approximately $300,000 over the next six months to fund the marketing and technical support efforts of the CCLS On-Line joint venture, of which it is a 50% owner. The Company has entered into an agreement with Call Center Learning Solutions Inc. to form a new corporation, CCLS On-Line. This new corporation will develop, own and exploit courseware in an electronic format capable of electronic distribution. o The Company will use approximately $1,000,000 over the next 12 months to enhance and complete its existing VCC technologies. o The Company will use the remaining capital resources to fund possible complementary acquisitions, develop new technologies, and other corporate and working capital needs. The Company believes that its existing cash resources, as well as the cash received and expected from the current private placement and the cash anticipated to be generated from sales of the Company's products and services will be sufficient to meet its short term working capital requirements for at least the next 12 months. On a long term basis, the Company may need to raise additional funds via private or public financings, strategic or other relationships because of additional undertakings of the Company or because revenues generated from the sale of the Company's products and services may be insufficient to satisfy the Company's cash requirements. -28- Outlook The Company's strategy is to be a leader in the ASP marketplace by providing strategic IT enterprise services and applications to mid and large sized organizations on its i-Hub platform via strategic relationships with Sun Microsystems, network carriers, software vendors and clients. The Company believes it will capture market share by initially focusing on three markets, Distance Learning, VCC and Telework. The Company feels it is strategically positioned to gain business velocity through its dominance in the selected vertical markets, with a view to providing an expanding suite of industry leading applications. The Company is anticipating that it will begin to generate revenue in the third quarter of the current fiscal year, but there can be no assurance that it will do so. This expected revenue stream will contribute to the existing cash resources. Year 2000 Compliance The Company's business depends on the operation of numerous systems that could potentially be impacted by Year 2000 related problems. Due to the Company's early stage of development, all critical hardware and software has been recently acquired or developed and is likely to be Year 2000 ready. The Company made the appropriate enquiries prior to acquiring its hardware and software and developed its products on platforms that are Year 2000 ready. There has been no expenditure to date by the Company related to becoming Year 2000 ready. The Company expects that any costs it incurs to test for Year 2000 readiness will consist primarily of the salaries of those employees who are assigned the tasks of testing for Year 2000 readiness and does not anticipate those salary costs to be material. See also "Risk Factors - Year 2000 Issues." -29- ITEM 3 PROPERTIES. The Company's operational headquarters is located in 2,190 square feet of leased office space in Chicago, Illinois and it has additional offices located in 5,404 square feet of leased office space in Toronto, Ontario. The Company's lease in Toronto, Ontario expires in November 2000 and its lease in Chicago, Illinois expires in March 2002. The Company and its subsidiaries also lease other facilities that are not material to the Company's business. The Company believes that its existing facilities are adequate for its needs for the foreseeable future and that if additional space is needed, it would be available on favorable terms. ITEM 4 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following table sets forth information as of August 31, 1999 with respect to the beneficial ownership of Common Stock by (i) each person known by the Company to own beneficially more than 5% of the Common Stock, (ii) each executive officer of the Company, (iii) each Director of the Company and (iv) all Directors and executive officers as a group. Name and Address of Number of Shares Percentage Beneficial Owner(1) Beneficially Owned Class(2) ------------------- ------------------ -------- Darcy Galvon 617,000(3) 3.28% A. Thomas Griffis 1,244,997(4) 6.76% James Leech 550,000(5) 2.98% Michael Sheehan 300,000(6) 1.64% James Hines 730,000(7) 3.99% Edward Turner 263,607(8) 1.44% Michael Gruber 270,000(9) 1.48% George Shafran 350,000(10) 1.91% Alex Walsh 500,000(11) 2.72% Jennifer Scoffield 25,000(12) * Treetop Capital Inc. 9,000,000(13) 49.47% Don Jeffrey 2,404,749(14) 12.58% Sheridan Reserve Incorporated 1,000,000 5.50 % -30- Name and Address of Number of Shares Percentage Beneficial Owner(1) Beneficially Owned Class(2) ------------------- ------------------ -------- All officers and 4,850,604 24.38% directors as a group (10 persons) - ----------------------- * Less than one percent (1%) of outstanding Common Stock. (1) Except as otherwise indicated, the address for each of the named individuals is c/o InfoCast Corporation, 1 Richmond Street West, Suite 902, Toronto, Ontario, Canada M5H 3W4. (2) Except as otherwise indicated, the stockholders listed in the table have sole voting and investment power with respect to all shares of Common Stock beneficially owned by them. Pursuant to the rules and regulations of the Securities and Exchange Commission, shares of Common Stock that an individual or group has a right to acquire within sixty (60) days pursuant to the exercise of warrants or options are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. (3) Represents (i) 517,000 shares to be issued in exchange for outstanding exchangeable shares of VPS and (ii) 100,000 shares issuable upon exercise of options granted to Mr. Galvon under the 1998 Stock Option Plan. (4) Represents (i) 124,997 shares to be issued in exchange for outstanding exchangeable shares of VPS by Griffis International Limited, of which Mr. Griffis, the Chairman of the Board of the Company, owns 100%, (ii) 100,000 shares issuable upon exercise of options granted to Mr. Griffis under the 1998 Stock Option Plan and (iii) 1,020,000 shares held by Treetop Capital Inc. ("Treetop"), of which Griffis International Limited is a shareholder. Treetop expects to distribute in the near future the shares it holds in the Company on a pro rata basis to Treetop's shareholders. VPS was acquired by the Company on January 29, 1999. Such exchangeable shares are exchangeable at any time for the shares of Common Stock of the Company on a share for share basis. (5) Represents (i) 250,000 shares issuable upon exercise of options granted to Mr. Leech in June 1999 and (ii) 300,000 shares held by Treetop of which Mr. Leech is an optionholder. Treetop expects to distribute in the near future the shares it holds in the Company on a pro rata basis to Treetop's shareholders. -31- (6) Represents (i) 100,000 shares issuable upon exercise of options granted to Mr. Sheehan under the 1998 Stock Option Plan and (ii) 200,000 shares held by Treetop, of which Mr. Sheehan is a shareholder. Treetop expects to distribute in the near future the shares it holds in the Company on a pro rata basis to Treetop's shareholders. (7) Represents (i) 100,000 shares issuable upon exercise of options granted to Mr. Hines under the 1998 Stock Option Plan and (ii) 630,000 shares held by Treetop, of which Mr. Hines is a shareholder. Treetop expects to distribute in the near future the shares it holds in the Company on a pro rata basis to Treetop's shareholders. (8) Represents (i) 83,607 shares to be issued in exchange for outstanding exchangeable shares of VPS by Mr. Turner and (ii) 180,000 shares held by Treetop, of which Mr. Turner is a shareholder. Treetop expects to distribute in the near future the shares it holds in the Company on a pro rata basis to Treetop's shareholders. VPS was acquired by the Company on January 29, 1999. Such exchangeable shares are exchangeable, at any time for the shares of Common Stock of the Company on a share for share basis. (9) Represents 270,000 shares held by Treetop, of which Mr. Gruber is a shareholder. Treetop expects to distribute in the near future the shares it holds in the Company on a pro rata basis to Treetop's shareholders. (10) Represents (i) 100,000 shares issuable upon exercise of options granted to Mr. Shafran under the 1998 Stock Option Plan and (ii) 250,000 shares held by Treetop, of which Mr. Shafran is a shareholder. Treetop expects to distribute in the near future the shares it holds in the Company on a pro rata basis to Treetop's shareholders. (11) Represents (i) 200,000 shares issuable upon exercise of options granted to Mr. Walsh under the 1999 Stock Option Plan and (ii) 300,000 shares held by Treetop, of which Mr. Walsh is a shareholder. Treetop expects to distribute in the near future the shares it holds in the Company on a pro rata basis to Treetop's shareholders. (12) Represents 25,000 shares issuable upon exercise of options granted to Ms. Scoffield under the 1999 Stock Option Plan. (13) Represents shares to be distributed to its shareholders on a pro rata basis in the near future. (14) Represents (i) 825,749 shares to be issued in exchange for outstanding exchangeable shares of VPS by Mr. Jeffrey, (ii) 100,000 shares issuable upon exercise of options granted to Mr. Jeffrey under the 1998 Stock Option Plan, and (iii) 1,479,000 shares held by Treetop, of which Mr. Jeffrey or his wholly-owned company is a shareholder. VPS was acquired by the Company on January 29, 1999. Such shares are exchangeable, at any time for the shares of Common Stock of the Company on a share for share basis. Treetop expects to distribute in -32- the near future the shares it holds in the Company on a pro rata basis to Treetop's shareholders. ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS. The directors and executive officers of the Company, and their ages and positions with the Company will be as follows: Name Age Position ---- --- -------- Darcy Galvon 43 Co-Chairman of the Board, Director A. Thomas Griffis 58 Co-Chairman of the Board, Director James Leech 52 President, CEO and Director Jennifer Scoffield 29 Vice President, Finance & Administration Michael Sheehan 58 Vice President, Virtual Call Center, Director James Hines 34 Executive Vice President, Director Alex "Sandy" Walsh 33 Chief Technology Officer Edward Turner 57 Vice President - Business Development Michael Gruber 32 Vice President - Marketing George Shafran 73 Director The officers of the Company are elected by the Board of Directors at the first meeting after each annual meeting of the Company's stockholders, and hold office until their death, until they resign or until they have been removed from office. No committees of the Board of Directors have been established to date. The following is a brief summary of the background of each director and executive officer of the Company: Mr. Galvon has been Co-Chairman and a director of the Company since May 13, 1999. From 1995 to the present, Mr. Galvon served as a director of Sun Computer Systems Inc. Alberta Ltd. and HomeBase Work Solutions Ltd., which was acquired by the Company in May 1999, and is currently a subsidiary of the Company. Mr. Galvon is also a director of Facet Petroleum Solutions, Inc., with which HomeBase Work Solutions, Inc. has entered into a licensing and distribution agreement. He is also Chairman of the Board of HomeBase. Mr. Griffis has been the Chairman of the Board and a director of the Company since January 12, 1999 and a Co-Chairman since May 13, 1999. In 1986, Mr. Griffis founded and is the sole owner of Griffis International Limited ("GIL"), a management consulting and business development firm. Mr. Leech has been President, Chief Executive Officer and a director of the Company since September 4, 1999. From 1996 until September 1999, Mr. Leech was Vice Chairman and Director -33- at Kasten Chase Applied Research Limited, where he was responsible for corporate strategy, finance, administration and production. From 1993 to 1996, Mr. Leech was President, Chief Executive Officer and Director of Disys Corporation, which was later merged into Kasten Chase Applied Research Limited. Ms. Scoffield has been the Vice President, Finance and Administration of the Company since July 7, 1999. From February 1997 to June 1999, Ms. Scoffield held various positions at PRI Automation Inc. (formerly Promis Systems Corporation Ltd.), most recently as Director, Financial Projects. From August 1996 to January 1997, Ms. Scoffield was Manager of Finance for Pet Valu Canada, Inc. From August 1993 to August 1996, Ms. Scoffield was an accountant with Ernst & Young in the Entrepreneurial Services group where she obtained her Chartered Accountant designation. Mr. Sheehan has been Vice President of Virtual Call Center since July 6, 1999 and a director of the Company since January 12, 1999. He served as the Chief Executive Officer of the Company from January 12, 1999 to July 6, 1999. From 1960 to 1998, Mr. Sheehan held a number of positions at AT&T, most recently as Director of Call Center Solutions for AT&T Labs. Mr. Hines has been the Executive Vice President of the Company since September 4, 1999 and a director of the Company since January 12, 1999. He was the President of the Company from January 12, 1999 to September 3, 1999. From 1996 to November 1998, Mr. Hines was President of Lasso Communications Inc., an international affiliate of the Grey Worldwide Network of companies. From 1994 to 1996, Mr. Hines was Vice President of TransActive Communications Inc. Mr. Walsh has been the Chief Technology Officer of the Company since May 1999. From March 1998 to April 1999, Mr. Walsh was Director of Research and Development - Business Intelligence Group for Hummingbird Communications Ltd. From March 1994 to February 1998, Mr. Walsh was Project Lead for Andyne Computing Limited of Kingston, Ontario. Prior to joining Andyne Computing Limited, Mr. Walsh held various positions in the software design field. Dr. Turner has been the Vice President - Business Development of the Company since January 12, 1999. From 1996 to 1998, Dr. Turner held the position of President of High Performance Group (USA), Inc. and from 1989 to 1996, Dr. Turner was President of High Performance Group, Inc. Mr. Gruber has been the Vice President - Marketing of the Company since January 12, 1999. From July 1996 to November 1998, Mr. Gruber held the position of Director of Sales at Lasso Communications Inc. Prior to July 1996, Mr. Gruber was President of MG Pursuit Enterprises Inc. Mr. Shafran has been a director of the Company since February 8, 1999. Mr. Shafran has been the President of Geo. P. Shafran & Associates, Inc., a management, marketing and investment consulting firm, for at least the last five years. Mr. Shafran serves as Senior Consultant for The High Performance Group and as an associate with the Technical Analysis Corporation. Mr. Shafran is vice-chairman of The Heritage Bank and a director of NVR Mortgage, Missing Kids, International and is chairman of the Advisory Board of the AAA Potomac. Mr. Shafran also serves as a consultant to various other companies. He currently serves on President Clinton's Legislative -34- Council of the U.S. Chamber of Commerce and on the Board of the National Capital Chapter of the American Red Cross. ITEM 6. EXECUTIVE COMPENSATION. The following table sets forth certain information concerning compensation for the year ended December 31, 1998 of the Company's Chief Executive Officer. No executive officer received compensation of a least $100,000 during the year ended December 31, 1998. Summary Compensation Table
Annual Compensation Long-Term Compensation Awards Payouts Securities Long-Term Name and Other Annual Underlying Incentive Plan All Other Principal Position Salary($) Bonus($) Compensation($) Options($) Payouts($) Compensation($) Michael Sheehan - - - - - -
- ------------------------- *Mr. Sheehan was the Company's Chief Executive Officer from January 12, 1999 to July 6, 1999. At the same time, Mr. William Wilson was the Company's President. Prior to Mr. Sheehan's tenure as Chief Executive Officer, the Company had no one serving in such position. Mr. Sheehan was paid $25,000 from January 12, 1999 to March 31, 1999 for his service as Chief Executive Officer. Mr. Wilson received no compensation for his service as the Company's President. Mr. Leech became the Company's new Chief Executive Officer on September 4, 1999. See "Item 6 - Executive Compensation - Employment Agreements." -35- Stock Option Plans In 1998, the Company adopted a stock option plan (the "1998 Stock Option Plan") pursuant to which 2,250,000 shares of Common Stock have been reserved for issuance upon the exercise of options designated as either (i) options intended to constitute incentive stock options ("ISOs") under the U.S. Internal Revenue Code of 1986, as amended (the "Code"), or (ii) nonqualified stock options ("NQSOs"). ISOs and NQSOs may be granted to employees of the Company. The purpose of the 1998 Stock Option Plan is to encourage stock ownership by officers and other key employees and consultants and advisors of the Company. The 1998 Stock Option Plan is administered by the Board of Directors of the Company. The Board, within the limitations of the 1998 Stock Option Plan, determines the persons to whom options will be granted, the number of shares to be covered by each option, the option purchase price per share and the manner of exercise, and the time, manner and form of payment upon exercise of an option. The Company granted no stock options in the year ended December 31, 1998 and there were no option exercises in the year ended December 31, 1998. No stock options were outstanding at December 31, 1998. As of August 31, 1999, 2,075,000 options were outstanding under the 1998 Stock Option Plan at an exercise price of $1.00 per share. The Company's 1999 Stock Option Plan (the "1999 Stock Option Plan") was approved by the Board of Directors of the Company on April 1, 1999 and by the stockholders of the Company on July 29, 1999. The purpose of the 1999 Stock Option Plan is to create additional incentives for the Company's employees, directors and others who perform substantial services to the Company by providing an opportunity to purchase shares of the Common Stock pursuant to the exercise of options granted under the 1999 Stock Option Plan. The Company may grant options that qualify as incentive stock options under Section 422 of the Code, and non-qualified stock options. Incentive stock options may be granted to employees (including officers and directors who are employees). Non-qualified stock options may be granted to employees, officers, directors, independent contractors and consultants of the Company. As of August 31, 1999, 2,000,000 shares were reserved for issuance under the 1999 Stock Option Plan and 1,180,500 options had been granted at an exercise price of $7.00 per share. The maximum number of shares that may be subject to options granted under the 1999 Stock Option Plan to any individual in any calendar year may not exceed 800,000 and the method of counting such shares shall conform to any requirements applicable to "performance-based" compensation under Section 162(m) of the Code. It is intended that compensation realized upon the exercise of an option granted under the 1999 Stock Option Plan will thereupon be regarded as "performance-based" under Section 162(m) of the Code and that such compensation may be deductible without regard to the limits of Section 162(m) of the Code. The Board of Directors or the Compensation Committee thereof (the "Compensation Committee") composed of two or more non-management directors that are "non-employee directors" -36- within the meaning of Rule 16b-3 promulgated under the Exchange Act and "outside directors" within the meaning of Section 162(m) of the Code, is authorized to administer the 1999 Stock Option Plan in a manner that complies with Rule 16b-3 under the Exchange Act. The Board of Directors or Compensation Committee determines which eligible individuals are granted options and the terms of such options including the exercise price, number of shares subject to the option and the vesting and exercisability thereof; provided, the maximum term of an incentive stock option granted under the 1999 Stock Option Plan may not exceed five years. The exercise price of an incentive stock option granted under the 1999 Stock Option plan must equal at least 100% of the fair market value of the subject stock on the date of grant and the exercise price of all non-qualified stock options must equal at least 80% of the fair market value of the subject stock on the date of grant; provided, however, that if an option granted to the Company's Chief Executive Officer or to any of the Company's other four most highly compensated officers is intended to qualify as "performance-based" compensation under Section 162(m) of the Code, the exercise price must equal at least 100% of the fair market value of the subject stock on the date of grant. With respect to any participant who owns more than 10% of the voting power of the Common Stock of the Company, the exercise price of any option granted must equal at least 110% of the fair market value on the date of grant. The aggregate fair market value on the date of grant of the stock for which incentive stock options are exercisable for the first time by an employee of the Company during any calendar year may not exceed $100,000. Options shall become exercisable at such times and in such installments as the Board of Directors or Compensation Committee shall provide. Non-qualified and incentive stock options granted under the 1999 Stock Option Plan are not transferable other than by will or the laws of descent or distribution, and each option that has not yet expired is exercisable only by the recipient during such person's lifetime, or for 12 months thereafter by the person or persons to whom the option passes by will or the laws of descent or distribution. The 1999 Stock Option Plan may be amended at any time by the Board of Directors, although certain amendments require stockholder approval. The 1999 Stock Option Plan will terminate on April 8, 2009, unless earlier terminated by the Board of Directors. Employment Agreement James Leech is employed by the Company pursuant to an employment agreement dated as of August 5, 1999. The agreement provides that Mr. Leech's employment with the Company shall continue unless it is terminated by either party in accordance with the terms of the agreement. The agreement provides for an initial base salary of Cdn $330,000 per annum, a minimum bonus of Cdn $30,000 for the period ending March 31, 2000 and a minimum bonus of Cdn $50,000 for each twelve-month period thereafter during the term of the agreement. Mr. Leech's salary shall be annually reviewed and may be increased at the discretion of the Board of Directors. -37- The agreement also provides that if Mr. Leech is terminated other than for "cause" (as defined in the agreement), he shall receive the base salary provided for under the agreement through the date of termination, plus a lump sum payment equal to twice his annual base salary and bonus. He will also receive his accrued bonus, continue to participate in certain benefit plans for the 24 months following such termination and any options issued to Mr. Leech will immediately vest. If Mr. Leech's employment is terminated due to death or "disability" (as defined therein), he shall be paid the base salary under the agreement until the date of termination and receive certain pro-rata bonus and incentive payments, as well as any benefits accrued until the date of termination and any options issued to Mr. Leech will immediately vest. In the event Mr. Leech is terminated within 24 months of a "change of control" of the Company (as defined in the employment agreement), Mr. Leech shall receive a payment equal to three times his annual base salary and bonus. He will also receive his accrued bonus, continue to participate in certain benefit plans for 36 months following such termination and any options issued to Mr. Leech will immediately vest. In addition, on June 1, 1999, Mr. Leech was granted options to purchase 750,000 shares of Common Stock at an exercise price of $7.00. Such options are currently exercisable as to 250,000 shares and become exercisable as to an additional 250,000 shares on September 4, 2000 and as to the remaining 250,000 shares on September 4, 2001. -38- ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. During the three months ended June 30, 1999, the Company paid consulting fees to A. Thomas Griffis, the Co-Chairman of the Board of the Company, who is the sole owner of Griffis International Limited, a shareholder beneficially owning approximately 6.8% of the outstanding shares of the Company, in the amount of Cdn $105,000 for services rendered. The Company will continue to pay a monthly consulting fee of Cdn $15,000 while services are being rendered. During the three months ended June 30, 1999, the Company paid consulting fees to Don Jeffrey, a shareholder beneficially owning approximately 12.6% of the outstanding shares of the Company, in the amount of Cdn $105,000. The Company will continue to pay a monthly consulting fee of Cdn$15,000 while services are being rendered. During the three months ended June 30, 1999, the Company paid consulting fees totaling $70,000 to George Shafran, a director of the Company, during the three month period ended June 30, 1999. The Company will continue to pay a monthly consulting fee of $10,000 while services are being rendered. As at August 31, 1999, the Company paid incentive compensation fees to Darcy Galvon, its Co-Chairman of the Board, of Cdn $140,000 in connection with the Company's acquisition of Homebase. From July 29, 1997 to March 31, 1999, the Company received cash advances from View Media, a company controlled by Don Jeffrey, a shareholder beneficially owning approximately 12.6% of the outstanding shares of the Company, totaling approximately $109,000. The Company repaid such advances prior to June 30, 1999. Darcy Galvon, Co-Chairman of the Board of the Company, is a Director of Facet Petroleum Solutions, Inc. Pursuant to a licensing and distribution agreement dated March 30, 1999 between HomeBase and Facet Petroleum Solutions Inc., Homebase acquired the exclusive right in the telework market to distribute Facet Petroleum's Telework Operational Data Store software for a period of two years in consideration for 6,910 common shares of HomeBase valued at $200,678. Facet Petroleum received 25,000 shares of Common Stock of the Company in exchange for the 6,910 Homebase shares as a result of the acquisition of Homebase by the Company on May 13, 1998. ITEM 8. LEGAL PROCEEDINGS. The Company is not currently involved in any material legal proceedings. From time to time, however, the Company may be subject to claims and lawsuits arising in the normal course of business. -39- ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's Common Stock is currently traded on the OTC Bulletin Board under the symbol "IFCC". Prior to changing its name to InfoCast Corporation on December 31, 1998, the Company's Common Stock traded on the OTC Bulletin Board under the symbol "GNRS." The following table sets forth the high and low closing prices on the OTC Bulletin Board for the periods indicated, as reported by the OTC Bulletin Board (as adjusted to reflect a 2 for 1 stock split effected on October 20, 1998). The quotations are interdealer prices without adjustment for retail markups, markdowns or commissions and do not necessarily represent actual transactions. These prices may not necessarily be indicative of any reliable market value. High Low 1998 Third Quarter.............................. $0.50 $0.25 Fourth Quarter............................. $5.00 $0.19 1999 First Quarter.............................. $7.00 $4.25 Second Quarter............................. $10.00 $4.50 Third Quarter (through August 31, 1999).... $13.00 $9.33 On August 31, 1999, the last reported sale price of the Common Stock on the OTC Bulletin Board was $11.19 per share. Dividend Policy The Company has not paid cash dividends on its Common Stock since its inception. The Company does not intend to pay cash dividends on its Common Stock in the foreseeable future. The Company currently intends to reinvest earnings, if any, in the development and expansion of its business. The declaration of dividends in the future will be at the election of the Board of Directors and will depend upon the earnings, capital requirements and financial position of the Company, general economic conditions and other relevant factors. -40- ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES. On October 13, 1998, the shareholders of the Company voted to effect a two-for-one stock split that increased the number of outstanding shares of Common Stock from 6,000,000 to 12,000,000 and increased the number of outstanding Common Stock purchase warrants from 1,000,000 to 2,000,000. Accordingly, the exercise price of the Common Stock purchase warrants was reduced to $0.25 per share. Subsequently, 1,580,000 of the Common Stock purchase warrants were exercised at $0.25 each for cash proceeds of $395,000. The remaining 420,000 Common Stock purchase warrants expired. In April 1998, the Company consummated a private placement of 1,000,000 units at a price of $0.50 per unit pursuant to Rule 504 of Regulation D of the Securities Act of 1933, as amended. Each unit consisted of two shares of Common Stock and two Common Stock purchase warrants. Each Common Stock purchase warrant was exercisable for one share of Common Stock at an exercise price of $0.25 per share. The $500,000 aggregate issue price of the units was satisfied through the receipt by the Company of cash proceeds of $260,000 and the settlement of a non-interest bearing note of $240,000 that was due from the Company. On January 29, 1999, the Company consummated the acquisition of VPS for 1,500,000 shares of Common Stock of the Company pursuant to an exemption under Section 4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder. On February 8, 1999, the Company issued options to purchase 2,250,000 shares of Common Stock at an exercise price of $1.00 per share pursuant to the Company's 1998 Stock Option Plan. In March 1999, the Company consummated a private placement financing pursuant to which it issued 2,767,334 shares of Common Stock for an aggregate offering price of $4,151,001 pursuant to Regulation S of the Securities Act of 1933, as amended. In March 1999, the Company consummated a private placement financing pursuant to which it issued 265,002 shares of Common Stock for an aggregate offering price of $397,503 pursuant to Regulation D of the Securities Act of 1933, as amended. Pursuant to an agreement dated March 22, 1999, the Company issued 60,000 shares of Common Stock to a financial investment consulting firm for assistance in securing additional financing over the following year. On May 13, 1999, the Company consummated the acquisition of Homebase for 3,400,000 shares of Common Stock of the Company pursuant to an exemption under Section 4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder. -41- In June 1999, the Company issued warrants to purchase 25,000 shares of Common Stock at an exercise price of $7.00 per share to a consulting firm. The Company may issue warrants to purchase an additional 75,000 shares of Common Stock to such firm. In June 1999, in return for services, the Company issued warrants to purchase an aggregate of 200,000 shares of Common Stock at an exercise price of $7.00 per share to four individuals. On June 1, 1999, the Company issued options to purchase 1,180,500 shares of Common Stock to officers, employees and consultants under the 1999 Stock Option Plan and options to purchase 750,000 shares of Common Stock to an officer and director. On June 24, 1999, the Company consummated a private placement financing pursuant to which it issued 420,000 shares of Common Stock and warrants to purchase 70,000 shares of Common Stock at an exercise price of $7.00 per share for an aggregate offering price of $2,100,000 pursuant to Regulation D of the Securities Act of 1933, as amended. In July and August 1999, the Company issued 1,100,000 shares of Common Stock in a private placement financing for an aggregate offering price of $6,050,000 pursuant to Regulation S of the Securities Act of 1933, as amended. The Company may issue up to an additional 1,400,000 shares of Common Stock for an aggregate offering price of $7,700,000 in such offering. ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED. The Company is presently authorized to issue up to 100,000,000 shares of Common Stock, $.001 par value per share. The following summary of certain provisions of the Common Stock does not purport to be complete and is subject to, and qualified in its entirety by, the provisions of the Company's Certificate of Incorporation and Bylaws that are included as exhibits to this Registration Statement and by provisions of applicable law. As of September 1, 1999, there were 18,192,336 shares of Common Stock outstanding and options and warrants to purchase an additional 2,075,000 shares of Common Stock at an exercise price of $1.00 per share and 2,225,500 shares of Common Stock at an exercise price of $7.00 per share. The holders of Common Stock are entitled to one vote for each share held of record on each matter submitted to a vote of stockholders. There is no cumulative voting for election of directors. Subject to the prior rights of any series of Preferred Stock which may from time to time be outstanding, holders of Common Stock are entitled to receive ratably such dividends as may be declared by the Board of Directors out of funds legally available therefor, and, upon the liquidation, dissolution or winding up of the Company, are entitled to share ratably in all assets remaining after payment of liabilities and payment of accrued dividends and liquidation preference on the Preferred Stock, if any. Holders of Common Stock have no preemptive rights and have no rights to convert their Common Stock into any other securities. -42- Transfer Agent and Registrar The transfer agent and registrar for the Common Stock is Corporate Stock Transfer in Denver, Colorado. -43- ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Neither the Company's Certificate of Incorporation, as amended, nor its Amended and Restated Bylaws provide for the indemnification of its officers and directors. Under Nevada's General Corporation Law, the Company may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the Company (such as a shareholder derivative suit), by reason of the fact that such person is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. Such indemnification may extend to expenses, including attorneys' fees, judgments, fines and amount paid in settlement actually and reasonable incurred by such person in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonable believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court to be liable to the Company or for amounts paid in settlement to the Company, unless the court in which the action or suit was brought, or another court of competent jurisdiction, determines that in view of all the circumstances, the person is fairly and reasonably entitled to be indemnified for such expenses. There is no pending litigation or proceeding involving a director, officer, employee or other agent of the Company as to which indemnification is being sought, and the Company is not aware of any pending or threatened litigation that may result in claims for indemnification by any officer, director, employee or other agent. The Company is in the process of purchasing Directors and Officers liability insurance to defend and indemnify directors and officers who are subject to claims made against them for their actions and omissions as directors and officers of the Company. ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The required financial statements are included under the section "Financial Statements" in this Registration Statement. -44- ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Ernst & Young LLP were appointed auditors of Virtual Performance Systems Inc. ("VPS") on December 1, 1998 and have audited the consolidated financial statements of VPS since its inception on July 29, 1997 to March 31, 1999. Prior to January 29, 1999, Jackson & Rhodes P.C. were the auditors for InfoCast Corporation , formerly Grant Reserve Corporation ("InfoCast" or the "Company"). Pursuant to a share purchase agreement dated January 29, 1999, the shareholders of VPS sold their 100% interest in VPS to InfoCast in consideration for 1,500,000 exchangeable shares of InfoCast Canada, a wholly-owned subsidiary of InfoCast. The InfoCast Canada shares are exchangeable into shares of Common Stock of InfoCast for no additional consideration. In addition, the shareholders of VPS also purchased a further 9,000,000 shares of Common Stock InfoCast from InfoCast's former controlling shareholder, Sheridan Reserve Incorporated, in consideration for a nominal cash amount. As a result of these two transactions, the shareholders of VPS effectively acquired 10,500,000 shares of Common Stock of InfoCast, which represents a controlling interest of approximately 70% (60% excluding the exchangeable shares). This transaction was considered an acquisition of InfoCast (the accounting subsidiary/legal parent) by VPS (the accounting parent/legal subsidiary) and was accounted for as a purchase of the net assets of InfoCast by VPS because InfoCast had no business operations or operating assets at the time of acquisition. The consolidated financial statements of the Company are issued under the name of InfoCast, but are a continuation of the financial statements of the accounting acquirer, VPS. Ernst & Young LLP, therefore, continue as auditors for the Company. The Company believes, and has been advised by Jackson & Rhodes P.C. that it concurs in such belief, that, during the year ended December 31, 1997 and subsequent thereto, InfoCast and Jackson & Rhodes P.C. did not have any disagreement on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of Jackson & Rhodes P.C., would have caused it to make reference in connection with its report on InfoCast's financial statements to the subject matter of the disagreement. No report of Jackson & Rhodes P.C. on InfoCast's financial statements for either of the past two fiscal years contained an adverse opinion, a disclaimer or opinion or a qualification or was modified as to uncertainty, audit scope or accounting principles. During such fiscal periods, there were no "reportable events" within the meaning of Item 304(a)(1) of Regulation S-K promulgated under the Securities Act of 1933, as amended. -45- ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements InfoCast Corporation Consolidated Financial Statements as of and for the three months ended March 31, 1999, the year ended December 31, 1998 and the period from July 29, 19997 (inception) to December 31, 1997. InfoCast Corporation Consolidated Financial Statements as of and for the three months ended June 30, 1999 (unaudited). Homebase Work Solutions Ltd. Financial Statements as of and for the three months ended March 31, 1999 and the year ended December 31, 1998. Applied Courseware Technology Inc. Financial Statements as of and for the year ended August 31, 1998 and 1997. Applied Courseware Technology Inc. Interim Financial Statements as of and for the ten months ended June 30, 1999 (unaudited). InfoCast Corporation Pro-Forma Consolidated Financial Statements as of and for the three months ended June 30,1 999. (b) Exhibits 3.1 Articles of Incorporation, as amended, of the Company. 3.2 Amended and Restated By-laws of the Company. 4.1 Specimen Certificate of the Company's Common Stock. 4.2 Form of 1998 Stock Option Plan ("1998 Plan"). 4.3 Form of Option Grant Letter under 1998 Plan. 4.4 Form of 1999 Stock Option Plan ("1999 Plan"). 4.5 Form of Option Grant Letter under 1999 Plan. 4.6 Option Agreement dated June 1, 1999, by and between the Company and James William Leech. -46- 4.7 Warrant to Purchase 50,000 shares of Common Stock dated June 24, 1999, issued to Thomson Kernaghan and Co. Ltd. 4.8 Warrant to Purchase 20,000 shares of Common Stock dated June 24, 1999, issued to Thomson Kernaghan and Co. Ltd. 4.9 Warrant to Purchase 25,000 shares of Common Stock dated May 31, 1999 issued to the Poretz Group. 4.10 Provisions Attaching to Common Shares of InfoCast Canada Corporation. 4.11 Exchange Agreement dated as of May 13, 1999 by and among the Company, InfoCast Canada Corporation, HomeBase Work Solutions Ltd. and the Shareholders. 4.12 Support Agreement dated as of May 13, 1999 by and among the Company, InfoCast Canada Corporation, HomeBase Work Solutions Ltd., and the Shareholders. 10.1 Letter Agreement dated March 17, 1999, from the Company to Sandy Walsh. 10.2 Employment to Agreement dated August 5, 1999, by and between the Company and James William Leech. 10.3 Consulting Agreement dated December 1, 1998, by and between the Company and Three Hundred & Sixty Degrees, Inc. 10.4 Consulting Agreement dated March 22, 1999, by and between the Company and Thomson Kernaghan & Co. Ltd. 10.5 Consulting Agreement dated April 15, 1999, by and between the Company and Michael Baybak and Company, Inc. 10.6 Letter Agreement dated June 15, 1999, by and between the Company and Lasso Communications Inc. -47- 10.7 Advertising Services Agreement dated July 1, 1999, by and between the Company and Lasso Communications Inc. 10.8 Release dated July 14, 1999, by and among the Company, Lasso Communications Inc., James Hines and Michael Gruber. 10.9 Memorandum of Understanding dated June 7, 1999, by and between the Company and Willow CSN. 10.10 Summary of Terms and Conditions dated April 21, 1999, by and between the Company and CosmoCom, Inc. 10.11 Agreement of Purchase and Sale dated as of November 17, 1998, by and between Advanced Systems Computer Consultants, Inc. and Cheltenham Technologies (Bermuda) Corporation. 10.12 Asset Sale Agreement dated as of November 23, 1998, by and between Grant Reserve Corporation and Cherokee Mining Company. 10.13 Pledge Agreement dated as of November 25, 1998, by and between Grant Reserve Corporation and Cherokee Mining Company. 10.14 Agreement dated as of May 18, 1999, by and between the Company and Call Center Learning Solutions, Inc. 10.15 Distribution Agreement dated as of March 12, 1999, by and between the Company and ITC Learning Corporation. 10.16 License Agreement dated June 29, 1999, by and between the Company and ITC Learning Corporation. 10.17 Letter Agreement dated March 24, 1999, by and between the Company and Applied Courseware Technology, Inc. 10.18 General Security Agreement dated March 25, 1999, by and between InfoCast Canada Corporation and Applied Courseware Technology, Inc. 10.19 Memorandum of Understanding dated August 28, 1998, by and between Home Base Work Solutions Ltd. and Shaw Fiberlink Ltd. -48- 10.20 Licensing and Distribution Agreement dated March 7, 1999, by and between Homebase Work Solutions Ltd. and Facet Decision Systems, Inc. 10.21 Licensing and Distribution Agreement dated March 30, 1999, by and between Homebase Work Solutions Ltd. and Facet Petroleum Solutions, Inc. 10.22 Share Purchase Agreement dated as of May 13, 1999, by and among the Company, InfoCast Canada Corporation, HomeBase Work Solutions Ltd. and the Shareholders named therein. 10.23 General Security Agreement dated March 25, 1999, by and between InfoCast Canada Corporation and HomeBase Work Solutions, Ltd. 10.24 Letter Agreement dated May 1999 (date unspecified), by and among the Company and Darcy Galvon, Ken MacLean and Sean Fleming. 10.25 Master Lease Agreement dated June 25, 1998, by and between HomeBase Work Solutions, Ltd. and Sun Microsystems. 10.26 Memorandum of Agreement dated July 31, 1997, by and between Virtual Performance Systems Inc. 10.27 Letter Agreement dated November 27, 1998, by and among Grant Reserve Corporation, Sheridan Reserve Corporation and Virtual Performance Systems Inc. 10.28 Share Purchase Agreement dated as of January 29, 1999, by and among InfoCast Canada Limited, Virtual Performance Systems Inc. and the Selling Shareholders named therein. 10.29 Letter Agreement dated May 18, 1999, by and between the Company and Satish Kumeta. 16.1 Letter from Jackson & Rhodes, P.C. relating to change of accountants, dated September 3, 1999. 21.1 List of Subsidiaries. 23.1 Consents of Ernst & Young LLP, independent public accountants. 23.2 Consents of Boudreau Porter Hetu, independent public accountants 27.1 Financial Data Schedule. 27.2 Financial Data Schedule. 27.3 Financial Data Schedule. 27.4 Financial Data Schedule. -49- FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS
Page INFOCAST CORPORATION, formerly Virtual Performance Systems Inc., a development stage company Report of Independent Certified Public Accountants............................................................F-4 Consolidated Balance Sheets as of March 31, 1999, December 31, 1998 and 1997..................................F-5 Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 1999 and 1998, the year ended December 31, 1998, the period from July 29, 1997 (inception) to December 31, 1997 and the period from July 29, 1997 (inception) to March 31, 1999.........................................................F-6 Consolidated Statements of Cash Flows for the three months ended March 31, 1999 and 1998, the year ended December 31, 1998, the period from July 29, 1997 (inception) to December 31, 1997 and the period from July 29, 1997 (inception) to March 31, 1999........................................................................................F-7 Consolidated Statements of Changes in Stockholders' Equity as of December 31, 1997 and 1998 and March 31, 1999.........................................................................F-8 Notes to Consolidated Financial Statements....................................................................F-9 Consolidated Balance Sheet as of June 30, 1999 (unaudited)....................................................F-24 Consolidated Statements of Operations and Comprehensive Loss for the three months ended June 30,1999 and 1998 and for the period from July 27, 1997 (inception) to June 30, 1999 (unaudited).................................................................F-25 Consolidated Statements of Cash Flows for the three months ended June 30, 1999 and 1998 and for the period from July 27, 1997 (inception) to June 30, 1999 (unaudited).........................................................................................F-26 Consolidated Statements of Changes in Stockholders' Equity as of March 31, 1998 and June 30, 1999 (unaudited)............................................................................F-27 Notes to Consolidated Financial Statements....................................................................F-28
F-1 HOMEBASE WORK SOLUTIONS LTD.
Report of Independent Certified Accountants....................................................................F-37 Balance Sheets as at March 31, 1999 and December 31, 1998......................................................F-38 Statements of Loss and Accumulated Development Stage Deficits for the three months ended March 31, 1999, the 101 day period ended December 31, 1998 and the period from September 22, 1998 (inception) to March 31, 1999......................................F-39 Statements of Cash Flows for the three months ended March 31, 1999, the 101 day period ended December 31, 1998 and the period from September 22, 1998 (inception) to March 31, 1999........................................................................F-40 Notes to Financial Statements..................................................................................F-41 APPLIED COURSEWARE TECHNOLOGY INC. Report of Independent Certified Public Accountants.............................................................F-49 Statement of Income and Retained Earnings for the years ended August 31, 1998 and 1997.................................................................................................F-50 Balance sheet at August 31, 1998 and 1997......................................................................F-51 Statement of Changes in Financial Position for the years ended August 31, 1998 and 1997..................................................................................................F-52 Notes to the Financial Statements..............................................................................F-53 Notice to Reader...............................................................................................F-61 Interim Statement of Income and Retained Earnings for the ten months ended June 30, 1999 and 1998 (unaudited)........................................................................F-62 Interim Balance Sheet as at June 30, 1999 and 1998 (unaudited).................................................F-63 Interim Statement of Cash Flows fro the ten months ended June 30, 1999 and 1998 (unaudited)......................................................................................F-64 Notes to the Interim Financial Statements......................................................................F-65
F-2 INFOCAST CORPORATION PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation..........................................................................................F-72 Pro-Forma Consolidated Balance Sheet as of June 30, 1999.......................................................F-74 Pro-Forma Consolidated Statement of Operations for the three months ended June 30, 1999.......................................................................................F-76 Pro-Forma Adjustments..........................................................................................F-79
F-3 AUDITORS' REPORT To the Directors of InfoCast Corporation We have audited the consolidated balance sheets of InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] as of March 31, 1999, December 31, 1998 and December 31, 1997 and the related consolidated statements of operations and comprehensive loss, cash flows and changes in stockholders' equity for the three month period ended March 31, 1999, the year ended December 31, 1998, the 156 day period ended December 31, 1997 and the period from July 29, 1997 to March 31, 1999. 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 audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about 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 audits provide a reasonable basis for our opinion. In our opinion, based on our audits, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of InfoCast Corporation as of March 31, 1999, December 31, 1998 and December 31, 1997 and the consolidated results of its operations and its cash flows for the periods then ended in conformity with accounting principles generally accepted in the United States. Toronto, Canada, April 21, 1999 [except for Note 9[b] which is as of /s/ Ernst & Young LLP May 13, 1999 and Note 9[d] which is as of Chartered Accountants June 25, 1999]. F-4 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] CONSOLIDATED BALANCE SHEETS [U.S. dollars, U.S. GAAP]
As of As of As of March 31, December 31, December 31, 1999 1998 1997 $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Current Cash and cash equivalents 3,092,445 25,595 301 Accounts receivable 19,416 9,693 16,286 Due from InfoCast Corporation [the acquired entity] [note 5] -- 25,020 -- Due from Applied Courseware Technology (A.C.T.) Inc. [note 9[d]] 139,299 -- -- Due from Homebase Work Solutions Ltd. [note 9[b]] 99,529 -- -- Prepaid expenses and refundable deposits 21,404 15,225 38 - ------------------------------------------------------------------------------------------------------------------------------------ Total current assets 3,372,093 75,533 16,625 - ------------------------------------------------------------------------------------------------------------------------------------ Capital assets, net [note 4] 107,392 18,908 11,954 Distribution rights deposit [note 9[c]] 500,000 -- -- Intellectual property, net [note 3] 45,591 49,026 25 - ------------------------------------------------------------------------------------------------------------------------------------ 4,025,076 143,467 28,604 - ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) Current Accounts payable and accrued liabilities 354,694 117,109 13,518 Note payable to InfoCast Corporation [the acquired entity] [note 5] -- 250,000 -- Due to directors, officers and stockholders [note 6] 177,270 273,025 109,545 - ------------------------------------------------------------------------------------------------------------------------------------ Total current liabilities 531,964 640,134 123,063 - ------------------------------------------------------------------------------------------------------------------------------------ Commitments and contingencies [notes 9 and 11] Stockholders' equity (deficiency) Common stock [note 7] 16,672 -- -- Additional paid-in-capital [note 7] 16,925,017 2,443 70 Deferred compensation [note 7] (9,858,932) -- -- Accumulated other comprehensive loss 14,309 20,923 1,632 Accumulated development stage deficit (3,603,954) (520,033) (96,161) - ------------------------------------------------------------------------------------------------------------------------------------ Total stockholders' equity (deficiency) 3,493,112 (496,667) (94,459) - ------------------------------------------------------------------------------------------------------------------------------------ 4,025,076 143,467 28,604 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes F-5 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS [U.S. dollars, U.S. GAAP]
Period from Cumulative Three months Three months July 29, 1997 from ended ended Year ended [inception] to inception to March 31, March 31, December 31, December 31, March 31, 1999 1998 1998 1997 1999 $ $ $ $ $ [unaudited] REVENUE Consulting income [note 8] -- 43,446 43,446 3,508 46,954 Interest income 4,478 -- -- -- 4,478 - -------------------------------------------------------------------------------------------------------------------------------- 4,478 43,446 43,446 3,508 51,432 - -------------------------------------------------------------------------------------------------------------------------------- EXPENSES General, administrative and selling 635,334 42,494 375,302 47,954 1,058,590 Stock option compensation [note 7] 2,256,938 -- -- -- 2,256,938 Research and development 162,914 19,703 88,180 51,257 302,351 Interest and loan fees 23,562 -- -- -- 23,562 Amortization 4,144 -- -- -- 4,144 Depreciation 5,507 870 3,836 458 9,801 - -------------------------------------------------------------------------------------------------------------------------------- 3,088,399 63,067 467,318 99,669 3,655,386 - -------------------------------------------------------------------------------------------------------------------------------- Net loss for the period (3,083,921) (19,621) (423,872) (96,161) (3,603,954) Translation adjustment (6,614) (1,227) 19,291 1,632 14,309 - -------------------------------------------------------------------------------------------------------------------------------- Comprehensive loss for the period (3,090,535) (20,848) (404,581) (94,529) (3,589,645) - -------------------------------------------------------------------------------------------------------------------------------- Weighted average number of shares outstanding 11,583,995 41 768,301 41 2,198,607 - -------------------------------------------------------------------------------------------------------------------------------- Basic and diluted loss per share $ (0.27) $(478.56) $(0.55) $(2,345.40) $(1.64) - --------------------------------------------------------------------------------------------------------------------------------
See accompanying notes F-6 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] CONSOLIDATED STATEMENTS OF CASH FLOWS [U.S. dollars, U.S. GAAP]
Period from Three months Three months July 29, Cumulative ended ended Year ended [inception] to inception to March 31, March 31, December 31, December 31, March 31, 1999 1998 1998 1997 1999 $ $ $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ [unaudited] OPERATING ACTIVITIES Net loss for the period (3,083,921) (19,621) (423,872) (96,161) (3,603,954) Add items not affecting cash Stock option compensation 2,256,938 -- -- -- 2,256,938 Common stock issued for services 10,180 -- -- -- 10,180 Amortization 4,144 -- -- -- 4,144 Depreciation 5,507 870 3,836 458 9,801 - ------------------------------------------------------------------------------------------------------------------------------------ (807,152) (18,751) (420,036) (95,703) (1,322,891) Changes in non-cash working capital balances Accounts receivable (9,723) (19,501) 6,593 (16,286) (19,416) Prepaid expenses and refundable deposits (6,179) (61) (15,187) (38) (21,404) Accounts payable and accrued liabilities 173,306 10,999 103,591 13,518 290,415 Bank overdraft -- 9,263 -- -- -- Due from InfoCast Corporation [the acquired entity] prior to acquisition -- -- (25,020) -- (25,020) - ------------------------------------------------------------------------------------------------------------------------------------ Cash used in operating activities (649,748) (18,051) (350,059) (98,509) (1,098,316) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTING ACTIVITIES Purchase of capital assets (93,659) (325) (11,644) (12,412) (117,715) Distribution rights deposit (500,000) -- -- -- (500,000) Due from Homebase Work Solutions Ltd. (99,529) -- -- -- (99,529) Due from Applied Courseware Technology (A.C.T.) Inc. (139,299) -- -- -- (139,299) Acquisition of InfoCast Corporation 87 -- -- -- 87 - ------------------------------------------------------------------------------------------------------------------------------------ Cash used in investing activities (832,400) (325) (11,644) (12,412) (856,456) - ------------------------------------------------------------------------------------------------------------------------------------ FINANCING ACTIVITIES Increase in note payable to InfoCast Corporation [the acquired entity] -- -- 250,000 -- 250,000 Increase (decrease) in due to directors, officers and stockholders (95,755) 19,346 114,476 109,545 128,266 Receipt of short-term unsecured loan 400,000 -- 70,000 -- 470,000 Payment of short-term unsecured loan (400,000) -- (70,000) -- (470,000) Cash advance from InfoCast Corporation [the acquired entity] prior to acquisition 146,900 -- -- -- 146,900 Cash proceeds from issuance of share capital, net 4,505,508 -- 2,373 45 4,507,926 - ------------------------------------------------------------------------------------------------------------------------------------ Cash provided by financing activities 4,556,653 19,346 366,849 109,590 5,033,092 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash during the period 3,074,505 970 5,146 (1,331) 3,078,320 Effect of foreign exchange rate changes on cash balances (7,655) (1,271) 20,148 1,632 14,125 Cash and cash equivalents, beginning of period 25,595 301 301 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents, end of period 3,092,445 -- 25,595 301 3,092,445 - ------------------------------------------------------------------------------------------------------------------------------------ Supplemental cash flow information Interest and lending fees paid during the period 23,562 -- -- -- 23,562 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes F-7 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company]
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY [U.S. dollars, U.S. GAAP] Accumulated Accumulated other Additional Common development comprehensive paid-in shares stage deficit loss capital # $ $ $ - ----------------------------------------------------------------------------------------------------------------------------------- Deemed common shares issued for intellectual properties [note 1[b]] 14 -- -- 25 Deemed common shares issued for cash [note 1[b]] 27 -- -- 45 Net loss for the period -- (96,161) -- -- Translation adjustment -- -- 1,632 -- - ----------------------------------------------------------------------------------------------------------------------------------- Deemed outstanding as of December 31, 1997 41 (96,161) 1,632 70 Deemed common shares issued for cash [note 1[b]] 1,499,959 -- -- 2,373 Net loss for the period -- (423,872) -- -- Translation adjustment -- -- 19,291 -- - ----------------------------------------------------------------------------------------------------------------------------------- Deemed outstanding as of December 31, 1998 1,500,000 (520,033) 20,923 2,443 Acquisition of InfoCast by VPS [note 1[b]] 13,580,000 -- -- 294,108 Common shares issued for cash 3,032,333 -- -- 4,545,468 Share issuance costs -- -- -- (42,992) Common shares issued for consulting services 60,000 -- -- 337,740 Granting of stock options -- -- -- 11,788,250 Amortization of deferred compensation -- -- -- -- Net loss for the period -- (3,083,921) -- -- Translation adjustment -- -- (6,614) -- - ------------------------------------------------------------------------------------------------------------------------------------ Outstanding as of March 31, 1999 18,172,333 (3,603,954) 14,309 16,925,017 - ------------------------------------------------------------------------------------------------------------------------------------
Common stock Total Deferred issued and stockholders' compensation outstanding equity $ $ $ - --------------------------------------------------------------------------------------------------------------------------- Deemed common shares issued for intellectual properties [note 1[b]] -- -- 25 Deemed common shares issued for cash [note 1[b]] -- -- 45 Net loss for the period -- -- (96,161) Translation adjustment -- -- 1,632 - --------------------------------------------------------------------------------------------------------------------------- Deemed outstanding as of December 31, 1997 -- -- (94,459) Deemed common shares issued for cash [note 1[b]] -- -- 2,373 Net loss for the period -- -- (423,872) Translation adjustment -- -- 19,291 - --------------------------------------------------------------------------------------------------------------------------- Deemed outstanding as of December 31, 1998 -- -- (496,667) Acquisition of InfoCast by VPS [note 1[b]] -- 13,580 307,688 Common shares issued for cash -- 3,032 4,548,500 Share issuance costs -- -- (42,992) Common shares issued for consulting services (337,800) 60 -- Granting of stock options (11,788,250) -- -- Amortization of deferred compensation 2,267,118 -- 2,267,118 Net loss for the period -- -- (3,083,921) Translation adjustment -- -- (6,614) - --------------------------------------------------------------------------------------------------------------------------- Outstanding as of March 31, 1999 (9,858,932) 16,672 3,493,112 - ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes F-8 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 1. BASIS OF ACCOUNTING [a] Nature of operations and continuing entity These consolidated financial statements are the continuing financial statements of Virtual Performance Systems Inc. ["VPS"] [a development stage company], an Ontario corporation which was incorporated on July 29, 1997. VPS has a 100% interest in Cheltenham Technologies Corporation ["Cheltenham Technologies"], an Ontario corporation, and Cheltenham Interactive Corporation ["Cheltenham Interactive"], an Ontario corporation. Cheltenham Technologies has a 100% interest in Cheltenham Technologies (Bermuda) Corporation ["Cheltenham Bermuda"], a Barbados corporation. On January 29, 1999, VPS acquired the net assets of InfoCast Corporation [formerly Grant Reserve Corporation] ["InfoCast"], a United States non-operating company traded on the NASDAQ OTC Bulletin Board which had a 100% interest in InfoCast Canada Corporation ["InfoCast Canada"]. After the acquisition, the accounting entity continued under the name of InfoCast Corporation [note 1[b]]. InfoCast, InfoCast Canada, VPS, Cheltenham Technologies, Cheltenham Interactive and Cheltenham Bermuda are collectively referred to as the "Company". The Company is a development stage technology company engaged in the research and development of information delivery technologies. The functional currency of VPS, Cheltenham Technologies, Cheltenham Interactive, Cheltenham Bermuda and InfoCast Canada is the Canadian dollar. However, for reporting purposes, the Company has adopted the United States dollar as its reporting currency. Accordingly, the Canadian dollar balance sheets of these companies have been translated into United States dollars at the rates of exchange at the respective period ends, while transactions during the periods and share capital amounts have been translated at the weighted average rates of exchange for the respective periods and the exchange rate at the date of the transaction, respectively. Gains and losses arising from these translation adjustments are included in comprehensive loss. [b] Reverse acquisition of InfoCast Corporation Pursuant to a share purchase agreement dated January 29, 1999, the shareholders of VPS sold their 100% interest in VPS to InfoCast in consideration for 1,500,000 exchangeable shares of InfoCast Canada, a wholly-owned subsidiary of InfoCast. The InfoCast Canada exchangeable shares are convertible into common shares of InfoCast at no additional consideration. In addition, the shareholders of VPS also purchased a further 9 million common shares of InfoCast from InfoCast's former controlling shareholder, Sheridan Reserve Incorporated, in consideration for a nominal cash amount. As a result of these two transactions, the shareholders of VPS effectively acquired 10,500,000 common shares of InfoCast which represents a controlling interest of approximately F-9 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 70% [60% excluding the exchangeable shares]. This transaction is considered an acquisition of InfoCast [the accounting subsidiary/legal parent] by VPS [the accounting parent/legal subsidiary] and has been accounted for as a purchase of the net assets of InfoCast by VPS in these consolidated financial statements because InfoCast had no business operations or operating assets at the time of the acquisition. These consolidated financial statements are issued under the name of InfoCast, but are a continuation of the financial statements of the accounting acquirer, VPS. VPS's assets and liabilities are included in the consolidated financial statements at their historical carrying amounts. Figures presented to January 29, 1999 are those of VPS. For purposes of the acquisition, the fair value of the net assets of InfoCast of $307,688 is ascribed to the 13,580,000 previously outstanding common shares of InfoCast deemed to be issued in the acquisition as follows: $ - -------------------------------------------------------------------------------- Cash 87 Note receivable from VPS 396,900 Payable to VPS (25,020) Accounts payable (64,279) - -------------------------------------------------------------------------------- Purchase price 307,688 - -------------------------------------------------------------------------------- Prior to the acquisition on January 29, 1999, the deemed number of outstanding shares of InfoCast is equal to the 1,500,000 exchangeable shares of InfoCast Canada that were issued to the shareholders of VPS in the acquisition. These shares have been allocated to the changes in the combined issued and outstanding and additional paid-in-capital common stock of VPS to January 29, 1999 as follows:
Deemed InfoCast shares VPS shares Amount # # $ - ---------------------------------------------------------------------------------------------------------- Issued for intellectual properties [note 3] 14 35 25 Issued for cash 27 65 45 - ---------------------------------------------------------------------------------------------------------- Outstanding as of December 31, 1997 41 100 70 Issued for cash 1,499,959 3,624,000 2,373 - ---------------------------------------------------------------------------------------------------------- Outstanding as of December 31, 1998 and January 29, 1999 prior to acquisition 1,500,000 3,624,100 2,443 - ----------------------------------------------------------------------------------------------------------
F-10 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 The combined issued and outstanding and additional paid-in-capital common stock of the continuing consolidated entity as of January 29, 1999 is computed as follows:
$ - --------------------------------------------------------------------------------------- Existing share capital of VPS as of January 29, 1999 prior to acquisition 2,443 Ascribed value of the acquired common shares of InfoCast 307,688 - --------------------------------------------------------------------------------------- Share capital of InfoCast [formerly VPS] as of January 29, 1999 310,131 - ---------------------------------------------------------------------------------------
The number of outstanding shares of InfoCast [formerly VPS] as of January 29, 1999 is computed as follows: Number of shares - -------------------------------------------------------------------------------- Deemed share capital of InfoCast [formerly VPS] as of January 29, 1999 prior to acquisition 1,500,000 Shares of InfoCast deemed issued by VPS 13,580,000 - -------------------------------------------------------------------------------- Shares of InfoCast [formerly VPS] as of January 29, 1999 15,080,000 - -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company's significant accounting policies are summarized as follows: Principles of consolidation These consolidated financial statements include the accounts of InfoCast and its subsidiaries, all of which are wholly-owned. Intercompany accounts and transactions have been eliminated upon consolidation. Cash and cash equivalents Cash and cash equivalents represent cash and short-term investments with a maturity date of less than three months when acquired. Change in year end The Company changed its year end to March 31 from December 31. F-11 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 Capital assets Capital assets are recorded at cost less accumulated depreciation. If it is determined that a capital asset is not recoverable over its estimated useful life, the capital asset will be written down to its net recoverable value. Maintenance and repairs are charged to expenses as incurred. Gains and losses on the disposition of capital assets are included in income. Depreciation is provided on a declining balance basis using the following annual rates: Computer equipment 30% Office equipment 20% Leasehold improvements 20% Intellectual property Acquired intellectual property is recorded at cost and represents proprietary rights to certain information delivery technologies. The capitalized costs of the intellectual property is amortized on a straight-line basis over its estimated useful life of 3 years. If it is determined that an investment in intellectual property is not recoverable over its estimated useful life, the intellectual property will be written down to its net recoverable value. Distribution rights Acquired distribution rights are recorded at cost and represent rights to the distribution of certain call centre products. The capitalized costs of the distribution rights will be amortized on a per user basis [note 9[c]]. If it is determined that an investment in distribution rights is not recoverable from estimated sales, the distribution rights will be written down to its net recoverable value. Revenue recognition Revenue from consulting and programming services is recognized at the time such services are rendered. Research and development Software development costs incurred prior to the establishment of technological feasibility are expensed as incurred. Research costs are expensed as incurred. F-12 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 Foreign currency measurement United States dollar monetary assets and liabilities of the Company's subsidiaries utilizing the Canadian dollar as its functional currency are remeasured into the subsidiaries' functional currency at the period end rate of exchange. Transactions in foreign currency are remeasured at the actual rates of exchange. Foreign currency remeasurement differences are included in general and administrative expenses. Stock options As permitted by FASB Statement No. 123 ["FASB 123"], "Accounting for Stock-Based Compensation," the Company has adopted the intrinsic value method of APB 25, "Accounting for Stock Issued to Employees" in respect of stock options granted to its employees and directors and FASB 123 in respect of stock options granted to its consultants. The measurement date of options granted to consultants will be the date the services are completed. For purposes of recognition of the cost of the options prior to the measurement date such options are measured at their then current fair value at each interim financial reporting date. Income taxes The Company follows the liability method of providing for income taxes in accordance with FASB Statement No. 109, "Accounting for Income Taxes." Basic and diluted loss per common share Per share amounts have been computed based on the weighted average number of common shares outstanding each period. The weighted average number of common shares outstanding prior to the acquisition on January 29, 1999 are based on the number of VPS common shares outstanding during that period. InfoCast Canada's 1,500,000 exchangeable shares outstanding are deemed to be outstanding common shares of InfoCast for the purposes of the loss per share calculations and share continuity disclosures because the exchangeable shares are the economic equivalent of common shares of the Company. F-13 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 Use of estimates Management uses estimates and assumptions in preparing consolidated financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Actual results could vary from the estimates that are used. 3. INTELLECTUAL PROPERTY The Company executed a Memorandum of Agreement dated July 31, 1997, whereby the Company acquired certain intellectual property owned by an officer of the Company, in consideration for 35 VPS common shares issued at Cdn.$1 per share. This value per share is consistent with the value ascribed to the other 65 VPS common shares issued during 1997 for cash consideration. The intellectual property purchased pursuant to this agreement relates to electronic information delivery algorithms. On November 17, 1998, the Company entered into a Purchase and Sale Agreement with Advanced Systems Computer Consultants Inc., a company owned by the officer of the Company noted above, pursuant to which the Company acquired certain additional intellectual property rights related to remote banking software. The Company purchased the intellectual property rights for consideration as follows: [i] Cdn.$75,000 if the Company becomes a public corporation and has completed a minimum financing of $2,000,000; and [ii] Cdn.$325,000 if the purchased remote banking software generates revenue. The Company has accrued the first Cdn.$75,000 [March 31, 1999 - $49,735] installment in its accounts and has recorded amortization of $4,144 in respect of the three-month period ended March 31, 1999 resulting in a net book value of $45,591. F-14 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 4. CAPITAL ASSETS Capital assets consist of the following:
March 31, 1999 December 31, 1998 ---------------------------------------- ---------------------------------------- Net Net Accumulated book Accumulated book Cost depreciation value Cost depreciation value $ $ $ $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ Computer equipment 64,899 7,684 57,215 15,865 4,077 11,788 Office equipment 49,220 1,887 47,333 7,180 60 7,120 Leasehold improvements 2,979 135 2,844 -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ 117,098 9,706 107,392 23,045 4,137 18,908 - ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1997 --------------------------------------- Net Accumulated book Cost depreciation value $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ Computer equipment 12,405 451 11,954 - ------------------------------------------------------------------------------------------------------------------------------------ 12,405 451 11,954 - ------------------------------------------------------------------------------------------------------------------------------------
5. NOTE PAYABLE TO INFOCAST CORPORATION AND AMOUNT DUE FROM INFOCAST CORPORATION InfoCast advanced $250,000 to VPS in December 1998 in contemplation of the acquisition [note 1[b]]. The advance was evidenced by a promissory note that is payable on demand and bears interest at 7%. Subsequent to December 31, 1998 and prior to the completion of the acquisition on January 29, 1999, InfoCast advanced an additional $146,900 to VPS on the same terms. During December 1998, VPS incurred expenses of $25,020 on behalf of InfoCast. The amount was outstanding as of December 31, 1998, was non-interest bearing and was payable on demand. These amounts were eliminated upon the acquisition of InfoCast by VPS on January 29, 1999 [note 1[b]]. F-15 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 6. DUE TO DIRECTORS, OFFICERS AND STOCKHOLDERS The amounts due to directors, officers and shareholders consist of the following:
March 31, December 31, December 31, 1999 1998 1997 $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ View Media 383 109,269 105,965 Advanced Systems Computer Consultants Inc. 65,420 64,125 3,580 Griffis International Limited 28,348 26,714 -- Past officer of the Company 44,001 43,280 -- Current officers and directors of the Company 39,118 29,637 -- - ------------------------------------------------------------------------------------------------------------------------------------ 177,270 273,025 109,545 - ------------------------------------------------------------------------------------------------------------------------------------
The amounts are non-interest bearing and payable on demand. All of the amounts due to View Media and Cdn.$25,000 of the amount due to Griffis International Limited as of March 31, 1999 and December 31, 1998 relate to cash advances provided to the Company, while $49,710 [Cdn.$75,000] of the amount due to Advanced Systems Computer Consultants Inc. as of March 31, 1999 and December 31, 1998 relates to the intellectual property described in note 3. The balance relates to expenditures incurred and services performed on behalf of the Company. During the three months ended March 31, 1999, the Company incurred expenses of nil [March 31, 1998 - $16,178; December 31, 1998 - $59,319; December 31, 1997 - $42,119] for managerial and consulting services from Advanced Systems Computer Consultants Inc., nil [March 31, 1998 - nil; December 31, 1998 - $30,526; 1997 - nil] for consulting services provided by View Media and $26,981 [March 31, 1998 - - nil; December 31, 1998 - $16,178; 1997 - nil] for consulting services provided by Griffis International Limited. View Media is a company controlled by a stockholder and former director of the Company. Griffis International Limited is a company owned by a stockholder and the Chairman of the Company. 7. SHARE CAPITAL Authorized The Company has 100,000,000 preferred shares authorized at a par value of $0.001 per share and has 100,000,000 common shares authorized at a par value of $0.001 per share. F-16 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 Issued and outstanding common shares The issued share capital subsequent to January 29, 1999 consists of the following:
Common stock issued and outstanding and additional paid-in-capital ------------------------------------ Shares Amount # $ - ------------------------------------------------------------------------------------------------------------------------------------ Outstanding as of January 29, 1999 [note 1[b]] 15,080,000 310,131 Private placement at $1.50 per share 3,032,333 4,548,500 Issuance of shares in consideration for consulting services 60,000 337,800 Share issuance costs -- (42,992) - ------------------------------------------------------------------------------------------------------------------------------------ Outstanding as of March 31, 1999 18,172,333 5,153,439 - ------------------------------------------------------------------------------------------------------------------------------------
Private placement During March 1999, InfoCast completed the placement of 3,032,333 common shares at $1.50 per share. The gross proceeds of the issue were $4,548,500. Issuance of shares in consideration for consulting services Pursuant to an agreement dated March 22, 1999, the Company issued 60,000 common shares to a financial investment consulting firm in consideration for assistance in securing additional financing over the following year. The measurement date for these common shares will be March 22, 2000. For purposes of recognition of the cost of the common shares prior to the measurement date such common shares are measured at their then current fair value at each interim financial reporting date. As of March 31, 1999, the common shares have been valued at the $5.63 per share closing price on the agreement date of which $10,180 was charged to general and administrative expenses during the three month period ended March 31, 1999. Stock options As a condition of the acquisition [note 1], InfoCast adopted the 1998 Stock Option Plan as amended on January 29, 1999 pursuant to which 2,250,000 stock options were set aside to be granted to various individuals involved in the management of VPS. The options were granted on February 8, 1999, are exercisable at a price of $1.00 per share, expire three years from the date of grant and are subject to a vesting period of at least six months. F-17 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 As of April 19, 1999, 175,000 of the stock options had been cancelled due to the termination of certain individuals and the renegotiation of employment terms. Of the 2,075,000 remaining stock options, 775,000 will vest on August 8, 1999 and 1,300,000 will vest on February 8, 2000. These outstanding stock options have been valued at $11,788,250 of which $2,256,938 has been recognized as a stock option compensation expense, and of which the balance of $9,531,312 has been recorded as deferred compensation in stockholders' equity. The deferred compensation will be adjusted for the then current fair market value at each interim financial reporting date for the 375,000 stock options granted to consultants and will be amortized to income over the vesting periods of the stock options. If the Company had been following FASB 123 in respect of stock options granted to its employees and directors, the Company would have recorded a higher stock option compensation expense for the three month period ended March 31, 1999 of $69,556 and a higher deferred compensation as of March 31, 1999 of $322,434. This higher stock option compensation expense would result in a pro-forma net loss of $3,153,487 and a pro-forma basic and diluted loss per share of $0.27 in respect of the three month period ended March 31, 1999. The Company assumed an expected dividend rate of 0%, a risk free interest rate of 5.08% and an expected volatility factor of 0.838 in respect of the valuation of the stock options in accordance with FASB 123. The directors of the Company have approved a 1999 stock option plan under which an additional 2,000,000 stock options will be eligible for grant. The 1999 stock option plan is subject to stockholder approval. 8. DISCONTINUED REVENUE SOURCES The Company recorded revenue of $43,446 during the year ended December 31, 1998 [March 31, 1998 - $43,446; December 31, 1997 - $3,508] mainly resulting from the provision of computer programming services to one customer. These services are no longer being provided by the Company to this customer. As of March 31, 1999, nil [March 31, 1998 - nil; December 31, 1997 - $3,448] was recorded as accounts receivable from this customer. F-18 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 9. COMMITMENTS [a] Lease commitments The Company leased premises under non-cancellable operating leases which require future annual minimum lease payments as follows: $ - ------------------------------------------------------------------- 1999 60,428 2000 52,238 2001 35,072 2002 5,874 2003 -- - ------------------------------------------------------------------- 153,612 - ------------------------------------------------------------------- The rental payments for the premises are exclusive of taxes and operating costs. During the three month period ended March 31, 1999, the Company incurred rent expense of $38,682 [March 31, 1998 - $4,044; December 31, 1998 - $16,701; December 31, 1997 - $5,711]. [b] Acquisition of Homebase Work Solutions Ltd. Pursuant to a Letter of Intent dated December 14, 1998, between the Company and Homebase Work Solutions Ltd. ["Homebase"], the Company intended to purchase a 100% interest in Homebase in consideration for 2,100,000 common shares of the Company. The agreement was conditional upon regulatory approval and satisfactory due diligence. Homebase is a telework solution provider headquartered in Calgary, Alberta. Pursuant to a share purchase agreement dated May 13, 1999, all of Homebase's outstanding common shares, first preferred series A shares, common share purchase warrants and penalty common share purchase warrants were acquired by the Company in consideration for 3,400,000 exchangeable shares of InfoCast Canada. The InfoCast Canada exchangeable shares are convertible into InfoCast common shares on a one-for-one basis at no additional consideration. The acquisition will be accounted for by the purchase method. The allocation of the purchase price has not yet been finalized. As a condition of the closing of the share purchase agreement, the Company will pay Cdn. $210,000 to officers of Homebase and must pay an additional Cdn. $210,000 to the officers of Homebase if the Company completes a private placement financing for gross proceeds of at least F-19 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 $1,000,000 or completes a letter of credit financing of at least $500,000. These amounts will be expensed after the closing. On March 25, 1999, the Company advanced Cdn. $150,000 to Homebase in consideration for a promissory note bearing interest at prime plus 1%. The promissory note is payable on demand and is collateralized by a general security agreement. As of March 31, 1999, $99,529 has been recorded as an amount due from Homebase, including interest receivable of $105. [c] Purchase of call centre distribution rights Pursuant to an agreement dated December 15, 1998, as amended by a letter agreement dated February 16, 1999, and an agreement dated March 12, 1999, between the Company and ITC Learning Corporation ["ITC"], the Company will purchase from ITC the distribution rights for certain call centre products in consideration for $1,000,000 in respect of the first 150,000 user licenses and based on a shared revenue formula for user licenses in excess of 150,000. The first $500,000 of the initial $1,000,000 purchase price was paid during March 1999 and has been recorded as distribution rights deposit in the accounts of the Company, while the final $500,000 of the initial $1,000,000 purchase price is payable on May 31, 1999. [d] Purchase of Applied Courseware Technology (A.C.T.) Inc. Pursuant to a Letter of Intent dated February 10, 1999 between the Company and Applied Courseware Technology (A.C.T.) Inc. ["ACT"], the Company intends to purchase a 100% interest in ACT in consideration for [i] Cdn. $280,000 cash, [ii] 750,000 common shares of the Company, [iii] the assumption of long-term debt of ACT of approximately Cdn. $700,000 which the Company intends to renegotiate and [iv] the settlement by the Company of approximately Cdn. $350,000 of additional ACT debt. The transaction is subject to satisfactory due diligence. During February and March 1999, the Company paid Cdn. $140,000 of the ACT debt in consideration for a note secured by a general security agreement subject to prior charges and made cash advances to ACT totalling Cdn. $70,000 to fund certain development expenditures incurred on behalf of the Company. As of March 31, 1999, $139,299 has been recorded as an amount due from ACT, including interest receivable of $107. The realization of these loans are dependent on the successful acquisition of ACT. Pursuant to subsequent negotiations, the Cdn. $280,000 cash component of the purchase price was revised to nil. The amount and terms of ACT's debt that will be assumed by the Company upon its acquisition has not yet been determined. F-20 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 [e] Marketing agreement Pursuant to a consulting agreement and a news letter publicity agreement dated April 15, 1999, the Company will pay $6,000 per month plus expenses to a marketing consultant in consideration for national media consulting services over the one year term of the agreement and will pay $250,000 for the costs of the production and distribution of an investor newsletter featuring the Company. 10. INCOME TAXES As of March 31, 1999, the Company has accumulated non-capital losses of approximately Cdn.$1,000,000 for Canadian income tax purposes which are available to reduce future years' taxable income. The future income tax benefits associated with these non-capital losses have not yet been recognized in the accounts. These non-capital losses will expire as follows: Cdn. $ - -------------------------------------------------------------------------- 2003 125,000 2004 625,000 2005 250,000 - -------------------------------------------------------------------------- 1,000,000 - -------------------------------------------------------------------------- The Company has recorded no United States current federal income tax expense or benefit. As of March 31, 1999, the Company has accumulated non-capital losses of approximately $600,000 for United States income tax purposes which are available to reduce future years' taxable income. The future income tax benefits associated with these non-capital losses have not yet been recognized in the accounts. These non-capital losses will expire as follows: $ - ------------------------------------------------------------------------ 2018 200,000 2019 400,000 - ------------------------------------------------------------------------ 600,000 - ------------------------------------------------------------------------ The Company has a United States capital loss carryforward of approximately $65,000. This capital loss carryforward will expire, if not utilized, in 2003. A capital loss carryforward may only be used to reduce capital gains and cannot be applied against taxable ordinary income that might be earned by the Company. A deferred tax asset has been established relating to the operating and capital loss carryforwards and the timing differences between the Company's tax and financial reporting basis. A valuation F-21 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 allowance equal to the entire amount of the deferred tax asset has been established due to the uncertainty of the future utilization of the operating and capital loss carryforwards. Following are the components of the Company's deferred tax asset balances: March 31, December 31, December 31, 1999 1998 1997 $ $ $ - ---------------------------------------------------------------------------- Deferred tax asset 559,887 231,189 40,517 Valuation allowance (559,887) (231,189) (40,517) - ---------------------------------------------------------------------------- -- -- -- - ---------------------------------------------------------------------------- 11. CONTINGENCIES Fair value of financial instruments The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS No. 107, "Disclosures about Fair Value of Financial Instruments." The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. The fair values of financial instruments classified as current assets or liabilities including cash and cash equivalents, accounts receivable, due from InfoCast [the acquired entity], due from ACT, due from Homebase, accounts payable and accrued liabilities, notes payable and due to directors, officers and stockholders as of March 31, 1999, March 31, 1998, December 31, 1998 and December 31, 1997 approximate the carrying values due to the short-term maturity of the instruments. Concentration of credit risk The Company invests its cash and cash equivalents primarily with a major Canadian chartered bank. Certain deposits, at times, are in excess of limits insured by the Canadian government. F-22 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [Information for the three month period ended March 31, 1998 is unaudited] [U.S. dollars except where otherwise noted, U.S. GAAP] March 31, 1999 Note receivable from Cherokee Mining Company Inc. Pursuant to an agreement dated November 23, 1998 as amended April 20, 1999, and effective December 18, 1998, InfoCast [the acquired entity] sold its equity interest in its two subsidiaries, Gold King Mines Corporation ["Gold King"] and Madison Mining Corporation ["Madison Mining"] to Cherokee Mining Company Inc. ["Cherokee"], a company controlled by a former director of InfoCast, for [i] a non-interest bearing note of $600,000 due November 25, 1999 and [ii] the entitlement to 80% of the net proceeds received by Madison Mining and Gold King in excess of $681,175 from the sale of their mining properties and assets. InfoCast did not record a value on the $600,000 note receivable because of the uncertainty of whether the management of Cherokee, Gold King and Madison Mining will be able to sell the capital assets of Gold King and Madison Mining for sufficient proceeds to enable the note to be repaid to InfoCast. As a result, VPS did not reflect the note in the purchase equation upon the acquisition of InfoCast [note 1[b]]. In the event that the note is repaid, the amount received will be credited to stockholders' equity. F-23 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] CONSOLIDATED BALANCE SHEET [U.S. dollars, U.S. GAAP]
Unaudited As of June 30, 1999 $ - --------------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 1,493,205 Accounts receivable 114,253 Due from Applied Courseware Technology (A.C.T.) Inc. [note 3[a]] 97,120 Prepaid expenses and refundable deposits 586,968 - --------------------------------------------------------------------------------- Total current assets 2,291,546 - --------------------------------------------------------------------------------- Capital assets, net 239,197 Goodwill, net 5,695,731 Distribution rights, net 2,975,000 Intellectual property, net 17,672,518 Software license 62,825 - --------------------------------------------------------------------------------- 28,936,817 - --------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Accounts payable and accrued liabilities 2,375,898 - --------------------------------------------------------------------------------- Total current liabilities 2,375,898 - --------------------------------------------------------------------------------- Deferred income taxes 6,699,395 - --------------------------------------------------------------------------------- Total liabilities 9,075,293 - --------------------------------------------------------------------------------- Commitments and contingencies [notes 3 and 4] Stockholders' equity Common stock 20,492 Additional paid-in-capital 38,125,727 Deferred compensation (6,448,694) Warrants 712,800 Accumulated other comprehensive loss (14,655) Accumulated development stage deficit (12,534,146) - --------------------------------------------------------------------------------- Total stockholders' equity 19,861,524 - --------------------------------------------------------------------------------- 28,936,817 - ---------------------------------------------------------------------------------
See accompanying notes On behalf of the Board: Director Director F-24 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS [U.S. dollars, U.S. GAAP]
Unaudited Cumulative Three months Three months from ended ended inception to June 30, June 30, June 30, 1999 1998 1999 $ $ $ REVENUE Consulting income -- 102 46,954 Interest income 23,157 -- 27,635 - ---------------------------------------------------------------------------------------------------- 23,157 102 74,589 - ---------------------------------------------------------------------------------------------------- EXPENSES General, administrative and selling 1,936,815 17,767 2,995,405 Stock option compensation 5,829,647 -- 8,086,585 Research and development 730,657 28,964 1,033,008 Interest and loan fees -- -- 23,562 Amortization 645,873 -- 650,017 Depreciation 8,962 941 18,763 - ---------------------------------------------------------------------------------------------------- 9,151,954 47,672 12,807,340 - ---------------------------------------------------------------------------------------------------- Loss before income taxes (9,128,797) (47,570) (12,732,751) Deferred income taxes (198,605) -- (198,605) - ---------------------------------------------------------------------------------------------------- Net loss for the period (8,930,192) (47,570) (12,534,146) Translation adjustment (28,964) 4,344 (14,655) - ---------------------------------------------------------------------------------------------------- Comprehensive loss for the period (8,959,156) (43,226) (12,548,801) - ---------------------------------------------------------------------------------------------------- Weighted average number of shares outstanding 20,035,410 298,324 4,596,050 - ---------------------------------------------------------------------------------------------------- Basic and diluted loss per share $(0.45) $(0.16) $(2.73) - ----------------------------------------------------------------------------------------------------
See accompanying notes F-25 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] CONSOLIDATED STATEMENTS OF CASH FLOWS [U.S. dollars, U.S. GAAP]
Unaudited Cumulative Three months Three months from ended ended inception to June 30, June 30, June 30, 1999 1998 1999 $ $ $ OPERATING ACTIVITIES Net loss for the period (8,930,192) (47,570) (12,534,146) Add (deduct) items not affecting cash Stock option compensation 5,829,647 -- 8,086,585 Common stock issued for services 157,923 -- 168,103 Warrants issued for services 449,998 -- 449,998 Write-off of in-process research and development 31,000 -- 31,000 Deferred income taxes (198,605) -- (198,605) Amortization 645,873 -- 650,017 Depreciation 8,962 941 18,763 - ------------------------------------------------------------------------------------------------------------------------------------ (2,005,394) (46,629) (3,328,285) Changes in non-cash working capital balances Accounts receivable (36,340) 35,467 (102,154) Prepaid expenses and refundable deposits (564,096) 62 (585,500) Accounts payable and accrued liabilities (60,982) (7,225) 229,433 Bank overdraft -- (7,662) -- Due from InfoCast [the acquired entity] prior to acquisition -- -- (25,020) - ------------------------------------------------------------------------------------------------------------------------------------ Cash used in operating activities (2,666,812) (25,987) (3,811,526) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTING ACTIVITIES Purchase of capital assets (117,151) (1,828) (234,866) Purchase of intellectual property (49,004) -- (49,004) Distribution rights (475,000) -- (975,000) Purchase of software license (62,825) -- (62,825) Due from Homebase Work Solutions Ltd. -- -- (99,529) Acquisition of Homebase Work Solutions Ltd. 50,667 -- 50,667 Due from Applied Courseware Technology (A.C.T.) Inc. -- -- (92,901) Acquisition of InfoCast Corporation -- -- 87 - ------------------------------------------------------------------------------------------------------------------------------------ Cash used in investing activities (653,313) (1,828) (1,463,371) - ------------------------------------------------------------------------------------------------------------------------------------ FINANCING ACTIVITIES Increase in note payable to InfoCast [the acquired entity] -- -- 250,000 Increase (decrease) in due to directors, officers and stockholders (128,266) 23,037 -- Receipt of short-term unsecured loan -- -- 470,000 Payment of short-term unsecured loan -- -- (470,000) Cash advance from InfoCast [the acquired entity] prior to acquisition -- -- 146,900 Cash proceeds from issuance of share capital, net 1,890,000 -- 6,397,926 - ------------------------------------------------------------------------------------------------------------------------------------ Cash provided by financing activities 1,761,734 23,037 6,794,826 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash during the period (1,558,391) (4,778) 1,519,929 Effect of foreign exchange rate changes on cash balances (40,849) 4,778 (26,724) Cash and cash equivalents, beginning of period 3,092,445 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents, end of period 1,493,205 -- 1,493,205 - ------------------------------------------------------------------------------------------------------------------------------------ Supplemental cash flow information Interest and lending fees paid during the period -- -- 23,562 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes F-26 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY [U.S. dollars, U.S. GAAP]
Unaudited Common stock Additional Common issued and paid-in Deferred shares outstanding capital compensation # $ $ $ - ----------------------------------------------------------------------------------------------------------------------------------- Outstanding as of March 31, 1999 18,172,333 16,672 16,925,017 (9,858,932) Deemed common shares issued for the acquisition of Homebase Work Solutions Ltd. 3,400,000 3,400 16,996,600 -- Common shares issued for cash 420,000 420 2,099,580 -- Share issuance costs - cash -- -- (210,000) -- Share issuance costs - warrants -- -- (226,800) -- Warrants issued for consulting services -- -- -- (36,002) Adjustments resulting from revaluation of stock options granted to consultants in previous period -- -- 1,233,750 830,579 Adjustments resulting from revaluation of common shares granted to consultants in previous period -- -- 269,700 (111,777) Granting of stock options -- -- 1,037,880 (1,037,880) Amortization of deferred compensation -- -- -- 3,765,318 Net loss for the period -- -- -- -- Translation adjustment -- -- -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Outstanding as of June 30, 1999 21,992,333 20,492 38,125,727 (6,448,694) - -----------------------------------------------------------------------------------------------------------------------------------
Accumulated other Accumulated Total comprehensive development stockholders' Warrants income (loss) stage deficit equity $ $ $ $ - --------------------------------------------------------------------------------------------------------------------------------- Outstanding as of March 31, 1999 -- 14,309 (3,603,954) 3,493,112 Deemed common shares issued for the acquisition of Homebase Work Solutions Ltd. -- -- -- 17,000,000 Common shares issued for cash -- -- -- 2,100,000 Share issuance costs - cash -- -- -- (210,000) Share issuance costs - warrants 226,800 -- -- -- Warrants issued for consulting services 486,000 -- -- 449,998 Adjustments resulting from revaluation of stock options granted to consultants in previous period -- -- -- 2,064,329 Adjustments resulting from revaluation of common shares granted to consultants in previous period -- -- -- 157,923 Granting of stock options -- -- -- -- Amortization of deferred compensation -- -- -- 3,765,318 Net loss for the period -- -- (8,930,192) (8,930,192) Translation adjustment -- (28,964) -- (28,964) - -------------------------------------------------------------------------------------------------------------------------------- Outstanding as of June 30, 1999 712,800 (14,655) (12,534,146) 19,861,524 - --------------------------------------------------------------------------------------------------------------------------------
See accompanying notes F-27 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [U.S. dollars except where otherwise noted, U.S. GAAP] June 30, 1999 Unaudited 1. BASIS OF ACCOUNTING Nature of operations and continuing entity These consolidated financial statements are the continuing financial statements of Virtual Performance Systems Inc. ["VPS"] [a development stage company], an Ontario corporation which was incorporated on July 29, 1997. VPS had a 100% interest in, and subsequently amalgamated with, Cheltenham Technologies Corporation, an Ontario corporation. VPS has a 100% interest in Cheltenham Interactive Corporation ["Cheltenham Interactive"], an Ontario corporation, and Cheltenham Technologies (Bermuda) Corporation ["Cheltenham Bermuda"], a Barbados corporation. On January 29, 1999, VPS acquired the net assets of InfoCast Corporation [formerly Grant Reserve Corporation] ["InfoCast"], a United States non-operating company traded on the NASDAQ OTC Bulletin Board which had a 100% interest in InfoCast Canada Corporation ["InfoCast Canada"]. After the acquisition, the accounting entity continued under the name of InfoCast Corporation. InfoCast, InfoCast Canada, VPS, Cheltenham Interactive and Cheltenham Bermuda are collectively referred to as the "Company". The Company is a development stage technology company engaged in the research and development of information delivery technologies. The functional currency of VPS, Cheltenham Interactive, Cheltenham Bermuda and InfoCast Canada is the Canadian dollar. However, for reporting purposes, the Company has adopted the United States dollar as its reporting currency. Accordingly, the Canadian dollar balance sheets of these companies have been translated into United States dollars at the rates of exchange at the respective period ends, while transactions during the periods and share capital amounts have been translated at the weighted average rates of exchange for the respective periods and the exchange rate at the date of the transaction, respectively. Gains and losses arising from these translation adjustments are included in comprehensive loss. Acquisition of Homebase Work Solutions Ltd. Pursuant to a share purchase agreement dated May 13, 1999, Homebase Work Solutions Ltd. ["Homebase"] was acquired by the Company in consideration for 3,400,000 exchangeable shares of InfoCast Canada. The InfoCast Canada exchangeable shares are convertible into InfoCast common shares on a one-for-one basis at no additional consideration. As a condition of the closing of the share purchase agreement, the Company paid Cdn.$210,000 [$141,561] to officers of Homebase in May 1999 and must pay an additional Cdn.$210,000 [$141,561] to the officers of Homebase if the Company completes a private placement financing for gross proceeds of at least $1,000,000 or completes a letter of credit financing of at least $500,000. A private placement of 420,000 common shares was completed in June 1999 at $5.00 F-28 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [U.S. dollars except where otherwise noted, U.S. GAAP] June 30, 1999 Unaudited per share for gross proceeds of $2,100,000 and, as a result, the remaining Cdn.$210,000 [$141,561] is included as an accrued liability at June 30, 1999. The acquisition has been accounted for using the purchase method. The value of the acquisition was $17,077,000, which included $77,000 of expenses directly attributable to the acquisition. For accounting purposes the exchangeable shares of InfoCast Canada have been valued at $5.00 which is equal to the price per share received from the June 1999 private placement of the Company's common shares. The total purchase price of $17,077,000 has been allocated as follows: $ - -------------------------------------------------------------------------------- Cash 127,667 Other current assets 13,565 Capital assets 20,465 Completed technology 17,015,000 In-process research and development 31,000 Trademarks 853,000 Workforce-in-place 253,000 Goodwill 5,846,293 Deferred income taxes (6,898,000) Accounts payable and accrued liabilities (82,145) Due to the Company (102,845) - -------------------------------------------------------------------------------- Purchase price 17,077,000 - -------------------------------------------------------------------------------- The completed technology, trademarks, workforce in-place and goodwill will be amortized over their respective useful lives of 5 years, 5 years, 3 years and 5 years. The in-process research and development was charged to income immediately subsequent to the acquisition. The completed technology, trademarks and workforce-in-place have been classified as intellectual property on the consolidated balance sheet. The deferred income tax liability was created in respect of the difference between the accounting and tax basis of the completed technology, trademarks and workforce-in-place. The results of operations of Homebase during the post-acquisition 49-day period ended June 30, 1999 have been consolidated with those of the Company. Change in year end The Company changed its year end from December 31 to March 31. F-29 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [U.S. dollars except where otherwise noted, U.S. GAAP] June 30, 1999 Unaudited Basis of presentation These unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. Accordingly, these unaudited interim consolidated financial statements do not include all the financial information required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments [consisting of normal recurring accruals] considered necessary for fair presentation have been included. The operating results for the three-month period ended June 30, 1999 may not be indicative of the operating results that will occur for the year ended March 31, 2000. For further information, please refer to the consolidated financial statements and footnotes thereto of the Company as of and for the three-month period ended March 31, 1999, as of and for the year ended December 31, 1998 and as of and for the 156-day period ended December 31, 1997, included elsewhere in this document. 2. SHARE CAPITAL Authorized The Company has 100,000,000 preferred shares authorized at a par value of $0.001 per share and has 100,000,000 common shares authorized at a par value of $0.001 per share. Issued and outstanding common shares
Common stock issued and outstanding and additional paid-in-capital Shares Amount # $ - ------------------------------------------------------------------------------------------------------------------------------------ Outstanding as of March 31, 1999 18,172,333 5,153,739 Acquisition of Homebase Work Solutions Ltd. 3,400,000 17,000,000 Private placement at $5.00 per share 420,000 2,100,000 Share issuance costs -- (436,800) - ------------------------------------------------------------------------------------------------------------------------------------ Outstanding as of June 30, 1999 21,992,333 23,816,939 - ------------------------------------------------------------------------------------------------------------------------------------
F-30 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [U.S. dollars except where otherwise noted, U.S. GAAP] June 30, 1999 Unaudited Exchangeable shares The number of common shares outstanding as of June 30, 1999 includes 4,900,000 exchangeable shares of InfoCast Canada which have been deemed as common shares of the Company for accounting purposes because the exchangeable shares are the economic equivalent of common shares of the Company. Securities Purchase Agreement Pursuant to a Securities Purchase Agreement dated June 24, 1999, the Company issued, by way of a private placement, 420,000 common shares to the agent at $5.00 per share for gross proceeds of $2,100,000, net of commissions of $210,000. Also pursuant to the Securities Purchase Agreement, the Company issued 70,000 warrants on June 24, 1999 to the agent. Each warrant has an exercise price of $7.00, expires June 23, 2001 and has been valued at $3.24 in the accounts based on an expected volatility factor of 0.715 and a risk free interest rate of 5.1%. As a result, $226,800 was charged to share issuance costs during the three-month period ended June 30, 1999. Stock options As of June 30, 1999, 2,075,000 common shares were reserved for the exercise of stock options granted to various individuals involved in the management of VPS pursuant to the Company's 1998 Stock Option Plan as amended on January 29, 1999. The options were granted on February 8, 1999, are exercisable at a price of $1.00 per share, expire three years from the date of grant and are subject to a vesting period of at least six months. Of the 2,075,000 stock options that were originally valued at $11,788,250, the 375,000 that were granted to consultants were revalued as of June 30, 1999 to $9.16 each based on a revised volatility factor of 0.718 and the June 30, 1999 common share closing market price of $10.25, which resulted in a charge to stock option compensation expense of $2,064,329 and an increase in deferred compensation of $830,579 during the three-month period ended June 30, 1999. Stock option compensation expense of $2,998,178 was charged to income in respect of the remaining 1,700,000 stock options during the three-month period ended June 30, 1999. The directors and stockholders of the Company approved the 1999 Stock Option Plan under which an additional 2,000,000 stock options are eligible for grant. As of June 30, 1999, 1,180,500 stock options were granted to various employees, officers, directors, consultants and advisors pursuant to the 1999 Stock Option Plan. The options were granted on June 1, 1999, are exercisable at a price of $7.00 per share, expire five years from the date of grant and are subject to a vesting period ranging from immediate vesting to six months. Of the 1,180,500 stock options, 905,500 vest immediately and 275,000 will vest on June 1, 2000. These outstanding stock options F-31 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [U.S. dollars except where otherwise noted, U.S. GAAP] June 30, 1999 Unaudited have been valued at $1,037,880 of which $767,140 has been recognized as a stock option compensation expense during the three-month period ended June 30, 1999, and of which the balance of $270,740 has been recorded as deferred compensation in stockholders' equity. The deferred compensation will be adjusted for the then current fair market value at each interim financial reporting date for the 480,500 stock options granted to consultants and advisors, and will be amortized to income over the vesting periods of the stock options. On June 1, 1999, the directors of the Company approved the grant of 750,000 stock options outside of the 1999 Stock Option Plan to an individual who became an officer of the Company. The stock options are exercisable at a price of $7.00 per share, expire 5 years from the date of grant and vest as follows: 250,000 on September 4, 1999 upon the acceptance by the individual of formal employment with the Company, 250,000 on September 4, 2000 and 250,000 on September 4, 2001. The measurement date in respect of these stock options will be September 4, 1999. If the Company had been following FASB Statement No. 123 ["FASB 123"] in respect of stock options granted to its employees and directors, the Company would have recorded a higher stock option compensation expense for the three-month period ended June 30, 1999 of $1,414,656 which results in a pro-forma net loss of $10,323,880 and a pro-forma basic and diluted loss per share of $0.52 in respect of the three-month period ended June 30, 1999. The Company assumed an expected dividend rate of 0%, a risk-free interest rate of 5.08% and an expected volatility factor of 0.838 in respect of the valuation of the stock options granted under the 1998 Stock Option Plan in accordance with FASB 123. The Company assumed an expected dividend rate of 0%, a risk-free interest rate of 5.1% and an expected volatility factor of 0.744 in respect of the valuation of the stock options granted under the 1999 Stock Option Plan in accordance with FASB 123. Issuance of shares in consideration for consulting services Pursuant to an agreement dated March 22, 1999, the Company issued 60,000 common shares to a financial investment consulting firm on March 22, 1999 in consideration for assistance in securing additional financing over the following year. The measurement date for these common shares will be March 22, 2000. For purposes of recognition of the cost of the common shares prior to the measurement date such common shares are measured at their then current fair value at each interim financial reporting date. These common shares were revalued as of June 30, 1999 to $10.13 each which resulted in a charge to general and administrative expenses of $157,923 and a charge to deferred compensation of $111,777 during the three-month period ended June 30, 1999. F-32 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [U.S. dollars except where otherwise noted, U.S. GAAP] June 30, 1999 Unaudited Other warrants Pursuant to a letter agreement dated May 20, 1999 with an investor relations company, the Company will pay $25,000 and issue 25,000 warrants each quarter in advance commencing June 1, 1999 in consideration for consulting services over the period from June 1, 1999 to May 31, 2000. Based on a volatility factor of 0.744 and a risk-free interest rate of 5.10%, the Company valued the 25,000 warrants issued on June 1, 1999 at $54,000, which will be adjusted on the August 31, 1999 measurement date to their then fair market value. Each of the existing and future warrants issued under this letter agreement has an exercise price of $7.00, is exercisable on or after June 1, 2000 and expires May 31, 2001. The Company charged $17,998 to general and administrative expenses in respect of these warrants during the three-month period ended June 30, 1999. On June 1, 1999, the Company issued 200,000 warrants to parties in consideration for past consulting services to the Company. These warrants have a purchase price of $7.00, are exercisable on or after June 1, 2000 and expire May 31, 2001. These warrants have been valued at $432,000 in the accounts based on a volatility factor of 0.744 and a risk-free interest rate of 5.10% and have been charged to general and administrative expenses. 3. COMMITMENTS [a] Purchase of Applied Courseware Technology (A.C.T.) Inc. Pursuant to a Letter of Intent dated February 10, 1999 between the Company and Applied Courseware Technology (A.C.T.) Inc. ["ACT"], the Company intended to purchase a 100% interest in ACT in consideration for [i] Cdn.$280,000 cash, [ii] 750,000 common shares of the Company and [iii] the assumption of ACT's liabilities. Pursuant to subsequent negotiations, the Cdn.$280,000 cash component of the purchase price was revised to nil. The transaction is subject to satisfactory due diligence. The amount and terms of ACT's debt that will be assumed by the Company upon its acquisition has not yet been determined. During the three-month period ended June 30, 1999, the Company made cash advances to ACT totalling Cdn.$428,000 to fund certain development expenditures incurred on behalf of the Company. These advances in addition to Cdn.$70,000 that was outstanding as of March 31, 1999 have been charged to research and development during the three-month period ended June 30, 1999. As of June 30, 1999, $97,120 [1998 - nil], including interest receivable of $2,611, has been recorded as an amount due from ACT in respect of Cdn.$140,000 of ACT's debt that the Company paid in March 1999 in consideration for a note secured by a general security agreement subject to prior charges. The realization of this loan is dependent on the successful acquisition of ACT. [b] Marketing agreement F-33 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [U.S. dollars except where otherwise noted, U.S. GAAP] June 30, 1999 Unaudited Pursuant to an advertising services agreement dated July 14, 1999, the Company will pay Cdn.$20,833 per month to an advertising agency in consideration for the creation, production and placement of various marketing and advertising initiatives. This agreement commences July 1, 1999 and continues for a fixed term until May 1, 2000. [c] License agreement Pursuant to a license agreement dated June 29, 1999, between the Company and ITC Learning Corporation ["ITC"], and for total consideration of $2,000,000 payable in three installments, the Company will become ITC's exclusive distance learning technology partner for the delivery of educational material for the State of California. This amount has been provided for in the accounts. [d] Call Center Learning Solutions On-Line Inc. joint venture Pursuant to an agreement dated May 18, 1999, between the Company and Call Center Learning Solutions Inc. ["CCLS"], the two parties have agreed to form a new corporation, Call Center Learning Solutions On-Line Inc. ["CCLS On-Line"] to be owned equally by the Company and CCLS. The new corporation will develop, own and exploit courseware in an electronic format capable of electronic distribution. The Company will contribute the resources necessary to convert the first five courses into the electronic format, will fund the incorporation and organization of the new corporation and will fund all marketing and technical support efforts of the new corporation for the initial six-month period. At the end of the initial six-month period, the two parties will share all revenues and bear all costs on a 50/50 basis. [e] Lease agreement Homebase entered into a lease agreement with Sun Microsystems on June 25, 1999 for the lease of a Sun Microsystems Enterprise 10000 computer. The Company paid a deposit of Cdn.$700,000 at the time of signing. The commencement date of the lease is the 16th day following delivery of the equipment. The equipment had not been delivered as of June 30, 1999. After delivery of the equipment, the lease requires monthly payments of Cdn.$59,197 over a term of 36 months. F-34 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [U.S. dollars except where otherwise noted, U.S. GAAP] June 30, 1999 Unaudited 4. CONTINGENCIES Fair value of financial instruments The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS No. 107, "Disclosures about Fair Value of Financial Instruments." The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. The fair values of financial instruments classified as current assets or liabilities including cash and cash equivalents, accounts receivable, due from ACT and accounts payable and accrued liabilities as of June 30, 1999 approximate the carrying values due to the short-term maturity of the instruments. Concentration of credit risk The Company invests its cash and cash equivalents primarily with a major Canadian chartered bank. Certain deposits, at times, are in excess of limits insured by the Canadian government. Note receivable from Cherokee Mining Company Inc. Pursuant to an agreement dated November 23, 1998, as amended April 20, 1999, and effective December 18, 1998, InfoCast [the acquired entity] sold its equity interest in its two subsidiaries, Gold King Mines Corporation ["Gold King"] and Madison Mining Corporation ["Madison Mining"] to Cherokee Mining Company Inc. ["Cherokee"], a company controlled by a former director of InfoCast, for [i] a non-interest bearing note of $600,000 due November 25, 1999 and [ii] the entitlement to 80% of the net proceeds received by Madison Mining and Gold King in excess of $681,175 from the sale of their mining properties and assets. InfoCast did not record a value on the $600,000 note receivable because of the uncertainty of whether the management of Cherokee, Gold King and Madison Mining will be able to sell the capital assets of Gold King and Madison Mining for sufficient proceeds to enable the note to be repaid to InfoCast. As a result, VPS did not reflect the note in the purchase equation upon the acquisition of InfoCast in January 1999. In the event that the note is repaid, the amount received will be credited to stockholders' equity. F-35 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [U.S. dollars except where otherwise noted, U.S. GAAP] June 30, 1999 Unaudited 5. SUBSEQUENT EVENT Private placement During July and August 1999, the Company completed the placement of 1,100,000 common shares at $5.50 per share for gross proceeds of $6,050,000, less an agent's fee of $605,041. F-36 AUDITORS' REPORT To the Directors of Homebase Work Solutions Ltd. We have audited the balance sheets of Homebase Work Solutions Ltd. [a development stage company] as at March 31, 1999 and December 31, 1998 and the statements of loss and accumulated development stage deficit and cash flows for the three-month period ended March 31, 1999, the 101-day period ended December 31, 1998 and the cumulative period from inception, September 22, 1998, to March 31, 1999. 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 audits. We conducted our audits in accordance with auditing standards generally accepted in Canada. Those standards require that we plan and perform an 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. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at March 31, 1999 and December 31, 1998 and the results of its operations and its cash flows for the three-month period ended March 31, 1999, the 101-day period ended December 31, 1998 and the cumulative period from inception, September 22, 1998, to March 31, 1999 in accordance with accounting principles generally accepted in Canada. Toronto, Canada, /s/ Ernst & Young LLP June 11, 1999. Chartered Accountants F-37 Homebase Work Solutions Ltd. [a development stage company] BALANCE SHEETS [expressed in Canadian dollars]
As at As at March 31, December 31, 1999 1998 $ $ - -------------------------------------------------------------------------------------------------------------------------- ASSETS Current Cash 332,198 66,716 Prepaid expenses 2,140 2,140 Accounts receivable 9,719 41,455 - -------------------------------------------------------------------------------------------------------------------------- Total current assets 344,057 110,311 - -------------------------------------------------------------------------------------------------------------------------- Fixed assets, net [note 3] 9,643 1,900 Software distribution rights, net [note 4] 389,244 -- - -------------------------------------------------------------------------------------------------------------------------- 742,944 112,211 - -------------------------------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) Current Accounts payable and accrued liabilities 134,378 6,920 Promissory note payable to InfoCast Corporation [note 6] 150,000 -- Due to shareholders [note 7] 283 1,117 First preferred series A shares [note 5] 258,639 236,683 Dividends payable on first preferred series A shares [note 5] 28,125 -- - -------------------------------------------------------------------------------------------------------------------------- Total current liabilities 571,425 244,720 - -------------------------------------------------------------------------------------------------------------------------- Shareholders' equity (deficiency) Common shares [note 5] 727,275 8,212 Accumulated development stage deficit (555,756) (140,721) - -------------------------------------------------------------------------------------------------------------------------- Total shareholders' equity (deficiency) 171,519 (132,509) - -------------------------------------------------------------------------------------------------------------------------- 742,944 112,211 - --------------------------------------------------------------------------------------------------------------------------
See accompanying notes F-38 Homebase Work Solutions Ltd. [a development stage company] STATEMENTS OF LOSS AND ACCUMULATED DEVELOPMENT STAGE DEFICIT [expressed in Canadian dollars]
Cumulative period from inception, Three-month 101-day period September 22, period ended ended 1998, March 31, December 31, to March 31, 1999 1998 1999 $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ REVENUE Interest 288 719 1,007 - ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES Professional fees 46,460 78,545 125,005 Wages and benefits 81,733 29,511 111,244 National Environmental Policy Institute funding [note 9] 143,884 -- 143,884 Bank charges and interest 234 193 427 First preferred series A share interest accretion [note 5] 21,956 11,683 33,639 First preferred series A share dividend expense [note 5] 28,125 -- 28,125 Other 62,605 21,508 84,113 Depreciation and amortization 30,326 -- 30,326 - ------------------------------------------------------------------------------------------------------------------------------------ 415,323 141,440 556,763 - ------------------------------------------------------------------------------------------------------------------------------------ Net loss for the period (415,035) (140,721) (555,756) Accumulated development stage deficit, beginning of period (140,721) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Accumulated development stage deficit, end of period (555,756) (140,721) (555,756) - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes F-39 Homebase Work Solutions Ltd. [a development stage company] STATEMENTS OF CASH FLOWS [expressed in Canadian dollars]
Cumulative period from inception, Three-month 101-day period September 22, period ended ended 1998, March 31, December 31, to March 31, 1999 1998 1999 $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ OPERATING ACTIVITIES Net loss for the period (415,035) (140,721) (555,756) Add items not affecting cash Depreciation and amortization 30,326 -- 30,326 First preferred series A share interest accretion [note 5] 21,956 11,683 33,639 First preferred series A share dividend expense [note 5] 28,125 -- 28,125 - ------------------------------------------------------------------------------------------------------------------------------------ (334,628) (129,038) (463,666) Net change in non-cash working capital balances related to operations 158,360 (35,558) 122,802 - ------------------------------------------------------------------------------------------------------------------------------------ Cash used in operating activities (176,268) (164,596) (340,864) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTING ACTIVITIES Purchase of fixed assets (8,250) (1,900) (10,150) - ------------------------------------------------------------------------------------------------------------------------------------ Cash used in investing activities (8,250) (1,900) (10,150) - ------------------------------------------------------------------------------------------------------------------------------------ FINANCING ACTIVITIES Proceeds from issuance of preferred shares -- 225,000 225,000 Proceeds from issuance of common shares 300,000 8,212 308,212 Promissory note payable to InfoCast Corporation 150,000 -- 150,000 - ------------------------------------------------------------------------------------------------------------------------------------ Cash provided by financing activities 450,000 233,212 683,212 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in cash during the period 265,482 66,716 332,198 Cash, beginning of period 66,716 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Cash, end of period 332,198 66,716 332,198 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes F-40 Homebase Work Solutions Ltd. [a development stage company] NOTES TO FINANCIAL STATEMENTS [expressed in Canadian dollars] March 31, 1999 1. NATURE OF OPERATIONS Incorporation Homebase Work Solutions Ltd. [the "Company"] was incorporated on September 22, 1998 under the Alberta Corporations Act. The Company is in the development stage and is engaged in the development of information delivery technologies. Economic dependence In May 1999, the Company was acquired by InfoCast Corporation ["InfoCast"], a company also in the development stage [note 8]. As a result of the Company's limited financial resources, the Company is economically dependent upon InfoCast. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with accounting principles generally accepted in Canada which conform in all material respects with accounting principles generally accepted in the United States ["US GAAP"], except as outlined in note 12. The preparation of financial statements in accordance with such principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could vary from the estimates that were used. The Company's significant accounting policies are summarized as follows: Fiscal periods presented The Company has not yet chosen a year end. The financial periods reported in these financial statements conform with those of the Company's acquirer, InfoCast [note 8]. F-41 Homebase Work Solutions Ltd. [a development stage company] NOTES TO FINANCIAL STATEMENTS [expressed in Canadian dollars] March 31, 1999 Fixed assets Fixed assets are recorded at cost less accumulated depreciation. If it is determined that a fixed asset is not recoverable over its estimated useful life, the fixed asset will be written down to its net recoverable value. Maintenance and repairs are charged to expenses as incurred. Gains and losses on disposition of fixed assets are included in income. Depreciation is provided for at the following annual rate and method: Office furniture and equipment 30% declining balance Software distribution rights Software distribution rights are recorded at cost less accumulated amortization. If it is determined that a software distribution right is not recoverable over its estimated useful life, the software distribution right will be written down to its net recoverable value. Amortization is provided on a straight-line basis over two years. Research and development Software development costs are expensed as incurred unless they meet generally accepted accounting criteria for deferral and amortization. Software development costs incurred prior to the establishment of technological feasibility do not meet these criteria and are expensed as incurred. Research costs are expensed as incurred. Income taxes The Company follows the tax liability method of income tax allocation. F-42 Homebase Work Solutions Ltd. [a development stage company] NOTES TO FINANCIAL STATEMENTS [expressed in Canadian dollars] March 31, 1999 3. FIXED ASSETS Fixed assets consist of the following:
March 31, 1999 ------------------------------------------------ Accumulated Net book Cost depreciation value $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ Office furniture and equipment 10,150 507 9,643 - ------------------------------------------------------------------------------------------------------------------------------------ December 31, 1998 ------------------------------------------------ Accumulated Net book Cost depreciation value $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ Office furniture and equipment 1,900 -- 1,900 - ------------------------------------------------------------------------------------------------------------------------------------
4. SOFTWARE DISTRIBUTION RIGHTS Software distribution rights consist of the following:
March 31, 1999 -------------------------------------------------- Accumulated Net book Cost amortization value $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ Facet Decisions software distribution rights 218,385 28,719 189,666 Facet Petroleum software distribution rights 200,678 1,100 199,578 - ------------------------------------------------------------------------------------------------------------------------------------ 419,063 29,819 389,244 - ------------------------------------------------------------------------------------------------------------------------------------
Pursuant to a licensing and distribution agreement dated March 7, 1999 between the Company and Facet Decisions Inc. ["Facet Decisions"], a private British Columbia company, the Company acquired the exclusive right in the telework market to distribute Facet Decisions' computer software for a period of two years in consideration for 6,910 common shares of the Company valued at $218,385. The software subject to the agreement includes Cause&Effect Complex Decision Support Software and optional modules, HeadsUp Business Intelligence Software and optional modules, FastTracks Methodology and Decision Frameworks Industry Applications F-43 Homebase Work Solutions Ltd. [a development stage company] NOTES TO FINANCIAL STATEMENTS [expressed in Canadian dollars] March 31, 1999 ["Facet Decisions' Software"]. In addition, all sales of Facet Decisions' Software to the Company will be discounted by 30% from Facet Decisions' published prices. Pursuant to a licensing and distribution agreement dated March 30, 1999 between the Company and Facet Petroleum Solutions Inc. ["Facet Petroleum"], a private British Columbia company, the Company acquired the exclusive right in the telework market to distribute Facet Petroleum's Telework Operational Data Store ["TODS"] software for a period of two years in consideration for 6,910 common shares of the Company valued at $200,678. In addition, all sales of the TODS software to the Company will be discounted by 50% from Facet Petroleum's published prices. The ascribed value of the shares issued to Facet Decisions and Facet Petroleum is based on the 50,000 total InfoCast shares received by Facet Decisions and Facet Petroleum upon the acquisition of the Company by InfoCast [note 8] and the market price of the InfoCast shares on the effective dates of the respective licensing and distribution agreements with Facet Decisions and Facet Petroleum. A principal shareholder, director and officer of the Company is a director of Facet Decisions and Facet Petroleum. 5. CAPITAL STOCK Authorized The Company is authorized to issue an unlimited number of common shares and an unlimited number of first and second preferred shares. First and second preferred shares may be issued in series and the directors of the Company may fix, before issuance, the rights, privileges, restrictions and conditions attached thereto. F-44 Homebase Work Solutions Ltd. [a development stage company] NOTES TO FINANCIAL STATEMENTS [expressed in Canadian dollars] March 31, 1999 Issued and outstanding
Shares Amount # $ - ------------------------------------------------------------------------------------------------------------------------------------ Common shares On incorporation, issued for cash 1,000 1 Issued for cash, pursuant to a private placement 820,180 8,211 - ------------------------------------------------------------------------------------------------------------------------------------ Outstanding as at December 31, 1998 821,180 8,212 Issued pursuant to a private placement 120,000 300,000 Issued for acquisition of software distribution rights [note 4] 13,820 419,063 - ------------------------------------------------------------------------------------------------------------------------------------ Outstanding as at March 31, 1999 955,000 727,275 - ------------------------------------------------------------------------------------------------------------------------------------
Shares Amount # $ - ------------------------------------------------------------------------------------------------------------------------------------ First preferred series A shares Issued for cash, pursuant to a private placement dated November 10, 1998 45,000 225,000 Interest accretion to redemption price -- 11,683 - ------------------------------------------------------------------------------------------------------------------------------------ Outstanding as at December 31, 1998 45,000 236,683 Interest accretion to redemption price -- 21,956 - ------------------------------------------------------------------------------------------------------------------------------------ Outstanding as at March 31, 1999 45,000 258,639 - ------------------------------------------------------------------------------------------------------------------------------------
First preferred series A units Series A of the first preferred shares were issued in units. Each unit consisted of 2,000 redeemable first preferred series A shares, 3,000 common share purchase warrants, and 1,500 penalty common share purchase warrants. Each first preferred series A share was required to be redeemed by the Company by December 31, 1999 at $7.50 per share and commanded 50% cumulative dividends commencing January 1, 1999. The Company has recorded first preferred series A share interest expenses of $21,956 for the three-month period ended March 31, 1999 and $11,683 for the 101-day period ended December 31, 1998 based on the accretion of the first preferred series A shares from the $5.00 issuance price to the December 31, 1999 $7.50 redemption price using the effective yield method. In addition, the Company has recorded first preferred Series A share dividend expenses of $28,125 in respect of the three-month period ended March 31, 1999. The first preferred series A shares were acquired by InfoCast [note 8]. F-45 Homebase Work Solutions Ltd. [a development stage company] NOTES TO FINANCIAL STATEMENTS [expressed in Canadian dollars] March 31, 1999 Each common share purchase warrant entitled the holder thereof to purchase one common share of the Company at $5.00 per share. The common share purchase warrants would have expired 30 days subsequent to the redemption of the first preferred series A shares in proportion to such redemption. Each penalty common share purchase warrant entitled the holder to purchase one common share of the Company at $5.00 per share. The penalty common share purchase warrants would have vested three years after the issuance of the first preferred series A units in proportion to the number of first preferred series A shares that had not been redeemed at that time, and would have expired 30 days subsequent to the redemption of the first preferred series A shares in proportion to such redemption. The outstanding 67,500 common share purchase warrants and 33,750 penalty common share purchase warrants of the Company were acquired by InfoCast [note 8]. 6. PROMISSORY NOTE PAYABLE TO INFOCAST CORPORATION The promissory note payable to InfoCast [note 8] bears interest at prime plus 1%, is secured by a general security agreement covering all assets of the Company and is due on demand. No interest was paid by the Company on the note during the three-month period ended March 31, 1999. The note was repaid during May 1999. 7. DUE TO SHAREHOLDERS Amounts due to shareholders are payable on demand and are non-interest bearing. 8. ACQUISITION BY INFOCAST CORPORATION Pursuant to a share purchase agreement dated May 13, 1999, all of the Company's outstanding common shares, first preferred series A shares, common share purchase warrants and penalty common share purchase warrants were acquired by InfoCast in consideration for 3.4 million exchangeable shares of InfoCast Canada Corporation ["InfoCast Canada"], a 100% owned subsidiary of InfoCast. The InfoCast Canada exchangeable shares are convertible into InfoCast common shares on a one-for-one basis at no additional consideration. InfoCast is a development F-46 Homebase Work Solutions Ltd. [a development stage company] NOTES TO FINANCIAL STATEMENTS [expressed in Canadian dollars] March 31, 1999 stage technology company traded on the NASDAQ OTC Bulletin Board and is engaged in the research and development of information delivery technologies. As a condition of the closing of the share purchase agreement, InfoCast will pay $210,000 to officers of the Company and must pay an additional $210,000 to the officers of the Company if InfoCast completes a private placement financing for gross proceeds of at least US$1,000,000 or completes a letter of credit financing of at least US$500,000. 9. NATIONAL ENVIRONMENTAL POLICY INSTITUTE FUNDING During the three-month period ended March 31, 1999, the Company paid US$25,000 to the National Environmental Policy Institute ["NEPI"], a United States based non-profit environmental lobbyist group, to assist NEPI's efforts in promoting telework policies in the United States. In addition, as at March 31, 1999, the Company has committed an additional US$70,000 in funding to NEPI which has been provided for in the accounts. 10. INCOME TAX LOSS CARRYFORWARDS As at March 31, 1999, the Company has accumulated non-capital losses for Canadian income tax purposes of approximately $319,000 which are available to reduce future years' taxable income. The future income tax benefits associated with these non-capital losses have not yet been recognized in the accounts. The loss carryforwards will expire as follows: $ - ---------------------------------------------------------- 2005 126,000 2006 193,000 - ---------------------------------------------------------- 319,000 - ---------------------------------------------------------- F-47 Homebase Work Solutions Ltd. [a development stage company] NOTES TO FINANCIAL STATEMENTS [expressed in Canadian dollars] March 31, 1999 11. 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 Year 2000 Issue affecting the Company, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved. 12. RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES These financial statements have been prepared in accordance with accounting principles generally accepted in Canada which conform in all material respects with US GAAP except as follows: Interest accretion and dividends on first preferred shares Under US GAAP, first preferred share interest accretion and dividends payable are charged directly to shareholders' equity. Accordingly, the net loss would have decreased by $50,081 in respect of the three-month period ended March 31, 1999 [101-day period ended December 31, 1998 - $11,683]. F-48 AUDITORS' REPORT To the Shareholders of APPLIED COURSEWARE TECHNOLOGY INC. We have audited the balance sheet of Applied Courseware Technology Inc., as at August 31, 1998 and the statements of income and retained earnings together with the statement of changes in financial position 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. Those standards require that we plan and perform an 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. The accompanying financial statements, in our opinion, do not draw attention explicitly to doubts concerning the company's ability to realize its assets and discharge its liabilities in the normal course of business. These doubts arise because it is uncertain whether the company will be able to generate sufficient revenues to meet it's long term debt of $670,604. and also because of the recurring losses in the past three years. It is not known whether the company's research and development product can realized the projected revenues. In our opinion, except for the omission of the disclosure described in the preceding paragraph, these financial statements present fairly in all material respects, the financial position of the company as at August 31, 1998 and the results of its operations and the changes in its financial position for the year then ended in accordance with generally accepted accounting principles. /s/ Boudreau Porter Hetu ....................................... CERTIFIED GENERAL ACCOUNTANTS Moncton, New Brunswick March 5, 1999 F-49 APPLIED COURSEWARE TECHNOLOGY INC. STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED AUGUST 31, 1998 1998 1997 ---- ---- REVENUES $155,406 $ 279,471 ---------- --------- EXPENSES Advertising and promotion 44,814 21,559 Bad debt 53,888 -- Amortization 15,152 22,393 Commissions 19,890 4,465 Dues and fees 820 6,785 Equipment rental 3,946 1,682 Insurance 3,675 136 Interest and bank charges 11,452 6,627 Interest on long term debt 14,131 3,106 Meals and entertainment 6,248 9,635 Office expenses and postage 11,106 8,678 Printing materials 10,225 30,507 Production Distribution 647 14,072 Professional fees 23,776 26,571 Rent and electricity 6,477 9,857 Repairs and maintenance 137 313 Salaries and benefits 132,801 153,896 Sub contracting -- 44,566 Telephone 11,037 9,802 Trade shows, seminars and direct mail 16,818 16,019 Travel and accommodations 47,146 82,767 Vehicle lease 3,942 -- ---------- --------- 438,128 473,436 ---------- --------- Loss before income taxes (282,722) (193,965) Income taxes - recovered (1,287) -- Income taxes - deferred (90,893) (58,663) ---------- --------- Net (Loss) (190,542) (135,302) Retained Earnings, beginning of year 251,230 386,532 ---------- --------- Retained Earnings, end of year $ 60,688 $ 251,230 ---------- ---------
See accompanying notes to the financial statements. F-50 APPLIED COURSEWARE TECHNOLOGY INC. BALANCE SHEET AUGUST 31, 1998 1998 1997 - --------------- ---- ---- ASSETS CURRENT Accounts receivable $ 108,549 $ 138,856 Prepaid expenses -- 5,010 Investment tax credit receivable 301,361 444,879 ---------- ---------- 409,910 588,745 Capital (Note 3) 32,567 46,805 Deferred development costs (Notes 2(b) & 4) 578,720 329,205 Deferred income taxes (Notes 2(c)& 5) 197,770 106,877 Deferred investment tax credit 149,942 149,108 ---------- ---------- $1,368,909 $1,220,740 ---------- ---------- LIABILITIES CURRENT Bank indebtedness (Note 6) $ 179,226 $ 835 Note payable 60,000 60,000 Deferred revenue 100,000 -- Accounts payable & accrued liabilities 101,072 149,613 Due to shareholders 38,404 -- Current portion of long term debt 196,429 300,000 ---------- ---------- 675,131 510,448 Long term debt (Note 7) 474,175 250,000 Due to shareholders (Note 8) 158,914 209,061 1,308,220 969,509 Contingencies (Note 9) -- -- ---------- ---------- 1,308,220 969,509 SHAREHOLDERS' EQUITY Capital stock (Note 10) 1 1 Retained earnings 60,688 251,230 ---------- ---------- 60,689 251,231 ---------- ---------- $1,368,909 $1,220,740 ---------- ---------- APPROVED ON BEHALF OF THE BOARD: ................................DIRECTOR. See accompanying notes to the financial statements. F-51 APPLIED COURSEWARE TECHNOLOGY INC. STATEMENT OF CHANGES IN FINANCIAL POSITION FOR THE YEAR ENDED AUGUST 31, 1998 1998 1997 ---- ---- FUNDS PROVIDED FROM (USED FOR) OPERATING ACTIVITIES Net (Loss) $(190,542) $(135,302) Amortization 15,152 22,393 Deferred income taxes (90,893) (58,663) --------- --------- (266,283) (171,572) CHANGES IN NON CASH WORKING CAPITAL ACCOUNTS Accounts receivable 30,307 35,626 Prepaid expenses 5,010 (5,010) Investment tax credit 143,518 (86,473) Note payable -- 15,000 Deferred revenue 100,000 -- Accounts payable (48,541) 53,209 Due to Shareholders 38,404 -- --------- --------- 2,415 (159,220) --------- --------- FINANCING ACTIVITIES Proceeds from long term debt 125,000 550,000 Interest charges capitalized 5,604 -- Repayment of long term debt (10,000) -- Advances from shareholders -- 81,422 Repayment to shareholders (50,147) -- --------- --------- 70,457 631,422 --------- --------- INVESTING ACTIVITIES Additions to capital assets (914) (3,660) Additions to deferred development costs (249,515) (192,967) Increase in deferred investment tax credit (834) (47,267) --------- --------- (251,263) (243,894) --------- --------- Increase (Decrease) In Cash (178,391) 228,308 Cash and Equivalents (Deficiency),Beginning (835) (229,143) --------- --------- Cash and Equivalents (Deficiency),Ending $(179,226) $ (835) --------- --------- Represented by: Bank Indebtedness $(179,226) $ (835) --------- --------- See accompanying notes to the financial statements. F-52 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AUGUST 31, 1998 NOTE 1 LEGAL STATUS The company was incorporated under the Corporation Act of the Province of Newfoundland on August 22, 1988 under the name of Norcos Operations Inc. The company applied for and was granted a name change to Applied Courseware Technology (A.C.T.) Inc., on April 11, 1990. The Company was registered as an extra- provincial corporation under the Business Corporations Act of the Province of New Brunswick on January 6, 1997. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICY (A) Capital assets are recorded at cost, net of investment tax credit and amortized over the estimated useful lives of the assets as follows: Building 5% Declining Balance Furniture and Equipment 20% Declining Balance Computer Equipment 30% Declining Balance Computer Software 50% Straight line NOTE: Assets acquired during the current year are amortized at 50% of the stated rates. (B) Research and Software Development Costs Research costs are expensed as incurred. Software Development costs undertaken with a reasonable expectation of commercial success and of future benefits arising from the work are recorded at cost and deferred to future period for subsequent amortization on a straight line basis over a period not exceeding 3 years. Amortization will commence with commercial production of the software. Software development costs are recorded net of government grants and investment tax credits. (C) Income Taxes The Company has always accounted for income taxes on the tax payable basis which only recognizes the current income tax expense. Effective September 1, 1995, management adopted the tax allocation basis which provides a more realistic approach of matching the tax effect of a temporary difference in the period such a difference occurs. F-53 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AUGUST 31, 1998 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICY (C) Income Taxes (continued) As indicated above, the company accounts for income taxes using the tax allocation basis effective September 1, 1995 by charging against its net income for accounting purposes income taxes currently payable and also income taxes deferred by claiming certain costs for income tax purposes in amounts differing from the related costs charged to income, and by recognizing the tax benefits of losses available for carry forward. The accumulated total of such tax deferrals is reflected in the balance sheet as deferred income taxes.
NOTE 3 CAPITAL ASSETS Accumulated 1998 1997 Amorti- Net Book Net Book Cost zation Value Value ---- ------ ----- ----- Furniture & Equipment $ 38,625 $ 20,581 $ 18,044 $ 22,155 Computer Equipment 86,331 72,162 14,169 19,958 Computer Software 35,016 34,662 354 4,692 --------------------------------------------- $159,972 $127,405 $ 32,567 $ 46,805 ---------------------------------------------
NOTE 4 DEFERRED DEVELOPMENT COSTS 1998 1997 AT COST Software Development $1,265,451 $ 1,013,026 Less: Government Grants (185,733) (185,733) Investment Tax Credits (500,998) (498,088) ------------------------ $ 578,720 $ 329,205 ------------------------
As explained in Note 2 (b), amortization will commence with commercial production of the software product and will be recorded on a straight line basis over a period of three years. F-54 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AUGUST 31, 1998 NOTE 5 INCOME TAXES The Company is a Canadian Controlled Private Corporation (CCPC) as defined under the Canadian Income Tax Act. The combined Federal and Provincial tax rate on the first $200,000 of Canadian taxable income is 20.12%. A tax liability may be reduced by the presence of investment tax credit and unused losses from prior years. These losses are created by the temporary differences between the financial reporting basis and the income tax basis of a company's assets and liabilities. The major temporary differences that give rise to these losses are depreciation, amortization, gains or losses on dispositions of capital assets and development costs. 1998 1997 Net loss before taxes $(282,722) $(193,965) Timing differences - Excess of depreciation over capital cost allowance 1,527 4,355 - Excess of Research and Development expenditures for income tax purposes over accounting purposes (77,294) (113,937) Permanent differences - Non deductible expense 3,124 11,979 --------- --------- Net Loss for tax purposes $(355,365) $(291,568) --------- --------- F-55 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AUGUST 31, 1998 NOTE 5 INCOME TAXES (continued) The deferred income taxes asset of $197,770 as at August 31, 1998 represents the tax benefit of the net loss for tax purposes at the rate of 20.12%. The total amount of losses incurred by the company and available to reduce taxable income of future years amounts to $982,951 and expires in the years 2003 $(336,018) and 2004 $(291,568) and 2005 $(355,365). NOTE 6 BANK INDEBTEDNESS 1998 1997 Bank overdraft $179,226 $ 835 The Canadian Imperial Bank of Commerce bank indebtedness is secured by a general assignment of accounts receivable, all personal property of the business and by the personal guarantee of the shareholders. The bank charges bank prime plus 2% interest on the company's bank overdraft. NOTE 7 LONG TERM DEBT 1998 1997 Canadian Imperial Bank of Commerce Demand Instalment loan, repayable at $5,000 per month plus interest at prime plus 2% (see Note 6 for security). $240,000 $250,000 Province of New Brunswick, Department of Economic Development and Tourism, Debenture loan, repayable at $10,714 per month without interest beginning in December 1998. Maturity date March 31, 2001. The loan does not bear any interest until or unless the security shall become enforceable. The loan is secured by a fixed and specific mortgage on all equipment and personal property and by a floating charge on all undertaking. 300,000 300,000 F-56 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AUGUST 31, 1998 NOTE 7 LONG TERM DEBT (continued) 1998 1997 Business Development Bank of Canada authorized term loan of $250,000, non disbursed amount of $125,000, repayable at $4,200. per month plus interest at 7.1% plus a variance. Maturity date October 23, 2003. The loan is secured by a general security agreement providing a security interest in all present and after acquired personal property and specifically including a charge on equipment, furniture and fixture and a floating charge over residential assets subject to prior charge by the Canadian Imperial Bank of Commerce and the Province of New Brunswick. 130,604 -- ------------------- 670,604 550,000 ------------------- Principal due within one year 196,429 300,000 ------------------- $474,175 $250,000 ------------------- Principal repayment over the next four years will be as follows: 1999 $196,429 2000 238,971 2001 175,204 2002 60,000 NOTE 8 DUE TO SHAREHOLDERS 1998 1997 Balance, beginning of year $209,061 $127,639 Advances during the year 38,336 117,152 -------------------- 247,397 244,791 Repayments during the year 88,483 35,730 --------------------- Balance, end of year $158,914 $209,061 --------------------- The loan has no set term of repayment or interest and has been assigned as security to the debenture loan with the Department of Economic Development and Tourism. F-57 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AUGUST 31, 1998 NOTE 9 CONTINGENCIES A) Legal proceedings The Company has received claims in respect of the following: 1. A claim by Janice Yates for compensation with respect to her termination as an employee of the company on or about July 17, 1996. 2. Claims by Janice Yates, Lee McAboy and the consulting firm of McAboy, Yates Corporation for their alleged loss of interest in the company as a result of them no longer participating in the business. Because the amounts in issue are not clear, the extent of financial liability cannot be determined. Management takes the position that both Yates and McAboy are in breach of the contract. No provision has been made in these financial statements since it is not possible to determine the outcome of this threatened litigation. If a settlement should occur concerning this contingency, it will be recorded as a charge to the statement of income in the period in which it takes place. B) Revenue Canada Audit 1. During the year, Revenue Canada completed their examination of the Scientific Research and Experimental Development ( R & D) claim for the fiscal year ended August 31, 1996. Certain expenses were disallowed for R & D purposes and as a result the company's claim for investment tax credit was reduced by $108,287. However, the net loss for income tax purposes was increased by $96,386. The financial statements were adjusted by increasing the deferred income taxes by $19,393. 2. As noted in the notes to the financial statements for the year ended August 31, 1997 the company has filed notice of objection to appeal Revenue Canada Notice of Assessments for the years ending August 31, 1994 and 1995. The appeal have not been resolved by Revenue Canada as of the date of these financial statements. F-58 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AUGUST 31, 1998 NOTE 10 CAPITAL STOCK 1998 1997 AUTHORIZED 5,000 common shares, without par value. ISSUED AND FULLY PAID 100 common shares. $ 1 $ 1 NOTE 11 DIVIDENDS AND SHARES RESTRICTIONS Covenants respecting the company`s long term debt restrict the company`s ability to declare or pay dividends on its capital stock, redeem any of its capital stock or allow the ownership in respect of the majority of the shares of any class in its capital stock to change, without the prior written consent of the lender. NOTE 12 SUBSEQUENT EVENT On November 5, 1998, Revenue Canada completed their examination of the R & D claim for the fiscal year ended August 31, 1997. The claim was accepted as filed and the company received a refund of $152,607. NOTE 13 GOVERNMENT ASSISTANCE A) ATLANTIC CANADA OPPORTUNITY AGENCY Under the ACOA Action Program, the company has received financial assistance as contribution towards the implementation of the company`s marketing plan. The duration of the project was from August 1, 1994 to August 1, 1997. During the year, $8,832 (1997 - $18,212) was credited to revenues. The assistance is not conditionally repayable. B) CANADIAN INTERNATIONAL DEVELOPMENT AGENCY During the year 1997, the Company received financial assistance of $114,500 representing contribution of 38% of expenses resulting from the participation in an industrial cooperation project (Training and Technology Facility) in Trinidad and Tobago. The assistance is repayable if the company obtains contracts or realizes export sales of at least $5.0 million as a direct result of the contributions. F-59 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AUGUST 31, 1998 NOTE 13 GOVERNMENT ASSISTANCE (continued) C) INDUSTRY CANADA Pursuant to a Program for Export Market Development (PEMD), the Company has received financial assistance as contribution toward eligible costs incurred in establishing a market development strategy for a software product. The assistance is repayable if the Company derived sales in excess of a predefined level during each of the next fiscal years. During the year, $19,956 (1997 - $50,000) was credited to revenues. NOTE 14 COMPARATIVE FIGURES Certain comparative figures have been revised to conform with current statement format. F-60 NOTICE TO READER To the Directors of APPLIED COURSEWARE TECHNOLOGY INC. We have compiled the Interim Balance Sheet of Applied Courseware Technology Inc., as at June 30, 1999 and June 30, 1998 and the Interim Statement of Income and Retained Earnings together with the Interim Statement of Cash Flows for the ten month period then ended from information provided from Management. We have not audited, reviewed or otherwise attempted to verify the accuracy or completeness of such information. Accordingly, readers are cautioned that these Interim Financial Statements may not be appropriate for their purposes. /s/ Boudreau Porter Hetu ......................................... CERTIFIED GENERAL ACCOUNTANTS Moncton, New Brunswick August 30, 1999 F-61 APPLIED COURSEWARE TECHNOLOGY INC. INTERIM STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE TEN MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED) - SEE NOTICE TO READER 1999 1998 ---- ---- REVENUES Sales and Consulting - InfoCast Corporation $ 498,000 $ -- Sales and Consulting - Others 93,373 136,223 Interest 4,270 -- ------------------------- 595,643 136,223 ------------------------- EXPENSES Advertising and promotion -- 42,071 Amortization 11,349 12,615 Commissions -- 17,850 Due and Fees 4,765 500 Equipment rental 6,894 6,291 Insurance 2,223 2,760 Interest and bank charges 17,197 13,949 Interest on long term debt 36,582 17,023 Meals and entertainment 3,107 4,177 Office expenses and postage 5,832 17,716 Printing materials -- 25,562 Production distribution 3,557 647 Professional fees 40,315 35,257 Rent and electricity 10,785 10,200 Repairs and maintenance 92 138 Salaries and benefits 197,314 253,338 Sub contracting 76,092 26,237 Telephone 12,219 17,438 Trade shows, seminars and direct mail 1,785 16,818 Travel and accommodations 43,111 28,574 Vehicle lease 4,248 3,092 ------------------------- 477,467 552,253 ------------------------- Income (Loss) Before Income Taxes 118,176 (416,030) Income Taxes Recovered -- 1,287 ------------------------- Net Income (Loss) 118,176 (414,743) Retained Earnings, (Deficit) Beginning of the period (197,082) 144,352 ------------------------- (Deficit), End of the period $ (78,906) $ (270,391) ------------------------- See accompanying notes to the interim financial statements. F-62 APPLIED COURSEWARE TECHNOLOGY INC. INTERIM BALANCE SHEET - "SEE NOTE 2 - BASIS OF PRESENTATION" AS AT JUNE 30, 1999 (UNAUDITED) - SEE NOTICE TO READER 1999 1998 ASSETS CURRENT Bank $ 27,804 $ -- Accounts receivable 7,998 188,877 Prepaid expenses -- 5,010 Investment tax credit receivable 153,024 292,574 --------------------- 188,826 486,461 Capital 53,928 35,104 Deferred development costs 728,662 478,313 --------------------- $971,416 $999,878 --------------------- LIABILITIES CURRENT Bank indebtedness (Note 3) $ -- $161,207 Notes payable (Note 4) 200,000 60,000 Accounts payable & accrued liabilities 164,588 201,289 Current portion of long term debt 490,000 675,000 --------------------- 854,588 1,097,496 Long term debt (Note 5) -- -- Due to shareholders 195,733 172,772 --------------------- 1,050,321 1,270,268 --------------------- CONTINGENCIES (Note 6) SHAREHOLDERS' EQUITY Capital Stock (Note 7) 1 1 Deficit (78,906) (270,391) --------------------- (78,905) (270,390) --------------------- $ 971,416 $ 999,878 --------------------- APPROVED ON BEHALF OF THE BOARD ...........................................................DIRECTOR. See accompanying notes to the interim financial statements. F-63 APPLIED COURSEWARE TECHNOLOGY INC. INTERIM STATEMENT OF CASH FLOWS FOR THE TEN MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED) - SEE NOTICE TO READER 1999 1998 ---- ---- FUNDS PROVIDED FROM (USED FOR) OPERATING ACTIVITIES Net Loss $118,176 $(414,743) Amortization 11,349 12,615 ----------------------- 129,525 (402,128) CHANGES IN NON CASH WORKING CAPITAL ACCOUNTS Accounts receivable 551 (50,021) Investment tax credit 148,337 152,305 Notes payable 140,000 -- Accounts payable 3,516 51,676 ----------------------- 421,929 (248,168) ----------------------- FINANCING ACTIVITIES Proceeds from long term debt -- 125,000 Repayment of long term debt (180,604) -- Repayment to shareholders (1,585) (36,289) ----------------------- (182,189) 88,711 ----------------------- INVESTING ACTIVITIES Additions to capital assets (32,710) (915) ----------------------- Increase (Decrease) In Cash 207,030 (160,372) Cash and Equivalents (Deficiency),Beginning (179,226) (835) ----------------------- Cash and Equivalents (Deficiency),Ending $ 27,804 $(161,207) ----------------------- Represented by: Bank $ 27,804 $ -- Bank Indebtedness 18,751 (161,207) ----------------------- $ 27,804 $(161,207) ----------------------- SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid during the period $ 52,564 $ 30,518 ----------------------- See accompanying notes to the interim financial statements. F-64 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE TEN MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED) - SEE NOTICE TO READER NOTE 1 LEGAL STATUS The company was incorporated under the Corporation Act of the Province of Newfoundland on August 22, 1988 under the name of Norcos Operations Inc. The company applied for and was granted a name change to Applied Courseware Technology (A.C.T.) Inc., ("A.C.T."or the "Company")on April 11, 1990. The Company was registered as an extra-provincial corporation under the Business Corporations Act of the Province of New Brunswick on January 6, 1997. The Company was continued under the Canada Business Corporations Act on July 9, 1998 and received permission to change it's name to Applied Courseware Technology Inc. NOTE 2 BASIS OF PRESENTATION The Company's financial statements have been presented on the basis that it is a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses in the last three years, has a working capital deficiency of $865,762 and is in default of its bank covenants (Notes 3 & 5). The ability of the Company to continue as a going concern is uncertain and is dependent on the continued financial support of its shareholders and creditors, the successful development and implementation of the Company's software and the Company's ability to arrange financing. The outcome of these matters cannot be predicted at this time. These financial statements do not include any adjustments to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The financial statements have been prepared in accordance with accounting principles generally accepted in Canada which conform in all material respects with accounting principles generally accepted in the United States (US "GAAP") except as outlined in Note 11. F-65 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE TEN MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED) - SEE NOTICE TO READER NOTE 3 BANK INDEBTEDNESS 1999 1998 Bank overdraft $ -- $161,207 The Canadian Imperial Bank of Commerce bank indebtedness is secured by a general assignment of accounts receivable, all personal property of the business and by the personal guarantee of the shareholders. The bank charges bank prime plus 2% interest on the company's bank overdraft. According to the Company's banking agreement, the bank overdraft is limited to the lessor of i) $150,000 and ii) the sum of 75% of the accounts receivable from the Canadian Government and 50% of the accounts receivable less priority claims and non-government accounts receivable over 90 days past due. The Company is in default of the agreement under the limit imposed under ii) above. NOTE 4 NOTES PAYABLE 1999 1998 InfoCast Corporation $140,000 $ -- Mary Costello 60,000 60,000 ----------------------- $200,000 $ 60,000 ----------------------- As indicated in Note 9, InfoCast Corporation, pursuant to a letter of intent dated February 10, 1999 intends to purchase a 100% interest in Applied Courseware Technology Inc. F-66 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE TEN MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED) - SEE NOTICE TO READER NOTE 5 LONG TERM DEBT 1999 1998 Canadian Imperial Bank of Commerce ("CIBC") Demand Instalment loan, repayable at $5,000 per month plus interest at prime plus 2% (see Note 3 for security). $190,000 $250,000 Province of New Brunswick, Department of Economic Development and Tourism, Debenture loan, repayable at $10,714 per month without interest beginning in December 1998. Maturity date March 31, 2001. The loan does not bear any interest until or unless the security shall become enforceable. The loan is secured by a fixed and specific mortgage on all equipment and personal property and by a floating charge on all undertaking. 300,000 300,000 Business Development Bank of Canada authorized term loan of $250,000, non disbursed amount of $125,000 repayable at $4,200. per month plus interest at 7.1% plus an interest adjustment factor. Maturity date October 23, 2003. The loan is secured by a general security agreement providing a security interest in all present and after acquired personal property and specifically including a charge on equipment, furniture and fixture and a floating charge over residential assets subject to prior charge by the Canadian Imperial Bank of Commerce and the Province of New Brunswick. -- 125,000 ------------------- 490,000 675,000 Principal due within one year 490,000 675,000 ------------------- $ -- $ -- ------------------- F-67 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE TEN MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED) - SEE NOTICE TO READER NOTE 5 LONG TERM DEBT (continued) According to the Company's banking agreement with the CIBC, the Company is required to maintain a 2:1 debt to equity ratio. The Company was in default of this covenant during 1999 and 1998. NOTE 6 CONTINGENCIES As noted in the notes to the financial statements for the year ended August 31, 1997, the Company has filed notice of objection to appeal Revenue Canada Notice of Assessments for the year ending August 31, 1994 and 1995. The appeal has not been resolved by Revenue Canada as of the date of these financial statements. The investment tax credit receivable on the balance sheet includes $68,621 related to amounts being appealed or in dispute with Revenue Canada. NOTE 7 CAPITAL STOCK 1999 1998 AUTHORIZED Unlimited number of common shares without par value. Unlimited number of preference shares without par value. ISSUED AND FULLY PAID 100 common shares. $ 1 $ 1 NOTE 8 DIVIDENDS AND SHARES RESTRICTIONS Covenants respecting the Company's long term debt restrict the Company's ability to declare or pay dividends on its capital stock, redeem any of its capital stock or allow the ownership in respect of the majority of the shares of any class in its capital stock to change without the prior written consent of the lender. F-68 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE TEN MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED) - SEE NOTICE TO READER NOTE 9 SUBSEQUENT EVENT Pursuant to a Letter of Intent dated February 10, 1999 between the Company and InfoCast Corporation ("InfoCast"), InfoCast intended to purchase a 100% interest in A.C.T. in consideration for (i) $280,000 cash, (ii) 750,000 common shares of InfoCast and (iii) the settlement of the Company's debts. Pursuant to subsequent negotiations, the cash component of the consideration was changed from $280,000 to nil. The transaction is subject to satisfactory due diligence. During the period, InfoCast settled the Company's debt to the Business Development Bank of Canada in consideration for note secured by general security agreement and made cash advances to A.C.T. totaling $450,000 to fund certain development expenditures incurred on behalf of InfoCast. NOTE 10 RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES These financial statements have been prepared in accordance with accounting principles generally accepted in Canada ("Canadian GAAP") which conforms in all material respects with accounting principles generally accepted in the United States ("US GAAP") except as follows: Deferred Development Costs Under Canadian GAAP, research and development costs of companies in the development stage may be capitalized if management expects the amounts to be recovered through future revenues. Under US GAAP, research and development incurred prior to the establishment of technological feasibility are expensed as incurred. Under Canadian GAAP deferred development costs were $728,662 as at June 30, 1999 (1998 - $478,313). As a result, the significant income recognition and presentation differences between Canadian and US GAAP would be as follows: F-69 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE TEN MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED) - SEE NOTICE TO READER NOTE 10 RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES For the ten month period ended June 30 1999 1998 Net loss determined in accordance with Canadian GAAP $ (81,824) $(414,743) Research and Development costs (net of government grants and investment tax credits) -- -- Net Loss determined in accordance with US GAAP. $ (81,824) $(414,743) Deferred development costs (net of government grants and investment tax credits) determined in accordance with Canadian GAAP 728,662 478,313 Adjustment to opening retained earnings (728,662) (478,313) Expense costs incurred during year -- -- Deferred development costs (net of government grants and investment tax credits) determined in accordance with US GAAP Nil Nil F-70 APPLIED COURSEWARE TECHNOLOGY INC. NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE TEN MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED) - SEE NOTICE TO READER NOTE 10 RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES For the ten month period ended June 30 1999 1998 Cash and Cash Equivalents Under Canadian GAAP, for the purposes of the statement of changes in financial position, cash and cash equivalents may include bank overdrafts. Under US GAAP, only cash and short-term investments with original maturities of less than three months would be included in cash and cash equivalents. Bank overdrafts amounted to $161,207 as at June 30, 1998. As a result the significant presentation differences between Canadian and US GAAP would be as follow:
Canadian US Canadian US GAAP GAAP GAAP GAAP Cash provided by financing activities (182,189) (182,189) 88,711 88,711
As at June 30 1999 1998 Canadian US Canadian US GAAP GAAP GAAP GAAP Cash and cash equivalents, end of period (27,804) 27,804 (161,207) Nil
F-71 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS [Expressed in United States dollars unless otherwise stated] Prepared without audit or review June 30, 1999 BASIS OF PRESENTATION The unaudited pro-forma consolidated financial information of InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] [the "Company"] set forth below gives effect to the acquisitions of Homebase Work Solutions Ltd. ["Homebase"] and Applied Courseware Technology (A.C.T.) Inc. ["ACT"] as if the Company had acquired ACT on June 30, 1999 for the purpose of the pro-forma consolidated balance sheet and as if the Company had acquired Homebase and ACT as of January 1, 1998 for purposes of the pro-forma consolidated statements of operations for the three-month periods ended June 30, 1999 and March 31, 1999 [the transition period] and for the year ended December 31, 1998. Homebase was acquired by the Company on May 13, 1999, and the acquisition of ACT is expected to close before December 31, 1999. The pro-forma consolidated financial statements are not necessarily indicative of the results that actually would have occurred had the Company acquired Homebase and ACT on the dates indicated or which would be obtained in the future. The unaudited pro-forma consolidated information should be read in conjunction with the audited and unaudited consolidated financial statements of the Company, the audited financial statements of Homebase and the audited and unaudited financial statements of ACT appearing elsewhere in this registration statement. The unaudited pro-forma consolidated balance sheet as of June 30, 1999 has been prepared from the unaudited consolidated balance sheet of the Company as of June 30, 1999 and the unaudited balance sheet of ACT as of June 30, 1999 after translation of the ACT balance sheet from Canadian dollars to United States dollars. The unaudited balance sheet of ACT as of June 30, 1999 has been prepared in accordance with accounting principles generally accepted in Canada ["Canadian GAAP"]. The unaudited pro-forma statement of operations for the year ended December 31, 1998 and the three-month periods ended March 31, 1999 and June 30, 1999 have been prepared from the audited and unaudited consolidated statements of operations of the Company and the audited and unaudited pre-acquisition statements of operations of Homebase and ACT after translation of their statements of operations from Canadian dollars to United States dollars. ACT's unaudited statements of operations for the year ended November 30, 1998, the three-month period ended February 28, 1999 and the three-month period ended June 30, 1999 were used in respect of the preparation of the pro-forma statements of operations for the year ended December 31, 1998, the three-month period ended March 31, 1999 and the three-month period ended June 30, 1999, respectively. The audited and unaudited statements of operations of Homebase and ACT have been prepared in accordance with Canadian GAAP. F-72 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS [Expressed in United States dollars unless otherwise stated] Prepared without audit or review June 30, 1999 The pro-forma adjustments do not reflect any operating efficiencies or potential synergies that may be achievable with respect to the combined companies. The pro-forma adjustments reflecting the acquisitions of Homebase and ACT under the purchase method of accounting are based on available financial information and certain estimates and assumptions. The actual adjustments to the Company's consolidated financial statements upon consummation of the acquisition of ACT and the completion of the allocation of the purchase price of Homebase will depend on a number of factors, including additional financial information at such time, changes in values and changes in ACT's operating results between the date of preparation of the unaudited pro-forma consolidated information. Therefore, it is likely that the actual adjustments will differ from the pro-forma adjustments. Management of the Company believes that such assumptions provide a reasonable basis for presenting all of the significant effects of the transactions contemplated and that the pro-forma adjustments give appropriate effect to those assumptions and are properly applied in the pro-forma combined financial statements. Management of the Company also believes that actual financial position and results of operations will not differ materially from the pro-forma amounts reflected herein. F-73 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS [Expressed in United States dollars unless otherwise stated] Prepared without audit or review June 30, 1999 PRO-FORMA CONSOLIDATED BALANCE SHEET - ASSETS As of June 30, 1999
Applied Courseware InfoCast Technology Pro-forma Pro-forma Corporation (A.C.T.) Inc. adjustment consolidated $ $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ Current Cash and cash equivalents 1,493,205 18,935 1,512,140 Accounts receivable 114,253 5,447 119,700 Investment tax credit receivable -- 104,209 104,209 Due from Applied Courseware Technology (A.C.T.) Inc. 97,120 -- [f] (97,120) -- Prepaid expenses and refundable deposits 586,968 -- 586,968 - ------------------------------------------------------------------------------------------------------------------------------------ 2,291,546 128,591 (97,120) 2,323,017 Capital assets, net 239,197 36,725 275,922 Distribution rights 2,975,000 -- 2,975,000 Completed technology 16,600,291 -- [d] 641,000 17,241,291 In-process research and [d] 220,000 development -- [j] (220,000) -- Trademarks 830,323 -- [d] 243,000 1,073,323 Workforce-in-place 241,904 -- [d] 256,000 497,904 Goodwill, net 5,695,731 -- [d] 2,939,953 8,635,684 Deferred development costs, net 496,219 [d] (496,219) -- Software license 62,825 -- 62,825 - ------------------------------------------------------------------------------------------------------------------------------------ 28,936,817 661,535 3,486,614 33,084,966 - ------------------------------------------------------------------------------------------------------------------------------------
F-74 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS [Expressed in United States dollars unless otherwise stated] Prepared without audit or review June 30, 1999 PRO-FORMA CONSOLIDATED BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) As of June 30, 1999
Applied Courseware InfoCast Technology Pro-forma Pro-forma Corporation (A.C.T.) Inc. adjustment consolidated $ $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ Current Accounts payable and accrued liabilities 2,375,898 112,084 -- 2,487,982 Notes payable -- 40,860 -- 40,860 Due to InfoCast Corporation -- 95,340 [f] (95,340) -- Current portion of long-term debt -- 333,690 -- 333,690 - ------------------------------------------------------------------------------------------------------------------------------------ 2,375,898 581,974 (95,340) 2,862,532 Due to shareholder -- 133,295 -- 133,295 Deferred income taxes 6,699,395 -- 6,699,395 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 9,075,293 715,269 (95,340) 9,695,222 - ------------------------------------------------------------------------------------------------------------------------------------ Shareholders' equity (deficiency) Common stock 20,492 1 [d] 750 -- [d] (1) 21,242 Additional paid-in-capital 38,125,727 -- [d] 3,749,250 41,874,977 Deferred compensation (6,448,694) -- (6,448,694) Warrants 712,800 -- 712,800 Accumulated other comprehensive loss (14,655) -- (14,655) Accumulated development stage deficit (12,534,146) (53,735) [d] 53,735 -- -- [f] (1,780) -- -- [j] (220,000) (12,755,926) - ------------------------------------------------------------------------------------------------------------------------------------ 19,861,524 (53,734) 3,581,954 23,389,744 - ------------------------------------------------------------------------------------------------------------------------------------ 28,936,817 661,535 3,486,614 33,084,966 - ------------------------------------------------------------------------------------------------------------------------------------
F-75 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS [Expressed in United States dollars unless otherwise stated] Prepared without audit or review June 30, 1999 PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS For the three-month period ended June 30, 1999
Homebase Work Solutions Ltd. Applied [43-day period Courseware InfoCast ended Technology Pro-forma Pro-forma Corporation May 13, 1999] (A.C.T.) Inc. adjustment consolidated $ $ $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ REVENUE Other revenue -- -- 293,354 [g] (290,596) 2,758 Interest 23,157 473 -- [e] (1,664) 21,966 - ------------------------------------------------------------------------------------------------------------------------------------ 23,157 473 293,354 (292,260) 24,724 - ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES General, administrative and selling 1,936,815 68,130 167,637 2,172,582 Stock option compensation 5,829,647 -- -- 5,829,647 Research and development 730,657 -- -- [g] (339,145) 391,512 Interest and loan fees -- -- 5,633 5,633 Amortization and depreciation 654,835 16,872 2,312 [c] 546,351 [i] 212,531 1,432,901 First preferred Series A share interest accretion -- 7,518 -- [b] (7,518) -- First preferred Series A share dividend expense -- 8,813 -- [b] (8,813) -- - ------------------------------------------------------------------------------------------------------------------------------------ 9,151,954 101,333 175,582 403,406 9,832,275 - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) before income taxes (9,128,797) (100,860) 117,772 (695,666) (9,807,551) Deferred income taxes (198,605) -- -- [c] (156,486) (355,091) Net income (loss) for the period (8,930,192) (100,860) 117,772 (539,180) (9,452,460) - ------------------------------------------------------------------------------------------------------------------------------------ Weighted average number of shares outstanding 20,035,410 3,400,000 750,000 24,185,410 - ------------------------------------------------------------------------------------------------------------------------------------ Basic and diluted income (loss) per share (0.45) (0.03) 0.16 (0.39) - ------------------------------------------------------------------------------------------------------------------------------------
F-76 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS [Expressed in United States dollars unless otherwise stated] Prepared without audit or review June 30, 1999 PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS For the three-month period ended March 31, 1999
Applied Courseware Technology (A.C.T.) Inc. [three-month Homebase period ended InfoCast Work February 28, Pro-forma Pro-forma Corporation Solutions Ltd. 1999] adjustment consolidated $ $ $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ REVENUE Other revenue -- -- 8,282 [g] (6,617) 1,665 Interest 4,478 191 [a] (105) [e] (107) 4,457 - ------------------------------------------------------------------------------------------------------------------------------------ 4,478 191 8,282 (6,829) 6,122 - ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES General, administrative and selling 635,334 221,453 50,179 906,966 Stock option compensation 2,256,938 -- -- 2,256,938 Research and development 162,914 -- -- [h] -- 162,914 Interest and loan fees 23,562 155 8,567 32,284 First preferred Series A share interest accretion -- 14,528 -- [b] (14,528) -- First preferred Series A share dividend expense -- 18,610 -- [b] (18,610) -- Amortization and depreciation 9,651 20,066 1,542 [c] 1,187,067 [i] 212,531 1,430,857 - ------------------------------------------------------------------------------------------------------------------------------------ 3,088,399 274,812 60,288 1,366,460 4,789,959 - ------------------------------------------------------------------------------------------------------------------------------------ Loss before income taxes (3,083,921) (274,621) (52,006) (1,373,289) (4,783,837) Deferred income taxes -- -- -- [c] (340,006) (340,006) Net loss for the period (3,083,921) (274,621) (52,006) (1,033,283) (4,443,831) - ------------------------------------------------------------------------------------------------------------------------------------ Weighted average number of shares outstanding 11,583,995 3,400,000 750,000 15,733,995 - ------------------------------------------------------------------------------------------------------------------------------------ Basic and diluted loss per share (0.27) (0.08) (0.07) (0.28) - ------------------------------------------------------------------------------------------------------------------------------------
F-77 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS [Expressed in United States dollars unless otherwise stated] Prepared without audit or review June 30, 1999 PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS For the year ended December 31, 1998
Homebase Applied Work Courseware Solutions Ltd. Technology [101-day (A.C.T.) Inc. period ended [year ended InfoCast December 31, November 30, Pro-forma Pro-forma Corporation 1998] 1998] adjustment consolidated $ $ $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ REVENUE Other revenue 43,446 -- 108,255 151,701 Interest -- 485 2,878 3,363 - ------------------------------------------------------------------------------------------------------------------------------------ 43,446 485 111,133 -- 155,064 - ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES General, administrative and selling 375,302 87,337 266,819 729,458 Research and development 88,180 -- -- [h] 168,756 256,936 Interest and loan fees -- 130 30,040 30,170 First preferred Series A share interest accretion -- 7,875 -- [b] (7,875) -- Amortization and depreciation 3,836 -- 10,214 [c] 4,827,192 [i] 850,124 5,691,366 - ------------------------------------------------------------------------------------------------------------------------------------ 467,318 95,342 307,073 5,838,197 6,707,930 - ------------------------------------------------------------------------------------------------------------------------------------ Loss before income taxes (423,872) (94,857) (195,940) (5,838,197) (6,552,866) Deferred income taxes -- -- -- (1,390,015) (1,390,015) Net loss for the period (423,872) (94,857) (195,940) (4,448,182) (5,162,851) - ------------------------------------------------------------------------------------------------------------------------------------ Weighted average number of shares outstanding 768,301 3,400,000 750,000 4,918,301 - ------------------------------------------------------------------------------------------------------------------------------------ Basic and diluted loss per share (0.55) (0.03) (0.26) (1.05) - ------------------------------------------------------------------------------------------------------------------------------------
F-78 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS [Expressed in United States dollars unless otherwise stated] Prepared without audit or review June 30, 1999 PRO-FORMA ADJUSTMENTS The unaudited pro-forma consolidated financial statements give effect to the following pro-forma adjustments: [a] The elimination of nil and $105 of interest revenue recorded in the accounts of the Company for the 43-day period ended May 13, 1999 and the three-month period ended March 31, 1999, respectively, in respect of the note payable from Homebase to the Company. ACT did not accrue the corresponding interest expense. [b] Homebase's first preferred series A shares were purchased by the Company on May 13, 1999. Accordingly, Homebase's first preferred Series A share interest accretion of $7,518, $14,528 and $7,875 in respect of the 43-day period ended May 13, 1999, the three-month period ended March 31, 1999 and the 101-day period ended December 31, 1998, respectively, have been eliminated. In addition, Homebase's first preferred Series A share dividend expenses of $8,813, $18,610 and nil in respect of the 43-day period ended May 13, 1999, the three-month period ended March 31, 1999 and the 101-day period ended December 31, 1998, respectively, have been eliminated. [c] The amortization of the $17,015,000 of completed technology, $853,000 of trademarks, $253,000 of workforce-in-place and $5,846,293 of goodwill created by the purchase of Homebase by the Company over the pre-acquisition 43-day period ended May 13, 1999, the three-month period ended March 31, 1999 and the year ended December 31, 1998 on a straight-line basis utilizing amortization periods of five years in respect of the completed technology, trademarks and goodwill and three years in respect of the workforce-in-place. In addition, the amortization of the $6,898,00 deferred income tax liability [created by the purchase of Homebase by the Company in respect of the difference between the tax and accounting basis of the completed technology, trademarks and workforce-in-place] over the periods of the underlying assets. [d] The acquisition of ACT by InfoCast. Pursuant to a letter of intent dated February 10, 1999, as amended during subsequent negotiations and subject to due diligence, ACT will be acquired by the Company in consideration for [i] 750,000 common shares of the Company and [ii] the assumption of certain of ACT's liabilities. The pro-forma acquisition has been accounted for by the purchase method whereby the pro-forma purchase price is equal to the ascribed value of the 750,000 common shares. For accounting purposes the common shares of the Company have been valued at $5.00 which is equal to the price per share received by the Company on a private placement conducted in June 1999. As a result, the total pro-forma purchase price is $3,750,000 and has been allocated as follows: F-79 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS [Expressed in United States dollars unless otherwise stated] Prepared without audit or review June 30, 1999 $ - ---------------------------------------------------------------------------- Cash 18,935 Accounts receivable 5,447 Investment tax credit receivable 104,209 Capital assets 36,725 Completed technology 641,000 In-process research and development 220,000 Trademarks 243,000 Workforce-in-place 256,000 Goodwill 2,939,953 Accounts payable and accrued liabilities (112,084) Notes payable (40,860) Due to directors, officers and shareholders (133,295) Long-term debt (333,690) Due to the Company (95,340) - ----------------------------------------------------------------------- 3,750,000 - ----------------------------------------------------------------------- [e] The elimination of the $1,664 and $107 of interest revenue recorded in the accounts of the Company for the three-month periods ended June 30, 1999 and March 31, 1999, respectively, in respect of the note payable from ACT to the Company. ACT did not accrue the corresponding interest expense. [f] The elimination of the $97,120 [Cdn.$142,611] amount payable from ACT to the Company as of June 30, 1999, including interest of $1,780 [Cdn.$2,611]. ACT did not accrue the corresponding interest expense. [g] The elimination of $290,596 [Cdn.$428,000] and $6,617 [Cdn.$10,000] of consulting revenue from InfoCast recorded by ACT during the three-month period ended June 30, 1999 and the three-month period ended February 28, 1999, respectively, and the elimination of $339,145 [Cdn.$498,000] of research and development expenses recorded by InfoCast during the three-month period ended June 30, 1999 in respect of payments made to ACT of Cdn.$10,000 during February 1999, Cdn.$60,000 during March 1999 and Cdn.$428,000 during the three-month period ended June 30, 1999. [h] Under Canadian GAAP, development costs of companies in the development stage may be capitalized if management expects the amounts to be recovered through future revenues. Under US GAAP, development costs incurred prior to the establishment of technological feasibility are expensed as incurred. As a result, development costs incurred by ACT, net of investment tax credits, of $168,756 during the year ended November 30, 1998, nil during the F-80 InfoCast Corporation [formerly Virtual Performance Systems Inc.] [a development stage company] PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS [Expressed in United States dollars unless otherwise stated] Prepared without audit or review June 30, 1999 three-month period ended February 28, 1999 and nil during the three-month period ended June 30, 1999 have been charged to income. [i] The amortization of the $641,000 of completed technology, $243,000 of trademarks, $256,000 of workforce-in-place and $2,939,953 of goodwill created by the purchase of ACT by the Company, as described in [d] above, over the three-month period ended June 30, 1999, the three-month period ended March 31, 1999 and the year ended December 31, 1998 on a straight-line basis utilizing amortization periods of five years in respect of the completed technology, trademarks and goodwill and three years in respect of the workforce-in-place. The amortization of the $297,000 deferred income tax liability [created by the purchase of ACT by the Company in respect of the difference between the tax and accounting basis of the completed technology, trademarks and workforce-in-place] over the periods of the underlying assets has been limited to nil because of an offsetting deferred income tax debit created in respect of estimated tax loss carryforwards. [j] The write-off of the $220,000 of in-process research and development created by the purchase of ACT by the Company as described in [d] above. This adjustment is a non-recurring item and has therefore only been reflected in the pro-forma consolidated balance sheet. F-81 SIGNATURES In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized. September 13, 1999 INFOCAST CORPORATION By: /s/ A. Thomas Griffis ------------------------- A. Thomas Griffis Co-Chairman of the Board By: /s/ Darcy Galvon ------------------------- Darcy Galvon Co-Chairman of the Board EX-3.1 2 ARTICLES OF INCORPORATION Articles of Incorporation, as amended, of the Company (PURSUANT TO NRS 78) Filing fee: STATE OF NEVADA Receipt #: Secretary of State (For filing office use) (For filing office use) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- IMPORTANT: Read instructions on reverse side before completing this form. TYPE OR PRINT (BLACK INK ONLY) 1. NAME OF CORPORATION: Grant Reserve Corporation ------------------------------------------------------- 2. RESIDENT AGENT:(designated resident agent and his STREET ADDRESS in Nevada where process may be served) -------------- Name of Resident Agent: THE CORPORATION TRUST COMPANY OF NEVADA ---------------------------------------------------- Street Address: One East First Street Reno, NV 89501 ------------------------------------------------------------ Street No Street Name City Zip 3. SHARES: (number of shares the corporation is authorized to issue) SEE ATTACHMENT REGARDING SHARES Number of shares with par value:____________ Par value:______________ Number of shares without par value:____________ 4. GOVERNING BOARD: shall be styled as (check one): x Directors Trustees --- ---- The FIRST BOARD OF DIRECTORS shall consist of 4 members and the names --- and addresses are as follows (attach additional pages if necessary): See attached Appendix ------------------------------------- -------------------------------- Name Address City/State/Zip ------------------------------------- -------------------------------- Name Address City/State/Zip 5. PURPOSE (optional-see reverse side): The purpose of the corporation shall be: ------------------------------------------------------------------------ 6. OTHER MATTERS: This form includes the minimal statutory requirements to incorporate under NRS 78. You may attach additional information pursuant to NRS 78.037 or any other information you deem appropriate. If any of the additional information is contradictory to this form it cannot be filed and will be returned to you for correction. Number of pages attached ----------------. 7. SIGNATURES OF INCORPORATORS: The names and addresses of each of the incorporators signing the articles: (Signatures must be notarized) (Attach additional pages if there are more than two incorporators.) Laura Garcia Hiedi Liesch ------------------------------------- ---------------------------------- Name (print) Name (print) CT Corporation System, CT Corporation System, 1675 Broadway, Suite 1200, 1675 Broadway, Suite 1200, Denver, Colorado 80202 Denver, Colorado 80202 ------------------------------------- ---------------------------------- Address City/State/Zip Address City/State/Zip ------------------------------------- ---------------------------------- Signature Signature State of Colorado County of Denver State of Colorado County of Denver -------- ------ -------- ------ This instrument was acknowledged This instrument was acknowledged before me on December 23, 1997, by before me on December 23, 1997, by ----------- -- ----------- -- Laura Garcia Hiedi Liesch ------------------------------------- ---------------------------------- Name of Person Name of Person as incorporator as incorporator of Grant Reserve Corporation of Grant Reserve Corporation ------------------------------------- ---------------------------------- (name of party on behalf of whom (name of party on behalf of whom instrument was executed) instrument was executed) ------------------------------------- ---------------------------------- Notary Public Signature Notary Public Signature Virginia Omstead Virginia Omstead (affix notary stamp or seal) (affix notary stamp or seal) 8. CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT The Corporation Trust Company of Nevada hereby accept appointment as --------------------------------------- Resident Agent for the above named corporation. The Corporation Trust Company of Nevada By: ------------------------------------------------- ----------------------- Signature of Resident Agent (Assistant Secretary) Date -1- ATTACHMENT TO ARTICLES OF INCORPORATION GRANT RESERVE CORPORATION This Attachment sets forth the authorized shares of stock of the corporation: - ---------------------------------------------------------------------------- The total number of shares of capital stock that the Corporation shall be authorized to issue is Two Hundred Million (200,000,000) which is divided into two (2) classes as follows: (a) One Hundred Million (100,000,000) shares of common stock, with a par value per share of one-tenth of a cent ($.001) ("Common Stock"), and (b) One Hundrfed Million (100,000,000) shares of preferred stock, with a par value per share of one-tenth of a cent ($.001) ("Preferred Stock"). In accordance with NRS 78, 195, authority is vested in the Board of Directors to divide the Preferred Stock into series and to prescribe the voting powers, designations, preferences, limitations, restrictions, relative rights and distinguishing designation of each such series. -2- SIXTY DAY OF OFFICERS, DIRECTORS AND AGENT OF FILE NUMBER Grant Reserve Corporation A Nevada CORPORATION. FOR THE FILING PERIOD 12/23/97 TO 12/23/98 The Corporation's duly appointed Resident Agent in charge FOR OFFICE USE ONLY of said principal once in the State of Nevada upon whom FILED (DATE)_________ process can be served is: _____________________ The Corporation Trust Company of Nevada _____________________ One East First Street _____________________ Reno, Nevada 89501 _____________________ RETURN ALL COPIES OF THIS FORM We want to help you get your business with our office completed in the fastest, most efficient manner. TO AVOID DELAYS, RETURNS AND LATE CHARGES, PLEASE BE SURE YOU HAVE: 1. Names and mailing addresses for all officers and directors. A President, Secretary, Treasurer and Directors must be named. 2. An officer's signature at the bottom of this form. 3. Returned ALL COPIES of this form with the $85.00 filing fee. A $15.00 penalty must be added if this form isn't filed within 60 days from the date of incorporation. 4. Make your check payable to the Secretary of State. If you need a receipt, enclose a self-addressed stamped envelope. 5. If you have changed the resident agent or principal place of business, please contact our office for the proper forms to make the change before filling this 60 day list. SECRETARY OF STATE Capitol Complex Carson City, NV 89710 FILING FEE: $85.00 LATE PENALTY: $15.00 ----------------------------------------------- THIS FORM MUST BE FILED 60 DAYS FROM THE DATE OF INCORPORATION -------------------------------------------------------------- NAME TITLE(S) William R. Wilson PRESIDENT P.O. BOX STREET ADDRESS CITY ST ZIP 410 17th Street, Denver CO 80202 NAME TITLE(S) Arnold T. Kondrat SECRETARY P.O. BOX STREET ADDRESS CITY ST ZIP 181 University Ontario M5H3M7 NAME TITLE(S) Arnold T. Kondrat TREASURER P.O. BOX STREET ADDRESS CITY ST ZIP 181 University Toronto, M5H3M7 NAME TITLE(S) see attached rider DIRECTOR P.O. BOX STREET ADDRESS CITY ST ZIP NAME TITLE(S) DIRECTOR P.O. BOX STREET ADDRESS CITY ST ZIP NAME TITLE(S) DIRECTOR P.O. BOX STREET ADDRESS CITY ST ZIP -3- Appendix to Nevada Sixty Day List of Officers, Directors and Agent Grant Reserve Corporation - -------------------------------------------------------------------------------- List of Directors of Grant Reserve Corporation 1. Lloyd Joseph Bardswich PO Box 156 Virginia City, Montana 59755 2. William R. Wilson 410 17th Street, Suite 1375 Denver, Colorado 80202 3. Rodney D. Knutson 1625 Broadway, Suite 1600 Denver, Colorado 80202 4. Arnold T. Kondrat 181 University Avenue, Suite 2110 Ontario, Canada M5H3M7 -4- INITIAL LIST OF OFFICERS, DIRECTORS AND RESIDENT AGENT OF FILE NUMBER The Corporation's duly appointed Resident Agent in the FOR OFFICE USE ONLY State of Nevada upon whomprocess can be served is: FILED (DATE) THE CORPORATION TRUST CO. OF NEV. ONE EAST 1ST STREET RENO, NEVADA 89501 / / IF THE ABOVE INFORMATION IS INCORRECT, PLEASE CHECK THIS BOX AND A CHANGE OF RESIDENT AGENT/ADDRESS FORM WILL BE SENT. PLEASE READ INSTRUCTIONS BEFORE COMPLETING AND RETURNING THIS FORM. 1. Include the names and addresses, either residence or business, for all officers and directors. A President, Secretary, Treasurer and all Directors must be named. There must be at least one director. Last year's information has been preprinted. If you need to make changes, cross out the incorrect information and insert the new information above it. An officer must sign the form. FORM WILL BE RETURNED IF UNSIGNED. 2. If there are additional directors attach a list of them in this form. 3. Return the completed form with the $85.00 filing fee. A $15.00 penalty must be added for failure to file this form by the deadline indicated at the top of this form. 4. Make your check payable to the Secretary of State. If you need a receipt, enclose a self-addressed stamped envelope. To receive a certified copy, enclose a copy of this completed form, an additional $10.00 and appropriate instructions. 5. Return the completed form to: Secretary of State, Capitol Complex, Carson City, NV 89710, (702) 687-5105 FILING FEE: $85.00 LATE PENALTY: $15.00 ---------------------------------------------------- NAME TITLE(S) William R. Wilson PRESIDENT P.O. BOX STREET ADDRESS CITY ST ZIP 410 17th St., Ste. 1375 Denver CO 80202 NAME TITLE(S) Arnold T. Kondrat SECRETARY P.O. BOX STREET ADDRESS CITY ST ZIP 181 Univ. Ave., Ste. 2110 Ontario CAN M5H 3M7 NAME TITLE(S) Arnold T. Kondrat TREASURER P.O. BOX STREET ADDRESS CITY ST ZIP the same as above NAME TITLE(S) See Attached Rider DIRECTOR P.O. BOX STREET ADDRESS CITY ST ZIP NAME TITLE(S) DIRECTOR P.O. BOX STREET ADDRESS CITY ST ZIP NAME TITLE(S) DIRECTOR P.O. BOX STREET ADDRESS CITY ST ZIP -5- INITIAL LIST OF OFFICERS, DIRECTORS AND RESIDENT AGENT OF FILE NUMBER Grant Reserve Corporation 12/29/97 C29331-97 - ------------------------------------------ -------------------- --------- (Name of Corporation) (Incorporation Date) A Nevada CORPORATION FOR THE FILING PERIOD 12/97 TO 12/98 --------------- -------- ------- The Corporation's duly appointed Resident Agent FOR OFFICE USE ONLY in the State of Nevada upon whom process FILED (DATE) can be served is: The Corporation Trust Company Of Nevada One East First Street Reno, Nevada 89501 PLEASE READ INSTRUCTIONS BEFORE COMPLETING AND RETURNING THIS FORM. 1. Print or type names and addresses, either residence or business, for all officers and directors. A president secretary, treasurer and at least one director must be named. 2. Have an officer sign the form, FORM WILL BE RETURNED IF UNSIGNED. 3. Return the completed form with the $85.00 filing fee. A $15.00 penalty must be added for failure to file this form by the 1st day of the 2nd month following incorporation date. 4. Make your check payable to the Secretary of State. If you need a receipt, enclose a self-addressed stamped envelope. To receive a certified copy, enclose a copy of this completed form, an additional $10.00 and appropriate instructions. 5. Return the completed form to: Secretary of State, 101 North Carson Street, Suite 3, Carson City, NV 89701-4786, (702) 687-5203 FILING FEE: $85.00 LATE PENALTY: $15.00 ---------------------------------------------------- THIS FORM MUST BE FILED BY THE 1ST DAY OF THE 2ND MONTH ------------------------------------------------------- FOLLOWING INCORPORATION DATE ---------------------------- NAME TITLE(S) William R. Wilson PRESIDENT P.O. BOX STREET ADDRESS CITY ST ZIP 410 17th Street, Suite 1375 Denver CO 80202 NAME TITLE(S) Arnold T. Kondrat SECRETARY P.O. BOX STREET ADDRESS CITY ST ZIP 181 University Avenue, Suite 2110 Toronto, Ontario Canada M5H 3M7 NAME TITLE(S) Arnold T. Kondrat TREASURER P.O. BOX STREET ADDRESS CITY ST ZIP 181 University Avenue, Suite 2110 Toronto, Ontario Canada M5H 3M7 NAME TITLE(S) William R. Wilson DIRECTOR P.O. BOX STREET ADDRESS CITY ST ZIP 410 17th Street, Suite 1375 Denver CO 80202 NAME TITLE(S) Arnold T. Kondrat DIRECTOR P.O. BOX STREET ADDRESS CITY ST ZIP 181 University Avenue, Suite 2110 Toronto, Ontario Canada M5H 3M7 NAME TITLE(S) Rodney D. Knutson DIRECTOR P.O. BOX STREET ADDRESS CITY ST ZIP 1625 Broadway, Suite 1600 Denver CO 80202 I hereby certify this initial list. (See attachment for additional director.) X Signature of officer(s) Rodney D. Knutson Title(s) Director Date -6- ATTACHMENT TO INITIAL LIST OF OFFICERS, DIRECTORS AND RESIDENT AGENT OF GRANT RESERVE CORPORATION Name Title Lloyd Joseph Bardswich DIRECTOR P.O. BOX STREET ADDRESS City ST ZIP P.O. Box 156 Virginia City Montana 59755 -7- January 30, 1998 Grant Reserve Corporation The name of the custodian of the stock ledger or duplicate stock ledger of this corporation is William R. Wilson-President and the president and complete post office address where such stock ledger or duplicate stock ledger is kept is 410 17th Street, Suite 1375, Denver, State of Colorado. The statement is made pursuant to Section 78.105 of the Nevada Revised Statutes, as amended, and is to be kept in the registered office of this corporation in the State of Nevada in lieu of keeping at said office a stock ledger or duplicate stock ledger. /s/ Rodney D. Knutson --------------------------------- Director -8- Filed The Office of the Secretary of State of the State of Nevada Filed December 29, 1998 Dean Heller STATE OF NEVADA Telephone 702.687.5203 Secretary of State OFFICE OF THE SECRETARY Fax 702.687.3471 OF STATE Web site HTTP://SOS. 101 N. CARSON ST. STE 3 STATE.NV.US CARSON CITY, NEVADA 89701-4786 Filing Fee: $75.00 Certificate of Amendment to Articles of Incorporation ----------------------------------------------------- For Profit Nevada Corporations ------------------------------ (Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock) -Remit in Duplicate- 1. Name of corporation: Grant Reserve Corporation ------------------------------------------------------- - -------------------------------------------------------------------------------- 2. The articles have been amended as follows (provide article numbers, if available): To change to Corporation's name to Infocast Corporation - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3. The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation have voted in favor of the amendment is: ________________.* 11,802,100 of 11,802,200 votes 4. Signatures: /s/ William R. Wilson /s/ Rodney D. Knutson --------------------------------- ------------------------------ President or Vice President Secretary or Asst. Secretary (acknowledgement required) (acknowledgement not required) State of: Colorado County of: Denver This instrument was acknowledged before me on December 23, 1998, by William R. Wilson (Name of Person) as President [Notary] as designated to sign this certificate of Kathryn P. Tasset (name on behalf of whom instrument was executed) --------------------------------------------- Notary Public Signature *If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless of limitations or restrictions on the voting power thereof. IMPORTANT: Failure to include any of the above information and remit the proper fees may cause this filing to be rejected. -9- ANNUAL LIST OF OFFICERS, DIRECTORS AND AGENTS OF FILE NUMBER GRANT RESERVE CORPORATION FOR THE PERIOD DEC 1998 TO 1999. DUE BY DEC 31, 1998. FOR OFFICE USE ONLY The Corporation's duly appointed Resident Agent in FILED (DATE) the State of Nevada upon whom process can be served is: Filed Dec. 29, 1998 Dean Heller Secretary of State THE CORPORATION TRUST COMPANY OF NEVADA ONE EAST FIRST STREET RENO, NEVADA 89501 / / IF THE ABOVE INFORMATION IS INCORRECT, PLEASE CHECK THIS BOX AND A CHANGE OF RESIDENT AGENT/ADDRESS FORM WILL BE SENT. PLEASE READ INSTRUCTIONS BEFORE COMPLETING AND RETURNING THIS FORM. 1. Include the names and addresses, either residence or business, for all officers and directors. A President, Secretary, Treasurer and all Directors must be named. There must be at least one director. Last year's information has been preprinted. If you need to make changes, cross out the incorrect information and insert the new information above it. An officer must sign the form. FORM WILL BE RETURNED IF UNSIGNED. 2. If there are additional directors attach a list of them in this form. 3. Return the completed form with the $85.00 filing fee. A $15.00 penalty must be added for failure to file this form by the deadline indicated at the top of this form. 4. Make your check payable to the Secretary of State. If you need a receipt, enclose a self-addressed stamped envelope. To receive a certified copy, enclose a copy of this completed form, an additional $10.00 and appropriate instructions. FILING FEE: $85.00 LATE PENALTY: $15.00 ---------------------------------------------------- NAME TITLE(S) WILLIAM R. WILSON PRESIDENT P.O. BOX STREET ADDRESS CITY ST ZIP 410 17TH ST., STE. 1375 DENVER CO 80202 NAME TITLE(S) RODNEY D. KNUTSON SECRETARY P.O. BOX STREET ADDRESS CITY ST ZIP 1625 BROADWAY, STE. 1600 DENVER CO 80202 NAME TITLE(S) ARNOLD T. KONDRAT TREASURER P.O. BOX STREET ADDRESS CITY ST ZIP 181 UNIVERSITY AVE., STE. 211 TORONTO OT CN N5H3M NAME TITLE(S) DIRECTOR P.O. BOX STREET ADDRESS CITY ST ZIP NAME TITLE(S) DIRECTOR P.O. BOX STREET ADDRESS CITY ST ZIP I hereby certify this annual list. /s/ William R. Wilson X Signature of officer Title(s) Date December 21, 1998 -10- EX-3.2 3 AMENDED AND RESTATED BY LAWS AMENDED AND RESTATED BYLAWS OF INFOCAST CORPORATION (formerly Grant Reserve Corporation) ARTICLE I OFFICES SECTION 1. Registered Office. The registered office of Infocast Corporation (the "Corporation") shall be at The Corporation Trust Company of Nevada, One East First Street, Reno, Nevada 89501, and the name of the registered agent at such address is The Corporation Trust Company of Nevada. SECTION 2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Nevada as the Board of Directors of the Corporation (the "Board of Directors") may from time to time determine. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 1. Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Nevada as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof. SECTION 2. Annual Meetings. The annual meeting of shareholders shall be held on such day in such month in each year and at such time as may be fixed by the Board of Directors and stated in the notice of the meeting, for the purpose of electing directors and for the transaction of only such other business as is properly brought before the meeting in accordance with these Bylaws. Written notice of an annual meeting stating the place, date and hour of the meeting, shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. SECTION 3. Special Meetings. Unless otherwise prescribed by law or by the Certificate of Incorporation, special meetings of stockholders, for any purpose or purposes, may only be called by a majority of the entire Board of Directors or by the Chairman of the Board, the Vice Chairman of the Board or the President. Written notice of a special meeting stating the place, date and hour of the meeting, shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. SECTION 4. Quorum. Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the holders of a majority of the votes entitled to be cast by the stockholders entitled to vote thereat, present in person or represented by proxy may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented by proxy. 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 noticed. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting. SECTION 5. Voting. Unless otherwise required by law, the Certificate of Incorporation or these Bylaws, any question brought before any meeting of stockholders shall be decided by the vote of the holders of a majority of the stock represented and entitled to vote thereat. Each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder, unless otherwise provided by the Certificate of incorporation. Such votes may be cast in person or by proxy but no proxy shall be voted after three years from its date, unless such proxy provides for a longer period. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in his discretion, may require that any votes cast at such meeting shall be cast by written ballot. SECTION 6. List of Stockholders Entitled to Vote. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present SECTION 7. Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to (i) the identity of the stockholders entitled to examine the stock ledger, the list required by Section 6 of this Article II, or the books of the Corporation, and (ii) who may vote in person or by proxy at any meeting of stockholders. -2- ARTICLE III DIRECTORS SECTION 1. Member; Meetings. The number of directors which shall constitute the whole Board of Directors of the Corporation shall not be less than one (1), nor more than ten (10) and shall be such as shall be determined from time to time by the resolution of the Board of Directors. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Nevada. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the Chairman of the Board, Vice Chairman of the Board or the President or a majority of the entire Board of Directors. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than 72 hours before the date of the meeting, by telephone or telegram on 48 hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Any director present at a special meeting will be deemed to have received proper notice. SECTION 2. Quorum. Except as may be otherwise specifically provided by law, the Certificate of Incorporation or these Bylaws, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. SECTION 3. Actions of Board of Directors. Unless otherwise provided by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. SECTION 4. Meetings by Means of Conference Telephone. Unless otherwise provided by law, the Certificate of Incorporation or these Bylaws, members of the Board of Directors of the Corporation, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications requirement by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 4 of Article 111 shall constitute presence in person at such meeting. SECTION 5. Committees. The Board of Directors may, by resolution passed by a majority of the entire Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified -3- member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. Each committee shall keep regular minutes and report to the Board of Directors when required. SECTION 6. Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. SECTION 7. Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose if (i) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. SECTION 8. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by the affirmative vote of a two-thirds majority of the remaining directors then in office, although less than a quorum, or by a sole remaining director. When one or more directors shall resign from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided -4- above in the filling of other vacancies. A director elected to fill a vacancy shall hold office for the unexpired term of his or her predecessor and until his or her successor is elected and qualified. SECTION 9. Compensation. The Board of Directors may fix the compensation of directors. ARTICLE IV OFFICERS SECTION 1. General. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, a Secretary and a Treasurer. The Board of Directors, in its discretion, may also choose a Chairman of the Board of Directors (who must be a director), a Co- Chairman of the Board of Directors (who must be a director), a Vice Chairman of the Board of Directors (who also must be a director) and one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate of Incorporation or these Bylaws. The officers of the Corporation need not be stockholders of the Corporation nor, except in the case of the Chairman and Vice Chairman of the Board of Directors, need such officers be directors of the Corporation. SECTION 2. Election. The Board of Directors at its first meeting held after each annual meeting of stockholders shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier resignation or removal. Any officer elected by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors. The salaries of all officers who are directors of the Corporation shall be fixed by the Board of Directors. SECTION 3. Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the President or any Vice President and any such officer may, in the name and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons. SECTION 4. Chairman of the Board of Directors. The Chairman of the Board of Directors, if there be one, shall preside at all meetings of the stockholders and of the Board of -5- Directors. Except where by law the signature of the President is required, the Chairman of the Board of Directors shall possess the same power as the President to sign all contracts, certificates and other instruments of the Corporation which may be authorized by the Board of Directors. During the absence or disability of the President, the Chairman of the Board of Directors shall exercise all the powers and discharge all the duties of the President. The Chairman of the Board of Directors shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him by these Bylaws or by the Board of Directors. SECTION 5. Vice Chairman of the Board of Directors. The Vice Chairman of the Board of Directors shall preside at all meetings of the stockholders and Board of Directors, where the Chairman of the Board is absent. In general, the Vice Chairman will be responsible for the supervision and control of the day to day business operations of the Corporation. Except where prohibited by law, he may sign with the Secretary or any other proper officer of the Corporation thereunto authorized by the Board of Directors, certificates for shares of the Corporation, deeds, mortgages, bonds, and contracts or other instruments which the Board has authorized to be executed so as to ensure compliance with the Board's directives as they relate to the operations of the Corporation. The Vice Chairman of the Board may also exercise such powers as from time to time may be assigned to him by these Bylaws or by the Board of Directors. SECTION 6. President. The President shall, subject to the control of the Board of Directors and, if their offices are filled, subject to the control of the Chairman and Vice Chairman of the Board of Directors, have general supervision of the Corporation, be its Chief Executive Officer and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these Bylaws, the Board of Directors, or the President. In the absence or disability of both the Chairman and Vice Chairman of the Board of Directors, the President shall preside at all meetings of the stockholders and the Board of Directors. The President shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him by these Bylaws or by the Board of Directors. SECTION 7. Vice Presidents. At the request of the President or in his absence or in the event of his inability or refusal to act (and if there be no Chairman of the Board of Directors), the Vice President or the Vice Presidents if there is more than one (in the order designated by the Board of Directors) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all of the restrictions upon the President. Each Vice President shall perform such other duties and have such other powers as the Board of Directors from time to time may prescribe. If there be no Chairman of the Board of Directors, Vice Chairman of the Board of Directors and no Vice President, the Board of Directors shall designate the officer of the Corporation who, in the absence of the President or in the event of the inability or refusal of the President to act, 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. -6- SECTION 8. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Secretary shall also perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then either the Board of Directors or the President may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature. The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be. SECTION 9. Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation. SECTION 10. Assistant Secretaries. Except as may be otherwise provided in these Bylaws, Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Secretary, and in the absence of the Secretary or in the event of his disability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary. SECTION 11. Assistant Treasurers. Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice Present, if there be one, or the Treasurer, and in the absence of the Treasurer or in the event of his disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the -7- Treasurer. If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Director for the faithful performance of the duties of his office and for the restoration of the Corporation, in case of his death resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation. SECTION 12. Controller. The Controller shall establish and maintain the accounting records of the Corporation in accordance with generally accepted accounting principles applied on a consistent basis, maintain proper internal control of the assets of the Corporation and shall perform such other duties as the Board of Directors, the President, the Treasurer, or any Vice President of the Corporation may prescribe. SECTION 13. Other Officers. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers. ARTICLE V STOCK SECTION 1. Form of Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed, in the name of the Corporation (i) by the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, the President or a Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. SECTION 2. Signatures. Any or all of the signatures on the certificate may be a facsimile, including, but not limited signatures of officers of the Corporation and countersignatures of a transfer agent or registrar. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. SECTION 3. Lost Certificates. The Board of Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. -8- SECTION 4. Transfers. Stock of the Corporation shall be transferable in the manner prescribed by law and in these Bylaws. Transfers of stock shall be made on the books of the Corporation only by the person named on the certificate or by his attorney lawfully constituted in writing and upon the surrender of the certificates therefor, which shall be canceled before a new certificate shall be issued. SECTION 5. Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at my meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 60 days nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 6. Beneficial Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law. ARTICLE VI NOTICES SECTION 1. Notices. Whenever written notice is required by law, the Certificate of Incorporation orthese Bylaws, to tee given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by telegram, facsimile, telex or cable. SECTION 2. Waiver of Notice. Whenever any notice is required by law, the Certificate of Incorporation or these Bylaws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed, by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. -9- ARTICLE VII GENERAL PROVISIONS SECTION 1. Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, and of law, may be declared by the Board of Directors at any regular or special meeting, and may be paid in cash, in property, or in shares of the capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve. SECTION 2. Disbursement. All checks or demand for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. SECTION 2. Fiscal Year. The fiscal year of the Corporation shall end on March 31, unless the fiscal year is otherwise fixed by affirmative resolution of the Board of Directors. Duly approved and adopted on May 12, 1999. /s/ (signature is illegible) ------------------------------------------ Secretary -10- EX-4.1 4 FORM OF STOCK CERTIFICATE NUMBER InfoCast Corporation SHARES INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA AUTHORIZED: 100,000,000 COMMON SHARES, $.001 PAR VALUE SEE REVERSE FOR CERTAIN DEFINITIONS CUSIP 45664S 10 0 This Certifies that ****************SPECIMEN **************** is the owner of FULLY PAID AND NON-ASSESSABLE COMMON SHARES, $.001 PAR VALUE OF InfoCast Corporation transferable upon the books of the Corporation in person or by duly authorized attorney upon surrender of this Certificate properly endorsed or assigned. This Certificate is not valid until countersigned and registered by the Transfer Agent and Registrar. WITNESS, the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. INFOCAST CORPORATION CORPORATE SEAL NEVADA Secretary President COUNTERSIGNED: CORPORATE STOCK TRANSFER, INC. 370-17th Street, Suite 2350-, Denver, Colorado 80202 By:_________________________________________________ Transfer Agent and Registrar Authorized Officer InfoCast Corporation Corporate Stock Transfer, Inc. Transfer Fee: $15.00 Per Certificate - -------------------------------------------------------------------------------- The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM __ as tenants in common UNIF GIFT MIN ACT - Custodian for... (Cust.) (Minor) TEN ENT __ as tenants by the entireties under Uniform Gifts to Minors JT TEN __ as joint tenants with right of Act of . . . . . . . . . . . survivorship and not as tenants (State) in common Additional abbreviations may also be used through not in the above list. For value received ................... hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ------------------------------------------- ------------------------------------------- Please print or type name and address of assignee ............................................................................ ............................................................................ ............................................................................ ......................................................................shares of the Common Stock represented by the within Certificate and do hereby irrevocably constitute and appoint ............................................................................ ............................................................................ Attorney to transfer the said stock on the books of the within named Corporation, with full power of substitution in the premises. Dated........................ 19 ..................... SIGNATURE GUARANTEED: X ________________________ X ________________________ THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACT OF THIS CERTIFICATE IN EVERY PARTICULAR. WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan Association and Credit Union) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM. -2- EX-4.2 5 1998 AMENDED AND RESTATED STOCK OPTION PLAN GRANT RESERVE CORPORATION 1998 AMENDED AND RESTATED STOCK OPTION PLAN ARTICLE I - GENERAL 1.01 Purpose. The purpose of this 1998 Stock Option Plan (the "Plan") are to: (1) closely associate the interests of the management of and directors, consultants and advisors to Grant Reserve Corporation and its subsidiaries and affiliates (collectively referred to as the "Company") with the shareholders by reinforcing the relationship between participants' rewards and shareholder gains; (2) provide management, directors, consultants and advisors with an equity ownership in the Company commensurate with Company performance, as reflected in increased shareholder value; (3) maintain competitive compensation levels; and (4) provide an incentive to management for continuous employment with the Company. 1.02 Administration. (a) The Plan shall be administered by a Committee of disinterested persons appointed by the Board of Directors of Grant Reserve Corporation (the "Committee"), as constituted from time to time. The Committee shall consist of at least two members of such Board. (b) The Committee shall have the authority, in its sole discretion and from time to time to: (i) designate the employees, directors, consultants and advisors eligible to participate in the Plan; (ii) grant awards provided in the Plan in such form and amount as the committee shall determine; (iii) impose such limitations, restrictions and conditions upon any such award as the Committee shall deem appropriate; and (iv) interpret the Plan, adopt, amend and rescind rules and regulations relating to the Plan, and make all other determinations and take all other action necessary or advisable for the implementation and administration of the Plan. (c) Decisions and determinations of the Committee on all matters relating to the Plan shall be in its sole discretion and shall be conclusive. No member of the Committee shall be liable for any action taken or decision made in good faith relating to the Plan or any award thereunder. 1.03. Eligibility for Participation. Participants in the Plan shall be selected by the Committee from the executive officers and other key employees of the Company who occupy responsible managerial or professional positions and who have the capability of making a substantial contribution to the success of the Company and directors, consultants and advisors to the Company. In making this selection and in determining the form and amount of awards, the Committee shall consider any factors deemed relevant, including the individual's functions, responsibilities, value of services to the Company and past and potential contributions to the Company's profitability and sound growth. 1.04 Types of Awards Under Plan. Awards under the Plan may be in the form of any one or more of the following: (i) Stock Options, as described in Article II; and (ii) Incentive Stock Options, as described in Article III. 1.05 Aggregate Limitation on Awards. (a) Shares of stock which may be issued under the Plan shall be authorized and unissued or treasury shares of Common Stock of Grant Reserve Corporation ("Common Stock"). The maximum number of shares of Common Stock which may be issued under the Plan shall be 2,250,000. (b) Any shares of Common Stock subject to a Stock Option or Incentive Stock Option which for any reason is terminated unexercised or expires shall again be available for issuance under the Plan. 1.06 Effective Date and Term of Plan. (a) The Plan shall become effective on the date approved by the holders of a majority of the shares of Common Stock present in person or by proxy and entitled to vote at the Special Meeting of Shareholders of Grant Reserve Corporation to be called to consider and vote upon the Plan. (b) No awards shall be made under the Plan after the last day of the Company's fiscal year ending in 2003 provided, however, that the Plan and all awards made under the Plan prior to such date shall remain in effect until such awards have been satisfied or terminated in accordance with the Plan and the terms of such awards. ARTICLE II - STOCK OPTIONS 2..01 Award of Stock Options. The Committee may from time to time, and subject to the provisions of the Plan and such other terms and conditions as the Committee may prescribe, grant to any participant in the Plan one or more options to purchase for cash the number of shares of Common Stock ("Stock Options") allotted by the Committee. The date a Stock Option is granted shall mean the date selected by the Committee as of which the Committee allots a specific number of shares to a participant pursuant to the Plan. -2- 2.02 Stock Option Agreements. The grant of a Stock Option shall be evidenced by a written Stock Option Agreement, executed by the Company and the holder of a Stock Option (the "optionee"), stating the number of shares of Common Stock subject to the Stock Option evidenced thereby, and in such form as the Committee may from time to time determine. 2.03 Stock Option Price. The option price per share of Common Stock deliverable upon the exercise of a Stock Option shall be $1.00 per share. 2.04 Term and Exercise. Each Stock Option shall be fully exercisable six months from the date of its grant unless a longer period is provided by the Committee and may be exercised during a period to be determined by the Committee but not to exceed ten years from the date of grant thereof (the "option term"). No Stock Option shall be exercisable after the expiration of its option term. 2.05. Manner of Payment. Each Stock Option Agreement shall set forth the procedure governing the exercise of the Stock Option granted thereunder, and shall provide that, upon such exercise in respect of any shares of Common Stock subject thereto, the optionee shall pay to the Company, in full, the option price for such shares with cash. 2.06 Delivery of Stock Certificates. As soon as practicable after receipt of payment, the Company shall deliver to the optionee a certificate or certificates for such shares of Common Stock. The optionee shall become a shareholder of the Company with respect to Common Stock represented by share certificates so issued and as such shall be fully entitled to receive dividends, to vote and to exercise all other rights of a shareholder. 2.07. Death of Optionee. (a) Upon the death of the optionee, any rights which have become exercisable on or before the date of death may be exercised by the optionee's estate, or by a person who acquires the right to exercise such Stock Option by bequest or inheritance following the death of the optionee, provided that such exercise occurs within both the remaining effective term of the Stock Option and one year after the optionee's death. (b) The provisions of this Section shall apply notwithstanding the fact that the optionee's employment may have terminated prior to death, but only to the extent of any rights which were exercisable on the date of death. 2.08. Retirement or Disability. Upon termination of the optionee's employment by reason of retirement or permanent disability (as each is determined by the Committee), the optionee may, within 36 months from the date of termination, exercise any Stock Options to the extent such options had become exercisable on or before such termination of employment. 2.09 Termination for Other Reasons. Except as provided in Sections 2.07 and 2.08, or except as otherwise determined by the Committee, all Stock Options shall terminate upon the termination of the optionee's employment. -3- ARTICLE III - INCENTIVE STOCK OPTIONS 3.01 Award of Incentive Stock Options. The Committee may, from time to time and subject to the provisions of the Plan and such other terms and conditions as the Committee may prescribe, grant to any participant in the Plan one or more "incentive stock options" (intended to qualify as such under the provisions of Section 422 of the Internal Revenue Code of 1986, as amended ("Incentive Stock Options") to purchase for cash the number of shares of Common Stock allotted by the Committee. The date an Incentive Stock Option is granted shall mean the date selected by the Committee as of which the Committee allots a specific number of shares to a participant pursuant to the Plan. Notwithstanding the foregoing, Incentive Stock Options shall not be granted to any owner of shares of capital stock having 10% or more of the total combined voting power of all shares of the capital stock of the Company entitled to vote. 3.02 Incentive Stock Option Agreements. The grant of an Incentive Stock Option shall be evidenced by a written Incentive Stock Option Agreement, executed by the Company and the holder of an Incentive Stock Option (the "optionee"), stating the number of shares of Common Stock subject to the Incentive Stock Option evidenced thereby, and in such form as the Committee may from time to time determine. 3.03 Incentive Stock Option Price. The option price per share of Common Stock deliverable upon the exercise of an Incentive Stock Option shall be 100% of the fair market value of a share of Common Stock on the date the Incentive Stock Option is granted. 3.04 Term and Exercise. Each Incentive Stock Option shall be fully exercisable six months from the date of its grant unless a longer period is provided by the Committee and may be exercised during a period to be determined by the Committee but not to exceed ten years from the date of grant thereof (the "option term"). No Incentive Stock Option shall be exercisable after the expiration of its option term. 3.05 Maximum Amount of Incentive Stock Option Grant. The aggregate fair market value (determined on the date the option is granted) of Common Stock subject to an Incentive Stock Option granted to an optionee by the Committee in any calendar year shall not exceed $100,000. 3.06 Death of Optionee. (a) Upon the death of the optionee, any Incentive Stock Option which had become exercisable on or before the date of death may be exercised by the optionee's estate or by a person who acquires the right to exercise such Incentive Stock Option by bequest or inheritance following the death of the optionee, provided that such exercise occurs within both the remaining option term of the Incentive Stock Option and one year after the optionee's death. (b) The provisions of this Section shall apply notwithstanding the fact that the optionee's employment may have terminated prior to death, but only to the extent of any Incentive Stock Options which were exercisable on the date of death. -4- 3.07 Retirement or Disability. Upon the termination of the optionee's employment by reason of permanent disability or retirement (as each is determined by the Committee), the optionee may, within 36 months from the date of such termination of employment, exercise any Incentive Stock Options to the extent such Incentive Stock Options had become exercisable on or before the date of such termination of employment. Notwithstanding the foregoing, the tax treatment available pursuant to Section 422 of the Internal Revenue Code of 1986 upon the exercise of an Incentive Stock Option will not be available to an optionee who exercises any Incentive Stock Options more than (i) 12 months after the date of termination of employment due to permanent disability or (ii) three months after the date of termination of employment due to retirement. 3.08 Termination for Other Reasons. Except as provided in Sections 3.06 and 3.07 or except as otherwise determined by the Committee, all Incentive Stock Options shall terminate upon the termination of the optionee's employment. 3.09 Applicability of Stock Options Sections. Sections 2.05 and 2.06 shall also apply to Incentive Stock Options. Said Sections are incorporated by reference in this Article III as though fully set forth herein. ARTICLE IV - MISCELLANEOUS 4.01 General Restrictions. Each award under the Plan shall be subject to the requirement that, if at any time the Committee shall determine that (i) the listing, registration or qualification of the shares of Common Stock subject or related thereto upon any securities exchange or under any state or Federal law, or (ii) the consent or approval of any government regulatory body, or (iii) an agreement by the grantee of an award with respect to the disposition of shares of Common Stock, is necessary or desirable as a condition of, or in connection with, the granting of such award or the issue or purchase of shares of Common Stock thereunder, such award may not be consummated in whole or in part unless such listings, registration, qualification, consent, approval or agreement shall have been effected or obtained free of any conditions not acceptable to the Committee. The certificates evidencing ownership of shares of Common Stock acquired upon exercise of any Stock Option or Incentive Stock Option awarded under the Plan shall bear such legends as the Committee shall approve as necessary or desirable to conform to applicable laws and regulations relating to the sale of securities. 4.02 Non-Assignability. No award under the Plan shall be assignable or transferable by the recipient thereof, except by will or by the laws of descent and distribution. During the life of the recipient, such award shall be exercisable only by such person or by such person's guardian or legal representative. 4.03 Withholding Taxes. Whenever the Company proposes or is required to issue or transfer shares of Common Stock under the Plan, the Company shall have the right to require the grantee to remit to the Company an amount sufficient to satisfy any Federal, state and/or local withholding tax requirements prior to the delivery of any certificate or certificates for such shares. -5- Alternatively, the Company may issue or transfer such shares of Common Stock net of the number of shares sufficient to satisfy the withholding tax requirements. For withholding tax purposes, the shares of Common Stock shall be valued on the date the withholding obligation is incurred. 4.04 Right to Terminate Employment. Nothing in the Plan or in any agreement entered into pursuant to the Plan shall confer upon any participant the right to continue in the employment of the Company or effect any right which the Company may have to terminate the employment of such participant. 4.05. Non-Uniform Determinations. The Committee's determinations under the Plan (including without limitation determinations of the persons to receive awards, the form, amount and timing of such awards, the terms and provisions of such awards and the agreements evidencing same) need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, awards under the Plan, whether or not such persons are similarly situated. 4.06 Rights as a Shareholder. The recipient of any award under the Plan shall have no rights as a shareholder with respect thereto unless and until certificates for shares of Common Stock are issued to him. 4.07 Definitions. In this Plan the following definitions shall apply: (a) "Subsidiary" means any corporation of which, at the time more than 50% of the shares entitled to vote generally in an election of directors are owned directly or indirectly by Grant Reserve Corporation or any subsidiary thereof. (b) "Affiliate" means any person or entity which directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with Grant Reserve Corporation. (c) "Fair market value" as of any date and in respect of any share of Common Stock means the closing price on such date or on the next business day, if such date is not a business day, of a share of Common Stock on any stock exchange or any stock market upon which the Common Stock may then be listed or traded, or if the Common Stock is not so listed or traded then the fair market value of shares of Common Stock shall be as determined by the Committee in such other manner as it may deem appropriate. In no event shall the fair market value of any share of Common Stock be less than its par value. (d) "Option" means Stock Option or Incentive Stock Option. (e) "Option price" means the purchase price per share of Common Stock deliverable upon the exercise of a Stock Option or Incentive Stock Option. -6- 4.08 Leaves of Absence. The Committee shall be entitled to make such rules, regulations and determinations as it deems appropriate under the Plan in respect of any leave of absence taken by the recipient of any award. Without limiting the generality of the foregoing, the Committee shall be entitled to determine (i) whether or not any such leave of absence shall constitute a termination of employment within the meaning of the Plan and (ii) the impact, if any, of any such leave of absence on awards under the Plan theretofore made to any recipient who takes such leave of absence. 4.09 Newly Eligible Employees. The Committee shall be entitled to make such rules, regulations, determinations and awards as it deems appropriate in respect of an employee who becomes eligible to participate in the Plan or any portion thereof after the commencement of an award or incentive period. 4.10 Adjustments. In any event of any change in the outstanding Common Stock by reason of a stock dividend or distribution, recapitalization, merger, consolidation, split-up, combination, exchange of shares or the like, the Committee may appropriately adjust the number of shares of Common Stock which may be issued under the Plan, the number of shares of Common Stock subject to Options theretofore granted under the Plan, the option price of Options theretofore granted under the Plan, and any and all other matters deemed appropriate by the Committee. 4.11 Amendment of the Plan. (a) The Committee may, without further action by the shareholders and without receiving further consideration from the participants, amend this Plan or condition or modify awards under the Plan in response to changes in securities or other laws or rules, regulations or regulatory interpretations thereof applicable to this Plan or to comply with stock exchange rules or requirements. (b) The Committee may at any time and from time to time terminate or modify or amend the Plan in any respect, except that without shareholder approval the Committee may not (i) increase the maximum number of shares of Common Stock which may be issued under the Plan (other than increases pursuant to Section 4.10), (ii) extend the period during which any award may be granted or exercised, or (iii) extend the term of the Plan. The termination or modification or amendment of the Plan, except as provided in subsection (a), shall not, without the consent of a participant, affect his or her rights under an award previously granted to him or her. -7- EX-4.3 6 FORM OF OPTION GRANT LETTER UNDER 1998 PLAN INFOCAST CORPORATION 1 Richmond Street West Toronto, Ontario M5H 3W4 As of February 8, 1999 To: [Optionee] We are pleased to inform you that as of February 8, 1999, the Board of Directors of Infocast Corporation (the "Company") granted you Stock Options (the "Option") pursuant to the Company's 1998 Stock Option Plan (the "Plan"), to purchase [ ] shares (the "Shares") of common stock, par value $.001 per share ("Common Stock"), of the Company, at a price of $1.00 per share. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Plan. No part of the Option is currently exercisable. The Option may be exercised with respect to all of the Shares at any time or from time to time on or after August 8, 1999. In the event of a change in control of the Company, all Options granted hereby immediately become fully vested and exercisable. A "change in control" is defined as (i) approval by the stockholders of the Company of any consolidation or merger of the Company in which the holders of voting stock of the Company immediately before the merger or consolidation will not own 50 percent or more of the voting shares of the continuing or surviving corporation or of a sale or other transfer of all or substantially all the assets of the Company or (ii) a change of 50 percent in the membership of the Board of Directors of the Company within a 12-month period, unless the election of such new directors was approved by the vote of 85 percent of the directors then in office who were in office at the beginning of such period. The Option, to the extent not previously exercised, will expire at 5:00 p.m., Eastern Time, on February 7, 2002. You must purchase a minimum of 100 Shares each time you choose to purchase Shares, except to purchase the remaining Shares available to you. The Option is issued in accordance with and is subject to and conditioned upon all of the terms and conditions of the Plan (a copy of which in its present form is attached hereto), as from time to time amended, provided, however, that no future amendment or termination of the Plan shall, without your consent, alter or impair any of your rights or obligations under the Option. Reference is made to the terms and conditions of the Plan, all of which are incorporated by reference herein as if fully set forth herein. Unless at the time of the exercise of the Option a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Shares, any Shares purchased by you upon the exercise of the Option shall be acquired for investment and not for sale or distribution, and if the Company so requests, upon any exercise of the Option, in whole or in part, you will execute and deliver to the Company a certificate to such effect. The Company shall not be obligated to issue any Shares pursuant to the Option if, in the opinion of counsel to the Company, the Shares to be so issued are required to be registered or otherwise qualified under the Act or under any other applicable statute, regulation or ordinance affecting the sale of securities, unless and until such Shares have been so registered or otherwise qualified. You understand and acknowledge that, under existing law, unless at the time of the exercise of the Option a registration statement under the Act is in effect as to the Shares (i) any Shares purchased by you upon exercise of the Option may be required to be held indefinitely unless such Shares are subsequently registered under the Act or an exemption from such registration is available; (ii) any sales of such Shares made in reliance upon Rule 144 promulgated under the Act may be made only in accordance with the terms and conditions of that Rule (which, under certain circumstances, restrict the number of Shares which may be sold and the manner in which Shares may be sold); (iii) in the case of securities to which Rule 144 is not applicable, compliance with Regulation A promulgated under the Act or some other disclosure exemption will be required; (iv) certificates for Shares to be issued to you hereunder shall bear a legend to the effect that the Shares have not been registered under the Act and that the Shares may not be sold, hypothecated or otherwise transferred in the absence of an effective registration statement under the Act relating thereto or an opinion of counsel satisfactory to the Company that such registration is not required; (v) the Company will place an appropriate "stop transfer" order with its transfer agent with respect to such Shares; and (vi) the Company has undertaken no obligation to register the Shares or to include the Shares in any registration statement which may be filed by it subsequent to the issuance of the Shares to you. In addition, you understand and acknowledge that the Company has no obligation to you to furnish information necessary to enable you to make sales under Rule 144. The Option (or installment thereof) is to be exercised by delivering to the Company a written notice of exercise in the form attached hereto as Exhibit A, specifying the number of Shares to be purchased, together with payment of the purchase price of the Shares to be purchased. The purchase price is to be paid in cash or certified check. -2- Would you kindly evidence your acceptance of the Option and your agreement to comply with the provisions hereof and of the Plan by executing this letter under the words "Agreed To and Accepted." Very truly yours, INFOCAST CORPORATION By: ___________________________________ Name: Title: AGREED TO AND ACCEPTED: - ----------------------- [Optionee] -3- Exhibit A Infocast Corporation 1 Richmond Street West Toronto, Ontario M5H 3W4 Gentlemen: Notice is hereby given of my election to purchase _____ shares of Common Stock, $.001 par value (the "Shares"), of Infocast Corporation, at a price of $____ per Share, pursuant to the provisions of the stock option granted to me as of February 8, 1999, under the Company's 1998 Stock Option Plan. Enclosed in payment for the Shares is: ---- /___/ my check in the amount of $________. The following information is supplied for use in issuing and registering the Shares purchased hereby: Number of Certificates and Denominations ___________________ Name ___________________ Address ___________________ ------------------- Social Security Number ___________________ Dated: _______________, ____ Very truly yours, -------------------------- [Optionee] -4- EX-4.4 7 1999 STOCK OPTION PLAN INFOCAST CORPORATION 1999 STOCK OPTION PLAN 1. Purpose of the Plan. This 1999 Stock Option Plan (the "Plan") is intended as an incentive, to retain in the employ of and as consultants and advisors to INFOCAST CORPORATION, a Nevada corporation (the "Company") and any Subsidiary of the Company, within the meaning of Section 424(f) of the United States Internal Revenue Code of 1986, as amended (the "Code"), persons of training, experience and ability, to attract new employees, directors, advisors and consultants whose services are considered valuable, to encourage the sense of proprietorship and to stimulate the active interest of such persons in the development and financial success of the Company and its Subsidiaries. It is further intended that certain options granted pursuant to the Plan shall constitute incentive stock options within the meaning of Section 422 of the Code (the "Incentive Options") while certain other options granted pursuant to the Plan shall be nonqualified stock options (the "Nonqualified Options"). Incentive Options and Nonqualified Options are hereinafter referred to collectively as "Options." The Company intends that the Plan meet the requirements of Rule 16b-3 ("Rule 16b- 3") promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and that transactions of the type specified in subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of the Company pursuant to the Plan will be exempt from the operation of Section 16(b) of the Exchange Act. Further, the Plan is intended to satisfy the performance-based compensation exception to the limitation on the Company's tax deductions imposed by Section 162(m) of the Code. In all cases, the terms, provisions, conditions and limitations of the Plan shall be construed and interpreted consistent with the Company's intent as stated in this Section 1. 2. Administration of the Plan. The Board of Directors of the Company (the "Board") shall appoint and maintain as administrator of the Plan a Committee (the "Committee") consisting of two or more directors that are "Non-Employee Directors" (as such term is defined in Rule 16b-3) and "Outside Directors" (as such term is defined in Section 162(m) of the Code), which shall serve at the pleasure of the Board. The Committee, subject to Sections 3 and 5 hereof, shall have full power and authority to designate recipients of Options, to determine the terms and conditions of respective Option agreements (which need not be identical) and to interpret the provisions and supervise the administration of the Plan. The Committee shall have the authority, without limitation, to designate which Options granted under the Plan shall be Incentive Options and which shall be Nonqualified Options. To the extent any Option does not qualify as an Incentive Option, it shall constitute a separate Nonqualified Option. Subject to the provisions of the Plan, the Committee shall interpret the Plan and all Options granted under the Plan, shall make such rules as it deems necessary for the proper administration of the Plan, shall make all other determinations necessary or advisable for the administration of the Plan and shall correct any defects or supply any omission or reconcile any inconsistency in the Plan or in any Options granted under the Plan in the manner and to the extent that the Committee deems desirable to carry into effect the Plan or any Options. The act or determination of a majority of the Committee shall be the act or determination of the Committee and any decision reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a majority at a meeting duly held. Subject to the provisions of the Plan, any action taken or determination made by the Committee pursuant to this and the other Sections of the Plan shall be conclusive on all parties. In the event that for any reason the Committee is unable to act or if the Committee at the time of any grant, award or other acquisition under the Plan of Options or Stock as hereinafter defined does not consist of two or more Non-Employee Directors, or if there shall be no such Committee, then the Plan shall be administered by the Board and any such grant, award or other acquisition may be approved or ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3; provided, however, that options granted to the Company's Chief Executive Officer or to any of the Company's other four most highly compensation officers that are intended to qualify as performance-based compensation under Section 162(m) of the Code may only be granted by the Committee. 3. Designation of Optionees. The persons eligible for participation in the Plan as recipients of Options (the "Optionees") shall include employees, officers and directors of, and consultants and advisors to, the Company or any Subsidiary; provided that Incentive Options may only be granted to employees of the Company and the Subsidiaries. In selecting Optionees, and in determining the number of shares to be covered by each Option granted to Optionees, the Committee may consider the office or position held by the Optionee or the Optionee's relationship to the Company, the Optionee's degree of responsibility for and contribution to the growth and success of the Company or any Subsidiary, the Optionee's length of service, age, promotions, potential and any other factors that the Committee may consider relevant. An Optionee who has been granted an Option hereunder may be granted an additional Option or Options, if the Committee shall so determine. 4. Stock Reserved for the Plan. Subject to adjustment as provided in Section 7 hereof, a total of 2,000,000 shares of the Company's Common Stock, $0.001 par value per share (the "Stock"), shall be subject to the Plan. The maximum number of shares of Stock that may be subject to options granted under the Plan to -2- any individual in any calendar year shall not exceed 800,000, and the method of counting such shares shall conform to any requirements applicable to performance-based compensation under Section 162(m) of the Code. The shares of Stock subject to the Plan shall consist of unissued shares or previously issued shares held by any Subsidiary of the Company, and such amount of shares of Stock shall be and is hereby reserved for such purpose. Any of such shares of Stock that may remain unsold and that are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purposes of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of shares of Stock to meet the requirements of the Plan. Should any Option expire or be cancelled prior to its exercise in full or should the number of shares of Stock to be delivered upon the exercise in full of an Option be reduced for any reason, the shares of Stock theretofore subject to such Option may be subject to future Options under the Plan. 5. Terms and Conditions of Options. Options granted under the Plan shall be subject to the following conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable: (a) Option Price. The purchase price of each share of Stock purchasable under an Incentive Option shall be determined by the Committee at the time of grant, but shall not be less than 100% of the Fair Market Value (as defined below) of such share of Stock on the date the Option is granted; provided, however, that with respect to an Optionee who, at the time such Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, the purchase price per share of Stock shall be at least 110% of the Fair Market Value per share of Stock on the date of grant; provided, however, that if an option granted to the Company's Chief Executive Officer or to any of the Company's other four most highly compensation officers is intended to qualify as performance-based compensation under Section 162(m) of the Code, the exercise price of such Option shall not be less than 100% of the Fair Market Value of such share of Stock on the date the Option is granted. The purchase price of each share of Stock purchasable under a Nonqualified Option shall not be less than 80% of the Fair Market Value of such share of Stock on the date the Option is granted. The exercise price for each Option shall be subject to adjustment as provided in Section 7 below. Fair Market Value means the closing price of publicly traded shares of Stock on the principal securities exchange on which shares of Stock are listed (if the shares of Stock are so listed), or on the NASDAQ Stock Market (if the shares of Stock are regularly quoted on the NASDAQ Stock Market), or, if not so listed or regularly quoted, the mean between the closing bid and asked prices of publicly traded shares of Stock in the over-the-counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the Committee in a manner consistent with the provisions of the Code. Anything in this Section 5(a) to the contrary notwithstanding, in no event shall the purchase price of a share of Stock be less than the minimum price permitted under rules and policies of the rules and policies of the national securities exchange on which the shares of Stock are listed. -3- (b) Option Term. The term of each Option shall be fixed by the Committee, but no Option shall be exercisable more than ten years after the date such Option is granted. (c) Exercisability. Subject to Section 5(j) hereof, Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at the time of grant. (d) Method of Exercise. Options to the extent then exercisable may be exercised in whole or in part at any time during the option period, by giving written notice to the Company specifying the number of shares of Stock to be purchased, accompanied by payment in full of the purchase price, in cash, by check or such other instrument as may be acceptable to the Committee. As determined by the Committee, in its sole discretion, at or after grant, payment in full or in part may also be made in the form of Stock owned by the Optionee (based on the Fair Market Value of the Stock on the trading day before the Option is exercised). An Optionee shall have the right to dividends and other rights of a stockholder with respect to shares of Stock purchased upon exercise of an Option after (i) the Optionee has given written notice of exercise and has paid in full for such shares and (ii) becomes a stockholder of record with respect thereto. (e) Non-transferability of Options. Options are not transferable and may be exercised solely by the Optionee during his lifetime or after his death by the person or persons entitled thereto under his will or the laws of descent and distribution. Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject to execution, attachment or similar process, any Option contrary to the provisions hereof shall be void and ineffective and shall give no right to the purported transferee. (f) Termination by Death. Unless otherwise determined by the Committee at grant, if any Optionee's employment with or service to the Company or any Subsidiary terminates by reason of death, the Option may thereafter be exercised, to the extent then exercisable (or on such accelerated basis as the Committee shall determine at or after grant), by the legal representative of the estate or by the legatee of the Optionee under the will of the Optionee, for a period of one year after the date of such death or until the expiration of the stated term of such Option as provided under the Plan, whichever period is shorter. (g) Termination by Reason of Disability. Unless otherwise determined by the Committee at grant, if any Optionee's employment with or service to the Company or any Subsidiary terminates by reason of total and permanent disability, any Option held by such Optionee may thereafter be exercised, to the extent it was exercisable at the time of termination due to Disability (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after 30 days after the date of such termination of employment or service or the expiration of the stated term of such Option, whichever period is shorter; provided, however, that, if the Optionee dies within such 30 day period, any unexercised Option held by such Optionee shall thereafter be exercisable to the extent to which it was exercisable at the time of death for a period -4- of one year after the date of such death or for the stated term of such Option, whichever period is shorter. (h) Termination by Reason of Retirement. Unless otherwise determined by the Committee at grant, if any Optionee's employment with or service to the Company or any Subsidiary terminates by reason of Normal or Early Retirement (as such terms are defined below), any Option held by such Optionee may thereafter be exercised to the extent it was exercisable at the time of such Retirement (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after 30 days after the date of such termination of employment or service or the expiration of the stated term of such Option, whichever period is shorter; provided, however, that, if the Optionee dies within such 30 day period, any unexercised Option held by such Optionee shall thereafter be exercisable, to the extent to which it was exercisable at the time of death, for a period of one year after the date of such death or for the stated term of such Option, whichever period is shorter. For purposes of this paragraph (h), Normal Retirement shall mean retirement from active employment with the Company or any Subsidiary on or after the normal retirement date specified in the applicable Company or Subsidiary pension plan or if no such pension plan, age 65. Early Retirement shall mean retirement from active employment with the Company or any Subsidiary pursuant to the early retirement provisions of the applicable Company or Subsidiary pension plan or if no such pension plan, age 55. (i) Other Termination. Unless otherwise determined by the Committee at grant, if any Optionee's employment with or service to the Company or any Subsidiary terminates for any reason other than death, Disability or Normal or Early Retirement, the Option shall thereupon terminate, except that the portion of any Option that was exercisable on the date of such termination of employment may be exercised for the lesser of 30 days after the date of termination or the balance of such Option's term if the Optionee's employment or service with the Company or any Subsidiary is terminated by the Company or such Subsidiary without cause (the determination as to whether termination was for cause to be made by the Committee). The transfer of an Optionee from the employ of the Company to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a termination of employment for purposes of the Plan. (j) Limit on Value of Incentive Option. The aggregate Fair Market Value, determined as of the date the Incentive Option is granted, of Stock for which Incentive Options are exercisable for the first time by any Optionee during any calendar year under the Plan (and/or any other stock option plans of the Company or any Subsidiary) shall not exceed $100,000. (k) Transfer of Incentive Option Shares. The stock option agreement evidencing any Incentive Options granted under this Plan shall provide that if the Optionee makes a disposition, within the meaning of Section 424(c) of the Code and regulations promulgated thereunder, of any share or shares of Stock issued to him upon exercise of an Incentive Option granted under the Plan -5- within the two-year period commencing on the day after the date of the grant of such Incentive Option or within a one-year period commencing on the day after the date of transfer of the share or shares to him pursuant to the exercise of such Incentive Option, he shall, within 10 days after such disposition, notify the Company thereof and immediately deliver to the Company any amount of United States federal income tax withholding required by law. 6. Term of Plan. No Option shall be granted pursuant to the Plan on or after April 7, 2009, but Options theretofore granted may extend beyond that date. 7. Capital Change of the Company. In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, or other change in corporate structure affecting the Stock, the Committee shall make an appropriate and equitable adjustment in the number and kind of shares reserved for issuance under the Plan and in the number and option price of shares subject to outstanding Options granted under the Plan, to the end that after such event each Optionee's proportionate interest shall be maintained as immediately before the occurrence of such event. 8. Purchase for Investment. Unless the Options and shares covered by the Plan have been registered under the Securities Act of 1933, as amended (the "Securities Act"), or the Company has determined that such registration is unnecessary, each person exercising an Option under the Plan may be required by the Company to give a representation in writing that he is acquiring the shares for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof. 9. Taxes. The Company may make such provisions as it may deem appropriate, consistent with applicable law, in connection with any Options granted under the Plan with respect to the withholding of any taxes or any other tax matters. 10. Effective Date of Plan. The Plan shall be effective on April 8, 1999, provided however that the Plan shall subsequently be approved by majority vote of the Company's stockholders not later than April 7, 2000. -6- 11. Amendment and Termination. The Board may amend, suspend, or terminate the Plan, except that no amendment shall be made that would impair the rights of any Optionee under any Option theretofore granted without his consent, and except that no amendment shall be made which, without the approval of the stockholders of the Company would: (a) materially increase the number of shares that may be issued under the Plan, except as is provided in Section 7; (b) materially increase the benefits accruing to the Optionees under the Plan; (c) materially modify the requirements as to eligibility for participation in the Plan; (d) decrease the exercise price of an Incentive Option to less than 100% of the Fair Market Value per share of Stock on the date of grant thereof or the exercise price of a Nonqualified Option to less than 80% of the Fair Market Value per share of Stock on the date of grant thereof; or (e) extend the term of any Option beyond that provided for in Section 5(b). The Committee may amend the terms of any Option theretofore granted, prospectively or retroactively, but no such amendment shall impair the rights of any Optionee without his consent. The Committee may also substitute new Options for previously granted Options, including options granted under other plans applicable to the participant and previously granted Options having higher option prices, upon such terms as the Committee may deem appropriate. 12. Government Regulations. The Plan, and the grant and exercise of Options hereunder, and the obligation of the Company to sell and deliver shares under such Options, shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies, national securities exchanges and interdealer quotation systems as may be required. 13. General Provisions. (a) Certificates. All certificates for shares of Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, or other securities commission having jurisdiction, any applicable Federal or state securities law, any -7- stock exchange or interdealer quotation system upon which the Stock is then listed or traded and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions. (b) Employment Matters. The adoption of the Plan shall not confer upon any Optionee of the Company or any Subsidiary any right to continued employment or, in the case of an Optionee who is a director, continued service as a director, with the Company or a Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any of its employees, the service of any of its directors or the retention of any of its consultants or advisors at any time. (c) Limitation of Liability. No member of the Board or the Committee, or any officer or employee of the Company acting on behalf of the Board or the Committee, shall be personally liable for any action, determination or interpretation taken or made in good faith with respect to the Plan, and all members of the Board or the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation. (d) Registration of Stock. Notwithstanding any other provision in the Plan, no Option may be exercised unless and until the Stock to be issued upon the exercise thereof has been registered under the Securities Act and applicable state securities laws, or are, in the opinion of counsel to the Company, exempt from such registration in the United States. The Company shall not be under any obligation to register under applicable federal or state securities laws any Stock to be issued upon the exercise of an Option granted hereunder in order to permit the exercise of an Option and the issuance and sale of the Stock subject to such Option however, the Company may in its sole discretion register such Stock at such time as the Company shall determine. If the Company chooses to comply with such an exemption from registration, the Stock issued under the Plan may, at the direction of the Committee, bear an appropriate restrictive legend restricting the transfer or pledge of the Stock represented thereby, and the Committee may also give appropriate stop transfer instructions to the Company's transfer agents. INFOCAST CORPORATION April 8, 1999 -8- EX-4.5 8 FORM OF OPTION GRANT LETTER UNDER 1999 PLAN INFOCAST CORPORATION 1 Richmond Street West Toronto, Ontario M5H 3W4 June 1, 1999 To: [Optionee] We are pleased to inform you that on June 1, 1999, the Board of Directors of Infocast Corporation (the "Company") granted you a Nonqualified Option (the "Option") to purchase [_______] shares of common stock (the "Shares"), $.001 par value, of the Company ("Common Stock") pursuant to the Company's 1999 Stock Option Plan (the "Plan"), at a price of $7.00 per Share. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Plan (a copy of which in its present form is attached hereto). No part of the Option is currently exercisable. Prior to May 31, 2004 (the date on which the Option will, to the extent not previously exercised, expire) the Option may be exercised, as follows: ___________]. You must purchase a minimum of 100 Shares each time you choose to purchase Shares, except to purchase the remaining Shares available to you. In the event of a change in control of the Company, all Options granted hereby immediately become fully vested and exercisable. A "change in control" is defined as (i) approval by the stockholders of the Company of any consolidation or merger of the Company in which the holders of voting stock of the Company immediately before the merger or consolidation will not own 50 percent or more of the voting shares of the continuing or surviving corporation or of a sale or other transfer of all or substantially all the assets of the Company or (ii) a change of 50 percent in the membership of the Board of Directors of the Company within a 12-month period, unless the election of such new directors was approved by the vote of 85 percent of the directors then in office who were in office at the beginning of such period. This Option is issued in accordance with and is subject to and conditioned upon all of the terms and conditions of the Plan, as from time to time amended, provided, however, that no future amendment or termination of the Plan shall, without your consent, alter or impair any of your rights or obligations under the Option. Reference is made to the terms and conditions of the Plan, all of which are incorporated by reference herein as if fully set forth herein. The Company, in its sole discretion, may file a registration statement under the Securities Act of 1933, as amended (the "Act"), in order to register the Shares. Unless at the time of the exercise of the Option a registration statement under the Act is in effect as to such Shares, any Shares purchased by you upon the exercise of the Option shall be acquired for investment and not for sale or distribution, and if the Company so requests, upon any exercise of the Option, in whole or in part, you will execute and deliver to the Company a certificate to such effect. The Company shall not be obligated to issue any Shares pursuant to the Option if, in the opinion of counsel to the Company, the Shares to be so issued are required to be registered or otherwise qualified under the Act or under any other applicable statute, regulation or ordinance affecting the sale of securities, unless and until such Shares have been so registered or otherwise qualified. You understand and acknowledge that, under existing law, unless at the time of the exercise of the Option a registration statement under the Act is in effect as to such Shares (i) any Shares purchased by you upon exercise of the Option may be required to be held indefinitely unless such Shares are subsequently registered under the Act or an exemption from such registration is available; (ii) any sales of such Shares made in reliance upon Rule 144 promulgated under the Act may be made only in accordance with the terms and conditions of that Rule (which, under certain circumstances, restrict the number of shares which may be sold and the manner in which shares may be sold); (iii) in the case of securities to which Rule 144 is not applicable, compliance with some other disclosure exemption will be required before any Shares may be sold; (iv) certificates for Shares to be issued to you hereunder shall bear a legend to the effect that the Shares have not been registered under the Act and that the Shares may not be sold, hypothecated or otherwise transferred in the absence of an effective registration statement under the Act relating thereto or an opinion of counsel satisfactory to the Company that such registration is not required; (v) the Company will place an appropriate "stop transfer" order with its transfer agent with respect to such Shares; and (vi) the Company has undertaken no obligation to register the Shares or to include the Shares in any registration statement which may be filed by it subsequent to the issuance of the Shares to you. The Option (or installment thereof) is to be exercised by delivering to the Company a written notice of exercise in the form attached hereto as Exhibit A, specifying the number of Shares to be purchased, together with payment of the purchase price of the Shares to be purchased. The purchase price is to be paid in cash or, at the discretion of the Committee, by delivering shares of Common Stock already owned by you and having a Fair Market Value on the trading day immediately preceding the date of exercise equal to the exercise price of the Option, or a combination of shares of Common Stock and cash, or otherwise in accordance with the Plan. -2- Would you kindly evidence your acceptance of the Option and your agreement to comply with the provisions hereof and of the Plan by executing this letter under the words "Agreed To and Accepted." Very truly yours, INFOCAST CORPORATION By: ____________________________ Name: Title: AGREED TO AND ACCEPTED: [Optionee] -3- Exhibit A INFOCAST CORPORATION 1 Richmond Street West Toronto, Ontario M5H 3W4 Gentlemen: Notice is hereby given of my election to purchase _____ Shares of Common Stock, $.001 par value (the "Shares"), of Infocast Corporation at a price of $____ per Share, pursuant to the provisions of the option granted to me on June 1, 1999, under the Company's 1999 Stock Option Plan. Enclosed in payment for the Shares is: ---- /___/ my check in the amount of $________. ---- */___/ ___________ Shares having a total value $________. The following information is supplied for use in issuing and registering the Shares purchased hereby: Number of Certificates and Denominations ___________________ Name ___________________ Address ___________________ ___________________ Social Security Number ___________________ Dated: _______________, ____ Very truly yours, __________________________ *Subject to the approval of the -4- Board of Directors -5- EX-4.6 9 LEECH OPTION AGREEMENT INFOCAST CORPORATION 1 Richmond Street West Toronto, Ontario M5H 3W4 June 1, 1999 To: James William Leech 61 Inglewood Drive Toronto, Ontario M4T 1H2 We are pleased to inform you that on June 1, 1999, the Board of Directors of Infocast Corporation (the "Company") granted you a non-qualified stock option (the "Option") to purchase 750,000 shares of common stock (the "Shares"), $.001 par value, of the Company ("Common Stock"), at a price of US$7.00 per Share. Prior to May 31, 2004 (the date on which the Option will, to the extent not previously exercised, expire) the Option may be exercised, as follows: (i) as to 250,000 Shares at any time on or after the date you assume the position of the Company's President and Chief Executive Officer (the "Start Date"); (ii) as to an additional 250,000 Shares at any time after the first anniversary of the Start Date; (iii) as to the remaining 250,000 Shares at any time after the second anniversary of the Start Date. You must purchase a minimum of 1,000 Shares each time you choose to purchase Shares, except to purchase the remaining Shares available to you. In the event of a change in control of the Company, all Options granted hereby immediately become fully vested and exercisable. A "change in control" is defined as (i) the direct or indirect sale, lease, exchange or other transfer of all or substantially all (50% or more) of the assets of the Company to any person or entity or group of persons or entities acting jointly or in concert as a partnership or other group (a "Group of Persons"); (ii) the merger, consolidation or other business combination of the Company with or into another corporation with the effect that the shareholders of the Company immediately following the merger, consolidation or other business combination, hold 50% or less of the combined voting power of the then outstanding securities of the surviving corporation of such merger, consolidation or other business combination ordinarily (and apart from rights accruing under special circumstances) having the right to vote in the election of directors; (iii) the replacement of majority of the Board of Directors of the Company or of any committee of the Board of Directors of the Company in any given year as compared to the directors who constituted the Board of Directors of the Company or such committee at the beginning of such year, and such replacement shall not have been approved by the Board of Directors of the Company, as the case may be, as constituted at the beginning of such year; (iv) a person or Group of Persons shall, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases, merger, consolidation or other business combination, or otherwise, have become the beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of securities of the Company representing 20% or more of the combined voting power of the then outstanding securities of such corporation ordinarily (and apart from rights accruing under special circumstances) having the right to vote in the election of directors; or (v) the voluntary liquidation, dissolution or winding-up of the Company, in connection with which a distribution is made to the holders of the Company's Common Stock. The Option is not transferable and may be exercised solely by you during your lifetime or after your death by the person or persons entitled thereto under your will or the laws of descent and distribution. Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject to execution, attachment or similar process, the Option contrary to the provisions hereof shall be void and ineffective and shall give no right to the purported transferee. If your employment with or service to the Company or any Subsidiary terminates by reason of death, the Option shall immediately become fully vested and exercisable and the Option may thereafter be exercised by the legal representative of your estate or by your legatee under your will, for a period of one year after the date of such death or until the expiration of the stated term of the Option, whichever period is shorter. As used in this Agreement, the term "Subsidiary" means any Subsidiary of the Company within the meaning of Section 425(f) of the United States Internal Revenue Code of 1986, as amended. If your employment with or service to the Company or any Subsidiary terminates by reason of disability as will be provided for in your employment agreement, the Option shall immediately become fully vested and exercisable and the Option may thereafter be exercised for a period of one year after the date of such termination of employment or service or until the expiration of the stated term of the Option, whichever period is shorter. -2- If your employment with or service to the Company or any Subsidiary is terminated by the Company for cause as will be provided for in your employment agreement, the Option shall thereupon immediately terminate. If your employment with or service to the Company or any Subsidiary is terminated by the Company for any reason other than cause, death, disability or at any time within 24 months following the occurrence of a "change in control," the Option shall immediately become fully vested and exercisable and the Option may be exercised for the lesser of 24 months after the date of termination or the balance of the Option's term. Your transfer from the employ of the Company to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a termination of employment for purposes of the Option. If your employment with or service to the Company or any Subsidiary is terminated by the Company at any time within 24 months following the occurrence of a "change in control", the Option may be exercised for the lesser of 36 months after the date of termination or the balance of the Option's term. If your employment with or service to the Company or any Subsidiary is terminated by you, the Option shall thereupon immediately terminate except that the portion of the Option that was exercisable on the date of such termination of employment or service may thereafter be exercised for a period of 30 days after the date of such termination of employment or service or until the expiration of the stated term of the Option, whichever period is shorter. In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, or other change in corporate structure affecting the Common Stock, the Board of Directors of the Company shall make an appropriate and equitable adjustment in the number and option price of shares subject to the Option to the end that after such event your proportionate interest shall be maintained as immediately before the occurrence of such event. The Company may make such provisions as it may deem appropriate, consistent with applicable law, in connection with the Option with respect to the withholding of any taxes or any other tax matters. The Company, in its sole discretion, may file a registration statement under the Securities Act of 1933, as amended (the "Act"), in order to register the Shares. Unless at the time of the exercise of the Option a registration statement under the Act is in effect as to such Shares, any Shares purchased by you upon the exercise of the Option shall be acquired for investment and not for sale or distribution, and if the Company so requests, upon any exercise of the Option, in whole or in part, you will execute and deliver to the Company a certificate to such effect. The Company shall not be obligated to issue any Shares pursuant to the Option if, in the opinion of counsel to the Company, the Shares to be so issued are required to be registered or otherwise qualified under the Act or under any other applicable statute, regulation or ordinance affecting the sale of securities, unless -3- and until such Shares have been so registered or otherwise qualified. You understand and acknowledge that, under existing law, unless at the time of the exercise of the Option a registration statement under the Act is in effect as to such Shares (i) any Shares purchased by you upon exercise of the Option may be required to be held indefinitely unless such Shares are subsequently registered under the Act or an exemption from such registration is available; (ii) any sales of such Shares made in reliance upon Rule 144 promulgated under the Act may be made only in accordance with the terms and conditions of that Rule (which, under certain circumstances, restrict the number of shares which may be sold and the manner in which shares may be sold); (iii) in the case of securities to which Rule 144 is not applicable, compliance with some other disclosure exemption will be required before any Shares may be sold; (iv) certificates for Shares to be issued to you hereunder shall bear a legend to the effect that the Shares have not been registered under the Act and that the Shares may not be sold, hypothecated or otherwise transferred in the absence of an effective registration statement under the Act relating thereto or an opinion of counsel satisfactory to the Company that such registration is not required; (v) the Company will place an appropriate "stop transfer" order with its transfer agent with respect to such Shares; and (vi) the Company has undertaken no obligation to register the Shares or to include the Shares in any registration statement which may be filed by it subsequent to the issuance of the Shares to you. The Option (or installment thereof) is to be exercised by delivering to the Company a written notice of exercise in the form attached hereto as Exhibit A, specifying the number of Shares to be purchased, together with payment in full of the purchase price of the Shares to be purchased. The purchase price is to be paid in cash, by check, such other instrument as may be acceptable to the Board of Directors of the Company, or, at the discretion of the Board of Directors of the Company, by delivering shares of Common Stock already owned by you and having a Fair Market Value (as hereinafter defined) on the trading day immediately preceding the date of exercise equal to the exercise price of the Option, or a combination of shares of Common Stock and cash. Fair Market Value means the closing price of publicly traded shares of Common Stock on the principal securities exchange on which shares of Common Stock are listed (if the shares of Common Stock are so listed), or on the NASDAQ Stock Market (if the shares of Common Stock are regularly quoted on the NASDAQ Stock Market), or, if not so listed or regularly quoted, the mean between the -4- closing bid and asked prices of publicly traded shares of Common Stock in the over-the-counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the Board of Directors of the Company. Anything in this provision to the contrary notwithstanding, in no event shall the purchase price of a share of Common Stock be less than the minimum price permitted under rules and policies of the rules and policies of the national securities exchange on which the shares of Common Stock are listed. -5- Would you kindly evidence your acceptance of the Option and your agreement to comply with the provisions hereof by executing this letter under the words "Agreed To and Accepted." Very truly yours, INFOCAST CORPORATION By:/S/ A.T. Griffis --------------------- Name: A. Thomas Griffis Title: Chairman of the Board AGREED TO AND ACCEPTED: /s/ James William Leech James William Leech -6- Exhibit A INFOCAST CORPORATION 1 Richmond Street West Toronto, Ontario M5H 3W4 Gentlemen: Notice is hereby given of my election to purchase _____ Shares of Common Stock, $.001 par value (the "Shares"), of Infocast Corporation at a price of U.S.$_____ per Share, pursuant to the provisions of the option granted to me on June 1, 1999. Enclosed in payment for the Shares is: ---- /___/ my check in the amount of $________. ---- */___/ ___________ Shares having a total value $________. The following information is supplied for use in issuing and registering the Shares purchased hereby: Number of Certificates and Denominations ___________________ Name ___________________ Address ___________________ ___________________ Social Security Number ___________________ Dated: _______________, ____ Very truly yours, -------------------------- *Subject to the approval of the Board of Directors -7- EX-4.7 10 THOMSON KERNAGHAN WARRANT FOR 50,000 SHARES [PURCHASER'S WARRANT] THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE SECURITIES LAWS, SUPPORTED BY AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO INFOCAST CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED Dated: June 24, 1999 WARRANT To Purchase 50,000 Shares of Common Stock EXPIRING 5:00 p.m. New York Time on June 23, 2001. THIS IS TO CERTIFY THAT, for value received, Thomson Kernaghan & Co. Limited, or registered assigns (the "Holder") is entitled to purchase from Infocast Corporation, a Nevada corporation (the "Company"), at any time or from time to time prior to 5:00 p.m., New York City time, on June 23, 2001 at the principal executive offices of the Company, at the Exercise Price (as hereinafter defined), the number of shares of Common Stock shown above, all subject to adjustment and upon the terms and conditions as hereinafter provided, and is entitled also to exercise the other appurtenant rights, powers and privileges hereinafter described. Certain terms used in this Warrant are defined in Article V. ARTICLE I EXERCISE OF WARRANTS 1.1. Method of Exercise. To exercise this Warrant in whole or in part, the Holder shall deliver to the Company, at the Company's offices at the address set forth in Section 6.1, (a) this Warrant, (b) a written notice, in substantially the form of the Exercise Notice attached hereto (or a reasonable facsimile thereof), of such Holder's election to exercise this Warrant, which notice shall specify the number of shares of Common Stock to be purchased, the denominations of the certificate or certificates desired, and the name or names in which such certificates are to be registered, and (c) payment of the Exercise Price with respect to such Common Stock. Payment made pursuant to clause (c) above may be made, at the option of the Holder by cash, money order, certified or bank cashier's check or wire transfer. 1.2. Delivery of Stock Certificates, etc. The Company shall, as promptly as practicable and in any event within five Business Days after the delivery to the Company of an Exercise Notice or Conversion, as the case may be, execute and deliver or cause to be executed and delivered, in accordance with such notice, a certificate or certificates representing the aggregate number of Shares of Common Stock specified in said notice. The certificate or certificates so delivered shall be in such denominations as may be specified in such notice or, if such notice shall not specify denominations, shall be in the amount of the number of shares of Common Stock for which the Warrant is being exercised and shall be issued in the name of the Holder or such other name or names as shall be designated in such notice. Such certificate or certificates shall be deemed to have been issued, and such Holder or any other Person so designated to be named therein shall be deemed for all purposes to have become a holder of record of such Common Stock, as of the date the aforementioned notice, accompanied by full payment of the Exercise Price with respect to such Common Stock pursuant to Section 1.1, is received by the Company. If this Warrant shall have been exercised only in part, the Company shall, at the time of delivery of the certificate or certificates, deliver to the Holder a new warrant certificate evidencing the rights to purchase the remaining Common Stock provided for by this Warrant, which new warrant certificate shall in all other respects be identical with this warrant, or, at the request of the Holder, appropriate notation may be made on this Warrant which shall then be returned to the Holder. The Company shall pay all expenses, taxes (other then income taxes of a Holder) and other charges payable in connection with the preparation, issuance and delivery of any such certificates for Common Stock and new Warrants, except that, if any such Common Stock certificates or new Warrants shall be registered in a name or names other than the name of the Holder, funds sufficient to pay all transfer taxes payable as a result of such transfer shall be paid by the Holder at the time of delivering the aforementioned notice of exercise or promptly upon receipt of a written request of the Company for payment. 1.3. Securities To Be Fully Paid and Nonassessable. All Common Stock issued upon the exercise of this Warrant: (i) shall be validly issued, fully paid and nonassessable and free from all preemptive rights of any holder of Common Stock, and from all taxes, liens and charges with respect to the issue thereof (other than transfer taxes); and (ii) if the Common Stock is then listed on any national securities exchanges (as defined in the Exchange Act) or quoted on NASDAQ, shall be duly listed or quoted thereon, as the case may be. 1.4. Securities Legend. Each certificate for Common Stock issued upon exercise of this Warrant, unless at the time of exercise such Common Stock are registered under the Securities Act, shall bear the following legend: -2- THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE SECURITIES LAWS, SUPPORTED BY AN OPINION OR COUNSEL, REASONABLY SATISFACTORY TO INFOCAST CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED. Any certificate issued at any time in exchange or substitution for any certificate bearing such legend (except a new certificate issued upon completion of a public distribution pursuant to a registration statement under the Securities Act) shall also bear such legend unless, in the reasonable opinion of counsel to the Company, the securities represented thereby are no longer subject to restrictions on resale under the Securities Act. 1.5. Reservation; Authorization. The Company has reserved and will keep available for issuance upon exercise of the Warrants the total number of shares of Common Stock deliverable upon exercise of all Warrants from time to time outstanding. The issuance of such Common Stock has been duly and validly authorized. ARTICLE II TRANSFER, EXCHANGE AND REPLACEMENT OF WARRANTS 2.1. Ownership of Warrant. The Company may deem and treat the Person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by any Person) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration of transfer as provided in this Article II. 2.2. Transfer of Warrant. The Company agrees to maintain at its principal executive offices books for the registration of transfers of the Warrants, and transfer of this Warrant and all rights hereunder shall be registered, in whole or in part, on such books, upon surrender of this Warrant at the Company's principal executive offices, together with a written assignment of this Warrant duly executed by the Holder or his duly authorized agent or attorney, with (unless the Holder is the original Holder of this Warrant) signatures guaranteed by a bank or trust Company or a broker or dealer registered with the NASD, and funds sufficient to pay any transfer taxes payable upon such transfer. Upon surrender the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in the instrument of assignment, and this Warrant shall promptly be canceled. The Company shall not be required to register any transfers absent an opinion of counsel to the Company that such transfer is exempt from the registration requirements of the Securities Act. -3- 2.3. Loss, Theft, Destruction or Mutilation of Warrants. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security reasonably satisfactory to the Company (the original Holder's or any institutional Holder's indemnity being satisfactory indemnity in the event of loss, theft or destruction of any Warrant owned by such holder), or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same aggregate number of Common Stock as provided for in such lost, stolen, destroyed or mutilated Warrant. 2.4. Expenses of Delivery of Warrants. The Company shall pay all expenses, taxes (other than transfer taxes or income taxes of a Holder) and other charges payable in connection with the preparation, issuance and delivery of Warrants and Common Stock issuable upon exercise of the Warrants hereunder. ARTICLE III CERTAIN RIGHTS 3.1. Registration Rights. The Common Stock issuable upon exercise of this Warrant are entitled to the benefits of the registration rights contemplated in the Securities Purchase Agreement. ARTICLE IV ANTIDILUTION PROVISIONS 4.1. Adjustments Generally. The Exercise Price and the number of shares of Common Stock (or other securities or property) issuable upon exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events, as provided in this Article IV. 4.2. Common Stock. In the event that the Exercise Price is adjusted pursuant to the terms hereof, then, effective at the time of such adjustment, the number of shares subject to this Warrant shall be adjusted to an amount equal to the result obtained by multiplying: (i) the number of shares of Common Stock subject to this Warrant prior to such adjustment by; (ii) a fraction the numerator of which shall be the Exercise Price immediately prior to such adjustment and the denominator of which shall be the Exercise Price following such adjustment. -4- 4.3. Adjustments to Exercise Price (a) Dividends. In the event the Company shall make or issue, or shall fix a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution (other than a distribution in liquidation or other distribution otherwise provided for herein) with respect to the Common Stock payable in (i) securities of the Company other than shares of Common Stock, or (ii) other assets (excluding cash dividends or distributions), then and in each such event provision shall be made so that the Holders shall receive upon exercise of this Warrant in addition to the number of shares of Common Stock receivable thereupon, the number of securities or such other assets of the Company which each Holder would have received had such Holder exercised this Warrant and acquired Common Stock on the date of such event and had such holder thereafter, during the period from the date of such event to and including the exercise of this Warrant by the Holder, retained such securities or such other assets receivable by such holder during such period, giving application to all other adjustments called for during such period under this Article IV with respect to the rights of the holders of the Common Stock. (b) Capital Reorganization or Reclassification. If the Common Stock issuable upon the exercise of this Warrant shall be changed into the same or different number of shares of any class or classes of capital stock, whether by capital reorganization, recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend provided for elsewhere in this Section 4.3, or the sale of all or substantially all of the Company's capital stock or assets to any other person), then and in each such event each Holder shall have the right thereafter to acquire the kind and amount of shares of capital stock and other securities and property receivable upon such reorganization, recapitalization, reclassification or other change by the holders of the number of shares of Common Stock for which such Warrant might have been exercised immediately prior to such reorganization, recapitalization, reclassification or change, all subject to further adjustment as provided herein. (c) Certificate as to Adjustments; Notice by Company. In each case of an adjustment or readjustment hereunder, the Company at its expense will furnish each Holder not later than the fifth Business Day following any such adjustment or readjustment, at such Holder's registered address as shall appear on the records of the Company, a certificate prepared by the Treasurer or Chief Financial Officer of the Company, showing such adjustment or readjustment, and stating in detail the facts upon which such adjustment or readjustment is based. (d) Reservation of Common Stock. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the exercise of the Warrants, such number of its shares of Common Stock as shall from time to time be sufficient to effect the exercise of the Warrants and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of Warrants, the Company shall take such action as may be necessary to increase, and it shall increase, its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. -5- 4.4. Merger, Consolidation, Etc. (a) If at any time or from time to time there shall be (i) a merger, or consolidation of the Company with or into another corporation, (ii) the sale of all or substantially all of the Company's capital stock or assets to any other person, (iii) any other form of business combination or reorganization in which the Company shall not be the continuing or surviving entity of such business combination or reorganization, or (iv) any transaction or series of transactions by the Company in which in excess of 50 percent of the Company's voting power is transferred (each, a "Reorganization"), then as a part of such Reorganization, provision shall be made so that the Holders shall thereafter be entitled to receive upon exercise the same kind and amount of stock or other securities or property (including cash) of the Company, or of the successor corporation resulting from such Reorganization to which such Holder would have been entitled if such Holder had exercised its Warrants immediately prior to the effective time of such Reorganization. In any such case, appropriate adjustment shall be made in the application of the provisions of Article IV to the end that the provisions of Article IV (including adjustment of the Exercise Price then in effect and the number of shares of Common Stock or other securities issuable upon exercise of the Warrants) shall be applicable after that event in as nearly equivalent a manner as may be practicable. (b) The Company will not effect any of the transactions described in clause (a) of this Section 4.4 hereof unless, prior to the consummation thereof, each person (other than the Company) which may be required to deliver any stock, securities, cash or property upon the exercise of this Warrant as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the Holders: (i) the obligations of the Company under this Warrant (and if the Company shall survive the consummation of such transaction, such assumption shall be in addition to, and shall not release the Company from, any continuing obligations of the Company under this Warrant), (ii) the obligations of the Company under the Securities Purchase Agreement with respect to Registration Rights and (iii) the obligation to deliver to each holder such shares of stock, securities, cash or property as, in accordance with the foregoing provisions of this Article IV, each Holder may be entitled to receive, and such Person shall have similarly delivered to such Holder an opinion of counsel for such Person, stating that this Warrant shall thereafter continue in full force and effect and the terms hereof (including without limitation all of the provisions of this Article IV) shall be applicable to the stock, securities, cash or property which such Person may be required to deliver upon any exercise of this Warrant or the exercise of any rights pursuant hereto. (c) The provisions of this Section 4.4 are in addition to and not in lieu of the other provisions of Article IV hereof. 4.5. Notice of Adjustment. In addition to any other notice required hereunder, not less than 10 nor more than 60 days prior to the record date or effective date, as the case may be, of any action which would require an adjustment or readjustment pursuant to this Article IV, the Company shall give notice to each Holder of such event, describing such event in reasonable detail and specifying the record date or effective date, as the case may be, and, if determinable, the required -6- adjustment and the computation thereof. If the required adjustment is not determinable at the time of such notice, the Company shall give notice to each Holder of such adjustment and computation promptly after such adjustment becomes determinable. 4.6. Notices of Corporate Action. In the event of (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, (b) any capital reorganization of the Company, reclassification or recapitalization of the capital stock of the Company or any consolidation or merger involving the Company and any other Person or any transfer of all or substantially all the assets of the Company to any other Person, or (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, the Company will mail to the holder of this Warrant a notice specifying (i) the date or expected date on which any record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right, and (ii) the date or expected date on which any such reorganization, reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation, winding-up or Sale of the Company is to take place, the time, if any such time is to be fixed, as of which the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for the securities or other property deliverable upon such reorganization, reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation or winding-up and a description in reasonable detail of the transaction. Such notice shall be mailed promptly after the decision is made to take any of the actions specified in (a)-(c) above. ARTICLE V DEFINITIONS The following terms, as used in this Warrant, have the following respective meanings: "Board of Directors" shall mean the board of directors of the Company. "Business Day" shall mean (a) if any Common Stock is listed or admitted to trading on a national securities exchange or Nasdaq, a day on which the principal national securities exchange Nasdaq on which such class of Common Stock are listed or admitted to trading is open for -7- business or (b) if Common Stock is not so listed or admitted to trading, a day on which any New York Stock Exchange member firm is open for business. "Common Stock" means the common stock, $.001 par value, of the Company. "Company" shall have the meaning set forth in the first paragraph of this Warrant. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and any similar or successor federal statute, and the rules and regulations of the Securities and Exchange Commission (or its successor) thereunder, all as the same shall be in effect at the time. "Exercise Price" shall mean $7.00 per share of Common Stock, adjusted as contemplated herein. "Holder" shall have the meaning set forth in the first paragraph of this Warrant. "Market Price" at any date shall be deemed to be the last reported sale price of the Common Stock on such date, or, in case no such reported sale takes place on such day, the average of the last reported sales prices for the immediately preceding three trading days, in either case as officially reported by the principal securities exchange on which the Common Stock is listed or admitted to trading, or, if the Common Stock is not listed or admitted to trading on any national securities exchange or if any such exchange on which the Common Stock is listed is not its principal trading market, the last reported sale price as furnished by the NASD through the Nasdaq National Market or SmallCap Market, or, if applicable, the OTC Bulletin Board, or if the Common Stock is not listed or admitted to trading on the Nasdaq National Market or SmallCap Market or OTC Bulletin Board or similar organization, as determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it. "NASD" means the National Association of Securities Dealers, Inc. "Nasdaq" means The National Association of Securities Dealers, Inc. Automated Quotation System. "Person" means any individual, corporation, limited liability company, partnership, limited liability partnership, joint venture or other entity. "Requisite Holders" means, as of any date of determination, persons holding outstanding Warrants entitling them to purchase a majority of the Common Stock issuable upon exercise of the Warrants originally represented hereby. "Securities Act" shall mean the Securities Act of 1933, as amended, and any similar or successor federal statute, and the rules and regulations of the Securities and Exchange Commission (or its successor) thereunder, all as the same shall be in effect at the time. -8- "Securities Purchase Agreement" means the Securities Purchase Agreement dated June 24, 1999 between the Company and Thomson Kernaghan & Co. Limited. "Shares" shall have the meaning set forth in the Securities Purchase Agreement. "Warrant or Warrants" means this Warrant and any Warrant issued to a transferee of all or any part of this Warrant. ARTICLE VI MISCELLANEOUS 6.1. Notices. All notices or other communications required hereby shall be in writing and shall be sent either by (a) courier, or (b) by telecopy as well as by registered or certified mail, and shall be regarded as properly given in the case of a courier upon actual delivery to the proper place of address; in the case of telecopy, on the day following the date of transmission if properly addressed and sent without transmission error to the correct number and receipt is confirmed by telephone within 48 hours of the transmission; in the case of a letter for which a telecopy could not be successfully transmitted or receipt of which could not be confirmed as herein provided, three (3) days after the registered or certified mailing date if the letter is properly addressed and postage prepaid; and shall be regarded as properly addressed if sent to the parties and their representatives at the addresses given below: To the Company: Infocast Corporation 1 Richmond Street West Suite 901 Toronto, Ontario M5H 3W4 Attention: President and Chief Executive Officer Facsimile: (416) 867-9320 Confirmation: (416) 867-9087 With a copy to: Olshan Grundman Frome Rosenzweig & Wolosky LLP 505 Park Avenue New York, New York 10022 Attention: Jeffrey Spindler, Esq. Facsimile: (212) 755-1467 Confirmation: (212) 753-7200 -9- To the Holder: Thomson Kernaghan & Co. Limited 365 Bay Street, 10th Floor Toronto, Ontario M5H 2V2 Attention: Mark Valentine Facsimile: (416) 860-6355 Confirmation: (416) 860-6130 or such other address as any of the above may have furnished to the other parties in writing in compliance with the terms of this Section. 6.2. Waivers: Amendments. No failure or delay of the Holder in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Holder are cumulative and not exclusive of any rights or remedies which it would otherwise have. The provisions of this Warrant may be amended, modified or waived with (and only with) the written consent of the Company and the Requisite Holders. Any such amendment, modification or waiver effected pursuant to this Section shall be binding upon the Holders of all Warrants and Common Stock issued upon exercise thereof, upon each future holder thereof and upon the Company. In the event of any such amendment, modification or waiver, the Company shall give prompt notice thereof to all Holders and, if appropriate, notation thereof shall be made on all Warrants thereafter surrendered for registration of transfer or exchange. No notice or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances. 6.3. Governing Law. This Warrant shall be construed in accordance with and governed by the laws of the State of New York without regard to principles of conflicts of law. 6.4. Survival of Agreements; Representations and Warranties, etc. All representations, warranties and covenants made by the Company herein or in any certificate or other instrument delivered by or on behalf of it in connection with the Warrants shall be considered to have been relied upon by the Holder and shall survive the issuance and delivery of the Warrants, regardless of any investigation made by the Holder, and shall continue in full force and effect so long as any Warrant is outstanding. 6.5. Covenants to Bind Successor and Assigns. All covenants, stipulations, promises and agreements in this Warrant contained by or on behalf of the Company shall bind its successors and assigns, whether so expressed or not. -10- 6.6. Severability. In case any one or more of the provisions contained in this Warrant shall be invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. 6.7. Section Headings. The sections headings used herein are for convenience of reference only, are not part of this Warrant and are not to affect the construction of or be taken into consideration in interpreting this Warrant. 6.8. No Impairment. The Company shall not by any action including, without limitation, amending its organizational documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company will (a) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Common Stock upon the exercise of this Warrant, and (b) use its commercially reasonable best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. -11- IN WITNESS WHEREOF, Infocast Corporation has caused this Warrant to be executed in its corporate name by one of its officers thereunto duly authorized, and attested by its Secretary or an Assistant Secretary, all as of the day and year first above written. INFOCAST CORPORATION By: /s/ A.T. Griffis ---------------------------------- Name: Title: Attest: /s/ Elia Crespo - -------------------------------- Name: Title: -12- FORM OF EXERCISE NOTICE (To be executed upon exercise of Warrant) TO: The undersigned hereby irrevocably elects to exercise the right to purchase represented by the attached Warrant for, and to purchase thereunder, __________________ Common Stock, as provided for therein, and tenders herewith payment of the Exercise Price in full in accordance with the terms of the attached warrant. Please issue a certificate or certificates for such Common Stock in the following name or names and denominations: If said number of Common Stock shall not be all the Common Stock issuable upon exercise of the attached Warrant, a new Warrant is to be issued in the name of the undersigned for the balance remaining of such Common Stock. Dated: _____________, _____ --------------------------------- Note: The above signature should correspond exactly with the name on the face of the attached Warrant or with the name of the assignee appearing in the assignment form below. ASSIGNMENT (To be executed upon assignment of Warrant) For value received, ________________________________ hereby sells, assigns and transfers unto __________________ the attached Warrant, together with all rights, title and interest therein, and does hereby irrevocably constitute and appoint ____________________ attorney to transfer said Warrant on the books of , with full power of substitution in the premises. --------------------------------- Note: The above signature should correspond exactly with the name on the face of the attached Warrant. EX-4.8 11 PLACEMENT AGENT WARRANT FOR 20,000 SHARES [PLACEMENT AGENT'S WARRANT] THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE SECURITIES LAWS, SUPPORTED BY AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO INFOCAST CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED Dated: June 24, 1999 WARRANT To Purchase 20,000 Shares of Common Stock EXPIRING 5:00 p.m. New York Time on June 23, 2001. THIS IS TO CERTIFY THAT, for value received, Thomson Kernaghan & Co. Limited, or registered assigns (the "Holder") is entitled to purchase from Infocast Corporation, a Nevada corporation (the "Company"), at any time or from time to time prior to 5:00 p.m., New York City time, on June 23, 2001 at the principal executive offices of the Company, at the Exercise Price (as hereinafter defined), the number of shares of Common Stock shown above, all subject to adjustment and upon the terms and conditions as hereinafter provided, and is entitled also to exercise the other appurtenant rights, powers and privileges hereinafter described. Certain terms used in this Warrant are defined in Article V. ARTICLE I EXERCISE OF WARRANTS 1.1. Method of Exercise. To exercise this Warrant in whole or in part, the Holder shall deliver to the Company, at the Company's offices at the address set forth in Section 6.1, (a) this Warrant, (b) a written notice, in substantially the form of the Exercise Notice attached hereto (or a reasonable facsimile thereof), of such Holder's election to exercise this Warrant, which notice shall specify the number of shares of Common Stock to be purchased, the denominations of the certificate or certificates desired, and the name or names in which such certificates are to be registered, and (c) payment of the Exercise Price with respect to such Common Stock. Payment made pursuant to clause (c) above may be made, at the option of the Holder by cash, money order, certified or bank cashier's check or wire transfer. 1.2. Delivery of Stock Certificates, etc. The Company shall, as promptly as practicable and in any event within five Business Days after the delivery to the Company of an Exercise Notice or Conversion, as the case may be, execute and deliver or cause to be executed and delivered, in accordance with such notice, a certificate or certificates representing the aggregate number of Shares of Common Stock specified in said notice. The certificate or certificates so delivered shall be in such denominations as may be specified in such notice or, if such notice shall not specify denominations, shall be in the amount of the number of shares of Common Stock for which the Warrant is being exercised and shall be issued in the name of the Holder or such other name or names as shall be designated in such notice. Such certificate or certificates shall be deemed to have been issued, and such Holder or any other Person so designated to be named therein shall be deemed for all purposes to have become a holder of record of such Common Stock, as of the date the aforementioned notice, accompanied by full payment of the Exercise Price with respect to such Common Stock pursuant to Section 1.1, is received by the Company. If this Warrant shall have been exercised only in part, the Company shall, at the time of delivery of the certificate or certificates, deliver to the Holder a new warrant certificate evidencing the rights to purchase the remaining Common Stock provided for by this Warrant, which new warrant certificate shall in all other respects be identical with this warrant, or, at the request of the Holder, appropriate notation may be made on this Warrant which shall then be returned to the Holder. The Company shall pay all expenses, taxes (other then income taxes of a Holder) and other charges payable in connection with the preparation, issuance and delivery of any such certificates for Common Stock and new Warrants, except that, if any such Common Stock certificates or new Warrants shall be registered in a name or names other than the name of the Holder, funds sufficient to pay all transfer taxes payable as a result of such transfer shall be paid by the Holder at the time of delivering the aforementioned notice of exercise or promptly upon receipt of a written request of the Company for payment. 1.3. Securities To Be Fully Paid and Nonassessable. All Common Stock issued upon the exercise of this Warrant: (i) shall be validly issued, fully paid and nonassessable and free from all preemptive rights of any holder of Common Stock, and from all taxes, liens and charges with respect to the issue thereof (other than transfer taxes); and (ii) if the Common Stock is then listed on any national securities exchanges (as defined in the Exchange Act) or quoted on NASDAQ, shall be duly listed or quoted thereon, as the case may be. 1.4. Securities Legend. Each certificate for Common Stock issued upon exercise of this Warrant, unless at the time of exercise such Common Stock are registered under the Securities Act, shall bear the following legend: -2- THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE SECURITIES LAWS, SUPPORTED BY AN OPINION OR COUNSEL, REASONABLY SATISFACTORY TO INFOCAST CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED. Any certificate issued at any time in exchange or substitution for any certificate bearing such legend (except a new certificate issued upon completion of a public distribution pursuant to a registration statement under the Securities Act) shall also bear such legend unless, in the reasonable opinion of counsel to the Company, the securities represented thereby are no longer subject to restrictions on resale under the Securities Act. 1.5. Reservation; Authorization. The Company has reserved and will keep available for issuance upon exercise of the Warrants the total number of shares of Common Stock deliverable upon exercise of all Warrants from time to time outstanding. The issuance of such Common Stock has been duly and validly authorized. ARTICLE II TRANSFER, EXCHANGE AND REPLACEMENT OF WARRANTS 2.1. Ownership of Warrant. The Company may deem and treat the Person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by any Person) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration of transfer as provided in this Article II. 2.2. Transfer of Warrant. The Company agrees to maintain at its principal executive offices books for the registration of transfers of the Warrants, and transfer of this Warrant and all rights hereunder shall be registered, in whole or in part, on such books, upon surrender of this Warrant at the Company's principal executive offices, together with a written assignment of this Warrant duly executed by the Holder or his duly authorized agent or attorney, with (unless the Holder is the original Holder of this Warrant) signatures guaranteed by a bank or trust Company or a broker or dealer registered with the NASD, and funds sufficient to pay any transfer taxes payable upon such transfer. Upon surrender the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in the instrument of assignment, and this Warrant shall promptly be canceled. The Company shall not be required to register any transfers absent an opinion of counsel to the Company that such transfer is exempt from the registration requirements of the Securities Act. -3- 2.3. Loss, Theft, Destruction or Mutilation of Warrants. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security reasonably satisfactory to the Company (the original Holder's or any institutional Holder's indemnity being satisfactory indemnity in the event of loss, theft or destruction of any Warrant owned by such holder), or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same aggregate number of Common Stock as provided for in such lost, stolen, destroyed or mutilated Warrant. 2.4. Expenses of Delivery of Warrants. The Company shall pay all expenses, taxes (other than transfer taxes or income taxes of a Holder) and other charges payable in connection with the preparation, issuance and delivery of Warrants and Common Stock issuable upon exercise of the Warrants hereunder. ARTICLE III CERTAIN RIGHTS 3.1. Registration Rights. The Common Stock issuable upon exercise of this Warrant are entitled to the benefits of the registration rights contemplated in the Securities Purchase Agreement. ARTICLE IV ANTIDILUTION PROVISIONS 4.1. Adjustments Generally. The Exercise Price and the number of shares of Common Stock (or other securities or property) issuable upon exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events, as provided in this Article IV. 4.2. Common Stock. In the event that the Exercise Price is adjusted pursuant to the terms hereof, then, effective at the time of such adjustment, the number of shares subject to this Warrant shall be adjusted to an amount equal to the result obtained by multiplying: (i) the number of shares of Common Stock subject to this Warrant prior to such adjustment by; (ii) a fraction the numerator of which shall be the Exercise Price immediately prior to such adjustment and the denominator of which shall be the Exercise Price following such adjustment. -4- 4.3. Adjustments to Exercise Price (a) Dividends. In the event the Company shall make or issue, or shall fix a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution (other than a distribution in liquidation or other distribution otherwise provided for herein) with respect to the Common Stock payable in (i) securities of the Company other than shares of Common Stock, or (ii) other assets (excluding cash dividends or distributions), then and in each such event provision shall be made so that the Holders shall receive upon exercise of this Warrant in addition to the number of shares of Common Stock receivable thereupon, the number of securities or such other assets of the Company which each Holder would have received had such Holder exercised this Warrant and acquired Common Stock on the date of such event and had such holder thereafter, during the period from the date of such event to and including the exercise of this Warrant by the Holder, retained such securities or such other assets receivable by such holder during such period, giving application to all other adjustments called for during such period under this Article IV with respect to the rights of the holders of the Common Stock. (b) Capital Reorganization or Reclassification. If the Common Stock issuable upon the exercise of this Warrant shall be changed into the same or different number of shares of any class or classes of capital stock, whether by capital reorganization, recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend provided for elsewhere in this Section 4.3, or the sale of all or substantially all of the Company's capital stock or assets to any other person), then and in each such event each Holder shall have the right thereafter to acquire the kind and amount of shares of capital stock and other securities and property receivable upon such reorganization, recapitalization, reclassification or other change by the holders of the number of shares of Common Stock for which such Warrant might have been exercised immediately prior to such reorganization, recapitalization, reclassification or change, all subject to further adjustment as provided herein. (c) Certificate as to Adjustments; Notice by Company. In each case of an adjustment or readjustment hereunder, the Company at its expense will furnish each Holder not later than the fifth Business Day following any such adjustment or readjustment, at such Holder's registered address as shall appear on the records of the Company, a certificate prepared by the Treasurer or Chief Financial Officer of the Company, showing such adjustment or readjustment, and stating in detail the facts upon which such adjustment or readjustment is based. (d) Reservation of Common Stock. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the exercise of the Warrants, such number of its shares of Common Stock as shall from time to time be sufficient to effect the exercise of the Warrants and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of Warrants, the Company shall take such action as may be necessary to increase, and it shall increase, its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. -5- 4.4. Merger, Consolidation, Etc. (a) If at any time or from time to time there shall be (i) a merger, or consolidation of the Company with or into another corporation, (ii) the sale of all or substantially all of the Company's capital stock or assets to any other person, (iii) any other form of business combination or reorganization in which the Company shall not be the continuing or surviving entity of such business combination or reorganization, or (iv) any transaction or series of transactions by the Company in which in excess of 50 percent of the Company's voting power is transferred (each, a "Reorganization"), then as a part of such Reorganization, provision shall be made so that the Holders shall thereafter be entitled to receive upon exercise the same kind and amount of stock or other securities or property (including cash) of the Company, or of the successor corporation resulting from such Reorganization to which such Holder would have been entitled if such Holder had exercised its Warrants immediately prior to the effective time of such Reorganization. In any such case, appropriate adjustment shall be made in the application of the provisions of Article IV to the end that the provisions of Article IV (including adjustment of the Exercise Price then in effect and the number of shares of Common Stock or other securities issuable upon exercise of the Warrants) shall be applicable after that event in as nearly equivalent a manner as may be practicable. (b) The Company will not effect any of the transactions described in clause (a) of this Section 4.4 hereof unless, prior to the consummation thereof, each person (other than the Company) which may be required to deliver any stock, securities, cash or property upon the exercise of this Warrant as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the Holders: (i) the obligations of the Company under this Warrant (and if the Company shall survive the consummation of such transaction, such assumption shall be in addition to, and shall not release the Company from, any continuing obligations of the Company under this Warrant), (ii) the obligations of the Company under the Securities Purchase Agreement with respect to Registration Rights and (iii) the obligation to deliver to each holder such shares of stock, securities, cash or property as, in accordance with the foregoing provisions of this Article IV, each Holder may be entitled to receive, and such Person shall have similarly delivered to such Holder an opinion of counsel for such Person, stating that this Warrant shall thereafter continue in full force and effect and the terms hereof (including without limitation all of the provisions of this Article IV) shall be applicable to the stock, securities, cash or property which such Person may be required to deliver upon any exercise of this Warrant or the exercise of any rights pursuant hereto. (c) The provisions of this Section 4.4 are in addition to and not in lieu of the other provisions of Article IV hereof. 4.5. Notice of Adjustment. In addition to any other notice required hereunder, not less than 10 nor more than 60 days prior to the record date or effective date, as the case may be, of any action which would require an adjustment or readjustment pursuant to this Article IV, the Company shall give notice to each Holder of such event, describing such event in reasonable detail and specifying the record date or effective date, as the case may be, and, if determinable, the required -6- adjustment and the computation thereof. If the required adjustment is not determinable at the time of such notice, the Company shall give notice to each Holder of such adjustment and computation promptly after such adjustment becomes determinable. 4.6. Notices of Corporate Action. In the event of (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, (b) any capital reorganization of the Company, reclassification or recapitalization of the capital stock of the Company or any consolidation or merger involving the Company and any other Person or any transfer of all or substantially all the assets of the Company to any other Person, or (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, the Company will mail to the holder of this Warrant a notice specifying (i) the date or expected date on which any record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right, and (ii) the date or expected date on which any such reorganization, reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation, winding-up or Sale of the Company is to take place, the time, if any such time is to be fixed, as of which the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for the securities or other property deliverable upon such reorganization, reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation or winding-up and a description in reasonable detail of the transaction. Such notice shall be mailed promptly after the decision is made to take any of the actions specified in (a)-(c) above. ARTICLE V DEFINITIONS The following terms, as used in this Warrant, have the following respective meanings: "Board of Directors" shall mean the board of directors of the Company. "Business Day" shall mean (a) if any Common Stock is listed or admitted to trading on a national securities exchange or Nasdaq, a day on which the principal national securities exchange Nasdaq on which such class of Common Stock are listed or admitted to trading is open for -7- business or (b) if Common Stock is not so listed or admitted to trading, a day on which any New York Stock Exchange member firm is open for business. "Common Stock" means the common stock, $.001 par value, of the Company. "Company" shall have the meaning set forth in the first paragraph of this Warrant. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and any similar or successor federal statute, and the rules and regulations of the Securities and Exchange Commission (or its successor) thereunder, all as the same shall be in effect at the time. "Exercise Price" shall mean $7.00 per share of Common Stock, adjusted as contemplated herein. "Holder" shall have the meaning set forth in the first paragraph of this Warrant. "Market Price" at any date shall be deemed to be the last reported sale price of the Common Stock on such date, or, in case no such reported sale takes place on such day, the average of the last reported sales prices for the immediately preceding three trading days, in either case as officially reported by the principal securities exchange on which the Common Stock is listed or admitted to trading, or, if the Common Stock is not listed or admitted to trading on any national securities exchange or if any such exchange on which the Common Stock is listed is not its principal trading market, the last reported sale price as furnished by the NASD through the Nasdaq National Market or SmallCap Market, or, if applicable, the OTC Bulletin Board, or if the Common Stock is not listed or admitted to trading on the Nasdaq National Market or SmallCap Market or OTC Bulletin Board or similar organization, as determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it. "NASD" means the National Association of Securities Dealers, Inc. "Nasdaq" means The National Association of Securities Dealers, Inc. Automated Quotation System. "Person" means any individual, corporation, limited liability company, partnership, limited liability partnership, joint venture or other entity. "Requisite Holders" means, as of any date of determination, persons holding outstanding Warrants entitling them to purchase a majority of the Common Stock issuable upon exercise of the Warrants originally represented hereby. "Securities Act" shall mean the Securities Act of 1933, as amended, and any similar or successor federal statute, and the rules and regulations of the Securities and Exchange Commission (or its successor) thereunder, all as the same shall be in effect at the time. -8- "Securities Purchase Agreement" means the Securities Purchase Agreement dated June 24, 1999 between the Company and Thomson Kernaghan & Co. Limited. "Shares" shall have the meaning set forth in the Securities Purchase Agreement. "Warrant or Warrants" means this Warrant and any Warrant issued to a transferee of all or any part of this Warrant. ARTICLE VI MISCELLANEOUS 6.1. Notices. All notices or other communications required hereby shall be in writing and shall be sent either by (a) courier, or (b) by telecopy as well as by registered or certified mail, and shall be regarded as properly given in the case of a courier upon actual delivery to the proper place of address; in the case of telecopy, on the day following the date of transmission if properly addressed and sent without transmission error to the correct number and receipt is confirmed by telephone within 48 hours of the transmission; in the case of a letter for which a telecopy could not be successfully transmitted or receipt of which could not be confirmed as herein provided, three (3) days after the registered or certified mailing date if the letter is properly addressed and postage prepaid; and shall be regarded as properly addressed if sent to the parties and their representatives at the addresses given below: To the Company: Infocast Corporation 1 Richmond Street West Suite 901 Toronto, Ontario M5H 3W4 Attention: President and Chief Executive Officer Facsimile: (416) 867-9320 Confirmation: (416) 867-9087 With a copy to: Olshan Grundman Frome Rosenzweig & Wolosky LLP 505 Park Avenue New York, New York 10022 Attention: Jeffrey Spindler, Esq. Facsimile: (212) 755-1467 Confirmation: (212) 753-7200 -9- To the Holder: Thomas Kernaghan & Co. Limited 365 Bay Street, 10th Floor Toronto, Ontario M5H 2V2 Attention: Mark Valentine Facsimile: (416) 860-6355 Confirmation: (416) 860-6130 or such other address as any of the above may have furnished to the other parties in writing in compliance with the terms of this Section. 6.2. Waivers: Amendments. No failure or delay of the Holder in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Holder are cumulative and not exclusive of any rights or remedies which it would otherwise have. The provisions of this Warrant may be amended, modified or waived with (and only with) the written consent of the Company and the Requisite Holders. Any such amendment, modification or waiver effected pursuant to this Section shall be binding upon the Holders of all Warrants and Common Stock issued upon exercise thereof, upon each future holder thereof and upon the Company. In the event of any such amendment, modification or waiver, the Company shall give prompt notice thereof to all Holders and, if appropriate, notation thereof shall be made on all Warrants thereafter surrendered for registration of transfer or exchange. No notice or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances. 6.3. Governing Law. This Warrant shall be construed in accordance with and governed by the laws of the State of New York without regard to principles of conflicts of law. 6.4. Survival of Agreements; Representations and Warranties, etc. All representations, warranties and covenants made by the Company herein or in any certificate or other instrument delivered by or on behalf of it in connection with the Warrants shall be considered to have been relied upon by the Holder and shall survive the issuance and delivery of the Warrants, regardless of any investigation made by the Holder, and shall continue in full force and effect so long as any Warrant is outstanding. 6.5. Covenants to Bind Successor and Assigns. All covenants, stipulations, promises and agreements in this Warrant contained by or on behalf of the Company shall bind its successors and assigns, whether so expressed or not. -10- 6.6. Severability. In case any one or more of the provisions contained in this Warrant shall be invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. 6.7. Section Headings. The sections headings used herein are for convenience of reference only, are not part of this Warrant and are not to affect the construction of or be taken into consideration in interpreting this Warrant. 6.8. No Impairment. The Company shall not by any action including, without limitation, amending its organizational documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company will (a) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Common Stock upon the exercise of this Warrant, and (b) use its commercially reasonable best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. -11- IN WITNESS WHEREOF, Infocast Corporation has caused this Warrant to be executed in its corporate name by one of its officers thereunto duly authorized, and attested by its Secretary or an Assistant Secretary, all as of the day and year first above written. INFOCAST CORPORATION By: /s/ A.T. Griffis ---------------------------------- Name: Title: Attest: /s/ Elia Crespo - -------------------------------- Name: Title: -12- FORM OF EXERCISE NOTICE (To be executed upon exercise of Warrant) TO: The undersigned hereby irrevocably elects to exercise the right to purchase represented by the attached Warrant for, and to purchase thereunder, __________________ Common Stock, as provided for therein, and tenders herewith payment of the Exercise Price in full in accordance with the terms of the attached warrant. Please issue a certificate or certificates for such Common Stock in the following name or names and denominations: If said number of Common Stock shall not be all the Common Stock issuable upon exercise of the attached Warrant, a new Warrant is to be issued in the name of the undersigned for the balance remaining of such Common Stock. Dated: _____________, _____ --------------------------------- Note: The above signature should correspond exactly with the name on the face of the attached Warrant or with the name of the assignee appearing in the assignment form below. ASSIGNMENT (To be executed upon assignment of Warrant) For value received, ________________________________ hereby sells, assigns and transfers unto __________________ the attached Warrant, together with all rights, title and interest therein, and does hereby irrevocably constitute and appoint ____________________ attorney to transfer said Warrant on the books of , with full power of substitution in the premises. --------------------------------- Note: The above signature should correspond exactly with the name on the face of the attached Warrant. EX-4.9 12 PORETZ GROUP WARRANT NEITHER THIS WARRANT NOR THE COMMON STOCK WHICH MAY BE ACQUIRED UPON THE EXERCISE HEREOF HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT AND COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAW, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED. VOID AFTER 5:00 P.M. EASTERN TIME, MAY 31, 2001. For the Purchase of 25,000 shares of Common Stock WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK OF INFOCAST CORPORATION (A Nevada corporation) Infocast Corporation, a Nevada corporation (the "Company"), hereby certifies that for value received, The Poretz Group or its registered assigns (the "Registered Holder"), residing at 1650 Tysons Boulevard, McLean, Virginia 22102, is entitled, subject to the terms set forth below, to purchase from the Company, pursuant to this Warrant ("Warrant"), at any time or from time to time on or after June 1, 2000, and at or before 5:00 p.m., Eastern Time, May 31, 2001 ("Expiration Date"), but not thereafter, 25,000 shares of Common Stock, $.001 par value, of the Company ("Common Stock"), at a purchase price (the "Purchase Price") equal to $7.00 per share of Common Stock. The number of shares of Common Stock purchasable upon exercise of this Warrant, and the purchase price per share, each as adjusted from time to time pursuant to the provisions of this Warrant, are hereinafter referred to as the "Warrant Shares" and the "Purchase Price," respectively. 1. Exercise. (a) This Warrant may be exercised by the Registered Holder, in whole or in part, by the surrender of this Warrant (with the Notice of Exercise Form attached hereto as Exhibit I duly executed, completed and delivered by such Registered Holder) at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full, in lawful money of the United States, of an amount equal to the then applicable Purchase Price multiplied by the number of Warrant Shares then being purchased upon such exercise. If the rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern Time, on the Expiration Date, this Warrant shall become and be void and without further force or effect, and all rights represented hereby shall cease and expire. (b) Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in subsection l(a) above. At such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable upon such exercise as provided in subsection I (c) below shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificates. (c) As soon as practicable after the exercise of the purchase right represented by this Warrant, the Company at its expense will use its best efforts to cause to be issued in the name of the Registered Holder and delivered to you: (i) a certificate or certificates for the number of full shares of Warrant Shares to which such Registered Holder shall be entitled upon such exercise plus, in lieu of any fractional share to which such Registered Holder would otherwise be entitled, a Warrant Share representing the remainder of the fractional share to the next whole Warrant Share, and (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, stating on the face or faces thereof the number of shares currently stated on the face of this Warrant minus the number of such shares purchased by the Registered Holder upon such exercise as provided in subsection l(a) above. 2. Adjustments. (a) Split, Subdivision or Combination of Shares. If the outstanding shares of the Company's Common Stock at any time while this Warrant remains outstanding and unexpired shall be subdivided or split into a greater number of shares, or a dividend in Common Stock shall be paid in respect of Common Stock, or a similar change in the Company's capitalization occurs which affects the outstanding Common Stock, as a class, then the Purchase Price in effect immediately prior to such subdivision or at the record date of such dividend shall, simultaneously with the effectiveness of such subdivision or split or immediately after the record date of such dividend (as the case may be), be proportionately decreased. If the outstanding shares of Common Stock shall be combined or reverse-split into a smaller number of shares, the Purchase Price in effect immediately prior to such combination or reverse split shall, simultaneously with the effectiveness of such combination or reverse split, be proportionately increased. When any adjustment is required to be made in the Purchase Price, the number of shares of Warrant Shares purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately prior to such -2- adjustment, multiplied by the Purchase Price in effect immediately prior to such adjustment, by (ii) the Purchase Price in effect immediately after such adjustment. (b) Reclassification, Reorganization, Consolidation or Merger. In the case of any reclassification of the Common Stock or any reorganization, consolidation or merger of the Company with or into another corporation (other than a merger or reorganization with respect to which the Company is the continuing corporation and which does not result in any reclassification of the Common Stock), or a transfer of all or substantially all of the assets of the Company, or the payment of a liquidating distribution then, as part of any such reorganization, reclassification, consolidation, merger, sale or liquidating distribution, the Company shall arrange for the other party to the transaction to agree to, and lawful provision shall be made, so that the Registered Holder of this Warrant shall have the right thereafter to receive upon the exercise hereof (to the extent, if any, still exercisable), the kind and amount of shares of stock or other securities or property which such Registered Holder would have been entitled to receive if, immediately prior to any such reorganization, reclassification, consolidation, merger, sale or liquidating distribution, as the case may be, such Registered Holder had held the number of shares of Common Stock which were then purchasable upon the exercise of this Warrant. In any such case, appropriate adjustment (as reasonably determined by the Board of Directors of the Company) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the Registered Holder of this Warrant such that the provisions set forth in this Section 2 (including provisions with respect to the Purchase Price) shall thereafter be applicable, as nearly as is reasonably practicable, in relation to any shares of stock or other securities or property thereafter deliverable upon the exercise of this Warrant. 3. Limitation on Sales. Each holder of this Warrant acknowledges that this Warrant and the Warrant Shares have not been registered under the Securities Act of 1933, as now in force or hereafter amended, or any successor legislation (the "Act"), and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Shares issued upon its exercise in the absence of (a) an effective registration statement under the Act as to this Warrant or such Warrant Shares and registration or qualification of this Warrant or such Warrant Shares under any applicable Blue Sky or state securities law then in effect or (b) an opinion of counsel, satisfactory to the Company, that such registration and qualification are not required. Without limiting the generality of the foregoing, unless the offering and sale of the Warrant Shares to be issued upon the particular exercise of the Warrant shall have been effectively registered under the Act, the Company shall be under no obligation to issue the shares covered by such exercise unless and until the Registered Holder shall have executed an investment letter in form and substance satisfactory to the Company, including a warranty at the time of such exercise that it is acquiring such shares for its own account, and will not transfer the Warrant Shares unless pursuant to an effective and current registration statement under the Act or an exemption from the registration requirements of the Act and any other applicable restrictions, in which event the Registered Holder shall be bound by the provisions of a legend or legends to such effect which shall be endorsed upon the certificate(s) representing the Warrant Shares issued pursuant to such exercise. The Warrant -3- Shares issued upon exercise thereof shall be imprinted with legends in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAW, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED." 4. Notices of Record Date. In case: (a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution (other than a dividend or distribution payable solely in capital stock of the Company or out of funds legally available therefor), or to receive any right to subscribe for or purchase any shares of any class or any other securities, or to receive any other right, or (b) of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity), or any transfer of all or substantially all of the assets of the Company, or (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company will mail or cause to be mailed to the Registered Holder of this Warrant a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be mailed at least ten (10) days prior to the record date or effective date for the event specified in such notice, provided that the failure to mail such notice shall not affect the legality or validity of any such action. -4- 5. Reservation of Stock. The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, such shares of Warrant Shares and other stock, securities and property, as from time to time shall be issuable upon the exercise of this Warrant. 6. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor. 7. Transfers, etc. (a) The Company will maintain or cause to be maintained a register containing the names and addresses of the Registered Holders of this Warrant. Any Registered Holder may change its, his or her address as shown on the warrant register by written notice to the Company requesting such change. (b) Until any transfer of this Warrant is made in the warrant register, the Company may treat the Registered Holder of this Warrant as the absolute owner hereof for all purposes; provided, however, that if and when this Warrant is properly assigned in blank, the Company may (but shall not be obligated to) treat the bearer hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. 8. No Rights as Shareholder. Until the exercise of this Warrant, the Registered Holder of this Warrant shall not have or exercise any rights by virtue hereof as a shareholder of the Company. 9. Change or Waiver. Any term of this Warrant may be changed or waived only by an instrument in writing signed by the party against which enforcement of the change or waiver is sought. 10. Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant. 11. Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Nevada as such laws are applied to contracts made and to be fully performed entirely within that state between residents of that state. 12. Mailing of Notices, etc. All notices and other communications under this Warrant (except payment) shall be in writing and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar receipt delivery, by facsimile delivery or, if mailed, postage prepaid, by certified mail, return receipt requested, as follows: -5- Registered Holder: To his or her address on page 1 of this Warrant. The Company: Infocast Corporation One Richmond Street West Suite 901 Toronto, Ontario M5H3W4 Canada Attn: A.T. Griffis with a copy to: Olshan Grundman Frome Rosenzweig & Wolosky LLP 505 Park Avenue New York, New York 10022 Attn: Jeffrey S. Spindler, Esq. or to such other address as any of them, by notice to the others may designate from time to time. Time shall be counted to, or from, as the case may be, the delivery in person or by mailing. INFOCAST CORPORATION By: /s/ A.T. Griffis ------------------------------------- Name: Title: -6- EXHIBIT I NOTICE OF EXERCISE TO: Infocast Corporation One Richmond Street West Suite 901 Toronto, Ontario M5H3W4 Canada 1. The undersigned hereby elects to purchase _______ shares of the Common Stock of Infocast Corporation, pursuant to terms of the attached Warrant, and tenders herewith payment of $________ in payment of the purchase price of such shares in full, together with all applicable transfer taxes, if any. 2. Please issue a certificate or certificates representing said shares of the Common Stock in the name of the undersigned or in such other name as is specified below: 3. The undersigned represents that it will sell the shares of Common Stock only pursuant to an effective Registration Statement under the Securities Act of 1933, as amended, or an exemption from registration thereunder. (Name) (Address) (Taxpayer Identification Number) [print name of Registered Holder] By: Title: Date: -7- EX-4.10 13 PROVISIONS ATTACHING TO COMMON SHARES INFOCAST CANADA CORPORATION PROVISIONS ATTACHING TO COMMON SHARES The Common Shares in the capital of the Corporation shall have the following rights, privileges, restrictions and conditions: 1. Voting Rights. Each holder of Common Shares shall be entitled to receive notice of and to attend all meetings of shareholders of the Corporation and to vote thereat, except meetings at which only holders of a specified class of shares (other than Common Shares) or specified series of shares are entitled to vote. At all meetings of which notice must be given to the holders of the Common Shares, each holder of Common Shares shall be entitled to one vote in respect of each Common Share held by such holder. 2. Dividends. The holders of the Common Shares shall be entitled, subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of the Corporation, to receive any dividend declared by the Corporation. 3. Liquidation. Dissolution or Winding-up. The holders of the Common Shares shall be entitled, subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of the Corporation, to receive the remaining property of the Corporation on a liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary. PROVISIONS ATTACHING TO EXCHANGEABLE SHARES The Exchangeable Shares in the capital of the Corporation shall have the following rights, privileges, restrictions and conditions: ARTICLE 1 INTERPRETATION 1.1 For the purposes of these share provisions: "Affiliate" and "control" have the respective meanings ascribed thereto in the OBCA. "Board of Directors" means the Board of Directors of the Corporation. "Business Day" means any day other than a Saturday, a Sunday or a day when Canadian chartered banks are not open for business in Toronto, Ontario. "Canadian Dollar Equivalent" means in respect of a dollar amount expressed in a foreign currency (the "Foreign Currency Amount") at any date the product obtained by multiplying (a) the Foreign Currency Amount by (b) the noon spot exchange rate on such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such exchange rate on such date for such foreign currency expressed in Canadian dollars as may be deemed by the Board of Directors to be appropriate for such purpose. "Common Shares" means the Common Shares of the Corporation. "Corporation" means this Corporation. "Exchange Agreement" means an exchange agreement among InfoCast Canada, InfoCast Corporation and a holder of Exchangeable Shares. "Exchangeable Shares" mean the Exchangeable Shares of the Corporation having the rights, privileges, restrictions and conditions set forth herein. "InfoCast" means InfoCast Corporation, a corporation organized and existing under the laws of the State of Nevada and any successor corporation thereof. "InfoCast Call Notice" has the meaning ascribed thereto in Section 5.3 of these share provisions. "InfoCast Common Shares" means the shares of common stock of InfoCast and any other securities into which such shares may be changed. "InfoCast Dividend Declaration Date" means the date on which the board of directors of InfoCast declares any cash dividend on the InfoCast Common Shares. "Liquidation Amount" has the meaning ascribed thereto in Section 4.1 of these share provisions. "Liquidation Call Right" has the meaning ascribed thereto in the Exchange Agreement. "Liquidation Date" has the meaning ascribed thereto in Section 4.1 of these share provisions. "OBCA" means the Business Corporations Act (Ontario) as the same may be amended from time to time. "Purchase Price" has the meaning ascribed thereto in Section 5.3 of these share provisions. "Redemption Call Right" has the meaning ascribed thereto in the Exchange Agreement. "Redemption Date" has the meaning ascribed thereto in Section 6.2 of these share provisions. "Redemption Price" has the meaning ascribed thereto in Section 6.1 of these share provisions. "Retracted Shares" has the meaning ascribed thereto in Section 5.1 of these share provisions. "Retraction Call Right" has the meaning ascribed thereto in Section 5.1 of these share provisions. "Retraction Date" has the meaning ascribed thereto in Section 5.1 of these share provisions. "Retraction Price" has the meaning ascribed thereto in Section 5.1 of these share provisions. "Retraction Request" has the meaning ascribed thereto in Section 5. l of these share provisions. "Triggering Event" has the meaning ascribed thereto in the Exchange Agreement. ARTICLE 2 RANKING OF EXCHANGEABLE SHARES 2.1 The Exchangeable Shares shall, with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, rank pari passu with Common Shares and any other shares of the Corporation. ARTICLE 3 DIVIDENDS 3.1 A holder of an Exchangeable Share shall be entitled to receive such dividends and distributions, as if they held one InfoCast Common Share for each Exchangeable Share. 3.2 Cheques of the Corporation payable at par at any branch of the bankers of the Corporation shall be issued in respect of any cash dividends contemplated by Section 3.1 hereof and the sending of such a cheque to each holder of an Exchangeable Share shall satisfy the cash dividend represented thereby unless the cheque is not paid on presentation. Certificates registered in the name of the registered holder of Exchangeable Shares shall be issued in respect of any stock distributions contemplated by Section 3.1 hereof and the sending of such a certificate to each holder of an Exchangeable Share shall satisfy the stock distribution represented thereby. No holder of an Exchangeable Share shall be entitled to recover by action or other legal process against the Corporation any dividend that is represented by a cheque that has not been duly presented to the Corporation's bankers for payment or that otherwise remains unclaimed for a period of six years from the date on which such dividend was payable. ARTICLE 4 DISTRIBUTION ON LIQUIDATION 4.1 In the event of the liquidation, dissolution or winding-up of the Corporation or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, a holder of Exchangeable Shares shall be entitled, subject to applicable law, to receive from the assets of the Corporation in respect of each Exchangeable Share held by such holder on the effective date (the "Liquidation Date") of such liquidation, dissolution or winding-up, an amount per share equal to the fair market value of a InfoCast Common Share on the last Business Day prior to the Liquidation Date which shall be satisfied in full by the Corporation causing to be delivered to such holder one InfoCast Common Share (the "Liquidation Amount"). 4.2 On or promptly after the Liquidation Date (and subject to the exercise by InfoCast of the Liquidation Call Right), the Corporation shall cause to be delivered to the holders of the Exchangeable Shares the Liquidation Amount (less any tax required to be deducted and withheld therefrom by the Corporation) for each such Exchangeable Share upon presentation and surrender of the certificates representing such Exchangeable Shares together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the OBCA and the by-laws of the Corporation and such additional documents and instruments as the Corporation may reasonably require, at the registered office of the Corporation. Payment of the total Liquidation Amount for such Exchangeable Shares shall be made by delivery to each holder, at the address of the holder recorded in the securities register of the Corporation for the Exchangeable Shares or by holding for pick up by the holder at the registered office of the Corporation, on behalf of the Corporation of certificates representing InfoCast Common Shares (less any tax required to be deducted and withheld therefrom by the Corporation). On and after the Liquidation Date, the holders of the Exchangeable Shares shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof, other than the right to receive their proportionate part of the total Liquidation Amount unless payment of the total Liquidation Amount for such Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the foregoing provisions, in which case the rights of the holder shall remain unaffected until the total Liquidation Amount has been paid in the manner hereinbefore provided. The Corporation shall have the right at any time on or after the Liquidation Date to deposit or cause to be deposited in trust for the holders of the Exchangeable Shares the total Liquidation Amount in respect of the Exchangeable Shares represented by certificates that have not at the Liquidation Date been surrendered by the holders thereof in a custodial account with any chartered bank or trust company in Canada. Upon such deposit being made, the rights of the holders of Exchangeable Shares after such deposit shall be limited to receiving their proportionate part of the total Liquidation Amount so deposited (less any tax required to be deducted and withheld therefrom) without interest for such Exchangeable Shares against presentation and surrender of the said certificates held by them, respectively, in accordance with the foregoing provisions. The Corporation is hereby authorized to sell or otherwise dispose of such portion of the property then payable to the holder as is necessary to provide sufficient funds to the Corporation in order to enable it to comply with such deduction or withholding requirement and the Corporation shall give an accounting to the holder with respect thereto and any balance of such proceeds of sale. 4.3 After the Corporation has satisfied its obligations to pay the holders of the Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant to Section 4.1 of these share provisions, such holders shall not be entitled to share in any further distribution of the assets of the Corporation. ARTICLE 5 RETRACTION OF EXCHANGEABLE SHARES BY HOLDER 5.1 A holder of Exchangeable Shares shall be entitled at any time, subject to applicable law and otherwise upon compliance with the provisions of this Article 5, to require the Corporation to redeem any or all of the Exchangeable Shares registered in the name of such holder for an amount per share equal to the fair market value of an InfoCast Common Share on the last Business Day prior to the Retraction Date, which shall be satisfied in full by the Corporation causing to be delivered to such holder one InfoCast Common Share for each Exchangeable Share presented and surrendered by the holder (collectively the "Retraction Price"). To effect such redemption, the holder shall present and surrender at the registered office of the Corporation the certificate or certificates representing the Exchangeable Shares which the holder desires to have the Corporation redeem, together with such other documents and instructions as may be required to effect a transfer of Exchangeable Shares under the OBCA and the by-laws of the Corporation and such additional documents and instruments as the Corporation may reasonably require together with a duly executed statement (the "Retraction Request"): (a) specifying that the holder desires to have all or any number specified therein of the Exchangeable Shares represented by such certificate or certificates (the "Retracted Shares") redeemed by the Corporation and representing and warranting that the holder has good title to and owns such shares free and clear of all liens, claims and encumbrances; (b) stating the Business Day on which the holder desires to have the Corporation redeem the Retracted Shares (the "Retraction Date"), provided that the Retraction Date shall be not less than 5 Business Days nor more than 30 Business Days after the date on which the Retraction Request is received by the Corporation and further provided that, in the event that no such Business Day is specified by the holder in the Retraction Request, the Retraction Date shall be deemed to be the twentieth Business Day after the date on which the Retraction Request is received by the Corporation; and (c) acknowledging the overriding right (the "Retraction Call Right") of InfoCast to purchase all but not less than all the Retracted Shares directly from the holder. A holder of Retracted Shares may, by notice in writing (the "Withdrawal Notice") given by the holder to the Corporation and InfoCast before the close of business on the Business Day immediately preceding the Retraction Date, withdraw its Retraction Request in whole, or as to the number of shares stipulated in the Withdrawal Notice in which event such Retraction Request shall be deemed to have been withdrawn or to have been withdrawn as to the shares stipulated in the Withdrawal Notice, as the case may be, provided that in respect of such Withdrawal Notice the holder reimburses the Corporation and InfoCast for any expenses incurred in respect of the withdrawal of such Retraction Request pro rata based on the number of Retracted Shares stipulated in the Withdrawal Notice. 5.2 Subject to the exercise by InfoCast of the Retraction Call Right upon receipt by the Corporation in the manner specified in Section 5.1 hereof of a certificate or certificates representing the number of Exchangeable Shares which the holder desires to have the Corporation redeem; together with a Retraction Request, the Corporation shall redeem the Retracted Shares effective at the close of business on the Retraction Date and shall cause to be delivered to such holder the total Retraction Price with respect to such shares on the Retraction Date. If only a part of the Exchangeable Shares represented by any certificate are redeemed (or purchased by InfoCast pursuant to the Retraction Call Right), a new certificate for the balance of such Exchangeable Shares shall be issued to the holder by the Corporation. 5.3 Upon receipt by the Corporation of a Retraction Request, the Corporation shall immediately notify InfoCast thereof. In order to exercise the Retraction Call Right, InfoCast must notify the Corporation in writing of InfoCast's determination to do so (the "InfoCast Call Notice") in accordance with the provisions of the Exchange Agreement. If InfoCast does not so notify the Corporation, the Corporation will notify the holder as soon as possible thereafter that InfoCast will not exercise the Retraction Call Right. If InfoCast delivers the InfoCast Call Notice, the Retraction Request shall thereupon be considered only to be an offer by the holder to sell the Retracted Shares to InfoCast in accordance with the Retraction Call Right. In such event the Corporation shall not redeem the Retracted Shares and InfoCast shall purchase from such holder and such holder shall sell to InfoCast on the Retraction Date the Retracted Shares for a purchase price (the "Purchase Price") per share equal to the Retraction Price per share. For the purposes of completing a purchase pursuant to the Retraction Call Right, InfoCast shall deposit with the Corporation or a Canadian trust company, in trust for such holder, on or before the Retraction Date, certificates representing InfoCast Common Shares. Provided that the total Purchase Price has been so deposited with the Corporation, the closing of the purchase and sale of the Retracted Shares pursuant to the Retraction Call Right shall be deemed to have occurred as at the close of business on the Retraction Date and, for greater certainty, no redemption by the Corporation of such Retracted Shares shall take place on the Retraction Date. In the event that InfoCast does not deliver an InfoCast Call Notice or fails to deposit with the Corporation the consideration for the Retracted Shares, the Corporation shall redeem the Retracted Shares on the Retraction Date and in the manner otherwise contemplated in this Article 5. 5.4 The Corporation or InfoCast, as the case may be, shall deliver to the relevant holder, at the address specified in the holder's Retraction Request or if not so specified, at the address of the holder recorded in the securities register of the Corporation for the Exchangeable Shares or by holding for pick up by the holder at the registered office of the Corporation, certificates representing the InfoCast Common Shares registered in the name of the holder or in such other name as the holder may request in payment of the total Retraction Price or the total Purchase Price, as the case may be (less any tax required to be deducted and withheld therefrom by the Corporation) and such delivery of such certificates on behalf of the Corporation or InfoCast, as the case may be, by the Corporation shall be deemed to be payment of and shall satisfy and discharge all liability of the Corporation or InfoCast, as the case may be, to the extent that the same is represented by such share certificates (less any tax required and in fact deducted and withheld therefrom and remitted to the proper tax authority). The Corporation or InfoCast, as the case may be, is hereby authorized to sell or otherwise dispose of such portion of the property then payable to the holder as is necessary to provide sufficient funds to the Corporation or InfoCast in order to enable it to comply with such deduction or withholding requirement and shall give an accounting to the holder with respect thereto and any balance of such proceeds of sale. 5.5 On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall cease to be a holder of such Retracted Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive the total Retraction Price or total Purchase Price, as the case may be, to which such holder is entitled unless upon presentation and surrender of certificates in accordance with the foregoing provisions, payment of the total Retraction Price or the total Purchase Price, as the case may be, shall not be made, in which case the rights of such holder shall remain unaffected until the total Retraction Price or the total Purchase Price, as the case may be, has been paid in the manner hereinbefore provided. 5.6 Notwithstanding any other provision of this Article 5, the Corporation shall not be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent that such redemption of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law, including, without limitation, applicable securities laws. If the Corporation believes that on any Retraction Date it would not be permitted by any of such provisions to redeem the Retracted Shares tendered for redemption on such date and provided that InfoCast shall not have exercised the Retraction Call Right with respect to the Retracted Shares, the Corporation shall only be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent of the maximum number that may be so redeemed (rounded down to a whole number of shares) as would not be contrary to such provisions and shall notify the holder at least two Business Days prior to the Retraction Date as to the number of Retracted Shares which will not be redeemed by the Corporation. In any case in which the redemption by the Corporation of all of the Retracted Shares would be contrary to solvency requirements or other provisions of applicable law, the Corporation shall redeem that number of Retracted Shares permitted without contravening such provision in accordance with Section 5.2 of these share provisions on a pro rata basis and shall issue to each holder of Retracted Shares a new certificate, at the expense of the Corporation, representing the Retracted Shares not redeemed by the Corporation pursuant to Section 5.2 hereof. The holder of any such Retracted Shares not redeemed by the Corporation pursuant to Section 5.2 of these share provisions as a result of solvency requirements or other provisions of applicable law shall be deemed by giving the Retraction Request to require InfoCast to purchase such Retracted Shares from such holder on the Retraction Date or as soon as practicable thereafter on payment by InfoCast to such holder of the Purchase Price for each such Retracted Share. ARTICLE 6 REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION 6.1 Subject to applicable law and to the right of a holder to require the Corporation to redeem Exchangeable Shares pursuant to Article 5 hereof, and subject (in any case) to the exercise by InfoCast of the Redemption Call Right, the Corporation may, at any time on or after the first to occur of any of the Triggering Events, redeem all of the then outstanding Exchangeable Shares for an amount per share equal to the fair market value of an InfoCast Common Share on the last Business Day prior to the Redemption Date which shall be satisfied in full by the Corporation causing to be delivered to the holder of each Exchangeable Share one InfoCast Common Share (the "Redemption Price"). 6.2 In any case of any redemption of Exchangeable Shares under this Article 6, the Corporation shall, at least 30 days before the date set for redemption by the Corporation (the "Redemption Date"), send or cause to be sent to each holder of Exchangeable Shares to be redeemed a notice in writing of the redemption by the Corporation or the purchase by InfoCast under the Redemption Call Right, as the case may be, of the Exchangeable Shares held by such holder. Such notice shall set out the formula for determining the Redemption Price or the Redemption Call Purchase Price as the case may be, the Redemption Date, and, if applicable, particulars of the Redemption Call Right. On or after the Redemption Date and subject to the exercise by InfoCast of the Redemption Call Right, the Corporation shall cause to be delivered to the holders of the Exchangeable Shares to be redeemed the Redemption Price (less any tax required to be deducted and withheld therefrom by the Corporation) for each such Exchangeable Share upon presentation and surrender at the registered office of the Corporation, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the OBCA and the by-laws of the Corporation and such additional documents and instruments as the Corporation may reasonably require. Payment of the total Redemption Price for such Exchangeable Shares shall be made by delivery to each holder, at the address of the holder recorded in the securities register of the Corporation or by holding for pick up by the holder at the registered office of the Corporation, certificates representing InfoCast Common Shares (less any tax required to be deducted and withheld therefrom by the Corporation) without interest in respect of the Redemption Price, as the case may be. On and after the Redemption Date, the holders of the Exchangeable Shares called for redemption shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof, other than the right to receive their proportionate part of the total Redemption Price, unless payment of the total Redemption Price for such Exchangeable Shares shall not be made upon presentation and surrender of certificates in accordance with the foregoing provisions, in which case the rights of the holders with respect to those Exchangeable Shares as to which the Redemption Price has not been paid shall remain unaffected until the total Redemption Price with respect thereto has been paid in the manner hereinbefore provided. The Corporation shall have the right at any time after the sending of notice of its intention to redeem Exchangeable Shares as aforesaid to deposit or cause to be deposited in trust for the holders of the Exchangeable Shares, the total Redemption Price of the Exchangeable Shares so called for redemption, or of such of the said Exchangeable Shares represented by certificates that have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, in a custodial account with any chartered bank or trust company in Canada named in such notice. Upon the later of such deposit being made and the Redemption Date, the Exchangeable Shares in respect whereof such deposit shall have been made shall be redeemed and the rights of the holders thereof after such deposit or Redemption Date, as the case may be, shall be limited to receiving their proportionate part of the total Redemption Price so deposited (less any tax required to be deducted and withheld therefrom by the Corporation) without interest for such Exchangeable Shares against presentation and surrender of the said certificates held by them, respectively, in accordance with the foregoing provisions. The Corporation is hereby authorized to sell or otherwise dispose of such portion of the property then payable to the holder as is necessary to provide sufficient funds to the Corporation in order to enable it to comply with such deduction or withholding requirement and shall give an accounting to the holder with respect thereto and any balance of such proceeds of sale. ARTICLE 7 VOTING RIGHTS 7.1 The holders of the Exchangeable Shares shall be entitled to receive notice of and to attend and vote together with the holders of Common Shares as a class at all meetings of the shareholders of the Corporation and at such meetings, each holder of Exchangeable Shares shall be entitled to one vote per Exchangeable Share. ARTICLE 8 AMENDMENT AND APPROVAL 8.1 The rights, privileges, restrictions and conditions attaching to the Exchangeable Shares may be added to, changed or removed but only with the approval of the holders of the Exchangeable Shares given as hereinafter specified. 8.2 Any approval given by the holders of the Exchangeable Shares to add to, change or remove any right privilege, restriction or condition attaching to the Exchangeable Shares or any other matter requiring the approval or consent of the holders of the Exchangeable Shares shall be deemed to have been sufficiently given if it shall have been given in accordance with applicable law subject to a minimum requirement that such approval be evidenced by resolution passed by not less than two-thirds of the votes cast on such resolution at a meeting of holders of Exchangeable Shares duly called and held at which the holders of at least 50% of the outstanding Exchangeable Shares at that time are present or represented by proxy; provided that if at any such meeting the holders of at least 50% of the outstanding Exchangeable Shares at that time are not present or represented by proxy within one-half hour after the time appointed for such meeting then the meeting shall be adjourned to such date not less than 10 days thereafter and to such time and place as may be designated by the Chair of such meeting. At such adjourned meeting the holders of Exchangeable Shares present or represented by proxy thereat may transact the business for which the meeting was originally called and a resolution passed thereat by the affirmative vote of not less than two-thirds of the votes cast on such resolution at such meeting shall constitute the approval or consent of the holders of the Exchangeable Shares. ARTICLE 9 LEGEND 9.1 The certificates evidencing the Exchangeable Shares shall contain or have affixed thereto a legend, in form and on terms approved by the Board of Directors, with respect to the Exchange Agreement and any restrictions of applicable securities law. ARTICLE 10 NOTICES 10.1 Any notice, request or other communication to be given to the Corporation by a holder of Exchangeable Shares shall be in writing and shall be valid and effective if given by facsimile or by delivery to the registered office of the Corporation and addressed to the attention of the President. Any such notice, request or other communication, if given by facsimile or delivery, shall only be deemed to have been given and received upon actual receipt thereof by the Corporation. 10.2 Any presentation and surrender by a holder of Exchangeable Shares to the Corporation of certificates represent Exchangeable Shares in connection with the liquidation, dissolution or winding up of the Corporation or the retraction or redemption of Exchangeable Shares shall be made by delivery to the registered office of the Corporation addressed to the attention of the President of the Corporation. Any such presentation and surrender of certificates shall only be deemed to have been made and to be effective upon actual receipt thereof by the Corporation. 10.3 Any notice, request or other communication to be given to a holder of Exchangeable Shares by or on behalf of the Corporation shall be in writing and shall be valid and effective if given by delivery to the address of the holder recorded in the securities register of the Corporation or, in the event of the address of any such holder not being so recorded, then at the last known address of such holder. Any such notice, request or other communication, if given by delivery, shall be deemed to have been given and received on the date of delivery. Accidental failure or omission to give any notice, request or other communication to one or more holders of Exchangeable Shares shall not invalidate or otherwise alter or affect any action or proceeding to be taken by the Corporation pursuant thereto. 8. The issue, transfer or ownership of shares is/is not restricted and the restrictions (if any) are as follows: No shareholder of the Corporation shall be entitled to transfer any share or shares of the Corporation without either (a) the consent of the holders of more than fifty per cent of the Common Shares and Exchangeable Shares for the time being outstanding expressed by a resolution passed by the votes of the holders of more than fifty per cent of the Common Shares and Exchangeable Shares for the time being outstanding at a meeting of the holders of the Common Shares and Exchangeable Shares or by a resolution in writing signed by all the holders of the Common Shares and Exchangeable Shares for the time being outstanding or by an instrument or instruments in writing signed by the holders of more than fifty per cent of the Common Shares and Exchangeable Shares for the time being outstanding; or (b) the consent of the directors of the Corporation expressed by a resolution passed by the votes of a majority of the directors of the Corporation at a meeting of the board of directors of the Corporation or by a resolution in writing signed by all the directors of the Corporation or by an instrument or instruments in writing signed by a majority of directors of the Corporation. 9. Other provisions, if any, are: Autres dispositions, s'il y a lieu: The following provisions apply to the Corporation: (a) The directors of the Corporation may, without authorization of the shareholders of the Corporation, (i) borrow money upon the credit of the Corporation; (ii) issue, reissue, sell or pledge debt obligations of the Corporation; (iii) give a guarantee on behalf of the Corporation to secure performance of an obligation of any person; and (iv) mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the Corporation, owned or subsequently acquired, to secure any obligation of the Corporation. The directors may by resolution delegate any one or all of the powers referred to in this clause to a director, a committee of directors or an officer of the Corporation. (b) The number of shareholders of the Corporation, exclusive of persons who are in its employment and exclusive of persons who, having been formerly in the employment of the Corporation, were, while in that employment, and have continued after termination of that employment to be, shareholders of the Corporation, is hereby limited to not more than fifty, two or more persons who are the joint registered owners of one or more shares being counted as one shareholder. (c) Any invitation to the public to subscribe for securities in the Corporation is prohibited. (d) Except where specifically provided under article 7 of these articles of incorporation, the holders of shares of a class or of a series of the Corporation are not entitled to vote separately as a class or series and are not entitled to dissent, upon a proposal to amend the articles to: (i) increase or decrease any maximum number of authorized shares of such class or series, or increase any maximum number of authorized shares of a class or series having rights or privileges equal or superior to the shares of such class or series; (ii) effect an exchange, reclassification or cancellation of the shares of such class or series; or (iii) create a new class or series of shares equal or superior to the shares of such class or series. EX-4.11 14 EXCHANGE AGREEMENT EXCHANGE AGREEMENT This Exchange Agreement (this "Agreement"), dated as of May 13, 1999, is entered into by and among Homebase Work Solutions Ltd., on behalf of each of the parties set out on Schedule "A" attached hereto (each such person or entity is referred to herein as a "Shareholder" and such individuals or entities are referred to herein collectively as the "Shareholders"), InfoCast Canada Corporation, an Ontario corporation (the "Corporation") and InfoCast Corporation, a Nevada corporation ("InfoCast"); WITNESSETH: WHEREAS pursuant to a share purchase agreement and related letters of transmittal contemplated thereby (collectively, the "Purchase Agreement") dated as of the 13th day of May, 1999 by and among the Shareholders, the Corporation and InfoCast, the parties agreed that they would execute and deliver this Exchange Agreement; AND WHEREAS pursuant to the Purchase Agreement, as consideration for the purchase of all of the issued and outstanding securities of Homebase Work Solutions Ltd., the Corporation issued 3,400,000 exchangeable shares of the Corporation (each an "Exchangeable Share" and collectively the "Exchangeable Shares"); AND WHEREAS the articles of incorporation of the Corporation set forth the rights, privileges, restrictions and conditions (collectively, the "Exchangeable Share Provisions") attaching to the Exchangeable Shares; AND WHEREAS InfoCast is the registered and beneficial owner of 10,000,000 common shares of the Corporation, being all OF THE issued and outstanding common shares of the Corporation as of the date hereof; AND WHEREAS the Shareholders are the registered and beneficial owners of 3,400,000 Exchangeable Shares; AND WHEREAS Homebase has full power and authority to execute and deliver this Agreement by and on behalf of each of the Shareholders; AND WHEREAS the Shareholders have agreed to grant InfoCast the right to purchase the Exchangeable Shares on the terms and subject to the conditions set out herein; NOW THEREFORE in consideration of the premises and mutual agreements and covenants herein contained (the receipt and adequacy of which consideration as to each of the parties hereto are hereby mutually acknowledged), the parties hereto hereby covenant and agree as follows: ARTICLE 1 DEFINITIONS AND INTERPRETATION 1.1 Defined Terms. All capitalized terms used in this Agreement shall, unless otherwise defined herein, have the meanings given to them in the Exchangeable Share Provisions. In addition, the following terms shall have the following meanings: "Automatic Exchange Right" means the benefit of the obligation of InfoCast to effect the automatic exchange of Exchangeable Shares for InfoCast Common Shares pursuant to section 2.10. "Insolvency Event" means the institution by the Corporation of any proceeding to be adjudicated a bankrupt or insolvent or to be dissolved or wound up, or the consent of the Corporation to the institution of bankruptcy, insolvency, dissolution, restructuring or winding up proceedings against it, or the filing of a petition, answer or consent seeking dissolution or winding up under any bankruptcy, insolvency or analogous laws, including without limitation the Companies Creditors' Arrangement Act (Canada) and the Bankruptcy and Insolvency Act (Canada), and the failure by the Corporation to contest in good faith any such proceedings commenced in respect of the Corporation within 15 days of becoming aware thereof, or the consent by the Corporation to the filing of any such petition or to the appointment of a receiver, or the making by the Corporation of a general assignment for the benefit of creditors, or the admission in writing by the Corporation of its inability to pay its debts generally as they become due, or the Corporation not being permitted, pursuant to solvency requirements of applicable law, to redeem any Retracted Shares pursuant to Section 5.1 of the Exchangeable Share Provisions. 1.2 Interpretation not Affected by Headings, etc. The division of this Agreement into articles, sections and paragraphs and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. 1.3 Number, Gender, etc. Words importing the singular number only shall include the plural and vice versa. Words importing the use of any gender shall include all genders. 1.4 Date for any Action. In the event that any date on or by which any action as required or permitted to be taken under this Agreement is not a Business Day, such action shall be required or permitted to be taken on or by the next succeeding Business Day. For the purposes of this Agreement, a "Business Day" means any day other than a Saturday, Sunday or a day when banks are not open for business in either or both of New York, New York or Toronto, Ontario. -2- ARTICLE 2 EXCHANGE RIGHT AND AUTOMATIC EXCHANGE 2.1 Grant and Ownership of the Exchange Right. InfoCast hereby grants to the Shareholders, subject to the provisions of applicable law (including applicable securities laws), the right (the "Exchange Right"), upon the occurrence and during the continuance of an Insolvency Event or in the case of a Triggering Event (such term having the meaning ascribed thereto in Section 3.3 hereof), to require InfoCast to purchase from each or any Shareholder all but not less than all of the Exchangeable Shares held by the Shareholder and hereby grants to the Shareholders the Automatic Exchange Right, all in accordance with the provisions of this Agreement. 2.2 Legended Share Certificates. The Corporation will cause each certificate representing the Exchangeable Shares to bear a legend as follows: The shares represented by this Certificate: (i) are subject to the terms and conditions of an Exchange Agreement (the "Agreement") and Support Agreement, both of which are dated May 13, 1999, and are between the Corporation, InfoCast and various other parties; (ii) provide the holder with an Exchange Right and Automatic Exchange Right, as defined in the Agreement (collectively the "Rights"), which Rights may be exercised in accordance with the Agreement; (iii) have been issued pursuant to exemptions from the registration and prospectus requirements of each of the Securities Act (Ontario) and Securities Act (Alberta) and are therefore subject to resale restrictions; and (iv) have not been registered under the Securities Act of 1933, as amended, and may not be resold or otherwise transferred unless they are either registered under said Act or sold or otherwise transferred pursuant to an exemption from such registration requirements. 2.3 Purchase Price. The purchase price payable by InfoCast for each Exchangeable Share to be purchased by InfoCast under the Exchange Right shall be one (1) InfoCast Common Share plus that additional consideration set out below. The purchase of such Exchangeable Share may be satisfied only by InfoCast delivering to the relevant Shareholder that number of InfoCast Common Shares equal to the number of Exchangeable Shares so purchased plus (i) an additional amount equal to the full amount of all cash dividends declared, payable and unpaid on such Exchangeable Share and all undeclared but payable cash dividends payable on such Exchangeable Share, plus (ii) an additional amount equal to all dividends declared and paid on the InfoCast Common Stock which have not been declared on the Exchangeable Shares in accordance herewith or with the Exchangeable Share Provisions, plus (iii) an additional amount representing any non-cash dividends declared, payable and unpaid on such Exchangeable Share ("Additional Consideration"). In connection with the foregoing, notwithstanding the terms of the Exchangeable Share Provisions, InfoCast hereby waives -3- its right to participate pari passu with the Exchangeable Shares with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or wind-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding-up its affairs, and hereby irrevocably acknowledges and agrees that the Exchangeable Shares held by the Shareholders shall be entitled to a preference over the Common Shares and any other shares ranking junior to the Exchangeable Shares with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation, among its shareholders for kite purpose of winding-up its affairs. The foregoing priority shall also apply between the parties with respect to any Liquidation Amount, Redemption Price and Retraction Price, notwithstanding any provisions in the Exchangeable Share Provisions to the contrary. 2.4 Exercise Instructions. Subject to the terms and conditions herein set forth, a Shareholder shall be entitled, upon the occurrence and during the continuance of an Insolvency Event or Triggering Event, to exercise the Exchange Right with respect to all but not less than all of the Exchangeable Shares registered in the name of such Shareholder on the books of the Corporation, subject to applicable securities laws. To exercise the Exchange Right, the Shareholder shall deliver to InfoCast in person, by courier service or by certified or registered mail, the certificates representing all of the Exchangeable Shares registered in the name of such Shareholder, duly endorsed in blank, and accompanied by such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Business Corporations Act (Ontario) and the by-laws of the Corporation and such additional documents and instruments as InfoCast may reasonably require (including evidence reasonably satisfactory to InfoCast that the holder of Exchangeable Shares is not a non-resident of Canada within the meaning of the Income Tax Act (Canada) or a Section 1 16 certificate with a certificate limit in the payment amount) together with (a) a duly completed form of notice of exercise of the Exchange Right, contained on the reverse of or attached to the Exchangeable Share certificates, stating (i) that the Shareholder thereby exercises the Exchange Right so as to require InfoCast to purchase from the Shareholder the Exchangeable Shares specified therein, (ii) that such Shareholder has good title to and owns all such Exchangeable Shares to be acquired by InfoCast free and clear of all liens, claims and encumbrances, (iii) the names in which the certificates representing InfoCast Common Shares deliverable in connection with the exercise of the Exchange Right are to be issued and (iv) the names and addresses of the persons to whom such new certificates should be delivered and (b) payment (or evidence satisfactory to the Corporation and InfoCast of payment) of the taxes (if any) payable as contemplated by section 2.7 of this Agreement. 2.5 Delivery of InfoCast Common Shares; Effect of Exercise. Promptly after receipt of the certificates representing all of the Exchangeable Shares registered in the name of the Shareholder together with such documents and instruments of transfer and a duly completed form of notice of exercise of the Exchange Right (and payment of taxes, if any, or evidence thereto), duly endorsed -4- for transfer to InfoCast, InfoCast shall as soon as practicable thereafter, and in any event within four business days, deliver to the Shareholder (or to such other persons, if any, properly designated by such Shareholder), the certificates for the number of InfoCast Common Shares deliverable in connection with the exercise of the Exchange Right, which shares shall be duly issued as fully paid and non-assessable and free and clear of any lien, claim, encumbrance, security interest or adverse claim (other any such lien, claim, encumbrance, security interest or adverse claim arising as a result of any action or inaction by a Shareholder), and the Additional Consideration, if any, the closing of the transaction of purchase and sale contemplated by the Exchange Right shall be deemed to have occurred, and the holder of such Exchangeable Shares shall be deemed to have transferred to InfoCast all of its right, title and interest in and to such Exchangeable Shares and shall cease to be a holder of such Exchangeable Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive his proportionate part of the total purchase price therefor, unless the requisite number of InfoCast Common Shares is not allotted, issued and delivered by InfoCast to such Shareholder (or to such other persons, if any, properly designated by such Shareholder), within twenty Business Days of the date of exercise, in which case the rights of the Shareholder shall remain unaffected until such InfoCast Common Shares are so allotted, issued and delivered by InfoCast. Concurrently with such Shareholder ceasing to be a holder of Exchangeable Shares, the Shareholder shall be considered and deemed for all purposes to be the holder of InfoCast Common Shares to which it is entitled pursuant to the Exchange Right. 2.6 Exercise of Exchange Right Subsequent to Retraction. In the event that a Shareholder has exercised its right under Article 5 of the Exchangeable Share Provisions to require the Corporation to redeem any or all of the Exchangeable Shares held by the Shareholder (the "Retracted Shares") and provided that the Shareholder has not revoked the Retraction Request delivered by the Shareholder to the Corporation pursuant to Section 5.1 of the Exchangeable Share Provisions, the Corporation hereby agrees with the Shareholder to forward or cause to be forwarded within 2 business days to InfoCast all relevant materials delivered by the Shareholder to the Corporation (including without limitation a copy of the Retraction Request delivered pursuant to Section 5.1 of the Exchangeable Share Provisions) in connection with such proposed redemption of the Retracted Shares and, subject to the provisions of applicable law (including applicable securities laws) and the Retraction Call Right, InfoCast will purchase such shares in accordance with the provisions of this Article 2. 2.7 Stamp or Other Transfer Taxes. Upon any sale of Exchangeable Shares to InfoCast pursuant to the Exchange Right, the Automatic Exchange Right, the Redemption Call Right, the Liquidation Call Right and the Retraction Call Right, the share certificate or certificates representing InfoCast Common Shares to be delivered in connection with the payment of the total purchase price therefor shall be issued in the name of the Shareholder of the Exchangeable Shares so sold or in such name as such Shareholder may otherwise direct in writing without charge to the holder of the Exchangeable Shares so sold; provided, however, that such Shareholder (a) shall pay (and neither InfoCast nor the Corporation shall be required to pay) any documentary stamp, transfer or other -5- taxes that may be payable in respect of any transfer involved in the issuance or delivery of such shares to a person other than such Shareholder or (b) shall have established to the satisfaction of InfoCast and the Corporation that such taxes, if any, have been paid. 2.8 Notice of Insolvency Event and Triggering Event. As soon as practicably possible upon the occurrence of a Triggering Event or Insolvency Event or any event which with the giving of notice or the passage of time or both would be an Insolvency Event or Triggering Event, the Corporation and InfoCast shall give written notice thereof to the Shareholder, which notice shall include a brief description of the Exchange Right. 2.9 Reservation of InfoCast Common Shares. InfoCast hereby represents, warrants and covenants that it has irrevocably reserved for issuance and will at all times keep available, out of its authorized and unissued capital stock, such number of InfoCast Common Shares equal to the number of Exchangeable Shares issued and outstanding from time to time and InfoCast further represents, warrants and covenants that such number of InfoCast Common Shares shall be issuable free and clear of any lien, claim, encumbrance, security interest or adverse claim (other any such lien, claim, encumbrance, security interest or adverse claim arising as a result of any action or inaction by a Shareholder) notwithstanding that the issuance of such InfoCast Common Shares may give rise to certain rights of third parties against InfoCast pursuant to pre-emptive or other rights granted by InfoCast to such third parties. 2.10 Automatic Exchange on Liquidation of InfoCast. (a) InfoCast will give each Shareholder notice (in the identical form and at the same time given by InfoCast to its stockholders) of each of the following events at the time set forth below: (i) in the event of any determination by the Board of Directors of InfoCast to institute voluntary liquidation, dissolution or winding up proceedings with respect to InfoCast or to effect any other distribution of assets of InfoCast among its shareholders for the purpose of winding up its affairs at least 30 days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution; and (ii) immediately, upon receipt by InfoCast of notice of or InfoCast otherwise becoming aware of any threatened or instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of InfoCast or to effect any other distribution of assets of InfoCast among its shareholders for the purpose of winding up its affairs; (any such event being hereinafter referred to as a "Liquidation Event"). -6- (b) In order that the Shareholders will be able to participate on a pro rata basis with the holders of InfoCast Common Shares in the distribution of assets of InfoCast in connection with a Liquidation Event, on the fifth Business Day prior to the effective date (the "Liquidation Event Effective Date") of a Liquidation Event all of the then outstanding Exchangeable Shares shall be automatically exchanged for InfoCast Common Shares, subject to the provisions of applicable law (including applicable securities law). To effect such automatic exchange, InfoCast shall purchase each Exchangeable Share outstanding as soon as practicable prior to the Liquidation Event Effective Date and held by a Shareholder, and each Shareholder shall sell the Exchangeable Shares held by it at such time, for a purchase price per Exchangeable Share equal to one InfoCast Common Share plus the Additional Consideration, if any, which shall be satisfied in full by InfoCast delivering to the Shareholder such number of InfoCast Common Shares equal to the number of Exchangeable Shares so purchased plus the Additional Consideration, if any. (c) The closing of the transaction of purchase and sale contemplated by the automatic exchange of Exchangeable Shares for InfoCast Common Shares shall be deemed to have occurred, and each Shareholder shall be deemed to have transferred to InfoCast all of the Shareholder's right, title and interest in and to its Exchangeable Shares and shall cease to be a holder of such Exchangeable Shares upon InfoCast delivering to the Shareholder InfoCast Common Shares deliverable upon the automatic exchange of Exchangeable Shares for InfoCast Common Shares and the Additional Consideration, if any. Concurrently with such Shareholder ceasing to be a holder of Exchangeable Shares, the Shareholder shall be considered and deemed for all purposes to be the holder of InfoCast Common Shares issued to it pursuant to the automatic exchange of Exchangeable Shares for InfoCast Common Shares and the certificates held by the Shareholder previously representing the Exchangeable Shares exchanged by the Shareholder with InfoCast pursuant to such automatic exchange shall thereafter be deemed to represent InfoCast Common Shares delivered to the Shareholder by InfoCast pursuant to such automatic exchange. Upon the request of a Shareholder and the surrender by the Shareholder of Exchangeable Share certificates deemed to represent InfoCast Common Shares, duly endorsed in blank and accompanied by such instruments of transfer as InfoCast may reasonably require, InfoCast shall deliver to the Shareholder certificates representing InfoCast Common Shares of which the Shareholder is the holder. -7- ARTICLE 3 CERTAIN RIGHTS OF INFOCAST TO ACQUIRE EXCHANGEABLE SHARES 3.1 InfoCast Liquidation Call Right. (a) Upon the occurrence and during the continuation of an Insolvency Event, InfoCast shall have the overriding right (the "Liquidation Call Right"), in the event of and notwithstanding the proposed liquidation, dissolution or winding-up of the Corporation pursuant to Article 4 of the Exchangeable Share Provisions to purchase from all but not less than all of the holders of Exchangeable Shares on the Liquidation Date (as defined in the Exchangeable Share Provisions) all but not less than all of the Exchangeable Shares held by each such holder on payment by InfoCast of an amount per Exchangeable Share equal to one InfoCast Common Share plus the Additional Consideration per share, if any, which shall be satisfied in full by delivering to each such holder for each Exchangeable Share an equivalent number of InfoCast Common Shares plus the Additional Consideration per share, if any, (the "Liquidation Call Purchase Price"), provided that if the record date for any declared and unpaid dividends occurs on or after the Liquidation Date, the Liquidation Call Purchase Price shall not include such additional amount equivalent to such dividends. In the event of the exercise of the Liquidation Call Right by InfoCast, each holder shall be obligated to sell all the Exchangeable Shares held by the holder to InfoCast on the Liquidation Date on payment by InfoCast to the holder of the Liquidation Call Purchase Price for each such Exchangeable Share. (b) To exercise the Liquidation Call Right, InfoCast must notify the Corporation as agent for the holders of Exchangeable Shares of InfoCast's intention to exercise such right at least 30 days before the Liquidation Date in the case of a voluntary liquidation, dissolution or winding up of the Corporation and at least five Business Days before the Liquidation Date in the case of an involuntary liquidation, dissolution or winding up of the Corporation; provided, however, that if it is impractical for InfoCast to give such notice, such lesser amount of notice as practicable shall be given. The Corporation will notify the holders of Exchangeable Shares as to whether or not InfoCast has exercised the Liquidation Call Right forthwith after the expiry of the period during which the same may be exercised by InfoCast. If InfoCast exercises the Liquidation Call Right, on the Liquidation Date InfoCast will purchase and the holders will sell all of the Exchangeable Shares then outstanding for a price per Exchangeable Share equal to the Liquidation Call Purchase Price. (c) For the purposes of completing the purchase of the Exchangeable Shares pursuant to the Liquidation Call Right, InfoCast shall deposit with the Corporation (as agent for the holders of Exchangeable Shares) on or before the Liquidation Date, certificates representing the aggregate number of InfoCast Common Shares and the Additional Consideration, if any, deliverable by InfoCast in payment of the total Liquidation Call Purchase Price. Provided that the total Liquidation Call Purchase Price has been so deposited with the Corporation, on and after the Liquidation Date the rights of each holder of Exchangeable Shares will be limited to receiving such holder's proportionate part of the total Liquidation Call Purchase -8- Price payable by InfoCast upon presentation and surrender by the holder of certificates representing the Exchangeable Shares held by such holder and the holder shall on and after the Liquidation Date be considered and deemed for all purposes to be the holder of the InfoCast Common Shares to which it is entitled. Upon surrender to the Corporation of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Business Corporations Act (Ontario) and the by-laws of the Corporation and such additional documents and instruments as the Corporation may reasonably require (including evidence reasonably satisfactory to the Corporation that the holder of Exchangeable Shares is not a non-resident of Canada within the meaning of the Income Tax Act (Canada) or a Section 1 16 certificate with a certificate limit in the payment amount) the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Corporation shall deliver to such holder, certificates representing the InfoCast Common Shares to which the holder is entitled. If InfoCast does not exercise the Liquidation Call Right in the manner described above, on the Liquidation Date the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the liquidation price otherwise payable by the Corporation in connection with the liquidation, dissolution or winding-up of the Corporation pursuant to Article 4 of the Exchangeable Share Provisions. 3.2 InfoCast Redemption Call Right. (a) InfoCast shall have the overriding right (the "Redemption Call Right"), notwithstanding the proposed redemption of Exchangeable Shares by the Corporation pursuant to Article 6 of the Exchangeable Share Provisions, to purchase from all but not less than all of the holders of Exchangeable Shares to be redeemed on the Redemption Date (as defined in the Exchangeable Share Provisions) all but not less than all of the Exchangeable Shares held by each such holder on payment by InfoCast to the holder of an amount per Exchangeable Share equal to one (1) InfoCast Common Share which shall be satisfied in full by delivering to such holder such number of InfoCast Common Shares equal to the number Exchangeable Shares so purchased plus the Additional Consideration, if any, (the "Redemption Call Purchase Price"). In the event of the exercise of the Redemption Call Right by InfoCast, each holder shall be obligated to sell all the Exchangeable Shares held by the holder and otherwise to be redeemed to InfoCast on the Redemption Date on payment by InfoCast to the holder of the Redemption Call Purchase Price for each such Exchangeable Share. (b) To exercise the Redemption Call Right, InfoCast must notify the Corporation (as agent for the holders of Exchangeable Shares) of InfoCast's intention to exercise such right at least 30 days before the Redemption Date (as defined in the Exchangeable Share Provisions); provided, however, that if it is impracticable for InfoCast to give such notice, such lesser amount of notice as practicable shall be given. The Corporation will notify the holders of the Exchangeable Shares as to whether or not InfoCast has exercised the Redemption Call Right -9- forthwith after the expiry of the period during which the same may be exercised by InfoCast. If InfoCast exercises the Redemption Call Right, on the Redemption Date InfoCast will purchase and the holders will sell all of the Exchangeable Shares to be redeemed for a price per Exchangeable Share equal to the Redemption Call Purchase Price. (c) For the purposes of completing the purchase of Exchangeable Shares pursuant to the Redemption Call Right, InfoCast shall deposit with the Corporation (as agent for the holders of Exchangeable Shares) on or before the Redemption Date, certificates representing the aggregate number of InfoCast Common Shares plus the Additional Consideration, if any, deliverable by InfoCast in payment of the total Redemption Call Purchase Price. Provided that the total Redemption Call Purchase Price has been so deposited with the Corporation, on and after the Redemption Date the rights of each holder of Exchangeable Shares so purchased will be limited to receiving such holder's proportionate part of the total Redemption Call Purchase Price payable by InfoCast upon presentation and surrender by the holder of certificates representing the Exchangeable Shares purchased by InfoCast from such holder and the holder shall on and after the Redemption Date be considered and deemed for all purposes to be the holder of the InfoCast Common Shares to which it is entitled. Upon surrender to the Corporation of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Business Corporations Act (Ontario) and the by-laws of the Corporation and such additional documents and instruments as the Corporation may reasonably require (including evidence reasonably satisfactory to the Corporation that the holder of Exchangeable Shares is not a non-resident of Canada within the meaning of the Income Tax Act (Canada) or ~ Section 1 16 certificate with a certificate limit in the payment amount) the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Corporation shall deliver to such holder, certificates representing the InfoCast Common Shares to which the holder is entitled. If InfoCast does not exercise the Redemption Call Right in the manner described above, on the Redemption Date the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the Redemption Price (subject to Section 2.3 hereof) otherwise payable by the Corporation in connection with the redemption of Exchangeable Shares pursuant to Article 6 of the Exchangeable Share Provisions. 3.3 Tender Offers, Etc. In the event that: (i) a tender offer, share exchange offer, issuer bid, take-over bid or similar transaction with respect to InfoCast Common Shares is proposed by InfoCast or its shareholders and is recommended for acceptance by the Board of Directors of InfoCast; (ii) less than fifty percent (50%) of the outstanding shares of InfoCast are held of record by InfoCast's stockholders as of the date hereof; or -10- (iii) InfoCast elects to initiate the voluntary liquidation, dissolution or winding-up of InfoCast Canada (each a "Triggering Event" and collectively the "Triggering Events"), InfoCast shall have the right to purchase all of the Exchangeable Shares then outstanding in accordance with the provisions of Article 6 of the Exchangeable Share Provisions. ARTICLE 4 MISCELLANEOUS 4.1 Withholding Rights. InfoCast shall be entitled to deduct and withhold from the consideration otherwise payable to the Shareholder pursuant to this Agreement such amounts as InfoCast is required or permitted to deduct and withhold with respect to such payment under the United States Internal Revenue Code of 1986, as amended, the Income Tax Act (Canada), as amended, or any provision of state, provincial, local or foreign tax law. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the Shareholder in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. To the extent that the amount so required or permitted to be deducted or withheld from any payment to the Shareholder exceeds the cash portion of the consideration otherwise payable to the Shareholder, InfoCast is hereby authorized to sell or otherwise dispose of at fair market value such portion of such consideration as is necessary to provide sufficient funds to InfoCast, in order to enable it to comply with such deduction or withholding requirement and InfoCast shall give an accounting to the Shareholder with respect thereto and any balance of such proceeds of sale. 4.2 Time of the Essence. Time shall be of the essence of this Agreement and all of the provisions of this Agreement. 4.3 No Assignment. The Shareholder may not assign, transfer or otherwise convey the whole or any part of such Shareholder's rights or obligations under this Agreement to any person without the express written consent of InfoCast. InfoCast may assign, transfer or otherwise convey its rights and obligations under this Agreement to any affiliate of InfoCast without the prior written consent of any other party provided that such affiliate agrees to be bound by the terms of this Agreement and provided that InfoCast shall not be relieved of its obligations under this Agreement. 4.4 Successors. This Agreement shall be binding upon and shall enure to the benefit of the parties hereto, their heirs, legal representatives, successors and permitted assigns. 4.5 Further Assurances. Each of the parties shall do all such things and provide all such reasonable assurances as may be required to consummate the agreements and transactions contemplated hereby and each party shall execute and deliver such further documents or instruments -11- required by any other party as may be reasonably necessary or desirable to effect the purpose of this Agreement and to carry out its provisions. 4.6 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. 4.7 Attornment. InfoCast hereby irrevocably attorns and submits to, and agrees to take all further steps necessary to submit to, the non-exclusive jurisdiction of the Ontario Court of Justice (General Division) in any action or proceeding arising out of or related to this Agreement and irrevocably agrees that all claims in respect of any such action or proceeding shall be heard and determined in such Ontario court. InfoCast hereby irrevocably waives, to the fullest extent it may effectively do so, the defence of an inconvenient forum to the maintenance of such action or proceeding. InfoCast hereby agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. InfoCast hereby irrevocably designates and appoints Aird & Berlis, Attention: M. Craig G. Brown as its authorized agent to accept and acknowledge on its behalf service of any and all process that may be served in any such action or proceeding in any such court and agrees that service of process upon such agent, and written notice of such service to InfoCast delivered to such agent, shall be deemed in every respect effective service of process upon InfoCast in any such suit, action, or proceeding and shall be taken and held to be valid personal service upon InfoCast. 4.8 Ontario Securities Law. The rights of the Shareholders pursuant to this Agreement are subject to Section 1 1.15 of the Purchase Agreement. 4.9 Interpretation. Subject to Section 2.3 hereof, in the event that any provisions of this Agreement are inconsistent with or conflict with the Exchangeable Share Provisions, the Exchangeable Share Provisions shall govern and be paramount. -12- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly signed, sealed and delivered as of the date first above written. INFOCAST CANADA CORPORATION By: /s/ (signature is illegible --------------------------- INFOCAST CORPORATION By:/s/ A.T. Griffis --------------------------- HOMEBASE WORK SOLUTIONS LTD., as duly authorized signatory for each of the SHAREHOLDERS By: -13- EX-4.12 15 SUPPORT AGREEMENT SUPPORT AGREEMENT This Support Agreement (this "Agreement"), dated for reference May 13, 1999, is by and among InfoCast Corporation, a Nevada corporation ("InfoCast"), InfoCast Canada Corporation, an Ontario corporation ("InfoCast Canada") and Homebase Work Solutions Ltd., on behalf of each of those parties listed on Schedule "A" attached hereto (individually a "Shareholder" and collectively the "Shareholders"). W I T N E S S E T H: WHEREAS InfoCast is the sole holder of InfoCast Canada's issued and outstanding common shares (the "InfoCast Canada Common Stock"); AND WHEREAS pursuant to a share purchase agreement dated as of the 1 3th day of May, 1999 (the "Purchase Agreement") InfoCast Canada acquired all of the 955,000 issued and outstanding common shares and all of the 45,000 issued and outstanding preferred shares of Homebase Work Solutions Ltd. and issued in consideration therefore, 3,400,000 Exchangeable Shares of InfoCast Canada (the "Exchangeable Shares") which are exchangeable for common shares in the capital of InfoCast ("InfoCast Common Stock"); AND WHEREAS InfoCast Canada's articles of incorporation dated January 27, 1999 set forth the rights, privileges, restrictions and conditions (the "Exchangeable Share Provisions") attaching to the Exchangeable Shares; AND WHEREAS the parties hereto desire to establish a procedure whereby InfoCast will take certain actions and make certain payments and deliveries necessary to ensure that InfoCast Canada will be able to make certain payments and to deliver or cause to be delivered shares of InfoCast Common Stock in satisfaction of the obligations of InfoCast Canada under the Exchangeable Share Provisions with respect to the payment and satisfaction of dividends, the Liquidation Amount, Redemption Price and Retraction Price, all in accordance with the Exchangeable Share Provisions; NOW THEREFORE in consideration of the respective covenants and agreements provided in this Agreement and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties agree as follows: -2- ARTICLE 1 INTERPRETATION 1.1 Interpretation not Affected by Headings, etc. The division of this Agreement into articles, sections and paragraphs and the insertion of headings are for convenience of reference only and will not affect the construction or interpretation of this Agreement. 1.2 Number, Gender, etc. Words imparting the singular number only include the plural and vice versa. Words imparting the use of any gender include all genders. 1.3 Date for any Action. If any date on which any action is required to be taken under this Agreement is not a Business Day, such action is required to be taken on the next succeeding Business Day. For the purposes of this Agreement, a "Business Day" means a day other than a Saturday, a Sunday or a statutory holiday in the City of Toronto, Ontario or the City of New York, New York. 1.4 Ontario Securities Law. The rights of the Shareholders pursuant to this Agreement are subject to Section 1 1.14 of the Purchase Agreement. 1.5 Defined Terms. Capitalized terms not otherwise defined herein have the meanings ascribed to such terms in the Exchangeable Share Provisions. ARTICLE 2 COVENANTS OF INFOCAST AND INFOCAST CANADA 2.1 Covenants of Parent Regarding Exchangeable Shares. So long as any Exchangeable Shares are outstanding, InfoCast will: (a) in the event that it declares or pays any dividend on the InfoCast Common Stock, it shall ensure that (i) InfoCast Canada has sufficient assets, funds or other property available to enable the due declaration and the due and punctual payment in accordance with applicable law, of an equivalent dividend on the Exchangeable Shares and (ii) InfoCast Canada simultaneously declares or pays, as the case may be, an equivalent dividend on the Exchangeable Shares; (b) cause InfoCast Canada to declare simultaneously with the declaration of any dividend on InfoCast Common Stock an equivalent dividend on the Exchangeable Shares and, when such dividend is paid on InfoCast Common Stock, cause InfoCast Canada to pay simultaneously therewith such equivalent dividend on the Exchangeable Shares, in each case in accordance with the Exchangeable Share Provisions; -3- (c) advise InfoCast Canada sufficiently in advance of the declaration by InfoCast of any dividend on InfoCast Common Stock and take all such other actions as are necessary, in cooperation with InfoCast Canada, to ensure that the respective declaration date, record date and payment date for a dividend on the Exchangeable Shares will be the same as the record date, declaration date and payment date for the corresponding dividend on InfoCast Common Stock; (d) take all such actions and do all such things as are necessary or desirable to enable and permit InfoCast Canada, in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of the Liquidation Amount with respect to each issued and outstanding Exchangeable Share upon the liquidation, dissolution or winding-up of InfoCast Canada, including without limitation all such actions and all such things as are necessary or desirable to enable and permit InfoCast Canada to cause to be delivered shares of InfoCast Common Stock to the holders of Exchangeable Shares in accordance with the provisions of Article 4 of the Exchangeable Share Provisions; and (e) take all such actions and do all such things as are necessary or desirable to enable and permit InfoCast Canada, in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of the Retraction Price or Redemption Price, as applicable, including without limitation all such actions and all such things as are necessary or desirable to enable and permit InfoCast Canada to cause to be delivered shares of InfoCast Common Stock to the holders of Exchangeable Shares upon the retraction of the Exchangeable Share. 2.2 Segregation of Funds. InfoCast will cause InfoCast Canada to, and InfoCast Canada shall, deposit sufficient funds in a separate account and segregate a sufficient amount of such assets and other property as is necessary to enable InfoCast Canada to pay or otherwise satisfy the applicable dividends, Liquidation Amount or Retraction Price, in each case for the benefit of holders from time to time of the Exchangeable Shares, and will cause InfoCast Canada to, and InfoCast Canada shall, use such funds, assets and other property so segregated exclusively for the payment of dividends and the payment or other satisfaction of the Liquidation Amount as applicable. 2.3 Reservation of Shares of InfoCast Common Stock. InfoCast hereby represents, warrants and covenants that it has irrevocably reserved for issuance and will at all times keep available out of its authorized and unissued capital stock such number of shares of InfoCast Common Stock (or other shares or securities into which InfoCast Common Stock may be reclassified or changed as contemplated by section 2.7 hereof) (a) as is equal to the number of Exchangeable Shares issued and outstanding from time to time and (b) as are now and may hereafter be required to enable and permit InfoCast Canada to meet its obligations hereunder, under the Exchange Agreement, under the Exchangeable Share Provisions and under any other security or commitment -4- pursuant to which InfoCast may now or hereafter be required to issue shares of InfoCast Common Stock. 2.4 Notification of Certain Events. In order to assist InfoCast to comply with its obligations hereunder, InfoCast Canada will give InfoCast notice of each of the following events at the time set forth below: (a) in the event of any determination by the Board of Directors of InfoCast Canada to institute voluntary liquidation, dissolution or winding up proceedings with respect to InfoCast Canada or to effect any other distribution of the assets to InfoCast Canada among its shareholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such voluntary liquidation, dissolution, winding up or other distribution; (b) immediately, upon the earlier of (i) receipt by InfoCast Canada of notice, and (ii) InfoCast Canada otherwise becoming aware of, any threatened or instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding up of InfoCast Canada or to effect any other distribution of the assets of InfoCast Canada among its shareholders for the purpose of winding up its affairs; (c) immediately, upon receipt by InfoCast Canada of a Retraction Request (as defined in the Exchangeable Share Provisions); and (d) as soon as practicable upon the issuance by InfoCast Canada of any Exchangeable Shares or rights to acquire Exchangeable Shares. 2.5 Delivery of Shares of InfoCast Common Stock. In furtherance of its obligations under sections 2.1(d) and 2.1(e) hereof, upon notice of any event which requires InfoCast Canada to cause to be delivered shares of InfoCast Common Stock to any holder of Exchangeable Shares, InfoCast will forthwith issue and deliver the requisite shares of InfoCast Common Stock to or to the order of the former holder of the surrendered Exchangeable Shares, as InfoCast Canada directs. All such shares of InfoCast Common Stock will be duly issued as fully paid and non-assessable and will be free and clear of any lien, claim, encumbrance, security interest or adverse claim. 2.6 Economic Equivalence (a) In the event that InfoCast determines to: (i) issue or distribute shares of InfoCast Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of -5- InfoCast Common Stock) to the holders of all or substantially all of the then outstanding InfoCast Common Stock by way of stock dividend or other distribution, other than an issue of shares of InfoCast Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of InfoCast Common Stock) to holders of shares of InfoCast Common Stock who exercise an option to receive dividends in InfoCast Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of InfoCast Common Stock) in lieu of receiving cash dividends; or (ii) issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding shares of InfoCast Common Stock entitling them to subscribe for or to purchase shares of InfoCast Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of InfoCast Common Stock); or (iii) issue or distribute to the holders of all or substantially all of the then outstanding shares of InfoCast Common Stock (A) shares or securities of InfoCast of any class other than InfoCast Common Stock (other than shares convertible into or exchangeable for or carrying rights to acquire shares of InfoCast Common Stock), (B) rights, options or warrants other than those referred to in subsection 2.6(a)(ii) above, (C) evidences of indebtedness of InfoCast or (D) assets of InfoCast; InfoCast will cause InfoCast Canada to simultaneously issue or distribute the economic equivalent on an after tax basis, if any, on a per share basis of such rights, options, securities, shares, evidences of indebtedness or other assets to holders of the Exchangeable Shares. (b) In the event that InfoCast determines to: (i) subdivide, redivide or change the then outstanding shares of InfoCast Common Stock into a greater number of shares of InfoCast Common Stock; or (ii) reduce, combine or consolidate or change the then outstanding shares of InfoCast Common Stock into a lesser number of shares of InfoCast Common Stock; or -6- (iii) reclassify or otherwise change the shares of InfoCast Common Stock or effect an amalgamation, merger, reorganization or other transaction affecting the shares of InfoCast Common Stock; InfoCast will cause InfoCast Canada to simultaneously make the same or an economically equivalent change with respect to the rights of holders of the Exchangeable Shares. (c) InfoCast will ensure that the record date for any event referred to in section 2.6(a) or 2.6(b) above is the same as the record date established by InfoCast for holders of InfoCast Common Stock and InfoCast covenants to give simultaneous notice thereof to InfoCast Canada and the holders of the Exchangeable Shares. (d) The Board of Directors of InfoCast will determine, in good faith and in its sole discretion (with the assistance of such reputable and qualified independent financial advisors and/or other experts as are customary for transactions of this type and as the board may require), economic equivalence for the purposes of any event referred to in sections 2.6(a) or 2.6(b) above. In making each such determination, the following factors will, without excluding other factors determined by the Board to be relevant, be considered by the Board of Directors of InfoCast: (i) in the case of any stock dividend or other distribution payable in shares of InfoCast Common Stock, the number of such shares issued in proportion to the number of shares of InfoCast Common Stock previously outstanding; (ii) in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase shares of InfoCast Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of InfoCast Common Stock), the relationship between the exercise price of each such right, option or warrant and the current market value (as determined by the Board of Directors of InfoCast in the manner above contemplated) of a share of InfoCast Common Stock; (iii) in the case of the issuance or distribution of any other form of property (including without limitation any shares or securities of InfoCast of any class other than InfoCast Common Stock, any rights options or warrants other than those referred to in subsection 2.6(d)(ii) above, any evidences of indebtedness of InfoCast or any assets of InfoCast), the relationship between the fair market value (as determined by the Board of Directors of InfoCast in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding share of InfoCast Common Stock and the current market value (as determined by the Board of Directors of InfoCast Canada in the manner above contemplated) of a share of InfoCast Common Stock; -7- (iv) in the case of any subdivision, redivision or change of the then outstanding shares of InfoCast Common Stock into a greater number of shares of InfoCast Common Stock or the reduction, combination or consolidation or change of the then outstanding shares of InfoCast Common Stock into a lesser number of shares of InfoCast Common Stock or any amalgamation, merger, reorganization or other transaction affecting InfoCast Common Stock, the effect thereof upon the then outstanding shares of InfoCast Common Stock; and (v) in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of shares of InfoCast Common Stock as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares). For purposes of the foregoing determinations, the current market value of any security listed and traded or quoted on a securities exchange will be the weighted average of the daily trading prices of such security during a period of not less than 20 consecutive trading days ending not more than five trading days before the date of determination on the principal securities exchange on which such securities are listed and traded or quoted; provided, however, that if there is no public market for InfoCast Common Stock or if in the opinion of the Board of Directors of InfoCast, acting reasonably, the public distribution or trading activity of such securities during such period does not create a market which reflects the fair market value of such securities, then the current market value thereof will be determined by the Board of Directors of InfoCast, in good faith and in its sole discretion. 2.7 Parent Not To Vote Exchangeable Shares. InfoCast covenants and agrees that it will appoint and cause to be appointed proxyholders with respect to all Exchangeable Shares held by InfoCast and its subsidiaries for the sole purpose of attending each meeting of holders of Exchangeable Shares in order to be counted as part of the quorum for each such meeting. InfoCast further covenants and agrees that it will not, and will cause its subsidiaries not to, exercise any voting rights which may be exercisable by holders of Exchangeable Shares from time to time pursuant to the Exchangeable Share Provisions or pursuant to the provisions of the Business Corporations Act (Ontario) (or any successor or other corporate statute by which InfoCast Canada may in the future be governed) with respect to any Exchangeable Shares held by it or by its subsidiaries in respect of any matter considered at any meeting of holders of Exchangeable Shares. -8- ARTICLE 3 GENERAL 3.1 Term. This Agreement will come into force and be effective as of the date hereof and will terminate and be of no further force and effect at such time as no Exchangeable Shares (or securities or rights convertible into or exchangeable for or carrying rights to acquire Exchangeable Shares) are held by any party other than InfoCast and any of its Affiliates. 3.2 Changes in Capital of Parent and InfoCast Canada. Notwithstanding the provisions of section 3 4 hereof, at all times after the occurrence of any event effected pursuant to section 2.7 hereof, as a result of which either InfoCast Common Stock or the Exchangeable Shares or both are in any way changed, this Agreement will forthwith be amended and modified as necessary in order that it will apply with full force and effect, mutatis mutandis, to all new securities into which InfoCast Common Stock or the Exchangeable Shares or both are so changed and the parties hereto will execute and deliver an agreement in writing giving effect to and evidencing such necessary amendments and modifications 3.3 Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remainder of this Agreement will not in any way be affected or impaired thereby and this Agreement will be carried out as nearly as possible in accordance with its original terms and conditions. 3.4 Amendments, Modifications, etc. This Agreement may not be amended or modified except by an agreement in writing executed by InfoCast Canada and InfoCast and approved by the holders of the Exchangeable Shares in accordance with Article 8 of the Exchangeable Share Provisions 3.5 Ministerial Amendments. Notwithstanding the provisions of section 3 .4, the parties to this Agreement may in writing, at any time and from time to time, without the approval of the holders of the Exchangeable Shares, amend or modify this Agreement for the purposes of: (a) adding to the covenants of either or both parties for the protection of the holders of the Exchangeable Shares; (b) making such amendments or modifications not inconsistent with this Agreement as may be necessary or desirable with respect to matters or questions which, in the opinion of the Board of Directors of each of InfoCast Canada and InfoCast, it may be expedient to make, provided that each such board of directors is of the opinion that such amendments or modifications will not be prejudicial to the interests of the holders of the Exchangeable Shares; or -9- (c) making such changes or corrections which, on the advice of counsel to InfoCast Canada and InfoCast, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error, provided that the boards of directors of each of InfoCast Canada and InfoCast are of the opinion that such changes or corrections will not be prejudicial to the interests of the holders of the Exchangeable Shares. 3.6 Meeting to Consider Amendments. InfoCast Canada, at the request of InfoCast, will call a meeting or meetings of the holders of the Exchangeable Shares for the purpose of considering any proposed amendment or modification requiring approval pursuant to section 3.4 hereof. Any such meeting or meetings will be called and held in accordance with the by-laws of InfoCast Canada, the Exchangeable Share Provisions and all applicable laws. 3.7 Amendments only in Writing. No amendment to or modification or waiver of any of the provisions of this Agreement otherwise permitted hereunder will be effective unless made in writing and signed by both of the parties hereto. 3.8 Enurement. This Agreement will be binding upon and enure to the benefit of the parties hereto and their respective successors and assigns. 3.9 Notices to Parties. Whenever this Agreement requires or permits any notice, request, or demand from one party to another, the notice, request, or demand must be in writing to be effective and will be deemed to be delivered and received (i) if personally delivered or if delivered by telex, telegram, or courier service, when actually received by the party to whom notice is sent (ii) if delivered by telecopier, on the date of sending provided such sending is evidenced by electronic verification or receipt and is and a hard copy is sent by regular mail, or (iii) if delivered by mail, upon receipt by the party addressed at the address of such party set forth below (or at such other address as such party may designate by written notice to all other parties in accordance herewith): If to InfoCast: InfoCast Corporation 1 Richmond Street West Suite 900 Toronto, Canada M5H 3W4 Fax No.: (416) 867-9320 Attn: A. Thomas Grifffis with a copy to: Olshan Grundman Frome & Rosenzweig LLP 505 Park Avenue New York, New York 10022 -10- Fax No.: (212) 755-1367 Attn: Stephen Irwin If to InfoCast Canada: c/o Aird & Berlis Barristers and Solicitors BCE Place Suite 1800 181 Bay Street Toronto, Ontario M5J 2T9 Fax No.: (416) 863-1515 Attn.: M. Craig G. Brown If to the Shareholders: c/o Homebase Work Solutions Ltd. 505 8th Avenue S.W. Suite 515 Calgary, Alberta T2P 1G2 Fax No.: (403) 237-5047 Attn.: Scott Fleming with a copy to: Burnet, Duckworth & Palmer 1400, 350 7th Avenue S.W. Calgary, Alberta T2P 3N9 Fax No.: (403) 260-0332 Attn.: Jeffery G. Lawson 3.10 Counterparts. This Agreement may be executed in counterparts each of which will be deemed an original, and all of which taken together will constitute one and the same instrument. 3.11 Attornment. The parties hereto agree that the forum for resolution of any dispute arising under this Agreement shall be the Province of Ontario, and InfoCast and InfoCast Canada hereby consent, and submit themselves to the jurisdiction of any court sitting in the Province of Ontario. -11- 3.12 Further Assurances. The parties hereto will promptly do all such acts and things and execute and deliver all such further agreements, instruments, deeds and documents as may be required to carry out the transactions contemplated by this Agreement to give effect to the intent of said agreement. 3.13 Time of Essence. Time shall be of the essence in all respects of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly signed, sealed and delivered as of the date first above written. INFOCAST CANADA. CORPORATION By: INFOCAST CORPORATION By: HOMEBASE WORK SOLUTIONS LTD., on behalf of the Shareholders By: SCHEDULE "A" to Support Agremnent dated May 13, 1999 LIST OF SHAREHOLDERS (attached) HOME BASE WORK SOLUTIONS LTD. SHAREHOLDER LIST # PREFERRED SHARE GROUP 1. Arlis Rackham #109, 540 -18 Ave. SW, Calgary, AB. T2S 0L5 2. Lorraine Toews 14 Evergreen Bay, SW, Calgary, AB T2Y 3E9 3. Craig Coulombe 393 Macewan Park View, NW, Calgary, AB. T3K 4G5 4. Dave Olson 1661 East Camelback Rd. Suite 245 Phoenix AZ. 85016 5. Ed Lambert 6620 Bow Cres., NW, Calgary, AB. T3B 2B9 6. Roger Broberg 2594 Fairview Place, Blind Bay, BC VOE 1H1 7. Systemix Ltd. 80 Shawnee Way, SW, Calgary AB T2Y 2V3 8. Bob Blackshaw 568 Coach Grove Road, SW, Calgary AB T3H 1R8 9. Dave Rackham #109, 540 -18 Ave. SW, Calgary AB. T2S OL5 10, Jeff Craig 435 Cannington Close, SW, Calgary AB. T2W 3E9 11. Jim Rackham 91 Sunlake Close, SE, Calgary AB. T2X 3H2 12. Mike Mikusta 9 Douglas Ridge Close, SE,;:, Calgary, AB T2Z 2M4 13. Dave Duckett 35 Patterson Dr. SW, Calgary, AB. T3H 2B8 COMMON SHAREHOLDER 1. Ken MacLean 131 Signature Crt.. SW, Calgary AB T2Y 2V3 2. Scott Fleming Suite 820, 639 - s Ave. SW Calgary AB T2P OM9 3. Ken MacLean 131 Signature Crt. SW, Calgary, AB T2Y 21/3 4. Scott Fleming Suite 820, 639 - 5 Ave. SW, Calgary, AB T2P OM9 5. Darcy Galvon 21 Ridge Point Dr. RR 1, DeWinton, AB T0L 0X0 6. Rick Shannon Suite 820 639 - 5 Ave. SW, Calgary, AB T2P 0M9 7. Kevin Baker Suite 2000, 335 - 8 Ave. SW Calgary, AB. T2P 1C9 8. Dave Synnott Suite 820, 639 - 5 Ave SW, Calgary, AB. T2P 0M9 9. Pat Dennis 80 Shawnee Way, SW, Calgary, AB T2Y 2V3 10. Anthony Rehlinger Suite 820, 639 - 5 Ave. SW, Calgary, AB. T2P 0M9 11. Francis M. Parsons 1800, 700 - 4 Ave. SW, Calgary, AB. T2P 3J4 12. Dave Allan Suite 820 - 639 - 5 Ave. SW, Calgary, AB. T2P 0M9 13. Scott Grim 1100 W. Mantpelier St. Broken Arrow, OK. 74012 14. Jeff Craig 435 Cannington Close, SW, Calgary, AB. T2W 3E9 15. Ivan Holloway Suite 920, 112 - 4 Ave. SW, Calgary, AB. T2P OH3 16. Pave Terbelco Suite 920, 112 -4 Ave.. SW, Calgary, AB. T2P 0H3 17. Dave Rackham #109 540 -18 Ave. SW, Calgary,AB. T2S OL5 18. Guy Nelson Suite 1506, 150 York St.Toronto, Ont.. M5H 3S5 19. Don Ritter Suite 330, 1100 - 17 St. NW, Washington, DC. 20036 20. Martin Cooper 13 Shannon Circle, SW, Calgary, AB. T2y 2H4 21. Shirley Crow 3207 Jacotte Circle, Dallas TX 75214 22. Rod Hall Bay 4, 3510 - 17 St. NE, Calgary, AB. T2Y 5E2 23. Harold Jeffers Suite 2U0Q, 335 - 8 Ave. SW, Calgary, AB. TZP 1C9 24. Martin Bunting 5630 Signal Hill Centre, SW, Calgary, A-B. T3H 3P8 25. Fred Cadham 593SChurchillSt.,Vancouver, BC V6M 3H4 26. lan Morrison 1635 Bay Laurel Drive, Menlo Park, CA. 94025 27. Ray Antony 900, 520 - 5 Avenue,, SW, Calgary, AB T2P 3R7 28. 786384 Alberta Ltd. 2402 - 37 Sr. SW, Calgary, AB. T2B 0Z2 29 786206 Alberta Ltd. 2402 - 37 St. SW, Calgary, AB. T2B 0Z2 30. First Marathon - ITF 130 King St. West, Toronto. ON M5X lJ9 31. T.D. Evergreen - lTF 32 Flr 100 Wellington St. W., Toronto, ON. M5K 1A2 32. T.D.. Evergreen - ITF 32 Flr. 100 Wellington St. S Toronto, ON. M5K 1A2 33. T S Evergreen - lTF 32 Flr. 100 Wellington SW, w. Toronto, ON. M5K 1A2 34. R8C Dominion - ITF PO Box 50, Royal Bank Plaza, Toronto, ON. M5J 2W7 35. RBC Dominion - ITF PO Box 50, Royal Bank Plaza, Toronto. ON M5J 2W7 36. RBC Dominion - ITF P() Box 50, Royal Bank Plaza, Toronto, ON. M5J 2W7 37. Facet Petroleum Solutions Inc. 1125, 333 -1l Ave. SW, Calgary, AB. T2R lL9 38 Facet Decision Systems Inc. #305 1505 West 2 Ave., Vancouver, BC, V6H 3Y4 EX-10.1 16 EMPLOYMENT LETTER AGREEMENT OF SANDY WALSH INFOCAST CORPORATION 1 Richmond Street West, Suite 901 Toronto Ontario Canada M5H 3W4 March 17, 1999 Via Fax (902) 466-6889 Mr. Sandy Walsh One Research Drive Dartmouth, Nova Scotia B2Y 4M9 Dear Sandy: This letter is intended to outline the general terms of your employment with InfoCast and will, upon your execution as outlined below, represent our obligations to you. As you now know, we consider your involvement with InfoCast to be extremely important and critical to our future growth and trust that the terms of this letter represent fair and equitable compensation to you. I would also add that once we are on a solid revenue growth pattern, it is my intention to revisit the terms of each senior executive's compensation package and revise it upwards if so warranted. It is assumed that your employment will commence on May 1, 1999 and you will be guaranteed a minimum of one year's salary. Obviously we intend to make it a much longer commitment from our side but until the company has matured, a one year contract is the most we can offer at this time. The terms of employment will also include: a. Your annual salary will be Cdn. $110,000; b. You will participate on a yet to be determined bonus sharing program; c. You will have the equivalent of 300,000 shares of InfoCast issued in your name through your direct holding in Tree Top; and d. You will be given options in InfoCast in the amount of no less than 100,000 and no more than 200,000 shares. The exact number will be determined when the Company more clearly defines its option plan after our current financing is completed. I trust the above accurately sets out our agreement and, if so, please acknowledge your agreement by signing at the space indicated below. Yours truly, INFOCAST CORPORATION /s/ A.T. Griffis -------------------------- A.T. Griffis Chairman ACKNOWLEDGED AND AGREED TO: /s/ Sandy Walsh - ------------------------------ Sandy Walsh Dated: March 20, 1999 -2- EX-10.2 17 SENIOR EXECUTIVE EMPLOYMENT AGREEMENT SENIOR EXECUTIVE EMPLOYMENT AGREEMENT THIS AGREEMENT made as of the 5th day of August, 1999 (the "Effective Date"). B E T W E E N: INFOCAST CORPORATION, a corporation incorporated under the laws of the State of Nevada, in the United States of America (hereinafter referred to as the "Employer") OF THE; FIRST PART and JAMES WILLIAM LEECH, of the City of Toronto, in the Province of Ontario (hereinafter referred to as the "Employee") OF THE SECOND PART WHEREAS the Employer wishes to employ the Employee in the capacity of President and Chief Executive Officer effective September 4, 1999 (the "Start Date"); AND WHEREAS the Employer recognizes that the Employee will render and provide to the Employer special skills which are essential to the continued growth of the Employer's business and the Employer believes that it is reasonable and fair to the Employer that the Employee receive fair incentive and security of employment and compensation terms; AND WHEREAS the Employer and the Employee have agreed to enter into this Employment Agreement to formalize in writing the terms and conditions reached between them governing the Employee's employment; NOW THEREFORE in consideration of the mutual covenants and agreements herein contained and Or other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties hereto agree as follows: Article 1. RETENTION. DUTIES AND POP OF THE EMPLOYEE 1.1. Employment of Employee. The Employer hereby employs the Employee effective the Start Date as its President and Chief Executive Officer to perform the duties and responsibilities incident to such position, subject at all times to the control and discretion of the Board of Directors of the Employer (the "Board"). Such employment shall continue, unless and until terminated in accordance with Article 4 of this Agreement. 1.2. Acceptance of Employment: Time and Attention. The Employee hereby accepts such employment and agrees that throughout the period of his employment hereunder, except as hereinafter provided, he will devote substantially all his time, attention, knowledge and skills, faithfully, diligently and to the best of his ability, in furtherance of the business of the Employer, and will perform the duties and responsibilities assigned to him pursuant to Section 1, subject, at all times, to the direction and control of the Board. As an executive officer, the Employee shall perform such specific duties and shall exercise such specific authority related to the management of the day-to-day operations of the Employer consistent with his position as President and Chief Executive Officer as may be assigned to the Employee from time to time by the Board. The Employee shall at all times be subject to, observe and carry out such rules, regulations, policies, directions and restrictions as the Employer shall from time to time establish. During the period of his employment hereunder, the Employee shall not, directly or indirectly, accept employment or compensation from, or perform services of any nature for, any business enterprise other than the Employer. Notwithstanding the foregoing, the Employer acknowledges and agrees that (i) during the term of this Agreement, the Employee may serve as a member of the Board of Directors of other corporations, and receive remuneration for such services, provided that the business of the Employer and provided that it does not otherwise interfere with the performance of his duties to the Employer in any material way and (ii) the Employee's current employer may require that the Employee provide transition assistance for up to 30 days after the Start Date. The Employee shall be elected to such offices of the Employer as may from time to time be determined by the Board. During the period of the Employee's employment hereunder, he shall not be entitled to additional compensation for serving in any offices of the Employer to which he is elected or appointed. -2- 1.3. Board of Directors The Employer agrees to include the Employee as a management nominee for election to the Board to solicit proxies in favour of such election at all meetings of Shareholders during the term of this Agreement. Article 2. COMPENSATION AND BENEFITS 2.1. Remuneration. For the performance of his services hereunder, the Employee shall be paid a salary (the "Base Salary") of Cdn. $330,000 per annum, payable twice monthly in arrears. The Employee's Base Salary shall be reviewed annually by the Board and, from time to time during the term of this Agreement, may be increased in the sole discretion of the Board. In the event that the Employee ceases to be a full-time employee but is a member of the Board, the Employee shall paid the same director fees paid by the Employer to its outside directors, from the date full-time employment ceases. 2.2. Benefits and Perquisites Provided the Employee is otherwise eligible, the Employee will be entitled to participate in all benefit plans and to receive all perquisites enjoyed by the senior employees of the Employer. The Employer will pay the costs of the Employee's existing disability insurance with annual premiums of approximately Cdn. $5,000. All benefit plans will be governed and interpreted by their written terms, if applicable. In the event that the Employee's employment is terminated for any reason whatsoever, the Employer shall pay for and on behalf of the Employee the cost of all outplacement services reasonably required by the Employee which cost shall not exceed Cdn. $35,000. 2.3. Incentive Plans. The Employee will be entitled to participate in all incentive plans (including, without limitation, a Bonus Plan which includes an entitlement to an annual target bonus of 50 percent of Base Salary to be paid within 90 days following the Employer's fiscal year end, and the Share Option Plan) made available to any employee of the Employer. Except as provided for herein, all incentive plans will be governed and interpreted by their written terms, if applicable. It is agreed that the Employee's bonus for the period ending March 31, 2000 shall be Cdn. $30,000 and shall be paid, on a prorated basis, at the end of each calendar quarter. It is further agreed that for all subsequent 12 month periods, the minimum annual bonus shall be Cdn. $50,000, payable Cdn. $12,500 per quarter. -3- It is acknowledged that on June 1, 1999 the Employer granted the Employee 750,000 options to purchase common shares on terms substantially the same as those set forth in the InfoCast Corporation 1999 Share Option Plan (a copy of which is attached as Schedule A hereto) except as otherwise provided herein. These options were issued with an exercise price of US$7.00 each, which the Employer represents was the fair market value of the underlying common shares at the date the options were issued, and a term of 5 years from their date of issue. The terms of these options provide that they vest as to 250,000 options upon the Employee assuming the position of the Employer's President and Chief Executive Officer, 250,000 on the first anniversary thereof and the remaining 250,000 on the first anniversary thereof and the remaining 250,000 on the second anniversary thereof. 2.4. Out-of-Pocket Expenses. The Employee shall, upon production of supporting statements and vouchers, be reimbursed forthwith by the Employer in accordance with applicable policies of the Employer for all reasonable out-of-pocket expenses actually incurred by the Employee in the performance of his duties under this Agreement. The Employer shall pay the Employee's reasonable legal fees and expenses incurred in connection with finalizing his employment arrangements to a maximum of Cdn. $10,000. 2.5. Vacation. The Employee is entitled to a minimum of four weeks paid vacation in respect of each 12 month period of his employment hereunder. To the extent that the Employee does not utilize his full vacation entitlement in any given year, the Employee shall be entitled to carry forward his vacation entitlement to the next year provided that the Employee shall not be entitled to accumulate more than 10 weeks vacation. Article 3. EMPLOYEE'S NEGATIVE COVENANTS 3.1. Confidential Information. The Employee acknowledges that, in the course of carrying out, performing and fulfilling his obligations to the Employer under this Agreement, the Employee will have access to and will be entrusted with information that would reasonably be considered confidential to the Employer and its affiliates, clients or suppliers, the disclosure of any of which to competitors of the Employer or any of its affiliates, clients or suppliers, or the general public, would be highly detrimental to the best interests of the Employer. Except as may be required in the course of carrying out his duties under this Agreement, the Employee therefore covenants and agrees that he will not disclose or directly or indirectly caused to be disclosed, during his employment or any time thereafter, any of such information to any person, other than the directors, officers or employees of the Employee or any of its affiliates that have a need to know such information, nor -4- shall the Employee use or exploit, directly or indirectly, the same for any purpose other than the purposes of the Employer. This provision will not apply to any confidential information which is publicly available through no fault of the Employee or which the Employee is required by law to disclose. 3.2. Corporate Opportunities. Any business opportunities related to the business of the Employer or any of its affiliates which become known to the Employee during the period of his employment hereunder must be fully disclosed and made available to the Employer by the Employee and the Employee agrees not to take or omit to take any action if the result would be to divert from the Employer or any of its affiliates any opportunity which is within the scope of its business as known to the Employee from time to time. 3.3. Proprietary Information. The Employee acknowledges and agrees that all right, title and interest in and to any information, trade secrets, inventions, discoveries, improvements, research materials and databases, including but not limited to patents, copyright, design and moral rights in the results thereof, made or conceived by the Employee during his employment with the Employer relating to the business or affairs of the Employer or any of its affiliates shall belong to the Employer and the Employee hereby waives any and all moral rights he may have in connection thereto. The Employee shall promptly communicate to the Employer all information concerning such proprietary information and, if requested by the Employer, the Employee shall provide, at the expense of the Employer, all such assistance as the Employer considers necessary to secure the vesting of such rights in the Employer. The Employee hereby, for the term of this Agreement, irrevocably appoints the Employer as the Employee's attorney with full power in Employee's name to execute and deliver documents and do any things which the Employer may consider necessary or desirable for purposes of giving effect to this Section 3.3. The Employee hereby agrees to ratify and confirm whatever the Employer may lawfully do as the Employee's attorney. 3.4. Non-Competition. (a) In consideration of his employment hereunder, the Employee shall not, during the Employee's term of employment (as set forth in Section 1.1) and during the 6 month period following the date that the Employee ceases to be an employee of the Employer or other termination of this Agreement (regardless of what initiated the termination and whether with or without cause), either individually or in partnership or in conjunction in any way with any person or persons, corporation, partnership or other entity, whether as principal agent, director, member, officer, consultant, shareholder, guarantor, creditor in or any other manner whatsoever, directly or indirectly: -5- (i) solicit, interfere with, endeavour to entice away from the Employer or any of its affiliates, accept any business related to the Restricted Business from, or sell any product or render any service related to the Restricted Business to, any person, firm, or corporation who is or was a client, customer or supplier of the Employer or any of its affiliates with whom the Employer or its affiliate has or has had any dealing during the 6 month period immediately preceding the date upon which the Employee ceases to be an employee of the Employer; (ii) offer employment to (unless previously terminated by Employer) or endeavour to entice away from the Employer or any of its affiliates, any person employed by the Employer or its affiliates at the date upon which the Employee ceases to be an employee of the Employer or interfere in any way with the employment relationship between such employee and the Employer or its affiliate, as the case may be or induce, influence or seek to induce or influence any person engaged as an employee, representative, agent, independent contractor or otherwise by the Employer, to terminate his or her relationship with the Employer; (iii) engage in, carry on or otherwise be concerned with or have any interest in, or advice, lend money to, guarantee the debts or obligations of, or permit the Employer's name or any part thereof to be used to employer by, and person, firm, association, syndicate or corporation engaged in or concerned with, a Restricted Business in North America; or (iv) own, manage, operate, join, control, participate in, invest in, or otherwise be connected with, in any manner, whether as an officer, director, employee, partner, investor or otherwise, any business entity engaged in or concerned with, a Restricted Business in North America. For the purpose of this Section 3.4(a), "Restricted Business" means any business carried on by the Employer or any of its affiliates at the date upon which the Employee ceases to be an employee of the Employer. (b) The foregoing covenants are given by the Employee acknowledging that the Employee either has or will have specific knowledge of the affairs or the Employer and its business. Therefore, the Employee hereby acknowledges and agrees that all covenants, provisions and restrictions contained in this Article 3 are reasonable and valid in the circumstances of this Agreement, and all defenses to the strict enforcement thereof by the Employer are hereby waived by the Employee. The Employee acknowledges and agrees that any breach by the Employee of the covenants, provisions and restrictions contained in this Article 3 -6- during the term of his employment under this Agreement shall constitute cause for termination. (c) The Employee further acknowledges and agrees that in the event of a breach of the covenants, provisions and restrictions in this Article 3, the Employer's remedy in the form of monetary damages may be inadequate and that the Employer shall be and is hereby authorized and entitled, in addition to all other rights and remedies available to the Employer, to apply for and obtain from any court of competent jurisdiction interim and permanent injunctive relief and an accounting of all profits and benefits arising out of such breach. The Employee also acknowledges that the operation of the foregoing covenants may seriously constrain his freedom to seek other remunerative employment. 3.5. Investments. Nothing in this Agreement shall be deemed to prevent or prohibit the Employee from owning shares in a public company as an investment, so long as the Employee does not own more than 5 percent of the outstanding voting shares thereof. 3.6. Survival. Neither the termination of this Agreement, nor of the Employee's employment hereunder, shall terminate or affect in any manner any provision of this Article 3 that is intended by its terms to survive such termination. 3.7. Qualification of Non-Competition. If the provisions of Section 3.4 are ever adjudicated to exceed the limitations on time or geographic scope permitted by applicable law, then such provisions shall be deemed to be amended to the maximum time or geographic scope permitted by applicable law. Article 4. TERMINATION 4.1. Termination for Cause, Disability, Etc. (a) Subject to Section 4.4, the Employer may terminate this Agreement and the Employee's employment hereunder without payment of any compensation either by way of anticipated earnings or damages of any kind for any of the following reasons: -7- (i) cause which, for the purposes of this Agreement, means a wilful refusal on the part of the Employee to perform the services required of him under this Agreement (including the wilful and intentional withholding of services thereunder), any breach of his fiduciary duties to the Employer likely to cause material harm to the Employer, fraud or any conviction of a felony or indictable offense or any crime involving moral turpitude or any of the theft or dishonesty relating to a matter material to the Employer, provided that a wilful refusal to perform the services required under this Agreement will constitute cause only if the Employee fails to terminate the relevant actions or cure the relevant failure to act and remedy any harm therefrom within 10 business days after receipt of written notice to such wrongful act, failure to act or harm from the Employer; (ii) disability which, for the purposes of this Agreement, means the eligibility of the Employee for long term disability benefits under the disability insurance referred to in Section 2.2 of this Agreement; or (iii) death of the Employee. (b) In the event of termination pursuant to Section 4.1(a), the Employee's sole entitlement shall be his Base Salary to and including the date of termination, all benefits accrued to the date of termination and all rights pursuant to any Share Option Plan governing options issued to the Employee. For greater certainty, the Employee shall not be entitled to any part or pro rata payment for any unpaid bonus or payments pursuant to any incentive plans except to the extent earned but not yet paid for the fiscal year immediately preceding the date of termination. (c) In the event of termination pursuant to Section 4.1(a)(ii) or (iii) above, the Employee's sole entitlement shall be his Base Salary to and including the date of termination, all benefits accrued to the date of termination, all rights pursuant to any Share Option Plan governing options issued to the Employee (provided that all such options shall immediately accelerate and vest in the Employee or the legal representative of his estate, as applicable) and a pro rata payment for all bonuses (calculated as the greater of the bonus which would be paid under the Employer's bonus plan on the basis that targets were met and 50% of annual Base Salary) and payments pursuant to any incentive plans up to the date on which the Employee's active employment ceased. 4.2. Other Termination by Employer without Cause. Notwithstanding anything contained in this Agreement and subject to Section 4.4, where the provisions of Section 4.1 do not apply, this Agreement and the Employee's employment under this Agreement may be terminated at any time by the Employer during the term set out in Section 1.1 as follows: -8- (a) the Employer shall pay to the Employee his Base Salary to and including the date of termination, together with a lump sum amount equal to 2 times his annual Base Salary (the "Base Severance"); (b) the Employer shall pay the Employee a lump sum amount in lieu of his annual bonus equal to the Base Severance times the higher of 50% or the percentage last used in determining the Employee's annual bonus. (c) all options for shares of the Employer issued to the Employee shall immediately accelerate and vest in the Employee and the exercise period for all options for shares of the Employer issued to the Employee shall be 24 months from the date of the termination. (d) the Employer shall continue, for a period of 24 months from the date of termination of this Agreement, all group insurance, pension or other benefits and all perquisites at a level equivalent to those provided to the Employee immediately proceeding the date of termination, provided that if the Employer cannot continue any particular group insurance or other benefit or perquisite, the Employer shall reimburse the Employee for the cost to the Employee to replace such group insurance or other benefit or perquisite; and (e) the Employer shall pay the Employee all bonuses (calculated as the greater of the bonus which would be paid under the Employer's bonus plan on the basis that targets were met and 50% of annual Base Salary) and payments under the incentive plans pro rata to the date of termination. 4.3. Other Termination by Employee. Notwithstanding anything contained in this Agreement and subject to Section 4.4, where the provisions of Section 4.1 do not apply, this Agreement and the Employee's employment under this Agreement may be terminated at any time by the Employee during the term set out in Section 1.1 upon three (3) months' notice in the case of termination before the second anniversary of the Start Date, and one (1) months' notice in the case of termination on or after the second anniversary of the Start Date, in writing by the Employee to the Employer. In that event, the following shall apply: (a) the Employer shall pay to the Employee his Base Salary to the effective date of resignation; (b) the Employer shall pay the Employee a lump sum amount in lieu of his annual bonus equal to the Base Salary times the higher of 50% or the percentage last used in determining the Employee's annual bonus, pro rata to the effective date of resignation; and -9- (c) the exercise period for all options for shares of the Employer issued to the Employee shall be as provided pursuant to the Share Option Plans under which they were issued. 4.4. Other Termination By Reason of Change in Control. (a) In the event of termination by the Employer of the Employee at any time within 24 months following the occurrence of a "Change of Control" (as hereinafter defined), then the provisions of Section 4.1, 4.2 and 4.3 shall not apply. Rather, notwithstanding anything contained in this Agreement, the following shall apply: (i) the Employer shall pay to the Employee an amount equal to 3 times his annual Base Salary (the "Enhanced Severance"); (ii) the Employer shall pay the Employee an amount in lieu of his annual bonus equal to the Enhanced Severance times the higher of 50% or the percentage last used in determining the Employee's annual bonus; (iii) all options for shares of the Employer issued to the Employee shall immediately accelerate and vest in the Employee and the exercise period for all options for shares of the Employer issued to the Employee shall be 36 months from the date of the termination; (iv) the Employer shall continue, for a period of 36 months from the date of termination of this Agreement, all group insurance, pension or other benefits and all perquisites at a level equivalent to those provided to the Employee immediately proceeding the date of termination, provided that if the Employer cannot continue any particular group insurance or other benefit or perquisite, the Employer shall reimburse the Employee for the cost to the Employee to replace such group insurance or other benefit perquisite; and (v) the Employer shall pay the Employee all bonuses and payments under the incentive plans pro rata to the date of termination. (b) For the purposes of this Agreement, "Change of Control" shall mean the occurrence, at any time, of any of the following events: (i) the direct or indirect sale, lease, exchange or other transfer of all or substantially all (50% or more) of the assets of the Employer to any person or entity or group of persons or entities acting jointly or in concert as a partnership or other group (a "Group of Persons"); -10- (ii) the merger, consolidation or other business combination of the Employer with or into another corporation with the effect that the shareholders of the Employer immediately following the merger, consolidation or other business combination, hold 50% or less of the combined voting power of the then outstanding securities of the surviving corporation of such merger, consolidation or other business combination ordinarily (and apart from rights accruing under special circumstances) having the right to vote in the election of directors; (iii) the replacement of a majority of the Board or of any committee of the Board in any given year as compared to the directors who constituted the Board or such committee at the beginning of such year, and such replacement shall not have been approved by the Board, as the case may be, as constituted at the beginning of such year; (iv) a person or Group of Persons shall, as a result of a tender or exchange offer, open market purchases, privately registered purchases, merger, consolidation or other business combination, or otherwise, have become the beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of securities of the Employer representing 20% or more of the combined voting power of the then outstanding securities of such corporation ordinarily (and apart from rights accruing under special circumstances) having the right to vote in the election of directors; or (v) the voluntary liquidation, dissolution or winding-up of the Employer, in connection with which a distribution is made to the holders of the Employer's common shares. 4.5. General Termination Provisions. (a) Upon any termination of this Agreement for any reason, the Employee shall at once deliver or cause to be delivered to the Employer all books, documents, effects, money, securities or other property belonging to the Employer or for which the Employer is liable to others, which are in the possession, charge, control or custody of the Employee. (b) All amounts referred to in this Agreement, specifically including the Employer's payment obligations pursuant to this Article 4, shall constitute when due a debt owned by the Employer to the Employee. The Employee shall not be required to mitigate damages by seeking other employment or otherwise, nor shall the amount provided for under this Agreement be reduced in any respect in the event that the Employee shall secure alternative employment, or not reasonably pursue -11- alternative employment, following the termination of the Employee's employment with the Employer. Notwithstanding the foregoing, should the Employee replace any life, health or accident plan, at an equivalent level, upon obtaining alternate employment or otherwise, the Employer shall not be required to continue such benefits. (c) As a condition to any payment pursuant to this Article 4, the Employee agrees to deliver to the Employer at the time of payment a full and final release from all actions or claims, such release to be in form reasonably satisfactory to the Employer and to be for the benefit of the Employer, its affiliates, directors, officers and employees. Article 5. DIRECTORS AND OFFICERS 5.1. Resignation. If the Employee is a director or officer at the relevant time, the Employee agrees that, after termination of his employment with the Employer for any reason, he will tender his resignation from any position he may hold as an officer or director of the Employer or any of its affiliated or associated companies. If the Employee fails to resign, the Employer is irrevocably authorized to appoint another person to act in his name and on his behalf to sign any documents necessary to give effect to the resignation. 5.2. Indemnity. (a) Subject to the provisions of applicable law, the Employer agrees to indemnify and save the Employee harmless from and against all demands, claims, costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which the Employee is made a party by reason of being or having been a director or officer of the Employer or any affiliated company, whether before or after any termination if: (i) the Employee acted honestly and good faith with a view to the best interests of the Employer; (ii) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the Employee had reasonable grounds for believing that his conduct was lawful. (b) Subject to the provisions of applicable law, the Employer agrees, with the approval of the court, to indemnify and save the Employee harmless from and -12- against all demands, claims, costs, charges and expenses reasonably incurred by him in connection with an action by or on behalf of the Employer to procure a judgment in the Employer's favour to which the Employee is made a party by reason of being or having been a director or officer of the Employer or of any affiliated company, whether before or after any termination, if: (i) the Employee acted honestly and in good faith with a view to the best interest of the Employer; and (ii) in the case of criminal or administrative action or proceeding that is enforced by a monetary penalty, the Employee had reasonable grounds for believing that his conduct was lawful. (c) The Employer agrees to obtain and maintain comprehensive directors and officers liability insurance in respect of the Employee in an amount (i) equal to coverage customary for companies in the same industry as the Employer and (ii) to be agreed to between the Employer and the Employee and subject to periodic review. Article 6. GENERAL CONTRACT PROVISIONS 6.1. Notices. Any notice or other document ("Notice") required or permitted to be given hereunder shall be in writing and shall be given by hand delivery, responsible over night delivery service, or facsimile transmission (with confirmation of receipt), to be addressed to: (a) the Employer or the Board of Directors at: 1 Richmond St. West, Suite #901 Toronto, Ontario M5H 3W4 Telephone: 416-867-9087 Facsimile: 416-867-9320 with a copy to: Olshan Grundman Frome Rosenzweig & Wolosky LLP 505 Park Avenue New York, New York 10022 Attention: Jeffrey S. Spindler, Esq. -13- or to such other person as the Employer may designate; (b) the Employee at: 61 Inglewood Drive Toronto, Ontario M4T 1H2 Telephone: 416-489-3737 Facsimile: 416-489-0005 Any notice hand delivered personally or by delivery service or transmitted by facsimile shall be deemed to have been received by and given to the addressee on the day of delivery or transmission occurs after normal business hours, on the business day next following the date of transmission. 6.2. Currency. All dollar amounts set forth or referred to in this Agreement and all uses of the dollar sign ($) used herein refer to Canadian currency, except as otherwise indicated. 6.3. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 6.4. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. The parties hereto attorn to the jurisdiction of the courts of the Province of Ontario. 6.5. Interpretation not Affected by Headings, etc. Any headings preceding the text and paragraphs in this Agreement hereof have been inserted for convenience and reference only and shall not be construed to affect the meaning, construction, or effect of this Agreement. 6.6. Deemed Amendments. If any paragraph or provision of this Agreement is adjudicated to be invalid or unenforceable, in whole or in part then such paragraph or provision, or part thereof, shall be -14- deemed amended to delete therefrom the objectionable portion and the remaining portions of this Agreement shall continue to remain in full force and effect. 6.7. Non-Assignability Neither this Agreement, nor the right to receive any payments hereunder, may be assigned by the Employee without the prior written consent of the Employer. 6.8. Time of the Essence. Time shall be of the essence of this Agreement. 6.9. Binding Effect. This Agreement shall be binding upon and shall enure to the benefits of each of the parties and their respective heirs, executors, administrators, successors and permitted assigns. 6.10. Entire Agreement This Agreement (together with the plans and documents referred to herein, that certain letter agreement between the parties hereto dated the date hereof, and the arrangements regarding the Employee's option to purchase shares of Treetop Capital, Inc.) supersedes and replaces all prior negotiations and/or agreements made between the parties, whether oral or written, and shall constitute the entire Agreement between the parties with respect to all matters relating to the Employee's employment and the execution of this Agreement has not been induced by, nor do any of the parties hereto rely upon or regard as material any representations or writings whatsoever not incorporated into and made a part of this Agreement. This Agreement shall not be amended, altered or modified except in writing signed by the parties hereto. 6.11. Taxes. All payments under this Agreement shall be subject to withholding of such amounts, if any relating to tax or other payroll deduction as the Employer may reasonably determine should be withheld pursuant to any applicable law or regulation. -15- IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of the Effective Date. INFOCAST CORPORATION Per: /s/ A.T. Griffis -------------------------------- Per: ________________________________ /s/ JAMES WILLIAM LEECH __________________________ _____________________________________ l/s Witness JAMES WILLIAM LEECH -16- EX-10.3 18 THREE HUNDRED AND SIX DEGREES CONSULTING AGREEMENT THIS CONSULTING AGREEMENT made as of the 1st day of December 1998 BETWEEN: INFOCAST CORPORATION (hereinafter referred to as the "Corporation") OF THE FIRST PART - and - THREE HUNDRED & SIXTY DEGREES INC. (hereinafter referred to as the "Consultant" OF THE SECOND PART WHEREAS the Corporation wishes to retain the Consultant as an investor relations and financial consultant for its business and financial operations and the Consultant has agreed to provide such services to the Corporation. NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, it is hereby agreed by and between the parties as follows: ARTICLE 1. Definitions 1.1 "Consulting Services" shall mean the corporate and financial planning services relating to the business and services of the Corporation to be provided by the Consultant, and in particular but without restricting the generality of the foregoing, means the providing of advice and assistance in connection with the business of the Corporation. 1.2 The terms "subsidiaries", "associates" and "affiliated corporations" shall have the meanings ascribed thereto in the Business Corporations Act (Ontario). ARTICLE 2. Engagement of the Consultant and Its Duties 2.1 The Corporation hereby engages the services of the Consultant and the Consultant hereby accepts the engagement of its services by the Corporation, subject to the terms and conditions hereinafter contained. 2.2 The Consultant shall provide the Consulting Services to the corporation in such manner as the Corporation and the Consultant may reasonably agree, and shall, devote such of its time as is necessary to properly manage the affairs of the Corporation, and all its efforts, skills, attention and energies during that time to the performance of its duties as herein set forth. 2.3 The Corporation acknowledges that it is aware of the Consultant's many outside activities, duties and financial interests and agrees that the performance of such activities and duties and involvement of such financial interests will not be construed as a breach of this Agreement, provided that the Consultant provides the Consulting Services on a basis which does not impair the activities and business interests of either the Corporation or the Consultant. 2.4 The Corporation agrees to co-operate with the Consultant and to provide such information, financial records and documents as may facilitate the performance of the Consulting Services by the Consultant. 2.5 The term of this Agreement shall commence on the 1st day of December, 1998 for a period of thirteen (13) months ending on December 31st, 1999 and may be terminated earlier by either party giving fifteen (15) days prior written notice to the other party that it wishes to terminate this Agreement. 2.6 The Consultant may be dismissed by the Corporation without notice on the happening of any of the following events, namely; (a) if Cliff Jones is found mentally incompetent; (b) if the consultant becomes bankrupt or suspends payment or compounds with their creditors or makes an authorized assignment under the Bankruptcy Act or is declared insolvent; or (c) for just cause if the Consultant violates any of the provisions of this Agreement or fails to properly fulfill the duties of the Consultant's engagement hereunder. ARTICLE 3. Compensation 3.1 The Corporation agrees to pay the Consultant, in consideration of the provision by the Consultant of the Consulting Services of the Corporation, the following compensation: (a) Four thousand dollars ($4,000.00) per month paid on the last business day of each month; (b) An option to purchase _____________ shares of InfoCast Corporation at a price of _______________ per share until December 31, 2000. -2- (c) In the event the Corporation wishes to retain the services of the Consultant beyond December 31, 1999 it will do so on terms and conditions negotiated between the parties at that time. ARTICLE 4. Compensation 4.1 The Consultant shall not disclose, during the term of this Agreement or at any time thereafter, any information concerning the business and affairs of the corporation or its subsidiaries, affiliated corporations or associates which it may have learned while providing the Consulting Services, to any person not an officer or Director of the Corporation other than in the proper discharge of its duties under this Agreement and it shall not use, for its own purpose or for any purpose other than that of the Corporation, either during the continuance of its engagement under this Agreement or at any time thereafter, any information it may have acquired, or may acquire, in or relation to the business of the Corporation, its subsidiaries, affiliated corporations or associates. ARTICLE 5. Miscellaneous 5.1 Any notice required or permitted to be given hereunder shall be given by hand delivery, facsimile transmission or by registered mail, postage prepaid, addressed to the parties at their respective address set forth below: (a) If to the Corporation: InfoCast Corporation 1 Richmond St. West Suite 901 Toronto, Ontario Telecopier No.: 416-867-9320 (b) If to Consultant 181 University Ave. Suite 2110 Toronto, Ontario M5H 3M7 Telecopier No.: 416-366-1890 and any such notices given by hand delivery or by facsimile transmission shall be deemed to have been received on the date of delivery or transmission and if given by prepaid registered mail, shall be deemed to have been received on the third business day immediately following the date of mailing. The parties shall be entitled to give notice of changes of address from time to time in the manner hereinbefore provided for the giving of notice. -3- 5.2 This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario. 5.3 Time shall be of the essence of this Agreement. 5.4 The provisions of this Agreement shall enure to the benefit of and be binding upon the Corporation and the Consultant and their respective successors and assigns. This Agreement shall not be assignable by the Consultant. 5.5 This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the parties hereto in connection with the subject matter hereof. No supplement, modification, waiver or termination of this Agreement shall be binding, unless executed in writing by the parties to be bound thereby. 5.6 The Consultant acknowledges having been advised to obtain independent legal advice and acknowledges either having obtained independent legal advice or having waived the right to independent legal advice. IN WITNESS WHEREOF this Agreement has been executed by the parties SIGNED, SEALED AND DELIVERED ) InfoCast Corporation ) ) ) ) Per: /s/ A.T. Griffis ) A.T. Griffis ) ) ) THREE HUNDRED & SIXTY DEGREES ) INC. ) ) ) Per: /s/ Cliff A. Jones ) Cliff A. Jones -4- EX-10.4 19 CONSULTING AGREEMENT CONSULTING AGREEMENT This Agreement is made and entered into as of March 22, 1999 by and between INFOCAST CORPORATION, a Nevada corporation (the "Company") and Thompson Kernaghan & Co. Limited ("Consultant"). WHEREAS, the Company is engaged in the business of electronic content delivery and information management, and WHEREAS, the Company wishes to engage the services of the Consultant pursuant to the terms of this Agreement, and WHEREAS, the Consultant wishes to be engaged by the Company pursuant to the terms hereof, it is NOW THEREFORE AGREED AS FOLLOWS: 1. Engagement of Consultant. The Company does hereby engage the Consultant and the Consultant hereby accepts the engagement, pursuant to the term of this Agreement. 2. Services. Services to be provided to the Company by the Consultant are set forth on Schedule A hereto ("Services"). The Consultant will devote so much time to the business of the Company as necessary and appropriate in order to provide the Services. It is understood that no minimum number of hours will be required of the Consultant. 3. Term. The Term of this Agreement shall be for a period of 1 years, commencing on the date hereof. 4. Compensation. In full compensation for all of Services to be rendered to the Company hereunder, the Company shall issue to the Consultant upon execution of this Agreement, 60,000 shares (the "Shares") of the Company's common stock, $.01 par value (the "Common Stock"). The Consultant represents and warrants that it is acquiring the Shares for its own account for investment purposes only; that it has no present intention of selling or otherwise disposing of the Shares or any part thereof; that it will not transfer the Shares in violation of the securities laws of the United States; that it is familiar with the business operations, management and financial conditions and affairs of the Company. The Consultant further confirms that it has been advised that the Shares have not been registered under the Securities Act of 1933, as amended, and that the Consultant has consulted with and been advised by counsel as to the restrictions on resale to which the Shares will thereby be subject. 5. Confidentiality. It is acknowledged by the Consultant that in providing its services hereunder the Consultant will be privy to all confidential and proprietary information of the Company The Consultant agrees that it shall hold all information of the Company in its possession which is not publicly disseminated, in confidence and as proprietary to the benefit of the Company. The Consultant shall take such steps as it deems appropriate in order to protect the confidentiality of such information. The Consultant shall not, without the prior written approval of the Company, directly or indirectly, solicit, raid, entice, or induce any person who presently is or shall be, an employee, director or officer of the Company or any of its affiliates to become employed by the Consultant or any of its affiliates. 6. Full Agreement of Parties. This Agreement shall constitute the full understanding of the parties. Any modification hereof shall be enforceable only if made in writing and executed by the party against whom such modification is sought. -2- 7. Assignability. This Agreement and the rights hereunder may not be assigned by either party (except by operation of law) without the prior written consent of the other. 8. Notices. Any notice or other communication between the parties hereto shall be sent by certified or registered mail, postage prepaid, if to the Company, addressed to it at 1 Richmond Street West, Suite 901, Toronto, Ontario M5H 2V2, Attention: [ ], or if to the Consultant, addressed to it at 365 Bay Street, Toronto, Ontario M5H 2V2, Attention: [ ], or to such address as may hereafter be designated in writing by one party to the other. Such notice or other communication shall be deemed to be given on the date of receipt. 9. Independent Contractor. It is agreed that the Consultant is an independent contractor vis-a-vis the Company and shall have no authority to execute instruments on behalf of the Company. 10. Governing Law. This Agreement shall be governed by the laws of the State of Nevada, without giving effect to conflicts of laws rules of such state. 11. Expenses. Subject to the prior approval of the Company and upon receipt of appropriate supporting documentation, the Company shall reimburse the Consultant for any and all reasonable out-of-pocket expenses incurred by the Consultant in connection with services rendered by the Consultant to the Company pursuant to this Agreement. Expenses payable by the Company under this Section 11 shall not include allocable overhead expenses of the Consultant, including but not limited to, secretarial charges and rent. 12. Counterparts. This Agreement may be executed in more than one counterpart with the same effect as if the parties executing the several counterparts had each executed one counterpart. -3- INFOCAST CORPORATION By: Name: Title: Agreed and Accepted as of the date first written above: March 22, 1999 THOMSON KERNAGHAN & CO. LIMITED By: /s/ Mark Valentine ---------------------------- Name: Mark Valentine Title: Exec. V.P. & Director -4- SCHEDULE A TO AGREEMENT DATED AS OF MARCH __, 1999 BETWEEN INFOCAST CORPORATION AND THOMSON KERNAGHAN & CO. LIMITED The Consultant shall confer with the Company and its senior officers in respect of: 1. Providing financial consulting services and advice pertaining to the Company's business affairs. 2. Providing sponsorship and exposure in connection with the dissemination of corporate information regarding the Company to the investment community at large under a systematic planned approach. 3. Rendering advice and assistance in connection with the preparation of annual and interim reports and press releases. 4. Assisting in the Company's financial public relations, including discussions between the Company and the financial community. 5. Rendering advice with respect to any acquisition program of the Company. 6. Rendering advice regarding a future public or private offering of securities of the Company or any subsidiary. -5- EX-10.5 20 BAYBACK CONSULTING AGREEMENT CONSULTING AGREEMENT THIS AGREEMENT is made this 15th day of April, 1999. BETWEEN: INFOCAST CORPORATION, a body corporate duly incorporated, and having its Registered office at 1 Richmond Street West, Suite 902, Toronto, ON M5H 3W4 Canada, (hereinafter called the "Company") OF THE FIRST PART AND: MICHAEL BAYBAK AND COMPANY, INC., a body corporate, incorporated under the laws of the State of California, having an office at 4515 Ocean View Blvd., Suite 305, La Canada, California 91011, U.S.A. (hereinafter called the "Consultant") OF THE SECOND PART WHEREAS: A. The Consultant is a firm carrying on the business of providing national media consulting services and financial community investor relations consulting services for emerging companies; B. The Company is desirous of retaining the consulting services of the Consultant on a fixed term basis and the Consultant has agreed to serve the Company as an independent contractor upon the terms and conditions herewith set forth; FOR VALUABLE CONSIDERATION it is hereby agreed as follows: 1. The Consultant shall provide major media consulting services to the company, such duties to include news feature development, relations with marketing newsletter and with other trade and advertising media interested in the Company and its technology. The Consultant shall also provide an investor relations program of communications to the U.S. institutional, brokerage and retail investor publics. Additionally, the Consultant shall consult and advise the CEO and Company on a variety of corporate matters on an on-going basis, as these may relate to the above programs. This work is SUBJECT ALWAYS to the control and direction of the CEO and Board of Directors of the Company. 2. The Company shall provide to Consultant copies of all proposed Company literature prior to the dissemination of such literature to any third parties and the Consultant shall not disseminate any such materials or documents without the prior approval of the Company, 3. The term of this Agreement shall be for a period of twelve (12) months from the date of this Agreement. This Agreement can be renewed at the option of the Company for a further twelve (12) months, upon notice in writing to the Consultant at least thirty (30) days prior to the end of the initial term. 4. The basic remuneration of the Consultant for its services hereunder shall be $US 6,000 per month, billed at the start of each monthly service period and payable in 15 days. The first monthly fee is payable immediately on implementation of this Agreement. 5. The Consultant shall be responsible for the payment of its income taxes as shall be required by any governmental entity with respect to any compensation paid by the Company to the Consultant. 6. During the term of this Agreement, the Consultant shall provide its services to the Company primarily through Michael Baybak and through George Duggan, and the Consultant shall ensure that Michael Baybak and/or George Duggan will be available to provide such services to the Company in a timely manner subject to their availability at the time of the request. 7. The Consultant shall be reimbursed for all reasonable out-of-pocket expenses actually and properly incurred by it in connection with its duties hereunder with the prior consent of the Company. For all such expenses, the Consultant shall furnish to the Company statements, receipts and vouchers. The costs of any dissemination programs to be undertaken with the approval of the Company shall be paid in advance when such costs exceed $US 1,500 per dissemination program. 8. The Consultant shall not, either during the continuance of its contract hereunder or any time thereafter, disclose the private affairs of the Company and/or its subsidiary or subsidiaries, or any secrets of the Company and/or its subsidiary or subsidiaries, to any person for its or their own personal benefit or purposes whether or not to the detriment of the Company and shall not use any information it may acquire in relation to the business and affairs of the Company and/or its subsidiary or subsidiaries for its own benefit or purposes, or for any purpose other than those of the Company as more particularly described in paragraph 1 above. 9. The Company agrees to indemnify and save the Consultant harmless from any loss, costs or expenses incurred as a result of or arising out of the Consultant=s dissemination or publication of any documents or literature issued or approved in writing by the Company in accordance with the provisions of paragraph 2 of this Agreement, in the event that it is established by a Court of competent jurisdiction that such materials contain material misrepresentations or false or misleading information, or omit to state a material fact necessary to prevent a statement that is made from being false or misleading. The Company shall be solely responsible for all required registrations/exemptions for its securities at the federal and state levels. 10. The Consultant shall well and faithfully serve the Company or any subsidiary as aforesaid during the continuance of its employment hereunder and use its best efforts to promote the interests of the Company. 10. The Consultant shall well and faithfully serve the Company or any subsidiary as aforesaid during the continuance of its employment hereunder and use its best efforts to promote the interests of the Company. 11. This Agreement may be terminated forthwith by the Company without prior notice if at any time: (a) The Consultant shall commit any breach of any of the provisions herein contained; or (b) The Consultant shall be guilty of any misconduct or neglect in the discharge of its duties hereunder. (c) The Consultant shall become bankrupt or make any arrangements or composition with its creditors; or (d) Michael Baybak shall become of unsound mind or be declared incompetent to handle his own personal affairs. 12. The Company is aware that the Consultant has now and will continue to have business interests in other companies and the Company recognizes that these companies will require a certain portion of the Consultant=s time. The Company agrees that the Consultant may continue to devote time to such outside interests, PROVIDED THAT such interests do not conflict with, in any way, the time required for the Consultant to perform its duties under this Agreement. 13. The services to be performed by the Consultant pursuant hereto are personal in character, and neither this Agreement nor any rights or benefits arising thereunder are assignable by the Consultant without the prior written consent of the Company. 14. Any notice in writing or permitted to be given to the Consultant hereunder shall be sufficiently given if delivered to the Consultant personally or mailed by registered mail, postage prepaid, addressed to the Consultant at its last business address known to the Secretary of the Company. Any such notice mailed as aforesaid shall be deemed to have been received by the Consultant on the first business day following the date of the mailing. Any notice in writing required or permitted to be given to the Company hereunder shall be given by registered mail, postage prepaid, addressed to the Company at the address shown on page 1 hereof. Any such notice mailed as aforesaid shall be deemed to have been received by the Company on the first business day following the date of mailing. Any such address for the giving of notices hereunder may be changed by notice in writing given hereunder. 15. The provisions of this Agreement shall inure to the benefit of and be binding upon the Consultant and the successors and assigns of the Company. For this purpose, the terms "successors" and "assigns" shall include any person, firm or corporation or other entity which at any time, whether by merger, purchase or otherwise, shall acquire all or substantially all of the assets or business of the Company. 16. Every provision of this Agreement is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity of the remainder of the provisions of this Agreement. 17. This Agreement is being delivered and is intended to be performed in the State of California and shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of that State. This Agreement may not be changed orally, but only by an instrument in writing signed by the party against whom or which enforcement of any waiver, change, modification or discharge is sought. IN WITNESS WHEREOF this Agreement has been executed as of the day, month and year first above written. THE COMMON SEAL OF ) INFOCAST CORPORATION ) was hereto affixed ) c/s in the presence of: ) ) ) per: /s/ A.T. Griffis /s/ Elin Crespo ) -------------------------------- Signature of Witness ) Authorized Signatory ) ) _________________________________ ) 21 April 1999 --------------------------------------- Address of Witness Date: SIGNED, SEALED AND DELIVERED by ) MICHAEL BAYBAK AND ) COMPANY, INC. by its authorized ) signatory in the presence of: ) MICHAEL BAYBAK AND ) COMPANY, INC. ) /s/ George Duggan ) per: /s/ Michael Baybak - -------------------------------- ------------------------------- Signature of Witness ) Authorized Signatory ) ) _________________________________ ) 15 April 1999 ------------------------------- Address of Witness ) Date: EX-10.6 21 LETTER AGREEMENT LASSO Communications Inc. 1881 Yonge Street Toronto Ontario M4S 3C4 Tel. 416.486.7746 Fax 416.486.8240 June 15, 1999 Mr. James Hines President Infocast 1 Richmond Street Suite 902 Toronto, Ontario M5H 3W4 Dear Mr. Hines: This letter will confirm your advice on behalf of Infocast Corporation ("Infocast") to Lasso Communications Inc. ("Lasso") that Infocast has secured the rights as a Value Added Reseller of ITC Learning Corporation to offer for sale in Canada licenses to use the electronic format of the ITC Learning courseware curriculum ("ITC Libraries") for delivery over the Interenet, Intranets or other networks. This letter will also confirm that Infocast has agreed to sell to Lasso licenses to use such ITC Libraries in association with Lasso's Long Distance Learning systems and related projects, at Infocast's best customer pricing, which in any event shall be no less than 40% off Infocast's list prices. We will work our purchase order arrangements with your sales staff. Please provide us with a copy of the ITC Libraries end-user license so that we can ensure that we will be in compliance as we go forward with incorporating the ITC Libraries into our projects. Please confirm the above terms by signing and returning the duplicate copy of this letter. Best regards, /s/ Tony Russell Tony Russell C.O.O. Grey Interactive/Lasso Communications Infocast Corporation Per: /s/ James Hines -------------------- EX-10.7 22 ADVERTISING SERVICES AGREEMENT AGREEMENT Agreement for advertising services effective July 1, 1999, between Infocast Corporation, (hereinafter referred to as the "Client") with offices at 1 Richmond Street West, Suite 902, Toronto, Ontario, M5H 3W4 and Lasso Communications Inc. (hereinafter referred to as the "Agency") with offices at 1881 Yonge Street, Suite 500, Toronto, Ontario, M4S 3C4 Whereas the Agency has the facilities and expertise to provide advertising services in Canada and is willing to provide such advertising services to Client in relation to such of Client's products and services as designated by Client and accepted by Agency; and Whereas Client wishes to avail itself of such advertising facilities services and expertise; Now therefore in consideration of the mutual promises made herein and for other good and valuable consideration, the parties do agree as follows: 1. TERM. The term of this Agreement (the "Term") shall commence effective July 1, 1999 and continue for a fixed term until May 31, 2000 (the "Initial Term"). Thereafter this agreement, shall be automatically renewed from year to year (the "Renewal Term"), unless either party delivers written notice of termination as hereinafter provided. 2. PRODUCTS. Client hereby engages the Agency to perform, in Canada and the U.S. (the "Territory"), advertising services customarily performed by an advertising agency in respect of the Client products and services designated by the Client and agreed to by the Agency (collectively referred to herein as "Client Products"). 3. SERVICES. Agency shall provide in the Territory the following core advertising services in respect of the creation, production and placement of authorized Client advertising in the Territory for the Client Products: A. General Advertising ------------------- i) the development, preparation and production of copy, layouts, and/or finished advertisements, for all types of print media including, without restriction, newspaper, magazine, all forms of outdoor advertising, billboards, transit advertising, in-store advertising; ii) the preparation of copy, storyboard, finished films, tapes and/or recordings for all types of broadcast media including, without restriction, television, radio, video formats of all kinds, electronic messaging, theaters and cinemas; iii) the purchase of artwork, engravings, film, tapes, and/or other mechanical and collateral materials; iv) testimonials, endorsements, researchers, etc., on Client's behalf with Client's written approval; B. Media ----- i) to provide, media planning, buying and reporting; ii) the auditing of all billings submitted by all media or other parties for material and services provided; iii) strategic input and recommendations on an ongoing basis as may be reasonably requested by Client. C. Interactive Media Services -------------------------- i) to provide web-site design and development, software engineering and application development. D. General ------- i) the carrying out of such special assignments within the framework of this Agreement as Client and Agency may agree, from time to time, in writing. 4. COMPENSATION. The Agency shall be compensated according to the terms set forth in Schedule A, attached hereto and made part hereof (the "Agency Compensation"). 5. AGENT STATUS. The Agency will conduct and represent itself as agent for the Client. The Agency shall not enter into any contract or make any commitment on behalf of the Client, unless Client's approval of such contract or commitment has first been secured. 6. OWNERSHIP. A. All creative materials (herein collectively referred to as "Creative Material") adopted by the Client for use in its advertising shall, as between Client and the Agency be the sole and exclusive property of Client provided Client has fully paid Agency for the costs of production, out-of-pocket expenses and all outstanding fees and commissions owing to Agency in respect of such Creative Material. B. In consideration of the payments aforesaid, Agency hereby assigns to Client copyright in the Creative Material and Client shall have the right to obtain and hold in its -2- own name copyrights, registrations and similar protection which may be available in the Creative Material. Agency agrees to give Client, at Client's expense, all assistance reasonably required to perfect such rights. C. Agency agrees that with respect to all items prepared for and submitted to Client containing or proposed to contain any pre-existing or third party created materials in respect of which rights have been reserved by some third party (hereinafter collectively referred to as "Third Party Works"), Agency will specifically identify all Third Party Works. D. Any agreement or license for Third Party Works, authorized by Client and entered into by Agency on behalf of Client with a third party, shall be entered into in the name of the Client. E. Notwithstanding anything to the contrary herein contained, all copyright, patents and code, including source and object code for any programs designed by Agency relating tot he provision of Interactive Media Services to Client shall remain the sole property of the Agency. 7. DOCUMENT RETENTION/DESTRUCTION. The Agency shall retain for two years all contracts, papers, correspondence, copy books, account, invoices, and all other information in its possession relating to the business of the Client and make all of such material or such portions of it as the Client may reasonably request available at the Agency's principal office for examination, copying and retrieval by the Client's authorized representatives at such times during the Agency's normal business hours as the Client may reasonably request. On an annual basis, stored artwork, mechanicals, film and tape shall be reviewed and at the written direction of the Client be (i) retained by Agency, (ii) returned to Client, provided that there is no undisputed overdue indebtedness owing by Client to Agency, or (iii) destroyed. 8. CONFIDENTIALITY. Client will supply all information reasonably requested by the Agency as necessary for the performance of its duties and obligations hereunder. Unless otherwise specified by Client, all information obtained from Client shall be held in confidence by Agency and the Agency will not disseminate or utilize such information for its own purposes and will restrict dissemination of such information within its own personnel on a "need to know basis" both during the Term of this Agreement and after its termination. Upon termination of this Agreement, the Agency will return to Client all copies of documents or other material containing such information. Notwithstanding the foregoing, the Agency shall have no obligation to keep confidential information which (a) is or becomes generally available to the public through no fault of the Agency, (b) is disclosed to others by Client without obligation of confidentiality, (c) was known to the Agency prior to its being obtained from Client by the Agency, and (d) required to be disclosed by statute, regulation, court order or legal process. -3- Client expressly reserves the right, in its own discretion and for reasons deemed by it to be sufficient, to modify or reject any and all schedules, plans or production submitted by the Agency and to instruct the Agency to cease work on any schedules, plans or production performed on its behalf. All such advice or instructions shall be given in writing. When advised to cease work, the Agency shall immediately cease internal activities and notify all publishers, printers, engravers, artists, designers or other third parties engaged in carrying out such schedules or plans to cease work thereon. Client shall be liable for all non-cancellable committed costs and penalties incurred. 9. APPROVAL OF ESTIMATES. The Agency shall not commence work on any project on behalf of Client, unless and until they have submitted an estimate for that project to Client, and in turn have received a written approval of that estimate from Client. In case of any changes affecting the ultimate billing to Client as it would relate to the estimate by more than 10%, the Agency will submit written revisions to Client, and not proceed with the project until such revisions have been approved in writing by Client. 10. A. AUTHORIZED CLIENT PERSONNEL. Client shall advise the Agency of the individuals authorized by Client to provide the instructions, advice and/or approvals called for under this Agreement. B. AGENCY PERSONNEL. Agency will involve such Agency personnel as may be required to perform the Services. 11. DUE CARE. The Agency shall exercise all reasonable due care and precautions in the preparation and examination of all material used by it on behalf of Client. 12. ETHICAL APPLICATIONS. The Agency has the right to refuse to handle any advertising or other service that, in its opinion, does or may violate a law, regulation, or self-regulatory rule or policy to which the Agency, Client or the media have subjected themselves. In any such event, the Agency shall, at Client's request and expense, furnish counsel's opinion. 13. INDEMNIFICATION. Client shall indemnify Agency against any liabilities and expenses (including reasonable attorney's fees) Agency may incur as a result of any loss, liability, claim, cause of action, suit, damage, injury, cost or expense relating to: (i) any undertaking or obligation on the part of Client under this Agreement; (ii) Client Products; (iii) any alleged injury or death to persons or injury or damage to property during the term of this Agreement if such injury occurs as a result of acts of Client or Client's employees, whether said loss is sustained by Agency or any other person(s) or third party. -4- (iv) false, deceptive, or misleading description, depiction or comparison of Client and/or competitive products results directly and to the extent that inaccurate information, material or data was supplied by or on behalf of Client to Agency. Upon the assertion of any claim or the commencement of any suit or proceeding against Agency by and third party that may give rise to liability of the Client hereunder, the Agency shall promptly notify the Client of the existence of such claim for Client's defense and/or settlement of the claim at Client's own expense and with counsel of its own selection. Agency shall at all times have the right to fully participate in such defense at its own expense and shall not be obligated, against its consent, to participate in any settlement which it reasonably believes would have an adverse affect on its business. The Agency shall make available to the Client all books and records relating to the claim, and the parties agree to render to each other such assistance as may reasonably be requested in order to insure a proper and adequate defense. The Agency shall not make any settlement of any claims which might give rise to liability of an Client hereunder without the prior written consent of the Client. 14. TRADE-MARKS. Agency shall ensure that all Client advertising, creative and promotional material prepared by the Agency which contains any of the Client's trade-marks as identified to the Agency from time to time properly and accurately identifies the Client's trade-marks in accordance with any Client written trade-mark policy delivered to the Agency. 15. INSURANCE. During the Term of this agreement, the Agency shall, at its own cost and expense, maintain the following insurance in full force and effect: (a) Agency shall maintain in full force and effect at its own cost and expense an advertising Agency Liability Policy issued by an insurance company acceptable to Client protecting against the following named perils: libel; slander; defamation; infringement of copyright or of title or slogan; piracy; plagiarism; unfair competition or idea misappropriation under implied contract; and/or invasion of rights of privacy, in an amount not less than $1,000,000; and (b) Comprehensive general liability insurance providing coverage for operations and for contractual liability with respect to liability assumed by the Agency hereunder. The limits shall be not less than $1,000,000 for bodily injury per occurrence and $1,000,000 for property damage; or alternatively, the limits shall be not less than $2,000,000 combined single limit coverage. 16. AGREEMENT NOT ASSIGNABLE. This Agreement is not assignable. Provided that Agency and Client hereby agree that either of them may assign their respective interests, rights and obligations under this Agreement to any entity with which such party has merged or -5- amalgamated or by which such party has been acquired or to which fifty percent (50%) or more of such party's capital stock, partnership interest or other analogous ownership interest has been sold or transferred, provided that such transferee assumes the transferor's obligations hereunder. 17. NOTICE. Communications, notices, directions and demands which either party hereto desires, or may under the provisions of this Agreement be required, to make or give the other shall be properly given and shall be in full compliance with the Terms hereof, if in writing, and delivered or sent by prepaid first class mail addressed to: To Agency: Lasso Communications Inc. 1881 Yonge Street Suite 500 Toronto, Ontario M4S 3C4 Attention: President To Client: Infocast Corporation 1 Richmond Street West Suite 902 Toronto, Ontario M5H 3W4 Attention: President Any communications, notice or direction so given shall be deemed to have been given and received when delivered or when sent by mail on the fifth business day following the day on which it was so mailed, subject to disruptions in the postal service. The Agency and Client may from time to time by notice aforesaid change their respective addresses for notice hereunder. 18. TERMINATION. The Initial Term of this Agreement is non-cancellable by the Client. In the event: i) the Client purports to terminate or cancel this Agreement prior to the end of the Initial Term for whatever reason; or ii) the Agency terminates this Agreement for material breach by the Client, the unpaid balance of the retainer fee set out in Schedule A shall immediately become due and payable in full, and any outstanding adjustments to such retainer fee and all outstanding disbursements shall immediately become due and payable. The Agency may terminate this Agreement for convenience during the Initial Term on at least thirty (30) days prior written notice in which event none of the retainer fee installments which would have become due subsequent to the effective date of termination shall be -6- payable, provided that any Agency compensation payable on a periodic basis shall be prorated to the effective date of termination. The Agency will be paid in full, in accordance with the terms of this Agreement and the attached Schedules, for all authorized costs, charges, expenses and disbursements incurred prior to the effective date of termination. The Agency's rights, duties and responsibilities shall continue during the applicable termination notice period. During any renewal terms following the Initial Term, either party shall have the right to terminate this Agreement at any time upon ninety (90) days prior written notice to the other. Effective upon the termination of this Agreement by Client or Agency, Client agrees to assume, and to indemnify and hold harmless Agency from, any responsibility for all talent payment for the post-termination use or re-use of advertising materials, which payments may be required pursuant to any applicable performers' union agreement, including without limitation ACTRA and L'Union des Artistes; and Client further agrees to so notify the applicable union in writing, copying the Agency (or to execute Agency's notification for, if so requested) forthwith upon termination of this Agreement. The Agency shall provide a list of all such continuing obligations. The provisions of this Agreement relating respectively to Ownership, Confidentiality and Indemnification shall not be affected by any termination of this Agreement. 19. NO PARTNERSHIP. This Agreement is a contract for the performance of a service, and nothing shall be construed as constituting either party the employer, servant, partner, or joint venture of the other. 20. WAIVER. No waiver by either party of the breach of any provision of this Agreement shall be construed to be a waiver of any preceding or succeeding breach of the same or any other provision. 21. REMEDIES CUMULATIVE. Either party's various rights and remedies hereunder shall be cumulative, and the exercise or enforcement of any one or more of them shall not preclude either party from exercising or enforcing any of the others or any right or remedy allowed by law. 22. APPLICABLE LAW. This Agreement shall be construed in accordance with the laws of the Province of Ontario. -7- In Witness Whereof, the parties have duly executed this Agreement INFOCAST CORPORATION By: /s/ (signature is illegible) Title: President Date: July 20, 1999 By: A.T. Griffis Title: Chairman Date: July 20, 1999 LASSO COMMUNICATIONS INC. By: /s/ (signature is illegible) Title: Chief Executive Officer Date: June 15, 1999 By: /s/ (signature is illegible) Title: Chief Financial Officer Date: June 15, 1999 -8- SCHEDULE "A" ------------ AGENCY COMPENSATION ------------------- Compensation Basis ------------------ 1. FEE COMPONENT (a) The Client shall pay Agency for the services described in the agreement to which this schedule is attached (the "Agreement") in accordance with the following fees and rates: i) RETAINER: Agency shall bill the Client, and the Client shall pay the Agency an annual retainer fee of $250,000 (plus GST) payable in equal monthly installments of $20,833 (plus GST) in advance, with the first payment payable on execution of this Agreement and thereafter on the first day of each month during the Initial Term until the last payment is made on May 1, 2000. During any Renewal Term the retainer fee shall continue at an annual rate equal to the immediately previous year's annual retainer fee and shall continue to be payable monthly in advance in equal monthly installments, unless at least sixty (60) days prior to the end of the Initial Term or any subsequent Renewal Term, the retainer fee is renegotiated and fixed between the parties. Notwithstanding payment of the monthly installments paid in respect of the retainer fee, actual staff time will be reported to Client monthly. Staff time will be summarised in a report delivered every six months ("Reporting Period") which report shall set out the staff time spent on behalf of the Client at the Agency's then current blended hourly rate (currently $145 per hour) applied against Client's account. ii) RETAINER ADJUSTMENT INITIAL TERM: In the event the aggregate of the staff time charges calculated at the applicable blended hourly rate for the first Reporting Period during the Initial Term of this Agreement exceeds the aggregate of the monthly installments paid during the first Reporting Period, Client shall forthwith, upon delivery of the report for the said Reporting Period, pay to Agency the shortfall (plus GST) as indicated on such report (the "First Period Differential"). Within 90 days following the end of the second Reporting Period during the Initial Term of this Agreement, the Agency shall provide the Client with a summary report (the "Annual Report") of the total staff time spent on behalf of the Client during the first two Reporting Periods of the Initial Term. In the event the aggregate of the staff time charges calculated at the applicable hourly rate for the two Reporting Periods set out in the Annual Report (the "Annual Staff Charges") exceeds the aggregate of the monthly installments paid during the said two Reporting Periods plus any First Period Differential paid to the Agency (the "One Year Aggregate"), Client shall forthwith, upon delivery of the report for the said Reporting Period, pay to Agency the shortfall as indicated in such report. In the event the Client has paid to Agency a First Period Differential, and the Annual Staff Charges are less than the One Year Aggregate, Agency shall forthwith after delivering the Annual Report, rebate to the Client the difference between the One Year Aggregate and the Annual Staff Charges provided that the aforesaid rebate shall not exceed the First Period Differential. iii) RETAINER ADJUSTMENT RENEWAL TERM: During any Renewal Term, the provisions and formulae contained in Section 1(a)(ii) with respect to the adjustment of the retainer fee shall apply mutatis mutandis to each particular Renewal Term. (b) The Client shall pay to Agency, in advance, all amounts required to secure media space and time, including newspaper, periodical, trade paper, public vehicle transit, radio, television, outdoor, direct mail advertising and other similar advertising expenditures. The Agency shall have no obligation to advance any sums on behalf of the client for the purchase of media. The Agency will allow the Client the benefit of any arrangements the Agency is able to make with media for terms more favourable than published rate card rates. The Agency shall not be entitled to a commission on the placement of media by the Agency. (c) For Client approved expenditures for externally produced layouts, storyboards, artwork, photographs, type composition, mechanicals, engravings, electro-typing, patterns, plates, mats, printing film etc., and for all elements of broadcast production including, without limitation, external storyboards and artwork, music, recording session(s), talent payment and repayment, colour corrections, rights of all kinds, release prints, and for all other similar and comparable items required in and for the production of print, outdoor, transit, radio and television advertising, the Agency shall bill the Client at net cost to Agency. Agency agrees to obtain at least three quotes for the external jobs as noted above when the job is estimated to exceed $15,000. (d) All expenditures shall be supported by invoices and purchase orders which shall be made available to Client upon request. (f) Client will pay for Client approved: (i) product testing and product and package development; (ii) sample surveys for measuring the size, characteristics and trends of markets; (iii) advertising testing both before advertising is exposed in media and after advertisements or campaigns are in use; and (iv) production, time and space costs, inclusive of commission, incurred in the testing of copy. For all such research, Client will be billed and pay to Agency, supplier's invoices and out-of-pocket expenses at net cost plus 15% (g) Other expenses not specifically identified will be agreed between the Client and Agency prior to their expenditure. 2. Miscellaneous Costs and Charges ------------------------------- (a) The Client will pay at net cost reasonable travel and accommodation expenses for Agency personnel associated with the creation and production of television and radio commercials or print advertisements. Such expenditures must be authorized in advance by the Client as part of a production estimate. (b) The Client will pay, on a net basis, travel and accommodation expenses of Agency personnel who attend presentations, business or sales meetings at the Client's request. The cost of travel between Agency offices and Client offices within the same municipality are not payable by Client. (c) The Client will pay Agency charges at net cost for: (i) long distance telephone and facsimile (FAX) charges; (ii) all extraordinary documents' duplication; (iii) courier, shipping, delivery or storage charges for extraordinary service specifically requested by Client; other than as aforesaid, each of Client and Agency shall be responsible for all their shipping, delivery and courier charges for shipments (including without limitation, all forms of correspondence) originating from each of their own respective offices; Receipts and invoices in support of such charges shall be made available upon request by Client. (d) The Client will pay all customs duties, federal, provincial and state taxes, GST and any other value added taxes, excise taxes and any other taxes (other than Agency's income taxes) applied to or which may become applicable to any of the fees, costs, charges and expenses billed, charged or invoiced to the Client hereunder. 3. Vendor's Discounts ------------------ All discounts in the amounts allowed to the Agency from all vendors for prompt payment, volume, frequency and other similar discounts will be passed on to Client. 4. Payment Terms ------------- The Agency will submit its accounts for amounts other than the fixed fee retainer, monthly by the fifteenth day of the next subsequent month. The terms of payment, for amounts other than the fixed fee retainer, are net 30 days. Media costs and charges will be billed in advance by media estimate and, notwithstanding the foregoing, must be received by Agency prior to Agency booking or ordering the media. Client's funds shall be in the Agency's hands in time for the Agency to make timely payment to other suppliers and where applicable, to secure discounts. On Agency request, the Client shall advance to Agency any amounts for external supplier costs and expenses detailed in Client approved Agency estimates. Overdue fees and accounts will be charged a late payment interest penalty of 2% per month (24% per annum). EX-10.8 23 RELEASE Release IN CONSIDERATION of (i) the execution of the certain agreement made between Infocast Corporation and Lasso Communications Inc. effective July 1, 1999 (the "Agreement") and, (ii) the fulfillment by Infocast of all of the above terms and conditions associated with the agreement, including without restriction, the full payment of the retainer fee set out therein, Lasso agrees that Infocast and Hines and Gruber will be fully released, acquitted and discharged from any and all claims which Lasso may have had against Hines, Gruber or Infocast arising from the departure of James Hines and Michael Gruber from Lass in order to accept a position of employment at Infocast Corporation. In the event Infocast fails to fulfill the terms and conditions associated with the Agreement, including without restriction, the full payment of the retainer fee, Lasso shall be entitled to bring whatever actions Lasso may deem necessary provided that (i) in such case Infocast shall be entitled to set off judgments or awards that may be obtained against Infocast by Lasso in respect of the above noted claims or claims under the Agreement, an amount equal to any payments of the retainer fee Infocast has already made or that it will be ordered to make under the agreement, less the value of services provided by Lasso under the terms of the Agreement as calculated in accordance with the terms thereof, and, (ii) if such action is brought, time periods will be deemed to have suspended between the effective date of the agreement and the end of the initial term of Agreement or the date of any breach of the Agreement during the Initial Term, whichever comes first. Executed at the City of Toronto, Province of Ontario, this 14th day of July, 1999. Lasso Communications /s/ P.B. Jones ----------------------------------- By: P.B. Jones Title: CFO /s/ James Hines - ------------------------------- ----------------------------------- Witness James Hines /s/ Michael Gruber - ------------------------------- ----------------------------------- Witness Michael Gruber Infocast Corporation /s/ A.T. Griffis ----------------------------------- By: A.T. Griffis Title: Chairman EX-10.9 24 WILLOW MEMORANDUM OF UNDERSTANDING WILLOW CSN CANADA AND INFOCAST CORPORATION MEMORANDUM OF UNDERSTANDING The following represents a basis of discussions but does not represent a final agreement. WHEREAS, Willow CSN (Canada) Inc. ("Willow"), is the developer and operator of The CyberAgent Network, (the "Network"), a economically viable alternative to the conventional call center model. The Network is supported by, a consortium of private corporations, education and government agencies working together to assemble a social and economical model that provides incentive to the CyberAgents, clients, governments and corporations involved, WHEREAS, Infocast Corporation ("Infocast"), is a company in the business of creation and provision of interactive software that delivers and manages information/electronic content on multiple communications platforms in real time, and, WHEREAS Infocast and Willow confirm their mutual desire to commence discussions and to exchange information with the goal of entering into formal agreement(s) establishing an on-going relationship. This memorandum is to define the terms, parameters and goals for the parties to reach a mutually beneficial agreement. Infocast agrees to provide Willow with appropriate documentation in regards to Infocast's financial viability. This information is to include but is not limited to Infocast's most recent financial statement, future plans for private funding, IPO and current lines of credit. Willow reserves the right to cease discussions with Infocast if this information is not provided or the financial viability of Infocast is deemed unacceptable. Infocast agrees to provide Willow with documentation outlining a transition plan and agreement if Infocast were to be sold or ceases to exist. Additionally, a term agreement can only be executed when both parties have agreed to all issues addressed in the Willow Request for Information (RFI). Understanding of Roles and Responsibilities 1.0 Infocast Corporations Roles and Responsibilities Cyber Agent Support for the following Items: (a) Cyber Agent Applications (b) Cyber Agent Desk Top Support (c) Secure Voice and Data Connectivity to the Willow Network Network Coordination (a) Act as a Single Point of Contact for all Network Issues (b) Provide a Best in Breed Network for Virtual Call Center Solutions (c) Provide a Network Topology and Coverage for all of Canada Client Integration (a) Provide Secure Access into the Willow's Client Databases (b) Provide Computer Telephony Integration into Clients Networks (c) Provide Expertise to Create Enhanced Applications and Services Reporting/Monitoring (a) Provide a Level of Call Reporting and Monitoring Similar to Nortel's DMS100 and CCMIS. Billing (a) Provide Direct Billing to the Cyber Agents and Clients as Agreed Upon 2.0 Willow CSN (Canada) Inc. Primary Canadian Roles and Responsibilities (a) Recruit Clients to Become CyberNetwork Users (b) Recruit CyberAgents to Become Call Takers (c) Provide Training Course Material in Conjunction with Training Affiliates for CyberAgent Training -2- (d) Provide Infocast a Best Estimate of Clients, CyberAgents and Call (e) Coordinate Consortium Members to Provide an End to End Cost Effective Call Center Solution 3.0 Joint Discussions and Responsibilities Operations and Service Levels (a) The parties agree to collaborate on levels of service, service agreements, points of contact and escalation procedures. Revenue Sharing and Profits (a) The parties agree to discuss profit margins and will work to a mutually beneficial agreement. Compensation (a) The parties agree the intent of this business arrangement is to provide a per call transaction based cost model. (b) The parties agree they will work in collaboration to mutually determine the price model for CyberAgents, clients, Infocast and Willow. Project Team (a) The parties agree to provide adequate resources during the exploration process, initial implementation and the on-going relationship. Non Disclosure (a) The parties agree to abide by the non-disclosure agreement in place. Non Compete (a) The parties agree that they will not compete against each other with respect to their core business as defined in the preamble. -3- Implementation (a) Infocast anticipates and Willow agrees that the parties will commence implementation on or about July 1 st, 1999 if the terms and issues identified in this document are met. Conclusion. The parties acknowledge that there are many details that need to be addressed in respect to structuring and implementing a final agreement. However, based upon the understanding contained within, the parties will each endeavor to work expeditiously toward a formal agreement. NOW THEREFORE, based upon the foregoing being generally in accordance with the parties understanding of their discussions to date, the parties affix their signatures and date the agreement as follows: Infocast Corporation Willow CSN Canada Per: /s/ James Hines A.T. Griffis Per: /s/ Christopher B. Richardson --------------- ------------ ----------------------------- Authorized Signature Authorized Signature /s/ James Hines Christopher B. Richardson Typed Name Typed Name President/CEO Willow CSN, Canada Title President Title Infocast Date June 7, 1999 Date -4- EX-10.10 25 COSMOCOM SUMMARY Summary of Terms and Conditions For a Definitive Agreement Between CosmoCom, Inc. and Infocast Corporation The purpose of this document is to present a summary of the terms and conditions to be included in more definitive agreements which will implement the March 23, 1999 Letter of Intent between Infocast and CosmoCom, covering the period from the date of this agreement to the end of the year 2000, and to serve as an initial purchase order from Infocast to CosmoCom. I. Software Purchases Infocast intends to purchase CosmoCall software licenses sufficient to enable at least 2000 CosmoCall Agents by year-end 2000, and may purchase more. CosmoCall software is licensed in various price element codes, which are defined on the attached Exhibit A. By signing this agreement, Infocast hereby places an initial order for licenses enabling 300 Agents as enumerated on the price quotation attached as Exhibit B, subject to the following terms, conditions, and milestones: A. Dates, Purchases, Milestones, Payments 1. Year 1999 Purchase order - 300 CosmoCall Agents per attached quote, and per the feature list attached as Exhibit C. Total License Value US$754,500, payable in four parts as defined in the following table, with go/no-go decision based on passing of Acceptance Test Procedure (ATP) for initial phase of 50 agents. ATP Definition will be proposed by CosmoCom, discussed, and mutually agreed. All Prices in U.S. Dollars Date Description Amount 21 April 99 Purchase Order Signed 21 April 99 Payment 50% of 50 Agents (50/300 of Total) $62,875 1 June 99 Delivery of 50 Agents 1 July 99 Acceptance of 50 Agents per ATP (TBD, but including supervisor/monitor feature) 1 July 99 Payment - Remaining 50% of 50 Agents $62,875 1 July 99 Payment - 50% of 250 Agents $314,375 1 Aug 99 Delivery of 250 Agents 1 Sept 99 Payment - Remaining 50% of 250 Agents $314,375 TOTAL $754,500 Professional services to be billed monthly as actually used (see III below). Infocast intends to purchase 700 additional CosmoCall Agents for delivery prior to year end 1999. 2. Year 2000 Infocast intends to purchase 1000 additional CosmoCall Agents for delivery during the year 2000. B. Pricing 1. Subsequent Order Pricing For its subsequent orders in fulfillment of the future purchase intentions expressed in this agreement, the base price per Live Connection will be $1,100. All other future price elements will be enumerated on the quotation in Exhibit B. 2. Volume Purchase Incentives In addition to the CosmoCall Live Connection discount reflected in the above price, special pricing incentives will take effect for all future orders if cumulative software purchases reach the following levels by the end of the year 2000: All Prices in U.S. Dollars (i) At $2M and up to $5M - 5% discount; and (ii) Over $5M in purchases - 8% discount. C. Payment terms 50% with order(s) and balance net 30 days. II. Maintenance and Technical Support A. CosmoCall Support Program. Infocast will purchase, and CosmoCom will provide, maintenance and technical support services to InfoCast from the date of this agreement until the end of the year 2000 under a separate support agreement to be developed. This section summarizes the key points of that agreement. The support program includes 24 x 7 telephone and remote support, and access to all software upgrades of licensed products. Support will be provided to designated Infocast personnel who have received CosmoCall product training. Infocast will provide technical support to its own end-users. B. Pricing. The price of the support program is 19% of the then current, pre-volume discount, Infocast price of purchased software. Infocast's ninety (90) day product warranty for the initial purchase will begin on August 1, 1999 with the delivery of 300 CosmoCall Agents. All subsequent purchases will include a 90 day warranty from date of delivery. Maintenance pricing during the year 2000 will be phased in quarterly as follows: 5% for Q1, 10% for Q2, 15% for Q3, and 19% for QA. Renewal of the support agreement after the year 2000 will be by mutual agreement. C. Payment terms. Maintenance and technical support is billed on the first day of each calendar quarter. III. Project Management and Professional Services A. CosmoCom will designate a project manager for the Infocast project. Project management will be provided by CosmoCom at no charge through 1999. B. Professional services provided by CosmoCom will be used as agreed in advance between Infocast and the CosmoCom Project Manager and will be charged on a time and material basis at the prevailing published hourly rate, currently $225 per hour, not to exceed $1800 per person per day, plus T&E. All Prices in U.S. Dollars C. After 1999, the Project Manager provided by CosmoCom will be billable on a time and material basis at the prevailing published hourly rate, currently $300 per hour, not to exceed $2400 per day, plus T&E. D. CosmoCom and Infocast will jointly define the requirements and method for interfacing CosmoCall with third party help-desk applications like Willow's. E. CosmoCom will load, integrate and test its software on Infocast's actual server platform in Hauppauge, NY. Infocast will provide this server platform by May 1, 1999. Additionally, Infocast will provide an identical duplicate hardware platform to be retained in CosmoCom's lab as a dedicated Infocast test bed. F. In the interest of mutual benefit and continuous improvement, CosmoCom and Infocast will engage in a quarterly review of all aspects of their relationship. This review will be attended by the project managers of each company and by appropriate representation of the senior management of each company. IV. UNIX Porting A. Porting Option. Infocast's initial order of 300 agents is for CosmoCall's current software version, which runs on a Microsoft NT Server platform. CosmoCom understands and acknowledges Infocast's interest in having an implementation of CosmoCall software that is based on a Unix platform. At any time following the payment by Infocast for the initial order of 300 CosmoCall Agents, Infocast will have the option, exercisable within 2 years, to require CosmoCom to convert the CosmoCall software to run in whole or in part, as mutually agreed, on a Unix platform. B. Port Delivery. CosmoCom will deliver the ported Server to Infocast for acceptance testing no more than 6 calendar months from the date on which the option is exercised. The software functionality will be the same as current NT version of CosmoCall at the time of delivery. C. Pricing (1) Project engineering fee: $350,000, payable 20% on exercise of the option, 30% on agreement to proceed after high level design review, and 50% on passing of ATP. (2) Purchase Credit. 50% of the project engineering fee will be available to Infocast as credit against the price of additional CosmoCall software license purchases. (3) Ported Server and Live Connection Pricing. The same as that of the NT Version. All Prices in U.S. Dollars (4) Migration of Purchased NT Licenses to Unix. No charge. D. Intellectual Property. CosmoCom retains all intellectual property rights to the ported Server and other software. E. Development Environment. Infocast will provide CosmoCom, at no charge, with the Unix hardware development platform to be held by CosmoCom for as long as its technical support and maintenance obligations to Infocast are in place. Infocast will attempt to obtain for the project the cooperation and assistance of Sun Microsystems if that is the platform of choice. V. Software Source Code Escrow Infocast and CosmoCom will develop a source code escrow agreement and implement a source code escrow program that will give Infocast access to the CosmoCom source code for both NT and Unix versions of CosmoCall under reasonable and customary terms. Infocast will bear the escrow cost associated with this program. VI. Publicity The parties will engage in joint marketing activities, including a joint press release, joint seminars for end users, preparation of white papers and the like. All such activities will be subject to the approval of both parties. Reviewed and Approved by: Reviewed and Approved by: /s/ Michael J. Sheehan /s/ Stephen R. Karaesky - ------------------------ --------------------------------- Infocast Representative CosmoCom Representative CEO 4/21/99 EVP 21 April 99 - ------------------------ ------------------------------------ All Prices in U.S. Dollars EX-10.11 26 AGREEMENT OF PURCHASE AND SALE AGREEMENT OF PURCHASE AND SALE THIS AGREEMENT made as of the 17th day of November, 1998 B E T W E E N ADVANCED SYSTEMS COMPUTER CONSULTANTS INC., a corporation incorporated under the laws of the Province of Ontario, Canada (hereinafter called the "Vendor") - and - CHELTENHAM TECHNOLOGIES (BERMUDA) CORPORATION, a corporation incorporated under the laws of the Island of Barbados (hereinafter called the "Purchaser") WHEREAS the Vendor has all rights and title to certain computer software and all intellectual properties rights relating thereto as more particularly described in Schedule "1" hereto (the "Assets"); AND WHEREAS the Vendor wishes to sell, and the purchaser wishes to purchase, all rights and title to the Assets on the terms and subject to the conditions hereinafter contained. NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and agreements herein contained and the sum of $2.00 and other good and valuable consideration paid by each of the parties hereto to the other (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: 1.0 PURCHASE AND SALE 1.1 On the terms and subject to the fulfillment of the conditions hereof, Vendor hereby sells, assigns, conveys, transfers and delivers unto the Purchaser all of the Vendor's right, title and interest in the Assets (as described in Schedule "1" hereto). 2.0 PURCHASE PRICE 2.1 The purchase price payable by the Purchaser to the Vendor for the Assets is the sum of CDN $400,000 (the "Purchase Price"). 2.2 The Purchaser agrees to pay the Vendor on terms and conditions as follows: (i) Payment of Cdn$75,000 when the Purchaser or its parent/affiliated company becomes public and has completed a minimum financing of Cdn$2 million; and (ii) The balance of Cdn$325,000 when the Remote Banking generates its first revenue whether such revenue is generated from license payments or actual transaction fees. 3.0 REPRESENTATIONS WARRANTIES OF THE VENDOR 3.1 The Vendor hereby represents and warrants to the Purchaser as follows, and confirms that the Purchaser is relying upon the accuracy of each of such representations and warranties in connection with the purchase of the Assets and the completion of the other transactions hereunder: (1) Corporate Authority and Binding Obligation The Vendor has good right, full corporate power and absolute authority to enter into this Agreement and to sell, assign and transfer the Assets to the Purchaser in the manner contemplated herein and to perform all of the Purchaser's obligations under this Agreement. The Vendor and its shareholders and board of directors have taken all necessary or desirable actions, steps and corporate and other proceedings to approve or authorize, validly and effectively, the entering into of, and the execution, delivery and performance of, this Agreement and the sale and transfer of the Assets by the Vendor to the Purchaser. This Agreement is a legal, valid and binding obligation of the Vendor, enforceable against it in accordance with its terms subject to (i) bankruptcy, insolvency, moratorium, reorganization and other laws relating to or affecting the enforcement of creditors' rights generally and (ii) the fact that equitable remedies, including the remedies of specific performance and injunction, may only be granted in the discretion of a court. (2) No Other Purchase Agreements No person has any agreement, option, understanding or commitment, or any right or privilege (whether by law, preemptive or contractual) capable of becoming an agreement, option or commitment, for the purchase or other acquisition from the Vendor of any of the Asset, or any rights or interest therein. (3) Contractual and Regulatory Approvals The Vendor is not under any obligation, contractual or otherwise, to request or obtain the consent of any person and no permits, licenses, certifications, authorizations or approvals -2- of, or notifications to any government or governmental agency, board, commission or authority are required to be obtained by the Vendor, i) in connection with the execution, delivery or performance by the Vendor of this Agreement or the completion of any of the transactions contemplated herein, or ii) to avoid the loss of any permit, licence, certification or other authorization relating to the Assets. (4) Corporate Status The Vendor is a corporation duly incorporated and validly subsisting in all respects under the laws of its jurisdiction of incorporation. (5) Compliance With Constating Documents, Agreements and Laws The execution, delivery and performance of this Agreement and each of the other agreements contemplated or referred to herein by the Vendor, and the completion of the transactions contemplated hereby, will not constitute or result in a violation, breach or default under: (i) any term or provision of any of the articles, by-laws or other constating documents of the Vendor, or (ii) the terms of any indenture, agreement (written or oral), instrument or understanding or other obligation or restriction to which the Vendor is a party or by which it is bound; or (iii) any term or provision of any licenses or any order of any court, governmental authority or regulatory body or any law or regulation of any jurisdiction in which the Vendor carries on business. (6) Liabilities There are no liabilities (contingent or otherwise) relating to the Assets of any kind whatsoever in respect of which the Purchaser may become liable on or after the consummation of the transactions contemplated by this Agreement. (7) Litigation There are no actions suits or proceedings, judicial or administrative (whether or not purportedly on behalf of the Vendor) pending or, to the best of the knowledge of the -3- Vendor, threatened, by or against or affecting the Vendor which relate to the Assets, at law or in equity, or before or by any court or any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign. (8) Title to Assets The Vendor is the owner of and has good and marketable title to all of the Assets free and clear of any encumbrances whatsoever. (9) Intellectual Property (a) The Vendor owns or is licensed or otherwise possesses legally enforceable rights to use, sell and license, free and clear of claims or rights of others, all patents, trademarks, trade names, trade secrets, industrial designs, slogans, logos, service marks, copyrights and any applications therefor, technology, inventions, ideas, circuit topographies, know how computer software programs or applications (in both source code and object code form), manufacturing and other processes, hardware and other designs, formulae, programming and other processes, software, algorithms, source and object codes, user manuals, working papers, tapes, charts, plans, models, drawings, concepts, ideas, discoveries, inventions, developments, modifications, adaptations, derivative works, and other information and written matter required for or incident to the Assets and tangible or intangible proprietary information or material that are necessary to, required for, used in or proposed to be used in the Assets and the commercial exploitation thereof (the "Vendor Intellectual Property Rights"). Schedule "2" to this Agreement lists all current and past (lapsed, expired, abandoned or canceled) patents, registered and material unregistered trademarks and service marks, registered and material unregistered copyrights, registered material unregistered industrial designs, and trade names, and any applications in respect of the Vendor Intellectual Property Rights, and specifies the jurisdictions in which each such Vendor Intellectual Property Right has been issued or registered or in which an application for such issuance and registration has been filed, including the respective registration or application numbers and the names of all registered owners, together with a list of all of the Vendor's currently marketed software products and an indication as to which, if any, of such software products have been registered for copyrights or other protection with the United States or Canadian Copyright Office and any other foreign offices and by whom such items have been registered. (b)The Vendor is not, nor will it be as a result of the execution and delivery of this Agreement or the performance of its obligations hereunder, in violation in any material respect of any license, sublicense or agreement described in Schedule "2", nor will the execution and delivery of this Agreement or the performance of its obligations hereunder cause the forfeiture or termination or give rise to a right of forfeiture or termination of any Vendor Intellectual Property Right. No claims with respect to the Vendor Intellectual -4- Property Rights, any trade secret or other intellectual property right material to the Assets are currently pending or, to the best knowledge of the Vendor, are threatened by any person, nor are there any valid grounds for any bona fide claims (i) to the effect that the manufacture, sale, licensing or use of the Assets as now used, sold or licensed or proposed for use, sale or license by the Purchaser as disclosed to the Vendor infringes on any copyright, patent design, service mark industrial design or trade secret or other intellectual property right of any other person. There is no material unauthorized use, infringement or misappropriation of any of the Vendor Intellectual Property by any third party, including any employee or former employee or contractor of the Vendor or any of its subsidiaries. Neither the Vendor nor any of its subsidiaries (i) has been sued or charged in writing as a defendant in any claim, suit, action or proceeding which involves a claim or infringement of any trade secrets, patents, trademarks, service marks, maskworks, copyrights or contractor and which has not been finally terminated prior to the date hereof, or been informed or notified by any third party that the Vendor may be engaged in such infringement by, or (ii) has knowledge of any infringement liability with respect to, or infringement by, the Vendor or any of its subsidiaries of any trade secret, patent, trademark, service mark, maskwork, copyright or other intellectual property right of any other person. (c) The Vendor has taken all reasonable, necessary and appropriate steps to safeguard and maintain the secrecy and confidentiality of, and its proprietary rights in, the Assets and all Vendor Intellectual Property Rights. All of the Vendor Intellectual Property Rights are and have been properly marked and, if applicable, licensed in accordance with the appropriate legislation so as to protect the property rights therein and allow proper enforcement of such rights against infringing third parties. (d) All software applications and products comprising the Assets (the "Software Applications and Products") have been tested internally and conform to Year 2000 date criteria. The Software Applications and Products: (i) accurately process date data (including, but not limited to calculating, comparing and sequencing) from, into and between the twentieth and twenty-first centuries, including leap year calculations, without a decrease in the functionality of such Software Applications and Products; (ii) are designed to be used prior to, during and after the calendar year 2000, and that will operate during each such time period without interruption, delay, impediment or error relating to date data, specifically including any interruption, delay, impediment or error relating to, or the product of, date data which represents or references different centuries or more than once century; and -5- (iii) shall not be adversely affected, interrupted, delayed or impeded by the internal computer clock turning to January 1, 2000. Date elements in interfaces and data storage in the Software Applications and Products will permit specifying the century to eliminate date ambiguity. (10) Outstanding Agreements The Vendor is not a party to or bound by any outstanding or executory agreement, contract or commitment, whether written or oral, relating to the Assets or Vendor Intellectual Property Rights. 4.0 REPRESENTATIONS AND WARRANTIES BY THE PURCHASER 4.1 The Purchaser hereby represents and warrants to the Vendor as follows, and confirms that the Vendor is relying upon the accuracy of each of such representations and warranties in connection with the sale of the Assets and the completion of the other transactions hereunder: (1) Corporate Authority and Binding Obligation The Purchaser is a corporation duly incorporated and validly subsisting in all respects under the laws of its jurisdiction of incorporation. The Purchaser has good right, full corporate power and absolute authority to enter into this Agreement and to purchase the Assets from the Vendor in the manner contemplated herein and to perform all of the Purchaser's obligations under this Agreement. The Purchaser and its shareholders and board of directors have taken all necessary or desirable actions, steps and corporate and other proceedings to approve or authorize, validly and effectively, the entering into of, and the execution, delivery and performance of, this Agreement and the purchase of the Assets by the Purchaser from the Vendor. This Agreement is a legal, valid and binding obligation of the Purchaser, enforceable against it in accordance with its terms subject to (i) bankruptcy, insolvency, moratorium, reorganization and other laws relating to or affecting the enforcement of creditors' rights generally and (ii) the fact that equitable remedies, including the remedies of specific performance and injunction, may only be granted in the discretion of a court. (2) Contractual and Regulatory Approvals The Purchaser is not under any obligation, contractual or otherwise to request or obtain the consent of any person, and no permits, licenses, certifications, authorizations or approvals or, or notifications to, any government or governmental agency, board, commission or authority are required to be obtained by the Purchaser in connection with the execution, delivery or performance by the Purchaser of this Agreement or the completion of any of the transactions contemplated herein. -6- (3) Compliance with Constating Documents,. Agreements and Laws The execution, delivery and performance of this Agreement and each of the other agreements contemplated or referred to herein by the Purchaser, and the completion of the transactions contemplated hereby, will not constitute or result in a violation or breach of or default under: (i) any term or provision of any of the articles, by-laws or other constating documents of the Purchaser, or (ii) the terms of any indenture, agreement (written or oral), instrument or understanding or other obligation or restriction to which the Purchaser is a party or by which it is bound, or (iii) any term or provision of any licenses, registrations or qualification of the Purchaser or any order of any court, governmental authority or regulatory body or any applicable law or regulation of any jurisdiction. 5.0 SURVIVAL AND LIMITATIONS OF REPRESENTATIONS AND WARRANTS Survival of Representations and Warranties by the Vendor 5.1 The representations and warranties made by the Vendor and contained in this Agreement, or contained in any document or certificate given in order to carry out the transactions contemplated hereby, will survive the closing of the purchase of the Assets provided for herein and, notwithstanding such closing or any investigation made by or on behalf of the Purchaser or any other person or any knowledge of the Purchaser or any other person, shall continue in full force and effect for the benefit of the Purchaser, subject to the following provisions of this section. Subject to paragraph 5.1(b), no warranty claim may be made or brought by the Purchaser after the date which is three years following the Closing Date. Any warranty claim which is based upon or relates to the title to the Assets or which is based upon intentional misrepresentation or fraud by the Vendor may be made or brought by the Purchaser at any time. After the expiration of the period of time referred to in paragraph (a) of this section, the Vendor will be released from all obligations and liabilities in respect of the representations and warranties made by the Vendor and contained in this Agreement or in any document or certificate given in order to carry out the transactions contemplated hereby except with respect to any claims made by the Purchaser in writing prior to the expiration of such period and subject to the rights of the Purchaser to make any claim permitted by paragraph (b) of this section. -7- Survival of Warranties by Purchaser 5.2 The representations and warranties made by the Purchaser and contained in this Agreement or contained in any document or certificate given in order to carry out the transactions contemplated hereby will survive the closing of the purchase and sale of the Assets provided for herein and, notwithstanding such closing or any investigation made by or on behalf of the Vendor or any other person or any knowledge of the Vendor or any other person, shall continue in full force and effect for the benefit of the Vendor. 6.0 CLOSING Closing Arrangements 6.1 Subject to the terms and conditions hereof, the transactions contemplated herein shall be closed at 10:00 AM (the "Closing Time") at the offices of the Vendor or at such other place or places and may be mutually agreed upon by the Vendor and the Purchaser. Documents be Delivered 6.2 At or before the Closing Time, the Vendor shall execute, or cause to be executed, and shall deliver, or cause to be delivered, to the Purchaser all documents, instruments and things which are to be delivered by the Vendor pursuant to the provisions of this Agreement, and the Purchaser shall execute, or cause to be executed, and shall deliver, or cause to be delivered, to the Vendor all cheques or bank drafts and all documents, instruments and things which the Purchaser is to deliver or cause to be delivered pursuant to the provisions of this Agreement. 7.0 GENERAL PROVISIONS Further Assurances 7.01 Each of the Vendor and the Purchaser hereby covenants and agrees that at any time and from time to time after the Closing Date it will, upon the request of the others, do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, assignments, transfers, conveyances and assurances as may be required for the better carrying out and performance of all the terms of this Agreement. Notices 7.02 Any notice, designation, communication, request, demand or other document, required or permitted to be given or sent or delivered hereunder to any party hereto shall be in writing and shall be sufficiently given or sent or delivered if it is: (a) delivered personally to an officer or director of such party, or -8- (b) sent to the party entitled to receive it by registered mail, postage prepaid, mailed in Bermuda, BVI, Barbados or Canada, or (c) sent by telecopy machine. Notices shall be sent to the following addresses or telecopy numbers: (i) in the case of the Vendor, Advance Systems Computer Consultants Inc. 1050 Castlefield Avenue, Suite 310 Toronto, Ontario MOB 1E7 Telephone/Telecopy: 416-787-4673 Attention: Mr. Satish Kumeta (ii) in the case of the Purchaser, Cheltenham Technologies (Bermuda) Corporation 129 Front Street Penthouse Suite Hamilton HM12, Bermuda Telephone: 441-296-4545 Telecopy: 441-232-0637 Attention: Mr. A.T. Griffis or to such other address or telecopier number as the party entitled to or receiving such notice, designation, communication, request, demand or other document shall, by a notice given in accordance with this section, have communicated to the party giving or sending or delivering such notice designation, communication, request, demand or other document. Any notice, designation, communication, request, demand or other document giving or sent or delivered as aforesaid shall if delivered as aforesaid, be deemed to have been given, sent, delivered and received on the date of delivery; if sent by mail as aforesaid, be deemed to have been given, sent, delivered and received (but not actually received) on the fourth business day following the date of mailing, unless at -9- any time between the date of mailing and the fourth business day thereafter there is a discontinuation or interruption of regular postal service, whether due to strike or lockout or work slowdown, affecting postal service at the point of dispatch or delivery of any intermediate point, in which case the same shall be deemed to have been given, sent, delivered and received in the ordinary course of the mails, allowing for such discontinuance or interruption of regular postal service; and if sent by telecopy machine, be deemed to have been given, sent, delivered and received on the date the sender receives the telecopy answer back confirming receipt by the recipient. Counterparts 7.03 This Agreement may be executed in several counterparts, each of which so executed shall be deemed to be an original, and such counterparts together shall constitute but one and the same instrument. Expenses of Parties 7.04 Each of the parties hereto shall bear all expenses incurred by it in connection with this Agreement including, without limitation, the charges of their respective counsel, accountants, financial advisors and finders. Assignment 7.05 This rights of the Vendor and the Shareholder hereunder shall not be assignable without the written consent of the Purchaser. The rights of the Purchaser hereunder shall not be assignable without the written consent of the Vendor and the Shareholder. Successors and Assigns 7.06 This Agreement shall be binding upon and endure to the benefit of the parties hereto and their respective successors and permitted assigns. Nothing herein, express or implied, is intended to confer upon any person, other than the parties hereto and their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement Entire Agreement 7.07 This Agreement and the Schedules referred to herein constitute the entire agreement between the parties hereto and supersede all prior agreements, representations, warranties, statements, promises, information, arrangements and understandings, whether oral or written, express or implied, with respect to the subject matter hereof None of the parties hereto shall be bound or charged with any oral or written agreements, representations, -10- warranties, statements, promises, information, arrangements or understandings not specifically set forth in this Agreement or in the Schedules, documents and instruments to be delivered on or before the Closing Date pursuant to this Agreement. The parties hereto further acknowledge and agree that, in entering into this Agreement and in delivering the Schedules, documents and instruments to be delivered on or before the Closing Date, they have not in any way relied, and will not in any way rely, upon any oral or written agreements, representations, warranties, statements, promises, information, arrangements or understandings, express or implied, not specifically set forth in this Agreement or in such Schedules, documents or instruments. The Purchaser may wish to modify the foregoing section if it is relying on information provided by the Vendor or its agent in an offering document. In that case, appropriate references would also be made to such information in the representations and warranties. Waiver 7.08 Any party hereto which is entitled to the benefits of this Agreement may, and has the right to, waive any term or condition hereof at any time on or prior to the Closing Time; provided; however, that such waiver shall be evidenced by written instrument duly executed on behalf of such party. Amendments 7.09 No modifications or amendments to this Agreement may be made unless agreed to by the parties hereto in writing. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement under seal as of the day and year first above written. ADVANCED SYSTEMS COMPUTER CONSULTANTS INC. By: /s/ Satish Kumeta 17 Nov. 1998 --------------------- Authorized Signatory CHELTENHAM TECHNOLOGIES (BERMUDA) CORPORATION By: /s/ A.T. Griffis --------------------- Authorized Signatory -11- EX-10.12 27 ASSET SALE AGREEMENT ASSET SALE AGREEMENT THIS ASSET SALE AGREEMENT ("Agreement") is made as of the 23rd day of November, 1998, by and between Grant Reserve Corporation, a Nevada corporation (the "Seller') and Cherokee Mining Company Inc., a Wyoming corporation (the "Purchaser"). The parties hereby agree as follows: 1. Sale of Assets 1.1 Assets to be Sold. Subject to the terms and conditions of this Agreement, the Seller will sell to the Purchaser, and the Purchaser will purchase from the Seller all of the Seller's right, title and interest in and to (i) 7,620,000 shares of common stock, without par value, of Madison Mining Corporation, a Montana corporation, ("Madison"), a wholly owned subsidiary of the Seller and (ii) 36,388 shares of common stock, without par value, of Gold King Mines Corporation ("Gold King"), representing ninety-four and thirty-two one hundredths percent (94.32%) of Gold King's issued and outstanding shares. The shares of Madison and Gold King common stock being sold to the Purchaser hereunder constitute substantially all of the Seller's assets and are collectively referred to as the "Shares." 1.2 Purchase Price. The price (the "Purchase Price") to be paid by or on behalf of the Purchaser to the Seller for the Shares shall be (i) $600,000 payable on the terms set forth in a Promissory Note substantially in the form thereof attached hereto as Exhibit 1 (the "Promissory Note") and (ii) an amount equal to eighty percent (80%) of the Net Proceeds (as defined in Section 6.4 below) received by the Purchaser in excess of $681,715. 2. Closing Date, Delivery 2.1 Closing Date. Subject to the satisfaction of the terms and conditions hereof, to purchase and sale of the Shares to be purchased and sold pursuant to Section 1.1 shall be held as soon as practicable following the approval of this Agreement by the Seller's shareholders. Such time is hereinafter referred to as the "Closing" and the date of the Closing is hereinafter referred to as the "Closing Date." 2.2 Deliveries by the Seller and the Purchaser. (a) Delivery by the Seller. At the Closing the Seller shall deliver to the Purchaser certificates evidencing the Shares to be purchased hereunder by the Purchaser, which certificates shall be duly endorsed in blank or accompanied by stock powers duly endorsed in blank. (b) Delivery by the Purchaser. At the Closing, the Purchaser shall deliver to the Seller: (i) The Promissory Note; and (ii) A Pledge Agreement in the form attached hereto as Exhibit 2 (the "Pledge Agreement") pursuant to which the Shares shall be held as security for, among other things, the payment and performance by the Purchaser of its obligations under the Promissory Note, this Agreement and the Pledge Agreement. 3. Representations and Warranties of the Seller. The Seller hereby represents and warrants to the Purchaser as follows: 3.1 Organization and Good Standing. The Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. Each of Madison and Gold King is a corporation duly organized, validly existing and in good standing under the laws of the State of Montana and Colorado, respectively. Each of Madison and Gold King is duly qualified or authorized to do business in each jurisdiction in which it conducts business, or own property, except where the failure so to qualify would not in the aggregate have a material adverse effect on the Seller, Madison and Gold King. 3.2 Authorization. The Seller has full corporate power and authority to enter into this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement is a valid and binding agreement of the Seller, enforceable in accordance with its terms except (a) as the same may be limited by applicable bankruptcy, insolvency, moratorium or similar laws of general application relating to or affecting creditors' rights, including, without limitation, the effect of statutory or other laws regarding fraudulent conveyances and preferential transfers, and (b) for the limitations imposed by general principles of equity. The foregoing exceptions set forth in subsections (a) and (b) of this Section 3.2 are hereinafter referred to as the "Enforceability Exceptions." 3.3 Licenses and Permits. Madison and Gold King are each duly licensed, with all requisite permits and qualifications, as required by applicable law for the purpose of conducting their respective business or owning their respective properties or both, in each jurisdiction in which they do business or own property, and where the failure to have such license, permit or qualification could have a material adverse effect on the assets, liabilities (whether absolute, accrued, contingent or otherwise), condition (financial or otherwise), results of operations or business of either Madison or Gold King (hereinafter, a "Material Adverse Effect"). Madison and Gold King are each in substantial compliance with all such licenses, permits and qualifications. There are no proceedings pending or, to the Seller's best knowledge, threatened to revoke or terminate any such presently existing license, permit or qualification and the Seller knows of no reason why any such license, permit or qualification would not be renewed in the ordinary course. -2- Purchaser is familiar with the required licenses and permits required of, and held by, Madison and Gold King. Purchaser has been given full access to Seller's records to review, and make copies of if so desired, all such licenses and permits. Purchaser also has been informed by Seller that Madison and Gold King are in substantial compliance with all such licenses and permits. Purchaser is purchasing the Shares with full knowledge of the attendant responsibilities and liabilities associated with such licenses and permits. 3.4 Consents and Approvals. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate, result in a breach of any of the terms or provisions of, constitute a default (or an event which, with the giving of notice or the passage of time or both, would constitute a default) under, result in the acceleration of any indebtedness under or performance required by, result in any right of termination of, increase any amounts payable under, decrease any amounts receivable under, change any other rights pursuant to, or conflict with, any material agreement, indenture or other instrument to which the Seller is a party or by which any of its properties are bound, or any judgment, decree, order or award of any court, governmental body or arbitrator (domestic or foreign) against the Seller. No consent, license, approval, order or authorization of, or declaration, filing or registration with, or payment of tax, fee, fine or penalty to, any governmental bureau, agency or commission or regulatory authority (domestic or foreign) or any other person (either governmental or private), is required to be obtained or made in connection with the execution and delivery by the Seller of this Agreement or the consummation of the transactions contemplated hereby except to the extent that the failure to obtain such consent, license, approval, order or authorization or to make such declaration, filing, registration or payment would not have a Material Adverse Effect. All prior consents, approvals and authorizations of, and declarations, filings and registrations with, and payments of all taxes, fees, fines and penalties to, any governmental or regulatory authority (domestic or foreign) or any other person (either governmental or private) required in connection with the executions and delivery by the Seller of this Agreement or the consummation of the transactions contemplated hereby have been obtained, made and satisfied. The shareholders of Seller must approve this transaction. 3.5 Financial Information. The Seller's consolidated financial statements for the year ended December 31, 1997 as reported on by the firm of Jackson & Rhodes, P.C. and the Seller's unaudited consolidated financial statements for the nine (9) months ended September 30, 1998 have been prepared from the books and records of the Seller, Madison and Gold King and present fairly the financial condition of the Seller, Madison and Gold King at and as of such dates in accordance with generally accepted accounting principles consistently applied ("GAAP"), except that required footnote disclosures may be omitted. Copies of such financial statements have previously been delivered to Purchaser. 3.6 Real Property. The Seller has previously delivered to Purchaser a complete description of all real property owned by Gold King and Madison at the Closing Date (the "Real Property"). -3- 3.7 Shares of Madison and Gold King. The Shares to be delivered to Purchaser pursuant hereto are duly and validly issued, full paid and non-assessable and when delivered to Purchaser hereunder will not be subject to any mortgage, lien, claim or other encumbrance whatsoever (other than as provided in Section 2.2(b) hereof) and shall vest in Purchaser legal title to the Shares. 4. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Seller as follows: 4.1 Organization and Good Standing. The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Wyoming and is duly qualified or authorized to do business in each jurisdiction in which it conducts business, or owns property, except where the failure to so qualify would not in the aggregate have a material adverse effect on the Purchaser. 4.2 Authorization. The Purchaser has full corporate power and authority to enter into this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement is a valid and binding agreement of the Purchaser, enforceable in accordance with its terms except for the Enforceability Exceptions. 4.3 Acquisition of Securities. This Agreement is made with the Purchaser in reliance upon the Purchaser's representation to the Seller, which by the Purchaser's execution of this Agreement the Purchaser hereby confirms, that the Shares to be received by the Purchaser will be acquired for investment for the Purchaser's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same, and the Purchaser has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof. 4.4 No Registration. The Purchaser understands and acknowledges that the Shares are not registered under the Securities Act of 1933, as amended (the "Act"), or under any other applicable blue sky or state securities law. The Purchaser understands that there is no current market for the Shares and the Purchaser further understands that it is not expected that any such market will develop. 4.5 Consents and Approvals. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate, result in a breach of any of the terms or provisions of, constitute a default (or an event which, with the giving of notice or the passage of time or both, would constitute a default) under, result in the acceleration of any indebtedness under or performance required by, result in any right of termination of, increase any amounts payable under, decrease any amounts receivable under, change any other rights pursuant to, or conflict with, any material agreement, indenture or other instrument to which the Purchaser is a party or by which any of its properties are bound, or any judgment, decree, order or -4- award of any court, governmental body or arbitrator (domestic or foreign) applicable to the Purchaser. No consent, approval or authorization of, or declaration, filing or registration with, or payment of any material tax, fee, fine or penalty to, any governmental or regulatory authority (domestic or foreign) or any other person (either governmental or private), is required in connection with the execution, delivery and performance by the Purchaser of this Agreement. 5. Conditions. 5.1 Conditions to Closing. (a) Conditions to Purchaser Obligations. The obligation of the Purchaser to purchase the Shares at the Closing is subject to the fulfillment on or prior to the Closing Date of the following conditions, any of which may be waived in accordance with the provisions of Section 8.1 hereof: (i) Representations and Warranties Correct: Performance of Obligations. The representations and warranties made by the Seller in Section 3 hereof shall be true and correct when made, and shall be true and correct on the Closing Date with the same force and effect as if they had been made on and as said date; the Seller shall have performed all obligations and conditions herein required to be performed or observed by it on or prior to the Closing Date. (ii) Authorization. All action on the part of the Seller necessary to authorize the execution, delivery and performance of this Agreement and other agreements provided for herein including the approval of this transaction by the Seller's shareholders, and the consummation of the transactions contemplated herein and therein, shall have been duly and validly taken by the Seller, and the Purchaser shall have been furnished with copies of resolutions and other instruments authorizing this Agreement and the transactions contemplated herein. (iii) Consents and Waivers. The Seller shall have obtained any and all consents, permits, orders, approvals and waivers necessary or appropriate for consummation of the transactions contemplated by this Agreement, including the approval of Seller's shareholders and all authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful sale of the Shares pursuant to the terms of this Agreement. (iv) Documents. All documents and instruments incident to the transactions contemplated hereby shall be reasonably satisfactory in substance and form to the Purchaser and Purchaser's counsel. -5- (v) Certificate of Compliance. The Seller shall have delivered to the Purchaser a Certificate, executed by an authorized officer of the Seller, dated the Closing Date, to the effect that the conditions in Section 5.1(a) have been satisfied as of such date. (b) Conditions to Seller Obligations. The Seller's obligation to sell the Shares at the Closing is subject to the fulfillment on or prior to the Closing Date of the following conditions, any of which may be waived by the Seller in accordance with the provisions of Section 8.1 hereof: (i) Representations and Warranties Correct. The representations and warranties made by the Purchaser in Section 4 hereof shall be true and correct when made, and shall be true and correct on the Closing Date with the same force and effect as if they had been made on and as of said date. (ii) Shareholder Approval. The Seller's Shareholders shall have approved the sale of the Shares to Purchaser in accordance with the laws of the State of Nevada. (iii) Documents. All documents and instruments incident to the transactions contemplated hereby shall be reasonably satisfactory in substance and form to the Seller and the Seller's counsel. (iv) Certificate of Compliance. The Purchaser shall have delivered to the Seller a Certificate, executed by an authorized officer of the Purchaser, dated the Closing Date, to the effect that the conditions in Section 5.1(b) have been satisfied as of such date. 6. Purchaser's Covenants. The Purchaser covenants that on and after the Closing Date, and for so long as it owns any of the Real Property and until all the Real Property is sold it will: 6.1 Sale of Real Property. Use its best efforts to sell the Real Property, in arms length transactions, for cash considerations equal to or greater than the fair market value of the Real Property at the time of such sale. 6.2 Payment of Taxes. The Purchaser will pay, before they become delinquent, all taxes, assessments and governmental charges or levies imposed upon it or the Real Property, provided that such items need not be paid while being contested in good faith by appropriate proceedings. -6- 6.3 Maintenance of Corporate Existence, Etc. The Purchaser will: (a) Financial Records - keep true and correct records and accounts and will prepare its financial statements, and financial statements for Madison and Gold King, in accordance with GAAP, consistently applied; (b) Corporate Existence - do or cause to be done all things necessary to preserve and keep in full force and effect its, and Madison's and Gold King's corporate existence, rights and franchises; (c) Compliance with Law - not be in violation of any laws, ordinances, or governmental rules and regulations to which it or the Real Property is subject and will not fail to obtain or maintain any licenses, permits, franchises or other governmental authorizations necessary to the ownership of the Real Property or to the conduct of its business, which violation or failure to obtain or maintain, might materially adversely affect its business or the Real Property. 6.4 Payments of Portion of Sale Proceeds Upon Sale of Real Property. Purchaser hereby agrees to pay Seller as part of the Purchase Price for the Shares pursuant to Section 1.2, an amount equal to eighty percent (80%) of the cumulative Net Proceeds (as defined below) received upon the sale of the Real Property. "Net Proceeds" shall mean any and all amounts received by Purchaser in excess of $681,715 in connection with bona fide sales of all of the Real Property to persons unrelated to the Purchaser or the holders or beneficial owners of the capital stock of Purchaser, less, the reasonable costs and expenses of sale, including reasonable brokerage commissions, attorneys fees and recording taxes and fees, if any, incurred by Purchaser in connection with such sales of the Real Property. The terms, including the sale price, of all sales of Real Property must be approved by Seller, such approval shall not be unreasonably withheld. 6.5 Sale of Shares; Issuance of Additional Shares. So long as the Promissory Note is not fully paid, and so long as any of the Real Property remains unsold, Purchaser will not sell or otherwise depose of, or grant any option or warrant with respect to, any of the Shares or create or permit to exist any lien or encumbrance upon or with respect to any of the Shares (except for the lien created pursuant to the Pledge Agreement) and at all times will be the sole beneficial owner of the Shares. 6.6 Sale of Assets or Merger. So long as the Promissory Note is not fully paid and so long as any of the Real Property remains unsold, Purchaser will not sell distribute or otherwise dispose of any of its assets or permit the sale, distribution or other deposition of any of the assets of Madison and Gold King, other than the Real Property in accordance with the terms of this Agreement, and the Purchaser will not consolidate or merge with or into any other person nor will it allow Madison or Gold King to so merge or consolidate with or into any other person. -7- 6.7 Liens and Encumbrances. Purchaser shall not create, permit or suffer to exist (other than as provided in this Agreement) any mortgage, encumbrance, lien, security interest, claim or charge against the Real Property or any part thereof, except as expressly agreed to in writing by the Seller, and Purchaser shall defend and cause Madison and Gold King to defend their respective interest in and to the Real Property against the claims and demands of all persons whomsoever, other than the claims of the Seller as provided for herein. 7. Defaults. 7.1 Nature of Events. A "Default" shall exist if any of the following occur and is continuing: (a) Principal and Interest Payments - Purchaser fails to make any payment of principal or interest on the Promissory Note on the date such payment is due, and such payment remains unpaid for ten (10) days after written notice of non-payment is received from Seller; (b) Covenant Default - Purchaser fails (1) to observe or perform any of its covenants and agreements contained in this Agreement or (2) defaults or fails to observe and perform any of its covenants and agreements contained in the Promissory Note or the Pledge Agreement; (c) Representations and Warranties - Any representation or warranty or other statement by or on behalf of Purchaser contained in this Agreement or in any instrument furnished in compliance with this Agreement is false or misleading in any material respect at the time when made; (d) Voluntary Bankruptcy Proceedings - Purchaser shall (A) apply for or consent to the appointment of a receiver, trustee, liquidator or similar official for all or any substantial part of the property of Purchaser, (B) admit in writing its inability to pay its debts as they mature, (C) make a general assignment for the benefit of its creditors, (D) be adjudicated bankrupt or insolvent, (E) file a voluntary petition in bankruptcy or an answer seeking reorganization or seeking to take advantage of any applicable insolvency law, (F) file any answer admitting the material allegations of a petition filed against Purchaser in any bankruptcy, reorganization or insolvency proceeding, or (G) take any corporate action for the purpose of effecting any of the foregoing under any bankruptcy, insolvency or any other applicable law. (e) Involuntary Bankruptcy Proceedings - If without its application, approval or consent, a proceeding shall be instituted in any court of competent jurisdiction, seeking in respect of Purchaser an adjudication in bankruptcy, dissolution, winding-up, liquidation, a composition arrangement with creditors, a readjustment of debt, the appointment of a receiver, a trustee, a liquidator or similar official for Purchaser or other like relief under any -8- applicable bankruptcy or insolvency law; and either (A) such proceeding shall not be actively contested by Purchaser in good faith, or (B) such proceedings shall continue undismissed for any period of 90 consecutive days, or (C) any conclusive order, judgment or decree shall be entered by any court of competent jurisdiction to effect any of the foregoing. (f) Dissolution, Merger, Etc. - Any dissolution, merger, or consolidation of Madison or Gold King, or any transfer of a substantial part of the property of Madison or Gold King, should occur other than the sale of the Real Property pursuant to the terms and provisions of this Agreement. (g) Covenant Default - Purchaser shall fail to pay or perform any obligation under, or the Purchaser shall fail to keep or perform any covenant, promise or warranty of Purchaser contained in, the Promissory Note or this Agreement. (h) Pledge Agreement - A Default under the Pledge Agreement. 7.2 Remedies Upon the occurrence of any Default hereunder, all remaining unpaid amounts due hereunder or under the Promissory Note shall, at the option of Seller, become immediately due and payable, and Seller may exercise at any time any rights and remedies available to it under the laws of the State of Colorado or other applicable jurisdictions. Purchaser shall, in case of a Default, pay all costs incurred by Seller in enforcing the rights of Seller hereunder, including reasonable attorneys' fees and other expenses. 8. Miscellaneous 8.1 Modifications, Amendments and Waivers. The Seller and the Purchaser may by written agreement: (a) Extend the time for the performance of any of the obligations or other acts of the parties hereto; (b) Waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement; (c) Waive compliance with any of the covenants and agreements contained in this Agreement; or (d) Amend or supplement any of the provisions of this Agreement. -9- 8.2 Governing Law; Jurisdiction. This Agreement shall be governed by, and construed and enforced in accordance with, the internal law, and not the law pertaining to conflicts or choice of law, of the State of Colorado. 8.3 Survival of Covenants. The covenants and agreements made herein shall survive the Closing. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Seller pursuant hereto or in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Seller hereunder as of the date of such certificate or instrument. 8.4 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto, except that no party may assign or otherwise transfer any of its rights under this Agreement without the written consent of the other party hereto. 8.5 Entire Agreement. This Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement among the parties with regard to the subject matter hereof and thereof. 8.6 Notices. All notices and other communication required or permitted hereunder shall be effective upon receipt and shall be in writing and delivered personally, by facsimile transmission, by overnight delivery service or by certified mail, return receipt requested, postage prepaid, addressed as set forth below the respective name on the signature page hereto, or at such other address as such party shall have furnished in writing. 8.7 Severability. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby. 8.8 Titles and Subtitles. The titles of the Sections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 8.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. 8.10 Construction of Agreement. None of the parties hereto or their respective counsel shall be deemed to have drafted this Agreement for purposes of construing the terms hereof. The language in all parts of this Agreement shall in all cases be construed according to its fair meaning, and not strictly for or against any party hereto. -10- IN WITNESS WHEREOF, the parties hereto have caused this Asset Sale Agreement to be duly executed and delivered as of the date first above written. THE SELLER GRANT RESERVE CORPORATION By: /s/ Arnold T. Kondrat ----------------------------- Name: Arnold T. Kondrat Title: Chairman Address for Notices: 410 17th Street Suite 1375 Denver, CO 80202 Attention: Arnold T. Kondrat THE PURCHASER CHEROKEE MINING COMPANY INC. By: /s/ William R. Wilson --------------------------------- Name: William R. Wilson Title: President Address for Notices: 410 17th Street Suite 1375 Denver, CO 80202 Attention: William R. Wilson -11- EXHIBIT 1 PROMISSORY NOTE Denver, Colorado November 25, 1998 For Value Received, Cherokee Mining Company Inc. ("Cherokee"), a Wyoming corporation, hereby promises to pay to the order of Grant Reserve Corporation, a Nevada corporation ("Grant"), on November 25, 1999, upon the presentation ans surrender hereof at the principal office of Cherokee, the Principal Sum of SIX HUNDRED THOUSAND DOLLARS ($600,000), and to pay interest on the amount of such Principal sum remaining unpaid from time to time at the rates and times provided herein, until said Principal Sum is paid in full. The interest on this Note, when due and payable, shall be paid to the registered owner of this Note at the close of business on the Record Date applicable to such interest payment, mailed to such registered owner at such registered owner's address appearing as of the close of business on such Record Date on the Note Register (as herein defined). For the purposes of this Note, the Record Date applicable to any interest payment hereunder shall be the fifth day (whether or not a business day) prior to the day upon which such interest payment is due and payable hereunder. Cherokee shall have the right at any time to prepay this Note, in whole or in part, without any premium or penalty of any kind. SECTION ONE SECURITY To secure payment of this Note, Cherokee, pursuant to the terms and provisions of a pledge agreement of even date herewith (the "Pledge Agreement"), has granted to Grant a security interest in (i) 7,620,000 of shares of Common Stock in Madison Mining Corporation ("Madison") and (ii) 36,388 of shares of Common Stock in Gold King Mines Corporation ("Gold King") acquired by Cherokee from Grant pursuant to an asset sale agreement of even date herewith (the "Asset Sale Agreement"). SECTION TWO DEFAULT The occurrence of any of the following events shall constitute a Default hereunder: 1. Any material statement or representation of Cherokee herein or in any other writing at any time furnished by Cherokee to Grant which shall prove to be false or misleading in any material respect. 2. If Cherokee shall (A) apply for or consent to the appointment of a receiver, trustee, liquidator or similar official for all or any substantial part of the property of Cherokee. (B) -12- admit in writing its inability to pay its debts as they mature. (C) make a general assignment for the benefit of its creditors, (D) be adjudicated bankrupt or insolvent, (E) file a voluntary petition in bankruptcy or an answer seeking reorganization or seeking to take advantage of any applicable insolvency law, (F) file any answer admitting the material allegations of a petition filed against Cherokee in any bankruptcy, reorganization or insolvency proceeding, or (G) take any corporate action for the purpose of effecting any of the foregoing under any bankruptcy, insolvency or any other applicable law. 3. If without its application, approval or consent, a proceeding shall be instituted in any court of competent jurisdiction, seeking in respect of Cherokee an adjudication in bankruptcy, dissolution, winding-up, liquidation, a composition arrangement with creditors, a readjustment of debt, the appointment of a receiver, a trustee, a liquidator or similar official for Cherokee or other like relief under any applicable bankruptcy or insolvency law; and either (A) such proceeding shall not be actively contested by Cherokee in good faith, or (B) such proceedings shall continue undismissed for any period of 90 consecutive days, or (C) any conclusive order, judgment or decree shall be entered by any court of competent jurisdiction to effect any of the foregoing. 4. The dissolution, merger or consolidation of Cherokee, or transfer of a substantial part of the property of Cherokee, other than the sale of the real property of Madison and Gold King pursuant to the terms and provisions of the Asset Sale Agreement. 5. An Event of Default under the Asset Sale Agreement or the failure of Cherokee to pay or perform any obligation under, or the failure by Cherokee to keep or perform any covenant, promise or warranty of Cherokee contained in, this Note, the Asset Sale Agreement or the Pledge Agreement. SECTION THREE REMEDIES On any Default hereunder, all remaining unpaid amounts on the Note shall, at the option of Grant, become immediately due and payable, and Grant may exercise at any time any rights and remedies available to it under the laws of the State of Colorado. Cherokee shall, in case of Default, pay all costs incurred by Grant in collecting on the Note and enforcing the rights of Grant hereunder, including reasonable attorneys' fees and legal expenses. In addition, from and after the occurrence of a Default, interest shall, without the necessity for the giving of notice or the taking of any other action by the holder hereof, become payable by Cherokee on the balance of the Principal Sum remaining unpaid from time to time thereafter at a floating annual percentage rate equal to two (2) percent plus the Prime Rate existing from time to time while any part of the Principal Sum of this Note shall remain unpaid, payable monthly in arrears on the last calendar day of each month until the Principal Sum of this Note shall have been paid in full. For the purposes hereof, the Prime Rate shall be as determined by reference to The Wall Street Journal. -13- SECTION FOUR NOTICE Cherokee hereby waives presentment for payment, notice of dishonor, protest and notice of protest and agrees to pay reasonable attorneys' fees in the event that the same are incurred in connection with the collection of the indebtedness evidenced hereby. Cherokee agrees not to interpose any offsets or counterclaims in any action for the collection of the indebtedness evidenced by this Note. SECTION FIVE MISCELLANEOUS This Note shall be governed by, and construed and enforced in accordance with, the internal law of the State of Colorado. Cherokee shall maintain at its principal office a register (the "Note Register") for the registration and transfer of the Note. Upon presentation of this Note for such purpose at such principal office, Cherokee shall register therein, and permit to be transferred thereon, this Note. The Note shall be transferable only upon the Note Register at the written request of the registered owner thereof or his representative duly authorized in writing, upon surrender thereof, together with a written instrument of transfer duly executed by the registered owner or his representative duly authorized in writing. The titles of the Sections of this Note are for convenience of reference only and are not to be considered in construing this Note. IN WITNESS WHEREOF, Cherokee Mining Company Inc. has caused this Promissory Note to be executed in its name and on its behalf by its proper officer thereunto duly authorized, as of the date first above written. CHEROKEE MINING COMPANY INC. By: /s/ William R. Wilson ---------------------------------- Name: William R. Wilson Title: President -14- EX-10.13 28 PLEDGE AGREEMENT PLEDGE AGREEMENT PLEDGE AGREEMENT, dated as of November 25, 1998 (this "Pledge Agreement"), between Cherokee Mining Company Inc. ("Cherokee"), a Wyoming corporation, and Grant Reserve Corporation ("Grant"), a Nevada corporation. W I T N E S S E T H: WHEREAS, Cherokee and Grant have entered into that certain asset sale agreement (the "Asset Sale Agreement") of even date herewith, under which Cherokee has acquired (i) 7,620,000 shares of Common Stock, no par value, in Madison Mining Corporation, a Montana corporation ("Madison") and (ii) 36,388 of shares of Common Stock, no par value, in Gold King Mines Corporation ("Gold King") (collectively, the "Pledged Shares"); WHEREAS, as part of the consideration for the sale of the Shares under the Asset Sale Agreement, Cherokee has agreed to pay Grant the principal sum of SIX HUNDRED THOUSAND DOLLARS ($600,000), which obligation is evidenced by a certain promissory note of even date herewith, (the "Note"); WHEREAS, to secure its obligations under the Asset Sale Agreement and the Note, Cherokee has agreed to (i) pledge to Grant, and grant to Grant, a security interest in, the Pledged Securities and (ii) execute and deliver this Pledge Agreement. NOW THEREFORE, the parties hereto agree as follows: 1. Pledge and Grant of Security Interest. Cherokee hereby pledges to Grant, and grants to Grant a continuing security interest in and to all of Cherokee's right, title and interest in (i) the Pledged Shares, (ii) the certificates representing the Pledged Shares and (iii) all products and proceeds of any of the Pledged Shares, including, without limitation, all dividends, interest, principal payments, cash, options, warrants, rights, instruments, subscriptions and other property or proceeds from time to time received, receivable or otherwise distributed or distributable in respect of or exchange for the any of the Pledged Shares (collectively (i), (ii) and (iii), the "Collateral") as collateral security for the prompt and complete payment and performance due (whether at stated maturity, by acceleration or otherwise) of the Obligations. As used herein, "Obligations" means, collectively, the unpaid principal and interest, if any, on the Note and all other obligations and liabilities of Cherokee, whether direct or indirect, which may arise under or in connection with the Asset Sale Agreement, the Note and this Pledge Agreement. 2. Delivery of the Collateral (a) All certificates evidencing the Pledged Shares shall be delivered to and held by Grant pursuant thereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer in blank, all in form and substance reasonably satisfactory to Grant. (b) On the date hereof, Cherokee shall take all actions necessary in order to transfer each item of the Collateral to Grant in a manner sufficient to create in favor of Grant, a perfected first priority security interest in the Collateral. In the event of any change in applicable law, Cherokee shall promptly take such action as may be required in order to continue Grant's security interest in the Collateral as a perfected first priority security interest and Grant shall cooperate with Cherokee in any such action. 3. Representations and Warranties Cherokee hereby represents and warrants that: (a) The execution, delivery and performance by Cherokee on this Pledge Agreement do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation of Cherokee or of any material agreement, judgment, injunction, order, decree or other instrument binding upon Cherokee or result in the creation or imposition of any lien encumbrance or security interest on or in any assets of Cherokee, except for the security interests granted under this Pledge Agreement to Grant. (b) Upon the delivery to Grant of the certificates representing the Pledged Shares, the pledge of the Collateral pursuant to this Pledge Agreement creates a valid and perfected first priority security interest in and to the Collateral, securing the payment and fulfillment of the Obligations for the benefit of Grant enforceable as such against all creditors of Cherokee and any persons purporting to purchase any of the Collateral from the Cherokee, except as such enforcement may be limited by (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally and (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law. (c) No consent of any other person and no consent, authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the pledge by Cherokee of the Collateral pursuant to this Pledge Agreement or for the execution, delivery or performance of this Pledge Agreement by Cherokee (except for any actions, notices, filings and notations necessary to perfect liens on or the security interest in the Collateral created pursuant to this Pledge Agreement). -2- 4. Further Assurances Cherokee agrees to promptly take such actions and to execute and deliver or cause to be executed and delivered, or use its best efforts to procure, such stock or bond powers, proxies, assignments, instruments and such other or different writings that may be necessary or as Grant may reasonably request, all in form and substance reasonably satisfactory to Grant, deliver any instruments to Grant and take any other actions that are necessary or, in the reasonably opinion of Grant, desirable, to perfect, continue the perfection of, confirm and assure the first priority of Grant's security interest in the Collateral, to perfect the Collateral against the rights, claims or interests of third persons, and to otherwise effect the purpose of this Pledge Agreement. 5. Covenants Cherokee covenants and agrees with Grant from and after the date of this Pledge Agreement until the payment in full and fulfillment of Obligations due and owing under the Asset Sale Agreement, the Note and of this Pledge Agreement that it will not: (a) (i) sell or otherwise dispose of, or grant any option or warrant with respect to, any of the Collateral or (ii) create or permit to exist any lien or encumbrance upon or with respect to any of the Collateral (except for the lien created pursuant to this Pledge Agreement) and at all times will be the sole beneficial owner of the Collateral; and (b) (i) enter into any agreement that purports to or may restrict or inhibit Grant's rights or remedies hereunder, including, without limitation, Grant's right to sell or otherwise dispose of the Collateral or (ii) fail to pay or discharge any tax assessment or levy of any nature not later than five days prior to the date of any proposed sale under any judgment, writ or warrant of attachment with respect to such tax assessment or levy with regard to the Collateral. 6. Power of Attorney Cherokee hereby appoints and constitutes Grant as Cherokee's attorney-in-fact to exercise to the fullest extent permitted by law, all of the following powers upon and at any time after the occurrence and during the continuance of a Default under the Note or the occurrence and during the continuance of an Event of Default under the Asset Sale Agreement: (i) collection of proceeds of any Collateral; (ii) conveyance of any item of Collateral to any purchaser thereof; (iii) giving of any notices or recording of any liens under Section 4 hereto; (iv) making of any payments or taking any acts under Section 7 hereof and (v) paying or discharging taxes or liens levied or placed upon the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by Grant in its reasonable discretion, and such payment made by Grant to become the Obligations of Cherokee to Grant, due and payable immediately upon demand. Grant's authority to execute and give receipt for any certificate of ownership or any document constituting Collateral, transfer title to any item of Collateral, sign Cherokee's name on all financing statements (to the extent permitted by applicable law) or any other documents reasonably deemed necessary or -3- appropriate by Grant to preserve, protect or perfect the security interest in the Collateral and to file the same, prepare, file and sign Cherokee's name on any notice of lien, and to take any other actions arising from the powers granted to Grant in this Pledge Agreement. This power of attorney is coupled with an interest and is irrevocable by Cherokee. 7. Grant May Perform If Cherokee fails to perform any agreement contained herein, Grant may itself perform, or cause performance of, such agreement. Grant shall provide written notice to Cherokee or any exercise of rights pursuant to Sections 6 or 7 hereof. 8. No Assumption of Duties: Reasonable Care The rights and powers granted to Granted hereunder are being granted in order to preserve and protect Grant's security interest in and to the Collateral granted hereby and shall not be interpreted to, and shall not, impose any duties on Grant in connection therewith other than those imposed under applicable law. Grant agrees to exercise reasonable care in the custody, preservation and disposition of the Collateral. 9. Indemnity Cherokee shall indemnify, defend and hold harmless Grant and its directors, officers, agents and employees from and against all claims, actions, obligations, losses, liabilities and expenses, including reasonably costs, reasonable fees and reasonable disbursements of counsel (including, without limitation, the reasonable cost to Grant of legal counsel), the reasonable costs of investigations, and claims for damages, arising from or in connection with Grant's performance of its duties or exercise of its rights or powers under this Pledge Agreement (other than such claims, actions, obligations, losses, liabilities and expenses which result from the bad faith, gross negligence or willful misconduct of Grant). 10. Security Interest Absolute All rights of Grant and security interests hereunder, and all obligations of Cherokee hereunder, shall be absolute and unconditional irrespective of: (a) any lack of validity or enforceability of the Asset Sale Agreement or any other agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations or of this Pledge Agreement. (c) any exchange, surrender, release or non-perfection of any liens on any other collateral for all or any of the Obligations; or -4- (d) to the extent permitted by applicable law, any other circumstance which might otherwise constitute a defense available to, or a discharge of, Cherokee in respect of the Obligations or of this Pledge Agreement. 11. Continuing Security Interest: Termination (a) The Pledge Agreement shall create a continuing security interest in and to the Collateral and shall, unless otherwise provided in the Asset Sale Agreement, remain in full force and effect until the fulfillment of and payment in full of all Obligations due and owing under the Asset Sale Agreement, the Note and this Pledge Agreement. At such time this Pledge Agreement shall terminate and Grant shall, at the written request of Cherokee, promptly reassign and redeliver to Cherokee all of the Collateral hereunder that has not been sold, disposed of, retained or applied by Grant in accordance with the terms of this Pledge Agreement and the Asset Sale Agreement. Such reassignment and redelivery shall be without warranty (either express or implied) by or recourse to Grant, except as to the absence of any prior assignments or encumbrances by Grant of the Collateral or its interests therein, and shall be at the reasonable expense of Cherokee. This Pledge Agreement shall be binding upon Cherokee, its successors and assigns, and shall inure, together with the rights and remedies of Grant hereunder, to the benefit of Grant and its successors, transferees and assigns. (b) Notwithstanding any provision in this Pledge Agreement, if any Default under the Note or an Event of Default under the Asset Sale Agreement occurs, Cherokee shall use its best efforts to immediately cause Grant, to have a perfected first priority security interest in the Collateral. This paragraph shall survive the termination of this Pledge Agreement. 12. Notices Any communication, notice or demand to be given hereunder to any party shall be duly given hereunder if given in writing and in the form and manner, and delivered to their address set forth in the Asset Sale Agreement, or in such other form and manner or to such other address and Persons as shall be designated by and party hereto to each other party hereto in a written notice delivered in accordance with the terms of the Asset Sale Agreement. 13. Governing Law THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF COLORADO. 14. Execution in Counterparts This Pledge Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. -5- 15. No Personal Liability of Directors, Officer, Employees and Others No past, present or future director, officer, employee, incorporator, partner or stockholder of Cherokee will have any liability for any obligations of Cherokee under this Pledge Agreement or for any claim based on, in respect of or by reason of such obligations or their creation. -6- IN WITNESS WHEREOF, the Parties have caused this Pledge Agreement to be duly executed as of the date first above written. PLEDGOR CHEROKEE MINING COMPANY INC. By: /s/ William R. Wilson Name: William R. Wilson Title President Address for Notices: 410 17th Street, Suite 1375 Denver, Colorado 30302 (303) 320-2840 (303) 595-9717 Attention: William R. Wilson PLEDGEE GRANT RESERVE CORPORATION By: /s/ (signature is illegible) Name: Title Address for Notices: 131 University Ave., Suite 2100 Toronto, Canada M5H 3M7 (416) 366-2221 (416) 366-7722 Attention: Arnold T. Kondrat -7- EX-10.14 29 CALL CENTER LEARNING AGREEMENT THIS AGREEMENT made as of the 18th day of May, 1999 BETWEEN: CALL CENTER LEARNING SOLUTIONS, INC. an Arizona corporation ("CCLS") OF THE FIRST PART, - and - INFOCAST CORPORATION a Nevada corporation ("InfoCast") OF THE SECOND PART. BACKGROUND CCLS is the owner of certain copyrights, trademarks, trade names, trade secrets and other rights in and to certain call center course materials listed in Schedule "A" (collectively, the "Underlying Intellectual Property"). CCLS currently markets the course materials utilizing the Underlying Intellectual Property to CCLS's existing clients. InfoCast is in the business of designing and developing electronic versions of content such as the Underlying Intellectual Property, developing marketing and promotional materials, and providing technical support for the electronic distribution of content. CCLS and InfoCast have agreed to form a new corporation ("Newco") to be owned equally by CCLS and InfoCast. The purpose of Newco is to develop, own and exploit the aforementioned courses as detailed in Schedule "A" which will be converted to an electronic format capable of electronic distribution (referred to hereafter as "Electronic Products"). Newco will engage and draw upon CCLS' and InfoCast's resources to market, sell and distribute the Electronic Products. CCLS will initially contribute to Newco: (a) the exclusive rights: (i) to convert the Underlying Intellectual Property in the first five courses described in Schedule "A" (Phase 1) to electronic format capable of electronic distribution (Electronic Products), and (ii) to sell, license or otherwise commercially exploit the first five Electronic Products described in Schedule "A" (Phase 1) by electronic distribution; (b) subject matter expertise to support the conversion of the Underlying Intellectual Property into the Electronic Products; (c) access to the CCLS customer base as detailed in the Marketing and Sales Plans and for a period of at least one year leadership by CCLS in making sales of the Electronic Products; (d) upon certain events occurring as detailed in section 2.5 of this Agreement, the exclusive rights to convert and to commercially exploit the balance of the Underlying Intellectual Property listed in Schedule "A" under Phase 2 to electronic format capable of electronic distribution. InfoCast will initially contribute to Newco: (a) the resources necessary to convert the Underlying Intellectual Property in the first initial five courses described in Schedule "B" to the Electronic Products; (b) funding of the marketing and technical support efforts for the Electronic Products during the initial "Six Month Period" commencing on the date of execution of this Agreement and ending six months thereafter; (c) access to InfoCast's customer base as detailed in the Marketing and Sales Plans; (d) courseware development expertise to support the conversion of the Underlying Intellectual Property into the Electronic Products; (e) access to InfoCast's Learning Management System ("LMS"), for utilization with the Electronic Products; and (f) funding the incorporation and organization of Newco and ongoing corporate expenses for the initial Six Month Period. AGREEMENT In consideration of the mutual covenants and agreements contained in this agreement and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and agreed, CCLS and InfoCast hereby declare, covenant and agree as follows: 1. FORMATION OF NEWCO 1.1 InfoCast shall cause to be formed under the laws of the State of Delaware, a new corporation to be called "Call Center Learning Solutions On Line, Inc." ("Newco") or such other name as may be mutually agreed and acceptable to applicable regulatory authorities. 1.2 The capitalization of Newco shall consist of 100 common shares. Each of CCLS and InfoCast shall subscribe for and be issued 50 common shares for US$1.00 per share. 1.3 Initially, the corporate records and accounting records of Newco shall be maintained at the Toronto, Canada office of InfoCast at Suite 902, 1 Richmond Street West, Toronto, Ontario M5H 3W4. 1.4 The board of directors of Newco shall consist of four persons. CCLS shall nominate two persons to the board of directors of Newco and InfoCast shall nominate two persons. In the event of a deadlock of the Board of Directors, either party may refer the subject matter of the deadlock to arbitration. 2. OBLIGATIONS TO NEWCO 2.1 CCLS will initially contribute to Newco: (a) the exclusive rights: (i) to convert the Underlying Intellectual Property in the first five courses described in Schedule "A" Phase 1 to electronic format capable of electronic distribution ("Electronic Products"), and (ii) to sell, license or otherwise commercially exploit the first five Electronic Products described in Schedule "A" by electronic distribution; (b) subject matter expertise ("SME") to support the conversion of the Underlying Intellectual Property into all the Electronic Products. The Subject Matter Expertise should demonstrate a highly proficient level of understanding and comprehensive knowledge pertaining to the subject matter of the course and the competency requirement of call center personnel. The SME should also demonstrate extensive training experience pertaining to subject matter covered by the course. Subject Matter Experts will interface with an instructional designer to prepare course outlines and scripts; (c) access to CCLS customer base as detailed in the Marketing and Sales Plans and leadership for a period of at least one year by CCLS in making sales of all the Electronic Products. Leadership in this section contemplates a half time commitment of CCLS' lead sales person, an identification of CCLS' client who are candidates for the electronic products and sales initiatives that include setting appointments, demonstrating the electronic products and closing sales; (d) upon certain events occurring as detailed in section 2.5 of this Agreement, the exclusive rights to convert the balance of the Underlying Intellectual Property to electronic format capable of electronic distribution. 2.2 InfoCast will initially contribute to Newco: (a) the resources necessary to convert the Underlying Intellectual Property in the first initial five courses described in Schedule "A" Phase 1 to the first five Electronic Products; (b) funding of the marketing and technical support efforts for the first five Electronic Products during the initial Six Month Period commencing on the date of execution of this Agreement and ending six months thereafter as detailed in Schedule "C"; (c) access to InfoCast's customer base as detailed in the Marketing and Sales Plan; (d) courseware development expertise to support the conversion of the Underlying Intellectual Property into the first five Electronic Products as set out in Schedule "A" and more clearly defined in Schedule "B"; (e) access to InfoCast's Learning Management System ("LMS") which is being developed concurrently with the conversion of the first five Electronic Products and which will provide learner tracking and reporting; and (f) funding the incorporation and organization of Newco. 2.3 In order to ensure the development of quality courseware and successful launches of the Electronic Products, both parties agree that important input will be required from both CCLS and InfoCast and each party will utilize its commercially reasonable efforts to attain the quality of products and to meet the target completions contemplated in this contract. 2.4 The Electronic Products courseware will be developed according to the Project Implementation Plan as set out as Schedule "B", with sign off approvals required from both CCLS and InfoCast at regular, scheduled milestones. 2.5 On or before November 1, 1999 Newco shall have the right and conditional obligation to convert the remaining six courses as detailed in Schedule "A" (Phase 2) at InfoCast's sole expense. The resultant Electronic Products shall be contributed to Newco absolutely. CCLS shall be obligated to contribute to Newco absolutely the intellectual property contained in the remaining six courses in the same manner as the aforementioned initial five courses. InfoCast's obligations under this section for the six remaining courses are conditional upon Newco securing 20,000 unit sales at a price between $50-$75 (U.S.) per unit by November 1, 1999. If these sales have not been secured, InfoCast does not have any obligation to go forward on the conversion of the remaining six courses. InfoCast has the unfettered right however, to proceed with the conversion of the six remaining courses in the event that the 20,000 unit sales are not secured. Should InfoCast decide to proceed with the conversion of the remaining six courses, it will utilize its commercially reasonable efforts to complete the conversion of the courses by May 1, 2000. If InfoCast decides not to proceed with the conversion of the remaining six courses then CCLS shall not be obligated to contribute its intellectual property with respect to the remaining six courses. CCLS may develop, convert and distribute these six courses thereafter as it deems fit in its sole discretion. Newco shall have no surviving rights to these six Electronic Products and Newco will cease to have any rights to a separate and exclusive section on the DXL as contemplated in section 7.4. If only the first five courses are developed by Newco as Electronic Products then InfoCast will maintain these courses in a call center section of its DXL on a non-exclusive basis. 3. ROLE OF NEWCO 3.1 The purpose of Newco shall be to develop, own and exploit the Electronic Products. 3.2 Newco shall establish pricing for sales of Electronic Products to generate optimum profits for Newco. 3.3 Newco will brand all Electronic Products for sale under the CCLS brand. 3.4 InfoCast acknowledges and agrees that CCLS is the sole and exclusive owner of all copyrights, trademarks, tradenames, trade secrets and other rights in the Underlying Intellectual Property. InfoCast and CCLS acknowledge and agree that Newco shall be the sole and exclusive owner of all copyrights, trademarks, tradenames, trade secrets and other rights in the Electronic Products. This Agreement gives InfoCast no rights in any such copyrights, trademarks, tradenames, trade secrets and other rights in the Underlying Intellectual Property and InfoCast shall never assert any rights therein; provided, however, that (a) CCLS grants to Newco a non-royalty bearing license to reproduce the trade names and trademarks of CCLS associated with the Underlying Intellectual Property in connection with the Electronic Products in advertisements and other promotional materials; and (b) Newco will reproduce on the Electronic Products the tradenames and trademarks of CCLS associated with the Underlying Intellectual Property. All components of the Electronic Products shall clearly identify Newco as the owner of the copyrights thereof. 3.5 CCLS acknowledges and agrees that InfoCast is the sole and exclusive owner of all copyrights, trademarks, trade secrets and other rights in software applications and technology that will be utilized in the project. This Agreement gives CCLS and Newco no rights in any of such copyrights, trademarks, trade secrets or other rights that are incorporated in the software applications and technology. 3.6 All sales shall be booked through Newco. CCLS and InfoCast shall be entitled to charge Newco certain recoverable expenses as set out in Schedule "C" for reimbursement which shall be accounted for through Newco. 3.7 Accounting records and functions shall be established and carried out by InfoCast on behalf of Newco in accordance with generally accepted accounting standards. 3.8 Both CCLS and InfoCast herein acknowledge that InfoCast and CCLS are operating and developing a distance learning business and that nothing in this Agreement will prevent InfoCast or CCLS from pursuing and developing other distance learning initiatives as it sees fit from time to time. 3.9 InfoCast and CCLS shall not be required to devote all of its time or business efforts to the affairs of Newco but shall devote so much of its time and attention to Newco as is reasonably necessary and advisable to meet its obligations under this Agreement. Except as otherwise expressly provided herein, either party and any shareholder, officer, or director may engage in or possess an interest in other business ventures of every nature and description, independently or with others whether or not such ventures are competitive with Newco. 3.10 InfoCast and CCLS agree that a dividend policy will be put into place for Newco wherein quarterly distributions will be made to the shareholders. The dividends will effectively distribute all profits while leaving enough funding to keep Newco operational. 4. MARKETING AND SALES INITIATIVES 4.1 Newco intends to market and sell the Electronic Products both to existing clients of CCLS and InfoCast and new clients developed by Newco, CCLS and InfoCast. Newco will appoint CCLS and InfoCast as sales agents for the Electronic Products. The parties shall pursue joint marketing and sales efforts of the Electronic Products. The following steps will be designed and utilized. (a) marketing plan and sales plan, each with mutual signoff to be completed by June 15, 1999. CCLS and InfoCast acknowledge the following marketing issues to be addressed (the following list is non-exclusive): collateral materials, web page design, web page interlinks, branding, publicity, sales strategy, client maintenance strategy, pricing, positioning and effort priorities; (b) beta site and system rollout management, including addressing such beta issues as technology integration, Learning Management System ("LMS") integration and navigation integration and rollout issues such as ongoing technology support and LMS monitoring; (c) help desk including customer service and technical support shall be established in conjunction with the sale and distribution of the first course; (d) development and drafting of a maintenance agreement to reflect a maintenance policy, including considering free upgrades within versions and costs for new versions (which are to be determined by Newco); and (e) a program to develop certification and accreditation alliances with appropriate academic and industry organizations for the Electronic Products. During the initial Six Month Period commencing on the date of execution of this Agreement and ending six months thereafter, InfoCast shall fund the marketing and sales efforts for the Electronic Products, the costs of which are estimated and detailed in Schedule "D". 4.2 InfoCast will provide up to 5 days training for the three principals of CCLS to ensure their personal fluency with Newco's Electronic Products and services. 5. REVIEW AND AUDIT RIGHTS 5.1 Each of CCLS and InfoCast (the "Auditing Party") shall have the right which right may be exercised at any time, during normal business hours and upon ten (10) days' prior written notice, to audit the books and records of Newco. The audit may be conducted by a representative of Auditing Party who may either, at its election, audit the books and records at the offices of Newco or require Newco to forward copies of the same to the representative's offices. The costs of one audit per year shall be borne by Newco and the results should be shared with each party. If more than one request for audit occurs during the calendar year, the Auditing Party shall pay for such audit and the results shall be shared with each party. 5.2 InfoCast and CCLS will have the right to electronically access and review on a read only basis, the records and accounts of Newco for monitoring purposes at any time. 6. CONVERSION AND DELIVERY 6.1 Subject to CCLS's timely input and adherence to the milestone objectives of Schedule "B" as detailed in section 6.4., InfoCast will use its commercially reasonable efforts to convert the Underlying Intellectual Property into the Electronic Products according to the Project Implementation Plan set out in Schedule "B". InfoCast shall use commercially reasonable efforts to initially convert the course materials entitled "Customer Care and Call Handling Skills for Call Center Agents" on or before July 21, 1999 and the remaining four courses listed in Schedule "A" Phase 1 on or before September 30, 1999. 6.2 The parties acknowledge and agree to use their commercially reasonable efforts to create top quality electronically deliverable courseware for the call center market as described in "Recommended System Requirements" as listed in "Schedule E". 6.3 The conversion of the Underlying Intellectual Property shall be completed to a standard acceptable to both CCLS and InfoCast, each acting reasonably. The benchmark for the quality of courseware development under this Agreement will be the design document as mutually revised for the existing CD Rom version of the CCLS course known as "Effective Skills In Dealing With Customers and Situations". The Electronic Products will have record and non-record visions. 6.4 During the conversion of the Underlying Intellectual Property of each CCLS course into Electronic Products, InfoCast shall require CCLS to contribute and CCLS shall contribute to Newco its SME in accordance with CCLS SME participation in Schedule "B". CCLS shall review and approve the build of the Electronic Products in accordance with the designated milestones in Schedule "B" to ensure that the content build is on schedule and in keeping with the quality standard and purpose of the Underlying Intellectual Property. CCLS acknowledges that time shall be of the essence in reviewing and approving the content build. CCLS shall use its commercially reasonable efforts to expedite the review and approval process in order to permit InfoCast to complete conversion as scheduled. CCLS and InfoCast acknowledge that the schedule for conversion set out in Schedule "B" is crucial to the successful launch of the Electronic Products. 6.5 CCLS agrees that InfoCast's ability to meet the aforementioned schedule is also contingent upon CCLS delivering quality and detailed instructor led material that includes outlines, behavioral objectives, teaching points, specific examples and learner exercises. 6.6 Subject to section 2.5 of this Agreement, upon successful conversion of the first five Electronic Products CCLS, InfoCast and Newco shall mutually agree upon the schedule and implementation plan for the conversion of the course materials for the remaining six courses. 6.7 If InfoCast goes forward with the completion of the last six courses under clause 2.5 then CCLS shall have first right of refusal to develop instructor led versions and to play the role of SME for the conversion of the Electronic format for all new products agreed to be included in the "Call Center Training" section of the DXL for Newco. InfoCast will also provide its resources for design and conversion to Newco. Both parties will provide their services at cost. 7. PROMOTIONAL DUTIES 7.1 Each party shall devote its commercially reasonable efforts to advertise, promote and sell the Electronic Products, to protect the goodwill created in the Electronic Products and to cooperate with the end-users of the Electronic Products. 7.2 Neither party shall use any advertising or promotional materials to promote the Electronic Products that have not been approved by Newco. 7.3 InfoCast acknowledges that CCLS is very active in selling the courseware products utilizing the Underlying Intellectual Property. CCLS and InfoCast will use their commercially reasonable efforts to support Newco sales of the Electronic Products to existing clients of CCLS. InfoCast shall refer all requests and leads for leader-led version of the Electronic Products to CCLS and no commissions shall be paid to InfoCast. Similarly, CCLS shall refer all requests and leads for virtual call center opportunities, IT outsourcing and content conversion and delivery to InfoCast and no commission shall be paid to CCLS. CCLS and Newco however will be given the opportunity to sell all products in the InfoCast DXL library subject to a reseller agreement to be negotiated. 7.4 All Newco promotional materials, electronic and written, will carry a dedicated Call Center Training category. Only Newco Electronic Products will be listed and marketed under this dedicated category. InfoCast agrees to create a separate and exclusive section on Digital Exchange Library (the "DXL") that will exclusively list the Electronic Products under the title "Call Center Training". 7.5 InfoCast will set up a website for Newco with transparent links to the InfoCast website and the DXL. InfoCast will set up transparent links from the CCLS website to the InfoCast website and Newco website. InfoCast will e-commerce enable the Newco website. 7.6 Each of CCLS and InfoCast shall provide to Newco, on a monthly basis, the names and addresses of customers that have been approached as determined by the Marketing and Sales Plans. 7.7 InfoCast and CCLS shall provide assistance to Newco to promote, market, sell and distribute the Electronic Products and InfoCast shall provide Newco with technical support for the Electronic Products including presale, sale (including e-commerce solutions) and post sales activities. During the initial six month period after the execution of this Agreement, InfoCast shall provide such assistance to Newco at no cost to Newco. Thereafter, InfoCast and CCLS shall be entitled to charge Newco for the provision of such assistance on a cost recovery basis as set out in Schedule "C". 7.8 InfoCast shall use its commercially reasonable efforts to introduce one of the Electronic Products in the initial submission to College Boreal for approval and inclusion in the College Boreal/AT&T Canada Learning Partner Program curriculum. InfoCast shall use similar efforts to introduce three of the Electronic Products in a subsequent submission to College Boreal for approval and inclusion in the College Boreal/AT&T Canada Learning Partner Program curriculum. CCLS and InfoCast acknowledge that inclusion in the College Boreal curriculum of any course is at the sole discretion of College Boreal and AT&T Canada. If any CCLS courses are included in this College Boreal/AT&T curriculum, CCLS and Newco herein acknowledge and agree that all pricing policies, marketing decisions, promotional materials and business activities shall be solely determined and developed by InfoCast, AT&T and College Boreal in their sole and unfettered discretion. Newco shall set the price at which the Electronic Products are offered to AT&T Canada, College Boreal and Infocast. 8. INTELLECTUAL PROPERTY 8.1 CCLS and InfoCast acknowledge and agree that the value of the Electronic Products and the resultant ability of CCLS and InfoCast to commercially exploit the Electronic Products will be based in part upon the quality, scope and breadth of the content of the Electronic Products. Each of CCLS and InfoCast agree that they shall use their commercially reasonable efforts to do all such things as may be necessary or desirable to ensure that the Electronic Products are top quality. CCLS and InfoCast acknowledge that in order to ensure that the Electronic Products are top quality, Newco may be required to acquire and/or develop similar, compatible or competing content products for the call center market and CCLS and InfoCast agree to use their commercially reasonable efforts to ensure that such steps as are necessary are taken to develop and maintain the Electronic Products as top quality courseware for the call center market. 8.2 CCLS and InfoCast acknowledge that the Underlying Intellectual Property and the Electronic Products including, without limitation, all source codes, whether reduced to written form, contained on disks or other media, consist of proprietary and confidential information. Each of CCLS and InfoCast recognize and acknowledge that in the course of fulfilling their respective obligations under this Agreement and commercially exploiting the Electronic Products, they will be significantly responsible for maintaining and enhancing the goodwill of each other with customers, potential customers and new customers. Each of CCLS and InfoCast shall use commercially reasonable efforts to preserve their respective goodwill. 8.3 Each party shall immediately notify the other party of (i) any legal, governmental or other official investigation of or proceeding involving the Electronic Products or (ii) of the existence of any infringement claim or any other claim that has been or could be asserted by or against Licensor with respect to its trademarks or other intellectual property. 8.4 Each party shall have sole responsibility for (and bear the cost of) insuring that the Electronic Products as marketed and used by such party are in compliance with the laws and regulations of any governmental body with jurisdiction and that all necessary permits and licenses are procured. 8.5 Newco shall market, promote, and use the Electronic Products under the tradenames and trademarks incorporating the tradenames and trademarks of CCLS. 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF INFOCAST InfoCast hereby represents, warrants, covenants and agrees as follows: 9.1 InfoCast is a corporation, duly organized, validly existing and in good standing under the laws of Nevada. InfoCast has full power to carry on its business as it is now conducted, under any applicable laws. InfoCast is or will be qualified to do business in all jurisdictions where it conducts business. 9.2 This Agreement has been adopted and its execution and delivery by InfoCast have been duly authorized and no further action is necessary on the part of InfoCast to make this Agreement valid and binding upon InfoCast. 9.3 The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby do not conflict with, or result in a breach of, or constitute a default under, or result in the acceleration of any indebtedness under, or result in the creation or imposition of any lien or charge under, any agreement or instrument to which InfoCast is a party or by which InfoCast may be bound, nor does such action violate any statute, law, rule or regulation nor any order, writ, injunction or decree of any court or governmental authority binding upon or affecting InfoCast. 9.4 No consent of any third party is required to be obtained by InfoCast in order to consummate the transaction contemplated by this Agreement or to enable InfoCast to perform InfoCast's obligations hereunder. 9.5 There are no actions, suits, claims, investigations or legal or administrative or arbitration proceedings pending, or to the best of InfoCast's knowledge, threatened against InfoCast or any of its assets: (i) which involve an agency, dealer, distributorship or other type of representation of a third party; or (ii) which, if adversely determined, might have a materially adverse effect on the validity or enforceability of this Agreement or on the financial condition or capability of InfoCast to perform hereunder. 9.6 InfoCast is familiar with the contents and purposes of the Foreign Corrupt Practices Act, ("FCPA") of the United States. InfoCast has not and shall not make, in the performance of its obligations hereunder, any payments, loans or gifts or promises or offers of payments, loans or gifts of money or anything of value, directly or indirectly: (i) to or for the use or benefit of any official, officer, employee or representative of any foreign government or any agency or instrumentality thereof; (ii) to any foreign political party of any official, officer, employee representative or candidate thereof, or (ii) to any other person, if InfoCast knows or has reason to know that any part of such payment, loan or gift will, directly or indirectly, be given or paid to any such governmental official, officer, employee or representative or candidate thereof. If requested by CCLS, InfoCast shall provide to CCLS duly executed affidavits, in form and substance satisfactory to CCLS, of all of its officers, directors, shareholders and employees who may assist InfoCast in the performance of its obligations under this Agreement, each such affidavit shall affirm that InfoCast has informed the affiant of InfoCast's obligation to abide by the FCPA and that affiant shall abide by the provisions of the FCPA. 9.7 Neither this Agreement nor the Electronic Products must be notified to, approved by or registered with, any governmental body, agency or instrumentality in any jurisdiction. 9.8 To the best of InfoCast's knowledge, this Agreement does not have to be executed in any language other than the English language in order to become effective or to be enforceable. 9.9 To the best of InfoCast's knowledge, InfoCast has the capacity under the applicable laws to agree to the choice of law and the choice of forum set forth in this Agreement and such choices are enforceable against InfoCast under the applicable laws. 9.10 To the best of InfoCast's knowledge, nothing in this Agreement violates the fundamental public policy of any application jurisdiction. 9.11 Each of the representations and warranties set forth in this Section shall survive the execution of this Agreement. 10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CCLS CCLS hereby represents, warrants, covenants and agrees as follows: 10.1 CCLS is a corporation, duly organized, validly existing and in good standing under the laws of the State of Arizona. CCLS has full power to carry on its business as it is now conducted, and to own the Underlying Intellectual Property under applicable state and federal law. CCLS is or will be qualified to do business in all jurisdictions where it conducts business. 10.2 This Agreement has been adopted and its execution and delivery by CCLS have been duly authorized and no further corporate action is necessary on the part of CCLS to make this Agreement valid and binding upon CCLS. 10.3 The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby do not conflict with, or result in a breach of, or constitute a default under, or result in the acceleration of any indebtedness under, or result in the creation or imposition of any lien or charge under, any agreement or instrument to which CCLS is a party or by which CCLS may be bound, nor does such action violate any statute, law, rule or regulation or any order, writ, injunction or decree of any court of governmental authority binding upon or affecting CCLS. 10.4 No consent of any third party or any state or federal governmental agency is required to be obtained by CCLS in order to consummate the transaction contemplated by this Agreement or to enable CCLS to perform CCLS's obligations hereunder. 10.5 There are no actions, suits, claims, investigations or legal or administrative or arbitration proceedings pending, or to the best of CCLS's knowledge, threatened against CCLS or any of its assets: (i) which involve an agency, dealer, distributorship or other type of representation of a third party; or (ii) which, if adversely determined, might have a materially adverse effect on the validity or enforceability of this Agreement or on the financial condition or capability of Licensee to perform hereunder. 10.6 CCLS is familiar with the contents and purposes of the Foreign Corrupt Practices Act, ("FCPA") of the United States. CCLS has not and shall not make, in the performance of its obligations hereunder, any payments, loans or gifts or promises or offers of payments, loans or gifts of money or anything of value, directly or indirectly: (i) to or for the use or benefit of any official, officer, employee or representative of any foreign government or any agency or instrumentality thereof; (ii) to any foreign political party of any official, officer, employee representative or candidate thereof, or (ii) to any other person, if CCLS knows or has reason to know that any part of such payment, loan or gift will, directly or indirectly, be given or paid to any such governmental official, officer, employee or representative or candidate thereof. If requested by InfoCast, CCLS shall provide to InfoCast duly executed affidavits, in form and substance satisfactory to InfoCast, of all of its officers, directors, shareholders and employees who may assist CCLS in the performance of its obligations under this Agreement, each such affidavit shall affirm that CCLS has informed the affiant of CCLS's obligation to abide by the FCPA and that affiant shall abide by the provisions of the FCPA. 10.7 Neither this Agreement nor the Underlying Intellectual Property must be notified to, approved by or registered with, any governmental body, agency or instrumentality in any jurisdiction. 10.8 To the best of CCLS's knowledge, this Agreement does not have to be executed in any language other than the English language in order to become effective or to be enforceable. 10.9 To the best of CCLS's knowledge, CCLS has the capacity under the applicable laws to agree to the choice of law and the choice of forum set forth in this Agreement and such choices are enforceable against CCLS under the applicable laws. 10.10 To the best of CCLS's knowledge, nothing in this Agreement violates the fundamental public policy of any application jurisdiction. 10.11 Each of the representations and warranties set forth in this Section shall survive the execution of this Agreement. 11. INDEMNITY 11.1 InfoCast does hereby agree to defend indemnify and hold CCLS harmless from and against any cost, damage, liability, responsibility or obligation, including, without limitation, reasonable attorney's fees, incurred in connection with, as a result of or arising out of: (i) a breach by InfoCast of any of the representations, warranties, covenants or obligations of InfoCast contained in this Agreement; or (ii) third party claims arising from any negligent act or inaction or willful misconduct of InfoCast, its agents and employees. 11.2 CCLS does hereby indemnify and hold InfoCast harmless from and against any cost, damage, liability, responsibility or obligation, including, without limitation, reasonable attorney's fees, incurred in connection with, as a result of or arising out of: (i) a breach by CCLS of any of the representations, warranties, covenants or obligations of CCLS contained in this Agreement; or (ii) third party claims arising from any negligent act or inaction or willful misconduct of CCLS, its agents and employees. 12. ARBITRATION 12.1 If any dispute or controversy shall occur between the parties hereto relating to the interpretation or implementation of any of the provisions of this Agreement, such dispute shall be resolved by arbitration. Such arbitration shall be conducted by a panel of three (3) arbitrators. Each party shall appoint a single arbitrator and those two arbitrators shall appoint a third independent arbitrator by agreement between those two arbitrators or, in default of agreement, such arbitrator shall be appointed by a Judge of appropriate jurisdiction in the State of Delaware upon the application of any of the said parties and such Judge shall be entitled to act as such arbitrator, if he so desires. Any such arbitration shall be held in the State of Delaware. The procedure to be followed shall be agreed by the arbitrators appointed by the parties or, in default of agreement, determined by the third arbitrator. The arbitrators shall have the power to proceed with the arbitration and to deliver their award, which shall be determined by a majority decision, notwithstanding the default by any party in respect of any procedural order made by the arbitrators. The arbitration shall proceed in accordance with the provision of applicable arbitration laws of the State of Delaware. The majority decision arrived at by the arbitrators shall be final and binding and no appeal shall lie therefrom. Judgement upon the award rendered by the arbitrators may be entered in any court having jurisdiction. Travel and lodging expenses for all parties shall be charged to Newco. 13. RIGHT OF FIRST REFUSAL 13.1 Each of CCLS and InfoCast hereby grants to the other, upon the terms and conditions set out herein, a right of first refusal in respect of the common shares of Newco held by them. 13.2 In the event that either CCLS or InfoCast (the "Vendor") receives from a third party, acting as principal and dealing at arm's length with the Vendor, a bona fide written offer (the "Offer") to purchase from the Vendor all or some of the common shares of Newco held by the Vendor (the "Shares") and the Offer is acceptable to the Vendor, then CCLS shall, prior to accepting the Offer, deliver to the other party (the "Rightholder") a notice of the Offer setting forth the terms thereof, including the name and address of the offeror and the number, price and other terms and conditions of the Offer. 13.3 In the event that the Vendor wishes to sell all or some of the Shares then the Vendor shall, prior to offering to sell the Shares, deliver to the Rightholder a notice setting forth the terms in which the Vendor wishes to sell the Shares, including the number, price and other terms and condition. 13.4 In either case, such notice shall be deemed to be an invitation to the Rightholder to purchase from the Vendor all of the Shares that are the subject of the offer or the number of shares which the Vendor wishes to sell as the case may be, on the terms and conditions specified in the offer. Within seven (7) days following the giving notice to the Rightholder, the Rightholder may by written notice to the Vendor elect to purchase from the Vendor all but not less than all of the Shares subject of the Offer or the number of Shares which the Vendor wishes to sell, as the case may be, on the terms and conditions specified in the notice to the Rightholder. Upon receipt by the Vendor of such notice, there shall be constituted between the Vendor and the Rightholder a binding agreement of purchase and sale in respect of such Shares at the same price and upon the same terms and conditions as specified in the notice to the Rightholder. 13.5 In the event that the Vendor has not received the response from the Rightholder within seven (7) days, the Vendor shall so inform the Rightholder and shall be at liberty to accept the Offer or sell the Shares in the number, at the price and upon terms and conditions no more favourable to the purchaser than those specified in the notice. 13.6 In the event that the Vendor does not sell all of the Shares subject of the notice within a 30 day period from the date of notifying the Rightholder of an Offer or of the Vendor's wish to sell the Shares, the Vendor shall lose its right sell such Shares and the provisions of this Agreement shall thereupon once again be applicable. 13.7 The purchase by the Rightholder and the sale by the Vendor of any Shares shall be completed at the offices of the Vendor at 10:00 o'clock in the forenoon on the 7th Business Day after the date the Vendor gives notice to the RightHolder of an Offer or its wish to sell the Shares, at which time the Rightholder shall pay by cash or certified cheque payable to or to the order of the Vendor, the aggregate purchase price for the Shares then being purchased and the Vendor shall deliver certificates representing the Shares then being purchased either duly endorsed in blank for transfer or registered in the name of the Rightholder. 14. EVENTS OF DEFAULT 14.1 An Event of Default shall be deemed to occur with respect to a party to this Agreement (the "Defaulting Party") if: (a) such party makes an assignment for the benefit of creditors or a proposal under the United States Bankruptcy Code or is declared bankrupt or becomes insolvent; or (b) any trustee in bankruptcy, liquidator or other office with similar powers is appointed for such party or for all or any material part of its property. 14.2 In addition to any rights or remedies that may be available to them, if an Event of Default shall occur with respect to a party, then while the Event of Default is continuing the other party who is not then the Defaulting Party (the "Non-Defaulting Party") shall be entitled to purchase the common shares of Newco held by the Defaulting Party. 14.3 In the event the Non-Defaulting Party wishes to purchase the common shares of Newco held by the Defaulting Party, the Non-Defaulting Party shall notify the Defaulting Party and Newco, in writing, of the date and time of closing which date shall be within a period of 30 days after the giving of such notice, on which date the purchase of the common shares of Newco shall take place, which time and date are hereafter respectively called the "Time of Closing" and the "Date of Closing". 14.4 The purchase price (the "Purchase Price") per share to be paid for any common shares of Newco purchased pursuant to this section 14 shall be the cost of acquisition of the Defaulting Party of the common shares of Newco to be purchased as detailed in Section 1.2. 14.5 The Purchase Price in respect of the purchase and sale to be effected pursuant to this section 14 shall be payable on the Date of Closing in cash or by certified cheque made payable to or to the order of the Vendor. 14.6 The closing of the purchase and sale to be effected pursuant to this section 14 shall be at the head office of Newco at the Time of Closing on the Date of Closing. 15. TERMINATION 15.1 If either CCLS or InfoCast wishes to terminate its business association with the other party, it may do so under this section. The party desiring the termination of the association (hereinafter referred to as the "Initiating Party") shall serve written notice of its desire to terminate upon the other party (hereinafter referred to as the "Receiving Party") and the notice shall include an "Offer to Purchase" of all the shares of Newco held by the Receiving Party. 15.2 The termination process shall result in a sale of all of the shares held by either party to the other party which represents a 50% ownership sale of Newco by one party to the other party. Newco shall continue to hold all the intellectual property contemplated under this Agreement and to be entitled to all the rights contemplated under this Agreement. The party that sells its share of Newco to the other party shall forfeit all rights to the property and business of Newco. 15.3 The written notice contemplated under this section shall include a proposal for an independent third party (hereinafter referred to as the "Valuator") that shall determine the selling price of the shares of Newco held by each party. The proposal shall name either the auditors of Newco, a major accounting firm or an independent certified valuating firm as a proposed independent Valuator of the Newco business. Within seven days from the receipt of this notice the Receiving Party shall either accept the named independent Valuator or shall counter propose another Valuator from the aforementioned list. 15.4 Should there be a counterproposal the Initiating Party shall have five business days to accept or reject the independent Valuator. If no consensus can be reached as to a Valuator, then the matter shall be referred to Arbitration and the Arbitrator shall select an independent Valuator and the decision as to the Valuator shall be final. 15.5 The selling price of all of either parties shares or 50% of Newco shall be calculated as follows: 100% of "Out of Pocket Costs" of the selling party plus 50% of the "Going Concern Value" of Newco. 15.6 "Out of Pocket Costs" shall be defined as all direct costs incurred by either party in the advancement of Newco's business from the date of this Agreement henceforth but shall not include costs that have been reimbursed to the party by Newco. In the case of InfoCast the list shall include but not be limited to all development and conversion costs, marketing and sales costs and salaries of InfoCast employees directly attributable to the support of Newco. For greater clarity the budgeted InfoCast costs through the next six months and including the conversion of the eleven courses is approximately $1.0 million (USD). In the case of CCLS the list shall include but not be limited to SME costs, marketing and sales costs and salaries of CCLS employees directly attributable to the support of Newco. Additionally the contributed Underlying Intellectual Property shall be calculated into the out of pocket costs and shall have a deemed value of $65,000 (USD) per course. The billing rate for CCLS executives for the above shall be US$150 per hour. 15.7 Going Concern Value shall be defined as the greater of $6,000,000 (USD) or an amount calculated as present value of discounted future cash flows utilizing conservative growth assumptions, a discount rate of 10% and a five (5) year time horizon or business life. 15.8 The Valuator shall seek independent input from both parties as to each party's views with respect to Going Concern Value and Out of Pocket Costs. The Valuator shall share with each party the input of the other party only after all information has been received from both parties and each party shall have the opportunity to comment to the Valuator on the opinion of the other party. The Valuator shall, after consideration of all the information, fix the price for the Going Concern Value as described in section 15.7 above. With respect to each party's Out of Pocket Costs the Valuator may disallow or modify any costs that the Valuator determines were not incurred either reasonably or in direct advancement of Newco business. The Valuator shall make his determinations within thirty (30) days of being appointed and his decisions shall be final. 15.9 The Receiving Party shall have seven (7) days from receipt of the Valuator's report to decide whether to accept the Offer to Purchase from the Initiating Party and to sell its share of Newco. If the Receiving Party does accept the Offer to Purchase the sale shall be finalized within forty-five (45) business days. If the Receiving Party does not accept the Offer to Purchase then the Receiving Party shall purchase the Initiating Party's share of Newco and the sale shall be finalized within forty five (45) days. 16. MISCELLANEOUS 16.1 Whenever used in this Agreement, words importing the singular number only shall include the plural, and vice versa, and words importing the masculine gender shall include the feminine gender. 16.2 Time shall be of the essence in all matters pertaining to this Agreement. 16.3 All dollar amounts expressed herein refer to lawful currency of the United States of America. 16.4 Any notice, document or other communication required or permitted by this Agreement to be given by a party hereto shall be in writing and is sufficiently given if delivered personally, or if transmitted by any form of telecommunication (which is tested prior to transmission, confirms to the sender the receipt of the entire transmission by the recipient and reproduces a complete written version of the transmission at the point of reception) to such party addressed as follows: (a) to Call Center Learning Solutions, Inc., at: 17263 E. Paradise Park Drive Phoenix, Arizona 85032 email: cclsi@att.net egreene2@ix.netcom.com Facsimile: (925) 516 - 2519 (b) to InfoCast Canada Corporation, at: Suite 902 1 Richmond Street West Toronto, Ontario M5H 3W4 email: jhines@InfoCast-corp.com Facsimile: (416) 867-1679 Notice transmitted by a form of recorded telecommunication must be accompanied by personal delivery. Notice transmitted by a form of recorded telecommunication during normal business hours on a business day (9:00 a.m. to 5:00 p.m. local time at the place of receipt) shall be deemed to have been given on the day of transmission or, in the case of notice transmitted outside of normal business hours shall be deemed to have been given on the first business day after the day of transmission. Notice delivered personally shall be deemed to have been given on the day it was delivered. Any party may from time to time notify the others in the manner provided herein of any change of address which thereafter, until changed by like notice, shall be the address of such party for all purposes hereof. 16.5 The parties agree to execute and deliver to each other such further instruments and other written assurances and to do or cause to be done such further acts or things as may be necessary or convenient to carry out and give effect to the intent of this Agreement or as any of the parties may reasonably request in order to carry out the transactions contemplated herein. 16.6 The insertion of headings and the division of this Agreement into articles, sections, paragraphs, clauses or schedules are for convenience of reference only and shall not affect or be utilized in the construction or the interpretation hereof. 16.7 This Agreement shall be construed, interpreted and the rights of the Parties determined in accordance with the laws, other than the conflicts of laws rules, of the State of Delaware and the laws of the United States of America applicable therein and shall be treated in all respects as a Delaware contract. The Parties hereby irrevocably attorn on a non-exclusive basis to the jurisdiction of the courts of the State of Delaware. 16.8 Unless otherwise stated, a reference herein to a numbered or lettered article, paragraph, clause or schedule refers to the article, paragraph, clause or schedule bearing that number or letter in this Agreement. A reference to "this Agreement", "hereof", "hereunder", "herein" or words of similar meaning, means this Agreement including the schedules hereto, together with any amendments thereof, and not any particular clause, subclause, section, subsection or paragraph or other portion hereof. 16.9 Unless otherwise specifically noted, all dollar amounts expressed herein refer to lawful currency of the United States of America. 16.10 This Agreement (including the Schedules hereto) sets forth the entire agreement among the parties hereto pertaining to the specific subject matter hereof and replaces and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written of the parties hereto, and there are no warranties, representations or other agreements, whether oral or written, express or implied, statutory or otherwise, between the parties hereto in connection with the subject matter hereof except as specifically set forth herein. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. 16.11 No delay or failure of any party in exercising any right or remedy hereunder and no partial exercise of any such right or remedy shall be deemed to constitute a waiver of such right or remedy or any other rights or remedies of such party hereunder. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions (whether or not similar) nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. Any consent by a party to or any waiver by a party of any breach of any provision of this Agreement shall not constitute a consent to or waiver of any subsequent, further or other breach of the provisions of this Agreement. 16.12 Each of the provisions of this Agreement (and each part of each such provision) is severable from every other provision hereof (and every other part thereof). In the event that any provision (or part thereof) contained in this Agreement or the application thereof to any circumstance shall be invalid, illegal or unenforceable, in whole or in part, in any jurisdiction and to any extent: (a) the validity, legality or enforceability of such provision (or such part thereof) in any other jurisdiction and of the remaining provisions contained in this Agreement (or the remaining parts of such provision, as the case may be) shall not in any way be affected or impaired thereby; (b) the application of such provision (or such part thereof) to circumstances other than those as to which it is held invalid, illegal or unenforceable shall not in any way be affected or impaired thereby; (c) such provision (or such part thereof) shall be severed from this Agreement and ineffective to the extent of such invalidity, illegality or unenforceability in such jurisdiction and in such circumstances; and (d) the remaining provisions of this Agreement (or the remaining parts of such provision, as the case may be) shall nevertheless remain in full force and effect. 16.13 This Agreement may be executed by the parties hereto in separate counterparts or duplicates each of which when so executed and delivered shall be an original, but all such counterparts or duplicates shall together constitute one and the same instrument. 16.14 In respect of this Agreement, no party is the partner or agent of any of the other parties. No representations shall be made or acts taken by any of the parties which could establish any apparent relationship or partnership or agency and no party shall be bound in any manner whatsoever by any agreements, warranties or representations made by any other party to any other Person with respect to the action of any other party. 16.15 This Agreement shall be binding upon and shall enure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, assigns and legal representatives. This Agreement may only be assigned upon the prior written consent of the parties hereto, which consent shall not be unreasonably withheld. 16.16 (a) If either of the parties shall be prevented or delayed from performing any of the obligations on its part to be performed hereunder or under any agreements related hereto, by reason of acts of God, strike, threat of imminent strike, lockout or other labour disturbance, action of the elements, lightning, storm, fire, flood, interruption or delay in transportation, war, insurrection, mob violence, blockade, riot, explosion, law, rule, order or regulation of any duly constituted court or governmental authority, unavoidable casualties, shortage of labour, equipment or materials, plant breakdown, dispute by a third party as to the parties' ownership rights to or interests in the Underlying Intellectual Property or any other disabling cause, without regard to the foregoing enumeration, beyond the control of the party so affected or which cannot be overcome by the means normally employed in performance, then and in every such event (each an "Intervening Event"), any such failure to perform shall not be deemed to be a breach of this Agreement but performance of any of the aforesaid obligations shall be suspended during such period of disability (or in the case of a dispute by a third party as to the ownership rights to or interests in the Underlying Intellectual Property, between the commencement of proceedings in such a dispute and ten days after the resolution of any such proceedings in a court or arena of final resort from which no appeal can be taken by any party involved therein) and the period of all such delays resulting from an Intervening Event shall be excluded in computing the time within which anything required or permitted by such party to be done is to be done hereunder, it being understood and agreed that the time within which anything is to be done hereunder shall be extended by the total period of all such delays and all dates subsequent to the termination of such Intervening Event shall be adjusted accordingly. (b) A party relying on the provisions of this Section will take all reasonable steps to eliminate any Intervening Event and, if possible, will perform its obligations under this Agreement as far as practical, but nothing herein will require such party to settle or adjust any labour dispute or to question or to test the validity of any law, rule, order or regulation of any duly constituted court or governmental authority or to complete its obligations under this Agreement if an Intervening Event renders completion impossible. (c) A party relying on the provisions of this Section shall give notice to the other party forthwith upon the occurrence of the Intervening Event and forthwith after the end of the period of delay when such Intervening Event has been eliminated or rectified. (d) Nothing herein contained shall entitle any party to invoke the provisions of this Section by reason of such party's failure or inability to fulfil its financial commitments or contributions under this Agreement. 16.17 All payments to be made to any party hereunder may be made by cheque or draft mailed or delivered to such party at its address for notice purposes as provided herein, or for the account of such party at such bank or banks in the United States of America as such party may designate from time to time by written notice. Such bank or banks shall be deemed the agent of the designating party for the purposes of receiving, collecting and receipting such payment. 16.18 This Agreement may be executed by the parties hereto in separate counterparts or duplicates each of which when so executed and delivered shall be an original, but all such counterparts or duplicates shall together constitute one and the same instrument. IN WITNESS WHEREOF the parties hereto have duly executed this Agreement. CALL CENTER LEARNING SOLUTIONS, INC. Per: /s/ Janet M. Edwards ------------------------- INFOCAST CORPORATION Per: /s/ A.T. Griffis ------------------------- EX-10.15 30 DISTRIBUTION AGREEMENT DISTRIBUTION AGREEMENT ITC LEARNING CORPORATION - and - INFOCAST CORPORATION TABLE OF CONTENTS ARTICLEI - RECITALS CORRECT...................................................1 1.01 Recitals Correct......................................1 ARTICLE II - INTERPRETATION...................................................2 2.01 Defined Terms.........................................2 2.02 Other Uses............................................3 2.03 United States Funds...................................3 2.04 Headings, etc.........................................3 2.05 Gender................................................3 2.06 Governing Law.........................................3 2.07 Time of the Essence...................................3 2.08 Schedules.............................................3 ARTICLE III - CAPACITY TO CONTRACT............................................4 3.01 Covenants of ITC......................................4 3.02 Covenants of InfoCast.................................4 ARTICLE IV - APPOINTMENT AND GRANT OF DISTRIBUTION RIGHTS TO INFOCAST........5 4.01 Grant of Appointment and Attendant Rights.............5 4.02 Conversion............................................5 4.03 Relationship of Parties...............................5 4.04 Preferred Pricing.....................................6 ARTICLE V - THE PRODUCTS......................................................6 5.01 Title to Products.....................................6 5.02 New Products..........................................6 5.03 Creation, Modification and Use of Products............6 ARTICLE VI - RESPONSIBILITIES OF ITC..........................................7 6.01 Ongoing Responsibilities of ITC.......................7 6.02 Source Code Use and Protection........................7 ARTICLE VII - CO-OPERATIVE DISTRIBUTION, MARKETING AND INFORMATION SHARING....8 7.01 Co-operative Distribution.............................8 7.02 Co-operative Marketing Commitments....................8 7.03 Sharing of Client Lists and Related Information.......9 ARTICLE VIII - FINANCIAL ARRANGEMENTS.........................................9 8.01 Distribution Rights Fee...............................9 8.02 Revenue Sharing......................................10 ARTICLE IX - ARBITRATION.....................................................11 9.01 Arbitration..........................................11 ARTICLE X - CONFIDENTIALITY PROVISIONS.......................................12 10.01 Confidentiality......................................12 ARTICLE XI - ASSIGNMENT......................................................12 11.01 Assignment...........................................12 ARTICLE XII - TERM, TERMINATION AND SURVIVAL.................................12 12.01 Term.................................................12 12.02 Termination..........................................12 12.03 Survival.............................................13 ARTICLE XIII - GENERAL CONTRACT PROVISIONS...................................13 13.01 Entire Agreement.....................................13 13.02 Severability.........................................13 13.03 Agreement Binding Upon Successors and Assigns........14 13.04 Waiver of Obligations................................14 13.05 Notices..............................................14 13.06 Counterparts.........................................15 SCHEDULE "1".................................................................17 PRODUCTS 17 SCHEDULE "2".................................................................18 REQUIRED SOURCE CODE COMPONENTS..................................18 SCHEDULE "3".................................................................19 PERMITTED ENCUMBRANCES...........................................19 DISTRIBUTION AGREEMENT THIS AGREEMENT made as of the 12th day of March, 1999. B E T W E E N: INFOCAST CORPORATION, a corporation incorporated under the laws of the State of Nevada (hereinafter called "InfoCast") OF THE FIRST PART ITC LEARNING CORPORATION, a corporation incorporated under the laws of the State of Maryland (hereinafter called "ITC") OF THE SECOND PART WHEREAS the parties hereto entered into a Memorandum of Understanding dated December 15, 1998 (the "MOU"), together with International Goldfields Limited ("IGL"), pursuant to which such parties agreed to the terms and principles pursuant to which ITC is willing to grant InfoCast certain distribution rights to products developed by and licensed to ITC; AND WHEREAS IGL will, contemporaneously with the execution of this agreement, assign to InfoCast all rights and obligations it has under the MOU and InfoCast has agreed to accept such assignment; AND WHEREAS the parties hereto wish to have this agreement prescribe the definitive terms of their commercial relationship as generally contemplated in the MOU. NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged) the parties hereby agree as follows: ARTICLE I - RECITALS CORRECT 1.1 Recitals Correct The parties hereby acknowledge and declare that the foregoing recitals are true and correct in substance and in fact. ARTICLE II - INTERPRETATION 2.01 Defined Terms In this agreement, any amendment to this agreement or any schedule to this agreement, unless the context indicates the contrary: (1) "agreement" means this agreement between InfoCast and ITC; (2) "Electronic Distribution" means electronic distribution effected by InfoCast via any electronic delivery medium, including the InfoCast delivery engine, through any distribution infrastructure including, without limitation, intranets, the internet, cable networks (excluding public television broadcasting), telephone networks, wireless telecommunications and satellite; (3) "Electronically Convert" or "Electronically Converted" means the conversion by InfoCast of Products into an electronic format capable of Electronic Distribution; (4) "End User" means an individual learner/user of a Product; (5) "License Agreement" means an agreement between InfoCast and licensees of Electronically Converted Products disseminated by InfoCast via Electronic Distribution which shall be consistent with industry standards and satisfactory to both ITC and InfoCast; (6) "Licensed Purchasers" means those End Users to whom Products are distributed by InfoCast, ITC or their authorized distribution agents via Electronic Distribution; (7) "person" means and includes an individual, body corporate, sole proprietorship, partnership, firm, joint venture, trust, trustee, government agency or board or commission or instrumentality or authority and any other form of entity or organization, whether or not incorporated; (8) "Preferred Pricing" means pricing at the best discounted rate charged by a party to its most favoured customer excluding the General Services Administration of the United States Government; (9) "Products" means the entire existing curriculum of products offered by ITC which have either been created by ITC or are under licence owned by ITC with restrictions as listed in Schedule A1" hereto and all future products developed or licensed by ITC from time to time; (10) "Source Code" mean those properties listed in Schedule "2"; (11) "Territory" means everywhere in the world; and (12) "User Licenses" means non-transferrable and non-exclusive licences of the Products disseminated by InfoCast via Electronic Distribution as prescribed in the form of License Agreement. 2.2 Other Uses References to "this agreement", "the agreement", "hereof", "herein", "hereto" and like references refer to this Distribution Agreement and to all schedules hereto. 2.3 United States Funds All dollar amounts referred to in this agreement shall be in United States funds. 2.4 Headings, etc. The division of this agreement into articles, sections, subsections and schedules and the use of headings are interpretation or construction of this agreement. 2.5 Gender All words and personal pronouns relating thereto shall be read and be construed as the number and gender of the party or parties referred to in each case required and the verb shall be construed as agreeing with the prior word and/or pronoun. 2.6 Governing Law This agreement shall be construed by the laws of the State of Delaware and the parties hereby irrevocably attorn to the jurisdiction of the courts of said state. 2.7 Time of the Essence Time shall be of the essence of this agreement and in every part hereof and no extension or variation of this agreement shall operate as a waiver of this provision. 2.8 Schedules The following are the schedules attached to and incorporated in this agreement by reference and deemed to be a part hereof: Schedule Description of Schedule -------- ----------------------- "1" Products "2" Required Source Code Components "3" Permitted Encumbrances ARTICLE III - CAPACITY TO CONTRACT 3.1 Covenants of ITC ITC hereby covenants, represents and warrants that: (a) it is entitled to grant to InfoCast the rights granted herein; (b) it is not a party to or subject to any other agreement in conflict with this agreement; (c) the execution and delivery by it of this agreement has been duly authorized; and (d) the execution and delivery by it of this agreement and the fulfilment of the terms and conditions hereof do not and will not result in the breach of any of the terms, conditions, provisions of its constating documents, as amended, by-laws or resolutions of the directors or shareholders of it or any license, permit, contract, agreement, instrument, order, decree or writ issued to it or to which it is a party or by which it is bound or constitute a default (or would with the passage of time or the giving of notice, or both, constitute a default) under any contract, agreement or instrument to which it is a party or by which it is bound. 3.2 Covenants of InfoCast InfoCast hereby represents, covenants and warrants that: (a) it is not a party to or subject to any agreement in conflict with this agreement; (b) the execution and delivery by it of this agreement has been duly authorized; and (c) the execution and delivery by it of this agreement and the fulfilment of the terms and conditions hereof do not and will not result in the breach of any of the terms, conditions, provisions of its constating documents, as amended, by-laws or resolutions of the directors or shareholders of it or any license, permit, contract, agreement, instrument, order, decree or writ issued to it or to which it is a party or by which it is bound or constitute a default) under any contract, agreement or instrument to which it is a party or by which it is bound. ARTICLE 4 - APPOINTMENT AND GRANT OF DISTRIBUTION RIGHTS TO INFOCAST 4.1 Grant of Appointment and Attendant Rights Subject to the terms and conditions set forth herein, ITC appoints InfoCast as a non-exclusive distributor to market and sell the Products in their current format (CD ROM platform) ("Non-converted Products"). ITC further grants to InfoCast and InfoCast hereby accepts a non-exclusive perpetual license to use the Products, after they have been Electronically Converted as contemplated in section 4.02 hereof, in the Territory for an unlimited term. ITC hereby grants InfoCast the perpetual rights to effect Electronic Distribution of the Products, for an unlimited term, in the Territory to Licensed Purchasers subsequent to conversion of the Products by InfoCast as contemplated in Section 4.02 hereof. InfoCast hereby accepts said appointment and agrees that all electronic conversion and Electronic Distribution of Products and all sales of Non-converted Products by it shall be effected in accordance with the terms and conditions of this agreement. 4.2 Conversion (a) ITC hereby grants InfoCast the unrestricted right to Electronically Convert all the Products. InfoCast and ITC agree that any Products Electronically Converted by InfoCast may be electronically distributed in perpetuity by both InfoCast and ITC and that revenues generated therefrom shall be shared in accordance with Article VIII hereof. (b) ITC may have a third party other than InfoCast (the "third party") electronically convert certain Products provided ITC gives written notice to Infocast, within ten (10) days of engagement of the Third Party confirming its engagement of a Third Party and stating which Products the Third Party will be electronically converting. Any such engagement of a Third Party by ITC does not relieve ITC of its obligation hereunder to provide InfoCast all the Products for electronic conversion during the term of this agreement. Furthermore, ITC will use it best efforts to ensure that any Products electronically converted by a Third Party during the term of this agreement shall be made available to InfoCast for Electronic Distribution and revenues generated therefrom shall be shared between InfoCast and ITC in the manner prescribed in Section 8.02(b). 4.3 Relationship of Parties The relationship of InfoCast to ITC under this agreement is that of an independent contractor. This agreement shall in no way constitute InfoCast a partner, joint venturer, agent, servant, employee or legal representative of ITC. The parties shall have no authority to bind, obligate or incur any liability on behalf of one another in any way whatsoever and shall be solely responsible for its own obligations and liabilities and shall have no right to indemnity or contribution from the other in respect thereof. 4.4 Preferred Pricing InfoCast and ITC agree that they shall offer each other Preferred Pricing in connection with the sale of goods and services to each other. ARTICLE 5 - THE PRODUCTS 5.1 Title to Products (a) ITC hereby represents and warrants that it has full title and right to possession of all the Products, as described and subject to the restrictions listed in Schedule "I", free and clear of any interest, lien, encumbrance or claim of any person and that there are no impediments to ITC granting to InfoCast Electronic Distribution rights in respect of the Products as contemplated by this agreement other than as disclosed in Schedule A3" hereof. (b) ITC and InfoCast agree that all Products Electronically Converted by InfoCast shall, upon completion of such conversion, become a new product that is a derivative of certain intellectual property contributed by each of ITC and InfoCast (the "Derivative Product"). Notwithstanding that InfoCast will have certain intellectual property rights in the Derivative Product, InfoCast hereby acknowledges and agrees that (other than the perpetual license granted herein to use the Products) it has no interest in or claims to any intellectual property rights specific to the Products which InfoCast acknowledges and agrees are the exclusive rights of ITC. All revenue derived from the sale/licensing of Electronically Converted Products effected via Electronic Distribution shall be shared in accordance with Section 8.02(b) and such revenue sharing arrangements shall survive the term of this agreement. 5.2 New Products Any new products developed from time to time by ITC shall be added to the list of Products in respect of which InfoCast has Electronic Distribution and conversion rights in accordance with this agreement. 5.3 Creation, Modification and Use of Products The parties agree that: (a) InfoCast shall use its best efforts to maintain the integrity of all the intellectual property of all Products which it electronically converts for the purpose of effecting Electronic Distribution thereof; (b) ITC shall promptly disclose to InfoCast all particulars of any improvement or further invention applicable to any of the Products which is made or discovered by ITC or any of its employees or which comes to ITC's knowledge; and (c) ITC shall at all time supply to InfoCast new or updated Products which have been modified, altered or improved in any manner whatsoever. ARTICLE 6 - RESPONSIBILITIES OF ITC 6.1 Ongoing Responsibilities of ITC ITC agrees that it will: (a) provide upon execution of this agreement Products as defined in Schedule 1 to InfoCast for the purpose of being electronically Converted; and (b) provide Source Code for the Products as defined in Schedule 1, including any updated Source Code for Products previously delivered under the parties December 15, 1998 MOU, which shall be delivered to InfoCast upon execution of this agreement. Source Code shall consist of, but not necessarily limited to the items defined in Schedule 2 ; and (c) make available and provide to InfoCast without delay all Source Code for all Products for the purpose of being Electronically Converted when requested by InfoCast; and (d) refer to InfoCast all inquiries relating to Electronic Distribution of the Products from Licensed Purchasers. 6.2 Source Code Use and Protection (a) ITC acknowledges and agrees that all Source Code provided to InfoCast is provided and granted to InfoCast for the purpose of being Electronically Converted by InfoCast and InfoCast cannot be compelled by ITC or its successors or assigns to return any ITC Source Code in InfoCast's possession until the earlier of: (i) the effective date of termination of this agreement; or (ii) the date upon which the Source Code has been Electronically Converted by InfoCast. (b) All Source Code provided to InfoCast by ITC in respect of the Products shall be treated as confidential and restricted material by InfoCast and shall be used by InfoCast only in connection with its conversion into a format capable of Electronic Distribution and shall be disclosed to employees and agents of InfoCast only on a "need to know" basis. InfoCast shall not alter the intellectual property of the Products without the prior written consent of ITC. InfoCast will protect all ITC Source Code provided to it with the same level of confidentiality as would be provided for very sensitive material. Precautions shall include, but not be limited to the following: (i) document tracking system; (b) secure data storage on InfoCast servers; (c) secure location of servers inaccessible from outside the building housing such servers; (d) secure, restricted access to any room in which InfoCast servers are stored. All Source Code created by InfoCast and provided to ITC shall be afforded similar protections. ARTICLE VII - CO-OPERATIVE DISTRIBUTION, MARKETING AND INFORMATION SHARING 7.1 Co-operative Distribution InfoCast and ITC agree that the distribution of all Electronically Converted Products is beneficial to both parties hereto. In recognition thereof, InfoCast will not charge ITC any fee in respect of storage of Electronically Converted Products of any servers owned or licensed by InfoCast. 7.2 Co-operative Marketing Commitments InfoCast and ITC agree to use their reasonable best efforts to support each other's marketing efforts with respect to Electronically Converted Products. 7.3 Sharing of Client Lists and Related Information Each of ITC and InfoCast will maintain databases ("Product Related Databases") containing details of all persons to whom the Products are licensed or sold via Electronic Distribution and all prospective licensees or purchasers identified by the parties. ITC and InfoCast agree to provide each other with access to their respective Product Related Databases for the purpose of facilitating the marketing and promotion of the Products. Each party's respective customers shall remain their property and primary account. However, joint marketing efforts by ITC and InfoCast may be made to such customers from time to time and, if agreed in writing to be a joint marketing initiative as contemplated in Section 8.02(d), all revenues generated from such joint marketing efforts will be shared in the manner prescribed in Section 8.02(d). 7.4 Protection of Key Relationships ITC recognizes the critical relationship that has been developed among InfoCast, AT&T Canada Corp. ("AT&T") and Sun Microsystems Inc. ("Sun") in connection with the development, implementation and commercial roll out of the AT&T Learning Partner Program (the "LPP"). ITC hereby undertakes and covenants not to deal directly with AT&T or Sun or their affiliated or related companies (other than in circumstances where ITC has an existing contractual relationship as of the date of this agreement with any such entity) in connection with the Electronic Distribution of any of the Products. ARTICLE VIII - FINANCIAL ARRANGEMENTS 8.1 Distribution Rights Fee (a) In consideration of the distribution rights hereby granted to InfoCast by ITC, InfoCast hereby agrees to pay ITC $1,000,000 in accordance with the payment terms prescribed in paragraph (b) of this Section 8.01. In the event InfoCast effects Electronic Distribution of any of the Products to more than 150,000 Licensed Purchasers (such Licensed Purchasers in excess of the first 150,000 being referred to herein as "Additional Licensees"), InfoCast and ITC shall share revenue generated therefrom in accordance with Section 8.02. (b) Payment by InfoCast of the fees contemplated in paragraph (a) of this Section 8.01 shall be made by certified cheque, bank draft or electronic wire transfer as follows: (i) $250,000 on March 5, 1999 and $250,000 on March 12, 1999 in accordance with the terms and conditions generally contemplated in the MOU and more specifically prescribed herein; and (ii) $500,000 on May 31, 1999. (c) ITC and InfoCast acknowledge and agree that, as of the date of this agreement, InfoCast and its legal counsel have not yet been afforded the opportunity to review the documentation pursuant to which certain licensors to and creditors of ITC have certain rights or security interests in the Products. ITC agrees to provide to InfoCast within seven (7) days from the date of this agreement, for review by its legal counsel: (i) all material documents relating to those Products licensed to ITC by third parties that may contain provisions restricting ITC from granting InfoCast rights to use the Products as contemplated herein; and (ii) all material documents in connection with security interests of any third party over the Products specifically or over all of the assets of ITC generally (all material documents referred to in the preceding paragraph (I) and this paragraph (ii) being called the "Encumbering Documents") In the event legal counsel, in its reasonable professional opinion, is of the view that the provisions of any of the Encumbering Documents materially prejudice or could reasonably be anticipated to materially prejudice InfoCast=s rights under the agreement (including, without limiting the generality of the foregoing, materially prejudicing InfoCast=s perpetual right to use and commercially exploit the Products subsequent to them being Electronically Converted), InfoCast shall give ITC written notice of the determination of its legal counsel and termination of the agreement and ITC shall, within 10 days of receipt of such written notice from InfoCast, return by certified cheque or bank draft all money advanced to ITC pursuant to Section 8.01. All Encumbering Documents will, after successful review by InfoCast's legal counsel, be added to Schedule "3" of the agreement. 8.2 Revenue Sharing (a) InfoCast and ITC acknowledge and agree that the payment of $1,000,000 to ITC in accordance with Section 8.01(a) represents payment in full to ITC in respect of the first 150,000 User Licenses sold by InfoCast. ITC will not be entitled to any revenue participation in respect of the sale by InfoCast of the first 150,000 User Licenses. (b) All revenue generated from licensing Products Electronically Converted by InfoCast to Additional Licensees (such term being defined in Section 8.01(a) hereof) shall be shared between ITC and InfoCast. The gross revenue generated from the licensing of an Electronically Converted Product shall be the amount actually received by InfoCast or ITC in respect of a particular User Licence(the "Gross Revenue"). The Gross Revenue in respect of each Product licensing transaction shall be allocated 75% to whichever of ITC or InfoCast consummated the licensing transaction and 25% to the other party. All licensing transactions shall be monitored and tracked by both ITC and InfoCast. The Gross Revenue allocations from licensing transactions shall be compiled and agreed to by each of ITC and InfoCast each month and distributed in accordance with the agreed allocations as soon as practicable thereafter. (c) All revenue generated from the sale and/or licensing of Non-converted Products by InfoCast to End Users shall be shared between ITC and InfoCast. The gross revenue generated from the sale and/or licensing of Non-converted Products (the "NCP Gross Revenue") shall be the amount actually received by InfoCast in respect of a particular sale or licensing of Non-converted Product. The NCP Gross Revenue determined in respect of the sale or licensing by InfoCast of each Non-converted Product shall be allocated 30% to InfoCast and 70% to ITC. NCP Gross Revenue allocated to ITC shall be distributed to ITC within thirty (30) days of receipt thereof by InfoCast. (d) All revenue generated from the sale and/or licensing of Electronically Converted Products resulting from marketing initiatives agreed in advance and in writing by ITC and InfoCast to be joint marketing initiatives will be allocated equally among ITC and InfoCast and distributed immediately following receipt by any one of ITC and InfoCast. ARTICLE IX - ARBITRATION 9.1 Arbitration If any dispute or controversy shall occur between the parties hereto relating to the interpretation or implementation of any of the provisions of this agreement, such dispute shall be resolved by arbitration. Such arbitration shall be conducted by a single arbitrator. The arbitrator shall be appointed by agreement between the parties or, in default of agreement, such arbitrator shall be appointed by a Judge of appropriate jurisdiction in the State of Delaware upon the application of any of the said parties and such Judge shall be entitled to act as such arbitrator, if he so desires. Any such arbitration shall be held in the State of Delaware. The procedure to be followed shall be agreed by the parties or, in default of agreement, determined by the arbitrator. The arbitrator shall have the power to proceed with the arbitration and to deliver his award notwithstanding the default by any party in respect of any procedural order made by the arbitrator. The arbitration shall proceed in accordance with the provisions of applicable arbitration laws of the State of Delaware. It is further agreed that such arbitration shall be a condition precedent to the commencement of any action at law. The decision arrived at by the arbitrator shall be final and binding and no appeal shall lie therefrom. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. ARTICLE X - CONFIDENTIALITY PROVISIONS 10.1 Confidentiality InfoCast and ITC shall treat as confidential and appropriately safeguard both during the life of this agreement and thereafter and all technical information pertaining to the Products including any and all Source Code materials and all information pertaining to their respective business or assets. To the extent warranted each party hereto may, from time to time, grant to the other non-exclusive licenses to utilize such knowhow and other information pertaining to the Products in furtherance of marketing, selling and distribution of Products as agreed upon hereunder. ARTICLE XI - ASSIGNMENT 11.1 Assignment Except as expressly provided herein, neither party to this agreement shall be entitled to assign its rights and obligations hereunder without the prior written consent of the party hereto, which shall not be unreasonably withheld. Notwithstanding the foregoing, nothing contained herein shall prevent InfoCast from effecting an assignment of this agreement and/or a transfer of all or any of the shares to an affiliated, related or associated company of that party (as such terms are used in the income tax legislation of the United States of America or Canada) without the prior written consent of ITC. ARTICLE XII - TERM, TERMINATION AND SURVIVAL 12.01 Term The term of this Agreement commences on the date of this agreement first written above and terminates on the third year anniversary thereof or until it is terminated by one of the parties in accordance with this agreement. 12.02 Termination (a) This agreement may be terminated immediately upon the commencement or happening of any occurrence connected with the insolvency, bankruptcy, dissolution or liquidation of ITC or InfoCast (the "Insolvent Party") by written notice of termination to the Insolvent Party by the other party. (b) In the event of a material default by a party hereto (the "Defaulting Party") in the performance of its obligations under this agreement, the other party hereunder (the "Non-defaulting Party") shall give the Defaulting Party detailed written notice of the alleged default (the "Default Notice"). In the event the Defaulting Party is of the view that it is not in default of a material obligation under the agreement, the matter shall be arbitrated in accordance with Section 9.01 hereof and the Defaulting Party shall give the Non-Defaulting Party written notice thereof ("Arbitration Notice") within five (5) days of receipt of the Default Notice. If an Arbitration Notice is not given to the Non-Defaulting Party within the five (5) day period, the Defaulting Party shall be deemed to have acknowledged the alleged default and shall have sixty (60) days from the date of receipt of the Default Notice to remedy the default. If the default is not remedied within the sixty (60) day period, the Non-Defaulting Party may give written notice ("Termination Notice") that the agreement is terminated and termination shall be effective on the date of receipt by the Defaulting Party of the Termination Notice. (c) This agreement may be terminated by InfoCast in the manner and under the restricted circumstances contemplated in Section 8.18 hereof. (d) Without prejudice to any other rights of either party under this agreement, if this agreement is terminated pursuant to paragraph (a), (b) or 8 above, all amounts owing by one party hereunder to another shall immediately become due and payable. 12.03 Survival Notwithstanding termination of this agreement for any reason, the rights and obligations of the parties prescribed in Section 4.01 and Sections 8.02(b) and (d) shall survive this agreement indefinitely. ARTICLE XIII - GENERAL CONTRACT PROVISIONS 13.1 Entire Agreement This agreement constitutes the entire agreement between and parties and supercedes all previous agreements and understandings between the parties in any way relating to the subject matter hereof. It is expressly understood and agreed that no representations, inducements, promises or agreements between the parties, oral or otherwise, not embodied herein shall be of any force or effect. 13.2 Severability If any covenant or other provision of this agreement is invalid, illegal or incapable of being enforced by reason of any rules of laws or public policy, all other conditions and provisions of this agreement shall, nevertheless, remain in full force and effect. 13.3 Agreement Binding Upon Successors and Assigns Subject to the restrictions on assignment herein contained, this agreement shall enure to the benefit of and be binding upon the parties and their respective successors and permitted assigns. 13.4 Waiver of Obligations Either party hereto may be written instrument unilaterally waive any obligation of or restriction imposed upon the other party under this agreement. No failure, refusal or neglect of either party hereto to exercise any right under this agreement or to insist upon full compliance by the other party with its obligations hereunder shall constitute a waiver of any provision of this agreement. 13.5 Notices All notices, requests, demands or other communications by the terms hereof required or permitted to be given by one party to another shall be given in writing by personal delivery or by registered mail, postage prepaid, addressed to the other party or delivered to such other party as follows: To InfoCast Corporation: 1 Richmond Street West Suite 901 Toronto, Ontario M5H 3W4 Attention: A. T. Griffis Fax: (416) 867-8160 To ITC: 13515 Dulles Technology Drive Herndon, Virginia 20171 Attention: Carl Stevens Fax: (703) 713-0065 or at such other address as may be given by either of them to the other in writing from time to time, and such notices, requests, demands and other communications shall be deemed to have been received when delivered, or if mailed, forty-eight (48) hours after 12:01 a.m. on the date of mailing hereof, provided that if any such notice, request, demand or other communication shall have been mailed and if registered mail service shall be interrupted by strikes or other irregularities on or before the second business day after the mailing thereof, on or before the second business day after the mailing thereof, such notices, requests, demands and other communications shall be deemed to have been received forty-eight (48) hours after 12:01 a.m. on the date of resumption of registered mail service. 13.6 Counterparts This agreement may be executed in several counterparts, each of which so executed being deemed to be an original, and such counterparts together shall constitute but one and the same instruments. IN WITNESS WHEREOF: INFOCAST CORPORATION Per: /s/ (signature is illegible) ITC LEARNING CORPORATION Per: /s/ Carl D. Stevens EX-10.16 31 LICENSE AGREEMENT LICENSE AGREEMENT DATED this 29th day of June, 1999. BETWEEN: INFOCAST CORPORATION 1 Richmond Street West, Suite 901 Toronto, Ontario M5H 3W4 (hereinafter referred to as "InfoCast") AND ITC LEARNING CORPORATION 13515 Dulles Technology Drive Herndon, Virginia 20171 (hereinafter referred to as "ITC") (Collectively referred to as the "Parties"). NOW THEREFORE, the Parties agree to the following: 1. InfoCast Corporation ("IFCC") will become ITC Learning Corporation's ("ITC") exclusive distance learning technology partner for hosting and delivery services utilizing the A- STAR(TM) component within ITC's Workforce Initiative Program ("WIP"). A-STAR and WIP are defined in Exhibit 1. 2. ITC will be the Prime Contractor ("Prime") with the WIP accounts drawing upon its existing and developing relationships with key state executives across the United States of America. 3. As the Prime, ITC will utilize its proprietary A-STAR system, a derivative of ITC's AdminSTAR training management system to facilitate skills assessments, the creation of individual development plans and the deployment of the requisite education and training in coordination with state and federal job training initiatives. 4. As a Subcontractor, IFCC will provide the iHUB and the InfoCast Digital Exchange Library and its inherent IS capabilities to host the A-STAR system as well as electronically deliver the requisite education and training to the participants in each state's workforce initiatives. 5. Each party acknowledges that a typical workforce initiative investment transaction with a state has several components. Such components include: a) Initial license fee associated with A-STAR system b) Certain services as required by each state including but not limited to, installation, setup, data migration, customization and delivery on a per user basis c) The conversion of products for electronic delivery via the A-STAR system and Infocast iHUB system d) As required, on-going conversion, hosting and delivery of requisite education and training 6. The parties mutually recognize that the combination of each others core competencies and capabilities must meet the financial litmus test of the customer as well as being technically viable. 7. IFCC is acquiring a perpetual license to host and deliver the A-STAR system to the State of California as well as other states in consideration for US$2 million, payable in three installments of US$1 million no later than August 10, 1999, US$500,000 no later than September 10, 1999 and final payment of US$500,000 by October 10, 1999. 8. Size of Opportunity - ITC has defined the State of California's workforce initiative as a potential US$20.0 million opportunity for ITC's A-STAR system software as well as an additional US$20.0 million associated with software services. The opportunity has been divided into two programs. The first is a US$2.0 million (software only) pilot program with the balance of US$18.0 million (software only) relating to the statewide implementation. 9. Terms for Targeted Opportunities a) State of California - IFCC will earn 40% on the net A-STAR system license ITC and IFCC agree to a 50-50 revenue sharing arrangement on all electronically delivered ITC courseware content within the State of California workforce initiative. Additional information relating to the State of California is provided in Exhibit 2. b) All Other States - IFCC will earn 20% on the net A-STAR system license ITC and IFCC agrees to a 75-25 (in favor of ITC) revenue sharing arrangement on all electronically delivered ITC courseware content within a state workforce initiative. 10. Net revenues from licenses, products and services is defined as revenues received by ITC after deducting any fees associated with ITC Business Alliance Partners or other third party vendors. -2- 11. Should the total revenues to IFCC not equal or exceed US$2.0 million as of December 31, 1999, then ITC agrees to modify its original distribution agreement (dated December 15, 1998 and subsequently modified on March 17, 1999) with IFCC to reflect a 50%-50% revenue sharing arrangement between the two parties, regardless of the selling agent. 12. Each party agrees not to publicize or disclose to any third party without the consent of the other party, either the terms of this agreement or the fact of its agreement and execution. No press releases shall be made without the mutual consent of both parties with such consent not being unreasonably withheld. 13. In accordance with ITC's standard return and cancellation policy, IFCC is granted a 30 day right of return or cancellation provision relating to this license agreement. Given the eminent national holidays in both Canada and the United States, the return and cancellation provision has been extended to 40 days. 14. Each party will bear its own legal and other fees and expenses incident to the transactions contemplated herein. ACCEPTED at Herndon, Virginia, USA this ____ day June, 1999. INFOCAST CORPORATION /s/ A.T. Griffis --------------------------------------- Authorized Signatory ITC LEARNING CORPORATION /s/ Carl D. Stevens --------------------------------------- Authorized Signatory -3- EX-10.17 32 ACT LETTER AGREEMENT Agreement dated this 24 day of March, 1999 B E T W E E N INFOCAST CANADA CORPORATION, A company incorporated under the laws of the Province of Ontario (hereinafter referred to as "InfoCast") OF THE FIRST PART - and - APPLIED COURSEWARE TECHNOLOGY INC. A company incorporated under the laws Of the Canadian Business Corporations Act. (hereinafter referred to as ("ACT") OF THE SECOND PART WHEREAS ACT is under a long term contract with InfoCast; AND WHEREAS ACT requires a cash advance of Cdn$ 140,000 to settle an outstanding loan with the Business Development Bank ("BDB"); NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants and agreement herein contained and for other good and valuable consideration, it is hereby agreed by the parties as follows: 1. InfoCast will advance the necessary funds by way of a promissory note attached hereto as Schedule "A" to enable ACT to cancel its outstanding loan with the BDB and in exchange, Act undertakes to give priority to the contract work undertaken with InfoCast towards meeting the deadline on the ITC/College Boreal Agreement; and 2. As a guarantee of the repayment of the loan, ACT will effect the transfer of the present escrowed agreement in place with the BDB to be assigned to InfoCast. IN WITNESS WHEREOF the parties cause this agreement to be duly executed this 24 day of March, 1999 INFOCAST CANADA CORPORATION /s/ James Hines - ---------------------------- Per: James Hines APPLIED COURSEWARE TECHNOLOGY /s/ Gerry Costello - ----------------------------- Per: Gerry Costello PROMISSORY NOTE FOR VALUE RECEIVED the Undersigned acknowledges itself indebted and promises to pay to, or to the order of, InfoCast Canada Corporation, 1 Richmond Street West, Suite 901, Toronto, Ontario M5H 3W4 or where it otherwise may direct, the principal sum of Cdn$ 140,000 bearing 7% interest per annum on or before December 31, 1999. This promissory note shall enure to the benefit of the holder and be binding upon the undersigned and their respective successors and assigns. DATED the 25 day of March, 1999 APPLIED COURSEWARE TECHNOLOGY (ACT) INC. Per: /s/ Gerry Costello ------------------------------------ Authorized Signatory WITNESS Per: /s/ Elia Crespo ----------------------------------- Name: Elia Crespo EX-10.18 33 SECURITY AGREEMENT GENERAL SECURITY AGREEMENT 1. SECURITY INTEREST (a) For valuable consideration, the undersigned, APPLIED COURSEWARE TECHNOLOGY INC. (the "Debtor"), hereby grants to INFOCAST CANADA CORPORATION (the "Secured Party"), by way of mortgage, charge, assignment and transfer, a security interest (the "Security Interest") in the undertaking of the Debtor and in all Goods (including all parts, accessories, attachments, special tools, additions and accessions thereto), Chattel Paper, Documents of Title (whether negotiable or not), Instruments, Intangibles and Securities now owned or hereafter owned or acquired by or on behalf of the Debtor (including such as may be returned to or repossessed by the Debtor) and in all proceeds and renewals thereof, accretions thereto and substitutions therefor, including, without limitation, all of the following now owned or hereafter owned, or acquired by or on behalf of the Debtor: Equipment (i) all present and future equipment of the Debtor, including without limitation, all machinery, fixtures, plant, tools, furniture, vehicles of any kind or description, all spare parts, accessories installed in or affixed or attached to any of the foregoing, and all drawings, specifications, plans and manuals relating thereto ("Equipment"); Inventory (ii) all present and future inventory of the Debtor, including without limitation, all raw materials, materials used or consumed in the business or profession of the Debtor, work-in-progress, finished goods, goods used for packing, materials used in the business of the Debtor not intended for sale, and goods acquired or held for sale or furnished or to be furnished under contracts of rental of service ("Inventory"); Accounts (iii) all present and future debts, demands and amounts due or accruing due to the Debtor whether or not earned by performance, including without limitation, its book debts, accounts receivable, and claims under policies of insurance; and all contracts, security interests and other rights and benefits in respect thereof ("Accounts"); Intangibles (iv) all present and future intangible personal property of the Debtor, including without limitation all contract rights, goodwill, patents, trade names, trade marks, copyrights and other intellectual property, and all other choses in action of the Debtor of every kind, whether due at the present time or hereafter to become due or owing ("Intangibles"); Documents of Title (v) all present and future documents of title of the Debtor, whether negotiable or otherwise, including all warehouse receipts and bills of lading ("Documents of Title"); Chattel Paper (vi) all present and future agreements made between the Debtor as secured party and others which evidence both a monetary obligation and a security interest in or a lease of specific goods ("Chattel Paper"); Instruments (vii) all present and future bills, notes and cheques (as such are defined pursuant to the Bills of Exchange Act (Canada)), and all other writings that evidence a right to the payment of money and are of a type that in the ordinary course of business are transferred by delivery without any necessary endorsement or assignment and all letters of credit and advices of credit of the Debtor provided that such letters of credit and advices of credit state that they must be surrendered upon claiming payment thereunder ("Instruments"); Money (viii) all present and future money of the Debtor, whether authorized or adopted by the Parliament of Canada as part of its currency or any foreign government as part of its currency ("Money"); Securities (ix) all present and future securities held by the Debtor, including shares, options, rights, warrants, joint venture interests, interests in limited partnerships, bonds, debentures and all other documents which constitute evidence of a share, participation or other interest of the Debtor in property or in an enterprise or which constitute evidence of an obligation of the issuer; and including an uncertificated security within the meaning of Part VI (Investment Securities) of the Business Corporations Act (Ontario) and all substitutions therefor and dividends and income derived therefrom ("Securities"); Documents (x) all books, accounts, invoices, letters, papers, documents and other records in any form evidencing or relating to the collateral subject to the Security Interest ("Documents"); Undertaking (xi) all present and future personal property, business, and undertaking of the Debtor not being Inventory, Equipment, Accounts, Documents of Title, Chattel Paper, Instruments, Money, Securities or Documents ("Undertaking"); and Proceeds (xii) all personal property in any form derived directly or indirectly from any dealing with collateral subject to the Security Interest or the proceeds therefrom, including insurance proceeds and any other payment representing indemnity or compensation for loss of or damage thereto or the proceeds therefrom ("Proceeds"). The Inventory, Equipment, Accounts, Documents of Title, Chattel Paper, Instruments, Money, Securities, Documents, Undertaking and Proceeds are collectively called the "Collateral". Any reference in this agreement to Collateral shall mean Collateral or any part thereof, unless the context otherwise requires. (b) The Security Interest granted hereby shall not extend or apply to and the Collateral shall not include the last day of the term of any lease or agreement therefor but upon the enforcement of the Security Interest the Debtor shall stand possessed of such last day in trust to assign the same to any person acquiring such term. (c) The terms "Accounts", "Goods", "Chattel Paper", "Equipment", "Documents of Title", "Instruments", "Intangibles", "Securities", "Proceeds", "Documents", "Inventory", "Money", "Undertaking" and "accession" whenever used herein shall be interpreted pursuant to the respective meanings when used in the Personal Property Security Act (Ontario), as amended from time to time, which Act, including amendments thereto and any Act substituted therefor and amendments thereto is herein referred to as the "PPSA". Provided always that the term "Goods" when used herein shall not include "consumer goods" of the Debtor as that term is defined in the PPSA, and the term "Inventory" when used herein shall include livestock and the young thereof after conception and crops that become such within one year of execution of this General Security Agreement. Any reference herein to the "Collateral" shall, unless the context otherwise requires, be deemed a reference to the "Collateral or any part thereof". 2. INDEBTEDNESS SECURED The Security Interest granted hereby secures payment and satisfaction of any and all obligations, indebtedness and liability of the Debtor to the Secured Party pursuant to a promissory note dated March 25, 1999 (hereinafter called the "Indebtedness"). 3. REPRESENTATIONS AND WARRANTIES OF THE DEBTOR The Debtor represents and warrants and so long as this General Security Agreement remains in effect shall be deemed to continuously represent and warrant that: (a) the Collateral is genuine and owned by the Debtor free of all security interests, mortgages, liens, claims, charges or other encumbrances (hereinafter collectively called "Encumbrances"), save for the Security Interest and those Encumbrances shown on Schedule "A" or hereafter approved in writing, prior to their creation or assumption, by the Secured Party; (b) each Debt, Chattel Paper and Instrument constituting the Collateral is enforceable in accordance with its terms against the party obligated to pay the same (the "Account Debtor"), and the amount represented by the Debtor to the Secured Party from time to time as owing by each Account Debtor or by all Account Debtors will be the correct amount actually and unconditionally owing by such Account Debtor or Account Debtors, except for normal cash discounts where applicable, and no Account Debtor will have any defence, set off, claim or counterclaim against the Debtor which can be asserted against the Secured Party whether in any proceeding to enforce the Collateral or otherwise; (c) the locations specified in Schedule "B" as to business operations and records are accurate and complete and, with respect to Goods (including Inventory) constituting the Collateral, the locations specified in Schedule "B" are accurate and complete save for goods in transit to such locations and Inventory on lease or consignment; and all fixtures or Goods about to become fixtures and all crops and all oil, gas or other minerals to be extract and all timber to be cut which forms part of the Collateral will be situate at one of such locations; and (d) without limiting the generality of the descriptions of the Collateral as set out in Clause 1 hereof, for greater certainty the Collateral shall include all present and future personal property of the Debtor located on or about or in transit to or from the address of the Debtor set out on Schedule "B" attached hereto and the locations set out in Schedule "B" attached hereto. 4. COVENANTS OF THE DEBTOR So long as this General Security Agreement remains in effect the Debtor covenants and agrees: (a) to defend the Collateral against the claims and demands of all other parties claiming the same or an interest therein; to keep the Collateral free from all Encumbrances, except for the Security Interest and those shown on Schedule "A" or hereafter approved in writing, prior to their creation or assumption by the Secured Party; and not to sell, exchange, transfer, assign, lease, or otherwise dispose of the Collateral or any interest therein without the prior written consent of the Secured Party; provided that, until default, the Debtor may, in the ordinary course of the Debtor's business, sell or lease Inventory and, subject to Clause 7 hereof, use monies available to the Debtor; (b) to notify the Secured Party promptly of: (i) any change in the information contained herein or in the Schedules hereto relating to the Debtor, the Debtor's business or the Collateral; (ii) the details of any significant acquisition of the Collateral; (iii) the details of any claims or litigation affecting the Debtor or the Collateral; (iv) any loss of or damage to the Collateral; (v) any default by any Account Debtor in payment or other performances of his obligations with respect to the Collateral; and (vi) the return to or repossessions by the Debtor of the Collateral; (c) to keep the Collateral in good order, condition and repair and not to use the Collateral in violation of the provisions of this General Security Agreement or any other agreement relating to the Collateral or any policy insuring the Collateral or any applicable statute, law, by-law, rule, regulation or ordinance; (d) to do, execute, acknowledge and deliver such financing statements and further assignments, transfers, documents, acts, matters and things (including further schedules hereto) as may be reasonably requested by the Secured Party of or with respect to the Collateral in order to give effect to these presents and to pay all costs of searches and filings in connection therewith; (e) to pay all taxes, rates, levies, assessments and other charges of every nature which may be lawfully levied, assessed or imposed against or in respect of the Debtor or the Collateral as and when the same become due and payable; (f) to insure the Collateral for such periods, in such amounts, on such terms and against loss or damage by fire and such other risks as the Secured Party shall reasonably direct with loss payable to the Secured Party and the Debtor, as insureds, as their respective interests may appear, and to pay all premiums therefor; (g) to prevent the Collateral, save Inventory sold or leased as permitted hereby, from being or becoming an accession to other property not covered by this General Security Agreement; (h) to carry on and conduct the business of the Debtor in a proper and efficient manner and so as to protect and preserve the Collateral and to keep, in accordance with generally accepted accounting principles, consistently applied, proper books of account for the Debtor's business as well as accurate and complete records concerning the Collateral, and mark any and all such records and the Collateral at the Secured Party's request so as to indicate the Security Interest; (i) to deliver to the Secured Party from time to time promptly upon request: (i) any Documents of Title, Instruments, Securities and Chattel Paper constituting, representing or relating to the Collateral; (ii) all books of account and all records, ledgers, reports, correspondence, schedules, documents, statements, lists and other writings relating to the Collateral for the purpose of inspecting, auditing or copying same; (iii) all financial statements prepared by or for the Debtor regarding the Debtor's business; (iv) all policies and certificates of insurance relating to the Collateral; and (v) such information concerning the Collateral, the Debtor and the Debtor's business and affairs as the Secured Party may reasonably request; (j) the Debtor agrees to promptly inform the Secured Party in writing of the acquisition by the Debtor of any personal property which is not of the nature or type described herein, and the Debtor agrees to execute and deliver at its own expense from time to time amendments to this agreement, or additional security agreements as may be reasonably required by the Secured Party in order that the Security Interest shall attach to such personal property; (k) the Secured Party may, before as well as after demand, notify any person obligated to the Debtor in respect of an Account, Chattel Paper or an Instrument to make payment to the Secured Party of all such present and future amounts due. 5. USE AND VERIFICATION OF THE COLLATERAL Subject to compliance with the Debtor's covenants contained herein and Clause 7 hereof, the Debtor may, until default, possess, operate, collect, use and enjoy and deal with the Collateral in the ordinary course of the Debtor's business in any manner not inconsistent with the provisions hereof; provided always that the Secured Party shall have the right at any time and from time to time verify the existence and state of the Collateral in any manner the Secured Party may consider appropriate and the Debtor agrees to furnish all assistance and information and to perform all such acts the Secured Party may reasonably request in connection therewith and for such purpose to grant to the Secured Party or its agents access to all places where the Collateral may be located and to all premises occupied by the Debtor. 6. SECURITIES If the Collateral at any time includes Securities, the Debtor authorizes the Secured Party to transfer the same or any part thereof into its own name or that of its nominee(s) so that the Secured Party or its nominee(s) may appear of record as the sole owner thereof; provided that, until default, the Secured Party shall delivery promptly to the Debtor all notices or other communications received by it or its nominee(s) as such registered owner and, upon demand and receipt of payment of any necessary expenses thereof, shall issue to the Debtor or its order a proxy to vote an take all action with respect to such Securities. After default, the Debtor waives all rights to receive any notices or communications received by the Secured Party or its nominee(s) as such registered owner and agrees that no proxy issued the Secured Party to the Debtor or its order as aforesaid shall thereafter be effective. 7. COLLECTION OF DEBTS After default under this General Security Agreement, the Secured Party may notify all or any Account Debtors of the Security Interest and may also direct such Account Debtors to make all payments on the Collateral to the Secured Party. The Debtor acknowledges that any payments on or other proceeds of the Collateral received by the Debtor from Account Debtors, whether before or after notification of this Security Interest to Account Debtors and after default under the General Security Agreement shall be received and held by the Debtor in trust for the Secured Party and shall be turned over to the Secured Party upon request. 8. INCOME FROM AND INTEREST ON THE COLLATERAL (a) Until default, the Debtor reserves the right to receive any monies constituting income from or interest on the Collateral and if the Secured Party receives any such monies prior to default, the Secured Party shall either credit the same to the account of the Debtor or pay the same promptly to the Debtor. (b) After default, the Debtor will not request or receive any monies constituting income from or interest on the Collateral and if the Debtor receives any such monies without any request by it, the Debtor will pay the same promptly to the Secured Party. 9. DISPOSITION OF MONIES Subject to any applicable requirements of the PPSA, all monies collected or received by the Secured Party pursuant to or in exercise of any right it possesses with respect to the Collateral shall be applied on account of the Indebtedness in such manner as the Secured Party deems best or, at the option of the Secured Party, may be held unappropriated in a collateral account or released to the Debtor, all without prejudice to the liability of the Debtor or the rights of the Secured Party hereunder, and any surplus shall be accounted for as required by law. 10. EVENTS OF DEFAULT The happening of any of the following events or conditions shall constitute default hereunder which is herein referred to as "default": (a) the non payment when due, whether by acceleration or otherwise, of any principal or interest forming part of the Indebtedness or the failure of the Debtor to observe or perform any obligation, covenant, term, provision or condition contained in this General Security Agreement or any other agreement between the Debtor and the Secured Party; (b) the bankruptcy or insolvency of the Debtor; the filing against the Debtor of a petition in bankruptcy the making of an unauthorized assignment of the benefit of creditors by the Debtor; the appointment of a receiver or trustee for the Debtor or for any assets of the Debtor; or the institution by or against the Debtor of any other type of insolvency proceeding under the Bankruptcy Act or otherwise; (c) the institution by or against the Debtor of any formal or informal proceeding for the dissolution or liquidation of, settlement of claims against or winding up of affairs of the Debtor; (d) if any Encumbrance affecting the Collateral becomes enforceable against the Collateral; (e) if the Debtor ceases or threatens to cease to carry on business or makes or agrees to make a bulk sale of assets without complying with applicable law or commits or threatens to commit an act of bankruptcy; (f) if an execution, sequestration, extent or other process of any court becomes enforceable against the Debtor or if a distress or analogous process is levied upon the assets of the Debtor or any part thereof; and (g) if any certificate, statement, representation, warranty or audit report heretofore or hereafter furnished by or on behalf of the Debtor pursuant to or in connection with the General Security Agreement, or otherwise (including, without limitation, the representations and warranties contained herein) or as an inducement to the Secured Party to extend any credit to or to enter into this or any other agreement with the Debtor, provides to have false in any material respect at the time as of which the facts therein set forth were stated or certified, or provides to have omitted an substantial contingent or unliquidated liability or claim against the Debtor; or if upon the date of execution of this General Security Agreement, there have been any material adverse change in any of the facts disclosed by any such certificate, representation, statement, warranty or audit report, which change shall not have been disclosed to the Secured Party at or prior to the time of such execution. 11. REMEDIES (a) Upon default, the Secured Party may appoint or reappoint by instrument in writing, any person or persons, whether an officer or officers or an employee or employees of the Secured Party or not, to be a receiver or receivers (hereinafter called a "Receiver", which term when used herein shall include a receiver and manager) of the Collateral (including any interest, income or profits therefrom) and may remove any Receiver so appointed and appoint another in his stead. Any such Receiver shall, so far as concerns responsibility for his acts, be deemed the agent of the Debtor and not the Secured Party, and the Secured Party shall not be in any way responsible for any misconduct, negligence, or non-feasance on the part of any such Receiver, his servants, agents or employees. Subject to the provisions of the instrument appointing him., any Receiver shall have power to take possession of the Collateral, to preserve the Collateral or its value, to carry on or concur in carrying on all or any part of the business of the Debtor and to sell, lease or otherwise dispose of or concur in selling, leasing or otherwise disposing of the Collateral. To facilitate foregoing powers, any such Receiver may, to the exclusion of all others, including the Debtor, enter upon, use and occupy all premises owned or occupied by the Debtor wherein the Collateral may be situate, maintain the Collateral upon such premises, borrow money on a secured or unsecured basis and use the Collateral directly in carrying on the Debtor's business or otherwise, as such Receiver shall, in his discretion, determine. Except as may be otherwise directed by the Secured Party, all monies received from time to time by such Receiver in carrying out his appointment shall be received in trust for an paid over to the Secured Party. Every such Receiver may, in the discretion of the Secured Party, be vested with all or any of the rights and powers of the Secured Party. (b) Upon default, the Secured Party may, either directly or through its agents or nominees, exercise all the power and rights given to a Receiver by virtue of the foregoing sub-clause (a). (c) The Secured Party may take possession of, collect, demand, sue on, enforce, recover and receive the Collateral and give valid and binding receipts and discharges therefor and in respect thereof and, upon default, the Secured Party may sell, lease or otherwise dispose of the Collateral in such manner, at such time or times and place or places, for such consideration and upon such terms and conditions as to the Secured Party may seem reasonable. (d) In addition to those rights granted herein and in any other agreement now or hereafter in effect between the Debtor and the Secured Party, and in addition to any other rights the Secured Party, may have at law or in equity, the Secured Party shall have, both before and after default, all rights and remedies of a secured party under the PPSA. Provided always, that the Secured Party shall not be liable or accountable for any failure to exercise its remedies, take possession of, collect, enforce, realize, sell, lease or otherwise dispose of the Collateral or to institute any proceedings for such purposes. Furthermore, the Secured Party shall have no obligation to take any steps to preserve rights against prior parties to any Instrument or Chattel whether the Collateral or Proceeds and whether or not in the Secured Party's possession and shall not be liable or accountable for failure to do so. (e) The Debtor acknowledges that the Secured Party or any Receiver appointed by it may take possession of the Collateral wherever it may be located and by any method permitted by law and the Debtor agrees upon request from the Secured Party or any such Receiver to assemble and deliver possession of the Collateral at such place or places as directed. (f) The Debtor agrees to pay all costs, charges and expenses reasonably incurred by the Secured Party or any Receiver appointed by it, whether directly or for services rendered (including reasonable solicitors and auditors costs and other legal expenses and Receiver remuneration), in operating the Debtor's accounts, in enforcing this General Security Agreement, taking custody of, preserving, repairing, processing, preparing for disposition and disposing of the Collateral and in enforcing or collecting the Indebtedness and all such costs, charges and expenses together with any monies owing as a result of any borrowing by the Secured Party or any Receiver appointed by it, as permitted hereby, shall be a first charge on the proceeds of realization, collection or disposition of the Collateral and shall be secured hereby. (g) Unless the Collateral in question is perishable or unless the Secured Party believes on reasonable grounds that the Collateral in question will decline speedily in value, the Secured Party will give the Debtor such notice of the date, time and place of any public sale or of the date after which any private disposition of the Collateral is to be made, as may be required by the PPSA. 12. MISCELLANEOUS (a) The Debtor hereby authorizes the Secured Party to file such financing statements and other documents and do such acts, matters and things (including completing and adding schedules hereto identifying the Collateral or any permitted Encumbrances affecting the Collateral or identifying the locations at which the Debtor's business is carried on and the Collateral and records relating thereto are situate) as the Secured Party may deem appropriate to perfect and continue the Security Interest, to protect and preserve the Collateral and to realize upon the Security Interest and the Debtor hereby irrevocably constitutes and appoints the Secured Party the true and lawful attorney of the Debtor, with full power of substitution, to do any of the foregoing in the name of the debtor whenever and wherever it may be deemed necessary or expedient. (b) Without limiting any other right of the Secured Party, whenever the Indebtedness is immediately due and payable, the Secured Party may, in its sole discretion, set off against the Indebtedness any and all monies then owed to the Debtor by the Secured Party in any capacity and the Secured Party shall be deemed to have exercised such right of set off immediately at the time of making its decision to do so even though any charge therefor is made or entered on the Secured Party's records subsequent thereto. (c) Upon the Debtor's failure to perform any of its duties hereunder, the Secured Party may, but shall not be obligated to, perform any or all of such duties, and the Debtor shall pay to the Secured Party, forthwith upon written demand therefor, an amount equal to the expense incurred by the Secured Party in so doing plus interest thereon from the date such expense is incurred until it is paid at the rate of 8% per annum. (d) The Secured Party may grant extensions of time and other indulgences, take and give up security, accept compositions, compound, compromise, settle, grant releases and discharges and otherwise deal with the Debtor, debtors of the Debtor, sureties and others and with the Collateral and other security as the Secured Party may see fit without prejudice to the liability of the Debtor or the Secured Party's right to hold and realize the Security Interest. Furthermore, the Secured party may demand, collect and sue on the Collateral in either the Debtor's or the Secured Party's name, at the Secured Party's option, and may endorse the Debtor's name on any and all cheques, commercial paper, and any other Instruments pertaining to or constituting the Collateral. (e) No delay or omission by the Secured Party in exercising any right or remedy hereunder or with respect to any of the Indebtedness shall operate as a waiver thereof or of any other right or remedy, and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right or remedy. Furthermore, the Secured Party, may remedy any default by the Debtor hereunder or with respect to any Indebtedness in any reasonable manner without waiving the default remedied and without waiving any other prior or subsequent default by the Debtor. All rights and remedies of the Secured party granted or recognized herein are cumulative and may be exercised at any time and from time to time independently or in combination. (f) The Debtor waives protest of any Instrument constituting the Collateral at any time held by the Secured Party on which the Debtor is in way liable and, subject to Clause 11(g) hereof, notice of any other action taken by the Secured Party. (g) This General Security Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. In any action brought by an assignee of this General Security Agreement and the Security Interest or any part thereof to enforce any rights hereunder, the Debtor shall not assert against the assignee any claim or defence which the Debtor now has or hereafter may have against the Secured Party. (h) Save for any schedules which may be added hereto pursuant to the provisions hereof, no modification, variation or amendment of any provision of this General Security Agreement shall be made except by a written agreement, executed by the parties hereto and no waiver of any provision hereof shall be effective unless in writing. (i) This General Security Agreement and the transactions evidenced hereby shall be governed by and construed in accordance with the laws of the Province of Ontario as the same may from time to time be in effect, including, where applicable, the PPSA (j) Subject to the requirements of Clauses 11(g) and 12(k) hereof, whenever either party hereto is required or entitled to notify or direct the other or to make a demand or request upon the other, such notice, direction, demand or request shall be in writing and shall be sufficiently given only if delivered to the party for whom it is intended at the principal address of such party herein set forth or as changed pursuant hereto or if sent by prepaid registered mail addressed to the party for whom it is intended at the principal address of such party herein set forth or as changed pursuant hereto. Either party may notify the other pursuant hereto of any change in such party's principal address to be used for the purposes hereof: Principal address of the Secured Party: InfoCast Canada Corporation Suite 901, 1 Richmond Street West Toronto, Ontario M5H 3W4 Principal address of the Debtor: Applied Courseware Technology Inc. 440 Wilsey Road, Suite 209 Fredericton, N.B. E3B 7G5 (k) This General Security Agreement and the security afforded hereby is in addition to and not in substitution for any other security now or hereafter held by he Secured Party, and is, and is intended to be a continuing General Security Agreement and shall remain in full force and effect until the Secured Party shall actually receive written notice of its discontinuance; and, notwithstanding such notice, shall remain in full force and effect thereafter until all the Indebtedness contracted for or created before the receipt of such notice by the Secured Party, and any extension or renewal thereof (whether made before or after receipt of such notice) together with interest accruing thereon after such notice, shall be paid in full. (l) The headings used in this General Security Agreement are for convenience only and are not to be considered a part of this General Security Agreement and do not in any way limit or amplify the terms and provisions of this General Security Agreement. (m) When the context so requires, the singular number shall be read as if the plural were expressed and the provisions hereof shall be read with all grammatical changes necessary dependent upon the person referred to being a male, female, firm or corporation. (n) In the event any provisions of this General Security Agreement , as amended from time to time, shall be deemed invalid or void, in whole or in part, by any Court of competent jurisdiction, the remaining terms and provisions of this General Security Agreement shall remain in full force and effect. (o) Nothing herein contained shall in any way obligate the Secured Party to grant, continue, renew, extend time for payment or accept anything which constitutes or would constitute the Indebtedness. (p) The Security Interest created hereby is intended to attach when this General Security Agreement is signed by the Debtor and delivered to the Secured Party. 13. EXCEPTION RE: LEASEHOLD INTERESTS AND CONTRACTUAL RIGHTS The day of the term of any lease, sublease or agreement therefor is specifically excepted from the Security Interest, but the Debtor agrees to stand possessed of such last day in trust for any person acquiring such interest of the Debtor. To the extent that the creation of the Security Interest would constitute a breach or cause the acceleration of any agreement right, licence or permit to which the Debtor is a party, the Security Interest shall not attach thereto but the Debtor shall hold its interest therein in trust for the Secured Party, and shall assign such agreement, right, license or permit to the Secured party forthwith upon obtaining the consent of the other party thereto. 14. COPY OF AGREEMENT The Debtor hereby acknowledges receipt of a copy of this General Security Agreement. IN WITNESS WHEREOF the Debtor has executed this General Security Agreement this 25th day of March, 1999. APPLIED COURSEWARE TECHNOLGY INC. Per: /s/ signature is illegible EX-10.19 34 MEMORANDUM OF UNDERSTANDING Shaw Fiberlink Memorandum of Understanding between: HOME BASE WORK SOLUTIONS LTD. And SHAW FIBERLINK LTD. This memorandum of Understanding (MOU) is entered into this 28th day of August, 1998, between Home Base Work Solutions Ltd., having offices at 131 Signature Court S.W., Calgary, Alberta, T3H 2V8 ("HBWS"), and Shaw FiberLink Ltd. having offices at 630 3rd Avenue S.W., Calgary, Alberta, T2P 4L4 ("SFL") and sets out the parties' intent and interim agreement as to the supply of services and development of a mutually beneficial business relationship. This document in and of itself does not constitute a legally binding agreement. The parties agree as follows: 1) Confidentiality This MOU, the subject matter hereof, and any confidential and proprietary information disclosed in connection with this MOU are each hereby designated as "Confidential Information" and shall be protected in accordance with the terms set out in "Agreement Not to Disclose Confidential Information" signed by both parties and dated August 28, 1998 (the "NDA"). All discussions currently underway are covered by such confidentiality. 2) Strategic Planning HBWS will be responsible for all aspects of their business plans for the provision of the value added remote LAN service to their customers (the "Service"). SFL will assist in market development, cooperative strategies and facilities planning. 3) Network Management HBWS and Shaw will discuss network management to support their respective network activities including maintenance and provisioning of circuits. Each company will maintain its own network via its 24 x 7 network management centers. HBWS agrees the first contact point for all customer service problems relating to the service will be HBWS and that SFL will only accept service escalations from HBWS, not directly from their end customers. 4) Customer Service/Order Desk HBWS and SFL will discuss the customer service/order desk function and an appropriate order process model including the development and maintenance of an "On-Net" and "Near-Net" database and an appropriate RFQ process. Until this process is defined the SFL Customer Care Center in Calgary will process all orders. 5) Service Provisioning SFL will be responsible for the provisioning of the cable modem service and the transparent LAN service. HBWS will be responsible for entering into the Service agreement directly with the customer and for providing their customer with the overall solution, which may including security software and hardware. SFL will contact the residential customer directly to facilitate the installation of the cable modem. All other end customer contact will be through HBWS. 6) Network Backbone and Standards HBWS and SFL will discuss and agree to conform to common network architecture standards. This covers all network components including fiber and fiber deployment, electronics and test equipment procedures. 7) The Services SFL shall provide to HBWS the following services; Cable Modem Service This shall constitute a service whereby Shaw will install a Hybrid Fiber/Coax (HFC) FX modem at HBWS's residential customer premise and transport the IP data from the residential customer premise to the Shaw network core. The residential customer premise interface will be Ethernet 10 base T. Shaw is not responsible for application or security software. It is understood that the cable modem service is on a shared transport medium and performance and throughout levels are not guaranteed. The cable modem is provided to HBWS as part of the fees for the cable modem service and shall remain the property of SFL. HBWS assumes the entire risk of loss, theft or damage to the cable modem due to any cause whatsoever and until the modem is returned to SFL. Upon termination of any cable modem service HBWS shall be responsible to disconnect the modem at its customer=s premises and return the modem to SFL. Transparent LAN service This shall constitute a service whereby Shaw provides an Ethernet circuit from it=s network core to the Customer corporate location. This circuit will be used to transport the IP data collected from the cable modem service and deliver it to the customer=s corporate network/server. Shaw is responsible for the core routing of the data and delivery on the transparent LAN circuit. Shaw is not responsible for any application software, security software or servers. The corporate customer interface will be Ethernet 10 base T. 7) Pricing and Commitment Levels This agreement is for a period of 12 months from date of signing. HBWS agrees to acquire 2,000 cable modems from SFL during this period. Based on this commitment SFL agrees to provide cable modem service at a cost of $100.00 per residential customer premise. The modems must be acquired on a monthly basis with a minimum of 150 new orders being processed each month. The installation cost per modem will be $150.00 per residential customer premise. The pricing for the Transparent LAN services shall be based on SFL=s current price structure. SFL will sell this service to HBWS based on a 3% discount. HBWS agrees to sell the customer solution, including the cable modem service at a price no lower than SFL's "Remote LAN" service offering, currently priced at $150.00 per month per residential customer premise. SFL agrees that it will review this pricing on a regular basis with HBWS and adjust it if the market conditions demand a change. This constitutes the understanding reached between Home Base Work Solutions Ltd. And Shaw FiberLink Ltd. We hereby agree to a business relationship based on the above, such relationship to be legally formalized in due course. /s/ Robert C. Watson /s/ Ken MacLean - --------------------------------- ------------------------------ Robert C. Watson, President Ken MacLean, President Shaw FiberLink Ltd. Home Base Work Solutions Ltd. _________________________________ August 28/98 Date Date EX-10.20 35 LICENSING AND DISTRIBUTION AGREEMENT LICENSING AND DISTRIBUTION AGREEMENT Between FACET DECISION SYSTEMS INC. (being the Licensor of specified software) AND HOMEBASE WORK SOLUTIONS LTD. (as Licensee) March 7, 1999 LICENSING AND DISTRIBUTION AGREEMENT BETWEEN FACET DECISION SYSTEMS INC., a body corporate having an office and carrying on business in the Province of British Columbia (hereinafter referred lo as "FDSI") OF THE FIRST PART and HOMEBASE WORK SOLUTIONS LTD., a body corporate organized under the laws of the Province of Alberta (hereinafter referred to as Homebase. or the "Licensee") OF THE SECOND PART WHEREAS each Of Facet Decision Systems Inc. (the "Licensor") are engaged in the business of developing and licensing certain software systems; AND WHEREAS the Licensee Is desirous of obtaining the exclusive bight to utilize, market and sell the software systems of the Licensor In the "telework" industry market sector; NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises, mutual covenants, agreements and warranties hereinafter set forth, the parties hereto agree as follows: -2- ARTICLE 1 INTERPRETATION 1.1 Definitions In this agreement, Including the recitals, this clause and the Licensees attached hereto, unless the context otherwise requires, or unless otherwise defined herein, the following words and phrases shall have the following meanings: (1) "Affiliate" has the meaning ascribed thereto in the Securities Act (Alberta); (2) "Applicable Law"' means any applicable Canadian federal, provincial, or local statute, regulation, by-law, and any regulation or order issued in respect thereof by a Governmental Authority, and the terms and conditions of any permit, licence, authorization, or approval issued by a Governmental Authority; (3) "Associate" has the meaning ascribed thereto in the Securities Act (Alberta); (4) "Claims" means any claim, demand, order, action, cause of action, damage, loss, cost, liability or expense, including reasonable legal fees and all reasonable costs incurred in investigating or pursuing any of the foregoing or any proceeding relating to any of the foregoing; (5) "Closing. means the date upon which the transactions contemplated herein, being the granting of exclusive licenses to Homebase and the issuance of Homebase Common Shares to the Licensor (6) "Closing Date" means 9:00 o'clock a.m., Calgary time, on or such other date or time as may be mutually agreed to by the parties hereto; (7) "Confidential Information" means: (1) Software; (2) all software materials and component elements directly or indirectly obtained from the Licensor or either of them including, without limitation: all definitions of input and output format, problem structure, statements of objectives and goals; statements of solution structure and logic; program algorithms; problem flow charts, coding notes and Instructions source programs, assembly and compilation notes testing and debugging notes; object programs; notes relating to program execution and final production programs; documentation, technical manuals, operational manuals. user documentation manuals documents relating to program operation and maintenance: -3- (3) all tangible personal property on which any part of the foregoing is imprinted or recorded (whether designated Hardware or "software" or otherwise); and (4) the proprietary rights attached to i, ii and iii (8) "CPU" means central processing unit; (9) "Development Contract" means the contract to be entered into between FDSI as developer and the Licensee as client for the development of an application for the FDSI Software (10) "Dollar" and "$" mean a dollar of lawful money of Canada: (11) "Effective Date" means 9:00 o'clock a.m., Calgary time, on September 30, 1998; (12) "Encumbrances" means all encumbrances, mortgages, pledges, liens, claims, charges, security Interests, restrictive covenants, easements or other similar Interests of any nature, whether or not consensual: (13) "Enhancements" means improvements or additions to the Software by the respective Licensor which add to the Functionality of the Software, as determined by the respective Licensor; (14) "FDSI Software. means the data processing programs usually called "Cause & Effect" and identified In Schedule "A" consisting of a series of instructions or statements in machine readable form and any related software materials including, without limitation, flow charts, logic diagrams and listings provided for use in connection with the data processing program; (1) any additional machine readable or printed material not included in the foregoing from time to time provided by FDSI to the Licensee: and (2) all tangible personal property on which any of the foregoing is imprinted or recorded, whether designated "hardware" or "software" or otherwise; (15) "Functionality" means the computer applications which the Software or any part or It is capable of performing; (16) "Governmental Authorities" means all applicable Canadian federal, provincial and municipal agencies, commissions, boards, bureaus, tribunals, ministries and departments; (17) "Homebase Common Shares" means the common shares in the share capital of Homebase, as presently constituted, and includes all shares for which the common shares of Homebase are changed, reclassified; subdivided, consolidated or converted into a different number or -4- class of shares or otherwise. as a result of a share reorganization, merger, amalgamation, arrangement or other similar transaction; (18) "Licence" means the rights and licenses granted to the Licensee pursuant to Section 2.1; (19) "Licensee" means Homebase Work Solutions Ltd., a body corporate organized under the laws of the Province of Alberta, (20) "Licensor" means FDSI; (21) "Modifications, Refinements and Updates" means alterations or refinements made by the Licensor to the Software which do not amount to Enhancements; (15) "Persons" means any person, corporation, partnership or other legal entity; (16) "Place of Closing" means the office of counsel to the Licensee. or as otherwise agreed to by the parties hereto; (17) "Purchase Price" has the meaning ascribed thereto in Section 2.1: (18) "Right of First Refusal" means a right of first refusal. pre-emptive right of purchase or similar right (including any requirement to obtain consent of a third party in order for each of the Licensors to grant the [exclusive licenses contemplated herein, other than a consent which by the terms of the applicable agreement cannot be unreasonably withheld) whereby any party has the right to acquire or purchase She exclusive rights granted herein as a consequence of the Licensor having agreed to grant the exclusive rights in accordance with this Agreement (19) "Royalty Burdens" means all gross and net overriding royalties, net profits interests, carried interests and all similar burdens and encumbrances: (20) "Security interest" means an assignment (including, without limitation, any assignment of any right to receive income), mortgage, charge. floating charge, hypothec, pledge, lien, encumbrance, conditional sales agreement or security interest of any nature or kind; (21) "Software" means the FDSI Software; (22) "Software Maintenance Services" or "Maintenance Services" means: (1) the provision of Modifications, Refinements and Updates to the Software, and (2) the remedial maintenance of the Software including all adjustments, repairs and corrections of all errors in the Software, -5- (23) "Standard Release" means a release of Modifications, Refinement and Updates from time to time; (24) "Successors" means successors and includes any successor continuing by reason of amalgamation or other reorganization and any Person to whom assets are transferred by reason of a liquidation dissolution, winding-up or otherwise; (25) "Tax Act" means the Income Tax Act (Canada), as amended from time to time: (26) "Tax Returns" includes all returns, reports, declarations, elections, filings, Information returns and statements filed in respect of Taxes; (27) "Taxes" includes all taxes. duties, fees, premiums, royalties, assessments, imposts, levies and other charges of any kind whatsoever imposed by any taxing or other governmental authority or agency within or outside of Canada, together with all interest, penalties or additional amounts imposed in respect thereof; and (28) "Telework Market is means the teleworking industry market sector. 1.2 Interpretation In tints Agreement: (1) the inclusion of headings and a table of contents are for convenience of reference only and are not to be considered or taken into account in construing the provisions of this Agreement or to in any way qualify, modify or explain the effect of any such provisions (2) references to an Article, Section or Schedules are references to an Article, Section or Schedule, as the case may be, in this Agreement (3) if any term or condition, whether express or implied, of a schedule hereto conflicts with or is at variance with any term or condition of the main body of this agreement, the main body of this agreement shall prevail; (4) "including" or "including without limitation" when used before a specific item or list of items in relation to a previous general description means "including, without limiting the generality of the foregoing.; (5) where in this agreement a representation or warranty is made on the basis of knowledge or awareness, such knowledge or awareness shall be conclusively deemed to consist of actual knowledge or awareness, as the case may be, of the officers, directors or employees of the party making the representations or warranty and does not Include the knowledge and awareness of any other person or pe rsons; -6- (6) words importing the singular shall include the plural and vice versa and words importing a particular gender shall include all genders; (7) references to a statute includes the regulations and any other subordinate legislation made pursuant to that statute and includes any amendment, consolidation, reenactment, substitution or replacement of all or any part of such statute, regulation or other subordinate legislation (8) all monetary amounts are expressed in Canadian currency; (9) where a period of time is specified, dated or calculated from a date or event, the period shall be calculated excluding such date or the date on which such event occurs, as the case may be; and (10) where a term is defined in this Agreement, a derivative of that term shall have a corresponding meaning unless the context otherwise requires. 1.3 Business Days If, pursuant to this Agreement, a notice must be given or an action taken within a specified period or on or before a specified date and such period ends on, or such date falls on a day that is a Saturday, Sunday or public holiday, such notice may be given or such action may be taken on the next succeeding day which is not a Saturday, Sunday or public holiday. 1.4 Schedules The following Schedules are attached hereto and form a part of this Agreement: Schedule "A" -FDSI Software Schedule "B" -FDSI License Terms and Conditions Wherever any term or condition, express or implied, of such Schedules conflicts or Is at variance with any term or condition in the body of this Agreement, such term or condition in the body of this Agreement shall prevail. ARTICLE 2 GRANT OF SOFTWARE LICENSE 2.1 Grant of Software License (i) In consideration of the issue of 6,9t0 Homebase Common Shares to be delivered to FDSI on the Closing Date subject only to the agreement by the Licensee to abide by the terms and conditions of this License Agreement FDSI grants to the Licensee an exclusive right in the Telework Market (the 'FDSI License") to use and resell the FDSI software program more -7- particularly identified in Schedule "A" (hereinafter referred to as the "Software') in connection with and incorporated in Software to be jointly developed by FDSI and Homebase for a period of two (2) years from the Closing Date and subject to the terms and conditions set out in Schedule "B" it being understood and agreed that FDSI will be entitled to receive license fees as per Schedule "B". The Licensor and Licensee shall deliver such other documents as may be necessary to complete the transactions provided for in this Agreement. 2.2 Development Agreement FDSI and Homebase shall enter into the Development Agreement before or aner the Closing. Under the forms of the Development Agreement, FDSI will develop an application of the FDSI Software for the specifications to be defined by Homebase. All rights, title and interest in the developed application will, subject to the rights of FDSI in the FDSI Software which will form part of the developed application and will be governed by this License Agreement, belong to Homebase 2.3 Modifications, Refinements and Updates As applicable, each of the respective Licensors shall without additional charge to the Licensee, furnish the Licensee with Standard Releases of the Software Licensee agrees to accept all Standard Releases and is solely liable for any loss or damages incurred and assumes all risks resulting from failure to install and implement the Standard Releases furnished by Licensors. Upon Licensee's request, the Licensor shall install such Standard Releases at the Licensee's site and will invoice Licensee at the Licensor's standard rates for labour and expenses for such installation services. If, Licensee does not request such Licensor's assistance in installation, Licensee shall be solely responsible for the installation and implementation of the Standard Releases. The Licenser shall not be responsible to Licensee for loss of use of the Software or for any other liabilities arising frond any alteration, addition, adjustment or repair that is made by other than authorized representatives of the Licensor. 2.4 Enhancements and New Application Modules Enhancements and new computer application modules may be developed or otherwise acquired by the Licensor from time to time. The development and acquisition of Enhancements and new application modules, includingthe nature and timing of same, shall be at the sole discretion of the Licensor. Enhancements and new application modules may, In Licensor's discretion, be priced separately and offered to the Licensee at each of the respective Licensor's then-current price. This Article 2.4 shall in and of itself, create no obligation on behalf of the Licensor or the Licensee to develop, acquire or license, as the case may be, Enhancements or new application modules. -8- ARTICLE 3 REPRESENTATlONS AND WARRANTIES 3.1 Licensor's Representations, Warranties and Covenants Generally The Licensor represents, warrants and covenants to and with the Licensee that: (1) Standing: such Licensor is a corporation duly organized and validly subsisting under the laws of its jurisdiction of incorporation; (2) Capacity: such Licensor has the requisite power and authority to conduct its business as now conducted, to license the Software in the manner provided in this Agreement (3) Consents and Approv Is: no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body exercising jurisdiction over the Software is required for the due execution, delivery and performance by such Licensor of this Agreement except those which has been obtained prior to the date hereof; (4) No Conflicts: none of the execution, delivery or performance of this Agreement by such Licensor does or, with the giving of notice or the lapse of time or both' will: (1) violate or conflict with any of the provisions of the constating documents or other governing documents of such Licensor; (2) violate or conflict with any provision of any law or administrative regulation or any Judicial or administrative order, award, judgment or decree applicable to such Licensor; (3) conflict with, result in a breach of, constitute a default under, or accelerate or permit the acceleration of the performance required by any agreement, covenant, undertaking or commitment to which such Licensor or any partner comprising such Licensor is a party or by which such Licensor or any Affiliate is bound or to which any properties or assets of such Licensor are subject; and (4) to the best of its knowledge, the use of such Licensor's Software, in compliance with the terms and conditions of this Agreement, will not infringe any patent or copyright of any third parry; and any updates and modifications to such Licensor's Software will be developed in a careful, diligent and workmanlike manner; (5) Execution and Enforce ability of Documents; this Agreement has been, and all documents executed and delivered by such Licensor pursuant hereto shall be' duty executed and delivered by it, and tints Agreement does, and such documents will, constitute legal, valid and binding obligations of such Licensor enforceable against such Licensor in accordance -9- with their respective terms, subject to bankruptcy, insolvency, preference, reorganization, moratorium and other similar laws affecting creditors rights generally and the discretionary nature of equitable remedies and defences (6) Finder's Fee: such Licensor has not incurred any obligation or liability. contingent or otherwise, for brokers' or finders' fees in respect of the transaction contemplated herein for which the Licensee shall have any obligation or liability; (7) Canadian Resident such Licensor is not a non-resident of Canada for the purposes of the Income Tax Act (Canada) (8) Private Company: such Licensor is a Private company" pursuant to the Securities Act (Alberta) and is not a "reporting issuer" pursuant to such Act and has no filing or reporting obligations pursuant to any securities legislation of any jurisdiction; (9) Lawsuits and Claims: there are no Material claims. violations, alleged violations, proceedings, actions, lawsuits, administrative proceedings or governmental investigations in existence, or to the best of such Licensor's knowledge, contemplated or threatened against or with respect to such Licensor such Licensor's Software or such Licensor Interests in the Software which might result In impairment or loss of such Licensor's Software or such Licencor's interests therein or which might otherwise materially adversely affect such Licrnsor Software. Such Licensor is not aware of any existing basis upon which any of such claims. violations, alleged violations, proceedings, actions or lawsuits might be commenced by any Person which or which might materially adversely affect such Licensor's Software; (10) Rights of First Refusal: the exclusive license rights granted by such Licensor are not subject to any Rights of First Refusal created, by or through under such Licensor or of which such Licensor is aware, that become operative by virtue of this Agreement or the transactions effected by this Agreement; is (11) except as stated herein, the Software and all accompanying written materials are provided "as is without warranty or condition of any kind, express or implied, including but not limited to implied warranties or conditions or merchantability or fitness for a particular purpose and those arising by statute or otherwise in law or from a usage in the trade. The entire risk as to results and performance of the Software is with the Licensee. Such Licensor does not warrant, guarantee or represent that the functions contained In the Software will meet the Licensee's requirements or that the installation or operation of the Software will be uninterrupted or error free. The Licensee acknowlcdges that it has only relied upon the representations, warranties and covenants contained in Article 3 and not on any representations, warranties or covenants outside this Agreement and the Licensor shall have no liability, whether In contract or in tort, In respect of any statements, Information representations. warranties or covenants made by them -10- or their agents or representatives, except liability for the representations, warranties and covenants contained in Article 3, which liability shall be subject to the limitations contained in this Agreement. 3.2 Licensee's Representations, Warranties and Covenants The Licensee hereby represents, warrants and covenants to and with each Licensor that: (1) Standing: it is a corporation validly existing and in good standing under the laws of its jurisdiction of incorporation and is. registered to do business under the laws of the Province of Alberta; (2) Capacity the Licensee has good and sufficient power, authority and right to enter into this Agreement and to complete the transactions to be completed by the Licensee contemplated hereby and has taken all requisite corporate action to authorize the due creation and issuance of the Homebase Common Shares to be issued to the Licensor hereunder, and, upon completion of Closing pursuant to this Agreement, the Homebase Common Shares shall be validly issued and outstanding as fully paid and non-assessable shares in the capital of the Licensee subject only to the escrow terms set out in Schedule "C" in compliance with all applicable securities laws and regulations; (3) Capital the authorized capital of the Licensee consists of an unlimited number of Homebase Common Shares and an unlimited number of First Preferred Shares, Series A, of which, prior to the issue of the Homebase Common Shares to the Licensor hereunder, not more than 900,000 Homebase Common Shares and 50,000 Homebase First Preferred Shares, Series A are issued and outstanding, all of which shares are fully paid and non-assessable; (4) No Conflicts: none of he execution delivery or performance of this Agreement by the Licensee does or, with the giving of notice or the lapse of time or both, will: (1) violate a conflict with any of the provisions of the charter, articles, bylaws or other governing documents of the Licensee; (2) violate Of conflict with any of the provisions of any law or administrative regulation or any judicial or administrative order, award, judgment or decree applicable to the Licensee; (3) conflict with, result in a breach of, constitute a default under, or accelerate or permit the acceleration of the performance required by any agreement, covenant, undertaking or commitment to which the Licensee is a party whereby which it is bound or to which any properties or assets of the Licensee are subject; -11- (5) Execution and Enforce ability of Documents: this Agreement has been, and all documents executed and delivered by the Licensee pursuant to this Agreement shall be, duly executed and delivered by it, and this Agreement does, and such documents will' constitute legal, valid and binding obligations of the Licensee enforceable against the Licensee in accordance with their respective terms, subject to bankruptcy, insolvency, preference. reorganization, moratorium and other similar laws affecting creditor's rights generally and the discretionary nature of equitable remedies and defences; (6) Finder's Fee: it has not incurred any obligation or liability, contingent or otherwise, for brokers' or finders' fees in respect of the transaction contemplated herein for which the Licensor shall have any obligation or liability; (7) Residence: the Licensee is not a non-resident of Canada within the meaning of Section 116 of The Income Tax Act (Canada). 3.3 No Merger There shall not be any merger of any covenant, representation or warranty in any assignment, conveyance, trans equity or statute to the contrary offer or Document delivered pursuant hereto notwithstanding any rule of law, and all such rules are hereby waived. 3.4 Breach The covenants, representations and warranties of the parties hereto set forth in Sections 3.1 and 3.2 shall be true or performed as the case may be at the Closing Date or, if it is to be performed after the Closing Date, shall be complied with after the Closing Date, but no claim or action commenced in respect of a breach of any such covenant, representation or warranty shall be made unless the party making the claim or prosecuting the action has given written notice of such claim (including reasonable particulars of the misrepresentation or breach) to the other party hereto within the period of twelve (12) months from the Closing Date. 3.5 Survival of Covenants Notwithstanding anything to the contrary herein expressed or implied, the covenants, representations and warranties set forth in Sections 3.1 and 3.2 are relied upon by the Licensee and the Licensor as being true on the date hereof and on the Closing Date and, notwithstanding the Closing or deliveries of covenants, representations and warranties in any other agreements at Closing or prior or subsequent thereto, the covenants, representations and warranties set forth in Sections 3.1 and 3.2 hereof shall survive Closing for the benefit of the parties hereto, subject to Sections 3.4 and 3.6 hereof. -12- 3.6 Limitations Notwithstanding anything In this agreement to the contrary, the Licensee shall have no remedy or cause of action against either of the Licensor for breach of representation, warranty or covenant or claim for indemnity, for any circumstance, matter or thing actually known to the Licensee or any employee, agent, consultant or representative thereof as at the Closing Date. -13- ARTICLE 4 LIABILITIES AND INDEMNITIES 4.1 Licensor's Liabilities and Indemnities (1) The is icensor shall remain liable for, and shall Indemnify the Licensee and its directors, officers. servants, agents and employees harmless from and against. all losses, costs, claims, damages, expenses or liabilities! suffered, sustained, paid or incurred by the Licensee or its directors, officers, servants, agents and employees arising as a direct consequence of the breach, as of the Closing Date, of any of the warranties and representations of such Licensor (and excluding the warranties and representations of the other Licensor) contained In this Agreement and the Licensee shall indemnify the Licensor and its directors, officers, servants, agents and employees harmless from and against all losses, costs, claims, damages, expenses or liabilities suffered, sustained, paid or incurred by such Licensor or its directors, officers, servants, agents and employees arising out of or pertaining to or with respect to its Software occurring subsequent to the Closing Date or as a direct consequence of the breach as of the Closing Date, of any of the warranties and representations of the Licensee; excepting, in each case, to the extent that such liabilities are reimbursed by insurance or are caused by the party claiming indemnity. Such indemnities shall be deemed to apply to all assignments, transfers, conveyances, novations and other documents licensing the Software to the Licensee notwithstanding the actual terms thereof. Such indemnities shall extend to legal costs on a solicitor and client basis. (2) Neither party shall be entitled to any Indemnification in respect of any matter or thing which is the subject of the indemnity in Section (a) above unless it shall have given written notice of its claim for indemnification (including reasonable particulars of the claim) to the other party. within six (6) months of the Closing Date. 4.2 Subrogation The Licensor license the Software to the Licensee with full right of substitution and subrogation of the Licensee in and to all covenants, representations and warranties of others given to the Licensor, or any of them, or its 'predecessors in title in respect of the Software or any part thereof. ARTICLE 5 PROPRIETARY INFORMATION, CONFIDENTIALITY AND RESTRICTIONS OF USE 5.1 Trade Secrets The Licensee acknowledges that the Software includes confidential data and know-how which are proprietary trade secrets of the Licensor. The Licensee shall not disclose such -14- data or knowhow to any third party and shall protect such data and know-how from disclosure by taking reasonable steps to protect the confidentiality of such data and know-how. 5.2 Licensee's Data All data furnished by the Licensee, and processed on the Licensee's CPUs, shall always be and remain the property of the Licensee, Such data shall not include the software or any part thereof. 5.3 Injunctive Relief lf the Licensee or any of its employees, agents or representatives uses, or attempts to use, or disposes of the Software In any manner contrary to the terms of this Agreement, the Licensor shall have the right, In additio 1' to such other remedies that may be available to them, to injunctive relief enjoining such acts or attempts, it being acknowledged that legal remedies are inadequate. 5.4 Confidential Information" All information and data, in whatever form, obtained by the Licensee In respect of the subject-matter of this Agreement (the "Confidential Information.) shall be held by the Licensee in the strictest confidence and shall not be disclosed prior to Closing: provided that such Confidential Information may be disclosed if the disclosure (i) is made with the consent of all the parties; (ii) is made to an Affiliate of the Licensee; '(iii) is required by law, by a government or governmental department, ministry, board, commission or agency or by a court or other tribunal of competent Jurisdiction: (iv) is required by a securities commission or stock exchange having jurisdiction over the Licensee or an Affiliate of the Licensee; (v) is in respect of Information" or data that Is in the public domain at the time of the disclosure through no fault of the Licensee; (vi) is made on a need-to-know basis to outside consultants, accounting, business or legal advisors who agree to maintain the confidentiality of the Confidential Information. ARTICLE 6 TERMINATION 6.1 Termination This License Agreement is effective until terminated. The FDSI License shall be subject to the termination provisions set out in Schedule "D". 6.2 Survival I All obligations herein regarding confidentiality, secrecy and disclosure including, without limitation, the provisions of Section 5.4 shall survive termination of this Agreement. -15- ARTICLE 7 GENERAL 7.1 Notice All notices shall be in writing and shall be sufficiently given or made if (i) delivered to the intended recipient personally or by courier during normal business hours on a business day at the intended recipient's addresses as set forth below; or telecopied to the intended recipient and If to FDSI: Suite 305 - 1505 West 2nd Avenue Vancouver, British Columbia V6H 3Y4 Attention: David Hawkins Telecopier (604) 739-7753 If to Homebase: Suite 901, 112 - 4th Avenue S.W. Calgary, Alberta T2P Attention Ken MacLean Telecopier (403) 237- 047 Any notice given or made in the above-noted manner shall be deemed to have been given or made and to have been received on the pay of its delivery or transmission, as the case may be, if such day is a business day and such notice is received prior to 4:00 p.m., local time, and, if not, on first business day thereafter. I 7.2 Arbitration If any master upon which the parties do not agree (6) required to be referred to arbitration pursuant to the terms hereof or if the parties agree to refer any matter arising hereunder to arbitration, the arbitration shall be conducted before a single arbitrator. Any such arbitration, including the selection of the arbitrator, shall be govern by the Arbitration Act (Alberta) and the nobles of the Arbitration and Mediation Society of Alberta. The decision of any such arbitrator shall be final and binding upon the parties and the fees and costs relating thereto shall be borne and paid in the manner the arbitrator determines l 7.3 Amendments and Waiver -16- All amendments to tints Agreement, and all waivers of any provision, or the breach of any provision, of this Agreement, shall be made in a written instrument signed by all of the parties. A waiver shalt affect only the matter specifically identified in the instrument granting the waiver and shall not extend to any other matter, provision or breach -17- 7.4 Remedies Cumulative No reference to of exercise of any specific right or remedy by a party hereunder shall prejudice or preclude such party from exercising or invoking any other remedy in respect thereof, whether allowed at law or in equity or expressly provided for herein. No such remedy shall be exclusive or dependent upon any other such remedy but each party may exercise any one or more of such remedies independently or In combination . 7.5 Further Assurances At the Closing and thereafter as may be necessary and without further consideration, parties hereto shall execute, acknowledge and deliver such other instruments and shall take such other action as may be necessary to carry out their respective obligation under this agreement. 7.6 Time Time shall be of the essence. 7.7 Governing Law This Agreement shall be interpreted, construed and governed in all respects by the laws of the Province of Alberta. 7.8 Prior Agreements and Amendments This agreement shall supersede and replace any and all prior agreements between the parties hereto relating to the licensing of the Software and may be amended only by written instrument signed by the parties hereto. 7.9 Entire Agreement This Agreements constitutes the entire agreement of the parties In respect of the subject matter herein and supersedes all prior oral or written agreements and understandings of the parties, or any one of them in relation thereto. 7.10 Assignment This Agreement may not be assigned by the other party hereto without the prior written consent of the other party hereto, which consent may not be unreasonably withheld. 7.11 Enurement -18- This Agreement is binding up and shall enure to the benefit of the parties hereto and their respective successors and permitted assigns. 7.12 Counterpart Execution This Agreement may be executed in any number of counterparts each of which shall be an original and all counterparts together shall constitute a single document. IN WITNESS WHEREOF the parties have duly executed this Agreement on the date first written above. FACET DECISION 8YSTEMS INC. Per: /s/ David Hawkins ________________________________ HOMEBASE WORK SOLUTIONS LTD. /s/ Ken MacLean ________________________________ -19- EX-10.21 36 FACET AND HOMEBASE AGREEMENT LICENSING AND DISTRIBUTION AGREEMENT Between FACET PETROLEUM SOLUTIONS INC. (being the Licensor of specified software) AND HOMEBASE WORK SOLUTIONS LTD. (as Licensee) March 30, 1999 Index Page ARTICLE 1 INTERPRETATION..............................................................1 1.1 Definitions.......................................................1 1.2 Interpretation....................................................1 1.3 Business Days.....................................................4 1.4 Schedules.........................................................5 ARTICLE 2 GRANT OF SOFTWARE LICENSE AND AGREEMENT OF PURCHASE AND SALE................5 2.1 Grant of Software License.........................................5 2.2 Development Agreement.............................................6 2.3 Modifications, Refinements and Updates............................6 2.4 Enhancements and New Application Modules..........................6 ARTICLE 3 REPRESENTATIONS AND WARRANTIES. 3.1 Licensor's Representations, Warranties and Covenants Generally....7 3.2 Licensee's Representations, Warranties and Covenants..............8 3.3 No Merger.........................................................9 3.4 Breach ...........................................................9 3.5 Survival of Covenants.............................................9 3.6 Limitations.......................................................9 ARTICLE 4 LIABILITIES AND INDEMNITIES................................................10 4.1 Licensor's Liabilities and Indemnities...........................10 4.2 Subrogation......................................................11 ARTICLE 5 PROPRIETARY INFORMATION, CONFIDENTIALITY AND RESTRICTIONS OF USE...........10 5.1 Trade Secrets ...................................................10 5.2 Licensee's Data..................................................11 5.3 Injunctive Relief................................................11 5.4 Confidential Information.........................................11 ARTICLE 6 TERMINATION................................................................11 6.1 Termination......................................................11 6.2 Survival.........................................................11 ARTICLE 7 GENERAL....................................................................11 7.1 Notice...........................................................11 7.2 Arbitration .....................................................12 7.3 Amendments and Waiver ...........................................12 7.4 Remedies Cumulative .............................................12 7.5 Further Assurances...............................................13 7.6 Time.............................................................13 7.7 Governing Law....................................................13 7.8 Prior Agreements and Amendments..................................13 7.9 Entire Agreement.................................................13 7.10 Assignment.......................................................13 7.11 Enurement........................................................13 7.12 Counterpart Execution............................................13 LICENSING AND DISTRIBUTION AGREEMENT BETWEEN: FACET PETROLEUM SOLUTIONS INC., a body corporate having an office and carrying on business in the City of Calgary, in the Province of Alberta (hereinafter referred to as "Facet PS" or the "Licensor") OF THE FIRST PART - and - HOMEBASE WORK SOLUTIONS LTD., a body corporate organized under the laws of the Province of Alberta (hereinafter referred to as "Homebase" or the "Licensee') OF THE SECOND PART WHEREAS Facet Petroleum Solutions Inc. (the "Licensor") is engaged in the business of developing and licensing certain software systems; AND WHERAS the Licensee is desirous of obtaining the exclusive right to utilize, market and sell the software systems of the Licensor in the "telework" industry market sector; NOW THEREFORE THIS AGREEMENT WlTNESSES that in consideration of the premises, mutual covenants agreements and warranties hereinafter set forth, the parties hereto agree as follows: ARTICLE 1 INTERPRETATION 1.1 Definitions In this agreement, including the recitals, this clause and the Licensees attached hereto, unless the context otherwise requires, or unless otherwise defined herein, the following words and phrases shall have the following meanings: (1) "Affiliate" has the meaning ascribed thereto in the Securities Act (Alberta); (2) "Applicable Law" means any applicable Canadian federal, provincial, or local statute, regulation, by-law, and any regulation or order issued in respect thereof by a Governmental Authority, and the terms and conditions of any permit, license, authorization, or approval issued by a Governmental Authority; (3) "Associate" has the meaning ascribed thereto in the Securities Act (Alberta); (4) "Claims" means any claim, demand, order, action, cause of action, damage, loss, cost, liability or expense, including reasonable legal fees and all reasonable costs incurred in investigating or pursuing any of the foregoing or any proceeding relating to any of the foregoing; (5) "Closing" means the date upon which the transactions contemplated herein, being the granting of exclusive licenses to Homebase and the issuance of Homebase Common Shares to the Licensor; (6) "Closing Date" means 9:00 o'clock a.m., Calgary time, on 30 March, 1999 or such other date or time as may be mutually agreed to by the parties hereto; (7) "Confidential Information" means: (1) Software; (2) all software materials and component elements directly or indirectly obtained from the Licensors or either of them including, without limitation: all definitions of input and output format, problem structure, statements of objectives and goals; statements of solution structure and logic; program algorithms; problem flow charts, coding notes and instructions; source programs, assembly and compilation notes; testing and debugging notes; object programs; notes relating to program execution and final production programs; documentation, technical manuals, operational manuals, user documentation manuals; documents relating to program operation and maintenance; (3) all tangible personal property on which any part of the foregoing is imprinted or recorded (whether designated "hardware" or "software" or otherwise); and (4) the proprietary rights attached to i, ii and iii; (8) "CPU" means central processing unit; (9) "Development Contract" means the contract to be entered into between Facet PS as developer and the Licensee as client for the development of an application for the Facet PS Software; (10) "Dollar" and "$" mean a dollar of lawful money of Canada. (USD) means a dollar of lawful money of the United States of America. (11) "Effective Date" means 9:00 o'clock a.m., Calgary time, on March 15, 1999; (12) "Encumbrances" means all encumbrances, mortgages, pledges, liens, claims, charges, security interests, restrictive covenants, easements or other similar interests of any nature, whether or not consensual; (13) "Enhancements" means improvements or additions to the Software by the Licensor which add to the Functionality of the Software, as determined by the Licensor; (14) "Facet PS Software" means the data processing programs usually called "Telework Operational Data Store (TODS)" and identified in Schedule "A" consisting of a series of instructions or statements in machine readable form and any related software materials including, without limitation, flow charts, logic diagrams and listings provided for use in connection with the data processing program; (1) any additional machine readable or printed material not included in the foregoing from time to time provided by Facet PS to the Licensee; and (1) all tangible personal property on which any of the foregoing is imprinted or recorded, whether designated "hardware" or "software" or otherwise; (15) "Functionality" means the computer applications which the Software or any part of it is capable of performing; (16) "Governmental Authorities" means all applicable Canadian federal, provincial and municipal agencies, commissions, boards, bureaus, tribunals, ministries and departments; (17) "Homebase Common Shares" means the common shares in the share capital of Homebase, as presently constituted, and includes all shares for which the common shares of Homebase are changed, reclassified, subdivided, consolidated or converted into a different number or class of shares or otherwise, as a result of a share reorganization, merger, amalgamation, arrangement or other similar transaction; (18) "License" means the rights and licenses granted to the Licensee pursuant to Section 2.1; (19) "Licensee" means Homebase Work Solutions Ltd., a body corporate organized under the laws of the Province of Alberta; (20) "Licensor" means Facet Petroleum Solutions Inc., a body corporate organized under the laws of the Province of Alberta; (21) "Modifications, Refinements and Updates" means alterations or refinements made by the Licensor to the Software which do not amount to Enhancements; (22) "Persons" means any person, corporation, partnership or other legal entity; (23) "Place of Closing" means the office of counsel to the Licensee, or as otherwise agreed to by the parties hereto; (24) "Purchase Price" has the meaning ascribed thereto in Section 2.1; (25) "Right of First Refusal" means a right of first refusal, pre-emptive right of purchase or similar right (including any requirement to obtain consent of a third party in order for the Licensor to grant the exclusive license contemplated herein, other than a consent which by the terms of the applicable agreement cannot be unreasonably withheld) whereby any party has the right to acquire or purchase the exclusive rights granted herein as a consequence of the Licensor having agreed to grant the exclusive rights in accordance with this Agreement: (26) "Royalty Burdens" means all gross and net overriding royalties, net profits interests, carried interests and all similar burdens and encumbrances; (27) "Security Interest" means an assignment (including, without limitation, any assignment of any right to receive income), mortgage, charge, floating charge, hypothec, pledge, lien, encumbrance, conditional sales agreement or security interest of any nature or kind; (28) "Software" means the Facet PS Software; (29) "Software Maintenance Services" or "Maintenance Services" means: (1) the provision of Modifications, Refinements and Updates to the Software; and (2) the remedial maintenance of the Software including all adjustments, repairs and corrections of all errors in the Software; (30) "Standard Release" means a release of Modifications, Refinement and Updates from time to time; (31) "Successors" means successors and includes any successor continuing by reason of amalgamation or other reorganization and any Person to whom assets are transferred by reason of a liquidation, dissolution, winding-up or otherwise; (32) "Tax Act" means the Income Tax Act (Canada), as amended from time to time; (33) "Tax Returns" includes all returns, reports, declarations, elections, filings, information returns and statements filed in respect of Taxes; (34) "Taxes" includes all taxes, duties, fees, premiums, royalties, assessments, imposts, levies and other charges of any kind whatsoever imposed by any taxing or other governmental authority or agency within or outside of Canada, together with all interest, penalties or additional amounts imposed in respect thereof; and (35) "Telework Market " means the teleworking industry market sector. 1.2 Interpretation In this Agreement: (1) the inclusion of headings and a table of contents are for convenience of reference only and are not to be considered or taken into account in construing the provisions of this Agreement or to in any way qualify, modify or explain the effect of any such provisions; (2) references to an Article, Section or Schedules are references to an Article, Section or Schedule, as the case may be, in this Agreement, (3) if any term or condition, whether express or implied, of a schedule hereto conflicts with or is at variance with any term or condition of the main body of this agreement, the main body of this agreement shall prevail; (4) "including" or "including without limitation" when used before a specific item or list of items in relation to a previous general description means "including, without limiting the generality of the foregoing"; (5) where in this agreement a representation or warranty is made on the basis of knowledge or awareness, such knowledge or awareness shall be conclusively deemed to consist of actual knowledge or awareness, as the case may be, of the officers, directors or employees of the party making the representations or warranty and does not include the knowledge and awareness of any other person or persons; (6) words importing the singular shall include the plural and vice versa and words importing a particular gender shall include all genders; (7) references to a statute includes the regulations and any other subordinate legislation made pursuant to that statute and includes any amendment, consolidation, reenactment, substitution or replacement of all or any part of such statute, regulation or other subordinate legislation; (8) all monetary amounts are expressed in Canadian currency; (9) where a period of time is specified, dated or calculated from a date or event, the period shall be calculated excluding such date or the date on which such event occurs, as the case may be; and (10) where a term is defined in this Agreement, a derivative of that term shall have a corresponding meaning unless the context otherwise requires. 1.3 Business Days If, pursuant to this Agreement, a notice must be given or an action taken within a specified period or on or before a specified date and such period ends on, or such date falls on a day that is a Saturday, Sunday or public holiday, such notice may be given or such action may be taken on the next succeeding day which is not a Saturday, Sunday or public holiday. 1.4 Schedules The following Schedules are attached hereto and form a part of this Agreement: Schedule "A" - Facet PS Software Schedule "B" - Facet PS Licensing Terms and Conditions Schedule "C" - License Fee Schedule Wherever any term or condition, express or implied, of such Schedules conflicts or is at variance with any term or condition in the body of this Agreement, such term or condition in the body of this Agreement shall prevail. ARTICLE 1 GRANT OF SOFTWARE LICENSE 1.5 Grant of Software License (i) In consideration of the issue of 6,910 Homebase Common Shares to Facet PS at an aggregate deemed value of $125,000 ) (the "Purchase Price") to be delivered to Facet PS on the Closing Date subject only to the agreement by the Licensee to abide by the terms and conditions of this License Agreement Facet PS grants to the Licensee an exclusive right in the Telework Market (the "Facet PS License") to use and resell the Facet PS software program more particularly identified in Schedule "A" (hereinafter referred to as the "Software") in connection with and incorporated in software to be jointly developed by Facet PS and Homebase for a period of two (2) years from the Closing Date and subject to the terms and conditions set out in Schedule B it being understood and agreed that Facet PS will be entitled to receive license and service fees as per Schedule "C". The Licensor and Licensee shall deliver such other documents as may be necessary to complete the transactions provided for in this Agreement. Development Agreement Facet PS and Homebase shall enter into the Development Agreement before or after the Closing. Under the terms of the Development Agreement, Facet PS will develop an application of the Facet PS Software for the specifications to be defined by Homebase. All rights, title and interest in the developed application will, subject to the rights of Facet PS in the Facet PS Software which will form part of the developed application and will be governed by this License Agreement, belong to Homebase. 1.6 Modifications, Refinements and Updates As applicable, the Licensor shall without additional charge to the Licensee, furnish the Licensee with Standard Releases of the Software. Licensee agrees to accept all Standard Releases and is solely liable for any loss or damages incurred and assumes all risks resulting from failure to install and implement the Standard Releases furnished by Licensors. Upon Licensee's request, the Licensor shall install such Standard Releases at the Licensee's site and will invoice Licensee at the respective Licensor's standard rates for labour and expenses for such installation services. If Licensee does not request such Licensor's assistance in installation, Licensee shall be solely responsible for the installation and implementation of the Standard Releases. The Licensor shall not be responsible to Licensee for loss of use of the Software or for any other liabilities arising from any alteration, addition, adjustment or repair that is made by other than authorized representatives of the Licensor. 1.7 Enhancements and New Application Modules Enhancements and new computer application modules may be developed or otherwise acquired by the Licensor from time to time. The development and acquisition of Enhancements and new application modules, including the nature and timing of same, shall be at the sole discretion of the Licensor. Enhancements and new application modules may, in Licensor's discretion, be priced separately and offered to the Licensee at the Licensor's then-current price. This Article 2.4 shall in and of itself, create no obligation on behalf of Licensor or the Licensee to develop, acquire or license, as the case may be, Enhancements or new application modules. ARTICLE 2 REPRESENTATIONS AND WARRANTIES 1.8 Licensor's Representations, Warranties and Covenants Generally The Licensor represents, warrants and covenants to and with the Licensee that: (1) Standing: such Licensor is a corporation duly organized and validly subsisting under the laws of its jurisdiction of incorporation; (2) Capacity: such Licensor has the requisite power and authority to conduct its business as now conducted, to license the Software in the manner provided in this Agreement; (3) Consents and Approvals: no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body exercising jurisdiction over the Software is required for the due execution, delivery and performance by such Licensor of this Agreement except those which has been obtained prior to the date hereof; (4) No Conflicts: none of the execution, delivery or performance of this Agreement by such Licensor does or, with the giving of notice or the lapse of time or both, will: (1) violate or conflict with any of the provisions of the constating documents or other governing documents of such Licensor; (2) violate or conflict with any provision of any law or administrative regulation or any judicial or administrative order, award, judgment or decree applicable to such Licensor; (3) conflict with, result in a breach of, constitute a default under, or accelerate or permit the acceleration of the performance required by any agreement, covenant, undertaking or commitment to which such Licensor or any partner comprising such Licensor is a party or by which such Licensor or any Affiliate is bound or to which any properties or assets of such Licensor are subject; and (4) to the best of its knowledge, the use of such Licensor's Software, in compliance with the terms and conditions of this Agreement, will not infringe any patent or copyright of any third party; and any updates and modifications to such Licensor's Software will be developed in a careful, diligent and workmanlike manner; (5) Execution and Enforceability of Documents: this Agreement has been, and all documents executed and delivered by such Licensor pursuant hereto shall be, duly executed and delivered by it, and this Agreement does, and such documents will, constitute legal, valid and binding obligations of such Licensor enforceable against such Licensor in accordance with their respective terms, subject to bankruptcy, insolvency, preference, reorganization, moratorium and other similar laws affecting creditor's rights generally and the discretionary nature of equitable remedies and defences; (6) Finder's Fee: such Licensor has not incurred any obligation or liability, contingent or otherwise, for brokers' or finders' fees in respect of the transaction contemplated herein for which the Licensee shall have any obligation or liability; (7) Canadian Resident: such Licensor is not a non-resident of Canada for the purposes of the Income Tax Act (Canada); (8) Private Company: such Licensor is a "private company" pursuant to the Securities Act (Alberta) and is not a "reporting issuer" pursuant to such Act and has no filing or reporting obligations pursuant to any securities legislation of any jurisdiction; (9) Lawsuits and Claims: there are no Material claims, violations, alleged violations, proceedings, actions, lawsuits, administrative proceedings or governmental investigations in existence, or to the best of such Licensor's knowledge, contemplated or threatened against or with respect to such Licensor, such Licensor's Software or such Licensor's interests in the Software which might result in impairment or loss of such Licensor's Software or such Licensor's interests therein or which might otherwise materially adversely affect such Licensor's Software. Such Licensor is not aware of any existing basis upon which any of such claims, violations, alleged violations, proceedings, actions or lawsuits might be commenced by any Person which or which might materially adversely affect such Licensor's Software; (10) Rights of First Refusal: Facet PS Inc. grants to Homebase Work Solutions Ltd. a Right of First Refusal to purchase an exclusive license in any related telework industry vertical during the effective period of this Agreement. The definition of a related telework industry vertical shall be as mutually agreed upon. (11) except as stated herein, the Software and all accompanying written materials are provided "as is" without warranty or condition of any kind, express or implied, including but not limited to implied warranties or conditions or merchantability or fitness for a particular purpose and those arising by statute or otherwise in law or from a usage in the trade. The entire risk as to results and performance of the Software is with the Licensee. Such Licensor does not warrant, guarantee or represent that the functions contained in the Software will meet the Licensee's requirements or that the installation or operation of the Software will be uninterrupted or error free. The Licensee acknowledges that it has only relied upon the representations, warranties and covenants contained in Article 3 and not on any representations, warranties or covenants outside this Agreement and the Licensor shall have no liability, whether in contract or in tort, in respect of any statements, information, representations, warranties or covenants made by them or their agents or representatives, except liability for the representations, warranties and covenants contained in Article 3, which liability shall be subject to the limitations contained in this Agreement. 1.9 Licensee's Representations, Warranties and Covenants The Licensee hereby represents, warrants and covenants to and with the Licensor that: (1) Standing: it is a corporation validly existing and in good standing under the laws of its jurisdiction of incorporation and is registered to do business under the laws of the Province of Alberta; (2) Capacity: the Licensee has good and sufficient power, authority and right to enter into this Agreement and to complete the transactions to be completed by the Licensee contemplated hereby and has taken all requisite corporate action to authorize the due creation and issuance of the Homebase Common Shares to be issued to the Licensor hereunder, and, upon completion of Closing pursuant to this Agreement, the Homebase Common Shares shall be validly issued and outstanding as fully paid and non-assessable shares in the capital of the Licensee in compliance with all applicable securities laws and regulations; (3) Capital: the authorized capital of the Licensee consists of an unlimited number of Homebase Common Shares and an unlimited number of First Preferred Shares, Series A, of which, prior to the issue of the Homebase Common Shares to the Licensor hereunder, not more than 900,000 Homebase Common Shares and 50,000 Homebase First Preferred Shares, Series A are issued and outstanding, all of which shares are fully paid and non assessable; (4) No Conflicts: none of the execution, delivery or performance of this Agreement by the Licensee does or, with the giving of notice or the lapse of time or both, will: (1) violate a conflict with any of the provisions of the charter, articles, bylaws or other governing documents of the Licensee; (2) violate or conflict with any of the provisions of any law or administrative regulation or any judicial or administrative order, award, judgment or decree applicable to the Licensee; (3) conflict with, result in a breach of, constitute a default under, or accelerate or permit the acceleration of the performance required by any agreement, covenant, undertaking or commitment to which the Licensee is a party whereby which it is bound or to which any properties or assets of the Licensee are subject; (5) Execution and Enforceability of Documents: this Agreement has been, and all documents executed and delivered by the Licensee pursuant to this Agreement shall be, duly executed and delivered by it, and this Agreement does, and such documents will, constitute legal, valid and binding obligations of the Licensee enforceable against the Licensee in accordance with their respective terms, subject to bankruptcy, insolvency, preference, reorganization, moratorium and other similar laws affecting creditor's rights generally and the discretionary nature of equitable remedies and defences; (6) Finder's Fee: it has not incurred any obligation or liability, contingent or otherwise, for brokers' or finders' fees in respect of the transaction contemplated herein for which the Licensor shall have any obligation or liability; (7) Residence: the Licensee is not a non-resident of Canada within the meaning of Section 116 of The Income Tax Act (Canada). 1.10 No Merger There shall not be any merger of any covenant, representation or warranty in any assignment, conveyance, transfer or document delivered pursuant hereto notwithstanding any rule of law, equity or statute to the contrary and all such rules are hereby waived. 1.11 Breach The covenants, representations and warranties of the parties hereto set forth in Sections 3.1 and 3.2 shall be true or performed as the case may be at the Closing Date or, if it is to be performed after the Closing Date, shall be complied with after the Closing Date, but no claim or action commenced in respect of a breach of any such covenant, representation or warranty shall be made unless the party making the claim or prosecuting the action has given written notice of such claim (including reasonable particulars of the misrepresentation or breach) to the other party hereto within the period of twelve (12) months from the Closing Date. 1.12 Survival of Covenants Notwithstanding anything to the contrary herein expressed or implied, the covenants, representations and warranties set forth in Sections 3.1 and 3.2 are relied upon by the Licensee and the Licensor respectively as being true on the date hereof and on the Closing Date and, notwithstanding the Closing or deliveries of covenants, representations and warranties in any other agreements at Closing or prior or subsequent thereto, the covenants, representations and warranties set forth in Sections 3.1 and 3.2 hereof shall survive Closing for the benefit of the parties hereto, subject to Sections 3.4 and 3.6 hereof. 1 .13 Limitations Notwithstanding anything in this agreement to the contrary, the Licensee shall have no remedy or cause of action against either of the Licensors for breach of representation, warranty or covenant or claim for indemnity for any circumstance, matter or thing actually known to the Licensee or any employee, agent, consultant or representative thereof as at the Closing Date. ARTICLE 3 LIABILITIES AND INDEMNITIES 1.14 Licensor's Liabilities and Indemnities (1) The Licensor shall remain liable for, and shall indemnify the Licensee and its directors, officers, servants, agents and employees harmless from and against, all losses, costs, claims, damages, expenses or liabilities suffered, sustained, paid or incurred by the Licensee or its directors, officers, servants, agents and employees arising as a direct consequence of the breach, as of the Closing Date, of any of the warranties and representations of the Licensor contained in this Agreement and the Licensee shall indemnify the Licensor and its directors, officers, servants, agents and employees harmless from and against all losses, costs, claims, damages, expenses or liabilities suffered, sustained, paid or incurred by the Licensor or its directors, officers, servants, agents and employees arising out of or pertaining to or with respect to its Software occurring subsequent to the Closing Date or as a direct consequence of the breach, as of the Closing Date, of any of the warranties and representations of the Licensee; excepting, in each case, to the extent that such liabilities are reimbursed by insurance or are caused by the party claiming indemnity. Such indemnities shall be deemed to apply to all assignments, transfers, conveyances, novations and other documents licensing the Software to the Licensee notwithstanding the actual terms thereof. Such indemnities shall extend to legal costs on a solicitor and client basis. (2) Neither party shall be entitled to any indemnification in respect of any matter or thing which is the subject of the indemnity in Section (a) above unless it shall have given written notice of its claim for indemnification (including reasonable particulars of the claim) to the other party, within six (6) months of the Closing Date. 1.15 Subrogation The Licensor licenses the Software to the Licensee with full right of substitution and subrogation of the Licensee in and to all covenants, representations and warranties of others given to the Licensor, or any of them, or its predecessors in title in respect of the Software or any part thereof. ARTICLE 4 PROPRIETARY INFORMATION, CONFIDENTIALITY AND RESTRICTIONS OF USE 1.16 Trade Secrets The Licensee acknowledges that the Software includes confidential data and knowhow which are proprietary trade secrets of the Licensor. The Licensee shall not disclose such data or know-how to any third party and shall protect such data and know-how from disclosure by taking reasonable steps to protect the confidentiality of such data and know-how. 1.17 Licensee's Data All data furnished by the Licensee, and processed on the Licensee's CPUs, shall always be and remain the property of the Licensee. Such data shall not include the Software or any part thereof. 1.18 Injunctive Relief If the Licensee or any of its employees, agents or representatives uses. or attempts to use, or disposes of the Software in any manner contrary to the terms of this Agreement, the Licensor shall have the right, in addition to such other remedies that may be available to them, to injunctive relief enjoining such acts or attempts, it being acknowledged that legal remedies are inadequate. 1.19 Confidential Information All information and data, in whatever form, obtained by the Licensee in respect of the subject-matter of this Agreement (the "Confidential Information") shall be held by the Licensee in the strictest confidence and shall not be disclosed prior to Closing; provided that such Confidential Information may be disclosed if the disclosure (i) is made with the consent of all the parties; (ii) is made to an Affiliate of the Licensee; (iii) is required by law, by a government or governmental department, ministry, board, commission or agency or by a court or other tribunal of competent jurisdiction; (iv) is required by a securities commission or stock exchange having jurisdiction over the Licensee or an Affiliate of the Licensee; (v) is in respect of information or data that is in the public domain at the time of the disclosure through no fault of the Licensee; (vi) is made on a need-to-know basis to outside consultants. accounting. business or legal advisors who agree to maintain the confidentiality of the Confidential Information. ARTICLE 5 TERMINATION 1.20 Termination This License Agreement is effective until terminated. The Facet PS License shall be subject to the termination provisions set out in Schedule "B". 1.21 Survival All obligations herein regarding confidentiality, secrecy and disclosure including, without limitation, the provisions of Section 5.4 shall survive termination of this Agreement. ARTICLE 6 GENERAL 1.22 Notice All notices shall be in writing and shall be sufficiently given or made if (i) delivered to the intended recipient personally or by courier during normal business hours on a business day at the intended recipient's addresses as set forth below, or telecopied to the intended recipient; and If to Facet PS: 1536 - 30th Avenue S.W. Calgary, Alberta T2T 1 P3 Attention: lan B. Elliott Telecopier: (403) 229-4468 If to Homebase: Suite 910, 112 - 4th Avenue S.W. Calgary, Alberta T2P OH3 Attention: Ken MacLean Telecopier: (403) 237-5047 Any notice given or made in the above-noted manner shall be deemed to have been given or made and to have been received on the day of its delivery or transmission, as the case may be, if such day is a business day and such notice is received prior to 4:00 p.m., local time, and, if not, on first business day thereafter. 1.23 Arbitration If any matter upon which the parties do not agree is required to be referred to arbitration pursuant to the terms hereof or if the parties agree to refer any matter arising hereunder to arbitration, the arbitration shall be conducted before a single arbitrator. Any such arbitration, including the selection of the arbitrator, shall be governed by the Arbitration Act (Alberta) and the rules of the Arbitration and Mediation Society of Alberta. The decision of any such arbitrator shall be final and binding upon the parties and the fees and costs relating thereto shall be borne and paid in the manner the arbitrator determines. 1.24 Amendments and Waiver All amendments to this Agreement, and all waivers of any provision, or the breach of any provision, of this Agreement, shall be made in a written instrument signed by all of the parties. A waiver shall affect only the matter specifically identified in the instrument granting the waiver and shall not extend to any other matter, provision or breach. 1.25 Remedies Cumulative No reference to or exercise of any specific right or remedy by a party hereunder, shall prejudice or preclude such party from exercising or invoking any other remedy in respect thereof, whether allowed at law or in equity or expressly provided for herein. No such remedy shall be exclusive or dependent upon any other such remedy but each party may exercise any one or more of such remedies independently or in combination. 1.26 Further Assurances At the Closing and thereafter as may be necessary and without further consideration, the parties hereto shall execute. acknowledge and deliver such other instruments and shall take such other action as may be necessary to carry out their respective obligations under this agreement. 1.27 Time Time shall be of the essence. 1.28 Governing Law This Agreement shall be interpreted, construed and governed in all respects by the laws of the Province of Alberta. 1.29 Prior Agreements and Amendments This agreement shall supersede and replace any and all prior agreements between the parties hereto relating to the licensing of the Software and may be amended only by written instrument signed by the parties hereto. 1.30 Entire Agreement This Agreements constitutes the entire agreement of the parties in respect of the subject matter herein and supersedes all prior oral or written agreements and understandings of the parties, or any one of them in relation thereto. 1.31 Assignment This Agreement may not be assigned by the other party hereto without the prior written consent of the other party hereto, which consent may not be unreasonably withheld. 1.32 Enurement This Agreement is binding up and shall enure to the benefit of the parties hereto and their respective successors and permitted assigns. 1.33 Counterpart Execution This Agreement may be executed in any number of counterparts each of which she.. be an original and all counterparts together shall constitute a single document. IN WITNESS WHEREOF the parties have duly executed this Agreement on the date first written above. FACET PETROLEUM SOLUTIONS INC. Per: /s/ Ian Elliott - ---------------------------------- HOMEBASE WORK SOLUTIONS LTD. Per: /s/ Ken MacLean - ---------------------------------- EX-10.22 37 SHARE PURCHASE AGREEMENT SHARE PURCHASE AGREEMENT AMONG HOMEBASE WORK SOLUTIONS LTD. THE CONTROLLING SHAREHOLDERS NAMED HEREIN AND INFOCAST CANADA CORPORATION AND INFOCAST CORPORATION DATED AS OF MAY 13, 1999 TABLE OF CONTENTS ARTICLE I DEFINITIONS................................................................1 Section 1.01 Definitions................................................1 Section 1.02 Accounting Principles......................................4 ARTICLE II AGREEMENT TO SELL AND PURCHASE THE PURCHASED SHARES........................9 Section 2.01 Sale and Purchase of the Purchased Shares..................9 Section 2.02 Purchase Price............................................10 ARTICLE III CLOSING...................................................................10 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE CONTROLLING SHAREHOLDERS..........................................10 Section 4.01 Organization, Good Standing and Qualification of the Company............................................10 Section 4.02 Articles of Incorporation and By-Laws; Records............11 Section 4.03 Capitalization............................................12 Section 4.04 Authority; Binding Nature of Agreements...................13 Section 4.05 Non-Contravention; Consents...............................13 Section 4.06 Proprietary Rights; Proprietary Information and Inventions Agreement..................................15 Section 4.07 Proceedings; Orders.......................................16 Section 4.08 Sale of Purchased Shares Valid............................16 Section 4.09 Financial Statements......................................17 Section 4.10 Title to Assets...........................................18 Section 4.11 Material Contracts........................................18 Section 4.12 Employees; Employee Benefits..............................20 Section 4.13 Receivables; Major Customers..............................21 Section 4.14 Major Suppliers...........................................22 Section 4.15 Compliance With Requirement of Laws.......................22 Section 4.16 Governmental Authorizations...............................23 Section 4.17 Tax Matters...............................................23 Section 4.18 Securities Laws Compliance; Registration Rights.......................................26 Section 4.19 Finders and Brokers.......................................26 i Section 4.20 Environmental Compliance..................................26 Section 4.21 Insurance.................................................26 Section 4.22 Related Party Transactions................................28 Section 4.23 Absence of Changes........................................28 Section 4.24 Controlling Shareholders..................................30 Section 4.25 Powers of Attorney........................................31 Section 4.26 Full Disclosure...........................................32 Section 4.27 Investment Representations................................32 Section 4.28 Corporate Governance......................................33 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND INFOCAST..............................................................33 Section 5.01 Organization, Good Standing and Qualification of the Purchaser............................33 Section 5.02 Capitalization............................................33 Section 5.03 Authority; Binding Nature of Agreements...................34 Section 5.04 Non-Contravention; Consents...............................34 Section 5.05 Proceedings; Orders.......................................35 Section 5.06 Sale of Exchangeable Shares Valid.........................35 Section 5.07 Investment Representations................................35 Section 5.08 Consents..................................................36 Section 5.09 Organization, Good Standing and Qualification of InfoCast.............................36 Section 5.10 Articles of Incorporation and By-Laws; Records...................................................37 Section 5.11 Capitalization............................................38 Section 5.12 Authority; Binding Nature of Agreements...................38 Section 5.13 Non-Contravention; Consents...............................38 Section 5.14 Proprietary Rights; Proprietary Information and Inventions Agreement......................39 Section 5.15 Proceedings; Orders.......................................40 Section 5.16 Sale of Purchased Shares Valid............................41 Section 5.17 Financial Statements......................................41 Section 5.18 Title to Assets...........................................42 Section 5.19 InfoCast Material Contracts...............................42 Section 5.20 Employees and Employee Benefits...........................43 Section 5.21 Compliance With Requirement of Laws.......................45 Section 5.22 Tax Matters...............................................45 Section 5.23 Securities Laws Compliance; Registration Rights.......................................47 Section 5.24 Insurance.................................................48 Section 5.25 Absence of Changes........................................49 Section 5.26 Full Disclosure...........................................51 Section 5.27 Corporate Governance......................................51 ii ARTICLE VI PRE-CLOSING COVENANTS OF THE COMPANY AND THE CONTROLLING SHAREHOLDERS..........................................52 Section 6.01 Access and Investigation..................................52 Section 6.02 Operation of Business.....................................52 Section 6.03 Filings and Consents......................................54 Section 6.04 Notification of Events or Conditions......................54 Section 6.05 Payment of Indebtedness by Related Parties................55 Section 6.06 No Negotiation............................................55 Section 6.07 Best Efforts..............................................56 Section 6.08 Confidentiality...........................................56 ARTICLE VII PRE-CLOSING COVENANTS OF THE PURCHASER AND INFOCAST.......................56 Section 7.01 Filings and Consents......................................56 Section 7.02 Access and Investigation..................................57 Section 7.03 Operation of Business.....................................57 Section 7.04 Filings and Consents......................................59 Section 7.05 Notification of Events or Conditions......................59 Section 7.06 Best Efforts..............................................60 ARTICLE VIII CONDITIONS TO PURCHASER'S OBLIGATIONS AT CLOSING..........................60 Section 8.01 Representations and Warranties; Performance of Obligations................................60 Section 8.02 Consents, Permits, Waivers and Approvals..................60 Section 8.03 Delivery of Certificates Evidencing Purchased Shares..........................................61 Section 8.04 Delivery of Employment Agreements.........................61 Section 8.05 Compliance Certificate....................................61 Section 8.06 Corporate Documents.......................................61 Section 8.07 Exchange Agreement........................................61 Section 8.08 Proceedings and Documents.................................61 Section 8.09 Delivery of Non-Controlling Shareholder Letters of Transmittal....................................62 ARTICLE IX CONDITIONS TO THE SELLINGSHAREHOLDER'S OBLIGATIONS AT CLOSING.............62 Section 9.01 Representations and Warranties; Performance of Obligations................................62 Section 9.02 Consents, Permits, Waivers and Approvals..................62 Section 9.03 Delivery of Certificates Evidencing Exchangeable Shares.......................................62 iii Section 9.04 Compliance Certificate of Purchaser.......................63 Section 9.05 Compliance Certificate of InfoCast........................63 Section 9.06 Corporate Documents.......................................63 Section 9.07 Exchange Agreement........................................63 Section 9.08 Proceedings and Documents.................................63 Section 9.09 Homebase Governance.......................................64 Section 9.10 Darcy Galvon - Co-Chairman of InfoCast....................64 ARTICLE X INDEMNIFICATION, ETC......................................................64 Section 10.01 Survival of Representations and Warranties................64 Section 10.02 Indemnification by Controlling Shareholders...............64 Section 10.03 Indemnification by the Purchaser and InfoCast.............65 Section 10.04 Interest..................................................66 Section 10.05 Defense of Third Party Claims.............................66 ARTICLE XI MISCELLANEOUS.............................................................67 Section 11.01 Tax Elections.............................................67 Section 11.02 Termination...............................................68 Section 11.03 Governing Law.............................................68 Section 11.04 Jurisdiction; Venue.......................................68 Section 11.05 Successors and Assigns....................................69 Section 11.06 Entire Agreement..........................................69 Section 11.07 Severability..............................................69 Section 11.08 Amendment and Waiver......................................69 Section 11.09 Notices...................................................69 Section 11.10 Counterparts..............................................71 Section 11.11 Attorney's Fees...........................................71 Section 11.12 Delays or Omissions.......................................71 Section 11.13 Remedies Cumulative.......................................72 Section 11.14 Ontario Securities Law Matters............................72 iv SCHEDULES Schedule 1 Name and Addresses of Selling Shareholders Schedule 2.01 Purchased Shares Schedule 2.02 Purchase Price Schedule 4.01(b) Board of Directors; Committees; Officers Schedule 4.01(d) Investments Schedule 4.05(b) Consents Schedule 4.06 Proprietary Assets Schedule 4.10 Leases and Licensed Assets Schedule 4.11 Material Contracts Schedule 4.12 Employees; Employee Benefits Schedule 4.13 Accounts Receivable; Major Customers Schedule 4.14 Major Suppliers Schedule 4.16 Government Authorizations Schedule 4.17 Tax Matters Schedule 4.21 Insurance Schedule 4.22 Related Party Transactions Schedule 4.23 Absence of Changes Schedule 5.04 Purchaser Consents Schedule 5.09(b) InfoCast Board of Directors; Committees; Officers Schedule 5.14 InfoCast Proprietary Assets Schedule 5.19 InfoCast Material Contracts v Schedule 5.20 InfoCast Employees and Employee Benefits Schedule 5.22 InfoCast Tax Matters Schedule 5.24 InfoCast Insurance Schedule 5.25 InfoCast Absence of Changes Schedule 5.27 Corporate Governance of Homebase Schedule 8.09 Non-Controlling Shareholder Letters of Transmittal Schedule 9.09 Co-Chairmen Guidelines vi EXHIBITS Exhibit A Rights and Designations of Exchangeable Shares Exhibit B Form of Exchange Agreement vii SHARE PURCHASE AGREEMENT This Share Purchase Agreement is entered into as of May 13, 1999, by and among Homebase Work Solutions Ltd., a corporation organized and existing under the laws of Province of Alberta (the "Company"), the Controlling Shareholders (as defined herein), InfoCast Canada Corporation, a corporation organized and existing under the laws of Ontario (the "Purchaser"), and InfoCast Corporation, a corporation organized and existing under the laws of Nevada ("InfoCast"). WITNESSETH: WHEREAS the Selling Shareholders (as defined herein) own, in the aggregate, a total of 955,000 common shares (the "Company Common Shares") in the capital of the Company, and 45,000 first preferred shares, Series A (the "Company Preferred Shares") which the holders thereof shall agree will be treated as Company Common Shares (other than the exchange ratio therefor) for purposes of this Agreement, which shares represent all of the issued and outstanding shares in the capital of the Company; AND WHEREAS the Purchaser desires to purchase from the Selling Shareholders 100% of Company Common Shares and Company Preferred Shares (collectively, the "Purchased Shares") owned by the Selling Shareholders (which shall be accomplished by the direct purchases of such shares from the Selling Shareholders) and the Selling Shareholders are willing to sell such Company Purchased Shares, to the Purchaser, upon the terms and subject to the conditions set forth herein; AND WHEREAS InfoCast is the registered and beneficial owner of 10,000,000 common shares of the Purchaser, being all the issued and outstanding common shares of the Purchaser; NOW THEREFORE in consideration of the mutual promises and covenants herein, the Purchaser, InfoCast, the Company and the Selling Shareholders, as applicable, hereby agree as follows: ARTICLE I DEFINITIONS Section 1.1 Definitions For purposes of this Agreement, the following terms shall have the meanings set forth in this Section 1.01: "Acquisition Transaction" shall mean any transaction involving: (a) the sale or other disposition of all or any portion of the Company's business or assets (other than the sale of goods or services in the Ordinary Course of Business); (b) the issuance, sale or other disposition of (i) any shares in the capital of the Company, (ii) any option, call, warrant or right (whether or not immediately exercisable) to acquire any shares in the capital of the Company, or (iii) any security, instrument or obligation that is or may become convertible into or exchangeable for any capital stock of the Company; or (c) any merger, consolidation, amalgamation, business combination, share exchange, reorganization, recapitalization or similar transaction involving the Company. "Agreement" shall mean this Share Purchase Agreement, dated as of May 13, 1999, by and among the Company, InfoCast, the Selling Shareholders and the Purchaser, together with all schedules and exhibits attached thereto, as it may be amended, supplemented or otherwise modified from time to time. "Alberta Act" means the Securities Act (Alberta). "Best Efforts" shall mean the efforts that a prudent Person desiring to achieve a particular result would use in order to ensure that such result is achieved as expeditiously as possible. "Breach" shall mean, in respect of a representation, warranty, covenant, obligation or other provision, that there is or has been (a) any material inaccuracy in or breach of, or any failure to comply with or perform, such representation, warranty, covenant, obligation or other provision, or (b) any claim (by any Person) or other circumstance that is inconsistent with such representation, warranty, covenant, obligation or other provision, which has the effect of imposing material limitations on the transactions contemplated hereby, or would if the transactions were consummated, materially and adversely affect any of the parties hereto. "CDN$" shall mean the lawful currency of Canada. "Closing" shall have the meaning specified in Article III. "Closing Date" shall have the meaning specified in Article III. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Company" shall mean Homebase Work Solutions Ltd., as specified in the first paragraph of this Agreement. "Company Common Shares" shall have the meaning specified in the recitals of this Agreement. 2 "Company Contract" shall mean any Contract (a) to which the Company is a party, (b) by which the Company or any of its assets is or may become bound or (c) under which the Company has, or may become subject to, any obligation or under which the Company has or may acquire any right or interest. "Company Preferred Shares" shall have the meaning specified in the recitals of this Agreement. Company Principals" means Messrs. Darcy Galvon, Ken Maclean and Scott Fleming. "Company Returns" shall have the meaning specified in Section 4.17(b) of the Agreement. "Company Warrants" has the meaning ascribed hereto in Section 4.03(b) of this Agreement. "Consent" shall mean any approval, consent, ratification, permission, waiver or authorization (including any Governmental Authorization). "Contract" shall mean, with respect to any Person, any written, oral, implied or other agreement, contract, understanding, arrangement, instrument, note, guaranty, indemnity, representation, warranty, deed, assignment, power of attorney, certificate, purchase order, work order, insurance policy, benefit plan, commitment, covenant, assurance or undertaking of any nature to which such Person is a party or by which its properties or assets may be bound or affected or under which it or its respective business, properties or assets receive benefits. "Controlling Shareholders" shall mean Darcy Galvon, Ken MacLean, Scott Fleming, 7863640 Alberta Ltd. and 786206 Alberta Ltd. all of Alberta, Canada and principal shareholders of the Company. "Damages" shall mean any loss, damage, injury, decline in value, lost opportunity, Liability, claim, demand, settlement, judgment, award, fine, penalty, Tax, fee (including any legal fee on a solicitor and his own client basis, expert fee, accounting fee or advisory fee), charge, cost (including any cost of investigation) or expense of any nature. "Employee Benefit Plan" shall mean any and all bonus, deferred compensation, incentive compensation, stock purchase, stock option, stock appreciation, phantom stock, savings, profit sharing, severance or termination pay, health or other medical, dental, life, disability or other insurance (whether insured or self-insured), supplementary unemployment or employment benefit, pension, retirement, registered retirement savings, supplementary retirement, change-in-control and any other employment benefit or compensation plan, program, agreement, arrangement, policy or practice (including any funding mechanism therefore which is now in effect which will be required in the future as a result of the Transactions), whether formal or informal, funded or unfunded, registered or unregistered, oral or written, which are maintained or contributed to or are required to be maintained, contributed to or provided by the Company, under which any employee, former employee or independent contractor (or any dependent of any such Persons) has any present or future right to benefits or compensation or under which the Company has any present or future liability or obligation. 3 "Entity" shall mean any corporation (including any non profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, cooperative, foundation, society, political party, union, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization or entity. "Environmental Law" shall mean any federal, provincial, state, local or foreign Requirement of Law relating to pollution or protection of human health or the environment. "Exchange Agreement" shall mean a share exchange agreement among each Selling Shareholder, the Purchaser and InfoCast, substantially in the form of Exhibit B, as such agreement may be amended, supplemented or otherwise modified from time to time, pursuant to which each Selling Shareholder agrees to sell to InfoCast the Exchangeable Shares held by such Selling Shareholder for consideration in the form of InfoCast Exchange Stock. "Exchangeable Shares" shall mean the Exchangeable Shares in the capital of the Purchaser having the rights and preferences described in Exhibit "A". "Financial Statements" shall have the meaning specified in Section 4.9(a). "Fleming Employment Agreement" shall mean an employment agreement, in form and substance satisfactory to Scott Fleming, the Purchaser and InfoCast, as such agreement may be amended, supplemented or otherwise modified from time to time. "GAAP" shall mean generally accepted accounting principles in effect in Canada, applied on a basis consistent with the basis on which the Financial Statements were prepared. "Galvon Management Agreement" shall mean a management agreement, in form and substance satisfactory to Darcy Galvon, the Purchaser and InfoCast, as such agreement may be amended, supplemented or otherwise modified from time to time. "Governmental Authorization" shall mean any (a) permit, license, certificate, franchise, concession, approval, consent, ratification, permission, clearance, confirmation, endorsement, waiver, certification, designation, rating, registration, qualification or authorization that is, has been or may in the future be issued, granted, given or otherwise made available by or under the authority of any Governmental Authority or pursuant to any Requirement of Law; or (b) right under any Contract with any Governmental Authority. 4 "Governmental Authority" shall mean any (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature, (b) federal, provincial, state, local, municipal, foreign or other government, (c) governmental or quasi governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or Entity and any court or other tribunal), (d) multi national organization or body, or (e) individual, Entity or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature. "Indemnified Party" shall have the meaning specified in Section 10.04. "InfoCast" shall mean InfoCast Corporation, a Delaware corporation. "InfoCast Acquisition Transaction" shall mean any transaction involving: i. the sale or other disposition of all or any portion of InfoCast's business or assets (other than the sale of goods or services in the ordinary course of business); ii. the issuance, sale or other disposition of (i) any shares in the capital of InfoCast, (ii) any option, call, warrant or right (whether or not immediately exercisable) to acquire any shares in the capital of InfoCast, or (iii) any security, instrument or obligation that is or may become convertible into or exchangeable for any capital stock of InfoCast; or iii. any merger, consolidation, amalgamation, business combination, share exchange, reorganization, recapitalization or similar transaction involving InfoCast. "InfoCast Common Stock" shall mean the common stock of InfoCast. "InfoCast Contract" shall mean any Contract (a) to which InfoCast is a party, (b) by which InfoCast or any of its assets is or may become bound or (c) under which InfoCast has, or may become subject to, any obligation or under which InfoCast has or may acquire any right or interest. "InfoCast Exchange Stock" shall mean the InfoCast Common Stock issuable to the Selling Shareholders upon the exchange of the Exchangeable Shares in accordance with the Exchange Agreement. "InfoCast Financial Statements" shall have the meaning specified in Section 5.17(a). "InfoCast Material Contract" shall have the meaning specified in Section 5.19 (a). "InfoCast Returns" shall have the meaning specified in Section 5.22(b) of the Agreement. 5 "Knowledge" shall mean, in respect of a particular fact or other matter by an individual that (a) such individual is actually aware of such fact or other matter, or (b) a prudent individual could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a diligent and comprehensive investigation concerning the truth or existence of such fact or other matter. A Person shall be deemed to have "Knowledge" of a particular fact or other matter if any officer, employee or other Representative of such Person has Knowledge of such fact or other matter. "KPMG" means KPMG LLP, Chartered Accountants of Toronto, Canada. "Liability" shall mean any debt, obligation, duty or liability of any nature (including any unknown, undisclosed, uncaptured, unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious, derivative, joint, several or secondary liability), regardless of whether such debt, obligation, duty or liability would be required to be disclosed on a balance sheet prepared in accordance with GAAP and regardless of whether such debt, obligation, duty or liability is immediately due and payable. "Lien" shall mean any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, equity, trust, equitable interest, claim, preference, right of possession, lease, tenancy, license, encroachment, covenant, infringement, interference, Order, proxy, option, right of first refusal, preemptive right, community property interest, legend, defect, impediment, exception, reservation, limitation, impairment, imperfection of title, condition or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset). "MacLean Employment Agreement" shall mean an employment agreement, in form and substance satisfactory to Ken MacLean, the Purchaser and InfoCast, as such agreement may be amended, supplemented or otherwise modified from time to time. "Material Contract" shall have the meaning specified in Section 4.11. "Non-Controlling Shareholders" means those Selling Shareholders who are not Controlling Shareholders. "Non-Controlling Shareholder Letters of Transmittal" means those Letters of Transmittal substantially in the form of Schedule 8.08 hereto. "Ontario Act" shall mean the Securities Act (Ontario), as amended. "Order" shall mean any (a) order, judgment, injunction, edict, decree, ruling, pronouncement, determination, decision, opinion, verdict, sentence, subpoena, writ or award that is, has been or may in the future be issued, made, entered, rendered or otherwise put into effect by or under the authority of any court, administrative agency or other Governmental Authority or any arbitrator or arbitration panel, or (b) Contract with any Governmental Authority that is, has been or may in the future be entered into in connection with any Proceeding. 6 "Ordinary Course of Business" shall mean, in respect of any action taken by or on behalf of the Company, that (a) such action is recurring in nature, is consistent with the Company's past practices and is taken in the ordinary course of the Company's normal day to day operations, (b) such action is taken in accordance with sound and prudent business practices, (c) such action is not required to be authorized by any of the Company's shareholders, the Company's board of directors or any committee of the Company's board of directors and does not require any other separate or special authorization of any nature, and (d) such action is similar in nature and magnitude to actions customarily taken, without any separate or special authorization, in the ordinary course of the normal day to day operations of other Entities that are engaged in businesses similar to the Company's business. "Person" shall mean any individual, Entity or Governmental Authority. "Pre-Closing Period" shall mean the period commencing as of the date of the Agreement and ending on the Closing Date. "Proceeding" shall mean any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding and any informal proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination or investigation that is, has been or may in the future be commenced, brought, conducted or heard by or before, or that otherwise has involved or may involve, any Governmental Authority or any arbitrator or arbitration panel. "Proprietary Asset" shall mean any patent, patent application, trademark (whether registered or unregistered and whether or not relating to a published work), trademark application, trade name, fictitious business name, service mark (whether registered or unregistered), service mark application, copyright (whether registered or unregistered), copyright application, maskwork, maskwork application, trade secret, know how, franchise, system, computer software, invention, design, blueprint, proprietary product, technology, proprietary right or other intellectual property right or intangible asset. "Purchase Price" shall have the meaning specified in Section 2.02. "Purchased Shares" shall have the meaning specified in Section 2.01. "Purchaser" shall have the meaning specified in the first paragraph of this Agreement. "Related Party" shall mean (a) each Controlling Shareholder, (b) each individual who is, or who has at any time been, an officer of the Company, (c) each member of the family of each of the individuals referred to in clause (b) above; and (d) any Entity (other than the Company) in which any one of the Persons referred to in clauses (a), (b) and (c) above holds (or in which more than one of such individuals collectively hold), beneficially or otherwise, a material voting, proprietary or equity interest. 7 "Representatives" shall mean as to any Person, the officers, directors, employees, attorneys, accountants, advisors and representatives of such party. Messrs Ken MacLean, Darcy Galvon, Scott Fleming and Richard Shannon shall be deemed to be "Representatives" of the Company. "Requirement of Law" shall mean any federal, provincial, state, local, municipal, foreign or other law, statute, legislation, constitution, principle of common law, resolution, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, ruling, directive, pronouncement, requirement, specification, determination, decision, opinion or interpretation that is, has been or may in the future be issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority. "Galvon" shall mean Darcy Galvon, an individual. "MacLean" shall mean Ken MacLean, an individual. "Fleming" shall mean Scott Fleming, an individual. "Selling Shareholders" shall mean each of those entities and individuals listed on Schedule I attached hereto. "Tax" shall mean any tax (including any income tax, franchise tax, capital gains tax, estimated tax, gross receipts tax, value added tax, surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax, occupation tax, inventory tax, occupancy tax, withholding tax, capital tax, land transfer tax, goods and services tax or payroll tax), levy, assessment, tariff, impost, imposition, toll, duty (including any customs duty), deficiency or fee, and any related charge or amount (including any fine, penalty or interest), that is, has been or may in the future be (a) imposed, assessed or collected by or under the authority of any Governmental Authority, or (b) payable pursuant to any tax sharing agreement or similar Contract and all unemployment insurance, health insurance and Canada, provincial or other government pension plan premiums. "Tax Act" means the Income Tax Act (Canada). "Tax Return" shall mean any return (including any information return), report, statement, declaration, estimate, schedule, notice, notification, form, election, certificate or other document or information that is, has been or may in the future be filed with or submitted to, or required to be filed with or submitted to, any Governmental Authority in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Requirement of Law relating to any Tax. 8 "Transaction Documents" shall mean this Agreement, the Non-Controlling Shareholder Letters of Transmittal, the Galvon Management Agreement, the MacLean Employment Agreement, the Employment Agreement, the Fleming Employment Agreement, the Exchange Agreement and all other agreements, certificates and instruments executed or contemplated to be executed by any of the Parties in connection with the Transactions. "Transactions" shall mean all of the transactions contemplated by this Agreement and each of the other Transaction Documents, including, without limitation, (a) the sale of the Purchased Shares by the Selling Shareholders and the purchase thereof by the Purchaser in accordance with this Agreement, (b) the issuance by the Purchaser of the Exchangeable Shares to the Selling Shareholders in connection with such purchase in accordance with this Agreement, (c) the exchange of Exchangeable Shares by the Selling Shareholders for shares of InfoCast Exchange Stock in accordance with the Exchange Agreement, and (d) the execution and delivery of, and the performance under, the Galvon Management Agreement, the MacLean Employment Agreement, the Fleming Employment Agreement. "Unaudited Interim Balance Sheet" shall have the meaning specified in Section 4.9(a). "US GAAP" shall mean generally accepted accounting principles in effect in the United States, applied on a basis consistent with the basis on which the InfoCast Financial Statements were prepared. "US$" shall mean the lawful currency of the United States of America. "U.S. Securities Act" shall mean the United States Securities Act of 1933, as amended. Section 1.02 Accounting Principles All references to generally accepted accounting principles or GAAP means references to principles recommended, from time to time, in the Handbook of the Canadian Institute of Chartered Accountants and all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with such generally accepted accounting principles. ARTICLE II AGREEMENT TO SELL AND PURCHASE THE PURCHASED SHARES Section II.1 Sale and Purchase of the Purchased Shares Subject to the terms and conditions of this Agreement, at the Closing, the Selling Shareholders shall sell, assign, transfer and deliver to the Purchaser an aggregate of 955,000 Company Common Shares and 45,000 Company Preferred Shares (collectively, the "Purchased Shares"). Set forth on Schedule 2.01 is a list of the number of shares of Purchased Shares to be so sold, assigned, transferred and delivered to Purchaser by each Selling Shareholder. 9 Section II.2 Purchase Price At the Closing, the Purchaser shall pay to the Selling Shareholders an aggregate purchase price (subject to adjustment as provided below) for the Purchased Shares (the "Purchase Price") as follows: (a) Exchangeable Shares. On the Closing Date, the Purchaser shall issue to the Selling Shareholders an aggregate of three million four hundred thousand (3,400,000) Exchangeable Shares. Set forth on Schedule 2.02 is a list of the number of shares of Exchangeable Shares to be issued, transferred and delivered to each of the Selling Shareholders. (b) Allocation of Purchase Price. The Purchase Price shall be allocated among the Selling Shareholders in accordance with the provisions of Schedule 2.02. Each Selling Shareholder and the Purchaser agree to report the purchase and sale of their Purchased Shares in any returns required to be filed under the Tax Act and any other taxation statutes in accordance with the provisions of Schedule 2.02. ARTICLE III CLOSING The closing (the "Closing") shall take place at the offices of InfoCast Canada Corporation, 1 Richmond Street West, Suite 901 Toronto, Ontario, Canada at 10:00 A.M. (Eastern Standard Time) on May 13, 1999 or on such other date or at such other place or time as the Company, the Selling Shareholders and the Purchaser may mutually agree (such date is hereinafter referred to as the "Closing Date"). ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE CONTROLLING SHAREHOLDERS The Company and each of the Controlling Shareholders, jointly and severally, hereby represents and warrants to the Purchaser and InfoCast as follows: Section 4.01 Organization, Good Standing and Qualification of the Company 10 (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the Province of Alberta and is duly qualified to conduct business and in corporate and tax good standing under the laws of each jurisdiction in which the nature of its business or the ownership or leasing of its properties require such qualification. The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute, deliver and perform its obligations under this Agreement, and to carry on its business as presently conducted and as presently proposed to be conducted. (b) Schedule 4.01(b) accurately sets forth (i) the names of the members of the Company's board of directors, (ii) the names of the members of each committee of the Company's board of directors and (iii) the names and titles of the Company's officers. (c) The Company is not insolvent within the meaning of applicable laws, rules regulation or similar requirement, and has not made any assignment in favour of its creditors nor a proposal in bankruptcy to its creditors or any class thereof, nor has any petition for a receiver order been presented in respect of the Company. The Company has not initiated any proceedings with respect to a compromise or arrangement with its creditors or for the dissolution, liquidation or reorganization of the Company or the winding up or cessation of the business or affairs of the Company. No receiver has been appointed in respect of the Company or any of its assets and no execution or distress has been levied upon any of its assets. (d) The Company has no subsidiaries, and, except as set forth in Schedule 4.01(d), has never owned, beneficially or otherwise, any shares or other securities of, or any direct or indirect interest of any nature in, any Entity. Section 4.02 Articles of Incorporation and By-Laws; Records (a) The Company has delivered to the Purchaser accurate and complete copies of: (i) the articles of incorporation and bylaws, including all amendments thereto of the Company; (ii) the share transfer register of the Company; and (iii) the minutes and other records of the meetings and other proceedings (including any actions taken by written consent or otherwise without a meeting) of the stockholders, board of directors and all committees of the board of directors of the Company. (b) There have been no meetings or other proceedings of the stockholders, the board of directors or any committee of the board of directors of the Company, that are not fully reflected in such minutes or other records. (c) The Company has never conducted any business under or otherwise used, for any purpose or in any jurisdiction, any fictitious name, assumed name, trade name or other name, other than the name "Homebase Work Solutions Ltd.". 11 (d) There has not been any material violation of any of the provisions of the articles of incorporation or bylaws of the Company or of any resolution adopted by the shareholders, board of directors or any committee of the board of directors of the Company and no event has occurred, and no condition or circumstance exists that might (with or without notice or lapse of time) constitute or result directly or indirectly in such a violation. (e) The books of account, stock records, minute books and other records of the Company are accurate, up to date and complete in all material respects, and have been maintained in accordance with sound and prudent business practices. All of the records of the Company are in the actual possession and direct control of the Company. Section 4.03 Capitalization (a) The authorized capital stock of the Company consists of an unlimited number of Company Common Shares, an unlimited number of first preferred shares and an unlimited number of second preferred shares of which 955,000 Company Common Shares and 45,000 Company Preferred Shares have been issued and are outstanding, and will be the only Company Common Shares and Company Preferred Shares issued and outstanding on the Closing Date, and are owned and held beneficially and of record by the Selling Shareholders as set forth on Schedule I hereto. All issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued in full compliance with all applicable securities laws and other applicable Requirement of Laws, and are outstanding as fully paid and non-assessable. (b) There are no: (i) outstanding subscriptions, options, calls, warrants or rights (whether or not currently exercisable) to acquire any shares in the capital or other securities of the Company, other than 67,500 outstanding share purchase warrants and 33,750 outstanding "penalty" share purchase warrants (collectively, the "Company Warrants") associated with the Company Preferred Shares, which Warrants shall be tendered for cancellation on the Closing Date, (ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares in the capital or other securities of the Company, (iii) Contract under which the Company is or may become obligated to sell or otherwise issue any shares of its capital stock or any other securities, or (iv) condition or circumstance that may directly or indirectly give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any shares in the capital, or other securities of, the Company. (c) The Company has never repurchased, redeemed or otherwise reacquired (and has not agreed, committed or offered (in writing or otherwise) to reacquire) any shares of capital stock or other securities of the Company. (d) Upon the acquisition by Purchaser of the Purchased Shares, Purchaser will own 100% of the issued and outstanding shares of capital stock of the Company. 12 Section 4.04 Authority; Binding Nature of Agreements (a) Subject to completion of the Non-Controlling Shareholder Letters of Transmittal and the tender of the same at closing, the Company has the absolute and unrestricted right, power and authority to enter into and to perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party, and the execution, delivery and performance by the Company of this Agreement and each of such other Transaction Documents have been duly authorized by all necessary action on the part of the Company and its shareholders, board of directors and officers. Each of this Agreement and such other Transaction Documents constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). (b) Each of the Controlling Shareholders has the absolute and unrestricted right, power and capacity to enter into and to perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party, and the execution, delivery and performance by each Controlling Shareholder of this Agreement and such other Transaction Documents have been duly authorized by all necessary action on the part of such Controlling Shareholder. Each of this Agreement and such other Transaction Documents constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of each Controlling Shareholder party thereto, enforceable against such Controlling Shareholder in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). Section IV.5 Non-Contravention; Consents (a) Neither the execution and delivery of this Agreement or any other Transaction Document to which the Company or any of the Controlling Shareholders is a party, nor the consummation or performance of any of the Transactions, will directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with or result in a violation of (i) any of the provisions of the articles of incorporation or bylaws of the Company, or (ii) any resolution adopted by the shareholders, board of directors or any committee of the board of directors of the Company, or (iii) the provision of any agreement, whether or not written, between the holders of Company Common Shares of which the Company or the Controlling Shareholders have knowledge; 13 (ii) to the Knowledge of the Company or the Controlling Shareholders, contravene, conflict with or result in a violation of, or give any Governmental Authority or other Person the right to challenge any of the Transactions or to exercise any remedy or obtain any relief under, any Requirement of Law or any Order to which the Company or any of the Controlling Shareholders, or any of the assets owned or used by the Company or any of the Controlling Shareholders, is subject; (iii) to the Knowledge of the Company or the Controlling Shareholders, cause the Company to become subject to, or to become liable for the payment of, any Tax; (iv) to the Knowledge of the Company or the Controlling Shareholders, cause any of the assets owned or used by the Company or to be reassessed or revalued by any taxing authority or other Governmental Authority; (v) contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by the Company or any of its employees or that otherwise relates to the business of the Company or to any of the assets owned or used by the Company; (vi) contravene, conflict with or result in a violation or breach of, or result in a default under, any provision of any of the Company Contracts; (vii) give any Person the right to (i) declare a default or exercise any remedy under any Company Contract (ii) accelerate the maturity or performance of any Company Contract or (iii) cancel, terminate or modify any Company Contract; (viii) give any Person the right to any payment by the Company or give rise to any acceleration or change in the award, grant, vesting or determination of options, warrants, rights, severance payments or other contingent obligations of any nature whatsoever of the Company in favour of any Person, in any such case as a result of the change in control of the Company, or otherwise resulting from the Transactions; (ix) contravene, conflict with or result in a violation or breach of or a default under any provision of, or give any Person the right to declare a default under, any Contract to which any of the Controlling Shareholders is a party or by which any of the Controlling Shareholders is bound; or 14 (x) result in the imposition or creation of any Lien upon or with respect to any asset owned or used by the Company. (b) Except as set forth on Schedule 4.05(b), and assuming the completion and tender of the Non-Controlling Shareholder Letters of Transmittal on Closing, neither the Company nor any of the Controlling Shareholders was, is or will be required to make any filing with or give any notice to, or to obtain any Consent from, any Person in connection with the execution and delivery of this Agreement or any of the other Transaction Documents or the consummation or performance of any of the Transactions. Section 4.06 Proprietary Rights; Proprietary Information and Inventions Agreement (a) Except as set forth in Schedule 4.06, there is no Proprietary Asset that is owned by or licensed to the Company or that is otherwise used or useful in connection with the Company's business. (b) The Company has taken all reasonable measures and precautions to protect the confidentiality and value of each Proprietary Asset identified or required to be identified in Schedule 4.06. (c) The Company does not believe it is or will be necessary to utilize any inventions, trade secrets or proprietary information of any of its employees made prior to their employment by the Company, except for inventions, trade secrets or proprietary information that have been assigned to the Company or are licensed by any of the Selling Shareholders as described in Schedule 4.06. (d) To the Knowledge of the Controlling Shareholders, the Company has conducted its business without infringement or claim of infringement of any license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of others. The Company is not infringing, and has not at any time infringed or received any notice or other communication (in writing or otherwise) of any actual, alleged, possible or potential infringement of, any Proprietary Asset owned or used by any other Person. To the Knowledge of the Company and each of the Controlling Shareholders, no other Person is infringing, and no Proprietary Asset owned or used by any other Person infringes or conflicts with, any Proprietary Asset owned or used by the Company. (e) The Company owns, licenses or has rights to all of the Proprietary Assets owned or used by the Company which are material to the business of the Company. The Proprietary Assets identified in Schedule 4.06 constitute all of the Proprietary Assets necessary to enable the Company to conduct its business in the manner in which its business is currently being conducted. 15 Section 4.07 Proceedings; Orders (a) There is no pending Proceeding and, to the Knowledge of the Company and the Controlling Shareholders, no Person has threatened to commence any Proceeding: (i) that involves the Company or that otherwise relates to or might affect the business of the Company or any of the assets owned or used by the Company (whether or not the Company is named as a party thereto); or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Transactions. (b) No event has occurred, and no claim, dispute or other condition or circumstance exists, that might directly or indirectly give rise to or serve as a basis for the commencement of any material Proceeding of the type described in Section 4.07(a). (c) No Proceeding has ever been commenced by or against the Company and no Proceeding otherwise involving or relating to the Company has been pending or threatened at any time. (d) There is no Order to which the Company or any of the assets owned or used by the Company is subject, and to the Knowledge of the Company and the Controlling Shareholders, none of the Selling Shareholders is subject to any Order that relates to the business of the Company or to any of the assets owned or used by the Company. (e) No officer or employee of the Company is subject to any Order that prohibits such officer or employee from engaging in or continuing any conduct, activity or practice relating to the business of the Company. (f) To the knowledge of the Company and the Controlling Shareholders, there is no proposed Order that, if issued or otherwise put into effect, (i) may have a material adverse effect on the business, condition, assets, liabilities, operations, financial performance, net income or prospects (or on any aspect or portion thereof) of the Company or on the ability of the Company or any of the Controlling Shareholders to comply with or perform any covenant or obligation under this Agreement or any of the other Transactional Documents, or (ii) may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the Transactions. Section 4.08 Sale of Purchased Shares Valid 16 Assuming the accuracy of the representations and warranties of the Purchaser and InfoCast contained in Section 5.07, the offer and sale of the Purchased Shares will be exempt from the prospectus and registration requirements of the Ontario Act. Neither the Company nor any of the Controlling Shareholders nor any agent on behalf of any such party has solicited or will solicit any offers to sell or has offered to sell or will offer to sell all or any part of such shares to any person or persons so as to bring the offer or sale of the Purchased Shares to the Purchaser within such requirements. Section 4.09 Financial Statements (a) The Company has delivered to the Purchaser the unaudited balance sheet of the Company as at March 31, 1999 (the "Unaudited Interim Balance Sheet"), and the related unaudited statements of operations, changes in shareholders' equity and cash flows of the Company for the six months then ended, together with the notes thereto (collectively, the "Financial Statements"). (b) All of the Financial Statements are accurate and complete in all material respects, and the dollar amount of each line item included in the Financial Statements is accurate in all material respects. The Financial Statements and notes referred to in Section 4.09(a) are in accordance with the books and records of the Company and present fairly the financial position of the Company as of the respective dates thereof and the results of operations, changes in stockholder's equity and cash flows of the Company for the periods covered thereby. The Financial Statements have been prepared in accordance with GAAP, applied on a consistent basis throughout the periods covered. (c) At the date of the Unaudited Interim Balance Sheet, (i) the Company had no Liabilities of any nature (matured or unmatured, fixed or contingent) required by GAAP to be provided for in the Unaudited Interim Balance Sheet or described in the notes thereto which were not provided for in the Unaudited Interim Balance Sheet, described in the notes thereto, or set forth in Schedule 4.17 hereto, (ii) the Company had no material Liabilities of any nature (matured or unmatured, fixed or contingent) which were not required by GAAP to be provided for in the Unaudited Interim Balance Sheet or described in the notes thereto and (iii) all reserves established by the Company and set forth in the Unaudited Interim Balance Sheet were adequate for the purposes for which they were established. As of the date of this Agreement, the Company has no Liabilities, except for: (i) Liabilities identified as such in the "liabilities" column of the Unaudited Interim Balance Sheet; (ii) accounts payable (of the type required to be reflected as current liabilities in the "liabilities" column of a balance sheet prepared in accordance with GAAP) incurred by the Company in the Ordinary Course of Business since the date of the Unaudited Interim Balance Sheet; and (iii) the Company's obligations under the Contracts listed in Schedule 4.11 and potential liabilities set forth on Schedule 4.17 hereof. 17 Section 4.10 Title to Assets (a) The Company owns and has good and valid title to all assets purported to be owned by it, including: (i) with respect to the Company, all assets reflected on the Unaudited Interim Balance Sheet (except for inventory sold by the Company since the date of the Unaudited Interim Balance Sheet in the Ordinary Course of Business); (ii) all of the Company's rights under Company Contracts; and (iii) all other assets reflected in the Company's books and records as being owned by the Company. (b) Except as set forth in Schedule 4.10, all of said assets are owned by the Company free and clear of any Liens except liens for current taxes and assessments not delinquent. (c) Schedule 4.10 identifies all assets that are being leased or licensed to the Company. All leases pursuant to which the Company leases real or personal property are in good standing and are valid and effective in accordance with their respective terms and there exists no default thereunder or occurrence or condition which could result in a default thereunder or termination thereof. The buildings, equipment and other tangible assets of the Company are in good operating condition (normal wear and tear excepted) and are useable in the ordinary course of business, and the Company owns, or has valid leasehold interests in, all assets necessary for the conduct of its business as presently conducted. Section 4.11 Material Contracts (a) Schedule 4.11 identifies and provides an accurate and complete description of each Company Contract which involves future payments, performance of services or delivery of goods or materials to or by the Company of an aggregate amount or value in excess of CDN$5,000, or which otherwise is material to the business or prospects of the Company (collectively, the "Material Contracts"). All nonmaterial contracts of the Company do not in the aggregate represent a material portion of the assets or liabilities of the Company. The Company has delivered to the Purchaser accurate and complete copies of all Material Contracts, including all amendments thereto. (b) Each Material Contract is valid and in full force and effect, and is enforceable by the Company in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). 18 (c) The Company is not in default under any Material Contract in any material respect, and to the Knowledge of the Company and each of the Controlling Shareholders, no Person has violated or breached, or declared or committed any default under, any Material Contract; (d) No event has occurred, and no circumstance or condition exists, that might (with or without notice or lapse of time) (i) result in a material violation or breach of any of the provisions of any Material Contract, (ii) give any Person the right to declare a default or exercise any remedy under any Material Contract, (iii) give any Person the right to accelerate the maturity or performance of any Material Contract, or (iv) give any Person the right to cancel, terminate or modify, any Material Contract. (e) the Company has not waived any of its rights under any Material Contract. (f) The Company has never guaranteed or otherwise agreed to cause, insure or become liable for, and has never pledged any of its assets to secure, the performance or payment of any obligation or other Liability of any other Person. (g) Except as set forth in Schedule 4.11, the Company has never been a party to or bound by (i) any joint venture agreement, partnership agreement, profit sharing agreement, cost sharing agreement, loss sharing agreement or similar Contract, or (ii) any Contract that creates or grants to any Person, or provides for the creation or grant of, any share appreciation right, phantom share right or similar right or interest. (h) To the knowledge of the Company and the Controlling Shareholders, the performance of the Material Contracts will not result in any violation of, or failure to comply with, any Requirement of Law. (i) No Person is renegotiating, or has the right to renegotiate, any amount paid or payable to the Company under any Material Contract or any other term or provision of any Material Contract. (j) The Contracts identified in Schedule 4.11 collectively constitute all of the Contracts necessary to enable the Company to conduct its business in the manner in which such business is currently being conducted and in the manner in which such business is proposed to be conducted. (k) Schedule 4.11 identifies and provides an accurate and complete description of each proposed Contract as to which any bid, offer, written proposal, term sheet or similar document has been submitted or received by the Company. (l) No party to any Material Contract has made a claim to the effect that the Company has failed to perform an obligation thereunder. There is no known plan, intention or indication of any contracting party to any Contract to cause the termination, cancellation or modification of such Contract or to reduce or otherwise change its activity thereunder so as to adversely affect the benefits derived or expected to be derived therefrom by the Company. 19 (m) The Company is neither a party to, nor bound by, any contract, agreement, commitment or restriction which obligates the Company to perform services or to produce products unprofitably. Section IV.12 Employees; Employee Benefits (a) Schedule 4.12 contains a list of all employees of the Company as of the date hereof and their material terms and conditions of employment including salary or wages, bonus, position title and seniority date. Except as disclosed on Schedule 4.12, no employee of the Company is on long-term disability leave or extended absence or in receipt of workers' compensation benefits. (b) Schedule 4.12 contains a list of individuals who are currently performing services for the Company related to its business and are classified as "consultants" or "independent contractors". (c) The Company is not a party to or subject to any collective bargaining agreements with any trade union or collective bargaining agent representing any of its employees. There is no labour union organizing activity pending or, to the Company's or the Controlling Shareholders' knowledge, threatened with respect to any employees of the Company. Except as specified on Schedule 4.12, no employee of the Company has any agreement or contract, written or verbal, regarding his employment, other than those deemed to exist at common law. (d) To the Knowledge of the Company and the Controlling Shareholders, no employee of the Company, nor any consultant with whom the Company has contracted, is in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company because of the nature of the business to be conducted by the Company, and to the Company's knowledge the continued employment by the Company of its present employees, and the performance of the Company's contracts with its independent contractors, will not result in any such violation. The Company has not received any notice alleging that any such violation has occurred. The Company is not aware that any officer or key employee, or that any group of key employees, intends to terminate his, her or their employment with the Company, nor does the Company have a present intention to terminate the employment of any officer, key employee or group of key employees. (e) Except as set forth in Schedule 4.12 there are no employment policies or plans, including policies or plans regarding incentive compensation, stock options, severance pay or other terms or conditions of employment or terms or conditions upon which Employees may be terminated, which are binding upon the Company. (f) The Company has been and is being operated in full compliance with all Requirements of Law relating to employees, including employment standards, occupational health and safety, pay equity and employment equity. There have been no complaints under such laws against the Company. 20 (g) There are no complaints nor, to the Knowledge of the Company and the Controlling Shareholders, are there any threatened complaints, against the Company, before any employment standards branch or tribunal or human rights tribunal. To the Knowledge of the Company and the Controlling Shareholders, nothing has occurred which might lead to a complaint against the Company, under any human rights legislation or employment standards legislation. There are no outstanding decisions or settlements or pending settlements under the employment standards legislation which place any obligation upon the Company, to do or refrain from doing any act. (h) All current assessments under the Workers' Compensation Act (Alberta) in relation to the Company have been paid or accrued and the Company has not been subject to any special or penalty assessment under such legislation which has not been paid. (i) To the knowledge of the Company and the Controlling Shareholders, there are no outstanding labour tribunal proceedings of any kind, including any proceedings which could result in certification of a trade union as bargaining agent for any employees or independent contractors of the Company. Section 4.13 Receivables; Major Customers (a) Schedule 4.13 provides an accurate and complete breakdown and aging of all accounts receivable, notes receivable and other receivables of the Company as of March 31, 1999. (b) All existing accounts receivable of the Company (including those accounts receivable reflected on the Unaudited Interim Balance Sheet that have not yet been collected and those accounts receivable that have arisen since March 31, 1999 and have not yet been collected): (i) represent valid obligations of customers of the Company arising from bona fide transactions entered into in the Ordinary Course of Business; and (ii) are current and will be collected in full (without any counterclaim or setoff) in the Ordinary Course of Business; (c) Schedule 4.13 accurately identifies, and provides an accurate and complete breakdown of the revenues received from, each customer or other Person that accounted for more than CDN$5,000 of the gross revenues of the Company from September, 1998 through March 31, 1999 on an annualized basis. The Company has not received any notice or other communication (in writing or otherwise), and has not received any other information, indicating that any customer or other Person identified in Schedule 4.13 may cease dealing with the Company or may otherwise reduce the volume of business transacted by such Person with the Company below historical levels. 21 Section 4.14 Major Suppliers (a) Schedule 4.14: (i) provides an accurate and complete breakdown and aging of the Company's accounts payable as of March 31, 1999; (ii) provides an accurate and complete breakdown of all customer deposits and other deposits held by the Company as of the date of this Agreement; and (iii) provides an accurate and complete breakdown of the Company's long term debt as of the date of this Agreement. (b) Schedule 4.14 accurately identifies, and provides an accurate and complete breakdown of the amounts paid to, each supplier or other Person that received more than CDN$5,000 from the Company from September, 1998 through March 31, 1999 on an annualized basis. Section 4.15 Compliance With Requirement of Laws (a) To the Knowledge of the Company and the Controlling Shareholders, the Company is in full compliance with each Requirement of Law that is applicable to it or to the conduct of its business or the ownership or use of its assets. (b) To the Knowledge of the Company and the Controlling Shareholders, no event has occurred, and no condition or circumstance exists, that might (with or without notice or lapse of time) constitute or result directly or indirectly in a material violation by the Company of, or a material failure on the part of the Company to comply with, any Requirement of Law. (c) The Company has not received, at any time, any notice or other communication (in writing or otherwise) from any Governmental Authority or any other Person regarding (i) any actual, alleged, possible or potential violation of, or failure to comply with, any Requirement of Law, or (ii) any actual, alleged, possible or potential obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any cleanup or any remedial, corrective or response action of any nature. (d) To the Knowledge of the Company and each of the Controlling Shareholders, no Governmental Authority has proposed or is considering any Requirement of Law that, if adopted or otherwise put into effect, (i) may have an material adverse effect on the business, condition, assets, liabilities, operations, financial performance, net income or prospects of the Company, or on the ability of the Company or any of the Controlling Shareholders to comply with or perform any covenant or obligation under any of the Transactional Documents, or (ii) may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the Transactions. 21 Section 4.16 Governmental Authorizations (a) Schedule 4.16 identifies: (i) each Governmental Authorization that is held by the Company; and (ii) each other Governmental Authorization that, to the Knowledge of the Company and each of the Controlling Shareholders, is held by any of the Company's employees and relates to or is useful in connection with the Company's business. (b) The Company has delivered to the Purchaser accurate and complete copies of all of the Governmental Authorizations identified in Schedule 4.16, including all renewals thereof and all amendments thereto. Each Governmental Authorization identified or required to be identified in Schedule 4.16 is valid and in full force and effect. (c) The Governmental Authorizations identified in Schedule 4.16 constitute all of the Governmental Authorizations necessary (i) to enable the Company to conduct its business in the manner in which its business is currently being conducted, and (ii) to permit the Company to own and use its assets in the manner in which they are currently owned and used. Section 4.17 Tax Matters (a) Each Tax required to have been paid, or claimed by any Governmental Authority to be payable, by the Company (whether pursuant to any Tax Return or otherwise) has been duly paid in full on a timely basis including all installments on account of Tax for the current year that are due and payable by it. Any Tax required to have been withheld or collected by the Company has been duly withheld and collected, and (to the extent required) each such Tax has been paid to the appropriate Governmental Authority. (b) Schedule 4.17 accurately identifies all Tax Returns required to be filed by or on behalf of the Company with any Governmental Authority with respect to any taxable period ending on or before the Closing Date ("Company Returns"). All Company Returns (i) have been or will be filed when due, and (ii) have been or will be, when filed, accurately and completely prepared in full compliance with all applicable Requirement of Laws, and the Company have completely and accurately reported all income and all other amounts of information required to be reported thereon. All amounts shown on the Company Returns to be due on or before the Closing Date, and all amounts otherwise payable in connection with the Company Returns on or before the Closing Date, have been or will be paid on or before the Closing Date. The Company, having been incorporated in September 1998, has not yet been required to file a Tax Return. 22 (c) The Company's liability for unpaid Taxes for all periods ending on or before March 31, 1999 does not, in the aggregate, exceed the amount of the current liability accruals for Taxes (excluding reserves for deferred taxes) reported in the Unaudited Interim Financial Statements. The Company will establish, in the Ordinary Course of Business, reserves adequate for the payment of all Taxes for the period from September 30, 1998 through the Closing Date in addition to those not included on the Company's Unaudited Interim Balance Sheet, and the Company will disclose the dollar amount of such reserves to the Purchaser on or prior to the Closing Date. (d) Schedule 4.17 accurately identifies each examination or audit of any Company Return that has been conducted by any Governmental Authority since the Company's inception. The Company has delivered to the Purchaser accurate and complete copies of all material audit reports (to which the Company has access) relating to Company Returns, elections, designations or similar things relating to Taxes for which the Company is or may be liable. No extension or waiver of the limitation period applicable to any of the Company Returns has been granted (by the Company or any other Person), and no such extension or waiver has been requested from the Company. (e) There are no unsatisfied Liabilities for Taxes (including liabilities for interest, additions to tax and penalties thereon and related expenses) with respect to any notice of deficiency or similar document received by the Company. (f) There are no actions, suits, proceedings, investigations, audits or claims now pending or, to the knowledge of the Company and the Controlling Shareholders threatened, against the Company in respect of any Taxes and there are no matters under discussion, audit or appeal with any Governmental Authority relating to Taxes. (g) Except as specifically disclosed in writing to the Purchaser, for purposes of the Tax Act or any applicable provincial or municipal taxing statute, no Person or group of Persons has ever acquired or had the right to acquire control of the Company. (h) The transfer pricing practices of the Company have not been the subject of a review or audit by any revenue or other taxing authority and there are no agreements, waivers or other agreement providing for an extension of time with respect to the assessment or collection of any Tax against the Company with respect to any matter relating to transfer pricing issues or the transfer pricing practices of the Company. There are no suits or similar proceedings now pending or threatened against the Company with respect to any transfer pricing issue or transfer pricing practice of the Company. There are currently no matters under discussion with any taxation or other authority relating to any transfer pricing issue, transfer pricing practices of the Company, or any advance pricing agreement or similar process or agreement concerning transfer pricing practices and issues of the Company. (i) No reserves are required to be taken by the Company for purposes of the Tax Act. 23 (j) There are no reassessments of the Company that are issued and outstanding and there are no outstanding issues which have been raised and communicated to the Company by any governmental body for any taxation year in respect of which a Tax Return of the Company has been audited. No Governmental Authority has challenged, disputed or questioned the Company in respect of Taxes or of any returns, filings or other reports filed under any statute providing for Taxes. The Company is not negotiating any draft assessment or reassessment with any Governmental Authority. To the Knowledge of the Company and each of the Controlling Shareholders, there are no grounds for an assessment or reassessment of the Company of an amount which would have a material adverse effect on the Company other than as disclosed in the Financial Statements. The Company has not received any indication from any governmental body that an assessment (other than an assessment accepting a Tax Return as filed) or reassessment of the Company is proposed in respect of any Taxes, regardless of its merits. The Company has not executed or filed with any governmental body any agreement or waiver extending the period for assessment, reassessment or collection of any Taxes. (k) The Company has withheld from each payment made to any of its present or former employees, officers and directors, and to all persons who are non-residents of Canada for the purposes of the Tax Act, all amounts required by law to be withheld, and furthermore, have remitted such withheld amounts within the prescribed periods to the appropriate Governmental Authority. The Company has remitted all Canada Pension Plan contributions, provincial pension plan contributions, employment insurance premiums, employer health taxes, worker's compensation premiums and other Taxes payable by it in respect of its employees and has remitted such amounts to the proper governmental body within the time required under the applicable legislation. Other than as set forth in Schedule 4.17, the Company has charged, collected and remitted on a timely basis all Taxes as required under applicable legislation on any sale, supply or delivery whatsoever it has made; and for any late filings disclosed on Schedule 4.17, no penalties or fines will or have become due and owing as a result of such late filings. (l) The Company has not deducted any material amounts in computing its income in a taxation year that are currently unpaid and that could, if they remain unpaid, be required to be included in income in a subsequent taxation year under Section 78 of the Tax Act. (m) The Company will not at any time be deemed to have a capital gain pursuant to subsection 80.03(2) of the Tax Act as a result of any transactions or event taking place in any fiscal period or portion thereof ending on or before the Closing Date. (n) The Company (i) does not have a permanent establishment in any jurisdiction other than Canada, (ii) is not subject to any form of taxation in any jurisdiction other than Canada, and (iii) has never filed or is now or has ever been required to file any federal, state, local, provincial or other form of tax return in any jurisdiction other than Canada. 24 Section 4.18 Securities Laws Compliance; Registration Rights The offer and sale of the Purchased Shares to the Purchaser has complied and will comply with all securities laws of the Province of Alberta. The Company has complied with all applicable provincial securities laws of Canada in connection with all offers and sales of securities of the Company prior to the date of this Agreement. The Company has not heretofore granted any purchaser of its securities the right to qualify the distribution of its securities by prospectus in any province of Canada. Section 4.19 Finders and Brokers Neither the Company or any Controlling Shareholder nor any person acting on behalf of the Company or any Controlling Shareholder has negotiated with any finder, broker, intermediary or any similar person in connection with the transactions contemplated herein. The Company and the Controlling Shareholders will indemnify the Purchaser and hold it harmless from any liability or expense arising from any claim for brokerage commissions, finder's fees or other similar compensation based upon any agreement, arrangement or understanding made by or on behalf of the Company or any Controlling Shareholder. Section 4.20 Environmental Compliance The Company is in compliance in all material respect with all applicable Environmental Laws. The Company has not received any notice or other communication (in writing or otherwise) that alleges that the Company is not in compliance with any Environmental Law, and, to the best Knowledge of the Company and the Controlling Shareholders, there are no circumstances that may prevent or interfere with the Company's compliance with any Environmental Law in the future. Section 4.21 Insurance (a) Schedule 4.21 accurately sets forth, with respect to each insurance policy maintained by or at the expense of, or for the direct or indirect benefit of, the Company: (i) the name of the insurance carrier that issued such policy and the policy number of such policy; (ii) whether such policy is a "claims made" or an "occurrences" policy; (iii) a description of the coverage provided by such policy and the material terms and provisions of such policy (including all applicable coverage limits, deductible amounts and co-insurance arrangements and any non customary exclusions from coverage); 25 (iv) the annual premium payable with respect to such policy, and the cash value (if any) of such policy; and (v) a description of any claims pending, and any claims that have been asserted in the past, with respect to such policy. (b) Schedule 4.21 also identifies (i) each pending application for insurance that has been submitted by or on behalf of the Company, and (ii) each self-insurance or risk-sharing arrangement affecting the Company or any of its assets. The Company has delivered to the Purchaser accurate and complete copies of all of the insurance policies identified in Schedule 4.21 (including all renewals thereof and endorsements thereto) and all of the pending applications identified in Schedule 4.21. (c) Each of the policies identified in Schedule 4.21 is valid, enforceable and in full force and effect, and has been issued by an insurance carrier that, to the Knowledge of the Company and the Controlling Shareholders, is solvent, financially sound and reputable. All of the information contained in the applications submitted in connection with said policies was (at the times said applications were submitted) accurate and complete, and all premiums and other amounts owing with respect to said policies have been paid in full on a timely basis. The nature, scope and dollar amounts of the insurance coverage provided by said policies are similar to the coverage customarily carried by companies of similar size and character of the Company. Each of the policies identified in Schedule 4.21 will continue in full force and effect following the Closing. The Company has paid all premiums due, and has otherwise performed all of its obligations, under each policy to which it is a party or that provides coverage to it or any of its directors or officers in connection with their performance of services to the Company. (d) There is no pending material claim under or based upon any of the policies identified in Schedule 4.21, and no event has occurred, and no condition or circumstance exists, that might (with or without notice or lapse of time) directly or indirectly give rise to or serve as a basis for any such claim. (e) The Company has not received: (i) any notice or other communication (in writing or otherwise) regarding the actual or possible cancellation or invalidation of any of the policies identified in Schedule 4.21 or regarding any actual or possible adjustment in the amount of the premiums payable with respect to any of said policies; (ii) any notice or other communication (in writing or otherwise) regarding any actual or possible refusal of coverage under, or any actual or possible rejection of any claim under, any of the policies identified in Schedule 4.21; or 26 (iii) any indication that the issuer of any of the policies identified in Schedule 4.21 may be unwilling or unable to perform any of its obligations thereunder. Section 4.22 Related Party Transactions Except as set forth in Schedule 4.22: (a) no Related Party has, and no Related Party has at any time since September 1998 had, any direct or indirect interest of any nature in any asset used in or otherwise relating to the business of the Company; (b) no Related Party is, or has at any time since September 1998 been, indebted to the Company; (c) since September 1998, no Related Party has entered into, or has had any direct or indirect financial interest in, any Contract, transaction or business dealing of any nature involving the Company; (d) to the Knowledge of the Company and the Controlling Shareholders, no Related Party is competing, or has at any time since September 1998 competed, directly or indirectly, with the Company in any market served by the Company; (e) to the Knowledge of the Company and the Controlling Shareholders, no Related Party has any claim or right against the Company; and (f) to the Knowledge of the Company and the Controlling Shareholders, no event has occurred, and no condition or circumstance exists, that might (with or without notice or lapse of time) directly or indirectly give rise to or serve as a basis for any material claim or right in favour of any Related Party against the Company. Section 4.23 Absence of Changes Except as set forth in Schedule 4.23, since January 1, 1999: (a) there has not been any material adverse change in the Company's business, condi tion, assets, liabilities, operations, financial performance, net income or prospects (or in any aspect or portion thereof), and no event has occurred that might have a material adverse effect on the Company's business, condition, assets, liabilities, operations, financial performance, net income or prospects (or on any aspect or portion thereof); (b) there has not been any loss, damage or destruction to, or any interruption in the use of, any of the Company's assets (whether or not covered by insurance); 27 (c) the Company has not (i) declared, accrued, set aside or paid any dividend or made any other distribution in respect of any shares of capital stock, or (ii) repurchased, redeemed or otherwise reacquired any shares of capital stock or other securities; (d) the Company has not sold or otherwise issued any shares of capital stock or any other securities; (e) the Company has not amended its articles of incorporation or bylaws and has not effected or been a party to any Acquisition Transaction, reclassification of shares, stock split, reverse stock split or similar transaction; (f) the Company has not purchased or otherwise acquired any asset from any other Person, except for supplies acquired by the Company in the Ordinary Course of Business; (g) the Company has not leased or licensed any asset from any other Person; (h) the Company has not made any material capital expenditure; (i) the Company has not sold or otherwise transferred, and has not leased or licensed, any asset to any other Person except for products sold by the Company from its inventory in the Ordinary Course of Business; (j) the Company has not written off as uncollectible, or established any extraordinary reserve with respect to, any account receivable or other indebtedness; (k) the Company has not pledged or hypothecated any of its assets or otherwise permitted any of its assets to become subject to any Lien; (l) the Company has not made any loan or advance to any other Person; (m) the Company has not (i) established or adopted any employee benefit plan, or (ii) paid any bonus or made any profit sharing or similar payment to, or increased the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers or employees; (n) the Company has not increased the compensation of any of its officers, or the rate of pay of its employees as a group, except as part of regular compensation increases in the ordinary course of its business; (o) there has been no resignation or termination of employment of any officer or key employee of the Company; 28 (p) there has been no labour dispute involving the Company or its employees and none is pending or, to the Company's Knowledge, threatened; (q) the Company has not entered into, and neither the Company nor any of the assets owned or used by the Company has become bound by, any Material Contract; (r) no Material Contract by which the Company or any of the assets owned or used by the Company is or was bound, or under which the Company has or had any rights or interest, has been amended or terminated; (s) the Company has not incurred, assumed or otherwise become subject to any Liability, other than accounts payable (of the type required to be reflected as current liabilities in the "liabilities" column of a balance sheet prepared in accordance with GAAP) incurred by the Company in the Ordinary Course of Business; (t) the Company has not discharged any Lien or discharged or paid any indebtedness or other Liability, except for accounts payable that (i) are reflected as current liabilities in the "liabilities" column of the Unaudited Interim Balance Sheet or have been incurred by the Company since March 31, 1999 in the Ordinary Course of Business, and (ii) have been discharged or paid in the Ordinary Course of Business; (u) the Company has not forgiven any debt or otherwise released or waived any right or claim; (v) the Company has not changed any of its methods of accounting or accounting practices in any respect; (w) the Company has not entered into any transaction or taken any other action outside the Ordinary Course of Business; and (x) the Company has not agreed, committed or offered (in writing or otherwise), and has not attempted, to take any of the actions referred to in clauses "(c)" through "(w)" above. Section 4.24 Controlling Shareholders (a) Each Controlling Shareholder has the capacity and financial capability to comply with and perform all of his covenants and obligations under each of the Transaction Documents to which it is or may become a party. 29 (b) Each Controlling Shareholder is, and at the Closing will be, the registered and beneficial owner and holder of the Purchased Shares set forth beside its name on Schedule 2.01, free and clear of any Liens. Each Controlling Shareholder has delivered to the Purchaser accurate and complete copies of the stock certificates evidencing the Purchased Shares owned by such Controlling Shareholder. (c) Each Controlling Shareholder: (i) has not, at any time, (A) made a general assignment for the benefit of creditors, (B) filed, or had filed against him, any bankruptcy petition or similar filing, (C) suffered the attachment or other judicial seizure of all or a substantial portion of his assets, (D) admitted in writing its inability to pay his debts as they become due, (E) been convicted of, or pleaded guilty to, fraud or criminal dishonesty or (F) taken or been the subject of any action that may have an adverse effect on his ability to comply with or perform his respective covenants or obligations under any of the Transaction Documents; and (ii) is not subject to any Order that may have an adverse effect on his ability to comply with or perform its covenants or obligations under any of the Transaction Documents. (d) There is no Proceeding pending, and no Person has threatened to commence any Proceeding, that may have an adverse effect on the ability of any Controlling Shareholder to comply with or perform his covenants or obligations under any of the Transaction Documents. No event has occurred, and no claim, dispute or other condition or circumstance exists, that might directly or indirectly give rise to or serve as a basis for the commencement of any such Proceeding. (e) No consent, approval, authorization, order, registration or qualification of or by any Person is required in connection with the execution, delivery and performance by any Controlling Shareholder of this Agreement or the consummation of the Transactions contemplated hereby. (f) To the Knowledge of the Company and the Controlling Shareholders, each of the Selling Shareholders is not a non-resident of Canada for purposes of the Tax Act and accordingly, Section 116 of the Tax Act has no application to the transactions contemplated herein, with the exception of Messrs. Dave Olson, Scott Grim, Don Ritter, Shirley Crow and Ian Morrison. Section 4.25 Powers of Attorney Neither the Company nor any of the Controlling Shareholders has or have given a power of attorney to any Person. 30 Section 4.26 Full Disclosure (a) The representations and warranties of the Company and each Controlling Shareholder contained in this Agreement, each of the other Transaction Documents and each of the documents delivered or provided to the Purchaser by or on behalf of the Company or any Controlling Shareholder in connection with this Agreement or any of the Transactions (i) do not contain any untrue statement of a material fact, or (ii) omit to state any material fact of which the Company or any of the Controlling Shareholders has Knowledge, which fact is necessary in order to make the statements and information contained in this Agreement, the other Transaction documents and such documents not misleading. (b) The Company and the Controlling Shareholders have provided the Purchaser and the Purchaser's Representatives with full and complete access to all of the Company's records and other documents and data. Section 4.27 Investment Representations (a) Each Selling Shareholder has been advised by the Company and understands that none of the Exchangeable Shares or the InfoCast Exchange Stock issuable upon the exchange thereof has been registered under the U.S. Securities Act or qualified by prospectus for distribution under the Securities Act or the comparable registration in the other provinces of Canada. Each Selling Shareholder has been advised by the Company and understands that the Exchangeable Shares and the InfoCast Exchange Stock are being offered and sold pursuant to an exemption from registration contained in the U.S. Securities Act, and upon exemptions (which, in the case of trades in the InfoCast Exchange Stock, may be unavailable unless and until a discretionary ruling is made by the Ontario Securities Commission in respect thereof) from the prospectus and registration requirements of the Securities Act, based in part upon each Selling Shareholder's representations contained in this Agreement and the Non-Controlling Shareholder Letters of Transmittal. 31 (b) Each Selling Shareholder has been advised by the Company and acknowledged that it must bear the economic risk of the investment in the Exchangeable Shares and/or the InfoCast Exchange Stock indefinitely unless the Exchangeable Shares or the InfoCast Exchange Stock, as the case may be, are registered pursuant to the U.S. Securities Act, or an exemption from registration is available, or are qualified for distribution by prospectus in Canada, or an exemption from applicable prospectus requirements in respect of the resale thereof is available. Each Selling Shareholder has been advised by the Company and acknowledged that its right to obtain InfoCast Exchange Stock upon the exchange of the Exchangeable Shares is subject to the availability of exemptions from the prospectus and registration requirements under applicable securities laws in respect of trades in the InfoCast Exchange Stock. Each Selling Shareholder understands that there is no assurance that any exemption from registration under the U.S. Securities Act or any exemption from the prospectus requirements of the Securities Act will be available and that, even if available, such exemption may not allow any Selling Shareholder to transfer all or any portion of the Exchangeable Shares or the InfoCast Exchange Stock under the circumstances, in the amounts or at the times such Selling Shareholder might propose. (c) Each Controlling Shareholder is acquiring the Exchangeable Shares and the InfoCast Exchange Stock for such Controlling Shareholder's own account for investment only, and not with the current intention of making a public distribution thereof. (d) Each Controlling Shareholder represents that by reason of its business or financial experience, each Controlling Shareholder has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement. Section 4.28 Corporate Governance The Company and each of the Controlling Shareholders agrees to and agrees to be bound by the provisions and governance guidelines prescribed in Schedule 5.27, which agreement and obligation shall survive the completion of the transactions contemplated herein. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND INFOCAST Each of the Purchaser and InfoCast, jointly and severally, hereby represents and warrants to the Company and the Selling Shareholders as follows: Section 4.1 Organization, Good Standing and Qualification of the Purchaser (a) The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Ontario and is duly qualified to conduct business and in corporate and tax good standing under the laws of each jurisdiction in which the nature of its business or the ownership or leasing of its properties requires such qualification. The Purchaser has all requisite corporate power and authority to own and operate its properties and assets, to execute, deliver and perform its obligations under this Agreement, and to carry on its business as presently conducted and as presently proposed to be conducted. Section 4.2 Capitalization 32 The authorized capital of the Purchaser consists of (a) an unlimited number of common shares, 10,000,000 of which are issued and outstanding and owned beneficially and of record by InfoCast, and (b) an unlimited number of Exchangeable Shares, of which 1,500,000 are issued and outstanding as of the date hereof and, after giving effect to the issuance of the Exchangeable Shares in accordance with Section 2.02(b) on the Closing Date, a further 3,400,000 of which shall be issued and outstanding. All issued and outstanding common shares of the Purchaser have been, and on the Closing Date, all of the Exchangeable Shares will be, duly authorized and validly issued in full compliance with all applicable securities laws and other applicable Requirement of Laws, and are fully paid and non-assessable. Section 5.3 Authority; Binding Nature of Agreements The Purchaser has the absolute and unrestricted right, power and authority to enter into and to perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party, and the execution, delivery and performance by the Purchaser of this Agreement and each of such other Transaction Documents have been duly authorized by all necessary action on the part of the Purchaser, its shareholders, board of directors and officers. Each of this Agreement and such other Transaction Documents constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). Section 5.4 Non-Contravention; Consents (a) Neither the execution and delivery of this Agreement or any other Transaction Document to which the Purchaser is a party, nor the consummation or performance of any of the Transactions, will directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with or result in a violation of (i) any of the provisions of the Purchaser's articles of incorporation or bylaws, or (ii) any resolution adopted by the Purchaser's stockholders, the Purchaser's board of directors or any committee of the Purchaser's board of directors; (ii) to the Knowledge of the Purchaser and InfoCast, contravene, conflict with or result in a violation of, or give any Governmental Authority or other Person the right to challenge any of the Transactions or to exercise any remedy or obtain any relief under, any Requirement of Law or any Order to which the Purchaser or any of the assets owned or used by the Purchaser is subject; or (iii) contravene, conflict with or result in a violation or breach of, or result in a default under, any provision of any of Contract to which the Purchaser is a party; (b) Except as set forth on Schedule 5.04, the Purchaser was, is and will not be required to make any filing with or give any notice to, or to obtain any Consent from, any Person in connection with the execution and delivery of any of this Agreement or any of the other Transaction Documents or the consummation or performance of any of the Transactions. 33 Section 5.5 Proceedings; Orders (a) There is no pending Proceeding, and, to the Knowledge of the Purchaser, no Person has threatened to commence any Proceeding that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Transactions. (b) No event has occurred, and no claim, dispute or other condition or circumstance exists, that might directly or indirectly give rise to or serve as a basis for the commencement of any Proceeding of the type described in Section 5.05(a). (c) To the Knowledge of the Purchaser and InfoCast, there is no proposed Order that, if issued or otherwise put into effect may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the Transactions. Section 5.6 Sale of Exchangeable Shares Valid Assuming the accuracy of the representations and warranties of the Company and the Company Principals contained in Section 4.08, and of the Selling Shareholders set forth in the Letters of Transmittal, and of the Non-Controlling Shareholders set forth in the Non-Controlling Shareholder Letters of Transmittal, the offer and sale of the Exchangeable Shares and the issuance of the InfoCast Exchange Stock upon the exchange thereof in accordance with the Exchange Agreement will be exempt from the registration requirements of the U.S. Securities Act and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws. The issuance of the Exchangeable Shares to the Selling Shareholders is exempt from the prospectus requirements of the Ontario Act. Neither the Purchaser nor any agent on behalf of the Purchaser has solicited or will solicit any offers to sell or has offered to sell or will offer to sell all or any part of the Exchangeable Shares or the InfoCast Exchange Stock to any person or persons, so as to bring the offer or sale of the Exchangeable Shares or the InfoCast Exchange Stock to the Selling Shareholders within the registration provisions of the U.S. Securities Act or any state securities laws. Section 5.7 Investment Representations (a) The Purchaser understands that none of the Purchased Shares have been registered under the U.S. Securities Act. The Purchaser also understands that the Purchased Shares are being offered and sold pursuant to an exemption from registration contained in the U.S. Securities Act and upon an exemption from the prospectus requirements of the Ontario Act based in part upon the Purchaser's representations contained in this Agreement. 34 (b) The Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. The Purchaser must bear the economic risk of this investment indefinitely unless the Purchased Shares are registered pursuant to the U.S. Securities Act or qualified for distribution by prospectus in Canada, or an exemption from registration or prospectus requirements is available. The Purchaser understands that there is no assurance that any exemption from registration under the U.S. Securities Act or from the prospectus requirements of Canadian securities legislation will be available and that, even if available, such exemption may not allow Purchaser to transfer all or any portion of the Purchased Shares under the circumstances, in the amounts or at the times Purchaser might propose. (c) The Purchaser is acquiring the Purchased Shares for the Purchaser's own account for investment only, and not with the current intention of making a public distribution thereof. (d) The Purchaser represents that by reason of its, or of its management's business or financial experience, the Purchaser has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement. Section 5.8 Consents All consents, approvals, orders, or authorizations of, or registration, qualification, designation, declaration or filing with any Governmental Authority or banking authority required on the part of Purchaser in connection with the consummation of the transactions contemplated in this Agreement have been or shall have been obtained prior to and shall be effective as of the Closing. In addition to the joint and several representations and warranties set forth above, InfoCast alone hereby represents and warrants to the Company and each of the Selling Shareholders as follows: Section 5.9 Organization, Good Standing and Qualification of InfoCast (a) InfoCast is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and is duly qualified to conduct business and in corporate and tax good standing under the laws of each jurisdiction in which the nature of its business or the ownership or leasing of its properties require such qualification. InfoCast has all requisite corporate power and authority to own and operate its properties and assets, to execute, deliver and perform its obligations under this Agreement, and to carry on its business as presently conducted and as presently proposed to be conducted. (b) Schedule 5.09(b) accurately sets forth (i) the names of the members of InfoCast's board of directors, (ii) the names of the members of each committee of InfoCast's board of directors and (iii) the names and titles of InfoCast's officers. 35 (c) InfoCast is not insolvent within the meaning of applicable laws, rules regulation or similar requirement, and has not made any assignment in favour of its creditors nor a proposal in bankruptcy to its creditors or any class thereof, nor has any petition for a receiver order been presented in respect of InfoCast. InfoCast has not initiated any proceedings with respect to a compromise or arrangement with its creditors or for the dissolution, liquidation or reorganization of InfoCast or the winding up or cessation of the business or affairs of InfoCast. No receiver has been appointed in respect of InfoCast or any of its assets and no execution or distress has been levied upon any of its assets. (d) InfoCast has no subsidiaries other than the Purchaser, Virtual Performance Systems Inc. and Cheltenham Technologies (Bermuda) Ltd. Section 5.10 Articles of Incorporation and By-Laws; Records (a) InfoCast has delivered to the Company accurate and complete copies of: (i) the articles of incorporation and bylaws, including all amendments thereto of InfoCast; (ii) the minutes and other records of the meetings and other proceedings (including any actions taken by written consent or otherwise without a meeting) of the stockholders, board of directors and all committees of the board of directors of InfoCast. (b) There have been no meetings or other proceedings of the stockholders, the board of directors or any committee of the board of directors of InfoCast, that are not fully reflected in such minutes or other records. (c) InfoCast has never conducted any business under or otherwise used, for any purpose or in any jurisdiction, any fictitious name, assumed name, trade name or other name, other than the name "InfoCast Corporation" and "Grant Reserve Corporation". (d) There has not been any material violation of any of the provisions of the articles of incorporation or bylaws of InfoCast or of any resolution adopted by the shareholders, board of directors or any committee of the board of directors of InfoCast and no event has occurred, and no condition or circumstance exists that might (with or without notice or lapse of time) constitute or result directly or indirectly in such a violation. (e) The books of account, stock records, minute books and other records of InfoCast are accurate, up to date and complete in all material respects, and have been maintained in accordance with sound and prudent business practices. All of the records of InfoCast are in the actual possession and direct control of InfoCast. 36 Section 5.11 Capitalization (a) The authorized capital stock of InfoCast consists of an unlimited number of common shares of which 16,672,333 shares have been issued and are outstanding, and will be the only shares issued and outstanding on the Closing Date. All issued and outstanding shares of capital stock of InfoCast have been duly authorized and validly issued in full compliance with all applicable securities laws and other applicable Requirement of Laws, and are outstanding as fully paid and non-assessable. (b) There are no: (i) outstanding subscriptions, options, calls, warrants or rights (whether or not currently exercisable) to acquire any shares in the capital or other securities of InfoCast, other than 2,075,000 options to acquire 2,075,000 shares at exercise price of US$1.00 per share, (ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares in the capital or other securities of InfoCast, other than 1,500,000 shares of InfoCast Common Stock reserved for issuance upon exercise of outstanding Exchangeable Shares, (iii) contracts under which InfoCast is or may become obligated to sell or otherwise issue any shares of its capital stock or any other securities, or (iv) condition or circumstance that may directly or indirectly give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any shares in the capital, or other securities of, InfoCast. (c) InfoCast has never repurchased, redeemed or otherwise reacquired (and has not agreed, committed or offered (in writing or otherwise) to reacquire) any shares of capital stock or other securities of InfoCast. Section 5.12 Authority; Binding Nature of Agreements (a) InfoCast has the absolute and unrestricted right, power and authority to enter into and to perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party, and the execution, delivery and performance by InfoCast of this Agreement and each of such other Transaction Documents have been duly authorized by all necessary action on the part of InfoCast and its shareholders, board of directors and officers. Each of this Agreement and such other Transaction Documents constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of InfoCast enforceable against InfoCast in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). Section 5.13 Non-Contravention; Consents (a) Neither the execution and delivery of this Agreement or any other Transaction Document to which InfoCast is a party, nor the consummation or performance of any of the Transactions, will directly or indirectly (with or without notice or lapse of time): 37 (i) contravene, conflict with or result in a violation of (i) any of the provisions of the articles of incorporation or bylaws of InfoCast, or (ii) any resolution adopted by the shareholders, board of directors or any committee of the board of directors of InfoCast, or (iii) the provision of any agreement, whether or not written, between the holders of InfoCast Common Stock; (ii) contravene, conflict with or result in a violation of, or give any Governmental Authority or other Person the right to challenge any of the Transactions or to exercise any remedy or obtain any relief under, any Requirement of Law or any Order to which InfoCast or any of the assets owned or used by InfoCast is subject; (iii) contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by InfoCast or any of its employees or that otherwise relates to the business of InfoCast or to any of the assets owned or used by InfoCast; (iv) contravene, conflict with or result in a violation or breach of, or result in a default under, any provision of any of InfoCast Contracts; (v) give any Person the right to (i) declare a default or exercise any remedy under any InfoCast Contract (ii) accelerate the maturity or performance of any InfoCast Contract or (iii) cancel, terminate or modify any InfoCast Contract; (vi) give any Person the right to any payment by InfoCast or give rise to any acceleration or change in the award, grant, vesting or determination of options, warrants, rights, severance payments or other contingent obligations of any nature whatsoever of InfoCast in favour of any Person, in any such case as a result of the change in control of InfoCast, or otherwise resulting from the Transactions; or (vii) result in the imposition or creation of any Lien upon or with respect to any asset owned or used by InfoCast. Section 5.14 Proprietary Rights; Proprietary Information and Inventions Agreement (a) Except as set forth in Schedule 5.14, there is no Proprietary Asset that is owned by or licensed to InfoCast or that is otherwise used or useful in connection with InfoCast's business. 38 (b) InfoCast has taken all reasonable measures and precautions to protect the confidentiality and value of each Proprietary Asset identified or required to be identified in Schedule 5.14. (c) To the Knowledge of InfoCast, InfoCast has conducted its business without infringement or claim of infringement of any license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of others. InfoCast is not infringing, and has not at any time infringed or received any notice or other communication (in writing or otherwise) of any actual, alleged, possible or potential infringement of, any Proprietary Asset owned or used by any other Person. To the Knowledge of InfoCast no other Person is infringing, and no Proprietary Asset owned or used by any other Person infringes or conflicts with, any Proprietary Asset owned or used by InfoCast. (d) InfoCast owns, licenses or has rights to all of the Proprietary Assets owned or used by InfoCast. The Proprietary Assets identified in Schedule 5.14 constitute all of the Proprietary Assets necessary to enable InfoCast to conduct its business in the manner in which its business is currently being conducted. Section 5.15 Proceedings; Orders (a) There is no pending Proceeding and, to the Knowledge of InfoCast, no Person has threatened to commence any Proceeding: (i) that involves InfoCast or that otherwise relates to or might affect the business of InfoCast or any of the assets owned or used by InfoCast (whether or not InfoCast is named as a party thereto); or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Transactions. (b) No event has occurred, and no claim, dispute or other condition or circumstance exists, that might directly or indirectly give rise to or serve as a basis for the commencement of any material Proceeding of the type described in Section 5.15(a). (c) No Proceeding has ever been commenced by or against InfoCast and no Proceeding otherwise involving or relating to InfoCast has been pending or threatened at any time. (d) There is no Order to which InfoCast or any of the assets owned or used by InfoCast is subject that relates to the business of InfoCast or to any of the assets owned or used by InfoCast. 39 (e) To the knowledge of InfoCast, there is no proposed Order that, if issued or otherwise put into effect, (i) may have a material adverse effect on the business, condition, assets, liabilities, operations, financial performance, net income or prospects (or on any aspect or portion thereof) of InfoCast or on the ability of InfoCast to comply with or perform any covenant or obligation under this Agreement or any of the other Transactional Documents, or (ii) may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the Transactions. Section 5.16 Sale of Purchased Shares Valid Assuming the accuracy of the representations and warranties of the Controlling Shareholders and the Selling Shareholders contained herein and in the Non-Controlling Shareholder Declarations, the issue of the Exchangeable Shares and the InfoCast Exchange Stock will be exempt from the prospectus and registration requirements of the Ontario Act and the Alberta Act. Section 5.17 Financial Statements (a) InfoCast has delivered to the Company the audited balance sheet of InfoCast as at March 31, 1999 (the "InfoCast Balance Sheet"), and the related audited statements together with the notes thereto (collectively, the "InfoCast Financial Statements"). (b) The InfoCast Financial Statements are accurate and complete in all material respects, and the dollar amount of each line item included in the InfoCast Financial Statements is accurate in all material respects. The Financial Statements and the notes thereto are in accordance with the books and records of InfoCast and present fairly the financial position of InfoCast as of the respective dates thereof and the results of operations, changes in stockholder's equity and cash flows of InfoCast for the periods covered thereby. The Financial Statements have been prepared in accordance with US GAAP, applied on a consistent basis throughout the periods covered. (c) At the date of the InfoCast Balance Sheet, (i) InfoCast had no Liabilities of any nature (matured or unmatured, fixed or contingent) required by US GAAP to be provided for in the InfoCast Balance Sheet or described in the notes thereto which were not provided for in the InfoCast Balance Sheet, or described in the notes thereto, (ii) InfoCast had no material Liabilities of any nature (matured or unmatured, fixed or contingent) which were not required by US GAAP to be provided for in the InfoCast Balance Sheet or described in the notes thereto and (iii) all reserves established by InfoCast and set forth in the InfoCast Balance Sheet were adequate for the purposes for which they were established. As of the date of this Agreement, InfoCast has no Liabilities, except for: (i) Liabilities identified as such in the "liabilities" column of the InfoCast Balance Sheet; (ii) accounts payable (of the type required to be reflected as current liabilities in the "liabilities" column of a balance sheet prepared in accordance with US GAAP) incurred by InfoCast in the ordinary course of business since the date of the InfoCast Balance Sheet; and (iii) InfoCast's obligations under the Contracts listed in Schedule 5.19. 40 Section 5.18 Title to Assets (a) InfoCast owns and has good and valid title to all assets purported to be owned by it, including: (i) with respect to InfoCast, all assets reflected on the InfoCast Balance Sheet (except for inventory sold by InfoCast since the date of the InfoCast Balance Sheet in the ordinary course of business); (ii) all of InfoCast's rights under InfoCast Contracts; and (iii) all other assets reflected in InfoCast's books and records as being owned by InfoCast. Section 5.19 InfoCast Material Contracts (a) Schedule 5.19 identifies and provides an accurate and complete description of each InfoCast Contract which involves future payments, performance of services or delivery of goods or materials to or by InfoCast of an aggregate amount or value in excess of US$100,000, or which otherwise is material to the business or prospects of InfoCast (collectively, the "InfoCast Material Contracts"). All nonmaterial contracts of InfoCast do not in the aggregate represent a material portion of the assets or liabilities of InfoCast. InfoCast has delivered to the Company accurate and complete copies of all InfoCast Material Contracts, including all amendments thereto. (b) Each InfoCast Material Contract is valid and in full force and effect, and is enforceable by InfoCast in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). (c) InfoCast is not in default under any InfoCast Material Contract in any material respect, and to the Knowledge of InfoCast, no Person has violated or breached, or declared or committed any default under, any InfoCast Material Contract. (d) No event has occurred, and no circumstance or condition exists, that might (with or without notice or lapse of time) (i) result in a material violation or breach of any of the provisions of any InfoCast Material Contract, (ii) give any Person the right to declare a default or exercise any remedy under any InfoCast Material Contract, (iii) give any Person the right to accelerate the maturity or performance of any InfoCast Material Contract, or (iv) give any Person the right to cancel, terminate or modify, any InfoCast Material Contract. (e) InfoCast has not waived any of its rights under any InfoCast Material Contract. 41 (f) InfoCast has never guaranteed or otherwise agreed to cause, insure or become liable for, and has never pledged any of its assets to secure, the performance or payment of any obligation or other Liability of any other Person. (g) Except as set forth in Schedule 5.19, InfoCast has never been a party to or bound by (i) any joint venture agreement, partnership agreement, profit sharing agreement, cost sharing agreement, loss sharing agreement or similar Contract, or (ii) any Contract that creates or grants to any Person, or provides for the creation or grant of, any share appreciation right, phantom share right or similar right or interest. (h) The performance of the InfoCast Material Contracts will not result in any violation of, or failure to comply with, any Requirement of Law. (i) No Person is renegotiating, or has the right to renegotiate, any amount paid or payable to InfoCast under any InfoCast Material Contract or any other term or provision of any InfoCast Material Contract. (j) The Contracts identified in Schedule 5.19, collectively constitute all of the Contracts necessary to enable InfoCast to conduct its business in the manner in which such business is currently being conducted and in the manner in which such business is proposed to be conducted. (k) Schedule 5.19 identifies and provides an accurate and complete description of each proposed Contract as to which any bid, offer, written proposal, term sheet or similar document has been submitted or received by InfoCast. (l) No party to any InfoCast Material Contract has made a claim to the effect that InfoCast has failed to perform an obligation thereunder. There is no known plan, intention or indication of any contracting party to any Contract to cause the termination, cancellation or modification of such Contract or to reduce or otherwise change its activity thereunder so as to adversely affect the benefits derived or expected to be derived therefrom by InfoCast. (m) InfoCast is neither a party to, nor bound by, any contract, agreement, commitment or restriction which obligates InfoCast to perform services or to produce products unprofitably. Section 5.20 Employees and Employee Benefits (a) Schedule 5.20 contains a list of all employees of InfoCast as of the date hereof and their material terms and conditions of employment including salary or wages, bonus, position title and seniority date. Except as disclosed on Schedule 5.20, no employee of InfoCast is on long-term disability leave or extended absence or in receipt of workers' compensation benefits. (b) Schedule 5.20 contains a list of individuals who are currently performing services for InfoCast related to its business and are classified as "consultants" or "independent contractors". 42 (c) InfoCast is not a party to or subject to any collective bargaining agreements with any trade union or collective bargaining agent representing any of its employees. There is no labour union organizing activity pending or, to InfoCast's knowledge, threatened with respect to any employees of InfoCast. Except as specified on Schedule 5.20, no employee of InfoCast has any agreement or contract, written or verbal, regarding his employment, other than those deemed to exist at common law. (d) To the Knowledge of InfoCast, no employee of InfoCast, nor any consultant with whom InfoCast has contracted, is in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, InfoCast because of the nature of the business to be conducted by InfoCast, and to InfoCast's knowledge the continued employment by InfoCast of its present employees, and the performance of InfoCast's contracts with its independent contractors, will not result in any such violation. InfoCast has not received any notice alleging that any such violation has occurred. InfoCast is not aware that any officer or key employee, or that any group of key employees, intends to terminate his, her or their employment with InfoCast, nor does InfoCast have a present intention to terminate the employment of any officer, key employee or group of key employees. (e) Except as set forth in Schedule 5.20 there are no employment policies or plans, including policies or plans regarding incentive compensation, stock options, severance pay or other terms or conditions of employment or terms or conditions upon which Employees may be terminated, which are binding upon InfoCast. (f) InfoCast has been and is being operated in full compliance with all Requirements of Law relating to employees, including employment standards, occupational health and safety, pay equity and employment equity. There have been no complaints under such laws against InfoCast. (g) There are no complaints nor, to the Knowledge of InfoCast, are there any threatened complaints, against InfoCast, before any employment standards branch or tribunal or human rights tribunal. To the Knowledge of InfoCast nothing has occurred which might lead to a complaint against InfoCast, under any human rights legislation or employment standards legislation. There are no outstanding decisions or settlements or pending settlements under the employment standards legislation which place any obligation upon InfoCast, to do or refrain from doing any act. (h) To the knowledge of InfoCast, there are no outstanding labour tribunal proceedings of any kind, including any proceedings which could result in certification of a trade union as bargaining agent for any employees or independent contractors of InfoCast. 43 Section 5.21 Compliance With Requirement of Laws (a) InfoCast is in full compliance with each Requirement of Law that is applicable to it or to the conduct of its business or the ownership or use of any of its assets. (b) No event has occurred, and no condition or circumstance exists, that might (with or without notice or lapse of time) constitute or result directly or indirectly in a material violation by InfoCast of, or a material failure on the part of InfoCast to comply with, any Requirement of Law. (c) InfoCast has not received, at any time, any notice or other communication (in writing or otherwise) from any Governmental Authority or any other Person regarding (i) any actual, alleged, possible or potential violation of, or failure to comply with, any Requirement of Law, or (ii) any actual, alleged, possible or potential obligation on the part of InfoCast to undertake, or to bear all or any portion of the cost of, any cleanup or any remedial, corrective or response action of any nature. (d) To the Knowledge of InfoCast, no Governmental Authority has proposed or is considering any Requirement of Law that, if adopted or otherwise put into effect, (i) may have an material adverse effect on the business, condition, assets, liabilities, operations, financial performance, net income or prospects of InfoCast, or on the ability of InfoCast to comply with or perform any covenant or obligation under any of the Transactional Documents, or (ii) may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the Transactions. Section 5.22 Tax Matters (a) Each Tax required to have been paid, or claimed by any Governmental Authority to be payable, by InfoCast (whether pursuant to any Tax Return or otherwise) has been duly paid in full on a timely basis including all installments on account of Tax for the current year that are due and payable by it. Any Tax required to have been withheld or collected by InfoCast has been duly withheld and collected, and (to the extent required) each such Tax has been paid to the appropriate Governmental Authority. (b) Schedule 5.22 accurately identifies all Tax Returns required to be filed by or on behalf of InfoCast with any Governmental Authority with respect to any taxable period ending on or before the Closing Date ("InfoCast Returns"). All InfoCast Returns (i) have been or will be filed when due, and (ii) have been or will be, when filed, accurately and completely prepared in full compliance with all applicable Requirement of Laws, and InfoCast have completely and accurately reported all income and all other amounts of information required to be reported thereon. All amounts shown on InfoCast Returns to be due on or before the Closing Date, and all amounts otherwise payable in connection with InfoCast Returns on or before the Closing Date, have been or will be paid on or before the Closing Date. 44 (c) InfoCast's liability for unpaid Taxes for all periods ending on or before March 31, 1999 does not, in the aggregate, exceed the amount of the current liability accruals for Taxes (excluding reserves for deferred taxes) reported in the InfoCast Financial Statements. InfoCast will establish, in the ordinary course of business, reserves adequate for the payment of all Taxes for the period from March 31, 1999 through to the Closing Date in addition to those included on the InfoCast Balance Sheet, and InfoCast will disclose the dollar amount of such reserves to the Company on or prior to the Closing Date. (d) Schedule 5.22 accurately identifies each examination or audit of any InfoCast Return that has been conducted by any Governmental Authority since InfoCast's inception. InfoCast has delivered to the Purchaser accurate and complete copies of all material audit reports (to which InfoCast has access) relating to InfoCast Returns, elections, designations or similar things relating to Taxes for which InfoCast is or may be liable. No extension or waiver of the limitation period applicable to any of InfoCast Returns has been granted (by InfoCast or any other Person), and no such extension or waiver has been requested from InfoCast. (e) To the knowledge of InfoCast, there are no unsatisfied Liabilities for Taxes (including liabilities for interest, additions to tax and penalties thereon and related expenses) with respect to any notice of deficiency or similar document received by InfoCast. (f) To the knowledge of InfoCast, there are no actions, suits, proceedings, investigations, audits or claims now pending or, to the knowledge of InfoCast threatened, against InfoCast in respect of any Taxes and there are no matters under discussion, audit or appeal with any Governmental Authority relating to Taxes. (g) Except as specifically disclosed in writing to the Company, for purposes of the Tax Act or any applicable provincial or municipal taxing statute, no Person or group of Persons has ever acquired or had the right to acquire control of InfoCast. (h) The transfer pricing practices of InfoCast have not been the subject of a review or audit by any revenue or other taxing authority and there are no agreements, waivers or other agreement providing for an extension of time with respect to the assessment or collection of any Tax against InfoCast with respect to any matter relating to transfer pricing issues or the transfer pricing practices of InfoCast. To the knowledge of InfoCast, there are no suits or similar proceedings now pending or threatened against InfoCast with respect to any transfer pricing issue or transfer pricing practice of InfoCast. There are currently no matters under discussion with any taxation or other authority relating to any transfer pricing issue, transfer pricing practices of InfoCast, or any advance pricing agreement or similar process or agreement concerning transfer pricing practices and issues of InfoCast. (i) No reserves are required to be taken by InfoCast for purposes of the Tax Act. 45 (j) There are no reassessments of InfoCast that are issued and outstanding and there are no outstanding issues which have been raised and communicated to InfoCast by any governmental body for any taxation year in respect of which a Tax Return of InfoCast has been audited. No governmental body has challenged, disputed or questioned InfoCast in respect of Taxes or of any returns, filings or other reports filed under any statute providing for Taxes. InfoCast is not negotiating any draft assessment or reassessment with any governmental body. To the Knowledge of InfoCast, there are no grounds for an assessment or reassessment of InfoCast of an amount which would have a material adverse effect on InfoCast other than as disclosed in the Financial Statements. InfoCast has not received any indication from any governmental body that an assessment (other than an assessment accepting a Tax Return as filed) or reassessment of InfoCast is proposed in respect of any Taxes, regardless of its merits. InfoCast has not executed or filed with any governmental body any agreement or waiver extending the period for assessment, reassessment or collection of any Taxes. (k) InfoCast has withheld from each payment made to any of its present or former employees, officers and directors, and to all persons who are non-residents of Canada for the purposes of the Tax Act, all amounts required by law to be withheld, and furthermore, have remitted such withheld amounts within the prescribed periods to the appropriate governmental body. InfoCast has remitted all Taxes payable by it in respect of its employees and has remitted such amounts to the proper governmental body within the time required under the applicable legislation. Other than as set forth in Schedule 5.22, InfoCast has charged, collected and remitted on a timely basis all Taxes as required under applicable legislation on any sale, supply or delivery whatsoever it has made; and for any late filings disclosed on Schedule 5.22, no penalties or fines will or have become due and owing as a result of such late filings. (l) InfoCast has not deducted any material amounts in computing its income in a taxation year that are currently unpaid and that could, if they remain unpaid, be required to be included in income in a subsequent taxation year. (m) InfoCast will not at any time be deemed to have a capital gain pursuant to subsection 80.03(2) of the Tax Act as a result of any transactions or event taking place in any fiscal period or portion thereof ending on or before the Closing Date. Section 5.23 Securities Laws Compliance; Registration Rights The issue of the Exchangeable Shares to the Selling Shareholders has complied and will comply with all securities laws of the Provinces of Alberta and Ontario, and applicable securities laws of the United States. InfoCast has complied with all applicable securities laws of Canada and the United States in connection with all offers and sales of securities of InfoCast prior to the date of this Agreement. 46 Section 5.24 Insurance (a) Schedule 5.24 accurately sets forth, with respect to each insurance policy maintained by or at the expense of, or for the direct or indirect benefit of, InfoCast: (i) the name of the insurance carrier that issued such policy and the policy number of such policy; (ii) whether such policy is a "claims made" or an "occurrences" policy; (iii) a description of the coverage provided by such policy and the material terms and provisions of such policy (including all applicable coverage limits, deductible amounts and co-insurance arrangements and any non customary exclusions from coverage); (iv) the annual premium payable with respect to such policy, and the cash value (if any) of such policy; and (v) a description of any claims pending, and any claims that have been asserted in the past, with respect to such policy. (b) Schedule 5.24 also identifies (i) each pending application for insurance that has been submitted by or on behalf of InfoCast, and (ii) each self-insurance or risk-sharing arrangement affecting InfoCast or any of its assets. InfoCast has delivered to the Company accurate and complete copies of all of the insurance policies identified in Schedule 5.24 (including all renewals thereof and endorsements thereto) and all of the pending applications identified in Schedule 5.24. (c) Each of the policies identified in Schedule 5.24 is valid, enforceable and in full force and effect, and has been issued by an insurance carrier that, to the Knowledge of InfoCast, is solvent, financially sound and reputable. All of the information contained in the applications submitted in connection with said policies was (at the times said applications were submitted) accurate and complete, and all premiums and other amounts owing with respect to said policies have been paid in full on a timely basis. The nature, scope and dollar amounts of the insurance coverage provided by said policies are similar to the coverage customarily carried by companies of similar size and character of InfoCast. Each of the policies identified in Schedule 5.24 will continue in full force and effect following the Closing. InfoCast has paid all premiums due, and has otherwise performed all of its obligations, under each policy to which it is a party or that provides coverage to it or any of its directors or officers in connection with their performance of services to InfoCast. (d) There is no pending material claim under or based upon any of the policies identified in Schedule 5.24(a), and no event has occurred, and no condition or circumstance exists, that might (with or without notice or lapse of time) directly or indirectly give rise to or serve as a basis for any such claim. 47 (e) InfoCast has not received: (i) any notice or other communication (in writing or otherwise) regarding the actual or possible cancellation or invalidation of any of the policies identified in Schedule 5.24 or regarding any actual or possible adjustment in the amount of the premiums payable with respect to any of said policies; (ii) any notice or other communication (in writing or otherwise) regarding any actual or possible refusal of coverage under, or any actual or possible rejection of any claim under, any of the policies identified in Schedule 5.24; or (iii) any indication that the issuer of any of the policies identified in Schedule 5.24 may be unwilling or unable to perform any of its obligations thereunder. Section 5.25 Absence of Changes Except as set forth in Schedule 5.25, since March 31, 1999: (a) there has not been any material adverse change in InfoCast's business, condition, assets, liabilities, operations, financial performance, net income or prospects (or in any aspect or portion thereof), and no event has occurred that might have an adverse effect on InfoCast's business, condition, assets, liabilities, operations, financial performance, net income or prospects (or on any aspect or portion thereof); (b) there has not been any loss, damage or destruction to, or any interruption in the use of, any of InfoCast's assets (whether or not covered by insurance); (c) InfoCast has not (i) declared, accrued, set aside or paid any dividend or made any other distribution in respect of any shares of capital stock, or (ii) repurchased, redeemed or otherwise reacquired any shares of capital stock or other securities; (d) InfoCast has not sold or otherwise issued any shares of capital stock or any other securities; (e) InfoCast has not amended its articles of incorporation or bylaws and has not effected or been a party to any InfoCast Acquisition Transaction, reclassification of shares, stock split, reverse stock split or similar transaction; (f) InfoCast has not purchased or otherwise acquired any asset from any other Person, except for supplies acquired by InfoCast in the ordinary course of business; 48 (g) InfoCast has not leased or licensed any asset from any other Person; (h) InfoCast has not made any material capital expenditure; (i) InfoCast has not sold or otherwise transferred, and has not leased or licensed, any asset to any other Person except for products sold by InfoCast from its inventory in the ordinary course of business; (j) InfoCast has not written off as uncollectible, or established any extraordinary reserve with respect to, any account receivable or other indebtedness; (k) InfoCast has not pledged or hypothecated any of its assets or otherwise permitted any of its assets to become subject to any Lien; (l) InfoCast has not made any loan or advance to any other Person; (m) InfoCast has not (i) established or adopted any employee benefit plan, or (ii) paid any bonus or made any profit sharing or similar payment to, or increased the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers or employees; (n) InfoCast has not increased the compensation of any of its officers, or the rate of pay of its employees as a group, except as part of regular compensation increases in the ordinary course of its business; (o) there has been no resignation or termination of employment of any officer or key employee of InfoCast; (p) there has been no labour dispute involving InfoCast or its employees and none is pending or, to InfoCast's Knowledge, threatened; (q) InfoCast has not entered into, and neither InfoCast nor any of the assets owned or used by InfoCast has become bound by, any InfoCast Material Contract; (r) no InfoCast Material Contract by which InfoCast or any of the assets owned or used by InfoCast is or was bound, or under which InfoCast has or had any rights or interest, has been amended or terminated; (s) InfoCast has not incurred, assumed or otherwise become subject to any Liability, other than accounts payable (of the type required to be reflected as current liabilities in the "liabilities" column of a balance sheet prepared in accordance with US GAAP) incurred by InfoCast in the ordinary course of business; 49 (t) InfoCast has not discharged any Lien or discharged or paid any indebtedness or other Liability, except for accounts payable that (i) are reflected as current liabilities in the "liabilities" column of the InfoCast Balance Sheet or have been incurred by InfoCast since March 31, 1999 in the Ordinary Course of Business, and (ii) have been discharged or paid in the Ordinary Course of Business; (u) InfoCast has not forgiven any debt or otherwise released or waived any right or claim; (v) InfoCast has not changed any of its methods of accounting or accounting practices in any respect; (w) InfoCast has not entered into any transaction or taken any other action outside the ordinary course of business; and (x) InfoCast has not agreed, committed or offered (in writing or otherwise), and has not attempted, to take any of the actions referred to in clauses "(c)" through "(w)" above. Section 5.26 Full Disclosure (a) The representations and warranties of InfoCast contained in this Agreement, each of the other Transaction Documents and each of the documents delivered or provided to the Company and the Selling Shareholders by or on behalf of InfoCast in connection with this Agreement or any of the Transactions (i) do not contain any untrue statement of a material fact, or (ii) omit to state any material fact of which InfoCast has Knowledge, which fact is necessary in order to make the statements and information contained in this Agreement, the other Transaction documents and such documents not misleading. (b) InfoCast has provided the Company with full and complete access to all of InfoCast's records and other documents and data. Section 5.27 Corporate Governance InfoCast and the Purchaser agree to be bound by the provisions and governance guidelines prescribed in Schedule 5.27, which agreement and obligation shall survive the completion of the transactions contemplated herein. 50 ARTICLE VI PRE-CLOSING COVENANTS OF THE COMPANY AND THE CONTROLLING SHAREHOLDERS Section 6.1 Access and Investigation The Company shall ensure that, at all times during the Pre-Closing Period: (a) The Company and its Representatives provide the Purchaser and its Representatives with free and complete access to the Company's Representatives, personnel and assets and to all existing books, records, Tax Returns, work papers and other documents and information relating to the Company; (b) The Company and its Representatives provide the Purchaser and its Representatives with such copies of existing books, records, Tax Returns, work papers and other documents and information relating to the Company as the Purchaser may request in good faith; and (c) The Company and its Representatives compile and provide the Purchaser and its Representations with such additional financial, operating and other data and information regarding the Company as the Purchaser may request in good faith. Section 6.2 Operation of Business The Company and the Controlling Shareholders shall ensure that during the Pre-Closing Period: (a) The Company conducts its operations exclusively in the Ordinary Course of Business and in the same manner as such operations have been conducted prior to the date of this Agreement; (b) The Company preserves intact its current business organization, keeps available the services of its current officers and employees and maintains its relations and good will with all suppliers, customers, landlords, creditors, licensors, licensees, employees and other Persons having business relationships with the Company; (c) The Company keeps in full force all insurance policies identified in Schedule 4.21; (d) The Company's officers confer regularly with the Purchaser concerning operational matters and otherwise report regularly to the Purchaser concerning the status of the Company's business, condition, assets, liabilities, operations, financial performance and prospects; (e) The Company immediately notifies the Purchaser of any inquiry, proposal or offer from any Person relating to any Acquisition Transaction; 51 (f) The Company does not declare, accrue, set aside or pay any dividend or make any other distribution in respect of any shares in its capital, and does not repurchase, redeem or otherwise reacquire any such shares or other securities (except as expressly contemplated by this Agreement); (g) The Company does not sell or otherwise issue any shares or any other securities; (h) The Company does not amend its articles of incorporation or bylaws, and does not effect or become a party to any Acquisition Transaction, reclassification of shares, share split, reverse share split or similar transaction; (i) The Company does not form any subsidiary or acquire any equity interest or other interest in any other Entity; (j) The Company does not make any capital expenditure, except for capital expenditures that are made in the Ordinary Course of Business and that, when added to all other capital expenditures made on behalf of the Company during the Pre-Closing Period, do not exceed CDN$25,000 in the aggregate; (k) The Company does not enter into or permit any of the assets owned or used by the Company to become subject to any Lien; (l) The Company does not incur, assume or otherwise become subject to any Liability, except for current liabilities (of the type required to be reflected in the "liabilities" column of a balance sheet prepared in accordance with GAAP) incurred in the Ordinary Course of Business; (m) The Company does not establish or adopt any employee benefit plan, and does not pay any bonus or make any profit sharing or similar payment to, or increase the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers or employees; (n) The Company does not change any of its methods of accounting or accounting practices in any respect; (o) The Company does not make any Tax election; (p) The Company does not commence any Proceeding; (q) The Company does not enter into any transaction or take any other action of the type referred to in Section 4.23; (r) The Company does not enter into any transaction or take any other action outside the Ordinary Course of Business; 52 (s) The Company does not enter into any transaction or take any other action that might cause or constitute a Breach of any representation or warranty made by the Company or any of the Selling Shareholders in this Agreement any of the Non-Controlling Shareholder Letters of Transmittal or in any other Transaction Document; and (t) The Company does not agree, commit or offer (in writing or otherwise), and does not attempt, to take any of the actions described in clauses (g) through (t) of this Section 6.02. Section 6.3 Filings and Consents The Company and the Controlling Shareholders shall use its Best Efforts to ensure that: (a) each filing or notice required to be made or given (pursuant to any applicable Requirement of Law, Order or Material Contract, or otherwise) by the Company or any of the Selling Shareholders in connection with the execution and delivery of any of the Transaction Documents or in connection with the consummation or performance of any of the Transactions (including each of the filings and notices identified in Schedule 4.05) is made or given as soon as possible after the date of this Agreement; (b) each Consent required to be obtained (pursuant to any applicable Requirement of Law, Order or Material Contract, or otherwise) by the Company or any of the Selling Shareholders in connection with the execution and delivery of any of the Transactional Documents or in connection with the consummation or performance of any of the Transactions (including each of the Consents identified in Schedule 4.05) is obtained as soon as possible after the date of this Agreement and remains in full force and effect through the Closing Date; (c) The Company promptly delivers to the Purchaser a copy of each filing made, each notice given and each Consent obtained by the Company or any Selling Shareholders during the Pre-Closing Period; and (d) during the Pre-Closing Period, the Company and its Representatives cooperate with the Purchaser and with the Purchaser's Representatives, and prepare and make available such documents and take such other actions as the Purchaser may request in good faith, in connection with any filing, notice or Consent that the Purchaser is required or elects to make, give or obtain. Section 6.4 Notification of Events or Conditions During the Pre-Closing Period, the Company and the Controlling Shareholders shall promptly notify the Purchaser in writing of: 53 (a) the discovery by the Company or any of the Controlling Shareholders of any event, condition, fact or circumstance that occurred or existed on or prior to the date of this Agreement and that caused or constitutes a Breach of any representation or warranty made by the Company or any of the Selling Shareholders in this Agreement or any of the Non-Controlling Shareholder Letters of Transmittal; (b) any event, condition, fact or circumstance that occurs, arises or exists after the date of this Agreement and that would cause or constitute a Breach of any representation or warranty made by the Company or any of the Selling Shareholders in this Agreement or any of the Non-Controlling Shareholder Letters of Transmittal if (A) such representation or warranty had been made as of the time of the occurrence, existence or discovery of such event, condition, fact or circumstance, or (B) such event, condition, fact or circumstance had occurred, arisen or existed on or prior to the date of this Agreement; (c) any Breach of any covenant or obligation of the Company or any of the Selling Shareholders; and (d) any event, condition, fact or circumstance that may make the timely satisfaction of any of the conditions set forth in Article VIII impossible or unlikely. Section 6.5 Payment of Indebtedness by Related Parties The Company and the Controlling Shareholders shall cause all indebtedness and other Liabilities owing to each Related Party to the Company by the Company to be discharged and paid in full prior to the Closing, other than liabilities incurred in the Ordinary Course of Business which are not due at the Closing Date, or are to be assumed by InfoCast at Closing. Section 6.6 No Negotiation The Company and the Controlling Shareholders shall ensure that, during the Pre-Closing Period, neither the Company nor any of the Company's Representatives directly or indirectly: (a) solicits or encourages the initiation of any inquiry, proposal or offer from any Person (other than the Purchaser) relating to any Acquisition Transaction; (b) participates in any discussions or negotiations with, or provides any non public information to, any Person (other than the Purchaser) relating to any Acquisition Transaction; or (c) considers the merits of any unsolicited inquiry, proposal or offer from any Person (other than the Purchaser) relating to any Acquisition Transaction. 54 Section 6.7 Best Efforts During the Pre-Closing Period, the Company and the Controlling Shareholders shall use their respective Best Efforts to cause the conditions set forth in Articles VIII and Article IX to be satisfied on a timely basis, and shall not take any action or omit to take any action, the taking or omission of which would or could reasonably be expected to result in any of the representations and warranties set forth in this Agreement or any of the other Transaction Documents becoming untrue, in any of the conditions of Closing set forth in Article VIII or Article IX not being satisfied or in the business of the Company becoming materially less valuable. Section 6.8 Confidentiality The Company and the Controlling Shareholders shall ensure that, during the Pre-Closing Period: (a) The Company and its Representatives keep strictly confidential the existence and terms of this Agreement; (b) neither the Company nor any of its Representatives issues or disseminates any press release or other publicity or otherwise makes any disclosure of any nature (to any of the Company's suppliers, customers, landlords, creditors or employees or to any other Person) regarding any of the Transactions, except to employees of the Company involved in the consummation of the Transactions or to the extent that the Company is required by law to make any such disclosure regarding the Transactions; and (c) if the Company is required by law to make any disclosure regarding the Transactions, the Company advises the Purchaser, at least five business days before making such disclosure, of the nature and content of the intended disclosure. ARTICLE VII PRE-CLOSING COVENANTS OF THE PURCHASER AND INFOCAST Section 7.1 Filings and Consents The Purchaser and InfoCast shall ensure that: (a) each filing or notice required to be made or given (pursuant to any applicable Requirement of Law or Order) by the Purchaser in connection with the execution and delivery of any of the Transaction Documents or in connection with the consummation or performance of any of the Transactions is made or given as soon as possible after the date of this Agreement; 55 (b) each Consent required to be obtained (pursuant to any applicable Requirement of Law or Order) by the Purchaser in connection with the execution and delivery of any of the Transaction Documents or in connection with the consummation or performance of any of the Transactions is obtained as soon as possible after the date of this Agreement and remains in full force and effect through the Closing Date; (c) the Purchaser promptly delivers to the Company a copy of each filing made, each notice given and each Consent referred to in this Section 7.01 obtained by the Purchaser during the Pre-Closing Period; and (d) during the Pre-Closing Period, the Purchaser and its Representatives cooperate with the Company, the Controlling Shareholders and their respective Representatives, and prepare and make available such documents and take such other actions as the Company or any of the Controlling Shareholders may request in good faith, in connection with any filing, notice or Consent that the Company or the Selling Shareholders is required or elects to make, give or obtain. Section 7.2 Access and Investigation InfoCast shall ensure that, at all times during the Pre-Closing Period: (a) InfoCast and its Representatives provide the Company and its Representatives with free and complete access to InfoCast's Representatives, personnel and assets and to all existing books, records, Tax Returns, work papers and other documents and information relating to InfoCast; (b) InfoCast and its Representatives provide the Purchaser and its Representatives with such copies of existing books, records, Tax Returns, work papers and other documents and information relating to InfoCast as the Purchaser may request in good faith; and (c) InfoCast and its Representatives compile and provide the Purchaser and its Representations with such additional financial, operating and other data and information regarding InfoCast as the Purchaser may request in good faith. Section 7.3 Operation of Business InfoCast shall ensure that during the Pre-Closing Period: (a) InfoCast conducts its operations exclusively in the ordinary course of business and in the same manner as such operations have been conducted prior to the date of this Agreement; (b) InfoCast keeps in full force all insurance policies identified in Schedule 5.24; (c) InfoCast immediately notifies the Company of any inquiry, proposal or offer from any Person relating to any InfoCast Acquisition Transaction; 56 (d) InfoCast does not declare, accrue, set aside or pay any dividend or make any other distribution in respect of any shares in its capital, and does not repurchase, redeem or otherwise reacquire any such shares or other securities (except as expressly contemplated by this Agreement); (e) InfoCast does not sell or otherwise issue any shares or any other securities; (f) InfoCast does not amend its articles of incorporation or bylaws, and does not effect or become a party to any InfoCast Acquisition Transaction, reclassification of shares, share split, reverse share split or similar transaction; (g) InfoCast does not make any capital expenditure, except for capital expenditures that are made in the ordinary course of business and that, when added to all other capital expenditures made on behalf of InfoCast during the Pre-Closing Period, do not exceed CDN$100,000 in the aggregate; (h) InfoCast does not incur, assume or otherwise become subject to any Liability, except for current liabilities (of the type required to be reflected in the "liabilities" column of a balance sheet prepared in accordance with US GAAP) incurred in the ordinary course of business; (i) InfoCast does not establish or adopt any employee benefit plan, and does not pay any bonus or make any profit sharing or similar payment to, or increase the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers or employees; (j) InfoCast does not change any of its methods of accounting or accounting practices in any respect; (k) InfoCast does not make any Tax election; (l) InfoCast does not commence any Proceeding; (m) InfoCast does not enter into any transaction or take any other action of the type referred to in Section 5.25; (n) InfoCast does not enter into any InfoCast Acquisition Transaction or take any other action outside the ordinary course of business; (o) InfoCast does not enter into any transaction or take any other action that might cause or constitute a Breach of any representation or warranty made by InfoCast or the Purchaser in this Agreement or in any other Transaction Document; and (p) InfoCast does not agree, commit or offer (in writing or otherwise), and does not attempt, to take any of the actions described in clauses (e) through (o) of this Section 7.03. 57 Section 7.4 Filings and Consents InfoCast shall ensure that: (a) each filing or notice required to be made or given (pursuant to any applicable Requirement of Law, Order or InfoCast Material Contract, or otherwise) by InfoCast or the Purchaser in connection with the execution and delivery of any of the Transaction Documents or in connection with the consummation or performance of any of the Transactions is made or given as soon as possible after the date of this Agreement; (b) each Consent required to be obtained (pursuant to any applicable Requirement of Law, Order or InfoCast Material Contract, or otherwise) by InfoCast or the Purchaser in connection with the execution and delivery of any of the Transactional Documents or in connection with the consummation or performance of any of the Transactions is obtained as soon as possible after the date of this Agreement and remains in full force and effect through the Closing Date; (c) InfoCast promptly delivers to the Company a copy of each filing made, each notice given and each Consent obtained by InfoCast or the Purchaser during the Pre-Closing Period; and (d) during the Pre-Closing Period, InfoCast and its Representatives cooperate with the Purchaser and with the Purchaser's Representatives, and prepare and make available such documents and take such other actions as the Purchaser may request in good faith, in connection with any filing, notice or Consent that the Purchaser is required or elects to make, give or obtain. Section 7.5 Notification of Events or Conditions During the Pre-Closing Period, InfoCast and the Purchaser shall promptly notify the Company in writing of: (a) the discovery by InfoCast or the Purchaser of any event, condition, fact or circumstance that occurred or existed on or prior to the date of this Agreement and that caused or constitutes a Breach of any representation or warranty made by InfoCast or the Purchaser in this Agreement or any of the Transaction Documents; (b) any event, condition, fact or circumstance that occurs, arises or exists after the date of this Agreement and that would cause or constitute a Breach of any representation or warranty made by InfoCast or the Purchaser in this Agreement or any of the Transaction Documents if (A) such representation or warranty had been made as of the time of the occurrence, existence or discovery of such event, condition, fact or circumstance, or (B) such event, condition, fact or circumstance had occurred, arisen or existed on or prior to the date of this Agreement; (c) any Breach of any covenant or obligation of InfoCast or the Purchaser; and 58 (d) any event, condition, fact or circumstance that may make the timely satisfaction of any of the conditions set forth herein impossible or unlikely. Section 7.6 Best Efforts During the Pre-Closing Period, InfoCast and the Purchaser shall use their respective Best Efforts to cause the conditions set forth in Article VIII and Article IX to be satisfied on a timely basis, and shall not take any action or omit to take any action, the taking or omission of which would or could reasonably be expected to result in any of the representations and warranties set forth in this Agreement or any of the other Transaction Documents becoming untrue, in any of the conditions of Closing set forth in Article VIII or Article IX not being satisfied or in the business of InfoCast becoming materially less valuable. ARTICLE VIII CONDITIONS TO PURCHASER'S OBLIGATIONS AT CLOSING The Purchaser's obligation to purchase the Purchased Shares and to take the other actions required to be taken by the Purchaser at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions: Section 8.1 Representations and Warranties; Performance of Obligations The representations and warranties of the Company and the Selling Shareholders contained in this Agreement and the Non-Controlling Shareholder Letters of Transmittal and in each of the other Transaction Documents shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date and the Company shall have performed in all material respects all obligations herein required to be performed or observed by it on or prior to the Closing. Section 8.2 Consents, Permits, Waivers and Approvals The Company, the Selling Shareholders, the Purchaser and InfoCast shall have obtained any and all consents, permits, waivers and approvals necessary or appropriate for consummation of the transactions contemplated hereunder (except for such as may be properly obtained subsequent to the Closing). 59 Section 8.3 Delivery of Certificates Evidencing Purchased Shares The Selling Shareholders shall have delivered to the Purchaser certificates representing 100% of the Purchased Shares, duly endorsed for transfer. Section 8.4 Delivery of Employment Agreements Each of Darcy Galvon, Scott Fleming and Ken McLean shall have delivered to the Purchaser the Galvon Management Agreement, MacLean Employment Agreement or the Fleming Employment Agreement, as the case may be, duly executed by Galvon, MacLean and Fleming, respectively. Section 8.5 Compliance Certificate The Company shall have delivered to the Purchaser a certificate, executed by the President of the Company, dated the Closing Date, setting forth the Company's representation and warranty that (i) each of the representations and warranties made by the Company and, to the Knowledge of the Company, each of the Selling Shareholders in this Agreement and the Non-Controlling Shareholder Letters of Transmittal was accurate in all material respects as of the date of this Agreement, (ii) each of the representations and warranties made by the Company in this Agreement and in each of the other Transaction Documents is accurate in all material respects as of the Closing, and (iii) each of the covenants and obligations that the Company is required to have complied with or performed pursuant to this Agreement at or prior to the Closing has been duly complied with and performed in all material respects. Section 8.6 Corporate Documents The Company shall have delivered to the Purchaser or its counsel, copies of all corporate documents of the Company as the Purchaser shall reasonably request. Section 8.7 Exchange Agreement The Company, on behalf of each of the Selling Shareholders, shall have duly executed and delivered to the Purchaser and InfoCast the Exchange Agreement. Section 8.8 Proceedings and Documents All corporate and other proceedings in connection with the transactions contemplated at the Closing hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchaser and its counsel, and the Purchaser and its counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. 60 Section 9.9 Delivery of Non-Controlling Shareholder Letters of Transmittal Each of the Non-Controlling Shareholders shall have delivered to the Purchaser, on or before the Closing Date, a duly executed Non-Controlling Shareholder Declaration substantially in the form of Schedule 8.09 hereto. ARTICLE IX CONDITIONS TO THE SELLING SHAREHOLDER'S OBLIGATIONS AT CLOSING The Selling Shareholders' obligation to sell, assign, transfer and deliver the Purchased Shares to the Purchaser and the Selling Shareholders' obligation to take the other actions required to be taken on their part at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions: Section 9.1. Representations and Warranties; Performance of Obligations The representations and warranties of the Purchaser and InfoCast contained in this Agreement and in each of the other Transaction Documents shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date and the Purchaser and InfoCast shall have performed in all material respects all obligations herein required to be performed or observed by them on or prior to the Closing. Section 9.2 Consents, Permits, Waivers and Approvals The Company, the Selling Shareholders, the Purchaser and InfoCast shall have obtained any and all consents, permits, waivers and approvals necessary or appropriate for consummation of the transactions contemplated hereunder (except for such as may be properly obtained subsequent to the Closing). Section 9.3 Delivery of Certificates Evidencing Exchangeable Shares The Purchaser shall issue certificates representing the Exchangeable Shares issuable to the Selling Shareholders specified in Section 2.02(b), bearing such legends as counsel may advise are necessary or desirable and deposit same with legal counsel of the Purchaser until Section 116 Certificates are issued in respect of the transaction contemplated herein, at which time they will be delivered. 61 Section 9.4 Compliance Certificate of Purchaser The Purchaser shall have delivered to the Company and each of the Selling Shareholders a certificate, executed by the President of the Purchaser, dated the Closing Date, setting forth the Purchaser's representation and warranty that (i) each of the representations and warranties made by the Purchaser in this Agreement was accurate in all material respects as of the date of this Agreement, (ii) each of the representations and warranties made by the Purchaser in this Agreement and in each of the other Transaction Documents is accurate in all material respects as of the Closing, and (iii) each of the covenants and obligations that the Purchaser is required to have complied with or performed pursuant to this Agreement at or prior to the Closing has been duly complied with and performed in all material respects. Section 9.5 Compliance Certificate of InfoCast InfoCast shall have delivered to the Company and each of the Selling Shareholders a certificate, executed by the President of InfoCast, dated the Closing Date, setting forth InfoCast's representation and warranty that (i) each of the representations and warranties made by InfoCast in this Agreement was accurate in all material respects as of the date of this Agreement, (ii) each of the representations and warranties made by InfoCast in this Agreement and in each of the other Transaction Documents is accurate in all material respects as of the Closing, and (iii) each of the covenants and obligations that InfoCast is required to have complied with or performed pursuant to this Agreement at or prior to the Closing has been duly complied with and performed in all material respects. Section 9.6 Corporate Documents The Purchaser and InfoCast shall have delivered to the Company or its counsel, copies of all corporate documents of the Purchaser and InfoCast as the Controlling Shareholders shall reasonably request. Section 9.7 Exchange Agreement Each of the Purchaser and InfoCast shall have duly executed and delivered to the Company and the Controlling Shareholders the Exchange Agreement. Section 8.8 Proceedings and Documents All corporate and other proceedings in connection with the transactions contemplated at the Closing hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Company, the Selling Shareholders and their respective counsel, and the Company, the Selling Shareholders and their respective counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. 62 Section 9.9 Homebase Governance A resolution of the directors of each of InfoCast and InfoCast Canada shall have been passed approving the terms of governance and support of the Company prescribed in the memorandum attached hereto as Schedule 9.09. Section 9.10 Darcy Galvon - Co-Chairman of InfoCast All corporate proceedings shall have been taken and all necessary resolutions of the directors of InfoCast shall have been duly passed to appoint Darcy Galvon as a director and Co-Chairman of InfoCast, with the acknowledgement that all decisions of the Co-Chairman must be unanimous. ARTICLE X INDEMNIFICATION, ETC. Section 10.1 Survival of Representations and Warranties The representations and warranties of each party contained in this Agreement, the Non-Controlling Shareholder Letters of Transmittal and in each of the other Transaction Documents shall survive the Closing for a period of one year; provided that (i) each of the representations contained in Section 4.17, and (ii) any representation the Breach of which the Company or any Selling Shareholder had Knowledge on or prior to the Closing and any covenants or obligations to be performed after the Closing, shall, in each case, survive and continue for the applicable statute of limitation period or periods legally applicable to them. Section 10.2 Indemnification by Controlling Shareholders (a) Each of the Controlling Shareholders shall, jointly and severally in respect of representations, warranties or covenants made by or on behalf of the Company, and severally only in respect of representations, warranties or covenants made in respect of such Controlling Shareholders, hold harmless and indemnify the Purchaser and its officers, directors, employees, agents and representatives (collectively, the "Purchaser-Related Indemnitee" and individually each a "Purchaser-Related Indemnitee") from and against, and shall compensate and reimburse each of the Purchaser Indemnitees for, any Damages which are suffered or incurred by any of the Purchaser-Related Indemnitees or to which any of the Purchaser-Related Indemnitees may otherwise become subject at any time (regardless of whether or not such Damages relate to any third party claim) and which arise from or as a direct or indirect result of, or are directly or indirectly connected with: (i) any Breach of any representation or warranty made by the Company or such Controlling Shareholder in this Agreement or in any of the other Transaction Documents; 63 (ii) any Breach of any covenant or obligation of the Company or such Controlling Shareholders; (iii) any Proceeding relating to any Breach, or Liability or matter of the type referred to in any of the clauses listed above (including any Proceeding commenced by any Purchaser-Related Indemnitee for the purpose of enforcing any of its rights under this Article X); or (iv) the failure by the Company or such Controlling Shareholder to obtain any necessary consents in connection with any Material Contracts. (b) Each Controlling Shareholder acknowledges and agrees that, if there is any Breach of any representation, warranty or other provision relating to the Company or the Company's business, condition, assets, liabilities, operations, financial performance, net income or prospects (or any aspect or portion thereof), then the Purchaser itself shall be deemed, by virtue of its ownership of Purchased Shares, to have incurred Damages as a result of such Breach or Liability. Nothing contained in this Section 10.02(b) shall have the effect of (i) limiting the circumstances under which the Purchaser may otherwise be deemed to have incurred Damages for purposes of this Agreement, (ii) limiting the other types of Damages that the Purchaser may be deemed to have incurred (whether in connection with any such Breach or Liability or otherwise), or (iii) limiting the rights of the Company under this Section 10.02. (c) Notwithstanding anything to the contrary contained in this Agreement, any liability of the Controlling Shareholders hereunder shall be limited to the greater of: (i) the value of the Exchangeable Shares issued to all the Selling Shareholders on closing of the transactions contemplated hereby or (ii) the value of the Exchangeable Shares or any securities into which they may have been exchanged at the time the liability giving rise to indemnification hereunder is determined and notice of same is communicated to the Controlling Shareholders. Section 10.3 Indemnification by the Purchaser and InfoCast (a) The Purchaser and InfoCast shall, jointly and severally, hold harmless and indemnify each Selling Shareholder and each of their respective agents and representatives (collectively, the "Selling Shareholder-Related Indemnitees" and individually each a "Selling Shareholder-Related Indemnitee") from and against, and shall compensate and reimburse each of the Selling Shareholder-Related Indemnitees for, any Damages which are suffered or incurred by any of the Selling Shareholder-Related Indemnitees or to which any of the Selling Shareholder-Related Indemnitees may otherwise become subject at any time (regardless of whether or not such Damages relate to any third party claim) and which arise from or as a direct or indirect result of, or are directly or indirectly connected with: (i) any Breach of any representation or warranty made by the Purchaser and InfoCast in this Agreement or in any of the other Transaction Documents; 64 (ii) any Breach of any covenant or obligation of the Purchaser and InfoCast; or (iii) any Proceeding relating to any Breach, or Liability or matter of the type referred to in any of the clauses listed above (including any Proceeding commenced by any Selling Shareholder-Related Indemnitee for the purpose of enforcing any of its rights under this Section 10.03). (b) Notwithstanding anything to the contrary contained in this Agreement, any liability of the Purchaser or InfoCast hereunder, in respect of any particular Selling Shareholder-Related Indemnitee, be limited to the greater of: (i) the value of the Exchangeable Shares issued to such Selling Shareholder- Related Indemnitee on Closing of the transactions contemplated hereby or; (ii) the value of the Exchangeable Shares or any securities into which they may have been exchanged at the time of the liability giving rise to indemnification hereunder is determined and notice of same is communicated to such Selling Shareholder-Related Indemnitee. Section 10.4 Interest Any party (the "Indemnifying Party") that is required to indemnify any other Person (the "Indemnified Party") pursuant to this Article X with respect to any Damages shall also be required to pay such Indemnified Party interest on the amount of such Damages (for the period commencing as of the date on which such Indemnified Party first incurred or otherwise became subject to such Damages and ending on the date on which the applicable indemnification payment is made by such party) at a rate per annum equal to 7%. Section X.5 Defense of Third Party Claims (a) In the event of the assertion or commencement by any Person of any claim or Proceeding (whether against the Purchaser, any Selling Shareholder, any other Indemnitee or any other Person) with respect to which any of the Company, any Selling Shareholder, InfoCast or the Purchaser, as an Indemnifying Party, may become obligated to indemnify, hold harmless, compensate or reimburse any Indemnitee pursuant to this Article X, the Indemnified Party shall reasonably promptly, following the Indemnified Party's actual knowledge thereof, notify such Indemnifying Party of such claim or Proceeding. The Indemnified Party shall have the right, at its election, to designate such Indemnifying Party to assume the defense of such claim or Proceeding at the sole expense of one or more of such Indemnifying Party. If the Indemnified Party so elects to designate an Indemnifying Parties to assume the defense of any such claim or Proceeding: (i) such Indemnifying Party shall proceed to defend such claim or Proceeding in a diligent manner with counsel satisfactory to the Indemnified Party; 65 (ii) the Indemnifying Party shall keep the Indemnified Party informed of all material developments and events relating to such claim or Proceeding; (iii) the Indemnified Party shall have the right to participate in the defense of such claim or Proceeding at its sole expense, except that in the event the defense is not being conducted by the Indemnifying Party in a diligent manner as recommended by the Company's legal counsel, paragraph (b) below shall apply; and (iv) the Indemnifying Party shall not settle, adjust or compromise such claim or Proceeding without the prior written consent of the Indemnified Party. (b) If the Indemnified Party so proceeds with the defense of any such claim or Proceeding on its own: (i) all expenses incurred and relating to the defense of such claim or Proceeding (whether or not incurred by the Indemnified Party) shall be borne and paid exclusively by the Indemnifying Party; (ii) the Indemnifying Party shall make available to the Indemnified Party any documents and materials in the possession or control of the Indemnifying Party that may be necessary to the defense of such claim or Proceeding; (iii) the Indemnified Party shall keep the Indemnifying Party informed of all material developments and events relating to such claim or Proceeding; and (iv) the Indemnified Party shall have the right to settle, adjust or compromise such claim or Proceeding with the consent of the Indemnifying Party, provided, that the Indemnifying Party shall not unreasonably withhold such consent. ARTICLE XI MISCELLANEOUS Section 11.1 Tax Elections 66 The Selling Shareholders and the Purchaser shall elect in prescribed form and manner to have the provisions of subsection 85(1) of the Tax Act apply to the transfer of the Purchased Shares and the Selling Shareholders shall through the facilities of KPMG, deliver to and file the same with Revenue Canada, Customs, Excise and Taxation within the time prescribed in accordance with the Tax Act. The Selling Shareholders shall pay any late filing fees or penalties and shall provide the Purchaser with a copy of such forms as filed. For this purpose the Parties shall elect amounts in respect of such Purchased Shares equal to an amount to be determined by the Selling Shareholders in accordance with the limits set out in the Tax Act. The Selling Shareholders and the Purchaser shall file all necessary elections or filings under all corresponding provincial legislation to make the transfer effective on the same basis as contemplated under the Tax Act. Section 11.2 Termination This Agreement may be terminated: (a) by the written agreement of each of the Parties; (b) by the Purchaser, the Company or any Selling Shareholder if there shall be in effect a non-appealable order of a court of competent jurisdiction permanently prohibiting the consummation of the Transactions; or (c) by the Purchaser, the Company or any Selling Shareholder if the Closing shall not have occurred on or before May 31, 1999. Section 11.3 Governing Law This Agreement shall be construed in accordance with, and governed in all respects by, the laws of the Province of Ontario. Section 11.4 Jurisdiction; Venue Any legal action or other legal proceeding relating to this Agreement or the enforcement of any provision of this Agreement may be brought or otherwise commenced in any provincial or federal court located in the Province of Ontario, Canada. Each party to this Agreement: (a) expressly and irrevocably consents and submits to the jurisdiction of each provincial and federal court located in the Province of Ontario, Canada (and each appellate court located in the Province of Ontario, Canada) in connection with any such legal proceeding; (b) agrees that each provincial and federal court located in the Province of Ontario, Canada shall be deemed to be a convenient forum; and (c) agrees not to assert (by way of motion, as a defense or otherwise), in any such legal proceeding commenced in any provincial or federal court located in the Province of Ontario, Canada, any claim that such party is not subject personally to the jurisdiction of such court, that such legal proceeding has been brought in an inconvenient forum, that the venue of such proceeding is improper or that this Agreement or the subject matter of this Agreement may not be enforced in or by such court. 67 Section 11.5 Successors and Assigns This Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of each of the parties hereto. No Party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other Parties; provided, however, that the Purchaser may (i) assign any or all of its rights and interests hereunder to one or more of its affiliates and (ii) designate one or more of its affiliates to perform its obligations hereunder (in any or both of which cases the Purchaser nonetheless shall remain responsible for the performance of all of its obligations hereunder). Section 11.6 Entire Agreement This Agreement, the other Transaction Documents and the other documents delivered pursuant hereto and thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. Section 11.7 Severability In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 11.8 Amendment and Waiver (a) This Agreement may be amended or modified only upon the mutual written consent of the Company, InfoCast, the Purchaser and each of the Selling Shareholders. (b) Any amendment, modification or waiver effected pursuant to this Section 11.07 shall be binding upon the Company, InfoCast, Purchaser and each of the Selling Shareholders. Section 11.9 Notices All notices required or permitted hereunder shall be in writing and shall be deemed effectively given (a) upon personal delivery to the party to be notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the parties hereto at the respective addresses set forth below, or as notified by such party from time to time at least ten (10) days prior to the effectiveness of such notice: 68 if to the Company: Homebase Work Solutions Ltd. 639-5th Avenue S.W. Suite 820 Calgary, Alberta T2P 0M9 Attention: Ken MacLean Telecopier: (403) 265-8626 with a copy to: Burnet, Duckworth & Palmer 1400, 350-7th Avenue S.W. Calgary, Alberta T2P 3N9 Attention: Jeff Lawson Telecopier: (403) 260-0332 if to the Selling Shareholders: Shareholders of Homebase Work Solutions Ltd. c/o Homebase Work Solutions Ltd. 639 - 5th Avenue S.W. Suite 820 Calgary, Alberta T2P 0M9 Attention: Ken MacLean Telecopier: (403) 265-8626 with a copy to: Burnet, Duckworth & Palmer 1400, 350-7th Avenue S.W. Calgary, Alberta T2P 3N9 Attention: Jeff Lawson Telecopier: (403) 260-0332 if to the Purchaser: InfoCast Canada Inc. 1 Richmond Street West Suite 901 Toronto, Ontario M5H 3W4 Attention: A.T. Griffis Telecopier: (416) 867-1681 with a copy to: Aird & Berlis 181 Bay Street, BCE Place Suite 1800, P.O. Box 754 Toronto, Ontario M5J 2T9 Attention: M.C.G. Brown Telecopier: (416) 863-1515 69 if to InfoCast: InfoCast Corporation 1 Richmond Street West Suite 901 Toronto, Ontario M5H 3W4 Attention: A.T. Griffis Telecopier: (416) 867-1681 with a copy to: Aird & Berlis 181 Bay Street, BCE Place Suite 1800, P.O. Box 754 Toronto, Ontario M5J 2T9 Attention: M.C.G. Brown Telecopier: (416) 863-1515 Section 11.10 Counterparts This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. Section 11.11 Attorney's Fees InfoCast shall bear all reasonable legal fees and expenses incurred by the Purchaser's Canadian counsel, Aird & Berlis, Toronto, Canada, in connection with the negotiation and closing of the transaction contemplated hereby. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. The Company shall bear all reasonable legal fees and expenses incurred by Canadian counsel to the Company and the Selling Shareholders, Burnet, Duckworth & Palmer, Calgary, Alberta, in connection with the negotiation and closing of the transaction contemplated hereby. Section 11.12 Delays or Omissions No delay or omission to exercise any right, power or remedy accruing to any party hereto, upon any breach or default of any other party hereto, shall impair any such right, power or remedy of such party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any holder of any breach or default under this Agreement, or any waiver on the part of any holder of any provisions or conditions of this Agreement, must be made in writing and shall be effective only to the extent specifically set forth in such writing. 70 Section 11.13 Remedies Cumulative All remedies, either under this Agreement or by law or otherwise afforded to any party hereto, shall be cumulative and not alternative. Section 11.14 Ontario Securities Law Matters The Purchaser hereby covenants and agrees to use its best efforts to obtain, as promptly as practicable following the Closing Date, a discretionary ruling of each of the Ontario Securities Commission and the Alberta Securities Commission granting an exemption from the prospectus and registration requirements of the Ontario Act and the Alberta Act in connection with any and all trades of securities contemplated by or under the terms of the Exchangeable Shares or the Exchange Agreement, on such terms and in such form as is customary for transactions of this nature. The Controlling Shareholders covenant and agree (and each Selling Shareholder has agreed in the Non-Controlling Shareholder Letters of Transmittals) not to exercise any rights arising under the terms of the Exchangeable Shares or the Exchange Agreement that would cause the Purchaser or InfoCast to be required to effect a trade in securities that would constitute a contravention of the Ontario Act or the Alberta Act. This Section shall also operate as a waiver of the rights of a holder of Exchangeable Shares under the terms thereof such that no holder of Exchangeable Shares may exercise such rights in a manner contrary to the covenants provided for in this Section. Each Selling Shareholder agrees not to transfer any Exchangeable Shares to any person who does not first agree to be bound by the provisions of this Section, and to cause any subsequent transferee to become so bound as a condition of any subsequent transfer. IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date set forth in the first paragraph hereof. COMPANY: HOMEBASE WORK SOLUTIONS LTD. By: /s/ (signature is illegible) ----------------------------- Name: Title: SELLING SHAREHOLDERS: Witness: KEN MACLEAN 71 Witness: DARCY GALVON Witness: SCOTT FLEMING 786364 ALBERTA LTD. By: Name: Title: 786206 ALBERTA LTD. By: Name: Title: PURCHASER: INFOCAST CANADA CORPORATION By: Name: Title: INFOCAST CORPORATION By: Name: Title: 71 EX-10.23 38 SECURITY AGREEMENT GENERAL SECURITY AGREEMENT 1. SECURITY INTEREST (a) For valuable consideration, the undersigned, HOMEBASE WORK SOLUTIONS LTD. (the "Debtor"), hereby grants to INFOCAST CANADA CORPORATION (the "Secured Party"), by way of mortgage, charge, assignment and transfer, a security interest (the "Security Interest") in the undertaking of the Debtor and in all Goods (including all parts, accessories, attachments, special tools, additions and accessions thereto), Chattel Paper, Documents of Title (whether negotiable or not), Instruments, Intangibles and Securities now owned or hereafter owned or acquired by or on behalf of the Debtor (including such as may be returned to or repossessed by the Debtor) and in all proceeds and renewals thereof, accretions thereto and substitutions therefor, including, without limitation, all of the following now owned or hereafter owned, or acquired by or on behalf of the Debtor: Equipment (i) all present and future equipment of the Debtor, including without limitation, all machinery, fixtures, plant, tools, furniture, vehicles of any kind or description, all spare parts, accessories installed in or affixed or attached to any of the foregoing, and all drawings, specifications, plans and manuals relating thereto ("Equipment"); Inventory (ii) all present and future inventory of the Debtor, including without limitation, all raw materials, materials used or consumed in the business or profession of the Debtor, work-in-progress, finished goods, goods used for packing, materials used in the business of the Debtor not intended for sale, and goods acquired or held for sale or furnished or to be furnished under contracts of rental of service ("Inventory"); Accounts (iii) all present and future debts, demands and amounts due or accruing due to the Debtor whether or not earned by performance, including without limitation, its book debts, accounts receivable, and claims under policies of insurance; and all contracts, security interests and other rights and benefits in respect thereof ("Accounts"); Intangibles (iv) all present and future intangible personal property of the Debtor, including without limitation all contract rights, goodwill, patents, trade names, trade marks, copyrights and other intellectual property, and all other choses in action of the Debtor of every kind, whether due at the present time or hereafter to become due or owing ("Intangibles"); Documents of Title (v) all present and future documents of title of the Debtor, whether negotiable or otherwise, including all warehouse receipts and bills of lading ("Documents of Title"); Chattel Paper (vi) all present and future agreements made between the Debtor as secured party and others which evidence both a monetary obligation and a security interest in or a lease of specific goods ("Chattel Paper"); Instruments (vii) all present and future bills, notes and cheques (as such are defined pursuant to the Bills of Exchange Act (Canada)), and all other writings that evidence a right to the payment of money and are of a type that in the ordinary course of business are transferred by delivery without any necessary endorsement or assignment and all letters of credit and advices of credit of the Debtor provided that such letters of credit and advices of credit state that they must be surrendered upon claiming payment thereunder ("Instruments"); Money (viii) all present and future money of the Debtor, whether authorized or adopted by the Parliament of Canada as part of its currency or any foreign government as part of its currency ("Money"); Securities (ix) all present and future securities held by the Debtor, including shares, options, rights, warrants, joint venture interests, interests in limited partnerships, bonds, debentures and all other documents which constitute evidence of a share, participation or other interest of the Debtor in property or in an enterprise or which constitute evidence of an obligation of the issuer; and including an uncertificated security within the meaning of Part VI (Investment Securities) of the Business Corporations Act (Ontario) and all substitutions therefor and dividends and income derived therefrom ("Securities"); Documents (x) all books, accounts, invoices, letters, papers, documents and other records in any form evidencing or relating to the collateral subject to the Security Interest ("Documents"); 2 Undertaking (xi) all present and future personal property, business, and undertaking of the Debtor not being Inventory, Equipment, Accounts, Documents of Title, Chattel Paper, Instruments, Money, Securities or Documents ("Undertaking"); and Proceeds (xii) all personal property in any form derived directly or indirectly from any dealing with collateral subject to the Security Interest or the proceeds therefrom, including insurance proceeds and any other payment representing indemnity or compensation for loss of or damage thereto or the proceeds therefrom ("Proceeds"). The Inventory, Equipment, Accounts, Documents of Title, Chattel Paper, Instruments, Money, Securities, Documents, Undertaking and Proceeds are collectively called the "Collateral". Any reference in this agreement to Collateral shall mean Collateral or any part thereof, unless the context otherwise requires. (b) The Security Interest granted hereby shall not extend or apply to and the Collateral shall not include the last day of the term of any lease or agreement therefor but upon the enforcement of the Security Interest the Debtor shall stand possessed of such last day in trust to assign the same to any person acquiring such term. (c) The terms "Accounts", "Goods", "Chattel Paper", "Equipment", "Documents of Title", "Instruments", "Intangibles", "Securities", "Proceeds", "Documents", "Inventory", "Money", "Undertaking" and "accession" whenever used herein shall be interpreted pursuant to the respective meanings when used in the Personal Property Security Act (Ontario), as amended from time to time, which Act, including amendments thereto and any Act substituted therefor and amendments thereto is herein referred to as the "PPSA". Provided always that the term "Goods" when used herein shall not include "consumer goods" of the Debtor as that term is defined in the PPSA, and the term "Inventory" when used herein shall include livestock and the young thereof after conception and crops that become such within one year of execution of this General Security Agreement. Any reference herein to the "Collateral" shall, unless the context otherwise requires, be deemed a reference to the "Collateral or any part thereof". 2. INDEBTEDNESS SECURED The Security Interest granted hereby secures payment and satisfaction of any and all obligations, indebtedness and liability of the Debtor to the Secured Party pursuant to a promissory note dated March 25, 1999 (hereinafter called the "Indebtedness"). 3. REPRESENTATIONS AND WARRANTIES OF THE DEBTOR The Debtor represents and warrants and so long as this General Security Agreement remains in effect shall be deemed to continuously represent and warrant that: 3 (a) the Collateral is genuine and owned by the Debtor free of all security interests, mortgages, liens, claims, charges or other encumbrances (hereinafter collectively called "Encumbrances"), save for the Security Interest and those Encumbrances shown on Schedule "A" or hereafter approved in writing, prior to their creation or assumption, by the Secured Party; (b) each Debt, Chattel Paper and Instrument constituting the Collateral is enforceable in accordance with its terms against the party obligated to pay the same (the "Account Debtor"), and the amount represented by the Debtor to the Secured Party from time to time as owing by each Account Debtor or by all Account Debtors will be the correct amount actually and unconditionally owing by such Account Debtor or Account Debtors, except for normal cash discounts where applicable, and no Account Debtor will have any defence, set off, claim or counterclaim against the Debtor which can be asserted against the Secured Party whether in any proceeding to enforce the Collateral or otherwise; (c) the locations specified in Schedule "B" as to business operations and records are accurate and complete and, with respect to Goods (including Inventory) constituting the Collateral, the locations specified in Schedule "B" are accurate and complete save for goods in transit to such locations and Inventory on lease or consignment; and all fixtures or Goods about to become fixtures and all crops and all oil, gas or other minerals to be extract and all timber to be cut which forms part of the Collateral will be situate at one of such locations; and (d) without limiting the generality of the descriptions of the Collateral as set out in Clause 1 hereof, for greater certainty the Collateral shall include all present and future personal property of the Debtor located on or about or in transit to or from the address of the Debtor set out on Schedule "B" attached hereto and the locations set out in Schedule "B" attached hereto. 4. COVENANTS OF THE DEBTOR So long as this General Security Agreement remains in effect the Debtor covenants and agrees: (a) to defend the Collateral against the claims and demands of all other parties claiming the same or an interest therein; to keep the Collateral free from all Encumbrances, except for the Security Interest and those shown on Schedule "A" or hereafter approved in writing, prior to their creation or assumption by the Secured Party; and not to sell, exchange, transfer, assign, lease, or otherwise dispose of the Collateral or any interest therein without the prior written consent of the Secured Party; provided that, until default, the Debtor may, in the ordinary course of the Debtor's business, sell or lease Inventory and, subject to Clause 7 hereof, use monies available to the Debtor; (b) to notify the Secured Party promptly of: (i) any change in the information contained herein or in the Schedules hereto relating to the Debtor, the Debtor's business or the Collateral; (ii) the details of any significant acquisition of the Collateral; (iii) the details of any claims or litigation affecting the Debtor or the Collateral; 4 (iv) any loss of or damage to the Collateral; (v) any default by any Account Debtor in payment or other performances of his obligations with respect to the Collateral; and (vi) the return to or repossessions by the Debtor of the Collateral; (c) to keep the Collateral in good order, condition and repair and not to use the Collateral in violation of the provisions of this General Security Agreement or any other agreement relating to the Collateral or any policy insuring the Collateral or any applicable statute, law, by-law, rule, regulation or ordinance; (d) to do, execute, acknowledge and deliver such financing statements and further assignments, transfers, documents, acts, matters and things (including further schedules hereto) as may be reasonably requested by the Secured Party of or with respect to the Collateral in order to give effect to these presents and to pay all costs of searches and filings in connection therewith; (e) to pay all taxes, rates, levies, assessments and other charges of every nature which may be lawfully levied, assessed or imposed against or in respect of the Debtor or the Collateral as and when the same become due and payable; (f) to insure the Collateral for such periods, in such amounts, on such terms and against loss or damage by fire and such other risks as the Secured Party shall reasonably direct with loss payable to the Secured Party and the Debtor, as insureds, as their respective interests may appear, and to pay all premiums therefor; (g) to prevent the Collateral, save Inventory sold or leased as permitted hereby, from being or becoming an accession to other property not covered by this General Security Agreement; (h) to carry on and conduct the business of the Debtor in a proper and efficient manner and so as to protect and preserve the Collateral and to keep, in accordance with generally accepted accounting principles, consistently applied, proper books of account for the Debtor's business as well as accurate and complete records concerning the Collateral, and mark any and all such records and the Collateral at the Secured Party's request so as to indicate the Security Interest; (i) to deliver to the Secured Party from time to time promptly upon request: (i) any Documents of Title, Instruments, Securities and Chattel Paper constituting, representing or relating to the Collateral; (ii) all books of account and all records, ledgers, reports, correspondence, schedules, documents, statements, lists and other writings relating to the Collateral for the purpose of inspecting, auditing or copying same; (iii) all financial statements prepared by or for the Debtor regarding the Debtor's business; 5 (iv) all policies and certificates of insurance relating to the Collateral; and (v) such information concerning the Collateral, the Debtor and the Debtor's business and affairs as the Secured Party may reasonably request; (j) the Debtor agrees to promptly inform the Secured Party in writing of the acquisition by the Debtor of any personal property which is not of the nature or type described herein, and the Debtor agrees to execute and deliver at its own expense from time to time amendments to this agreement, or additional security agreements as may be reasonably required by the Secured Party in order that the Security Interest shall attach to such personal property; (k) the Secured Party may, before as well as after demand, notify any person obligated to the Debtor in respect of an Account, Chattel Paper or an Instrument to make payment to the Secured Party of all such present and future amounts due. 5. USE AND VERIFICATION OF THE COLLATERAL Subject to compliance with the Debtor's covenants contained herein and Clause 7 hereof, the Debtor may, until default, possess, operate, collect, use and enjoy and deal with the Collateral in the ordinary course of the Debtor's business in any manner not inconsistent with the provisions hereof; provided always that the Secured Party shall have the right at any time and from time to time verify the existence and state of the Collateral in any manner the Secured Party may consider appropriate and the Debtor agrees to furnish all assistance and information and to perform all such acts the Secured Party may reasonably request in connection therewith and for such purpose to grant to the Secured Party or its agents access to all places where the Collateral may be located and to all premises occupied by the Debtor. 6. SECURITIES If the Collateral at any time includes Securities, the Debtor authorizes the Secured Party to transfer the same or any part thereof into its own name or that of its nominee(s) so that the Secured Party or its nominee(s) may appear of record as the sole owner thereof; provided that, until default, the Secured Party shall delivery promptly to the Debtor all notices or other communications received by it or its nominee(s) as such registered owner and, upon demand and receipt of payment of any necessary expenses thereof, shall issue to the Debtor or its order a proxy to vote an take all action with respect to such Securities. After default, the Debtor waives all rights to receive any notices or communications received by the Secured Party or its nominee(s) as such registered owner and agrees that no proxy issued the Secured Party to the Debtor or its order as aforesaid shall thereafter be effective. 7. COLLECTION OF DEBTS After default under this General Security Agreement, the Secured Party may notify all or any Account Debtors of the Security Interest and may also direct such Account Debtors to make all payments on the Collateral to the Secured Party. The Debtor acknowledges that any payments on or other proceeds of the Collateral received by the Debtor from Account Debtors, whether before or after notification of this Security Interest to Account Debtors and after default under the General Security Agreement shall be received and held by the Debtor in trust for the Secured Party and shall be turned over to the Secured Party upon request. 6 8. INCOME FROM AND INTEREST ON THE COLLATERAL (a) Until default, the Debtor reserves the right to receive any monies constituting income from or interest on the Collateral and if the Secured Party receives any such monies prior to default, the Secured Party shall either credit the same to the account of the Debtor or pay the same promptly to the Debtor. (b) After default, the Debtor will not request or receive any monies constituting income from or interest on the Collateral and if the Debtor receives any such monies without any request by it, the Debtor will pay the same promptly to the Secured Party. 9. DISPOSITION OF MONIES Subject to any applicable requirements of the PPSA, all monies collected or received by the Secured Party pursuant to or in exercise of any right it possesses with respect to the Collateral shall be applied on account of the Indebtedness in such manner as the Secured Party deems best or, at the option of the Secured Party, may be held unappropriated in a collateral account or released to the Debtor, all without prejudice to the liability of the Debtor or the rights of the Secured Party hereunder, and any surplus shall be accounted for as required by law. 10. EVENTS OF DEFAULT The happening of any of the following events or conditions shall constitute default hereunder which is herein referred to as "default": (a) the non payment when due, whether by acceleration or otherwise, of any principal or interest forming part of the Indebtedness or the failure of the Debtor to observe or perform any obligation, covenant, term, provision or condition contained in this General Security Agreement or any other agreement between the Debtor and the Secured Party; (b) the bankruptcy or insolvency of the Debtor; the filing against the Debtor of a petition in bankruptcy the making of an unauthorized assignment of the benefit of creditors by the Debtor; the appointment of a receiver or trustee for the Debtor or for any assets of the Debtor; or the institution by or against the Debtor of any other type of insolvency proceeding under the Bankruptcy Act or otherwise; (c) the institution by or against the Debtor of any formal or informal proceeding for the dissolution or liquidation of, settlement of claims against or winding up of affairs of the Debtor; (d) if any Encumbrance affecting the Collateral becomes enforceable against the Collateral; 7 (e) if the Debtor ceases or threatens to cease to carry on business or makes or agrees to make a bulk sale of assets without complying with applicable law or commits or threatens to commit an act of bankruptcy; (f) if an execution, sequestration, extent or other process of any court becomes enforceable against the Debtor or if a distress or analogous process is levied upon the assets of the Debtor or any part thereof; and (g) if any certificate, statement, representation, warranty or audit report heretofore or hereafter furnished by or on behalf of the Debtor pursuant to or in connection with the General Security Agreement, or otherwise (including, without limitation, the representations and warranties contained herein) or as an inducement to the Secured Party to extend any credit to or to enter into this or any other agreement with the Debtor, provides to have false in any material respect at the time as of which the facts therein set forth were stated or certified, or provides to have omitted an substantial contingent or unliquidated liability or claim against the Debtor; or if upon the date of execution of this General Security Agreement, there have been any material adverse change in any of the facts disclosed by any such certificate, representation, statement, warranty or audit report, which change shall not have been disclosed to the Secured Party at or prior to the time of such execution. 11. REMEDIES (a) Upon default, the Secured Party may appoint or reappoint by instrument in writing, any person or persons, whether an officer or officers or an employee or employees of the Secured Party or not, to be a receiver or receivers (hereinafter called a "Receiver", which term when used herein shall include a receiver and manager) of the Collateral (including any interest, income or profits therefrom) and may remove any Receiver so appointed and appoint another in his stead. Any such Receiver shall, so far as concerns responsibility for his acts, be deemed the agent of the Debtor and not the Secured Party, and the Secured Party shall not be in any way responsible for any misconduct, negligence, or non-feasance on the part of any such Receiver, his servants, agents or employees. Subject to the provisions of the instrument appointing him., any Receiver shall have power to take possession of the Collateral, to preserve the Collateral or its value, to carry on or concur in carrying on all or any part of the business of the Debtor and to sell, lease or otherwise dispose of or concur in selling, leasing or otherwise disposing of the Collateral. To facilitate foregoing powers, any such Receiver may, to the exclusion of all others, including the Debtor, enter upon, use and occupy all premises owned or occupied by the Debtor wherein the Collateral may be situate, maintain the Collateral upon such premises, borrow money on a secured or unsecured basis and use the Collateral directly in carrying on the Debtor's business or otherwise, as such Receiver shall, in his discretion, determine. Except as may be otherwise directed by the Secured Party, all monies received from time to time by such Receiver in carrying out his appointment shall be received in trust for an paid over to the Secured Party. Every such Receiver may, in the discretion of the Secured Party, be vested with all or any of the rights and powers of the Secured Party. (b) Upon default, the Secured Party may, either directly or through its agents or nominees, exercise all the power and rights given to a Receiver by virtue of the foregoing sub-clause (a). 8 (c) The Secured Party may take possession of, collect, demand, sue on, enforce, recover and receive the Collateral and give valid and binding receipts and discharges therefor and in respect thereof and, upon default, the Secured Party may sell, lease or otherwise dispose of the Collateral in such manner, at such time or times and place or places, for such consideration and upon such terms and conditions as to the Secured Party may seem reasonable. (d) In addition to those rights granted herein and in any other agreement now or hereafter in effect between the Debtor and the Secured Party, and in addition to any other rights the Secured Party, may have at law or in equity, the Secured Party shall have, both before and after default, all rights and remedies of a secured party under the PPSA. Provided always, that the Secured Party shall not be liable or accountable for any failure to exercise its remedies, take possession of, collect, enforce, realize, sell, lease or otherwise dispose of the Collateral or to institute any proceedings for such purposes. Furthermore, the Secured Party shall have no obligation to take any steps to preserve rights against prior parties to any Instrument or Chattel whether the Collateral or Proceeds and whether or not in the Secured Party's possession and shall not be liable or accountable for failure to do so. (e) The Debtor acknowledges that the Secured Party or any Receiver appointed by it may take possession of the Collateral wherever it may be located and by any method permitted by law and the Debtor agrees upon request from the Secured Party or any such Receiver to assemble and deliver possession of the Collateral at such place or places as directed. (f) The Debtor agrees to pay all costs, charges and expenses reasonably incurred by the Secured Party or any Receiver appointed by it, whether directly or for services rendered (including reasonable solicitors and auditors costs and other legal expenses and Receiver remuneration), in operating the Debtor's accounts, in enforcing this General Security Agreement, taking custody of, preserving, repairing, processing, preparing for disposition and disposing of the Collateral and in enforcing or collecting the Indebtedness and all such costs, charges and expenses together with any monies owing as a result of any borrowing by the Secured Party or any Receiver appointed by it, as permitted hereby, shall be a first charge on the proceeds of realization, collection or disposition of the Collateral and shall be secured hereby. (g) Unless the Collateral in question is perishable or unless the Secured Party believes on reasonable grounds that the Collateral in question will decline speedily in value, the Secured Party will give the Debtor such notice of the date, time and place of any public sale or of the date after which any private disposition of the Collateral is to be made, as may be required by the PPSA. 12. MISCELLANEOUS (a) The Debtor hereby authorizes the Secured Party to file such financing statements and other documents and do such acts, matters and things (including completing and adding schedules hereto identifying the Collateral or any permitted Encumbrances affecting the Collateral or identifying the locations at which the Debtor's business is carried on and the Collateral and records relating thereto are situate) as the Secured Party may deem appropriate to perfect and continue the Security Interest, to protect and preserve the Collateral and to realize upon the Security Interest and the Debtor hereby irrevocably constitutes and appoints the Secured Party the true and lawful attorney of the Debtor, with full power of substitution, to do 9 any of the foregoing in the name of the debtor whenever and wherever it may be deemed necessary or expedient. (b) Without limiting any other right of the Secured Party, whenever the Indebtedness is immediately due and payable, the Secured Party may, in its sole discretion, set off against the Indebtedness any and all monies then owed to the Debtor by the Secured Party in any capacity and the Secured Party shall be deemed to have exercised such right of set off immediately at the time of making its decision to do so even though any charge therefor is made or entered on the Secured Party's records subsequent thereto. (c) Upon the Debtor's failure to perform any of its duties hereunder, the Secured Party may, but shall not be obligated to, perform any or all of such duties, and the Debtor shall pay to the Secured Party, forthwith upon written demand therefor, an amount equal to the expense incurred by the Secured Party in so doing plus interest thereon from the date such expense is incurred until it is paid at the rate of 8% per annum. (d) The Secured Party may grant extensions of time and other indulgences, take and give up security, accept compositions, compound, compromise, settle, grant releases and discharges and otherwise deal with the Debtor, debtors of the Debtor, sureties and others and with the Collateral and other security as the Secured Party may see fit without prejudice to the liability of the Debtor or the Secured Party's right to hold and realize the Security Interest. Furthermore, the Secured party may demand, collect and sue on the Collateral in either the Debtor's or the Secured Party's name, at the Secured Party's option, and may endorse the Debtor's name on any and all cheques, commercial paper, and any other Instruments pertaining to or constituting the Collateral. (e) No delay or omission by the Secured Party in exercising any right or remedy hereunder or with respect to any of the Indebtedness shall operate as a waiver thereof or of any other right or remedy, and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right or remedy. Furthermore, the Secured Party, may remedy any default by the Debtor hereunder or with respect to any Indebtedness in any reasonable manner without waiving the default remedied and without waiving any other prior or subsequent default by the Debtor. All rights and remedies of the Secured party granted or recognized herein are cumulative and may be exercised at any time and from time to time independently or in combination. (f) The Debtor waives protest of any Instrument constituting the Collateral at any time held by the Secured Party on which the Debtor is in way liable and, subject to Clause 11(g) hereof, notice of any other action taken by the Secured Party. (g) This General Security Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. In any action brought by an assignee of this General Security Agreement and the Security Interest or any part thereof to enforce any rights hereunder, the Debtor shall not assert against the assignee any claim or defence which the Debtor now has or hereafter may have against the Secured Party. (h) Save for any schedules which may be added hereto pursuant to the provisions hereof, no modification, variation or amendment of any provision of this General Security 10 Agreement shall be made except by a written agreement, executed by the parties hereto and no waiver of any provision hereof shall be effective unless in writing. (i) This General Security Agreement and the transactions evidenced hereby shall be governed by and construed in accordance with the laws of the Province of Ontario as the same may from time to time be in effect, including, where applicable, the PPSA (j) Subject to the requirements of Clauses 11(g) and 12(k) hereof, whenever either party hereto is required or entitled to notify or direct the other or to make a demand or request upon the other, such notice, direction, demand or request shall be in writing and shall be sufficiently given only if delivered to the party for whom it is intended at the principal address of such party herein set forth or as changed pursuant hereto or if sent by prepaid registered mail addressed to the party for whom it is intended at the principal address of such party herein set forth or as changed pursuant hereto. Either party may notify the other pursuant hereto of any change in such party's principal address to be used for the purposes hereof: Principal address of the Secured Party: InfoCast Canada Corporation Suite 901, 1 Richmond Street West Toronto, Ontario M5H 3W4 Principal address of the Debtor: Homebase Work Solutions Ltd. Suite 515, 505-8th Avenue S.W. Calgary, Alberta T2P 1G2 (k) This General Security Agreement and the security afforded hereby is in addition to and not in substitution for any other security now or hereafter held by he Secured Party, and is, and is intended to be a continuing General Security Agreement and shall remain in full force and effect until the Secured Party shall actually receive written notice of its discontinuance; and, notwithstanding such notice, shall remain in full force and effect thereafter until all the Indebtedness contracted for or created before the receipt of such notice by the Secured Party, and any extension or renewal thereof (whether made before or after receipt of such notice) together with interest accruing thereon after such notice, shall be paid in full. (l) The headings used in this General Security Agreement are for convenience only and are not to be considered a part of this General Security Agreement and do not in any way limit or amplify the terms and provisions of this General Security Agreement. 11 (m) When the context so requires, the singular number shall be read as if the plural were expressed and the provisions hereof shall be read with all grammatical changes necessary dependent upon the person referred to being a male, female, firm or corporation. (n) In the event any provisions of this General Security Agreement , as amended from time to time, shall be deemed invalid or void, in whole or in part, by any Court of competent jurisdiction, the remaining terms and provisions of this General Security Agreement shall remain in full force and effect. (o) Nothing herein contained shall in any way obligate the Secured Party to grant, continue, renew, extend time for payment or accept anything which constitutes or would constitute the Indebtedness. (p) The Security Interest created hereby is intended to attach when this General Security Agreement is signed by the Debtor and delivered to the Secured Party. 13. EXCEPTION RE: LEASEHOLD INTERESTS AND CONTRACTUAL RIGHTS The day of the term of any lease, sublease or agreement therefor is specifically excepted from the Security Interest, but the Debtor agrees to stand possessed of such last day in trust for any person acquiring such interest of the Debtor. To the extent that the creation of the Security Interest would constitute a breach or cause the acceleration of any agreement right, licence or permit to which the Debtor is a party, the Security Interest shall not attach thereto but the Debtor shall hold its interest therein in trust for the Secured Party, and shall assign such agreement, right, license or permit to the Secured party forthwith upon obtaining the consent of the other party thereto. 14. COPY OF AGREEMENT The Debtor hereby acknowledges receipt of a copy of this General Security Agreement. 12 IN WITNESS WHEREOF the Debtor has executed this General Security Agreement this 25th day of March, 1999. HOMEBASE WORK SOLUTIONS LTD. Per: EX-10.24 39 COMPENSATION AGREEMENT COMPENSATION AGREEMENT TO: Darcy Galvon AND TO: Ken McLean AND TO: Scott Fleming Dear Sirs: Reference is made to the purchase and sale agreement made as of the 6th day of May, 1999 (the "Acquisition Agreement") among HomeBase Work Solutions Ltd. ("HomeBase"), Darcy Galvon, Ken MacLean, Scott Fleming, 786382 Alberta Ltd. and 786206 Alberta Ltd. (collectively, the "Controlling Shareholders"), Infocast Canada Corporation ("Infocast Canada"), Infocast Corporation ("Infocast") and the Controlling Shareholders (as defined therein). Capitalized terms used herein but not otherwise defined shall have the same meaning as provided in the Acquisition Agreement. In conjunction with the completion of the various transactions contemplated by the Acquisition Agreement, Infocast hereby covenants and agrees that, in consideration of Messrs. Galvon, MacLean and Fleming entering into the Acquisition Agreement and fulfilling their respective obligations thereunder, each shall be entitled to receive a payment in the amount of $140,000 payable as follows: a. $70,000 shall be paid to each of Messrs. Galvon, MacLean and Fleming on the Closing Date; and b. An additional $70,000 shall be paid to each of Messrs. Galvon, McLean and Fleming on the earlier of that date that (i) Infocast completes a private placement(s) for gross proceeds of U.S. $1,000,000 and (ii) completes a letter of credit financing with funds available Infocast of not less than U.S. $800,000 This Compensation Agreement is meant to constitute a binding agreement among the parties hereto on the terms set forth above. If you are in agreement with the foregoing, please so indicate by executing a duplicate copy of the agreement in the spaces set forth below. DATED this ___ day of May, 1999. INFOCAST CORPORATION Per: /s/ A.T. Griffis --------------------- Acknowledged and agree to this ___ day of May, 1999 /s/ Darcy Galvon /s/ - -------------------- ------------------------------ Darcy Galvon Witness /s/ Ken MacLean /s/ - ------------------ ------------------------------ Ken MacLean Witness /s/ Sean Fleming /s/ - ----------------- ------------------------------ Sean Fleming Witness EX-10.25 40 MASTER LEASE MASTER LEASE AGREEMENT Master Lease # _________________ Lessor agrees to lease to Lessee and Lessee agrees to lease from Lessor, subject to the following terms of this Master Lease Agreement ("Master Lease") and any Lease Schedule ("Schedule"), collectively referred to as the Lease ("Lease"), the personal property described in any Schedule together with all attachments, replacements, parts substitutions, additions, upgrades, accessories, software licenses and operating manuals (the "Product"). Each Schedule shall constitute a separate, distinct, and independent Lease and contractual obligation of Lessee. 1. Commencement Date and Term The initial lease term ("Initial Term") and Lessee's rental obligations shall begin on the Commencement Date and continue for the number of Rental Periods specified in the Lease as set forth in Section 2 below and shall renew automatically thereafter until terminated by either party upon not less than ninety (90) days prior written notice. The Commencement Date with respect to each item of Product shall be the 16th day after date of shipment to Lessee. 2. Rent and Rental Period All rental payments and any other amounts payable under a Lease are collectively referred to as "Rent." The Rental Period shall mean the rental payment period of either calendar months, quarters, or as otherwise specified in each Schedule. Rent for the specified Rental Period is due and payable in advance, to the address specified in Lessor's invoice, on the first day of each Rental Period during the Initial Term and any extension (collectively, the "Lease Term"), provided, however, that Rent for the period of time (if any) from the Commencement Date to the first day of the first Rental Period shall begin to accrue on the Commencement Date. If any Rent is not paid when due, Lessee will pay to Lessor interest at the rate of one and one half percent (1.5%) per month (i.e. 18% per annum) on the amount of unpaid Rent. 3. Net Lease, Taxes and Fees Each Schedule shall constitute a net lease and payment of Rent shall be absolute and unconditional, and shall not be subject to any abatement, reduction, set-off, defense, counterclaim, interruption, deferment or recoupment for any reason whatsoever. Lessee agrees to pay Lessor when due shipping charges, fees, and assessments. Lessee will pay when due or reimburse Lessor for all taxes, fees or any other charges (together with any related interest or penalties not arising from the negligence of Lessor) accrued for or arising during the term of each Schedule against Lessor. Lessee or the Product by any governmental authority (except only Federal, Provincial and local taxes on the capital or the net income of Lessor, Lessor will file all personal property tax returns for the Product and pay all property taxes when due. Lessee will reimburse Lessor for property taxes within thirty (30) days of receipt of an invoice from Lessor. 4. Title Product shall always remain personal property, Lessee shall have no right or interest in the Product except as provided in this Master Lease and the applicable Schedule and shall hold the Product subject and subordinate to the rights of Lessor, and Lessee shall not represent to any third party that the Product is the property of Lessee. When necessary under applicable law, Lessee authorizes Lessor, as Lessee's agent, to prepare, execute and file in Lessee's name security registration statements, affidavits, or other instruments reasonably required to evidence and protect the interest of the Lessor or the Lessor's Assignee (as defined in Section 7 of this Master Lease) in the Product and to insert serial numbers in Schedules as appropriate. Lessee will, at its expense, keep the Product free and clear from any security interests, liens or encumbrances of any kind (except any caused by Lessor) and will indemnify and hold Lessor harmless from and against any loss or expense caused by Lessee's failure to do so. Lessee shall give Lessor immediate written notice of any attachment or judicial process affecting the Product or Lessor's ownership. Lessee will label the Product as the property of Lessor, which label shall provide that no party shall tamper with, obstruct, interfere with, remove or alter the Product in which such label is affixed. Lessee shall allow, subject to Lessee's reasonable security requirements, the inspection of the Product during regular business hours. 5. Use, Maintenance and Repair Lessee, at its own expense, shall keep the Product in good repair, appearance and condition, other than normal wear and tear and shall obtain and keep in effect throughout the term of the Schedule a hardware and software maintenance agreement with the manufacturer or other party acceptable to Lessor. All parts furnished in connection with such repair and maintenance shall be manufacturer authorized parts and shall immediately become components of the Product and the property of Lessor. Lessee shall use the Product in compliance with the manufacturer's or supplier's guidelines. 6. Delivery and Return Product Lessee assumes the full expense of transportation, insurance, and installation to Lessee's site. Upon termination of each Schedule, Lessee will provide Lessor a letter from the manufacturer certifying that the Product is in good operating condition and is eligible for continued maintenance and that the operating system is at then current level, unless under a Sun Microsystems of Canada Inc. service contract during the Lease Term. Lessee, at its expense, shall deinstall, pack and ship the Product to a Canadian location identified by Lessor. Lessee shall remain obligated to pay Rent on the Product until the Product and certification are received by Lessor. 7. Assignment and Relocation Lessee may sublease or assign its rights under this Master Lease and a Schedule with Lessor's prior written consent, subject to any terms and conditions which Lessor may require. No permitted assignment or sublease shall relieve Lessee of any of its obligations hereunder. Lessee acknowledges Lessor may sell and/or assign its interest or grant a security interest in each Lease and/or the Product to an assignee ("Lessor's Assignee"). So long as Lessee is not in default -2- hereunder Lessor and Lessor's Assignee shall not interfere with Lessee's right of quiet enjoyment and use of the Product. Upon the assignment of each Lease, Lessor's Assignee shall not interfere with Lessee's right of quiet enjoyment and use of the Product. Upon the assignment of each Lease, Lessor's Assignee shall have any and all discretions, rights and remedies of Lessor and all references to Lessor shall mean Lessor's Assignee. Notwithstanding any such assignment, Lessor shall remain liable to Lessee for the performance of all duties, covenants and conditions hereunder, and in no event shall Lessor's Assignee be obligated to perform any duty, covenant or condition under this Lease and Lessee agrees it shall pay Lessor's Assignee without any defense, rights of set-off or counterclaims and shall not hold or attempt to hold Lessor's Assignee liable for any of Lessor's obligations hereunder. Lessee, at its expense, may relocate Product (after packing it for shipment in accordance with the manufacturer's instructions) to a different address with thirty (30) days prior written notice to Lessor. The Product shall at all times be used solely within Canada and Lessee hereby covenants not to remove any Products, of any part thereof, from such jurisdiction. 8. Upgrade and Additions Lessee may affix or install any accessory, addition, upgrade, equipment or device on the Product ("Additions") provided that such Additions are obtained from or approved in writing by Sun Microsystems of Canada Inc. and are not subject to the interest of any third party other than Lessor. At the end of the Schedule Term, Lessee shall remove any Additions which (i) were not leased by Lessor and (ii) are readily removable without causing material damage or impairment of the intended function, use, or value of the Product and restore the Product to its original configuration. Any Additions which are not so removable will become the Lessor's property (lien free). 9. Lease End Options Upon written service given at least ninety (90) days prior to expiration of the Lease Term, provided Lessee is not in default under any Schedule. Lessee may (i) exercise any purchase option set forth on the Schedule, or (ii) renew the Schedule for a minimum extension period of twelve (12) months, or (iii) return the Product to Lessor at the expiration date of the Schedule pursuant to Section 6 above. 10. Insurance, Loss or Damage Effective upon shipment of Product to Lessee and until Product is returned to Lessor in accordance with each Lease, Lessee shall provide at its expense (i) Insurance against the loss or theft or damage to the Product for the full replacement value, and (ii) Insurance against public liability and property damage. Lessee shall provide a certificate of Insurance that such coverage is in effect, upon request by Lessor, naming Lessor as co-loss payee or sole loss payee and/or named insured as may be required. Lessee shall bear the entire risk of loss, theft, destruction of or damage to any item of Product. No loss or damage shall relieve Lessee of the obligation to pay Rent or any other obligation under the Schedule. In the event of loss or damage, Lessee shall promptly notify Lessor and shall, at Lessor's -3- option, (i) place the Product in good condition and repair, or (ii) replace the Product with lien free Product of the same model, type and configuration in which case the relevant Schedule shall continue in full force and effect and clear title in such Product shall automatically vest in Lessor, or (iii) pay Lessor the present value of remaining Rent (discounted at six (6%) percent per annum, compounded monthly) plus the buyout purchase option price provided for in the applicable Schedule. 11. Selection, Warranties and Limitation of Liability Lessee acknowledges that it has selected the Product and disclaims any reliance upon statements made by Lessor. Lessee acknowledges and agrees that use and possession of the Product by Lessee shall be subject to and controlled by the terms of any manufacturer's or, if appropriate, supplier's warranty, and Lessee agrees to look solely to the manufacturer or, if appropriate, supplier with respect to all mechanical, service and other claims, and the right to enforce all warranties made by said manufacturer are hereby assigned to Lessee for the term of the Schedule. EXCEPT AS SPECIFICALLY PROVIDED HEREIN, LESSOR HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATIONS, WARRANTIES OR CONDITIONS, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, NON-INFRINGEMENT. THE DESIGN, QUALITY, CAPACITY OR CONDITION OF THE PRODUCT, ITS MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. IT BEING AGREED THAT AS THE LESSEE SELECTED BOTH THE PRODUCT AND THE SUPPLIER, NO DEFECT, EITHER ______ OR LATENT SHALL RELIEVE LESSEE OF ITS OBLIGATION HEREUNDER, LESSEE AGREES THAT LESSOR SHALL NOT BE LIABLE FOR EQUITABLE REMEDIES, WHETHER IN CONTRACT OR TORT OR OTHERWISE OF ANY REMEDIES, LIABILITY, LOSS, DAMAGE OR EXPENSE OF ANY KIND INCLUDING, WITHOUT LIMITATION, DIRECT, INDIRECT, INCIDENTAL, THIRD PARTY, CONSEQUENTIAL OR SPECIAL DAMAGES OF ANY NATURE, DAMAGES ARISING FROM THE LOSS OF USE OF PRODUCT, LOST DATA, LOST PROFITS, OR FOR ANY CLAIM OR DEMAND. 12. Indemnity Lessee shall indemnify and hold harmless Lessor and Lessor's Assignee from and against any and all claims, suits, proceedings, liabilities, damages, penalties, costs and expenses (including reasonable legal fees), arising out of the use, operation, possession, ownership (for strict liability in tort only), selection, leasing, maintenance, delivery or return of any item of Product. 13. Default and Remedies Lessee shall be in fundamental breach of any Lease if (i) Lessee fails to pay Rent within ten (10) days of due date; (ii) Lessee fails to perform or observe or breaches any covenant or condition or any representation or warranty in such Lease, and such failure or breach continues unremedied for a period of ten (10) days after written notice from Lessor; (iii) Lessee, except as adversely permitted in the Lease, attempts to move, sell, transfer, encumber, or sublet without consent any item of Product leased under such Lease; (iv) Lessee files or has filed against it a petition in bankruptcy or -4- becomes insolvent or makes an assignment for the benefit of creditors or consents to the appointment of a trustee or receiver or either shall be appointed for Lessee or for a substantial part of its property; or (v) Lessee or any guarantor of Lessee is declared legally deceased or if Lessee shall terminate its existence by amalgamation, winding up its business, sale of substantially all of its assets or otherwise. Upon any such breach, Lessor may, at its option, take one or more of the following actions: (i) with notice and demand declare all sums due and to become due under the Schedule immediately due and payable, and in so doing accelerate and recover the present value of the remaining payment stream of all Rent due under the defaulted Schedule (discounted at 6%, per annum, compounded monthly) together with all Rent and other amounts currently due as liquidated damages and not as a penalty; (ii) require Lessee to return immediately all Product leased under such Schedule to Lessor in accordance with Paragraph 6 hereof, (iii) without breach of the peace take immediate possession of and remove the Product; (iv) sell any or all of the Product at public or private sale or otherwise dispose of, hold, use or lease to others, or (v) exercise any right or remedy which may be available to Lessor under applicable law, including the right to recover damages for the breach of the Schedule. In addition, Lessee shall be liable for reasonable legal fees, other costs and expenses resulting from any default, or the exercise of Lessor's remedies, and expenses resulting from any default, or the exercise of Lessor's remedies, including placing such Product in the condition required by Paragraph 8 hereof. Each remedy shall be cumulative and in addition to any other remedy otherwise available to Lessor at law or in equity. Any waiver of default by Lessor must be in writing and no such waiver or any default shall constitute a waiver of any of Lessor's other rights or future defaults. Except as may be prohibited by law, and to the extent the same extends to and relates to this Master Lease, as amended, modified or supplemented or any security collateral hereto, Lessee hereby waives the benefit of all provisions of any applicable statutes and regulations which would in any manner affect, restrict or limit the rights of Lessor hereunder including, without limitation, the provisions of the Chattel Mortgages Act (British Columbia), the Sale of Goods on Condition Act (British Columbia), the Limitation of Civil Rights Act (Saskatchewan) and the Law of Property Act (Alberta) as the same may be amended, supplemented, re-enacted, substituted or replaced from time to time. Lessee also waives the right of any statutory exemption from execution or seizure and the right to demand security for costs in the event of litigation. If this Master Lease or any applicable Schedule is, or is deemed to be, subject to the laws of the Province of Quebec, Lessee agrees that, to the extent not prohibited by law, the provisions of the Civil Code of the Province of Quebec respecting the leasing or hiring of things do not apply to this Master Lease or any applicable Schedule or the rights, liabilities, and resources of Lessee hereunder. 14. Lessee's Representations Lessee represents and warrants for this Master Lease and each Schedule that the execution, delivery and performance by Lessee have been duly authorized by all necessary corporate activities individual executing was duly authorized to do so; the Master Lease and each Schedule constitute valid, binding agreements of the Lessee enforceable in accordance with their terms; that all information supplied by Lessee, including but not limited to the credit application and other financial information -5- concerning Lessee, is accurate in all material respects as of the date provided; and if there is any material change in such information prior to manufacturer's or, if appropriate, supplier's shipment of Product under the Schedule, Lessee will advise Lessor of such change in writing. 15. Applicable Law This Master Lease and each Schedule shall in all respects be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and the parties hereto hereby irrevocably attorn to the non-exclusive jurisdiction of the Province of Ontario. 16. Miscellaneous Lessee agrees to execute and deliver to Lessor such further documents, including, but not limited to, financing statements, assignments, and financial reports and take such further action as Lessor may reasonably request to protect Lessor's interest in the Product. The performance of any act or payment by Lessor shall not be deemed a waiver of any obligation or default on the part of Lessee. Lessor's failure to require strict performance by Lessee of any of the provisions of this Master Lease shall not be a waiver thereof. This Master Lease together with any Schedule and other terms and conditions attached hereto constitutes the entire understanding between the parties and supercedes any previous representations or agreements whether verbal or written with respect to the use, possession and lease of the Product described in that Schedule. In the event of a conflict, the terms of the Schedule shall prevail over the Master Lease. No amendment or change of any of the terms or conditions herein shall be binding upon either party unless they are made in writing and are signed by an authorized representative of each party. Each Schedule is non-cancellable for the full term specified and each Schedule shall be binding upon, and shall inure to the benefit of Lessor, Lessee, and their respective successors, legal representatives and permitted assigns. All agreements, representations and warranties contained herein shall be for the benefit of Lessor and shall survive the execution, delivery and termination of this Master Lease, any Schedule or related document. Any provision of this Master Agreement and/or each Schedule which is unenforceable shall not cause any other remaining provision to be ineffective or invalid. The captions set forth herein are for convenience only and shall not define or limit any of the terms hereof. Any notices or demands in connection with any Schedule shall be given in writing by courier or certified mail at the address indicated in the Schedule, or to any other address specified. -6- 17. Year 2000 Warranty A. Sun warrants that specified versions of products identified on Sun's External web site (url:www.sun.comm/y2000/cpl/html) as being year 2000 compliant ("listed products") will not produce errors in the processing of date data related to the year change from December 31, 1999 to January 1, 2000. Date representation, including leap years, will be accurate when listed products are used in accordance with their accompanying documentation, provided that all hardware and software products used in combination with listed products properly exchange date data with them. B. Specified versions of products identified on Sun's external web site as not yet compliant, but which have a compliance date scheduled, will become listed products when a remedial patch, update or subsequent release is issued, but in no event later than June 30, 1999. Other products are not covered by these warranties. C. Customer's sole and exclusive remedy for Sun's breach of these warranties will be for Sun: (I) to use commercially reasonable efforts to provide customer promptly with equivalent year 2000 compliant products: or (ii) if (i) is commercially unreasonable, to refund to customer the net book value for non-compliant listed products. THIS MASTER LEASE SHALL BECOME EFFECTIVE ON THE DATE ACCEPTED BY LESSOR. LESSOR: SUN MICROSYSTEMS FINANCE LESSEE: Homebase Work Solutions A division of Sun Microsystems of Ltd Canada Inc. BY:_________________________________ BY: /s/ R.D. Shannon ----------------------------- (Authorized Signature) (Authorized Signature) NAME:______________________________ NAME: R.D. Shannon TITLE:______________________________ TITLE: President & CEO DATE:_______________________________ DATE: June 25, 1999 -7- LEASE SCHEDULE ("SCHEDULE") NUMBER:______ TO MASTER LEASE AGREEMENT ("MASTER LEASE") NUMBER ______ Lessee LESSOR Name: HOMEBASE WORK SOLUTIONS LTD. SUN MICROSYSTEMS FINANCE A DIVISION OF Sun Microsystems of Canada Address: 820, 639-5th Avenue SW Inc. Calgary, AB, T2P 0M9 100 Renfrew Drive Markham, Ontario L3R 9R6 Attention: Rick Shannon Attention: Bob Hagarty Phone Number: (403) 294-1161 Phone Number: (905) 415-7935 Fax Number: (403) 265-8626 Fax Number: (905) 477-9423 BILLING ADDRESS PAYMENT SCHEDULE Name: Homebase Work Solutions Ltd Lease Term: 36 [X] Months [ ] Quarters Address: same as above Rent 1 x $700,000.00 Followed by 36 x $59,197.00 per Month Attention: Rick Shannon Phone Number: (403) 294-1161 LOCATION OF PRODUCT END OF LEASE OPTIONS Lessee P.O. Number 1. Fair Market Value Purchase; 2. FMV Renewal; OR Location: same as above 3. Return Equipment Attention: Rick Shannon Phone Number: (403) 294-1161 Other Terms: Fair Market Value not to exceed 27% of O.E.C. PRODUCT DESCRIPTION: As per attached Sales Quotation number CAL-98711-l MASTER LEASE: This original executed Schedule is issued and effective this date set forth below pursuant to the Master Lease identified above. All of the terms, conditions, representations and warranties of the Master Lease are hereby incorporated herein and made a part hereof as if they were expressly set forth in this Schedule and this Schedule constitutes a separately enforceable, complete and independent Lease with respect to the Product described herein. By their execution and delivery of this Schedule, the parties hereby affirm all of the terms, conditions, representations and warranties of the Master Lease. The additional terms set forth on the next page hereof are made a part of this Schedule. AGREED AND ACCEPTED BY AGREED AND ACCEPTED BY SUN MICROSYSTEMS FINANCE LESSEE: HOMEBASE WORK SOLUTIONS LTD. (A division of Sun Microsystems of Canada Inc.) By:_______________________________ By: /s/ R.D. Shannon -------------------------------- Name_____________________________ Name R.D. Shannon Title______________________________ Title President and CEO Date:_____________________________ Date June 25, 1999 -8- ADDITIONAL TERMS FOR SUN MICROSYSTEMS OF CANADA INC. PRODUCT The following additional terms and conditions shall govern the use of Sun Microsystems Inc. ("SMI") Products leased hereunder. 1.0 USE OF SOFTWARE Lessee's use of any software Products ("Software") provided under this Schedule shall be governed by the object code license accompanying such Software. 2.0 WARRANTY Applicable warranties and terms and conditions relating to the Products released hereunder accompany the Products at time of delivery. Software is warranted to conform to published specifications for a period of ninety (90) days from the date of delivery. Sun Microsystems of Canada Inc. ("SMC") does not warrant that: (i) operation of any software will be uninterrupted or effort free; or (ii) functions contained in Software will operate in combinations which may be selected for use by the Licensee or meet the Licensee's requirements. These warranties extend only to Lessee as an original Licensee. Lessee's exclusive remedy and SMI's entire liability under these warranties will be: (i) with respect to Product, repair or at SMI's option, replacement; and (ii) with respect to Software, use its best efforts to correct such Software as soon as practical after licensee has notified SMI of Software's nonconformance. It such repair, replacement or correction is not reasonably achievable, SMI will refund the rental fee/license fee. Unless Lessee has executed an on-site service agreement, repair or replacement will be undertaken at a service location authorized by SMI. All Software customization is provided "AS IS," without a warranty of any kind. No SMI warranty shall apply to any Software that is modified without SMI's written consent or any Product or Software which has been misused, altered, repaired or used with equipment or software not supplied or expressly approved by SMI. SMI reserves the right to change these warranties at any time upon Notice and without liability to Lessee or third parties. EXCEPT AS SPECIFIED IN THIS AGREEMENT, ALL EXPRESS OR IMPLIED REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT, ARE HEREBY DISCLAIMED. 3.0 TRADEMARKS AND OTHER PROPRIETARY RIGHTS "Trademarks" means all company names, products' names, marks, logos, designs, trade dress and other designations or brands used by Sun Microsystems, Inc., its subsidiaries and affiliates ("Sun") -9- in connection with Products, including, Sun, Sun Microsystems, the Sun logo, SPARCstation, SPARCserver, and all Sun Product designs. Lessee is granted no right, title, license or interest in the Trademarks. Lessee acknowledges Sun's rights in Trademarks and agrees that any and all use of the Trademarks by Lessee shall inure to the sole benefit of Sun. 4.0 HIGH RISK ACTIVITIES PRODUCTS ARE NOT DESIGNED OR INTENDED FOR USE IN ON-LINE CONTROL OF AIRCRAFT, AIR TRAFFIC, AIR CRAFT NAVIGATION OR AIRCRAFT COMMUNICATIONS; OR IN THE DESIGN, CONSTRUCTION, OPERATION OR MAINTENANCE OF ANY NUCLEAR FACILITY. SMC DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY OR FITNESS FOR SUCH USES. Lessee represents and warrants that it will not use, distribute or resell Products (including Software) for High Risk Activities and that it will ensure that its end-users or customers of Products are provided with a copy of the notice in the previous paragraph. -10- EX-10.26 41 MEMORANDUM OF AGREEMENT MEMORANDUM OF AGREEMENT made the 31st day of July, 1997. B E T W E E N: SATISH KUMETA (hereinafter called the "Vendor") OF THE FIRST PART, - and - VIRTUAL PERFORMANCE SYSTEMS INC. (hereinafter called the "Purchaser") OF THE SECOND PART, WHEREAS the Vendor is the owner of the intellectual property described in Schedule "A" hereto (the "Purchased Property"); AND WHEREAS the Vendor wishes to sell and the Purchaser wishes to purchase such Purchased Property upon and subject to the terms and conditions hereinafter set out; NOW, THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency whereof are hereby acknowledged by each of the parties from the other, the parties agree as follows: 1. Purchased Property 1.1 With effect as at the close of business on July 31, 1997 (the "Effective Time"), the Vendor hereby sells, transfers, assigns, bargains and conveys to the Purchaser and the Purchaser hereby purchases from the Vendor all right, title and interest of the Vendor in and to the Purchased Property for a purchase price determined as provided in Article 2 hereof. 2. Purchase Price 2.1 The purchase price of the Purchased Property (the "Purchase Price") shall be the fair market value of the Purchased Property as at the Effective Time which the parties have estimated to be Two Hundred Thousand dollars ($200,000). 3. Satisfaction of Purchase Price 3.1 The Purchase Price shall be satisfied by the allotment and issue to the Vendor of 35 common shares in the capital of the Purchaser. 3.2 The parties agree that the stated capital account maintained by the Purchaser for such common shares is to be designated as one dollar ($1.00). 4. Adjustment to Purchase Price 4.1 The parties agree that the Purchase Price is intended to be the fair market value of the Purchased Property and declare that the estimate set out in Article 2 is the parties= bona fide belief and agreement as to such fair market value. Notwithstanding Section 2.1 in the event that any taxing authority having jurisdiction alleges that the estimate as set out above is not the fair market value of the Purchased Property or proposes to make an assessment of tax on the basis that any benefit or advantage is or has been conferred on any person by reason of the purchase and sale provided for herein, then the Purchase Price shall be deemed to be and always to have been the fair market value of the Purchased Property as at the Effective Time as subsequently determined by the board of directors of the Purchaser after consultation with such taxing authority, and the Purchase Price shall be adjusted accordingly nunc pro tunc, with such other adjustments as may be necessary. 5. Representations and Warranties of the Vendor 5.1 The Vendor represents and warrants as follows and acknowledges that the Purchaser is relying upon such representations and warranties in connection with the purchase by the Purchaser of the Purchased Property: a) The Purchased Property is owned by the Vendor as the beneficial owner of records, with a good and marketable title thereto, free and clear of all mortgages, liens, charges, security interests adverse claims, pledges, encumbrances and demands whatsoever; b) No person, firm or corporation has any agreement or option or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option for the purchase from the Vendor of any of the Purchased Property; and c) The Vendor is, and as at the Effective Time will be, a resident of Canada, for the purposes of the Income Tax Act (Canada). 6. Representations and Warranties of the Purchaser 6.1 The Purchaser represents and warrants as follows and acknowledges that the Vendor is relying upon such representations and warranties in connection with the sale by the Vendor of the Purchased Property: a) The Purchaser has been duly incorporated and is validly subsisting under the laws of Ontario; 1) 2 b) The Purchaser has full authority to enter into and carry out the provisions of this agreement; and c) The common shares to be issued by the Purchaser to the Vendor in payment of the Purchase Price will be validly allotted and issued as fully paid and non-assessable to the Vendor, free and clear of all mortgages, liens, charges, encumbrances and demands whatsoever. 7. Election under the Income Tax Act (Canada) 7.1 The parties shall elect jointly pursuant to the provisions of section 85 of the Income Tax Act (Canada), by completing and filing all prescribed forms and related documents in such manner and at such time as is prescribed, that for tax purposes only, the proceeds of disposition received by the Vendor for the Purchased Property and the cost of the Purchased Property to the Purchaser shall be an amount that is not less than the adjusted cost base of the Purchased Property to the Vendor nor greater than the fair market value of the Purchased Property as at the Effective Time. 8. Transfer 8.1 This agreement is intended to be and shall be and operate as an immediate and effective transfer and assignment of the Purchased Property by the Vendor to the Purchaser as at the Effective Time. The parties agree to do all such other acts and things as may be necessary to give effect to the provisions hereof, and without limiting the generality of the foregoing, to validly and effectively transfer the Purchased Property from the Vendor to the Purchaser as at the Effective Time. 9. Applicable Law 9.1 This agreement shall be construed in accordance with and governed by the laws of the Province of Ontario. 10. Binding Effect 10.1 This agreement shall enure to the benefit of and be binding upon the parties and their respective heirs, legal representatives, successors and assigns. 3 IN WITNESS WHEREOF the parties have executed this agreement as of the date first mentioned above. /s/ Satish Kumeta -------------------------------------- SATISH KUMETA VIRTUAL PERFORMANCE SYSTEMS LTD. Per: /s/ Anthony Comparelli --------------------------- ANTHONY COMPARELLI Schedule "A" INTELLECTUAL PROPERTY ASSIGNMENT 1. The undersigned SATISH KUMETA of 310-1050 Castlefield Avenue, Toronto, Ontario, M6B 167 (the "Assignor"), in consideration of the sum of $1.00 and other valuable consideration, the receipt and sufficiency of which is acknowledged, does hereby grant, assign and convey to and in favour of VIRTUAL PERFORMANCE SYSTEMS, INC., a corporation incorporated under the laws of the Province of Ontario, the full post office address of whose principal office or place of business is suite 1800, 5775 Yonge Street, North York, Ontario M2M 4]1, (the "Assignee"), all the right, title and interest, including all goodwill arising therefrom which the Assignor may have acquire or has acquired worldwide, in the intellectual property identified in Schedule AA:. 2. The Assignee appoints Tony Comparelli whose full post office address in Canada is suite 1800, 5775 Yonge Street, North York, Ontario, M2M 4]1, as the person to which any notice in respect of this Assignment or any application or registration may be sent and on which service of any proceedings in respect of the Assignment or any application or registration may be given or served with the same effect as if they had been given or served on the Assignee, applicant or registrant. 3. The Assignee accepts this Assignment. IN WITNESS WHEREOF the Assignor and the Assignee have duly executed this agreement as of the 8th day of August, 1997. /s/ Satish Kumeta ------------------------------------ SATISH KUMETA VIRTUAL PERFORMANCE SYSTEMS INC. Per: /s/ ----------------------------------- [Authorized Officer] SCHEDULE "A" VIRTUAL PERFORMANCE SYSTEMS INC. 1. Virtual Performance System (VPS) The virtual performance system (VPS), is a 3D VRML (Virtual Reality Modeling Language) interface into an Enterprise=s resources. It can be considered as a framework to measure quantifiable data across an enterprise using proprietary PUSH/PULL technology. 2. Technology Overview VPS is a framework built in Java to measure quantifiable data across clients and servers in an architecture, operating system and application independent method on the Internet (or the Intranet). The core functionality of the system is to farm quantifiable data from multiple clients and send it to a server. The server in turn uses the data to perform required actions, such as draw graphs, send notifications, data warehouse, modify client behavior or send it to an external application. The clients and servers can be configured to exchange data between each other in real time or at some predetermined or configured intervals. The distinguishing advantage of this proprietary technology is that NO CHANGES need to be made to the existing applications to measure data across a client(s) Server(s) platform(s). The following picture is used to illustrate the logical flow of control in the VPS framework. EX-10.27 42 LETTER AGREEMENT VIRTUAL PERFORMANCE SYSTEMS INC. Suite 901 1 Richmond Street West Toronto, Ontario MSH 3W4 November 27, 1998 Grant Reserve Corporation 410 17th Street Suite 1375 Denver, Colorado 80202 - - and to - Sheridan Reserve Incorporated Suite 2110 181 University Avenue Toronto, Ontario MSH 3M7 Virtual Performance Systems Inc. ("VPS"), on behalf of itself and its shareholders, wishes to set out the general terms and conditions pursuant to which VPS and its shareholders will agree to be acquired by Grant Reserve Corporation ("Grant") and Sheridan Reserve Incorporated ("Sheridan") will agree to sell certain shares of Grant to or to the direction of shareholders of VPS. 1. VPS is a corporation incorporated under the laws of Ontario which is in the business of electronic content delivery and management on a multiple communication platform. VPS has created software technology designed to facilitate real-time communication in three primary areas: 1) convert and deliver real-time training/education content and users; 2) establish a virtual call center; and 3) provide virtual banking and transaction processing capabilities. 2. The authorized capital of VPS consists of: 1) VPS has outstanding 3,624,100 common shares. 3. Grant Reserve Corporation is a corporation formed under the laws of the State of Nevada. Grant's assets primarily consist of all of the outstanding shares of Madison Mining Corporation ("Madison") and 94% of the outstanding shares of Gold King Mines Corporation ("Gold King"). The board of directors and senior management of Grant has determined to dispose of Grant's interest in Madison and Gold King and acquire 100% of VPS. In that regard, a meeting of the shareholders of Grant will be convened for December 18, 1998 to approve, among other things, the approval of the sale of Grant's interest in Madison and Gold King. Grant will prepare and delivere to its shareholders a management proxy circular seeking shareholder approval of the proposed sale of Madison and Gold King and additionally describing the proposed acquisition of VPS. 4. Sheridan is a corporation incorporated under the laws of the Province of Ontario. The principal assets of Sheridan consist of 10,000,000 common shares of Grant. In order to facilitate the acquisition of VPS by Grant, Sheridan proposes to sell to the shareholders of VPS 9,000,000 of its shares of Grant for an aggregate consideration of US$9,000. In connection with the proposed disposition by Sheridan of 9,000,000 shares of Grant, a meeting of the shareholders of Sheridan will be convened for December 30, 1998 to consider and approve a special resolution authorizing the sale of the 9,000,000 shares of Grant by Sheridan to shareholders of VPS. In order to give effect to Grant acquiring from the VPS shareholders all of the issued and outstanding shares of VPS and Sheridan selling to or to the direction of VPS shareholders 9,000,000 shares of Grant, Sheridan, Grant, VPS and its shareholders acknowledge and agree as follows: 1) Grant shall convene a meeting of the shareholders of Grant to approve of the disposition by Grant of all of the share of Madison and Gold King held by it; 2) Grant shall dispose of all of its shares of Madison and Gold King. Upon completion of that disposition, the assets of Grant shall consists solely of cash and/or promissory note payable to Grant representing the proceeds of the sale of the interests in Madison and Gold King; 3) Sheridan shall convene a meeting of shareholders to approve of the disposition of 9,000,000 common shares of Grant for a consideration of US$9,000; 4) Sheridan shall agree to sell to or to the direction of VPS shareholders 9,000,000 common shares of Grant for US$9,000; 5) Grant shall agree to acquire 100% of the outstanding shares of VPS in consideration of the issuance of 1,500,000 common shares of Grant (or an economically equivalent transaction if deemed prudent for tax purposes); -2- 6) The board of directors of Grant shall be reconstituted to consist of four persons, three of whom shall be nominees of VPS or its shareholders. A single nominee of VPS or its shareholders shall be appointed to the board of directors of Grant upon the approval by shareholders of Sheridan of the sale 9,000,000 shares of Grant. Two further nominees of VPS shall be appointed directors of VPS upon the closing of the sale by Sheridan of the 9,000,000 shares of Grant. This letter of intent sets out the proposed transactions to be carried out by the parties. The parties shall conduct themselves with the intention of concluding these transactions. Could you kindly indicate that the foregoing sets out our intention by signing below on all copies of this letter, retaining copies for your files and returning an executed copy to our attention. Yours very truly, VIRTUAL PERFORMANCE SYSTEMS INC. for itself and on behalf of its shareholders Per:/s/ Anthony Comparelli ----------------------------------- GRANT RESERVE CORPORATION Per: /s/ ------------------------ SHERIDAN RESERVE INCORPORATED Per: /s/ ------------------------ -3- EX-10.28 43 SHARE PURCAHSE AGREEMENT SHARE PURCHASE AGREEMENT AMONG VIRTUAL PERFORMANCE SYSTEMS INC. THE SELLING SHAREHOLDERS NAMED HEREIN AND INFOCAST CANADA LIMITED DATED AS OF JANUARY 29, 1999 TABLE OF CONTENTS EXHIBITS......................................................................iv ARTICLE I DEFINITIONS...............................................................1 Section 1.01 Definitions................................................1 Section 1.02 Accounting Principles......................................7 ARTICLE II AGREEMENT TO SELL AND PURCHASE THE PURCHASED SHARES.......................8 Section 2.01 Sale and Purchase of the Purchased Shares..................8 Section 2.02 Purchase Price.............................................8 ARTICLE III CLOSING...................................................................8 Section 3.01 Closing....................................................8 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING SHAREHOLDERS..............................................9 Section 4.01 Organization, Good Standing and Qualification of the Company.............................................9 Section 4.02 Articles of Incorporation and By-Laws; Records.............9 Section 4.03 Capitalization............................................10 Section 4.04 Authority; Binding Nature of Agreements...................11 Section 4.05 Non-Contravention; Consents...............................11 Section 4.06 Proprietary Rights; Proprietary Information and Inventions Agreement......................................13 Section 4.07 Proceedings; Orders.......................................13 Section 4.08 Sale of Purchased Shares Valid............................14 Section 4.09 Financial Statements......................................15 Section 4.10 Title to Assets...........................................15 Section 4.11 Material Contracts........................................16 Section 4.12 Compliance With Requirement of Laws.......................17 Section 4.13 Governmental Authorizations...............................18 Section 4.14 Tax Matters...............................................18 Section 4.15 Securities Laws Compliance; Registration Rights...........20 Section 4.16 Finders and Brokers.......................................20 Section 4.17 Environmental Compliance..................................21 Section 4.18 Selling Shareholder.......................................21 Section 4.19 Powers of Attorney........................................22 Section 4.20 Full Disclosure...........................................22 Section 4.21 Investment Representations................................22 i ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..........................23 Section 5.01 Organization, Good Standing and Qualification of the Purchaser..........................................23 Section 5.02 Capitalization............................................24 Section 5.03 Authority; Binding Nature of Agreements...................24 Section 5.04 Non-Contravention; Consents...............................24 Section 5.05 Proceedings; Orders.......................................25 Section 5.06 Sale of Exchangeable Shares Valid.........................25 Section 5.07 Investment Representations................................25 Section 5.08 Consents..................................................26 ARTICLE VI PRE-CLOSING COVENANTS OF THE COMPANYAND THE SELLING SHAREHOLDERS.........27 Section 6.01 Access and Investigation..................................27 Section 6.02 Operation of Business.....................................27 Section 6.03 Filings and Consents......................................29 Section 6.04 Notification of Events or Conditions......................29 Section 6.05 No Negotiation............................................30 Section 6.06 Best Efforts..............................................30 Section 6.07 Confidentiality...........................................30 ARTICLE VII PRE-CLOSING COVENANTS OF THE PURCHASER...................................31 Section 7.01 Filings and Consents......................................31 ARTICLE VIII CONDITIONS TO PURCHASER'S OBLIGATIONS AT CLOSING.........................32 Section 8.01 Representations and Warranties; Performance of Obligations................................32 Section 8.02 Consents, Permits, Waivers and Approvals..................32 Section 8.03 Delivery of Certificates Evidencing Purchased Shares......32 Section 8.04 Compliance Certificate....................................32 Section 8.05 Corporate Documents.......................................33 Section 8.06 Share Exchange Agreement..................................33 Section 8.07 Proceedings and Documents.................................33 ARTICLE IX CONDITIONS TO THE SELLINGSTOCKHOLDER'S OBLIGATIONS AT CLOSING............33 Section 9.01 Representations and Warranties; Performance of Obligations................................33 Section 9.02 Consents, Permits, Waivers and Approvals..................34 Section 9.03 Delivery of Certificates Evidencing Exchangeable Shares...34 ii Section 9.04 Compliance Certificate....................................34 Section 9.05 Corporate Documents.......................................34 Section 9.06 Share Exchange Agreement..................................34 Section 9.07 Proceedings and Documents.................................34 ARTICLE X INDEMNIFICATION, ETC.....................................................35 Section 10.01 Survival of Representations and Warranties................35 Section 10.02 Indemnification by Selling Shareholders...................35 Section 10.03 Indemnification by the Purchaser..........................36 Section 10.04 Interest..................................................36 Section 10.05 Defense of Third Party Claims.............................37 ARTICLE XI MISCELLANEOUS............................................................38 Section 11.01 Tax Elections.............................................38 Section 11.02 Termination...............................................38 Section 11.03 Governing Law.............................................38 Section 11.04 Jurisdiction; Venue.......................................39 Section 11.05 Successors and Assigns....................................39 Section 11.06 Entire Agreement..........................................39 Section 11.07 Severability..............................................40 Section 11.08 Amendment and Waiver......................................40 Section 11.09 Notices...................................................40 Section 11.10 Counterparts..............................................41 Section 11.11 Attorney's Fees...........................................41 Section 11.12 Delays or Omissions.......................................41 Section 11.13 Remedies Cumulative.......................................42 Section 11.14 No Contribution...........................................42 Section 11.15 Ontario Securities Law Matters............................42 iii SCHEDULES Schedule 2.01 Purchased Shares Schedule 2.02 Exchangeable Shares Schedule 4.01(b) Board of Directors; Committees; Officers Schedule 4.06 Proprietary Assets Schedule 4.09 Financial Statements Schedule 4.11 Material Contracts EXHIBITS Exhibit A Rights and Designations of Exchangeable Shares Exhibit B Form of Share Exchange Agreement iv SHARE PURCHASE AGREEMENT This Share Purchase Agreement is entered into as of January 29, 1999, by and among Virtual Performance Systems Inc., a corporation organized and existing under the laws of Ontario (the "Company"), the entities and individuals listed in Schedule 2.01 attached hereto (each, a "Selling Shareholder" and, collectively, the "Selling Shareholders"), and InfoCast Canada Limited, a corporation organized and existing under the laws of Ontario (the "Purchaser"). WITNESSETH: WHEREAS the Selling Shareholders own, in the aggregate, a total of 3,624,100 common shares (the "Company Common Shares") in the capital of the Company, which shares represent 100% of the issued and outstanding shares in the capital of the Company; AND WHEREAS, the Purchaser desires to purchase from the Selling Shareholders 100% of the Company Common Shares owned by the Selling Shareholders (which shall be accomplished by the direct purchases of such shares from the Selling Shareholders) and the Selling Shareholders are willing to sell such Company Common Shares, to the Purchaser, upon the terms and subject to the conditions set forth herein; NOW THEREFORE in consideration of the mutual promises and covenants herein, the Purchaser, the Company and the Selling Shareholders hereby agree as follows: ARTICLE I DEFINITIONS Section 1.1 Definitions For purposes of this Agreement, the following terms shall have the meanings set forth in this Section 1.01: "Acquisition Transaction" shall mean any transaction involving: (a) the sale or other disposition of all or any portion of the Company's business or assets (other than the sale of goods or services in the Ordinary Course of Business); (b) the issuance, sale or other disposition of (i) any shares in the capital of the Company, (ii) any option, call, warrant or right (whether or not immediately exercisable) to acquire any shares in the capital of the Company, or (iii) any security, instrument or obligation that is or may become convertible into or exchangeable for any capital stock of the Company; or (c) any merger, consolidation, amalgamation, business combination, share exchange, reorganization, recapitalization or similar transaction involving the Company. "Agreement" shall mean this Share Purchase Agreement, dated as of January 29, 1999, by and among the Company, the Selling Shareholders and the Purchaser, together with all schedules and exhibits attached thereto, as it may be amended, supplemented or otherwise modified from time to time. "Best Efforts" shall mean the efforts that a prudent Person desiring to achieve a particular result would use in order to ensure that such result is achieved as expeditiously as possible. "Breach" shall mean, in respect of a representation, warranty, covenant, obligation or other provision, that there is or has been (a) any inaccuracy in or breach of, or any failure to comply with or perform, such representation, warranty, covenant, obligation or other provision, or (b) any claim (by any Person) or other circumstance that is inconsistent with such representation, warranty, covenant, obligation or other provision. "CDN$" shall mean the lawful currency of Canada. "Closing" shall have the meaning specified in Article III. "Closing Date" shall have the meaning specified in Article III. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Company" shall have the meaning specified in the first paragraph of this Agreement. "Company Common Shares" shall have the meaning specified in the recitals of this Agreement. "Company Contract" shall mean any Contract (a) to which the Company is a party, (b) by which the Company or any of its assets is or may become bound or (c) under which the Company has, or may become subject to, any obligation or under which the Company has or may acquire any right or interest. "Company Returns" shall have the meaning specified in Section 4.17(b) of the Agreement. "Consent" shall mean any approval, consent, ratification, permission, waiver or authorization (including any Governmental Authorization). 2 "Contract" shall mean, with respect to any Person, any written, oral, implied or other agreement, contract, understanding, arrangement, instrument, note, guaranty, indemnity, representation, warranty, deed, assignment, power of attorney, certificate, purchase order, work order, insurance policy, benefit plan, commitment, covenant, assurance or undertaking of any nature to which such Person is a party or by which its properties or assets may be bound or affected or under which it or its respective business, properties or assets receive benefits. "Damages" shall mean any loss, damage, injury, decline in value, lost opportunity, Liability, claim, demand, settlement, judgment, award, fine, penalty, Tax, fee (including any legal fee, expert fee, accounting fee or advisory fee), charge, cost (including any cost of investigation) or expense of any nature. "Employee Benefit Plan" shall mean any and all bonus, deferred compensation, incentive compensation, stock purchase, stock option, stock appreciation, phantom stock, savings, profit sharing, severance or termination pay, health or other medical, dental, life, disability or other insurance (whether insured or self-insured), supplementary unemployment or employment benefit, pension, retirement, registered retirement savings, supplementary retirement, change-in-control and any other employment benefit or compensation plan, program, agreement, arrangement, policy or practice (including any funding mechanism therefore which is now in effect which will be required in the future as a result of the Transactions), whether formal or informal, funded or unfunded, registered or unregistered, oral or written, which are maintained or contributed to or are required to be maintained, contributed to or provided by the Company, under which any employee, former employee or independent contractor (or any dependent of any such Persons) has any present or future right to benefits or compensation or under which the Company has any present or future liability or obligation. "Entity" shall mean any corporation (including any non profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, cooperative, foundation, society, political party, union, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization or entity. "Environmental Law" shall mean any federal, provincial, state, local or foreign Requirement of Law relating to pollution or protection of human health or the environment. "Exchangeable Shares" shall mean the Exchangeable Shares in the capital of the Purchaser having the rights and preferences described in Schedule II. "Financial Statements" shall have the meaning specified in Section 4.9(a). "GAAP" shall mean generally accepted accounting principles in effect in Canada, applied on a basis consistent with the basis on which the Financial Statements were prepared. 3 "Governmental Authorization" shall mean any (a) permit, license, certificate, franchise, concession, approval, consent, ratification, permission, clearance, confirmation, endorsement, waiver, certification, designation, rating, registration, qualification or authorization that is, has been or may in the future be issued, granted, given or otherwise made available by or under the authority of any Governmental Authority or pursuant to any Requirement of Law; or (b) right under any Contract with any Governmental Authority. "Governmental Authority" shall mean any (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature, (b) federal, provincial, state, local, municipal, foreign or other government, (c) governmental or quasi governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or Entity and any court or other tribunal), (d) multi national organization or body, or (e) individual, Entity or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature. "Indemnified Party" shall have the meaning specified in Section 10.04. "InfoCast" shall mean InfoCast Corporation, a Nevada corporation. "InfoCast Common Stock" shall mean the common stock of InfoCast. "InfoCast Exchange Stock" shall mean the InfoCast Common Stock issuable to the Selling Shareholders upon the exchange of the Exchangeable Shares in accordance with the Share Exchange Agreement. "Knowledge" shall mean, in respect of a particular fact or other matter by an individual that (a) such individual is actually aware of such fact or other matter, or (b) a prudent individual could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a diligent and comprehensive investigation concerning the truth or existence of such fact or other matter. The Company shall be deemed to have "Knowledge" of a particular fact or other matter if any officer, employee or other Representative of the Company has Knowledge of such fact or other matter. "KPMG" means KPMG LLP, Chartered Accountants of Toronto, Canada. "Liability" shall mean any debt, obligation, duty or liability of any nature (including any unknown, undisclosed, uncaptured, unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious, derivative, joint, several or secondary liability), regardless of whether such debt, obligation, duty or liability would be required to be disclosed on a balance sheet prepared in accordance with GAAP and regardless of whether such debt, obligation, duty or liability is immediately due and payable. 4 "Lien" shall mean any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, equity, trust, equitable interest, claim, preference, right of possession, lease, tenancy, license, encroachment, covenant, infringement, interference, Order, proxy, option, right of first refusal, preemptive right, community property interest, legend, defect, impediment, exception, reservation, limitation, impairment, imperfection of title, condition or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset). "Material Contract" shall have the meaning specified in Section 4.11. "Ontario Act" shall mean the Securities Act (Ontario), as amended. "Order" shall mean any (a) order, judgment, injunction, edict, decree, ruling, pronouncement, determination, decision, opinion, verdict, sentence, subpoena, writ or award that is, has been or may in the future be issued, made, entered, rendered or otherwise put into effect by or under the authority of any court, administrative agency or other Governmental Authority or any arbitrator or arbitration panel, or (b) Contract with any Governmental Authority that is, has been or may in the future be entered into in connection with any Proceeding. "Ordinary Course of Business" shall mean, in respect of any action taken by or on behalf of the Company, that (a) such action is recurring in nature, is consistent with the Company's past practices and is taken in the ordinary course of the Company's normal day to day operations, (b) such action is taken in accordance with sound and prudent business practices, (c) such action is not required to be authorized by any of the Company's shareholders, the Company's board of directors or any committee of the Company's board of directors and does not require any other separate or special authorization of any nature, and (d) such action is similar in nature and magnitude to actions customarily taken, without any separate or special authorization, in the ordinary course of the normal day to day operations of other Entities that are engaged in businesses similar to the Company's business. "Person" shall mean any individual, Entity or Governmental Authority. "Pre-Closing Period" shall mean the period commencing as of the date of the Agreement and ending on the Closing Date. "Proceeding" shall mean any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding and any informal proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination or investigation that is, has been or may in the future be commenced, brought, conducted or heard by or before, or that otherwise has involved or may involve, any Governmental Authority or any arbitrator or arbitration panel. 5 "Proprietary Asset" shall mean any patent, patent application, trademark (whether registered or unregistered and whether or not relating to a published work), trademark application, trade name, fictitious business name, service mark (whether registered or unregistered), service mark application, copyright (whether registered or unregistered), copyright application, maskwork, maskwork application, trade secret, know how, franchise, system, computer software, invention, design, blueprint, proprietary product, technology, proprietary right or other intellectual property right or intangible asset. "Purchase Price" shall have the meaning specified in Section 2.02. "Purchased Shares" shall have the meaning specified in Section 2.01. "Purchaser" shall have the meaning specified in the first paragraph of this Agreement. "Related Party" shall mean (a) each Selling Shareholder, (b) each individual who is, or who has at any time been, an officer of the Company, (c) each member of the family of each of the individuals referred to in clause (b) above; and (d) any Entity (other than the Company) in which any one of the Persons referred to in clauses (a), (b) and (c) above holds (or in which more than one of such individuals collectively hold), beneficially or otherwise, a material voting, proprietary or equity interest. "Representatives" shall mean as to any Person, the officers, directors, employees, attorneys, accountants, advisors and representatives of such party. The Selling Shareholders and all other Related Parties shall be deemed to be "Representatives" of the Company. "Requirement of Law" shall mean any federal, provincial, state, local, municipal, foreign or other law, statute, legislation, constitution, principle of common law, resolution, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, ruling, directive, pronouncement, requirement, specification, determination, decision, opinion or interpretation that is, has been or may in the future be issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority. "Selling Shareholders" shall have the meaning specified in the first paragraph of this Agreement. "Share Exchange Agreement" shall mean a share exchange agreement among each Selling Shareholder, the Purchaser and InfoCast, substantially in the form of Exhibit B, as such agreement may be amended, supplemented or otherwise modified from time to time, pursuant to which each Selling Shareholder agrees to sell to InfoCast the Exchangeable Shares held by such Selling Shareholder for consideration in the form of InfoCast Exchange Stock. 6 "Tax" shall mean any tax (including any income tax, franchise tax, capital gains tax, estimated tax, gross receipts tax, value added tax, surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax, occupation tax, inventory tax, occupancy tax, withholding tax, capital tax, land transfer tax, goods and services tax or payroll tax), levy, assessment, tariff, impost, imposition, toll, duty (including any customs duty), deficiency or fee, and any related charge or amount (including any fine, penalty or interest), that is, has been or may in the future be (a) imposed, assessed or collected by or under the authority of any Governmental Authority, or (b) payable pursuant to any tax sharing agreement or similar Contract and all unemployment insurance, health insurance and Canada, Quebec and other government pension plan premiums. "Tax Return" shall mean any return (including any information return), report, statement, declaration, estimate, schedule, notice, notification, form, election, certificate or other document or information that is, has been or may in the future be filed with or submitted to, or required to be filed with or submitted to, any Governmental Authority in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Requirement of Law relating to any Tax. "Transaction Documents" shall mean this Agreement, the Share Exchange Agreement and all other agreements, certificates and instruments executed or contemplated to be executed by any of the Parties in connection with the Transactions. "Transactions" shall mean all of the transactions contemplated by this Agreement and each of the other Transaction Documents, including, without limitation, (a) the sale of the Purchased Shares by the Selling Shareholders and the purchase thereof by the Purchaser in accordance with this Agreement, (b)the issuance by the Purchaser of the Exchangeable Shares to the Selling Shareholders in connection with such purchase in accordance with this Agreement, and (c) the exchange of Exchangeable Shares by the Selling Shareholders for shares of InfoCast Exchange Stock in accordance with the Share Exchange Agreement. "Unaudited Interim Balance Sheet" shall have the meaning specified in Section 4.9(a)(i). "US$" shall mean the lawful currency of the United States of America. "U.S. Securities Act" shall mean the United States Securities Act of 1933, as amended. Section 1.02 Accounting Principles All references to generally accepted accounting principles or GAAP means references to principles recommended, from time to time, in the Handbook of the Canadian Institute of Chartered Accountants and all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with such generally accepted accounting principles. 7 ARTICLE II AGREEMENT TO SELL AND PURCHASE THE PURCHASED SHARES Section 2.1 Sale and Purchase of the Purchased Shares Subject to the terms and conditions of this Agreement, at the Closing, the Selling Shareholders shall sell, assign, transfer and deliver to the Purchaser an aggregate of 3,624,100 Company Common Shares (collectively, the "Purchased Shares"). Set forth on Schedule 2.01 is a list of the number of shares of Purchased Shares to be so sold, assigned, transferred and delivered to Purchaser by each Selling Shareholder. Section 2.2 Purchase Price At the Closing, the Purchaser shall pay to the Selling Shareholders an aggregate purchase price (subject to adjustment as provided below) for the Purchased Shares (the "Purchase Price") as follows: (a) Exchangeable Shares. On the Closing Date, the Purchaser shall issue to the Selling Shareholders an aggregate of one million, five hundred thousand (1,500,000) Exchangeable Shares. Set forth on Schedule 2.02 is a list of the number of shares of Exchangeable Shares to be issued, transferred and delivered to each of the Selling Shareholders. (b) Allocation of Purchase Price. The Purchase Price shall be allocated among the Selling Shareholders in proportion to the number of Purchased Shares being sold by each Selling Shareholder is to the total number of Purchased Shares as set out in Schedule 2.01. Each Selling Shareholder and the Purchaser agree to report the purchase and sale of their Purchased Shares in any returns required to be filed under the Tax Act and any other taxation statutes accordingly. ARTICLE III CLOSING Section 3.1 Closing The closing (the "Closing") shall take place at the offices of Aird & Berlis, Suite 1800 BCE Place, Bay Wellington Tower, P.O. Box 754, 181 Bay Street, Toronto, Ontario, Canada at 10:00 A.M. (Eastern Standard Time) on January 29, 1999 or on such other date or at such other place or time as the Company, the Selling Shareholders and the Purchaser may mutually agree (such date is hereinafter referred to as the "Closing Date"). 8 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING SHAREHOLDERS The Company and each of the Selling Shareholders, jointly and severally, hereby represents and warrants to the Purchaser as follows: Section 4.1 Organization, Good Standing and Qualification of the Company (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of Ontario and is duly qualified to conduct business and in corporate and tax good standing under the laws of each jurisdiction in which the nature of its business or the ownership or leasing of its properties require such qualification. The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute, deliver and perform its obligations under this Agreement, and to carry on its business as presently conducted and as presently proposed to be conducted. (b) Schedule 4.01(b) accurately sets forth (i) the names of the members of the Company's board of directors, (ii) the names of the members of each committee of the Company's board of directors and (iii) the names and titles of the Company's officers. (c) The Company is not insolvent within the meaning of applicable laws, rules regulation or similar requirement, and have not made any assignment in favour of its creditors nor a proposal in bankruptcy to its creditors or any class thereof, nor has any petition for a receiver order been presented in respect of the Company. The Company has not initiated any proceedings with respect to a compromise or arrangement with its creditors or for the dissolution, liquidation or reorganization of the Company or the winding up or cessation of the business or affairs of the Company. No receiver has been appointed in respect of the Company or any of its assets and no execution or distress has been levied upon any of its assets. (d) The Company has no subsidiaries, has never owned, beneficially or otherwise, any shares or other securities of, or any direct or indirect interest of any nature in, any Entity. Section 4.2 Articles of Incorporation and By-Laws; Records (a) The Company has delivered to the Purchaser accurate and complete copies of: (i) the articles of incorporation and bylaws, including all amendments thereto of the Company; (ii) the share transfer register of the Company; and 9 (iii) the minutes and other records of the meetings and other proceedings (including any actions taken by written consent or otherwise without a meeting) of the stockholders, board of directors and all committees of the board of directors of the Company. (b) There have been no meetings or other proceedings of the stockholders, the board of directors or any committee of the board of directors of the Company, that are not fully reflected in such minutes or other records. (c) The Company has never conducted any business under or otherwise used, for any purpose or in any jurisdiction, any fictitious name, assumed name, trade name or other name, other than the name "Virtual Performance Systems Inc.". (d) There has not been any material violation of any of the provisions of the articles of incorporation or bylaws of the Company or of any resolution adopted by the shareholders, board of directors or any committee of the board of directors of the Company and no event has occurred, and no condition or circumstance exists that might (with or without notice or lapse of time) constitute or result directly or indirectly in such a violation. (e) The books of account, stock records, minute books and other records of the Company are accurate, up to date and complete in all material respects, and have been maintained in accordance with sound and prudent business practices. All of the records of the Company are in the actual possession and direct control of the Company. Section 4.3 Capitalization (a) The authorized capital stock of the Company consists of (i) an unlimited number of shares of Company Common Shares, of which 3,624,100 shares have been issued and are outstanding, and are owned and held beneficially and of record by the Selling Shareholders as set forth on Schedule I hereto. All issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued in full compliance with all applicable securities laws and other applicable Requirement of Laws, and are outstanding as fully paid and non-assessable. (b) There are no: (i) outstanding subscription, option, call, warrant or right (whether or not currently exercisable) to acquire any shares in the capital or other securities of the Company, (ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares in the capital or other securities of the Company, (iii) Contract under which the Company is or may become obligated to sell or otherwise issue any shares of its capital stock or any other securities, or (iv) condition or circumstance that may directly or indirectly give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any shares in the capital, or other securities of, the Company. 10 (c) The Company has never repurchased, redeemed or otherwise reacquired (and has not agreed, committed or offered (in writing or otherwise) to reacquire) any shares of capital stock or other securities of the Company. Section 4.4 Authority; Binding Nature of Agreements (a) The Company has the absolute and unrestricted right, power and authority to enter into and to perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party, and the execution, delivery and performance by the Company of this Agreement and each of such other Transaction Documents have been duly authorized by all necessary action on the part of the Company and its shareholders, board of directors and officers. Each of this Agreement and such other Transaction Documents constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). (b) Each of the Selling Shareholders has the absolute and unrestricted right, power and capacity to enter into and to perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party, and the execution, delivery and performance by each Selling Shareholder of this Agreement and such other Transaction Documents have been duly authorized by all necessary action on the part of such Selling Shareholder. Each of this Agreement and such other Transaction Documents constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of each Selling Shareholder party thereto, enforceable against such Selling Shareholder in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). Section 4.5 Non-Contravention; Consents (a) Neither the execution and delivery of this Agreement or any other Transaction Document to which the Company or any of the Selling Shareholders is a party, nor the consummation or performance of any of the Transactions, will directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with or result in a violation of(i) any of the provisions of the articles of incorporation or bylaws of the Company, or (ii) any resolution adopted by the shareholders, board of directors or any committee of the board of directors of the Company, or the provision of any agreement, whether or not written, between the holders of Company Common Shares; 11 (ii) contravene, conflict with or result in a violation of, or give any Governmental Authority or other Person the right to challenge any of the Transactions or to exercise any remedy or obtain any relief under, any Requirement of Law or any Order to which the Company or any of the Selling Shareholders, or any of the assets owned or used by the Company or any of the Selling Shareholders, is subject; (iii) cause the Company to become subject to, or to become liable for the payment of, any Tax; (iv) cause any of the assets owned or used by the Company or any of the Selling Shareholders to be reassessed or revalued by any taxing authority or other Governmental Authority; (v) contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by the Company or any of its employees or that otherwise relates to the business of the Company or to any of the assets owned or used by the Company; (vi) contravene, conflict with or result in a violation or breach of, or result in a default under, any provision of any of the Company Contracts; (vii) give any Person the right to (i) declare a default or exercise any remedy under any Company Contract (ii) accelerate the maturity or performance of any Company Contract or (iii) cancel, terminate or modify any Company Contract; (viii) give any Person the right to any payment by the Company or give rise to any acceleration or change in the award, grant, vesting or determination of options, warrants, rights, severance payments or other contingent obligations of any nature whatsoever of the Company in favour of any Person, in any such case as a result of the change in control of the Company, or otherwise resulting from the Transactions; (ix) contravene, conflict with or result in a violation or breach of or a default under any provision of, or give any Person the right to declare a default under, any Contract to which any of the Selling Shareholders is a party or by which any of the Selling Shareholders is bound; or (x) result in the imposition or creation of any Lien upon or with respect to any asset owned or used by the Company. 12 (b) Neither the Company nor any of the Selling Shareholders was, is or will be required to make any filing with or give any notice to, or to obtain any Consent from, any Person in connection with the execution and delivery of this Agreement or any of the other Transaction Documents or the consummation or performance of any of the Transactions. Section 4.6 Proprietary Rights; Proprietary Information and Inventions Agreement (a) Except as set forth in Schedule 4.06, there is no Proprietary Asset that is owned by or licensed to the Company or that is otherwise used or useful in connection with the Company's business. (b) The Company has taken all reasonable measures and precautions to protect the confidentiality and value of each Proprietary Asset identified or required to be identified in Schedule 4.06. (c) The Company is not aware that any of the employees or consultants of the Company is in violation of such agreement. The Company does not believe it is or will be necessary to utilize any inventions, trade secrets or proprietary information of any of its employees made prior to their employment by the Company, except for inventions, trade secrets or proprietary information that have been assigned to the Company or are licensed by any of the Selling Shareholders as described in Schedule 4.06. (d) To the knowledge of the Selling Shareholders, the Company has conducted its business without infringement or claim of infringement of any license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of others. The Company is not infringing, and has not at any time infringed or received any notice or other communication (in writing or otherwise) of any actual, alleged, possible or potential infringement of, any Proprietary Asset owned or used by any other Person. To the Knowledge of the Company and each of the Selling Shareholders, no other Person is infringing, and no Proprietary Asset owned or used by any other Person infringes or conflicts with, any Proprietary Asset owned or used by the Company. (e) The Company owns, licenses or has rights to all of the Proprietary Assets owned or used by the Company. The Proprietary Assets identified in Schedule 4.06 constitute all of the Proprietary Assets necessary to enable the Company to conduct its business in the manner in which its business is currently being conducted. Section 4.7 Proceedings; Orders (a) There is no pending Proceeding and, to the Knowledge of the Company and the Selling Shareholders, no Person has threatened to commence any Proceeding: 13 (i) that involves the Company or that otherwise relates to or might affect the business of the Company or any of the assets owned or used by the Company (whether or not the Company is named as a party thereto); or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Transactions. (b) No event has occurred, and no claim, dispute or other condition or circumstance exists, that might directly or indirectly give rise to or serve as a basis for the commencement of any material Proceeding of the type described in Section 4.07(a). (c) No Proceeding has ever been commenced by or against the Company and no Proceeding otherwise involving or relating to the Company has been pending or threatened at any time. (d) There is no Order to which the Company or any of the assets owned or used by the Company is subject, and none of the Selling Shareholders is subject to any Order that relates to the business of the Company or to any of the assets owned or used by the Company. (e) No officer or employee of the Company is subject to any Order that prohibits such officer or employee from engaging in or continuing any conduct, activity or practice relating to the business of the Company. (f) There is no proposed Order that, if issued or otherwise put into effect, (i) may have an adverse effect on the business, condition, assets, liabilities, operations, financial performance, net income or prospects (or on any aspect or portion thereof) of the Company or on the ability of the Company or any of the Selling Shareholders to comply with or perform any covenant or obligation under this Agreement or any of the other Transactional Documents, or (ii) may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the Transactions. Section 4.8 Sale of Purchased Shares Valid Assuming the accuracy of the representations and warranties of the Purchaser contained in Section 5.07, the offer and sale of the Purchased Shares will be exempt from the prospectus and registration requirements of the Ontario Act. Neither the Company nor any of the Selling Shareholders nor any agent on behalf of any such party has solicited or will solicit any offers to sell or has offered to sell or will offer to sell all or any part of such shares to any person or persons so as to bring the offer or sale of the Purchased Shares to the Purchaser within such requirements. 14 Section 4.9 Financial Statements (a) The Company has delivered to the Purchaser the unaudited balance sheet of the Company as at December 31, 1998 (the "Unaudited Balance Sheet"), and the related unaudited statements of operations and changes in shareholders' equity of the Company for the period ended December 31, 1998, together with the notes thereto, all as set out in Schedule 4.09 hereof (collectively, the "Financial Statements"). (b) All of the Financial Statements are accurate and complete in all material respects, and the dollar amount of each line item included in the Financial Statements is accurate in all material respects. The Financial Statements and notes referred to in Section 4.09(a) are in accordance with the books and records of the Company and present fairly the financial position of the Company as of the respective dates thereof and the results of operations and changes in stockholder's equity of the Company for the periods covered thereby. The Financial Statements have been prepared in accordance with GAAP, applied on a consistent basis throughout the periods covered. (c) At the date of the Unaudited Balance Sheet, (i) the Company had no Liabilities of any nature (matured or unmatured, fixed or contingent) required by GAAP to be provided for in the Unaudited Balance Sheet or described in the notes thereto which were not provided for in the Unaudited Balance Sheet, described in the notes thereto, or set forth in Schedule 4.14 hereto, (ii) the Company had no material Liabilities of any nature (matured or unmatured, fixed or contingent) which were not required by GAAP to be provided for in the Unaudited Balance Sheet or described in the notes thereto and (iii) all reserves established by the Company and set forth in the Unaudited Interim Balance Sheet were adequate for the purposes for which they were established. As of the date of this Agreement, the Company has no Liabilities, except for: (i) Liabilities identified as such in the "liabilities" column of the Unaudited Interim Balance Sheet; and (ii) accounts payable (of the type required to be reflected as current liabilities in the "liabilities" column of a balance sheet prepared in accordance with GAAP) incurred by the Company in the Ordinary Course of Business since the date of the Unaudited Interim Balance Sheet; and (iii) the potential liabilities set forth on Schedule 4.14 hereof. Section 4.10 Title to Assets (a) The Company owns and has good and valid title to all assets purported to be owned by it, including: 15 (i) with respect to the Company, all assets reflected on the Unaudited Interim Balance Sheet (except for inventory sold by the Company since the date of the Unaudited Interim Balance Sheet in the Ordinary Course of Business); (ii) all of the Company's rights under Company Contracts; and (iii) all other assets reflected in the Company's books and records as being owned by the Company. (b) All of said assets are owned by the Company free and clear of any Liens except liens for current taxes and assessments not delinquent. (c) None of the Company=s assets are being leased or licensed to the Company. Section 4.11 Material Contracts (a) Schedule 4.11 identifies and provides an accurate and complete description of each Company Contract which is material to the business or prospects of the Company (collectively, the "Material Contracts"). All nonmaterial contracts of the Company do not in the aggregate represent a material portion of the assets or liabilities of the Company. The Company has delivered to the Purchaser accurate and complete copies of all Material Contracts, including all amendments thereto. (b) Each Material Contract is valid and in full force and effect, and is enforceable by the Company in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). (c) The Company is not in default under any Material Contract in any material respect, and to the Knowledge of the Company and each of the Selling Shareholders, no Person has violated or breached, or declared or committed any default under, any Material Contract; (d) No event has occurred, and no circumstance or condition exists, that might (with or without notice or lapse of time) (i) result in a material violation or breach of any of the provisions of any Material Contract, (ii) give any Person the right to declare a default or exercise any remedy under any Material Contract, (iii) give any Person the right to accelerate the maturity or performance of any Material Contract, or (iv) give any Person the right to cancel, terminate or modify, any Material Contract. (e) the Company has not waived any of its rights under any Material Contract. 16 (f) To the Knowledge of the Company and the Selling Shareholders, each Person against which the Company has or may acquire any rights under any Company Contract is solvent and is able to satisfy all of such Person's current and future monetary obligations and other obligations and Liabilities to the Company. (g) The Company has never guaranteed or otherwise agreed to cause, insure or become liable for, and has never pledged any of its assets to secure, the performance or payment of any obligation or other Liability of any other Person. (h) Except as set forth in Schedule 4.11, the Company has never been a party to or bound by (i) any joint venture agreement, partnership agreement, profit sharing agreement, cost sharing agreement, loss sharing agreement or similar Contract, or (ii) any Contract that creates or grants to any Person, or provides for the creation or grant of, any share appreciation right, phantom share right or similar right or interest. (i) The performance of the Material Contracts will not result in any violation of, or failure to comply with, any Requirement of Law. (j) No Person is renegotiating, or has the right to renegotiate, any amount paid or payable to the Company under any Material Contract or any other term or provision of any Material Contract. (k) The Contracts identified in Schedule 4.11 collectively constitute all of the Contracts necessary to enable the Company to conduct its business in the manner in which such business is currently being conducted and in the manner in which such business is proposed to be conducted. (l) Schedule 4.11 identifies and provides an accurate and complete description of each proposed Contract as to which any bid, offer, written proposal, term sheet or similar document has been submitted or received by the Company. (m) No party to any Material Contract has made a claim to the effect that the Company has failed to perform an obligation thereunder. There is no known plan, intention or indication of any contracting party to any Contract to cause the termination, cancellation or modification of such Contract or to reduce or otherwise change its activity thereunder so as to adversely affect the benefits derived or expected to be derived therefrom by the Company. (n) The Company is neither a party to, nor bound by, any contract, agreement, commitment or restriction which obligates the Company to perform services or to produce products unprofitably. Section 4.12 Compliance With Requirement of Laws (a) The Company is in full compliance with each Requirement of Law that is applicable to each of them or to the conduct of each of their business or the ownership or use of any of each of their assets. 17 (b) No event has occurred, and no condition or circumstance exists, that might (with or without notice or lapse of time) constitute or result directly or indirectly in a material violation by the Company of, or a material failure on the part of the Company to comply with, any Requirement of Law. (c) The Company has not received, at any time, any notice or other communication (in writing or otherwise) from any Governmental Authority or any other Person regarding (i) any actual, alleged, possible or potential violation of, or failure to comply with, any Requirement of Law, or (ii) any actual, alleged, possible or potential obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any cleanup or any remedial, corrective or response action of any nature. (d) To the Knowledge of the Company and each of the Selling Shareholders, no Governmental Authority has proposed or is considering any Requirement of Law that, if adopted or otherwise put into effect, (i) may have an material adverse effect on the business, condition, assets, liabilities, operations, financial performance, net income or prospects of the Company, or on the ability of the Company or any of the Selling Shareholders to comply with or perform any covenant or obligation under any of the Transactional Documents, or (ii) may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the Transactions. Section 4.13 Governmental Authorizations (a) No Governmental Authorizations are necessary (i) to enable the Company to conduct its business in the manner in which its business is currently being conducted, or (ii) to permit the Company to own and use its assets in the manner in which they are currently owned and used. Section 4.14 Tax Matters (a) Each Tax required to have been paid, or claimed by any Governmental Authority to be payable, by the Company (whether pursuant to any Tax Return or otherwise) has been duly paid in full on a timely basis including all installments on account of Tax for the current year that are due and payable by it, other than as set out in the financial statements. Any Tax required to have been withheld or collected by the Company has been duly withheld and collected, and (to the extent required) each such Tax has been paid to the appropriate Governmental Authority, other than as set out in the financial statements. (b) No Tax Returns have been filed by or on behalf of the Company with any Governmental Authority with respect to any taxable period ending on or before the Closing Date ("Company Returns"). All Company Returns currently due will be filed as soon as possible and in no event later than December 31, 1999, and (ii) will be, when filed, accurately and completely prepared in full compliance with all applicable Requirement of Laws, and the Company will completely and accurately report all income and all other amounts of information required to be reported thereon. 18 (c) The Company's liability for unpaid Taxes for all periods ending on or before December 31, 1998 does not, in the aggregate, exceed the amount of the current liability accruals for Taxes (excluding reserves for deferred taxes) reported in the Financial Statements. The Company will establish, in the Ordinary Course of Business, reserves adequate for the payment of all Taxes payable up to and as of the Closing Date in addition to those not included on the Company's unaudited Balance Sheet, and the Company will disclose the dollar amount of such reserves to the Purchaser on or prior to the Closing Date. (d) The Company has never been audited. (e) There are no actions, suits, proceedings, investigations, audits or claims now pending or, to the knowledge of the Company threatened, against the Company in respect of any Taxes and there are no matters under discussion, audit or appeal with any Governmental Authority relating to Taxes. (f) Except as specifically disclosed in writing to the Purchaser, for purposes of the Tax Act or any applicable provincial or municipal taxing statute, no Person or group of Persons has ever acquired or had the right to acquire control of the Company. (g) There are no suits or similar proceedings now pending or threatened against the Company with respect to any transfer pricing issue or transfer pricing practice of the Company. There are currently no matters under discussion with any taxation or other authority relating to any transfer pricing issue, transfer pricing practices of the Company, or any advance pricing agreement or similar process or agreement concerning transfer pricing practices and issues of the Company. (h) No reserves are required to be taken by the Company for purposes of the Tax Act. (i) There are no reassessments of the Company that are issued and outstanding and there are no outstanding issues which have been raised and communicated to the Company by any governmental body for any taxation year. No governmental body has challenged, disputed or questioned the Company in respect of Taxes or of any returns, filings or other reports filed under any statute providing for Taxes. The Company is not negotiating any draft assessment or reassessment with any governmental body. The Company has not executed or filed with any governmental body any agreement or waiver extending the period for assessment, reassessment or collection of any Taxes. 19 (j) The Company has withheld from each payment made to any of its present or former employees, officers and directors, and to all persons who are non-residents of Canada for the purposes of the Tax Act, all amounts required by law to be withheld, and furthermore, have remitted such withheld amounts within the prescribed periods to the appropriate governmental body except as reflected in the Financial Statements. The Company has remitted all Canada Pension Plan contributions, provincial pension plan contributions, employment insurance premiums, employer health taxes, worker's compensation premiums and other Taxes payable by it in respect of its employees and has remitted such amounts to the proper governmental body within the time required under the applicable legislation except as reflected in the Financial Statements. Other than as set forth in the Financial Statements, the Company has charged, collected and remitted on a timely basis all Taxes as required under applicable legislation on any sale, supply or delivery whatsoever it has made. (k) The Company has not deducted any material amounts in computing its income in a taxation year that are currently unpaid and that could, if they remain unpaid, be required to be included in income in a subsequent taxation year under Section 78 of the Tax Act. (l) The Company will not at any time be deemed to have a capital gain pursuant to subsection 80.03(2) of the Tax Act as a result of any transactions or event taking place in any fiscal period or portion thereof ending on or before December 31, 1998. (m) The Company (i) does not have a permanent establishment in either the United States of America or the United Kingdom, (ii) is not subject to any form of taxation in the United States of America, the United Kingdom, or any jurisdiction or local thereof and (iii) has never filed or is now or has ever been required to file any federal, state, local, provincial or other form of tax return in either the United States of America or the United Kingdom; provided, that any claim for indemnification pursuant to Article X with respect to the representation and warranty set forth in this Section 4.17(n) shall be net of any sales taxes actually received by the Company from customers relating to periods prior to the Closing Date and for which a claim for indemnification under Article X could be made due to the failure of the Company to collect such sales taxes. Section 4.15 Securities Laws Compliance; Registration Rights The offer and sale of the Purchased Shares to the Purchaser has complied and will comply with all securities laws of the Province of Ontario. The Company and each Selling Shareholder have each complied with all applicable provincial securities laws of Canada in connection with all offers and sales of securities of the Company prior to the date of this Agreement. The Company has not heretofore granted any purchaser of its securities the right to qualify the distribution of its securities by prospectus in any province of Canada. Section 4.16 Finders and Brokers Neither the Company or any Selling Shareholder nor any person acting on behalf of the Company or any Selling Shareholder has negotiated with any finder, broker, intermediary or any similar person in connection with the transactions contemplated herein. The Company and the Selling Shareholders will indemnify the Purchaser and hold it harmless from any liability or expense arising from any claim for brokerage commissions, finder's fees or other similar compensation based upon any agreement, arrangement or understanding made by or on behalf of the Company or any Selling Shareholder. 20 Section 4.17 Environmental Compliance The Company is in compliance in all material respect with all applicable Environmental Laws. The Company has not received any notice or other communication (in writing or otherwise) that alleges that the Company is not in compliance with any Environmental Law, and, to the best knowledge of the Company and the Selling Shareholders, there are no circumstances that may prevent or interfere with the Company's compliance with any Environmental Law in the future. Section 4.18 Selling Shareholder (a) Each Selling Shareholder has the capacity and financial capability to comply with and perform all of his covenants and obligations under each of the Transaction Documents to which it is or may become a party. (b) Each Selling Shareholder is, and at the Closing will be, the registered and beneficial owner and holder of the Purchased Shares set forth beside its name on Schedule 2.01, free and clear of any Liens. Each Selling Shareholder has delivered to the Purchaser accurate and complete copies of the stock certificates evidencing the Purchased Shares owned by such Selling Shareholder. (c) Each Selling Shareholder: (i) has not, at any time, (A) made a general assignment for the benefit of creditors, (B) filed, or had filed against him, any bankruptcy petition or similar filing, (C) suffered the attachment or other judicial seizure of all or a substantial portion of his assets, (D) admitted in writing its inability to pay his debts as they become due, (E) been convicted of, or pleaded guilty to, any felony, or (F) taken or been the subject of any action that may have an adverse effect on his ability to comply with or perform his respective covenants or obligations under any of the Transaction Documents; and (ii) is not subject to any Order that may have an adverse effect on his ability to comply with or perform its covenants or obligations under any of the Transaction Documents. (d) There is no Proceeding pending, and no Person has threatened to commence any Proceeding, that may have an adverse effect on the ability of any Selling Shareholder to comply with or perform his covenants or obligations under any of the Transaction Documents. No event has occurred, and no claim, dispute or other condition or circumstance exists, that might directly or indirectly give rise to or serve as a basis for the commencement of any such Proceeding. (e) No consent, approval, authorization, order, registration or qualification of or by any Person is required in connection with the execution, delivery and performance by any Selling Shareholder of this Agreement or the consummation of the Transactions contemplated hereby. 21 (f) With the exception of Zipco Inc. and Edward Turner (both of which undertake to comply with the provisions of Section 116 of the Tax Act and to each provide the certificate contemplated thereby to the Purchaser prior to or at Closing, failing which the Purchaser shall hold back all of the 155,211 and 83,607 Exchangeable Shares otherwise deliverable to Zipco Inc. and Edward Turner, respectively, in respect of the 375,000 and 202,000 Purchased Shares being sold by Zipco Inc. and Edward Turner, respectively, in order to avoid non-compliance with section 116 of the Tax Act), each of the Selling Shareholders is not a non-resident of Canada for purposes of the Tax Act. Section 4.19 Powers of Attorney Neither the Company nor the Selling Shareholders has or have given a power of attorney to any Person. Section 4.20 Full Disclosure (a) The representations and warranties of the Company and each Selling Shareholder contained in this Agreement, each of the other Transaction Documents and each of the documents delivered or provided to the Purchaser by or on behalf of the Company or any Selling Shareholder in connection with this Agreement or any of the Transactions (i) do not contain any untrue statement of a material fact, or (ii) omit to state any material fact of which the Company or any of the Selling Shareholders has Knowledge, which fact is necessary in order to make the statements and information contained in this Agreement, the other Transaction documents and such documents not misleading. (b) The Company and the Selling Shareholders have provided the Purchaser and the Purchaser's Representatives with full and complete access to all of the Company's records and other documents and data. Section 4.21 Investment Representations (a) Each Selling Shareholder understands that none of the Exchangeable Shares or the InfoCast Exchange Stock issuable upon the exchange thereof has been registered under the U.S. Securities Act or qualified by prospectus for distribution under the Securities Act or the comparable registration in the other provinces of Canada. Each Selling Shareholder also understands that the Exchangeable Shares and the InfoCast Exchange Stock are being offered and sold pursuant to an exemption from registration contained in the U.S. Securities Act, and upon exemptions (which, in the case of trades in the InfoCast Exchange Stock, may be unavailable unless and until a discretionary ruling is made by the Ontario Securities Commission in respect thereof) from the prospectus and registration requirements of the Securities Act, based in part upon each Selling Shareholder's representations contained in this Agreement. 22 (b) Each Selling Shareholder acknowledges that it must bear the economic risk of the investment in the Exchangeable Shares and/or the InfoCast Exchange Stock indefinitely unless the Exchangeable Shares or the InfoCast Exchange Stock, as the case may be, are registered pursuant to the U.S. Securities Act, or an exemption from registration is available, or are qualified for distribution by prospectus in Canada, or an exemption from applicable prospectus requirements in respect of the resale thereof is available. Each Selling Shareholder acknowledges that his right to obtain InfoCast Exchange Stock upon the exchange of the Exchangeable Shares is subject to the availability of exemptions from the prospectus and registration requirements under applicable securities laws in respect of trades in the InfoCast Exchange Stock. Each Selling Shareholder understands that there is no assurance that any exemption from registration under the U.S. Securities Act or any exemption from the prospectus requirements of the Securities Act will be available and that, even if available, such exemption may not allow any Selling Shareholder to transfer all or any portion of the Exchangeable Shares or the InfoCast Exchange Stock under the circumstances, in the amounts or at the times such Selling Shareholder might propose. (c) Each Selling Shareholder is acquiring the Exchangeable Shares and the InfoCast Exchange Stock for such Selling Shareholder's own account for investment only, and not with the current intention of making a public distribution thereof. (d) Each Selling Shareholder represents that by reason of its business or financial experience, each Selling Shareholder has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER Purchaser hereby represents and warrants to the Company and the Selling Shareholders as follows: Section 5.1 Organization, Good Standing and Qualification of the Purchaser (a) The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Ontario and is duly qualified to conduct business and in corporate and tax good standing under the laws of each jurisdiction in which the nature of its business or the ownership or leasing of its properties requires such qualification. The Purchaser has all requisite corporate power and authority to own and operate its properties and assets, to execute, deliver and perform its obligations under this Agreement, and to carry on its business as presently conducted and as presently proposed to be conducted. 23 Section 5.2 Capitalization The authorized capital of the Purchaser consists of (a) an unlimited number of common shares, 10,000,000 of which are issued and outstanding and owned beneficially and of record by InfoCast, and (b) an unlimited number of Exchangeable Shares, none of which are issued and outstanding as of the date hereof and, after giving effect to the issuance of the Exchangeable Shares in accordance with Section 2.02(b) on the Closing Date, 1,500,000 of which shall be issued and outstanding. All issued and outstanding common shares of the Purchaser have been, and on the Closing Date, all of the Exchangeable Shares will be, duly authorized and validly issued in full compliance with all applicable securities laws and other applicable Requirement of Laws, and are fully paid and non-assessable. Section 5.3 Authority; Binding Nature of Agreements The Purchaser has the absolute and unrestricted right, power and authority to enter into and to perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party, and the execution, delivery and performance by the Purchaser of this Agreement and each of such other Transaction Documents have been duly authorized by all necessary action on the part of the Purchaser, its shareholders, board of directors and officers. Each of this Agreement and such other Transaction Documents constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). Section 5.4 Non-Contravention; Consents (a) Neither the execution and delivery of this Agreement or any other Transaction Document to which the Purchaser is a party, nor the consummation or performance of any of the Transactions, will directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with or result in a violation of (i) any of the provisions of the Purchaser's articles of incorporation or bylaws, or (ii) any resolution adopted by the Purchaser's stockholders, the Purchaser's board of directors or any committee of the Purchaser's board of directors; (ii) contravene, conflict with or result in a violation of, or give any Governmental Authority or other Person the right to challenge any of the Transactions or to exercise any remedy or obtain any relief under, any Requirement of Law or any Order to which the Purchaser or any of the assets owned or used by the Purchaser is subject; or 24 (iii) contravene, conflict with or result in a violation or breach of, or result in a default under, any provision of any of Contract to which the Purchaser is a party; (b) The Purchaser was, is and will not be required to make any filing with or give any notice to, or to obtain any Consent from, any Person in connection with the execution and delivery of any of this Agreement or any of the other Transaction Documents or the consummation or performance of any of the Transactions. Section 5.5 Proceedings; Orders (a) There is no pending Proceeding, and, to the Knowledge of the Purchaser, no Person has threatened to commence any Proceeding that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Transactions. (b) No event has occurred, and no claim, dispute or other condition or circumstance exists, that might directly or indirectly give rise to or serve as a basis for the commencement of any Proceeding of the type described in Section 5.05(a). (c) There is no proposed Order that, if issued or otherwise put into effect may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the Transactions. Section 5.6 Sale of Exchangeable Shares Valid Assuming the accuracy of the representations and warranties of the Company and the Selling Shareholders contained in Section 4.08, the offer and sale of the Exchangeable Shares and the issuance of the InfoCast Exchange Stock upon the exchange thereof in accordance with the Share Exchange Agreement will be exempt from the registration requirements of the U.S. Securities Act and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws. The issuance of the Exchangeable Shares to the Selling Shareholders is exempt from the prospectus requirements of the Ontario Act. Neither the Purchaser nor any agent on behalf of the Purchaser has solicited or will solicit any offers to sell or has offered to sell or will offer to sell all or any part of the Exchangeable Shares or the InfoCast Exchange Stock to any person or persons so as to bring the offer or sale of the Exchangeable Shares or the InfoCast Exchange Stock to the Selling Shareholders within the registration provisions of the U.S. Securities Act or any state securities laws. Section 5.7 Investment Representations 25 (a) The Purchaser understands that none of the Purchased Shares has been registered under the U.S. Securities Act. The Purchaser also understands that the Purchased Shares are being offered and sold pursuant to an exemption from registration contained in the U.S. Securities Act and upon an exemption from the prospectus requirements of the Ontario Act based in part upon the Purchaser's representations contained in this Agreement. (b) The directors of the Purchaser have substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that they are capable of evaluating the merits and risks of its investment in the Company on behalf of the Purchaser and have the capacity to protect the Purchaser=s interests. The Purchaser must bear the economic risk of this investment indefinitely unless the Purchased Shares are registered pursuant to the U.S. Securities Act or qualified for distribution by prospectus in Canada, or an exemption from registration or prospectus requirements is available. The Purchaser understands that there is no assurance that any exemption from registration under the U.S. Securities Act or from the prospectus requirements of Canadian securities legislation will be available and that, even if available, such exemption may not allow Purchaser to transfer all or any portion of the Purchased Shares under the circumstances, in the amounts or at the times Purchaser might propose. (c) The Purchaser is acquiring the Purchased Shares for the Purchaser's own account for investment only, and not with the current intention of making a public distribution thereof. (d) The Purchaser represents that by reason of its, or of its management's business or financial experience, the Purchaser has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement. Purchaser is not a corporation, partnership or other entity specifically formed for the purpose of consummating this transaction. (e) The Purchaser acknowledges that it is an accredited investor as that term is defined in Rule 50 1(a) of Regulation D, promulgated pursuant to the Securities Act. Section 5.8 Consents All consents, approvals, orders, or authorizations of, or registration, qualification, designation, declaration or filing with any governmental or banking authority required on the part of Purchaser in connection with the consummation of the transactions contemplated in this Agreement have been or shall have been obtained prior to and shall be effective as of the Closing. 26 ARTICLE VI PRE-CLOSING COVENANTS OF THE COMPANY AND THE SELLING SHAREHOLDERS Section 6.1 Access and Investigation The Company shall ensure that, at all times during the Pre-Closing Period: (a) The Company and its Representatives provide the Purchaser and its Representatives with free and complete access to the Company's Representatives, personnel and assets and to all existing books, records, Tax Returns, work papers and other documents and information relating to the Company; (b) The Company and its Representatives provide the Purchaser and its Representatives with such copies of existing books, records, Tax Returns, work papers and other documents and information relating to the Company as the Purchaser may request in good faith; and (c) The Company and its Representatives compile and provide the Purchaser and its Representations with such additional financial, operating and other data and information regarding the Company as the Purchaser may request in good faith. Section 6.2 Operation of Business The Company and the Selling Shareholders shall ensure that, during the Pre-Closing Period: (a) The Company conducts its operations exclusively in the Ordinary Course of Business and in the same manner as such operations have been conducted prior to the date of this Agreement; (b) The Company preserves intact its current business organization, keeps available the services of its current officers and employees and maintains its relations and good will with all suppliers, customers, landlords, creditors, licensors, licensees, employees and other Persons having business relationships with the Company; (c) The Company's officers confer regularly with the Purchaser concerning operational matters and otherwise report regularly to the Purchaser concerning the status of the Company's business, condition, assets, liabilities, operations, financial performance and prospects; (d) The Company immediately notifies the Purchaser of any inquiry, proposal or offer from any Person relating to any Acquisition Transaction; 27 (e) The Company and its officers use their Best Efforts to cause the Company to operate profitably and to maximize its net income; (f) The Company does not declare, accrue, set aside or pay any dividend or make any other distribution in respect of any shares in its capital, and does not repurchase, redeem or otherwise reacquire any such shares or other securities (except as expressly contemplated by this Agreement); (g) The Company does not sell or otherwise issue any shares or any other securities; (h) The Company does not amend its articles of incorporation or bylaws, and does not effect or become a party to any Acquisition Transaction, reclassification of shares, share split, reverse share split or similar transaction; (i) The Company does not form any subsidiary or acquire any equity interest or other interest in any other Entity; (j) The Company does not enter into or permit any of the assets owned or used by the Company to become subject to any Lien; (k) The Company does not incur, assume or otherwise become subject to any Liability, except for current liabilities (of the type required to be reflected in the "liabilities" column of a balance sheet prepared in accordance with GAAP) incurred in the Ordinary Course of Business; (l) The Company does not establish or adopt any employee benefit plan, and does not pay any bonus or make any profit sharing or similar payment to, or increase the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers or employees; (m) The Company does not change any of its methods of accounting or accounting practices in any respect; (n) The Company does not make any Tax election; (o) The Company does not commence any Proceeding; (p) The Company does not enter into any transaction or take any other action of the type referred to in Section 4.23; (q) The Company does not enter into any transaction or take any other action outside the Ordinary Course of Business; 28 (r) The Company does not enter into any transaction or take any other action that might cause or constitute a Breach of any representation or warranty made by the Company or any of the Selling Shareholders in this Agreement or in any other Transaction Document; and (s) The Company does not agree, commit or offer (in writing or otherwise), and does not attempt, to take any of the actions described in clauses (g) through (t) of this Section 6.02. Section 6.3 Filings and Consents The Company and the Selling Shareholders shall ensure that: (a) each filing or notice required to be made or given (pursuant to any applicable Requirement of Law, Order or Material Contract, or otherwise) by the Company or any of the Selling Shareholders in connection with the execution and delivery of any of the Transaction Documents or in connection with the consummation or performance of any of the Transactions (including each of the filings and notices identified in Schedule 4.05) is made or given as soon as possible after the date of this Agreement; (b) each Consent required to be obtained (pursuant to any applicable Requirement of Law, Order or Material Contract, or otherwise) by the Company or any of the Selling Shareholders in connection with the execution and delivery of any of the Transactional Documents or in connection with the consummation or performance of any of the Transactions (including each of the Consents identified in Schedule 4.05) is obtained as soon as possible after the date of this Agreement and remains in full force and effect through the Closing Date; (c) The Company promptly delivers to the Purchaser a copy of each filing made, each notice given and each Consent obtained by the Company or any Selling Shareholders during the Pre-Closing Period; and (d) during the Pre-Closing Period, the Company and its Representatives cooperate with the Purchaser and with the Purchaser's Representatives, and prepare and make available such documents and take such other actions as the Purchaser may request in good faith, in connection with any filing, notice or Consent that the Purchaser is required or elects to make, give or obtain. Section 6.4 Notification of Events or Conditions During the Pre-Closing Period, the Company and the Selling Shareholders shall promptly notify the Purchaser in writing of: (a) the discovery by the Company or any of the Selling Shareholders of any event, condition, fact or circumstance that occurred or existed on or prior to the date of this Agreement and that caused or constitutes a Breach of any representation or warranty made by the Company or any of the Selling Shareholders in this Agreement; 29 (b) any event, condition, fact or circumstance that occurs, arises or exists after the date of this Agreement and that would cause or constitute a Breach of any representation or warranty made by the Company or any of the Selling Shareholders in this Agreement if (A) such representation or warranty had been made as of the time of the occurrence, existence or discovery of such event, condition, fact or circumstance, or (B) such event, condition, fact or circumstance had occurred, arisen or existed on or prior to the date of this Agreement; (c) any Breach of any covenant or obligation of the Company or any of the Selling Shareholders; and (d) any event, condition, fact or circumstance that may make the timely satisfaction of any of the conditions set forth in Section 12 impossible or unlikely. Section 6.5 No Negotiation The Company and the Selling Shareholders shall ensure that, during the Pre-Closing Period, neither the Company nor any of the Company's Representatives directly or indirectly: (a) solicits or encourages the initiation of any inquiry, proposal or offer from any Person (other than the Purchaser) relating to any Acquisition Transaction; (b) participates in any discussions or negotiations with, or provides any non public information to, any Person (other than the Purchaser) relating to any Acquisition Transaction; or (c) considers the merits of any unsolicited inquiry, proposal or offer from any Person (other than the Purchaser) relating to any Acquisition Transaction. Section 6.6 Best Efforts During the Pre-Closing Period, the Company and the Selling Shareholders shall use their respective Best Efforts to cause the conditions set forth in Articles VIII and Article IX to be satisfied on a timely basis, and shall not take any action or omit to take any action, the taking or omission of which would or could reasonably be expected to result in any of the representations and warranties set forth in this Agreement or any of the other Transaction Documents becoming untrue, in any of the conditions of Closing set forth in Article VIII or Article IX not being satisfied or in the business of the Company becoming materially less valuable. Section 6.7 Confidentiality The Company and the Selling Shareholders shall ensure that, during the Pre-Closing Period: 30 (a) the Company and its Representatives keep strictly confidential the existence and terms of this Agreement; (b) neither the Company nor any of its Representatives issues or disseminates any press release or other publicity or otherwise makes any disclosure of any nature (to any of the Company's suppliers, customers, landlords, creditors or employees or to any other Person) regarding any of the Transactions, except to employees of the Company involved in the consummation of the Transactions or to the extent that the Company is required by law to make any such disclosure regarding the Transactions; and (c) if the Company is required by law to make any disclosure regarding the Transactions, the Company advises the Purchaser, at least five business days before making such disclosure, of the nature and content of the intended disclosure. ARTICLE VII PRE-CLOSING COVENANTS OF THE PURCHASER Section 7.1 Filings and Consents The Purchaser shall ensure that: (a) each filing or notice required to be made or given (pursuant to any applicable Requirement of Law or Order) by the Purchaser in connection with the execution and delivery of any of the Transaction Documents or in connection with the consummation or performance of any of the Transactions is made or given as soon as possible after the date of this Agreement; (b) each Consent required to be obtained (pursuant to any applicable Requirement of Law or Order) by the Purchaser in connection with the execution and delivery of any of the Transaction Documents or in connection with the consummation or performance of any of the Transactions is obtained as soon as possible after the date of this Agreement and remains in full force and effect through the Closing Date; (c) the Purchaser promptly delivers to the Company a copy of each filing made, each notice given and each Consent referred to in this Section 7.01 obtained by the Purchaser during the Pre-Closing Period; and (d) during the Pre-Closing Period, the Purchaser and its Representatives cooperate with the Company, the Selling Shareholders and their respective Representatives, and prepare and make available such documents and take such other actions as the Company or any of the Selling Shareholder may request in good faith, in connection with any filing, notice or Consent that the Company or the Selling Shareholders is required or elects to make, give or obtain. 31 ARTICLE VIII CONDITIONS TO PURCHASER'S OBLIGATIONS AT CLOSING The Purchaser's obligation to purchase the Purchased Shares and to take the other actions required to be taken by the Purchaser at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions: Section 8.1 Representations and Warranties; Performance of Obligations The representations and warranties of the Company and the Selling Shareholders contained in this Agreement and in each of the other Transaction Documents shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date and the Company shall have performed in all material respects all obligations herein required to be performed or observed by it on or prior to the Closing. Section 8.2 Consents, Permits, Waivers and Approvals The Company, the Selling Shareholders, the Purchaser and InfoCast shall have obtained any and all consents, permits, waivers and approvals necessary or appropriate for consummation of the transactions contemplated hereunder (except for such as may be properly obtained subsequent to the Closing). Section 8.3 Delivery of Certificates Evidencing Purchased Shares The Selling Shareholders shall have delivered to the Purchaser certificates representing 100% of the Purchased Shares, duly endorsed for transfer. Section 8.4 Compliance Certificate The Company shall have delivered to the Purchaser a certificate, executed by the President of the Company, dated the Closing Date, setting forth the Company's representation and warranty that (i) each of the representations and warranties made by the Company and each of the Selling Shareholders in this Agreement was accurate in all material respects as of the date of this Agreement, (ii) each of the representations and warranties made by the Company and each of the Selling Shareholders in this Agreement and in each of the other Transaction Documents is accurate in all material respects as of the Closing, and (iii) each of the covenants and obligations that the Company and each of the Selling Shareholders is required to have complied with or performed pursuant to this Agreement at or prior to the Closing has been duly complied with and performed in all material respects. 32 Section 8.5 Corporate Documents The Company shall have delivered to the Purchaser or its counsel, copies of all corporate documents of the Company as the Purchaser shall reasonably request. Section 8.6 Share Exchange Agreement Each of the Selling Shareholders shall have duly executed and delivered to the Purchaser and InfoCast the Share Exchange Agreement. Section 8.7 Proceedings and Documents All corporate and other proceedings in connection with the transactions contemplated at the Closing hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchaser and its counsel, and the Purchaser and its counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. Section 8.8 Releases Each of the Selling Shareholders shall have delivered to the Purchaser releases satisfactory to the Purchaser. ARTICLE IX CONDITIONS TO THE SELLING STOCKHOLDER'S OBLIGATIONS AT CLOSING The Selling Shareholders' obligation to sell, assign, transfer and deliver the Purchased Shares to the Purchaser and the Selling Shareholders' obligation to take the other actions required to be taken on their part at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions: Section 9.1 Representations and Warranties; Performance of Obligations The representations and warranties of the Purchaser contained in this Agreement and in each of the other Transaction documents shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date and the Purchaser shall have performed in all material respects all obligations herein required to be performed or observed by it on or prior to the Closing. 33 Section 9.2 Consents, Permits, Waivers and Approvals The Company, the Selling Shareholders, the Purchaser and InfoCast shall have obtained any and all consents, permits, waivers and approvals necessary or appropriate for consummation of the transactions contemplated hereunder (except for such as may be properly obtained subsequent to the Closing). Section 9.3 Delivery of Certificates Evidencing Exchangeable Shares The Purchaser shall, subject to Section 4.24(f), have delivered to the Selling Shareholders certificates representing the Exchangeable Shares specified in Section 2.02(b), bearing such legends as counsel may advise are necessary or desirable. Section 9.4 Compliance Certificate The Purchaser shall have delivered to the Company and each of the Selling Shareholders a certificate, executed by the President of the Purchaser, dated the Closing Date, setting forth the Purchaser's representation and warranty that (i) each of the representations and warranties made by the Purchaser in this Agreement was accurate in all material respects as of the date of this Agreement, (ii) each of the representations and warranties made by the Purchaser in this Agreement and in each of the other Transaction Documents is accurate in all material respects as of the Closing, and (iii) each of the covenants and obligations that the Purchaser is required to have complied with or performed pursuant to this Agreement at or prior to the Closing has been duly complied with and performed in all material respects. Section 9.5 Corporate Documents The Company shall have delivered to the Selling Shareholders or its counsel, copies of all corporate documents of the Company as the Purchaser shall reasonably request. Section 9.6 Share Exchange Agreement Each of the Purchaser and InfoCast shall have duly executed and delivered to each Selling Shareholder the Share Exchange Agreement. Section 9.7 Proceedings and Documents All corporate and other proceedings in connection with the transactions contemplated at the Closing hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Company, the Selling Shareholders and their respective counsel, and the Company, the Selling Shareholders and their respective counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. 34 ARTICLE X INDEMNIFICATION, ETC. Section 10.1 Survival of Representations and Warranties The representations and warranties of each party contained in this Agreement and in each of the other Transaction Documents shall survive the Closing for a period of one year; provided that (i) each of the representations contained in Section 4.17, and (ii) any representation the Breach of which the Company or any Selling Shareholder had Knowledge on or prior to the Closing and any covenants or obligations to be performed after the Closing, shall, in each case, survive and continue for the applicable statute of limitation period or periods legally applicable to them. Section 10.2 Indemnification by Selling Shareholders (a) Each of the Selling Shareholders shall, jointly and severally, hold harmless and indemnify the Purchaser and its officers, directors, employees, agents and representatives (collectively, the "Purchaser-Related Indemnities" and individually each a "Purchaser-Related Indemnitee") from and against, and shall compensate and reimburse each of the Purchaser Indemnities for, any Damages which are suffered or incurred by any of the Purchaser-Related Indemnities or to which any of the Purchaser-Related Indemnities may otherwise become subject at any time (regardless of whether or not such Damages relate to any third party claim) and which arise from or as a direct or indirect result of, or are directly or indirectly connected with: (i) any Breach of any representation or warranty made by the Company or any of the Selling Shareholders in this Agreement or in any of the other Transaction Documents; (ii) any Breach of any covenant or obligation of the Company or any of the Selling Shareholders; (iii) any Proceeding relating to any Breach, or Liability or matter of the type referred to in any of the clauses listed above (including any Proceeding commenced by any Purchaser-Related Indemnitee for the purpose of enforcing any of its rights under this Article X); or (iv) the failure by the Company or any Selling Shareholder to obtain any necessary consents in connection with any Material Contracts. 35 (b) Each Selling Shareholder acknowledges and agrees that, if there is any Breach of any representation, warranty or other provision relating to the Company or the Company's business, condition, assets, liabilities, operations, financial performance, net income or prospects (or any aspect or portion thereof), then the Purchaser itself shall be deemed, by virtue of its ownership of Purchased Shares, to have incurred Damages as a result of such Breach or Liability. Nothing contained in this Section 10.02(b) shall have the effect of (i) limiting the circumstances under which the Purchaser may otherwise be deemed to have incurred Damages for purposes of this Agreement, (ii) limiting the other types of Damages that the Purchaser may be deemed to have incurred (whether in connection with any such Breach or Liability or otherwise), or (iii) limiting the rights of the Company under this Section 10.02. Section 10.3 Indemnification by the Purchaser (a) The Purchaser shall hold harmless and indemnify each Selling Shareholder and each of their respective agents and representatives (collectively, the "Selling Shareholder-Related Indemnities" and individually each a "Selling Shareholder-Related Indemnitee") from and against, and shall compensate and reimburse each of the Selling Shareholder-Related Indemnities for, any Damages which are suffered or incurred by any of the Selling Shareholder-Related Indemnities or to which any of the Selling Shareholder-Related Indemnities may otherwise become subject at any time (regardless of whether or not such Damages relate to any third party claim) and which arise from or as a direct or indirect result of, or are directly or indirectly connected with: (i) any Breach of any representation or warranty made by the Purchaser in this Agreement or in any of the other Transaction Documents; (ii) any Breach of any covenant or obligation of the Purchaser; or (iii) any Proceeding relating to any Breach, or Liability or matter of the type referred to in any of the clauses listed above (including any Proceeding commenced by any Selling Shareholder-Related Indemnitee for the purpose of enforcing any of its rights under this Section 10.03). Section 10.4 Interest Any party (the "Indemnifying Party") that is required to indemnify any other Person (the "Indemnified Party") pursuant to this Article X with respect to any Damages shall also be required to pay such Indemnified Party interest on the amount of such Damages (for the period commencing as of the date on which such Indemnified Party first incurred or otherwise became subject to such Damages and ending on the date on which the applicable indemnification payment is made by such party) at a rate per annum equal to 7%. 36 Section 10.5 Defense of Third Party Claims (a) In the event of the assertion or commencement by any Person of any claim or Proceeding (whether against the Purchaser, any Selling Shareholder, any other Indemnitee or any other Person) with respect to which any of the Company, any Selling Shareholder or the Purchaser, as an Indemnifying Party, may become obligated to indemnify, hold harmless, compensate or reimburse any Indemnitee pursuant to this Article X, the Indemnified Party shall reasonably promptly, following the Indemnified Party's actual knowledge thereof, notify such Indemnifying Party of such claim or Proceeding. The Indemnified Party shall have the right, at its election, to designate such Indemnifying Party to assume the defense of such claim or Proceeding at the sole expense of one or more of such Indemnifying Party. If the Indemnified Party so elects to designate an Indemnifying Parties to assume the defense of any such claim or Proceeding: (i) such Indemnifying Party shall proceed to defend such claim or Proceeding in a diligent manner with counsel satisfactory to the Indemnified Party; (ii) the Indemnifying Party shall keep the Indemnified Party informed of all material developments and events relating to such claim or Proceeding; (iii) the Indemnified Party shall have the right to participate in the defense of such claim or Proceeding at its sole expense, except that in the event the defense is not being conducted by the Indemnifying Party in a diligent manner as recommended by the Company's legal counsel, paragraph (b) below shall apply; and (iv) the Indemnifying Party shall not settle, adjust or compromise such claim or Proceeding without the prior written consent of the Indemnified Party. (b) If the Indemnified Party so proceeds with the defense of any such claim or Proceeding on its own: (i) all expenses incurred and relating to the defense of such claim or Proceeding (whether or not incurred by the Indemnified Party) shall be borne and paid exclusively by the Indemnifying Party; (ii) the Indemnifying Party shall make available to the Indemnified Party any documents and materials in the possession or control of the Indemnifying Party that may be necessary to the defense of such claim or Proceeding; (iii) the Indemnified Party shall keep the Indemnifying Party informed of all material developments and events relating to such claim or Proceeding; and 37 (iv) the Indemnified Party shall have the right to settle, adjust or compromise such claim or Proceeding with the consent of the Indemnifying Party, provided, that the Indemnifying Party shall not unreasonably withhold such consent. ARTICLE XI MISCELLANEOUS Section 11.1 Tax Elections The Selling Shareholders and the Purchaser shall elect in prescribed form and manner to have the provisions of subsection 85(1) of the Tax Act apply to the transfer of the Purchased Shares and the Selling Shareholders shall through the facilities of KPMG, deliver to and file the same with Revenue Canada, Customs, Excise and Taxation within the time prescribed in accordance with the Tax Act. The Selling Shareholders shall pay any late filing fees or penalties and shall provide the Purchaser with a copy of such forms as filed. For this purpose the Parties shall elect amounts in respect of such Purchased Shares equal to an amount to be determined by the Selling Shareholders in accordance with the limits set out in the Tax Act. The Selling Shareholders and the Purchaser shall file all necessary elections or filings under all corresponding provincial legislation to make the transfer effective on the same basis as contemplated under the Tax Act. Section 11.2 Termination This Agreement may be terminated: (a) by the written agreement of each of the Parties; (b) by the Purchaser, the Company or any Selling Shareholder if there shall be in effect a non-appealable order of a court of competent jurisdiction permanently prohibiting the consummation of the Transactions; or (c) by the Purchaser, the Company or any Selling Shareholder if the Closing shall not have occurred on or before February 17, 1999. Section 11.3 Governing Law This Agreement shall be construed in accordance with, and governed in all respects by, the laws of the Province of Ontario. 38 Section 11.4 Jurisdiction; Venue Any legal action or other legal proceeding relating to this Agreement or the enforcement of any provision of this Agreement may be brought or otherwise commenced in any provincial or federal court located in the Province of Ontario, Canada. Each party to this Agreement: (a) expressly and irrevocably consents and submits to the jurisdiction of each provincial and federal court located in the Province of Ontario, Canada (and each appellate court located in the Province of Ontario, Canada) in connection with any such legal proceeding; (b) agrees that each provincial and federal court located in the Province of Ontario, Canada shall be deemed to be a convenient forum; and (c) agrees not to assert (by way of motion, as a defense or otherwise), in any such legal proceeding commenced in any provincial or federal court located in the Province of Ontario, Canada, any claim that such party is not subject personally to the jurisdiction of such court, that such legal proceeding has been brought in an inconvenient forum, that the venue of such proceeding is improper or that this Agreement or the subject matter of this Agreement may not be enforced in or by such court. Section 11.5 Successors and Assigns This Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of each of the parties hereto. No Party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other Parties; provided, however, that the Purchaser may (i) assign any or all of its rights and interests hereunder to one or more of its affiliates and (ii) designate one or more of its affiliates to perform its obligations hereunder (in any or both of which cases the Purchaser nonetheless shall remain responsible for the performance of all of its obligations hereunder). Section 11.6 Entire Agreement This Agreement, the other Transaction Documents and the other documents delivered pursuant hereto and thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 38 Section 11.7 Severability In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 11.8 Amendment and Waiver (a) This Agreement may be amended or modified only upon the mutual written consent of the Company, the Purchaser and each of the Selling Shareholders. (b) Any amendment, modification or waiver effected pursuant to this Section 11.07 shall be binding upon the Company, Purchaser and each of the Selling Shareholders. Section 11.9 Notices All notices required or permitted hereunder shall be in writing and shall be deemed effectively given (a) upon personal delivery to the party to be notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the parties hereto at the respective addresses set forth below, or as notified by such party from time to time at least ten (10) days prior to the effectiveness of such notice: if to the Company: Virtual Performance Systems Inc. 1 Richmond Street West Toronto, Ontario M5H 3W4 Canada Attention: A. T. Griffis Telecopier: (416) 867-1360 with a copy to: Boyle & Co. 36 Lombard Street Suite 600 Toronto, Ontario M5C 2X3 Attention: James Boyle Telecopier: (416) 868-6620 39 if to the Selling Shareholders: Shareholders of Virtual Performance Systems Inc. c/o Boyle & Co. 36 Lombard Street Suite 600 Toronto, Ontario M5C 2X3 Attention: James Boyle Telecopier: (416) 868-6620 if to the Purchaser: InfoCast Canada Limited 1 Richmond Street West, Suite 901 Toronto, Canada M5H 3W4 Attention: A.T. Griffis Telecopier: (416) 867-9320 with a copy to: M. Craig G. Brown Aird & Berlis 181 Bay Street Suite 1800 Toronto, Canada M5J 2T9 Section 11.10 Counterparts This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. Section 11.11 Attorney=s Fees InfoCast shall bear all reasonable legal fees and expenses incurred by the Company's Canadian counsel, Aird & Berlis, in connection with the negotiation and closing of the transaction contemplated hereby. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. Section 11.12 Delays or Omissions No delay or omission to exercise any right, power or remedy accruing to any party hereto, upon any breach or default of any other party hereto, shall impair any such right, power or remedy of such party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part 40 of any party of any holder of any breach or default under this Agreement, or any waiver on the part of any holder of any provisions or conditions of this Agreement, must be made in writing and shall be effective only to the extent specifically set forth in such writing. Section 11.13 Remedies Cumulative All remedies, either under this Agreement or by law or otherwise afforded to any party hereto, shall be cumulative and not alternative. Section 11.14 No Contribution Each Selling Shareholder hereby waives, and acknowledges and agrees that it shall not have and shall not exercise or assert or attempt to exercise or assert, any right of contribution or right of indemnity or any other right or remedy against the Company in connection with any indemnification obligation or any other Liability to which such Selling Shareholder may become subject under any of the Transactional Documents or otherwise in connection with any of the Transactions. Each Selling Shareholder further acknowledges that the waivers, acknowledgments and agreements of the Selling Shareholders contained in this Section 11.14 are an essential inducement to the Purchaser in entering into this Agreement and agreeing to consummate the Transactions. Section 11.15 Ontario Securities Law Matters The Purchaser hereby covenants and agrees to use its best efforts to obtain, as promptly as practicable following the Closing Date, a discretionary ruling of the Ontario Securities Commission granting an exemption from the prospectus and registration requirements of the Ontario Act in connection with any and all trades of securities contemplated by or under the terms of the Exchangeable Shares or the Share Exchange Agreement, on such terms and in such form as is customary for transactions of this nature. The Selling Shareholders covenant and agree not to exercise any rights arising under the terms of the Exchangeable Shares or the Share Exchange Agreement that would cause the Purchaser or InfoCast to be required to effect a trade in securities that would constitute a contravention of the Ontario Act (i) under any circumstances, until 120 days following the Closing Date; and (ii) at any time thereafter, provided that the Purchaser agrees to make a cash payment to the holder of the Exchangeable Shares of an amount equal to the fair market value of the InfoCast Exchange Stock the holder would have obtained on exercise but for the provisions of this paragraph, which amount shall be determined by good faith negotiation or, failing agreement, by binding arbitration. This Section shall also operate as a waiver of the rights of a holder of Exchangeable Shares under the terms thereof such that no holder of Exchangeable Shares may exercise such rights in a manner contrary to the covenants provided for in this Section. Each Selling Shareholder agrees not to transfer any Exchangeable Shares to any person who does not first agree to be bound by the provisions of this Section, and to cause any subsequent transferee to become so bound as a condition of any subsequent transfer. 41 IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date set forth in the first paragraph hereof. INFOCAST CANADA LIMITED By: /s/ (signature is illegible) -------------------------------- Name: Title: VIRTUAL PERFORMANCE SYSTEMS INC. By: /s/ (signature is illegible) -------------------------------- Name: Title: SELLING SHAREHOLDERS: Witness DONALD JEFFERY, in trust Witness J.E. BRITT DYSART, in trust Witness DANA GILMAN Witness WILLIAM LOVE Witness DAN SKALING 42 Witness EDWARD TURNER EASTCAN MEDIA GROUP LTD. Per: Authorized Signatory GRIFFIS INTERNATIONAL LIMITED Per: Authorized Signatory ADVANCED SYSTEMS COMPUTER CONSULTANTS INC. Per: Authorized Signatory VIEW MEDIA INTERNATIONAL CORPORATION Per: Authorized Signatory ZIPCO INC. Per: Authorized Signatory 43 EX-10.29 44 LETTER AGREEMENT INFOCAST CORPORATION Suite 902 1 Richmond Street West Toronto, Ontario M5H 3W4 May 18, 1999 Mr. Satish Kumeta Suite 310 1050 Castlefield Avenue Toronto, Ontario M6B 1E7 Dear Sirs: InfoCast Corporation ("InfoCast") writes to set out the terms of the agreement between InfoCast and Satish Kumeta ("Kumeta") relating to restructuring of Kumeta's relationships with InfoCast, InfoCast Canada Corporation ("InfoCast Canada"), Virtual Performance Systems Inc. ("VPS") and Treetop Capital Inc. ("Treetop"). Background 1. Kumeta was a shareholder and director of VPS. 2. VPS amalgamated with its wholly owned subsidiary, Cheltenham Technologies Corporation ("Cheltenham"). Cheltenham Technologies (Bermuda) Corporation ("Cheltenham Bermuda") was a wholly owned subsidiary of Cheltenham which became a wholly owned subsidiary of VPS upon completion of the amalgamation. 3. VPS or Cheltenham Bermuda acquired from Kumeta, directly and indirectly, or Kumeta developed for VPS or Cheltenham Bermuda, directly or indirectly, certain intellectual property consisting of technology, software programs, source code, programming, algorithms and developments, whether in written form or electronic form, relating to: (a) remote or virtual banking and transaction processing capabilities; (b) virtual call centre; and (c) conversion and delivery of training and educational content. -1- 4. InfoCast Canada is a subsidiary of InfoCast. 5. InfoCast Canada acquired all the outstanding shares of VPS in consideration of the issuance of exchangeable shares of InfoCast Canada, exchangeable for shares of InfoCast in certain circumstances. Kumeta received 289,742 exchangeable shares of InfoCast Canada exchangeable for 289,742 shares of InfoCast. 6. Kumeta is a beneficial shareholder of Treetop. Treetop holds 9,000,000 shares of InfoCast. All the issued and outstanding shares of Treetop are held by Boyle & Company, In Trust as nominee for the beneficial owners of the Treetop shares. 7. Kumeta and InfoCast have decided to restructure Kumeta's relationship with InfoCast, InfoCast Canada, VPS, Cheltenham Bermuda and Treetop. Terms In consideration of the mutual covenants and agreements contained in this letter agreement and other valuable and good consideration, Kumeta and InfoCast agree as follows: 8. Kumeta has resigned as officer, director and employee of InfoCast, VPS and Cheltenham Bermuda and terminated his consulting agreements, or arrangements with InfoCast and VPS. 9. InfoCast shall retain Kumeta as a consultant for a period of twelve months commencing April 1, 1999 in respect of which InfoCast shall pay Kumeta a monthly retainer of CDN$7,500 per month for six days per month. 10. InfoCast shall pay Kumeta concurrently with the execution hereof the sum of CDN$75,000. 11. Kumeta consents to the cancellation of stock options granted by InfoCast to Kumeta, other than options to acquire 100,000 common shares of InfoCast exercisable at a price of $1.00 on or before February 8, 2002, which InfoCast and Kumeta acknowledge may be subject to regulatory approval or disapproval by the Securities Exchange Commission (United States) in connection with InfoCast's Form 10 registration under the Securities Exchange Act (1934) (United States). 12. Kumeta acknowledges and agrees that he is the beneficial owner of 211,000 shares of Treetop which are held on his behalf by Boyle & Company, in trust as nominee, representing an indirect beneficial ownership in 211,000 common shares of InfoCast held by Treetop. 13. (a) InfoCast agrees to transfer and assign or cause Cheltenham Bermuda to transfer and assign to Kumetech Consulting Ltd. all intellectual property, including technology, software programs, source code, programming, algorithms and developments, whether in written form or electronic form, relating to remote or virtual banking and -2- transaction processing capabilities in consideration of Kumetech Consulting Ltd. paying to InfoCast CDN$1.00. (b) Kumeta agrees to cause Kumetech Consulting Ltd. to grant to InfoCast a perpetual non-exclusive royalty free license to use for its internal purposes only any such intellectual property transferred and assigned to Kumeta Consulting Ltd.; including any enhancements or developments of and to the intellectual property and any enhancements or developments of an to the intellectual property transferred to Kumetech Consulting Ltd. 14. Kumeta agrees to cause to be transferred and assigned to InfoCast, InfoCast Canada or VPS, as InfoCast may direct, all intellectual property, including technology, software, programs, sources code, programming, algorithms and direction and developments and all written, electronic or other recorded forms thereof, relating to Virtual Call Center and conversion and delivery of training and educational content in consideration of InfoCast entering into this agreement. 15. (a) In consideration of the mutual covenants contained in this Agreement InfoCast, on its own behalf and on behalf of VPS, InfoCast Canada, Cheltenham Bermuda and Treetop, their respective officers, directors, servants, agents, successors and assigns, on the one hand, and Kumeta for himself and on behalf of Advanced Systems Computer Consultants Inc. on the other hand, hereby remise, release and forever discharge each from the other from any and all manner of actions, causes of action, suits, debts, duties, accounts, bonds, covenants, warranties, contracts, claims and demands of every nature or kind existing at the present time; and (b) It is understood and agreed that this mutual release does not in anyway affect each parties' obligations and liability under this Agreement. 16. Kumeta acknowledges and agrees that other than as set out herein, he has no and shall have not ongoing claims or other rights to any compensation from InfoCast, InfoCast Canada, VPS or Cheltenham Bermuda or Treetop or any of their respective officers, directors or shareholders, any claims or rights to any assets or property of any of InfoCast, InfoCast Canada, VPS, or Cheltenham Bermuda, including without limitation, any intellectual property, technology, software programs, source code, programming, algorithms or developments, whether in written form or electronic form. 17. Kumeta acknowledges and agrees that all information concerning InfoCast, InfoCast Canada, VPS and Cheltenham Bermuda, other than relating to remote or virtual banking and transaction processing capabilities as provided herein, and all information relating to the property, business or affairs of InfoCast, VPS or Cheltenham Bermuda disclosed to him consists of proprietary and confidential information and trade secrets of InfoCast, InfoCast Canada, VPS and Cheltenham Bermuda, as the case may be, and that any disclosure or use -3- thereof by him or any other person will cause irreparable harm to InfoCast, InfoCast Canada, VPS or Cheltenham Bermuda. Kumeta agrees that he shall not at any time or under any circumstances, directly or indirectly, reveal, disclose or otherwise make available or known to any person or use or obtain any benefit from, directly or indirectly, any confidential information which has been disclosed or otherwise comes into his possession as a result of his prior relationships with InfoCast, InfoCast Canada, VPS or Cheltenham Bermuda. 18. Kumeta covenants and agrees that he shall not, directly or indirectly, either alone in conjunction with any person, in any capacity whatsoever, carry on or be engaged in or interested in or employed by any person or business which competes with InfoCast or VPS in the virtual call center and/or distance learning businesses conducted or which may be conducted by InfoCast and its subsidiary and affiliates for a period of one year. 19. Otherwise then as provided in the foregoing sections, InfoCast acknowledges that there are and will be no restrictions on the activities which Kumeta may engage in from and after the date hereof. General 20. Whenever used in this Agreement, words importing the singular number only shall include the plural, and vice versa, and words importing the masculine gender shall include the feminine gender. 21. Time shall in all respects be of the essence of this Agreement. 22. The insertion of headings and the division of this Agreement into articles, sections, paragraphs, clauses or schedules are for convenience of reference only and shall not affect or be utilized in the construction or the interpretation hereof. 23. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and the parties hereby attorn to the jurisdiction of the courts of the Province of Ontario. 24. All dollar amounts expressed herein refer to lawful currency of Canada. 25. Any notice, document or other communication required or permitted by this Agreement to be given by a party hereto shall be in writing and is sufficiently given if delivered personally, or if sent by prepaid ordinary mail posted in Canada, or if transmitted by any form of telecommunication (which is tested prior to transmission, confirms to the sender the receipt of the entire transmission by the recipient and reproduces a complete written version of the transmission at the point of reception) to such party addressed as set out on the face page hereof. Notice so mailed shall be deemed to have been given on the third business day after deposit in a post office or public letterbox. Neither party shall mail any notice, request or -4- other communication hereunder during any period in which Canadian postal workers are on strike or if such strike is imminent and may reasonably be anticipated to affect the normal delivery of mail. Notice transmitted by a form of recorded telecommunication during normal business hours on a business day (9:00 a.m. to 5:00 p.m. local time at the place of receipt) shall be deemed to have been given on the day of transmission or, in the case of notice transmitted outside of normal business hours shall be deemed to have been given on the first Business day after the day of transmission; [provided that immediately following such transmission such notice is given by personal delivery]. Notice delivered personally shall be deemed to have been given on the day it was delivered. Any party may from time to time notify the others in the manner provided herein of any change of address which thereafter, until changed by like notice, shall be the address of such party for all purposes hereof. 26. The parties agree to execute and deliver to each other such further instruments and other written assurances and to do or cause to be done such further acts or things as may be necessary or convenient to carry out and give effect to the intent of this Agreement or as any of the parties may reasonably request in order to carry out the transactions contemplated herein. 27. This Agreement sets forth the entire agreement among the parties hereto pertaining to the specific subject matter hereof and replaces and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties hereto, and there are no warranties, representations or other agreements, whether oral or written, express or implied, statutory or otherwise, between the parties hereto in connection with the subject matter hereof except as specifically set forth herein. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. 28. Each of the provisions of this Agreement (and each part of each such provision) is severable from every other provision hereof (and every other part thereof). In the event that any provision (or part thereof) contained in this Agreement or the application thereof to any circumstance shall be invalid, illegal or unenforceable, in whole or in part, in any jurisdiction and to any extent: (a) the validity, legality or enforceability of such provision (or such part thereof) in any other jurisdiction and of the remaining provisions contained in this Agreement (or the remaining parts of such provision, as the case may be) shall not in any way be affected or impaired thereby; (b) the application of such provision (or such part thereof) to circumstances other than those as to which it is held invalid, illegal or unenforceable shall not in any way be affected or impaired thereby; -5- (c) such provision (or such part thereof) shall be severed from this Agreement and ineffective to the extent of such invalidity, illegality or unenforceability in such jurisdiction and in such circumstances; and (d) the remaining provisions of this Agreement (or the remaining parts of such provision, as the case may be) shall nevertheless remain in full force and effect. 29. This Agreement may be executed by the parties hereto in separate counterparts or duplicates each of which when so executed and delivered shall be an original, but all such counterparts or duplicates shall together constitute one and the same instrument. 30. This Agreement shall be binding upon and shall enure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, assigns and legal representatives. IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written. INFOCAST CORPORATION By: Signed, sealed and delivered in the presence of /s/ SATISH KUMETA --------------------------- SATISH KUMETA -6- EX-16.1 45 LETTER AGREEMENT September 3, 1999 Securities and Exchange Commission 450 5th Street N.W. Washington, D.C. 20549 Gentlemen: We have been furnished with a copy of the response to the Form 10 for the Changes in and Disagreements With Accountants on Accounting and Disclosure to be filed by our former client, Infocast Corporation (formerly Grant Reserve Corporation). We agree with the statements made in response to that Form 10 insofar as they relate to our Firm. Very truly yours, /s/ Jackson & Rhodes P.C. - ------------------------- Jackson & Rhodes P.C. EX-21.1 46 LIST OF SUBSIDIARIES OF THE COMPANY List of Subsidiaries of the Company Infocast Canada Corporation 50% Interest in Call Center Learning Solutions OnLine, Inc. Virtual Performance Systems, Inc. (subsidiary of Infocast Canada Corporation) Homebase Work Solutions Inc. (subsidiary of Infocast Canada Corporation) [Applied Courseware Technology Inc.] (subsidiary of Infocast Canada Corporation) Cheltenham Technologies (Bermuda) Corporation (subsidiary of Infocast Canada Corporation) Cheltenham Interactive Corporation (subsidiary of Infocast Canada Corporation) EX-23.1 47 CONSENTS CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the inclusion in this Registration Statement on Form 10 dated September 15, 1999 of our report, dated April 21, 1999 (except for Note 9[b] which is as of May 13, 1999 and Note 9[d] which is as of June 25, 1999), relating to the consolidated financial statements of InfoCast Corporation as of March 31, 1999, December 31, 1998 and December 31, 1997 and for the three-month period ended March 31, 1999, the year ended December 31, 1998, the 156-day period ended December 31, 1997 and the period from July 29, 1997 to March 31, 1999. /s/ Ernst & Young LLP Ernst & Young LLP Toronto, Canada September 15, 1999 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the inclusion in this Registration Statement on Form 10 dated September 15, 1999 of our report, dated June 11, 1999, relating to the financial statements of Homebase Work Solutions Ltd. as at March 31, 1999 and December 31, 1998 and for the three-month period ended March 31, 1999 and the 101-day period ended December 31, 1998. /s/ Ernst & Young LLP Ernst & Young LLP Toronto, Canada September 15, 1999 EX-23.2 48 CONSENTS CONSENT OF INDEPENDENT CERTIFIED GENERAL ACCOUNTANTS THE BOARD OF DIRECTORS: APPLIED COURSEWARE TECHNOLOGY INC. We consent to the use in the registration statement of our reports dated August 30, 1999 accompanying the financial statements of Applied Courseware Technology Inc. contained in such registration statements. /s/ Boudreau Porter Hetu & Associates ..................................... Boudreau Porter Hetu & Associates Moncton, New Brunswick September 14, 1999 CONSENT OF INDEPENDENT CERTIFIED GENERAL ACCOUNTANTS THE BOARD OF DIRECTORS: APPLIED COURSEWARE TECHNOLOGY INC. We consent to the use in the registration statement of our reports dated March 5, 1999 accompanying the financial statements of Applied Courseware Technology Inc. contained in such registration statements. /s/ Boudreau Porter Hetu & Associates ................................. Boudreau Porter Hetu & Associates Moncton, New Brunswick September 14, 1999 September 7, 1999 CONSENT OF INDEPENDENT CERTIFIED GENERAL ACCOUNTANTS THE BOARD OF DIRECTORS: APPLIED COURSEWARE TECHNOLOGY INC. We consent to the use in the registration statement of our reports dated December 4, 1997 accompanying the financial statements of Applied Courseware Technology Inc. contained in such registration statements. /s/ Boudreau Porter Hetu & Associates ................................. Boudreau Porter Hetu & Associates Moncton, New Brunswick September 7, 1997 EX-27.1 49 ARTICLE 5 FDS FOR FORM 10-12G
5 The schedule contains summary financial information extracted from Infocast Consolidated Financial Statements as of March 31, 1999 and is qualified in its entirety by reference to such Consolidated Financial Statements. 1 3-MOS MAR-31-1999 JAN-01-1999 MAR-31-1999 3,092,445 0 258,244 0 0 21,404 117,098 (9,706) 4,025,076 531,964 0 0 0 16,672 3,476,440 4,025,076 0 4,478 0 0 3,064,837 0 23,562 (3,083,921) 0 (3,083,921) 0 0 0 (3,083,921) (.27) (.27)
EX-27.2 50 ARTICLE 5 FDS FOR FORM 10-12G
5 The schedule contains summary financial information extracted from Infocast Consolidated Financial Statements as of December 31, 1998 and is qualified in its entirety by reference to such Consolidated Financial Statements. 1 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 25,595 0 34,713 0 0 15,225 23,045 (4,137) 143,467 640,134 0 0 0 0 (496,667) 143,467 0 43,446 0 0 467,318 0 0 (423,872) 0 (423,872) 0 0 0 (423,872) (.55) (.55)
EX-27.3 51 ARTICLE 5 FDS FOR FORM 10-12G
5 The schedule contains summary financial information extracted from Infocast Consolidated Financial Statements as of December 31, 1998 and is qualified in its entirety by reference to such Consolidated Financial Statements. 1 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 0 0 35,786 0 0 99 12,817 (1,362) 47,365 162,673 0 0 0 0 (115,308) 47,365 0 43,446 0 0 63,067 0 0 (19,621) 0 (19,621) 0 0 0 (19,621) (478.56) (478.56)
EX-27.4 52 ARTICLE 5 FDS FOR FORM 10-12G
5 The schedule contains summary financial information extracted from Infocast Consolidated Financial Statements as of December 31, 1997 and is qualified in its entirety by reference to such Consolidated Financial Statements. 1 6-MOS DEC-31-1997 JUL-29-1997 DEC-31-1997 301 0 16,286 0 0 38 12,405 (451) 28,604 123,063 0 0 0 0 (94,459) 28,604 0 3,508 0 0 99,669 0 0 (96,161) 0 (96,161) 0 0 0 (96,161) (2,345.40) (2,345.40)
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