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