SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 7, 2000
PARAMOUNT SERVICES CORP.
(Exact name of Registrant as specified in its charter)
Delaware 0-26277 98-0204758
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
Suite 450, 999 West Hastings Street
Vancouver, British Columbia
Canada V6C 2W2
(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code: (604) 633-2556
Suite 1650
Waterfront Centre, 200 Burrard Street
Vancouver, British Columbia
Canada V6C 3L6
(Former name or former address if changed since last report.)
<PAGE>
Item 1. Changes in Control of Registrant
On February 7, 2000 the Company acquired all of the issued and outstanding
shares of Wowtown.com, Inc. in exchange for 5,000,000 shares of the Company's
common stock.
Wowtown was incorporated on June 9, 1999. Wowtown's principal business
activities include establishing web sites and operating and maintaining computer
internet web sites for certain cities in the United States and Canada.
Wowtown has established its first fully operational website at
www.vancouverwow.com.
As of January 25, 1999 Wowtown employed three people on a full-time basis.
Following the acquisition of Wowtown Andrew Hromyk resigned as the
Company's president. The Company's new officers and directors are:
Name Position
David Packman President and a Director
Stephen C. Jackson Secretary and a Director
David Jackson Chief Executive Officer and
a Director
As a result of the acquisition of Wowtown the following persons are the
principal shareholders of the Company's common stock.
Shares Percentage
Name Owned Ownership
595796 B.C. Ltd. 5,000,000 (1) 68%
Bona Vista West Ltd. 2,035,700 28%
(1 In connection with the acquisition of Wowtown the Company issued 5,000,000
shares of common stock to 595796 B. C. Ltd. The Company's present officers
and directors have the following ownership in 595796 B. C., Ltd.
Percentage
Name Ownership
David B. Jackson 25%
David Packman 25%
Stephen C. Jackson 25%
<PAGE>
Item 2. Acquisition or Disposition of Assets
See Item 1.
Item 5. Other Events
Concurrent with the acquisition of Wowtown the Company sold 500 shares of
its Series A Convertible Preferred stock at a price of $1,000 per share to two
investors. Each Series A Preferred Share is convertible into shares of the
Company's common stock on or after March 22, 2000. The number of shares of the
Company's common stock which will be issued upon the conversion of each Series A
Preferred share will be determined by dividing $1,000 by 75% of the average
market price of the Company's common stock for the ten trading days immediately
prior to the conversion date.
Item 7. Financial Statements, Pro Forma Financial Information
(a) Financial Statements of Business Acquired
(b) Pro Forma Financial Information
(c) Exhibits
2 Share Exchange Agreement
4 Certificate of Designation setting forth rights and preferences
of the Series A Convertible Preferred Stock
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 7, 2000
PARAMOUNT SERVICES CORP.
By: /s/ Stephan C. Jackson
Stephen C. Jackson
Secretary
<PAGE>
REPORT OF INDEPENDENT AUDITOR
To the Director of
Wowtown.com Inc.
We have audited the accompanying balance sheet of Wowtown.com Inc. (a
development stage enterprise) as of October 31, 1999 and the related statements
of operations, stockholders' equity and cash flows for the initial period 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wowtown.com Inc. at October 31,
1999, and the results of its operations and its cash flows for the initial
period then ended, in conformity with accounting principles generally accepted
in the United States.
/s/ N.I. Cameron Inc.
Vancouver, Canada, CHARTERED ACCOUNTANTS
November 24, 1999
<PAGE>
Wowtown.com Inc.
(a development stage enterprise)
Balance Sheet
October 31, 1999
ASSETS
CURRENT
Cash $ 4,787
Deferred charges 3,150
$ 7,937
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable (Note 4) $ 15,332
Notes payable (Note 5) 21,800
Notes payable to related parties (Notes 4 and 5) 18,900
Loans from stockholders (Note 6) 2,499
-----------
58,531
STOCKHOLDERS' DEFICIT Share capital (Note 3)
Common stock - $0.001 par value
50,000,000 authorized; 100 issued and outstanding 1
Preferred stock - $0.001 par value
5,000,000 authorized
Deficit accumulated in the development stage (50,595)
---------
(50,594)
$ 7,937
On behalf of the Board:
Director
The accompanying notes are an integral part of these financial statements.
<PAGE>
Wowtown.com Inc.
(a development stage enterprise)
Statement of Operations
For the Initial Period from date of
Incorporation June 9, 1999 to October 31, 1999
OPERATING EXPENSES
Professional fees $ 859
Office and miscellaneous 3,512
Development expenses (Note 4) 46,224
------------
LOSS FROM OPERATIONS $ (50,595)
===========
The accompanying notes are an integral part of these financialstatements.
<PAGE>
Wowtown.com Inc.
(a development stage enterprise)
Statement of Stockholders' Deficit
For the Initial Period from date of
Incorporation June 9, 1999 to October 31, 1999
Deficit
Accumulated
Common Stock in the
Number of development
Shares Amount stage Total
-------------------------------------------------
Issuance of common stock 100 $ 1 $ - $ 1
Loss for the period - - (50,595) (50,595)
=================================================
Balance October 31, 1999 100 $ 1 $ (50,595) $ (50,594)
=================================================
The accompanying notes are an integral part of these financial statements
<PAGE>
Wowtown.com Inc.
(a development stage enterprise)
Statement of Cash Flows
For the Initial Period from date of
Incorporation June 9, 1999 to October 31, 1999
OPERATING ACTIVITIES
Loss for the period $(50,595)
Add: Changes in non-cash working capital
Accounts payable 15,332
-----------
Net cash used in operating activities (35,263)
-----------
FINANCING ACTIVITIES
Advances from stockholders 2,499
Increase in notes payable 40,700
Issuance of share capital 1
-----------
Net cash provided by financing activities 43,200
-----------
INVESTING ACTIVITIES
Increase in deferred charges (3,150)
-----------
Net cash used in investing activities (3,150)
-----------
NET CHANGE IN CASH DURING THE PERIOD 4,787
CASH AT BEGINNING OF PERIOD -
-----------
CASH AT END OF PERIOD $ 4,787
===========
The accompanying notes are an integral part of these financial statements
<PAGE>
Wowtown.com Inc.
(a development stage enterprise)
Notes to Financial Statements
October 31, 1999
1. FORMATION AND BUSINESS OF THE COMPANY
Wowtown.com Inc. (the "Company") was incorporated in Nevada, U.S.A. on June
9, 1999.
The Company is a development stage company and its purpose at this time is
focused on bringing the Internet from the World Wide Web to an interactive
local market, develop advertising resources and community directories. The
Company is developing a community of Local Market Internet Portals in major
North American centres with further extension into suburbs and neighborhoods.
It is a free membership concept for the internet user, creating savings and
discounts for the members with the participating local business
establishments. There are approximately 1,100 members at this time.
2. SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from these estimates.
Income taxes
The Company uses the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on the
difference between financial statement and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that are
expected to be in effect when the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance in respect of
amounts considered by management to be less likely than not of realization in
future periods.
3. SHARE CAPITAL
Holders of the common stock are entitled to one vote per share and share
equally in any dividends declared and distributions on liquidation.
<PAGE>
Wowtown.com Inc.
(a development stage enterprise)
Notes to Financial Statements
October 31, 1999
4. RELATED PARTY TRANSACTIONS
(a) A company controlled by a director of the Company has provided
administrative services and facilities to the Company and development
expenses at cost. The Company as at October 31, 1999 was indebted in
relation to these services are as follows:
Notes payable $ 10,600
Accounts payable 2,254
-----------
$ 12,854
(b) A company controlled by three of the stockholders has performed
development services for the Company at cost. As at October 31, 1999,
the Company was indebted for these services are as follows:
Note payable $ 8,300
Accounts payable 2,539
----------
$ 10,839
The total amount of expenses incurred through services of these related parties
are as follows:
Administrative $ 3,500
Development expenses 23,445
---------
$ 26,945
5. NOTES PAYABLE
Notes payable to unrelated parties amounting to $21,800 do not bear interest
and are due and payable on December 31, 1999.
Notes payable to related parties amounting to $18,900 do not bear interest
and are due and payable on December 31, 1999.
<PAGE>
Wowtown.com Inc.
(a development stage enterprise)
Notes to Financial Statements
October 31, 1999
6. LOANS FROM STOCKHOLDERS
Loans from stockholders are interest-free and have no terms of repayment.
7. YEAR 2000
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
Year 2000 as 1900 or some other date, resulting in errors when information
using year 2000 dates is processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to represent 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 the Company's ability to conduct normal business
operations. It is not possible to be certain that all aspects of the Year
2000 Issue affecting the Company, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
<PAGE>
PARAMOUNT SERVICES CORP.
PRO FORMA FINANCIAL INFORMATION
The accompanying pro forma financial information reflects the purchase by
Paramount Services Corp. ("Paramount") of all the issued and outstanding
shares of WOWtown.com, Inc. ("WOWtown"). The transaction will be accounted
for as a reverse purchase acquisition between WOWtown as the acquirer and
Paramount as the acquired company. The pro forma financial information
presented consists of a condensed income statement for the six-month
period ended October 31, 1999 as if the transaction had occurred on May 1,
1999. A pro forma condensed income statement for the year ended April 30,
1999 is not presented as WOWtown was only incorporated on June 9, 1999, so
the income statement for the year ended April 30, 1999 would be
non-existent. In addition, a pro forma balance sheet as at October 31,
1999 is presented as if the transaction had occurred on October 31, 1999.
<PAGE>
Pro Forma Condensed Income Statement
October 31, 1999
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Historical Statements
Paramount WOWtown Adjustments (Note 1) Pro Forma
Six Months Period from Period from to Six Month to Period From Six Months Period from
Ended December 18,1999 June 9, 1999 Period End December 18, 1997 Ended December 18,1997
October 31, (date of to October 31, to October 31,1999 October 31, (date of
1999 incorporation) October 31,1999 1999 1999 incorporation)
to October 31,1999 (Note 2) to October 31,1999
Development $ - $ - $ 46,224 $ - $ - $ $ 46,224
expenses 46,224
Professional fees 5,225 20,045 859 (5,225) (20,045) 859 859
Office and 4,323 4,323 3,512 (4,323) (4,323) 3,512 3,512
administration --------------------------- -------- ------------------------- -------------------------
Net Loss for the
Period $(9,548) $ (24,368) $(50,595) $9,548 $ 24,368 $ (50,595) $ 50,959
============================= ============ ====================== =============================
Loss per share, basic and diluted $ (0.007)
===========
Adjusted weighted average number of common shares 7,349,000
issued ==========
</TABLE>
Notes to the Pro Forma Condensed Income Statement for the six month period ended
October 31, 1999
Note 1 The adjustments above reflect the removal of the historical accounts
of Paramount due to the reverse purchase acquisition.
Note 2 WOWtown was incorporated on June 9, 1999; therefore the financial
figures are for the period from June 9, 1999 to October 31, 1999.
<PAGE>
Pro Forma Condensed Balance Sheet
October 31, 1999
(Unaudited)
Historical Statements Adjustments Pro Forma
Paramount WOWtown Statement
--------------------------------------------------
ASSETS
CURRENT
Cash $ 929 $ 4,787 $500,000 $ 505,716
Deferred charges - 3,150 - 3,150
------------------------------------------------
$ 929 $ 7,937 $500,000 $ 508,866
================================================
LIABILITIES
CURRENT
Accounts payable $ 900 $15,332 - $ 16,232
Notes payable - 21,800 - 21,800
Notes payable and amounts
due to related parties 19,387 18,900 - 38,287
Loans from stockholders - 2,499 - 2,499
------------------------------------------------
20,287 58,531 - 78,818
------------------------------------------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock 225 1 (225)(Note 1) 735
500 (Note 1)
10 (Note 2)
224 (Note 3)
Preferred Stock - - 1 (Note 4) 1
Additional paid-in capital 4,785 - 499,999 (Note 4) 499,775
(4,785)(Note 1)
(224)(Note 3)
Deficit accumulated in the (24,368) (50,595) (10)(Note 2) (70,463)
development stage (19,858 (Note 1)
24,368 (Note 1)
------------------------------------------------
(19,358) (50,594) 500,000 430,048
------------------------------------------------
$ 929 $ 7,937 $500,000 $508,866
================================================
Note 1 This adjustment reflects the reverse purchase acquisition and the
issuance of 5,000,000 shares in the transaction.
Note 2 This adjustment reflects the issue of 100,000 shares of Paramount as
a consulting fee.
Note 3 This adjustment reflects the par value of 7,349,000 outstanding
common shares of Paramount at $0.0001 per share.
Note 4 This adjustment reflects the issue of 500 Paramount preferred shares
for $1,000 each.
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT is made as of the 13th day of January, 2000.
AMONG:
PARAMOUNT SERVICES CORP., a body corporate formed pursuant to the
laws of the State of Delaware and having an office for business
located at Suite 1650, 200 Burrard Street, Vancouver, British
Columbia, V6C 3L6
(the "Purchaser")
AND:
595796 B.C. LTD., a body corporate formed pursuant to the laws of
the Province of British Columbia and having its registered office
located at P.O. Box 10068, Pacific Centre, Suite 1600, 609 Granville
Street, Vancouver, British Columbia, V7Y 1C3
(the "Vendor")
AND:
DAVID B. JACKSON, businessman, of 2539 Westhill Drive, West
Vancouver, British Columbia V7S 3E4
AND:
STEPHEN C. JACKSON, businessman, of 7433, 13th Avenue, Burnaby,
British Columbia, V3M 2E2
AND:
DAVID PACKMAN, businessman, of 1858 West 12th Avenue, Vancouver,
British Columbia V6J 2E8
(David B. Jackson, Stephen C. Jackson and David Packman being
hereinafter referred to as the "Significant Shareholders")
WHEREAS:
A. WOW town.com Inc. (the "Company") is a body corporate formed pursuant to
the laws of the State of Nevada and engaged in the business of developing
a community of local market internet portals in major North American urban
centers;
B. The Vendor owns all of the issued and outstanding common shares in the
capital stock of the Company (the "Company Shares");
C. The Vendor has agreed to sell and the Purchaser has agreed to purchase the
Company Shares, subject to the terms and conditions of this Agreement; and
D. The Significant Shareholders own substantially all of the issued and
outstanding shares of the Vendor and are being made parties to this
Agreement for the purpose of jointly and severally covenanting with the
Vendor to indemnify the Purchaser in the manner hereinafter provided.
<PAGE>
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Definitions
1.1 In this Agreement the following terms will have the following meanings:
(a) "Acquisition Shares" means the 5,000,000 Purchaser Common Shares to
be issued in the name of the Vendor at Closing;
(b) "Agreement" means this agreement among the Purchaser and the Vendor;
(c) "Bridge Loan" means the sum of $50,000 advanced to the Company as
evidenced by the Promissory Note of the Company dated January 13th,
2000 and guaranteed by the Significant Shareholders;
(d) "Business" means all aspects of the business conducted by the
Company, including, without limitation, developing a community of
local market internet portals in major North American urban centers,
extending these portals into suburbs and neighborhoods, and all
other related activities;
(e) "Closing" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 10
hereof;
(f) "Closing Date" means the day on which all conditions precedent to
the completion of the transaction as contemplated hereby have been
satisfied or waived;
(g) "Company" means WOW town.com Inc.;
(h) "Company Accounts Payable and Liabilities" means all accounts
payable and liabilities of the Company due and owing as of December
31, 1999 as set forth is Schedule "C" hereto;
(i) "Company Accounts Receivable" means all accounts receivable and
other debts owing to the Company as of December 31, 1999;
(j) "Company Assets" means the undertaking and all the property and
assets of the Business of every kind and description wheresoever
situated including, without limitation, the Company Equipment, the
Company Inventory, the Company Material Contracts, the Company
Accounts Receivable, the Company Cash, the Company Intangible Assets
and the Company Goodwill, and all credit cards, charge cards and
banking cards issued to the Company;
(k) "Company Cash" means all cash on hand or on deposit to the credit of
the Company on the Closing Date;
<PAGE>
(l) "Company Equipment" means all machinery, equipment, furniture, and
furnishings used in the Business;
(m) "Company Financial Statements" means the audited financial
statements of the Company for the fiscal period ended October 31,
1999, prepared in accordance with United States' generally accepted
accounting principles, together with the unqualified auditors'
report thereon attached hereto as Schedule "A";
(n) "Company Goodwill" means the goodwill of the Business together with the
exclusive right of the Purchaser to represent itself as carrying on the
Business in succession of the Company subject to the terms hereof, the
right to all corporate, operating and trade names associated with the
Business, or any variations of such names as part of or in connection with
the Business, all telephone listings and telephone advertising contracts,
all lists of customers, books and records and other information relating to
the Business, all necessary licenses and authorizations and any other
rights used in connection with the Business;
(o) "Company Intangible Assets" means all of the intangible assets of
the Company, including, without limitation, the Company Goodwill,
all trademarks, logos, copyrights, designs, and other intellectual
and industrial property including, without limiting the generality
of the foregoing, the domain names listed in Schedule "E" hereto and
all other domain names registered by or in the name of the Company
or the Vendor or its officers, directors, employees or shareholders
and related to the Business;
(p) "Company Inventory" means all inventory and supplies of the Business
existing on the Closing Date;
(q) "Company Material Contracts" means the burden and benefit of and the right,
title and interest of the Company in, to and under all trade and non-trade
contracts, engagements or commitments, whether written or oral, to which
the Company is entitled in connection with the Business including, without
limitation, any loan agreements, security agreements, indemnities and
guarantees, any agreements with employees, lessees, licensees, managers,
accountants, suppliers, agents, distributors, officers, directors,
attorneys or others, and those contracts listed in Schedule "B" hereto;
(r) "Company Shares" means all of the issued and outstanding shares of
the Company's common stock, par value $0.001;
(s) "Employment Agreements" means employment agreements among the
Company, David B. Jackson, Stephen C. Jackson and David Packman to
be entered into pursuant to Article 7 hereof;
(t) "Place of Closing" means the offices of Century Capital Management
Ltd. or such other place as the Purchaser and the Vendors may
mutually agree upon;
(u) "Private Placement" means the private sale by the Purchaser of not
less than 500 Purchaser Preferred Shares at a price of $1,000.00 per
Purchaser Preferred Share;
(v) "Purchaser" means Paramount Services Corp.;
<PAGE>
(w) "Purchaser Accounts Payable and Liabilities" means all accounts
payable and liabilities of the Purchaser due and owing as of
December 31, 1999 as set forth is Schedule "G" hereto;
(x) "Purchaser Common Shares" means the shares of common stock in the
capital of the Purchaser;
(y) "Purchaser Financial Statements" means the audited financial
statements of the Purchaser for the periods ended April 30, 1998 and
1999 and the management prepared financial statements of the
Purchaser for the six month period ended October 31, 1998 and 1999,
true copies of which are attached as Schedule "F" hereto;
(z) "Purchaser Preferred Shares" means the 500 shares of the Purchaser's
Series A Convertible Preferred Stock to be issued in the Private
Placement;
(aa) "Significant Shareholders" means David B. Jackson, Stephen C.Jackson
and David Packman; and
(bb) "Vendor" means 595796 B.C. Ltd.
Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
Captions and Section Numbers
1.2 The headings and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not intended to
interpret, define or limit the scope, extent or intent of this Agreement or any
provision thereof.
Section References and Schedules
1.3 Any reference to a particular "Article", "section", "paragraph", "clause" or
other subdivision is to the particular Article, section, clause or other
subdivision of this Agreement and any reference to a Schedule by letter will
mean the appropriate Schedule attached to this Agreement and by such reference
the appropriate Schedule is incorporated into and made part of this Agreement.
The Schedules to this Agreement are as follows:
Information concerning the Company
Schedule "A" Company Financial Statements
Schedule "B" Company Material Contracts
Schedule "C" Company Accounts Payable and Liabilities
Schedule "D" Debts to Related Parties
Schedule "E" Domain Names
Information concerning the Purchaser
Schedule "F" Purchaser Financial Statements
Schedule "G" Purchaser Accounts Payable and Liabilities
<PAGE>
Severability of Clauses
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE 2
PURCHASE AND SALE OF COMPANY SHARES
Sale of Company Shares
2.1 The Vendor agrees to sell to the Purchaser, and the Purchaser agrees to
purchase from the Vendor, all the Company Shares at Closing subject to the terms
and conditions of this Agreement.
Consideration
2.2 In consideration of the sale of the Company Shares by the Vendor to the
Purchaser, the Purchaser agrees to issue the Acquisition Shares to the Vendor at
Closing.
Adherence with Applicable Securities Laws
2.3 The Vendor agrees that it is acquiring the Acquisition Shares for investment
purposes and will not offer, sell or otherwise transfer, pledge or hypothecate
any of the Acquisition Shares (other than pursuant to an effective Registration
Statement under the Securities Act of 1933 (United States), as amended) directly
or indirectly unless:
(a) the sale is to the Purchaser;
(b) the sale is made pursuant to the exemption from registration under
the Securities Act of 1933 (United States) provided by Rule 144
thereunder; or
(c) the Acquisition Shares are sold in a transaction that does not
require registration under the Securities Act of 1933 (United
States) or any applicable United States state laws and regulations
governing the offer and sale of securities, and the Vendor has
furnished to the Purchaser an opinion of counsel to that effect or
such other written opinion as may be reasonably required by the
Purchaser.
The Vendor acknowledges that the certificates representing the Acquisition
Shares shall bear the following legend:
NO SALE, OFFER TO SELL, OR TRANSFER OF THE SHARES REPRESENTED BY
THIS CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER
THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, IN RESPECT OF SUCH
SHARES IS THEN IN EFFECT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SAID ACT IS THEN IN FACT APPLICABLE TO SAID SHARES.
The Vendor further acknowledges that trades of Acquisition Shares within
British Columbia will be subject to restrictions imposed by the Securities Act
(British Columbia) and that the Acquisition Shares may not be traded within
British Columbia unless the trade is made solely through a registered dealer and
a prospectus is filed with the British Columbia Securities Commission in respect
of the Acquisition Shares (and a final receipt obtained for such prospectus) or
an exemption from the registration and prospectus requirements may be relied
upon.
<PAGE>
ARTICLE 3
REGISTRATION RIGHTS
3.1 As soon as practicable after the Closing the Purchaser shall file a
registration statement on Form SB-2 (or similar form) under the Securities Act
of 1933 (United States) covering not more than 250,000 of the Acquisition Shares
and will use its best efforts to cause such registration statement to be
declared effective by the Securities and Exchange Commission at the earliest
practicable date, all at the Purchaser's sole cost and expense. Such best
efforts shall include responding to all comments received by the staff of the
Securities and Exchange Commission and promptly preparing and filing amendments
to such registration statement which are responsive to the comments received
from the staff of the Securities and Exchange Commission. Such registration
statement shall name the Vendor as the selling shareholder and shall provide for
the sale by the Vendor of the Acquisition Shares being registered from time to
time directly to purchasers or in the over-the-counter market or through or to
securities brokers or dealers that may receive compensation in the form of
discounts, concessions, or commissions. None of the foregoing shall in any way
limit the Vendor's rights to sell any Acquisition Shares held by them in
reliance on an exemption from the registration requirements under the Securities
Act of 1933 (United States) in connection with a particular transaction.
3.2 The Purchaser shall use its best efforts to maintain the currency of the
registration statement filed with the Securities and Exchange Commission in
respect of the Acquisition Shares being registered for a period of twelve months
following the effective date thereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE VENDOR AND THE SIGNIFICANT SHAREHOLDERS
Representations and Warranties
4.1 Each of the Vendor and the Significant Shareholders jointly and severally
represent and warrant in all material respects to the Purchaser, with the intent
that the Purchaser will rely thereon in entering into this Agreement and in
completing the transactions contemplated hereby, that:
The Company - Corporate Status and Capacity
(a) Incorporation. The Company is a corporation duly incorporated and
validly subsisting under the laws of the State of Nevada, and is in
good standing with the office of the Secretary of State for the
State of Nevada;
(b) Carrying on Business. The Company carries on business in the
Province of British Columbia and does not carry on any material
business activity in any other jurisdiction. The Company has an
office in Vancouver, British Columbia and in no other locations. The
nature of the Business does not require the Company to register or
otherwise be qualified to carry on business in any other
jurisdiction;
<PAGE>
(c) Corporate Capacity. The Company has the corporate power, capacity and
authority to own the Company Assets and to carry on the Business;
The Vendors - Capacity and Tax Matters
(d) Capacity. The Vendor has the full right, power and authority to
enter into and complete this Agreement on the terms and conditions
contained herein and to transfer and cause the transfer of full
legal, registered and beneficial title and ownership of the Company
Shares to the Purchaser;
The Company - Capitalization
(e) Authorized Capital. The authorized capital of the Company consists
of 50,000,000 shares of Common Stock, par value $0.001 (being the
Company Shares) and 5,000,000 shares of Preferred Stock, par value
$0.001;
(f) Ownership of Company Shares. The issued and outstanding share capital of
the Company will on to Closing consist of 100 shares of Common Stock, par
value $0.001 (being the Company Shares), which shares on Closing shall be
validly issued and outstanding as fully paid and non-assessable shares. The
Vendor will be immediately prior to Closing the registered and beneficial
owner of all of the Company Shares. The Vendor owns and will immediately
prior to Closing own all of the Company Shares free and clear of any and
all liens, charges, pledges, encumbrances, restrictions on transfer and
adverse claims whatsoever;
(g) No Option. No person, firm or corporation has any agreement or
option or any right capable of becoming an agreement or option for
the acquisition of the Company Shares or for the purchase,
subscription or issuance of any of the unissued shares in the
capital of the Company;
(h) No Restrictions. The transfer of the Company Shares to the Purchaser
will not be restricted under the charter documents of the Company or
under any agreement, and will be permitted under all applicable laws
and regulations;
The Company - Records and Company Financial Statements
(i) Charter Documents. The charter documents of the Company have not been
altered since the incorporation of the Company, except as filed in the
record book of the Company;
(j) Books and Records. The books and records of the Company fairly and
correctly set out and disclose in all material respects the
financial position of the Company, and all material financial and
other transactions of the Company relating to the Business,
including any and all Company Material Contracts and any amendments
thereto, have been accurately recorded or filed in such books and
records;
<PAGE>
(k) Company Financial Statements. The Company Financial Statements are
true and correct and present fairly and correctly the assets and
liabilities (whether accrued, absolute, contingent or otherwise) of
the Company as of the date thereof, and the sales and earnings of
the Business during the period covered thereby, in all material
respects, and have been prepared in substantial accordance with
United States' generally accepted accounting principles consistently
applied;
(l) Company Accounts Receivable. All Company Accounts Receivable (if
any) are bona fide and are good and collectible without set-off or
counterclaim;
(m) Company Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of the Company which are not
disclosed in Schedules "E" or "F" hereto or reflected in the Company
Financial Statements, other than the Bridge Loan, except those incurred in
the ordinary course of business since the date of the said financial
statements, and the Company has not guaranteed or agreed to guarantee any
debt, liability or other obligation of any person, firm or corporation.
Without limiting the generality of the foregoing, all accounts payable and
liabilities of the Company, excluding the Bridge Loan, are described in
Schedules "E" or "F" hereto;
(n) No Debt to Related Parties. The Company is not, and on Closing will
not be, materially indebted to any of the Significant Shareholders
nor to any family member of any of the Significant Shareholders, nor
to any affiliate, director, officer or shareholder of the Company or
the Vendor except as set forth in Schedule "F" hereto;
(o) No Related Party Debt to the Company. Neither the Vendor nor any of
the Significant Shareholders are now indebted to or under any
financial obligation to the Company on any account whatsoever,
except for advances on account of travel and other expenses not
exceeding $5,000 in total;
(p) No Dividends. No dividends or other distributions on any shares in the
capital of the Company have been made, declared or authorized since the
date of the Company Financial Statements;
(q) No Payments. No payments of any kind have been made or authorized
since the date of the Company Financial Statements to or on behalf
of the Vendor or the Significant Shareholders or to or on behalf of
officers, directors, shareholders or employees of the Company or the
Vendor or under any management agreements with the Company, except
payments made in the ordinary course of business and at the regular
rates of salary or other remuneration payable to them;
(r) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting the Company;
(s) No Adverse Events. Since the date of the Company Financial Statements
(i) there has not been any material adverse change in the
financial position or condition of the Company, its
liabilities or the Company Assets or any damage, loss or other
change in circumstances materially affecting the Company, the
Business or the Company Assets or the Company's right to carry
on the Business, other than changes in the ordinary course of
business,
(ii) there has not been any damage, destruction, loss or other
event (whether or not covered by insurance) materially and
adversely affecting the Company, the Business or the Company
Assets,
<PAGE>
(iii) there has not been any material increase in the compensation
payable or to become payable by the Company to the Significant
Shareholders or to any of the Company's officers, employees or
agents or any bonus, payment or arrangement made to or with
any of them,
(iv) the Business has been and continues to be carried on in the ordinary
course,
(v) the Company has not waived or surrendered any right of material value,
(vi) the Company has not discharged or satisfied or paid any lien
or encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made;
The Company - Income Tax Matters
(t) Tax Returns. All tax returns and reports of the Company required by
law to be filed have been filed and are true, complete and correct,
and any taxes payable in accordance with any return filed by the
Company or in accordance with any notice of assessment or
reassessment issued by any taxing authority have been so paid;
(u) Current Taxes. Adequate provisions have been made for taxes payable for the
current period for which tax returns are not yet required to be filed and
there are no agreements, waivers, or other arrangements providing for an
extension of time with respect to the filing of any tax return by, or
payment of, any tax, governmental charge or deficiency by the Company. The
Vendors are not aware of any contingent tax liabilities or any grounds
which would prompt a reassessment including aggressive treatment of income
and expenses in filing earlier tax returns;
The Company - Applicable Laws and Legal Matters
(v) Licences. The Company holds all licences and permits as may be
requisite for carrying on the Business in the manner in which it has
heretofore been carried on, which licences and permits have been
maintained and continue to be in good standing;
(w) Applicable Laws. The Company has not been charged with or received
notice of breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees to which it is subject or which apply to
it the violation of which would have a material adverse effect on
the Company, and the Company is not in breach of any laws,
ordinances, statutes, regulations, by-laws, orders or decrees the
contravention of which would result in a material adverse impact on
the Business;
(x) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding or enquiry pending or
threatened against or relating to the Company, the Business, or any
of the Company Assets, nor does the Company have any knowledge of
any deliberate act or omission of the Company that would form any
material basis for any such action, proceeding or enquiry;
(y) No Bankruptcy. The Company has not made any voluntary assignment or
proposal under applicable laws relating to insolvency and bankruptcy
and no bankruptcy petition has been filed or presented against the
Company and no order has been made or a resolution passed for the
winding-up, dissolution or liquidation of the Company;
<PAGE>
(z) Labour Matters. The Company is not party to any collective agreement
relating to the Business with any labour union or other association
of employees and no part of the Business has been certified as a
unit appropriate for collective bargaining or, to the knowledge of
the Vendor or the Significant Shareholders, has made any attempt in
that regard;
(aa) Finder's Fees. The Company is not party to any agreement which
provides for the payment of finder's fees, brokerage fees,
commissions or other fees or amounts which are or may become payable
to any third party in connection with the execution and delivery of
this Agreement and the transactions contemplated herein except as
due to Century Capital Management Ltd.;
Execution and Performance of Agreement
(bb) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated
hereby, have been duly and validly authorized by all necessary
corporate action on the part of the Vendor and this Agreement
constitutes a legal, valid and binding obligation of the Vendor and
is enforceable against the Vendor and the Significant Shareholders
in accordance with its terms;
(cc) No Violation or Breach. The performance of this Agreement will not
(i) violate the charter documents of the Company or result in any
breach of, or default under, any loan agreement, mortgage,
deed of trust, or any other agreement to which the Vendor, the
Significant Shareholders, the Company, or any of them, is a
party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, the Company Material Contracts,
or any right or rights enjoyed by the Company,
(iii) result in any alteration of the Company's obligations under
any agreement to which the Company is party including, without
limitation, the Company Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance
or restriction of any nature whatsoever in favour of a third
party upon or against the Company Assets,
(v) result in the imposition of any tax liability to the Company
relating to the Company Assets or the Company Shares, or
(vi) violate any court order or decree to which the Company and the
Vendors or any of them are subject.
The Company Assets - Ownership and Condition
(dd) Business Assets. The Company Assets comprise all of the property and
assets of the Business, and none of the Vendor or the Significant
Shareholders nor any other person, firm or corporation owns any
assets used by the Company in operating the Business, whether under
a lease, rental agreement or other arrangement;
<PAGE>
(ee) Title. The Company is the legal and beneficial owner of the Company Assets,
free and clear of all mortgages, liens, charges, pledges, security
interests, encumbrances or other claims whatsoever;
(ff) No Option. No person, firm or corporation has any agreement or option or a
right capable of becoming an agreement for the purchase of any of the
Company Assets;
(gg) Company Material Contracts. The Company Material Contracts listed in
Schedule "B" constitute all of the material contracts of the Company;
(hh) No Default. There has not been any default in any material
obligation of either of the Company, the Vendor or any Significant
Shareholder or any other party to be performed under any of the
Company Material Contracts, each of which is in good standing and in
full force and effect and unamended, and the Vendor and the
Significant Shareholders are not aware of any default in the
obligations of any other party to any of the Company Material
Contracts;
(ii) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of the Company. The
Company is not obliged to pay benefits or share profits with any
employee after termination of employment except as required by law;
The Company Assets - Company Equipment
(jj) Company Equipment. The Company Equipment has been maintained in a manner
consistent with that of a reasonably prudent owner;
The Company Assets - Company Goodwill and Other Assets
(kk) Company Goodwill. The Company carries on the Business only under the names
"WOW town,.com Inc." and vancouverwow.com and under no other business or
trade names. The Company has the legal right to use its corporate name in
the Province of British Columbia and neither the Company, the Vendor nor
any of the Significant Shareholders are aware of any names similar to
"wowtown" in use in any areas where the Business is conducted or is planned
to be conducted. Neither the Vendor nor any Significant Shareholder has any
knowledge of any infringement by the Company of any patent, trademark,
copyright or trade secret;
The Business
(ll) Maintenance of Business. Since the date of the Company Financial
Statements, the Business has been carried on in the ordinary course
and the Company has not entered into any material agreement or
commitment except in the ordinary course; and
(mm) No Ownership of Company. The Company does not own any subsidiary and does
not otherwise own, directly or indirectly, any shares or interest in any
other corporation, partnership, joint venture or firm.
<PAGE>
Non-Merger and Survival
4.2 The representations and warranties of the Vendor and the Significant
Shareholders contained herein will be true at and as of Closing in all material
respects as though such representations and warranties were made as of such
time. Notwithstanding the completion of the transactions contemplated hereby,
the waiver of any condition contained herein (unless such waiver expressly
releases a party from any such representation or warranty) or any investigation
made by the Purchaser, the representations and warranties of the Vendor and the
Significant Shareholders shall survive the Closing.
Indemnity
4.3 The Vendor and the Significant Shareholders jointly and severally agree to
indemnify and save harmless the Purchaser from and against any and all claims,
demands, actions, suits, proceedings, assessments, judgments, damages, costs,
losses and expenses, including any payment made in good faith in settlement of
any claim (subject to the right of the Vendor and the Significant Shareholders
to defend any such claim), resulting from the breach by any of them of any
representation or warranty of such party under this Agreement or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by the Vendor or the Significant Shareholders to
the Purchaser hereunder.
ARTICLE 5
COVENANTS OF THE VENDORS
Covenants
5.1 The Vendor and the Significant Shareholders jointly and severally covenant
and agree with the Purchaser that they will:
(a) Conduct of Business. Until the Closing, conduct the Business
diligently and in the ordinary course consistent with the manner in
which the Business generally has been operated up to the date of
execution of this Agreement;
(b) Preservation of Business. Until the Closing, use their best efforts
to preserve the Business and the Company Assets and, without
limitation, preserve for the Purchaser the Company's relationships
with their suppliers, customers and others having business relations
with them;
(c) Access. Until the Closing, give the Purchaser and its
representatives full access to all of the properties, books,
contracts, commitments and records of the Company relating to the
Company, the Business and the Company Assets, and furnish to the
Purchaser and its representatives all such information as they may
reasonably request; and
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party
consents required to permit the transfer of the Company Shares to
the Purchaser and to preserve and maintain the Company Assets,
including the Company Material Contracts, notwithstanding the change
in control of the Company arising from the purchase of the Company
Shares by the Purchaser.
Authorization
5.2 The Vendor and the Significant Shareholders hereby agree to promptly cause
the Company, upon the request of the Purchaser, to authorize and direct any and
all federal, provincial, municipal, foreign and international governments and
regulatory authorities having jurisdiction respecting the Company to release any
and all information in their possession respecting the Company to the Purchaser.
The Vendor and the Significant Shareholders shall promptly cause the Company to
execute and deliver to the Purchaser any and all consents to the release of
information and specific authorizations which the Purchaser reasonably requires
to gain access to any and all such information.
<PAGE>
Survival
5.3 The covenants set forth in this Article shall survive until the Closing for
the benefit of the Purchaser.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Representations and Warranties
6.1 The Purchaser represents and warrants in all material respects to the Vendor
and the Significant Shareholders, with the intent that the Vendor and the
Significant Shareholders will rely thereon in entering into this Agreement and
in completing the transactions contemplated hereby, that:
The Purchaser - Corporate Status and Capacity
(a) Incorporation. The Purchaser is a corporation duly incorporated and
validly subsisting under the laws of the State of Delaware, and is
in good standing with the office of the Secretary of State for the
State of Delaware;
(b) Carrying on Business. The Purchaser has not carried on and does not
now carry on any material business activity. The Purchaser has an
office in Vancouver, British Columbia and in no other locations;
(c) Corporate Capacity. The Purchaser has the corporate power, capacity
and authority to enter into and complete this Agreement;
(d) Reporting Status. The Purchaser Common Shares have been registered
pursuant to s. 12(g) of the Securities and Exchange Act of 1934
(United States);
The Purchaser - Capitalization
(e) Authorized Capital. The authorized capital of the Purchaser consists
of 30,000,000 Purchaser Common Shares, $0.0001 par value and
5,000,000 shares of preferred stock. $0.0001 par value, of which
2,249,000 Purchaser Common Shares and no shares of preferred stock
are presently issued and outstanding;
(f) No Option. No person, firm or corporation has any agreement or
option or any right capable of becoming an agreement or option for
the acquisition of Purchaser Common Shares or for the purchase,
subscription or issuance of any of the unissued shares in the
capital of the Purchaser save and except as referred to herein;
(g) Capacity. The Purchaser has the full right, power and authority to
enter into and complete this Agreement on the terms and conditions
contained herein;
(h) No Restrictions. There are no restrictions on the transfer, sale or
other disposition of the Acquisition Shares contained in the charter
documents of the Purchaser or under any agreement to which the
Purchaser is a Party;
<PAGE>
The Purchaser - Records and Financial Statements
(i) Charter Documents. The charter documents of the Purchaser have not
been altered since the incorporation of the Purchaser, except as
filed in the record books of the Purchaser;
(j) Books and Records. The books and records of the Purchaser fairly and
correctly set out and disclose in all material respects the
financial position of the Purchaser, and all material financial and
other transactions of the Purchaser, including any and all contracts
and any amendments thereto, have been accurately recorded or filed
in such books and records;
(k) Purchaser Financial Statements. The Purchaser Financial Statements
are true and correct and present fairly and correctly the assets and
liabilities (whether accrued, absolute, contingent or otherwise) of
the Purchaser as of the respective dates thereof and have been
prepared in substantial accordance with United States' generally
accepted accounting principles consistently applied;
(l) Purchaser Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of the Purchaser which are not
disclosed in Schedule "G" hereto or reflected in the Purchaser Financial
Statements except those incurred in the ordinary course of business since
the date of the said financial statements, and the Purchaser has not
guaranteed or agreed to guarantee any debt, liability or other obligation
of any person, firm or corporation. Without limiting the generality of the
foregoing, all accounts payable and liabilities of the Purchaser are
described in Schedule "G" hereto;
(m) No Dividends. No dividends or other distributions on any shares in the
capital of the Purchaser have been made, declared or authorized since the
date of the Purchaser Financial Statements;
(n) No Payments. No payments of any kind have been made or authorized
since the date of the Purchaser Financial Statements to or on behalf
of officers, directors, shareholders or employees of the Purchaser
or under any management agreements with the Purchaser;
(o) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting the Purchaser;
(p) No Adverse Events. Since the date of the Purchaser Financial
Statements there has not been any material adverse change in the
financial position or condition of the Purchaser or its liabilities
or any damage, loss or other change in circumstances materially
affecting the Purchaser;
(q) Applicable Laws. The Purchaser has not been charged with or received
notice of breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees to which it is subject or which apply to
it the violation of which would have a material adverse effect on
the Purchaser;
(r) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding or enquiry pending or
threatened against or relating to the Purchaser nor does the
Purchaser have any knowledge of any deliberate act or omission of
the Purchaser that would form any material basis for any such
action, proceeding or enquiry;
<PAGE>
(s) No Bankruptcy. The Purchaser has not made any voluntary assignment
or proposal under applicable laws relating to insolvency and
bankruptcy and no bankruptcy petition has been filed or presented
against the Purchaser and no order has been made or a resolution
passed for the winding-up, dissolution or liquidation of the
Purchaser;
(t) Finder's Fees. The Purchaser is not party to any agreement which
provide for the payment of finder's fees, brokerage fees,
commissions or other fees or amounts which are or may become payable
to any third party in connection with the execution and delivery of
this Agreement and the transactions contemplated herein except as
due to Century Capital Management Ltd.;
Execution and Performance of Agreement
(u) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated
hereby, have been 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
and is enforceable against it in accordance with its terms;
(v) No Violation or Breach. The performance of this Agreement will not
violate the charter documents of the Purchaser or result in any
breach of, or default under, any agreement to which the Purchaser is
a party; and
The Purchaser - Acquisition Shares
(w) Acquisition Shares. The Acquisition Shares when delivered to the
Vendor shall be validly issued and outstanding as fully paid and
non-assessable shares, subject to the provisions of this Agreement,
and the Acquisition Shares shall be transferable upon the books of
the Purchaser, in all cases subject to the provisions and
restrictions of all applicable securities laws.
Non-Merger and Survival
6.2 The representations and warranties of the Purchaser contained herein will be
true at and as of Closing in all material respects as though such
representations and warranties were made as of such time. Notwithstanding the
completion of the transactions contemplated hereby, the waiver of any condition
contained herein (unless such waiver expressly releases a party from any such
representation or warranty) or any investigation made by the Vendor or the
Significant Shareholders, the representations and warranties of the Purchaser
shall survive the Closing.
Indemnity
6.3 The Purchaser agrees to indemnify and save harmless the Vendor and the
Significant Shareholders from and against any and all claims, demands, actions,
suits, proceedings, assessments, judgments, damages, costs, losses and expenses,
including any payment made in good faith in settlement of any claim (subject to
the right of the Purchaser to defend any such claim), resulting from the breach
by it of any representation or warranty of such party under this Agreement or
from any misrepresentation in or omission from any certificate or other
instrument furnished or to be furnished by the Purchaser to the Vendor and the
Significant Shareholders hereunder.
<PAGE>
ARTICLE 7
EMPLOYMENT AGREEMENTS
At the Closing, the Company shall enter into the Employment Agreements
with David B. Jackson, Stephen C. Jackson and David Packman pursuant to which
each of them will provide services to the Company.
ARTICLE 8
CONDITIONS PRECEDENT
Conditions Precedent in favour of the Purchaser
8.1 The Purchaser's obligations to carry out the transactions contemplated
hereby is subject to the fulfillment of each of the following conditions
precedent on or before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to the Purchaser hereunder will have been so executed and
delivered;
(b) pro forma financial statements showing the combined assets,
liabilities, stockholders' equity and results of operations of the
Purchaser and the Company, prepared in prepared in accordance with
United States' generally accepted accounting principles and the
requirements of the Securities and Exchange Commission will have
been delivered to the Purchaser;
(c) the Purchaser shall have completed its due diligence review of the
affairs of the Company, and shall be satisfied with same in all
material respects;
(d) the Company shall have agreed to repay the Bridge Loan from the
proceeds of the Private Placement;
(e) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by the Vendor at or prior to the Closing
will have been complied with or performed;
(f) title to the Company Shares and Company Assets will be free and
clear of all mortgages, liens, charges, pledges, security interests,
encumbrances or other claims whatsoever;
(g) the Vendor will have transferred the Company Shares to the Purchaser
and the Company Shares will be issued to the Purchaser and
registered on the books of the Company in the name of the Purchaser
at Closing;
(h) subject to Article 9 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of the Company, its liabilities or the Company
Assets or any damage, loss or other change in circumstances
materially and adversely affecting the Vendor, the Significant
Shareholders, the Business or the Company Assets or the
Company's right to carry on the Business, other than changes
in the ordinary course of business, none of which has been
materially adverse, or
(ii) any damage, destruction, loss or other event, including
changes to any laws or statutes applicable to the Company or
the Business (whether or not covered by insurance) materially
and adversely affecting the Company, the Business or the
Company Assets; and
<PAGE>
(i) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any.
Waiver by the Purchaser
8.2 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of the Purchaser and any such condition may be waived in
whole or in part by the Purchaser at or prior to Closing by delivering to the
Vendor a written waiver to that effect signed by the Purchaser. In the event
that the conditions precedent set out in the preceding section are not satisfied
on or before the Closing the Purchaser shall be released from all obligations
under this Agreement.
Conditions Precedent in Favour of Vendors
8.3 The obligation of the Vendor to carry out the transactions contemplated
hereby is subject to the fulfillment of each of the following conditions
precedent on or before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to the Vendor hereunder will have been so executed and
delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by the Purchaser at or prior to the
Closing will have been complied with or performed;
(c) the Purchaser will have delivered the Acquisition Shares to the
Vendor and the Acquisition Shares will be registered on the books of
the Purchaser in the name of the Vendor at Closing;
(d) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever;
(e) the board of directors of the Purchaser shall have appointed the
Significant Shareholders as directors of the Purchaser; and
(f) the Purchaser shall have received duly executed subscriptions for
not less that 500 Purchaser Preferred Shares pursuant to the Private
Placement and shall have received in full the subscription funds
therefore, such funds being held in escrow pending Closing.
Waiver by Vendor
8.4 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of the Vendor and any such condition may be waived in
whole or in part by the Vendor at or prior to the Closing by delivering to the
Purchaser a written waiver to that effect signed by the Vendor. In the event
that the conditions precedent set out in the preceding section are not satisfied
on or before the Closing the Vendor shall be released from all obligations under
this Agreement.
<PAGE>
Nature of Conditions Precedent
8.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favour of the other party or parties set forth in
this Article.
Confidentiality
8.6 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and that
if this Agreement is terminated the parties agree to return to one another any
and all financial, technical and business documents delivered to the other party
or parties in connection with the negotiation and execution of this Agreement
and shall keep the terms of this Agreement and all information and documents
received from the Company and the contents thereof confidential and not utilize
nor reveal or release same, provided, however, that the Purchaser will be
required to issue one or more news releases and file a Current Report on Form
8-K with the Securities and Exchange Commission respecting the proposed share
purchase contemplated hereby.
ARTICLE 9
RISK
If any material loss or damage to the Business occurs prior to Closing and
such loss or damage, in the Purchaser's reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, the Purchaser shall,
within seven (7) days following any such loss or damage, by notice in writing to
the Vendors, at its option, either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the purchase of the Company Shares and the other
transactions contemplated hereby, in which case the proceeds and the
rights to receive the proceeds of all insurance covering such loss
or damage will, as a condition precedent to the Purchaser's
obligations to carry out the transactions contemplated hereby, be
vested in the Company or otherwise adequately secured to the
satisfaction of the Purchaser on or before the Closing Date.
ARTICLE 10
CLOSING
Closing
10.1 The purchase and sale of the Company Shares and the other transactions
contemplated by this Agreement will be closed at the Place of Closing in
accordance with the closing procedure set out in this Article.
Documents to be Delivered by Vendors
10.2 On or before the Closing, the Vendor will deliver or cause to be delivered
to the Purchaser:
(a) certified copies of such resolutions of the directors of the Vendor
as are required to be passed to authorize the execution, delivery
and implementation of this Agreement;
<PAGE>
(b) the original or certified copies of the charter documents of the
Company and all corporate records documents and instruments of the
Company, the corporate seals of the Company and all books and
accounts of the Company;
(c) certificates representing the Company Shares, duly endorsed for
transfer to the Purchaser, together with a duly executed share
certificate respecting the Company Shares issued to the Purchaser
and recorded in the share register of the Company;
(d) all reasonable consents or approvals required to be obtained by the
Vendor and the Company for the purposes of validly transferring the
Company Shares to the Purchaser and preserving and maintaining the
interests of the Company under any and all Company Material
Contracts and in relation to the Company Assets;
(e) certified copies of such resolutions of the shareholders and
directors of the Company as are required to be passed to authorize
the execution, delivery and implementation of this Agreement;
(f) an acknowledgement from the Vendor of the satisfaction of the
conditions precedent set forth in section 8.3 hereof;
(g) the Employment Agreements, duly executed by the parties thereto; and
(h) such other documents as the Purchaser may reasonably require to give
effect to the terms and intention of this Agreement.
Documents to be Delivered by the Purchaser
10.3 On or before the Closing, the Purchaser shall deliver or cause to be
delivered to the Vendors:
(a) share certificates representing the Acquisition Shares duly registered in
the name of the Vendor;
(b) certified copies of such resolutions of the director of the
Purchaser as are required to be passed to authorize the execution,
delivery and implementation of this Agreement; and
(c) an acknowledgement from the Purchaser of the satisfaction of the
conditions precedent set forth in section 8.1 hereof.
ARTICLE 11
GENERAL PROVISIONS
Arbitration
11.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good negotiation fails to resolve such dispute,
controversy, difference or claim within fifteen (15) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration in the City of Vancouver, British
Columbia.
<PAGE>
Notice
11.2 Any notice required or permitted to be given by any party will be deemed to
be given when in writing and delivered to the address of the intended recipient
stated above by personal delivery, prepaid single certified or registered mail,
or telecopier. Any notice delivered by mail shall be deemed to have been
received on the fourth business day after and excluding the date of mailing,
except in the event of a disruption in regular postal service in which event
such notice shall be deemed to be delivered on the actual date of receipt. Any
notice delivered personally or by telecopier shall be deemed to have been
received on the actual date of delivery.
Change of Address
11.3 Any party may, by notice to the other parties change its address for notice
to some other address in North America and will so change its address for notice
whenever the existing address or notice ceases to be adequate for delivery by
hand. A post office box may not be used as an address for service.
Further Assurances
11.4 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
Time of the Essence
11.5 Time is expressly declared to be the essence of this Agreement.
Entire Agreement
11.6 The provisions contained herein constitute the entire agreement among the
Vendor, the Purchaser and the Significant Shareholders respecting the subject
matter hereof and supersede all previous communications, representations and
agreements, whether verbal or written, among the Vendor, the Purchaser and the
Significant Shareholders with respect to the subject matter hereof.
Enurement
11.7 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
Assignment
11.8 This Agreement is not assignable without the prior written consent of the
parties hereto.
Counterparts
11.9 This Agreement may be executed in counterparts, each of which when executed
by any party will be deemed to be an original and all of which counterparts will
together constitute one and the same Agreement. Delivery of executed copies of
this Agreement by telecopier will constitute proper delivery, provided that
originally executed counterparts are delivered to the parties within a
reasonable time thereafter.
<PAGE>
Applicable Law
11.10 This Agreement is subject to the laws of the Province of British Columbia
and the laws of Canada applicable therein and, subject to section 11.1 hereof,
the parties hereto to attorn to the exclusive jurisdiction of the Courts of the
Province of British Columbia.
Independent Legal Advice
11.11 The parties hereto acknowledge that they have each received independent
legal advice with respect to the terms of this Agreement and the transactions
contemplated herein or have knowingly and willingly elected not to do so. The
parties hereto further acknowledge that this Agreement has been prepared by
Century Capital Management Ltd. as a convenience to the parties only, and that
Century Capital Management Ltd. has not provided any of the parties hereto with
any professional advice with respect to this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
day and year first above written.
PARAMOUNT SERVICES CORP.
By: ___________________________
Authorized Signatory
_______________________
Witness
_______________________
Name
______________________
______________________
Address
595796 B.C. LTD.
By: ___________________________
Authorized Signatory
_______________________
Witness
_______________________
Name
______________________
______________________
Address
___________________________________
DAVID B. JACKSON
_______________________
Witness
_______________________
Name
______________________
______________________
Address
<PAGE>
___________________________________
STEPHEN C. JACKSON
_______________________
Witness
_______________________
Name
______________________
______________________
Address
___________________________________
DAVID PACKMAN
_______________________
Witness
_______________________
Name
______________________
______________________
Address
This is Page 22 to the Share Exchange Agreement dated January 13, 2000 among
Paramount Services Corp., 595796 B.C. Ltd., David B. Jackson, Stephen C. Jackson
and David Packman.
AMENDED CERTIFICATE OF DESIGNATION
Andrew Hromyk certifies that he is the President and Secretary of Paramount
Services Corp., a Delaware corporation (hereinafter referred to as the
"Company") and that, pursuant to the Company's Certificate of Incorporation, as
amended, and Section 151 of the General Business Corporation Law , the Board of
Directors of the Company adopted the following resolutions on February 3, 2000.
The Certificate of Designation filed with the Secretary of State for the State
of Delaware January 27, 2000 is hereby amended in its entirety and the following
is adopted in its place:
Creation of Series A Convertible Preferred Stock
1. There is hereby created a series of preferred stock consisting of 500
shares and designated as the Series A Convertible Preferred Stock (
"Preferred Stock"), having the voting powers, preferences, relative,
participating, limitations, qualifications, optional and other special
rights and the qualifications, limitations and restrictions thereof that
are set forth below.
Conversion Provisions
2. The holders of Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
Conversion
(a)Right to Convert. Subject to paragraph (m) hereof, from and after the
forty-fifth (45th) calendar day following the day on which the Company
receives payment in full for Preferred Stock from and issues Preferred
Stock to a particular holder of Preferred Stock (the "Issuance Date"),
all Preferred Stock held by that holder shall be convertible at the
option of the holder into such number of shares of common stock of the
Company ("Common Stock") as is calculated by the Conversion Rate (as
hereinafter defined). The Conversion Rate, subject to the exception
defined in paragraph 2(b) hereof, shall be that number of shares of
Common Stock equal to $1,000 divided by the lesser of: (i) seventy five
per cent (75%) of the average Market Price (as hereinafter defined) of
the shares of Common Stock for the ten trading days immediately prior
to the Conversion Date (as hereinafter defined); or (ii) $2.00.
(b) Failure to Register Exemption. In the event that a registration statement
in respect of the Common Stock to be issued upon the conversion of the
Preferred Stock has not been filed with and declared effective by the
Securities and Exchange Commission on or before the date which is twelve
months following the Issuance Date (the "Anniversary Date"), the number of
shares of Common Stock issued to a particular holder will be calculated by
the Failure to Register Conversion Rate. The Failure to Register Conversion
Rate shall be that number of shares of Common Stock equal to $1,000 divided
by the lesser of: (i) fifty per cent (50%) of the Market Price of the
shares of Common Stock on the day immediately preceding the Anniversary
Date; or (ii) $2.00.
<PAGE>
(c) Market Price. Market Price for a particular date shall be the closing
bid price of the shares of Common Stock on such date, as reported by
the National Association of Securities Dealers Automated Quotation
System (`NASDAQ"), or the closing bid price in the over-the-counter
market if other than NASDAQ.
(d) No Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of the Preferred Stock, and in lieu thereof the number of
shares of Common Stock to be issued for each share of Preferred Stock
converted shall be rounded down to the nearest whole number of shares of
Common Stock. Such number of whole shares of Common Stock to be issued upon
the conversion of one share of Preferred Stock shall be multiplied by the
number of shares of Preferred Stock submitted for conversion pursuant to
the Notice of Conversion (defined below) to determine the total number of
shares of Common Stock to be issued in connection with any one particular
conversions.
(e) Method of Conversion. In order to convert Preferred Stock into shares
of Common Stock, a holder of Preferred Stock shall
(A) complete, execute and deliver to the Company and the Company's
Transfer Agent, Interwest Transfer Co. Inc. (the "Transfer
Agent") the conversion certificate attached hereto as Exhibit A
(the "Notice of Conversion"), and
(B) surrender the certificate or certificates representing the
Preferred Stock being converted (the "Converted Certificate") to
the Transfer Agent.
Subject to paragraph 2(h) hereof, the Notice of Conversion shall be
effective and in full force and effect for a particular date if
delivered to the Company and the Transfer Agent on that particular
date prior to 5:00 pm, pacific time, by facsimile transmission or
otherwise, provided that particular date is a business day, and
provided that the original Notice of Conversion and the Converted
Certificate are delivered to and received by the Transfer Agent
within three (3) business days thereafter at 1981 East Murray
Holladay Road, Suite 100, PO Box 17136, Salt Lake City, Utah 84117
Telephone 801-272-9294 and that particular date shall be referred to
herein as the "Conversion Date". The person or persons entitled to
receive the shares of Common Stock to be issued upon conversion
shall be treated for all purposes as the record holder or holders of
such shares of Common Stock as of the Conversion Date. If the
original Notice of Conversion and the Converted Certificate are not
delivered to and received by the Transfer Agent within three (3)
business days following the Conversion Date, the Notice of
Conversion shall become null and void as if it were never given and
the Company shall, within two (2) business days thereafter, instruct
the Transfer Agent to return to the holder by overnight courier any
Converted Certificate that may have been submitted in connection
with any such conversion. In the event that any Converted
Certificate submitted represents a number of shares of Preferred
Stock that is greater than the number of such shares that is being
converted pursuant to the Notice of Conversion delivered in
connection therewith, the Transfer Agent shall advise the Company to
deliver a certificate representing the remaining number of shares of
Preferred Stock not converted.
<PAGE>
(f) Absolute Obligation to issue Common Stock. Upon receipt of a Notice of
Conversion, the Company shall absolutely and unconditionally be obligated
to cause a certificate or certificates representing the number of shares of
Common Stock to which a converting holder of Preferred Stock shall be
entitled as provided herein, which shares shall constitute fully paid and
non-assessable shares of Common Stock and shall be issued to, delivered by
overnight courier to, and received by such holder by the sixth (6th)
business day following the Conversion Date. Such delivery shall be made at
such address as such holder may designate therefor in its Notice of
Conversion or in its written instructions submitted together therewith.
(g) Minimum Conversion. No less than 10 shares of Preferred Stock may be
converted at any one time by a particular holder, unless the holder
then holds less than 10 shares and converts all such shares held by it
at that time.
(h) Deemed Conversion. Notwithstanding any other provision herein, and provided
that a registration statement in respect of the Common Stock to be issued
upon the conversion of the Preferred Stock has been filed with and declared
effective by the Securities and Exchange Commission on or before the
Anniversary Date, all of the Preferred Stock outstanding on Anniversary
Date shall be deemed to convert into shares of Common Stock as is
calculated by the Conversion Rate as defined in paragraph 2(a) hereof,
provided that, in the event that this paragraph would result in a
particular holder of Preferred Stock holding, together with the shares of
Common Stock then held by that holder, more than 9.9% of the Company's then
issued and outstanding Common Stock, the conversion deemed hereby shall be
postponed until such time as the particular holder holds such number of
shares of Common Stock that, together with the shares of Common Stock then
held by that holder, would constitute less than 9.9% of the Company's then
issued and outstanding Common Stock. The onus for notifying the Company of
the application of this qualification shall be upon the particular holder.
Adjustments to Conversion Rate
(i) Reclassification, Exchange and Substitution. If the Common Stock to be
issued on conversion of the Preferred Stock shall be changed into the same
or a different number of shares of any other class or classes of stock,
whether by capital reorganization, reclassification, reverse stock split or
forward stock split or stock dividend or otherwise (other than a
subdivision or combination of shares provided for above), the holders of
the Preferred Stock shall, upon its conversion be entitled to receive, in
lieu of the Common Stock which the holders would have become entitled to
receive but for such change, a number of shares of such other class or
classes of stock that would have been subject to receipt by the holders if
they had exercised their rights of conversion of the Preferred Stock
immediately before that changes.
(j) Reorganizations, Mergers, Consolidations or Sale of Assets. If at any time
there shall be a capital reorganization of the Company's common stock
(other than a subdivision, combination, reclassification or exchange of
shares provided for elsewhere in this Section 2) or merger of the Company
<PAGE>
into another corporation, or the sale of the Company's properties and
assets as, or substantially as, an entirety to any other person, then, as a
part of such reorganization, merger or sale, lawful provision shall be made
so that the holders of the Preferred Stock receive the number of shares of
stock or other securities or property of the Company, or of the successor
corporation resulting from such merger, to which holders of the Common
Stock deliverable upon conversion of the Preferred Stock would have been
entitled on such capital reorganization, merger or sale if the Preferred
Stock had been converted immediately before that capital reorganization,
merger or sale to the end that the provisions of this paragraph (including
adjustment of the Conversion Rate then in effect and the number of shares
purchasable upon conversion of the Preferred Stock) shall be applicable
after that event as nearly equivalently as may be practicable.
(k) No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization, transfer of
assets, merger, dissolution, or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 2 and in
the taking of all such action as may be necessary or appropriate in order
to protect the Conversion Rights of the holders of the Preferred Stock
against impairment.
(l) Certificate as to Adjustments. Upon the occurrence of each adjustment or
readjustment of the Conversion Rate for any shares of Preferred Stock
pursuant to paragraphs 2(i) or (j) hereof, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Preferred Stock
effected thereby a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request at any
time of any holder of Preferred Stock, furnish or cause to be furnished to
such holder a like certificate setting forth: (i) such adjustments and
readjustments; (ii) the Conversion Rate at the time in effect; and (iii)
the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of such
holder's shares of Preferred Stock
(m) Limitation on Conversion. Notwithstanding anything to the contrary set
forth herein the Preferred Stock held by a particular Purchaser shall
not convert if, upon giving effect to such conversion, the aggregate
number of shares of Common Stock beneficially owned by that Purchaser
and its affiliates exceed 9.9% of the outstanding shares of the Common
Stock following such conversion.
Liquidation Provisions
3. In the event of any liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, holders of Preferred Stock shall be entitled
to receive an amount equal to $1,000.00 per share, plus any accrued and unpaid
dividends. After the full preferential liquidation amount has been paid to, or
determined and set apart for the Preferred Stock and all other series of
<PAGE>
preferred stock hereafter authorized and issued, if any, the remaining assets of
the Company available for distribution to shareholders shall be distributed
ratably to the holders of the Common Stock. In the event the assets of the
Company available for distribution to its shareholders are insufficient to pay
the full preferential liquidation amount per share required to be paid to the
holders of Company's Preferred Stock, the entire amount of assets of the Company
available for distribution to shareholders shall be paid up to their respective
full liquidation amounts first to the holders of Preferred Stock, then to any
other series of preferred stock hereafter authorized and issued, all of which
amounts shall be distributed ratably among holders of each such series of
preferred stock, and the Common Stock shall receive nothing. A reorganization or
any other consolidation or merger of the Company with or into any other
corporation, or any other sale of all or substantially all of the assets of the
Company, shall not be deemed to be a liquidation, dissolution or winding up of
the Company within the meaning of this Section 3, and the Preferred Stock shall
be entitled only to: (i) the rights provided in any agreement or plan governing
the reorganization or other consolidation, merger or sale of assets transaction;
(ii) the rights contained in the Delaware General Business Corporation Law; and
(iii) the rights contained in other Sections hereof.
Dividend Provisions
4. The holders of shares of Preferred Stock shall not be entitled to receive any
dividends.
Reservation of Stock to be issued upon Conversion
5. The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose of
effecting the conversion of the shares of the Preferred Stock such number of its
shares of Common Stock as shall from time to time be sufficient, based on the
Conversion Rate then in effect, to effect the conversion of all then outstanding
shares of the Preferred Stock. If at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Preferred Stock, then, in addition to all
rights, claims and damages to which the holders of the Preferred Stock shall be
entitled to receive at law or in equity as a result of such failure by the
Company to fulfill its obligations to the holders hereunder, the Company will
take any and all corporate or other action as may, in the opinion of its
counsel, be helpful, appropriate or necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
Notices
6. In the event of the establishment by the Company of a record of the holders
of any class of securities for the purpose of determining the holders thereof
who are entitled to receive any distribution, the Company shall mail to each
holder of Preferred Stock at least twenty (20) days prior to the date specified
therein a notice specifying the date on which any such record is to be taken for
the purpose of such distribution and the amount and character of such
distribution.
<PAGE>
7. Any notices required by the provisions hereof to be given to the holders of
shares of Preferred Stock shall be deemed given if deposited in the United
States mail, postage prepaid and return receipt requested, and addressed to each
holder of record at its address appearing on the books of the Company or to such
other address of such holder or its representative as such holder may direct.
Voting Provisions
8. Except as otherwise expressly provided or required by law, the Preferred
Stock shall have no voting rights.
IN WITNESS WHEREOF, the Company has caused this Amended Certificate of
Designation of Series A Convertible Preferred Stock to be duly executed by its
President and attested to by its Secretary the 3rd day of February, 2000, who,
by signing their names hereto, acknowledge that this Certificate of Designation
is the act of the Company and state to the best of their knowledge, information
and belief, under the penalties of perjury, that the above matters and facts are
true in all material respects.
PARAMOUNT SERVICES CORP.
____________________________
Andrew Hromyk, President
____________________________
Andrew Hromyk, Secretary
<PAGE>
EXHIBIT A
CONVERSION CERTIFICATE
PARAMOUNT SERVICES CORP.
Series A Convertible Preferred Stock
The undersigned holder (the "Holder") is surrendering to Paramount Services
Corp., a Delaware corporation (the "Company"), one or more certificates
representing shares of Series A Convertible Preferred Stock of the Company (the
"Preferred Stock") in connection with the conversion of all or a portion of the
Preferred Stock into shares of Common Stock, $0.0001 par value per share, of the
Company (the "Common Stock") as set forth below.
1. The Holder understands that the Preferred Stock was issued by the
Company pursuant to the exemption for registration under the United
States Securities Act of 1933, as amended (the "Securities Act"),
provided by Regulation D promulgated thereunder.
2. The Holder represents and warrants that all offers and sales of the Common
Stock issued to the Holder upon such conversion of the Preferred Stock shall be
made (a) pursuant to an effective registration statement under the Securities
Act, (in which case the Holder represents that a prospectus has been delivered)
(b) in compliance with Rule 144, or (c) pursuant to some other exemption from
registration.
Number of Shares of Preferred Stock being Converted:
Applicable Conversion Rate:
OR
Applicable Alternative Conversion Rate:
Number of Shares of Common Stock To be issued:
Conversion Date:
Delivery instructions for certificates of Common Stock and for new certificates
representing any remaining shares of Preferred Stock:
Name of Holder - Printed
Signature of Holder
