SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT dated this 27th day of September,
1999, is made
BETWEEN
PLAYANDWIN CANADA INC., a corporation
incorporated under the laws of the Province of
Ontario (the "Purchaser")
OF THE FIRST PART
and the holders of common shares and common
share purchase warrants of PEST identified in
Schedule 2 hereto (the "Vendors")
OF THE SECOND PART
and PLAYANDWIN, INC., a corporation
incorporated under the laws of the State of Nevada
("PWIN")
OF THE THIRD PART
and P.E.S.T. CREATIVE GAMING CORPORATION, a
corporation incorporated under the laws of the
Province of Ontario ("PEST")
OF THE FOURTH PART
WHEREAS the Vendors are the registered and beneficial owners
of 114,284 common shares ("Shares") and 57,142 common share
purchase warrants ("Warrants") of PEST, a corporation
incorporated under the laws of the Province of Ontario;
AND WHEREAS the Purchaser desires to purchase the Shares and
the Warrants (collectively referred to as the "Purchased
Securities") from the Vendors and the Vendors desire to sell the
Purchased Securities to the Purchaser;
AND WHEREAS the Purchaser is a wholly-owned subsidiary of
PWIN;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of
the mutual covenants hereinafter contained and provided for and
other good and valuable consideration (the receipt and
sufficiency of which is hereby acknowledged by the Parties), the
Parties agree as follows:
ARTICLE I
INTERPRETATION
1.1 Definitions. In this Agreement, unless the context otherwise
requires, the terms set forth in Schedule 1 shall have the
meanings set forth therein.
1.2 Entire Agreement. This Agreement together with the
agreements and other documents to be delivered pursuant to this
Agreement, constitute the entire agreement between the Parties
pertaining to the Share Exchange and supersedes all prior
agreements, understandings, negotiations and discussions, whether
oral or written, and there are no warranties, representations and
other agreements between the Parties in connection with the
subject matter hereof except as specifically set forth in this
Agreement or any other agreement or document to be delivered
pursuant to this Agreement.
1.3 Extended Meanings. In this Agreement, words importing the
singular number include the plural and vice versa; words
importing the masculine gender include the feminine and neuter
genders.
1.4 Headings. The division of this Agreement into articles,
sections, subsections and paragraphs and the insertion of
headings are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement.
1.5 References. References to an article, section, subsection,
paragraph, schedule or exhibit shall be construed as references
to an article, section, subsection, paragraph, schedule or
exhibit to this Agreement, unless the context otherwise requires.
1.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the Province of Ontario
and the laws of Canada applicable in that Province.
1.7 Currency. Unless otherwise specified, the word "dollar", or
the symbol "$" refers to Canadian currency.
1.8 Schedules. The following is a list of schedules attached to
and incorporated into this Agreement by reference and deemed as
part of this Agreement.
SCHEDULE DESCRIPTION
1 Definitions
2 Vendors' Shareholdings
3 Support Agreement
ARTICLE II
SHARE EXCHANGE
2.1 Agreement to Purchase. Upon the terms and subject to the
conditions contained in this Agreement, the Vendors shall sell
and the Purchaser shall purchase the Purchased Securities as of
and with effect from the opening of business on the Closing Date.
2.2 Share Exchange. The purchase and sale of the Purchased
Securities shall be effected by the issue of Class B Special
Shares from the treasury of the Purchaser (the "Exchangeable
Shares") and of warrants to purchase Exchangeable Shares (the
"Exchangeable Warrants") to the Vendors, pursuant to the
prospectus and registration exemptions contained in paragraphs
72(1)(j) and 35(1)(16) of the Securities Act (Ontario), in
exchange for the Shares and Warrants (the "Share Exchange"), at
a ratio of two Exchangeable Shares for every one Share and two
Exchangeable Warrants for every one Warrant.
2.3 Rollover. At the option of each Vendor, the Purchaser
covenants and agrees to elect, jointly with such Vendor if
applicable, (referred to in this section as the "Electing
Vendor") in accordance with the provisions of subsection 85(1) or
85.1(1) of the Income Tax Act (Canada) (the "Tax Act") (and the
corresponding provisions of any applicable provincial tax
legislation) in the prescribed form and within the prescribed
time for the purposes of the Tax Act, and shall therein agree to
elect in respect of the Purchased Securities of the Electing
Vendor an amount as the Electing Vendor shall direct which shall
be deemed to be the Electing Vendor's proceeds of disposition
thereof and Purchaser's cost thereof. Notwithstanding the
foregoing, the Electing Vendor may not direct the parties to
elect an amount which is greater than the fair market value of
the Purchased Securities or an amount which is less than the
adjusted cost base of the Purchased Securities to the Electing
Vendor. The Electing Vendor and the Purchaser agree to execute
all such documents and forms to make the election contemplated in
this section.
2.4 Price Adjustment. The parties hereto covenant and agree
that, in the event that any governmental taxing authority having
jurisdiction issues or proposes to issue, assessments or
reassessments of additional liability for taxes or any other
subject by reason of asserting that the Elected Amount is greater
or less than the adjusted cost base of the Purchased Securities
to the Electing Vendor, or that the adjusted cost base of the
Purchased Securities to the Electing Vendor is greater than or
less than the Elected Amount, then the Elected Amount shall be
increased or decreased by the difference so determined; but only
to the extent that the Elected Amount so revised is accepted by
the taxing authority, the Electing Vendor and the Purchaser, or,
failing such acceptance is established by the courts having
jurisdiction in the matter after all rights of appeal have been
exhausted and all times for appeal have expired without appeals
having been taken by such taxing authority, the Electing Vendor
or the Purchaser. Each of the Electing Vendor and the Purchaser
hereby agrees to make such further elections, enter into such
acknowledgements or agreements, and do or cause to be done such
further acts and things as may be, in the opinion of counsel,
reasonably necessary to give effect to this section and the
change in the Elected Amount.
2.5 Exchangeable Shares. The Exchangeable Shares to be issued by
the Purchaser pursuant to this Agreement shall be subject to the
following terms:
(a) each Exchangeable Share may be exchanged at the request
of its holder for one common share of PWIN, provided that in
the event of a consolidation, split or other reorganization
of the capital stock of the Purchaser or of PWIN, the number
of PWIN common shares issuable for each one Exchangeable
Share shall be adjusted accordingly;
(b) Of the Exchangeable Shares received by a Lynx
Shareholder on the Closing Date:
(i) none may be exchanged during the period ending on
and including the day of the first anniversary of
the Closing Date;
(ii) up to one-third (1/3) may be exchanged after said
first anniversary;
(iii) an additional one-third (1/3) may be
exchanged after the second anniversary of the
Closing Date; and
(iv) all Exchangeable Shares may be exchanged after the
third anniversary of the Closing Date.
(c) Each Exchangeable Share may be exchanged at the request
of the Purchaser at any time during the period ending on and
including the day of the fifth anniversary of the Closing
Date, and shall be exchanged upon: (i) the occurrence of a
take over bid for all of the issued and outstanding shares
of PWIN; or (ii) the day of the fifth anniversary of the
Closing Date. All Exchangeable Shares shall be automatically
exchanged on the fifth anniversary of the Closing Date.
2.6 Exchangeable Warrants. Each Exchangeable Warrant to be
issued by PWIN Canada pursuant to this Agreement shall entitle
its holder to acquire one Exchangeable Share at a price of $1.70.
No Exchangeable Warrant may be exercised on or before the day of
the first anniversary of the Closing Date. The Exchangeable
Warrants shall expire eighteen (18) months after the Closing
Date.
2.7 Acknowledgment of Resale Restrictions. The Vendors hereby
acknowledge that any Exchangeable Shares or PWIN common shares
that they receive pursuant to this Agreement are restricted in
accordance with the United States Securities Act of 1933, as
amended, and the rules promulgated thereunder.
2.8 PWIN Proceedings. PWIN shall use its best efforts to
complete an S-4 filing with the US Securities and Exchange
Commission so as to permit the PWIN common shares obtained by the
Lynx Shareholders under this Agreement to be tradeable without
restriction.
2.9 Fractional Shares. No fractional Exchangeable Shares or
Exchangeable Warrants shall be issued pursuant to this Agreement.
The amount of Exchangeable Shares and/or Exchangeable Warrants
issuable to each Vendor shall be rounded up to the nearest whole
Exchangeable Share or Exchangeable Warrant.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE VENDORS AND PEST
3.1 Representations and Warranties of the Vendors. Each of the
Vendors jointly and severally represents and warrants to the
Purchaser and PWIN as follows (to the extent that the following
representations and warranties relate to that Vendor) and
acknowledges that the Purchaser and PWIN are relying on these
representations and warranties in connection with the completion
of the Share Exchange:
(a) Capacity to own Purchased Securities - The Vendors have all
necessary power, authority and capacity to own the Purchased
Securities. .
(b) Capacity to Enter Agreement - The Vendors have full power,
right and authority to enter into this Agreement and to
perform their obligations under it.
(c) Binding Obligation - This Agreement has been duly executed
and delivered by the Vendors and constitutes a valid and
binding obligation of each of them.
(d) Absence of Conflict - The Vendors are not a party to, bound
or affected by any agreement which would be violated,
breached or terminated by, or which would result in creation
or imposition of any Encumbrance upon any of the Purchased
Securities as a consequence of the execution and delivery
of this Agreement or the consummation of the transactions
contemplated in this Agreement.
(e) Title to Purchased Securities - The Vendors are the legal
and beneficial owners of the Purchased Securities as set
forth in Schedule 2 with good and marketable title, free and
clear of any Encumbrances.
(f) No Bankruptcy - No proceedings have been taken or authorized
by any Vendor or by any other person in respect of the
bankruptcy, insolvency, liquidation, dissolution or winding
up as applicable, of any Vendor.
(g) No Option - No Person, other than the Purchaser under this
Agreement, has any agreement or any right capable of
becoming an agreement or option for the purchase from the
Vendors of any of the Purchased Securities.
(h) Disclosure - The representations and warranties of the
Vendors in this Agreement are true, correct and do not
contain any untrue or misleading statement of a material
fact or omit to state a material fact necessary to make such
representations and warranties not misleading to the
Purchaser.
(i) Non-Violation - The entering into of this Agreement and the
consummation of transactions contemplated herein do not and
will not conflict with, or result in a breach of, or
constitute a default under the terms or conditions of any
constating document of the Vendor (if a corporation), any
by-laws, any court or administrative order or process, any
agreement or instrument to which the Vendor is party or by
which it is bound.
3.2 Representations and Warranties of PEST. PEST hereby
represents and warrants to the Purchaser and PWIN as follows and
acknowledges that the Purchaser and PWIN are relying on those
representations and warranties in connection with the Share
Exchange:
(a) Due Incorporation - PEST is a corporation duly incorporated
and validly existing under the laws of the Province of
Ontario.
(b) Capacity to Enter Agreement - PEST has full power, right and
authority to enter into this Agreement and to perform the
obligations under it.
(c) Due Corporate Authorization - The execution and delivery of
this Agreement and the consummation of the transactions
contemplated under it have been duly authorized by all
necessary corporate action on the part of PEST.
(d) Binding Obligation - This Agreement has been duly executed
and delivered by PEST and constitutes a valid and binding
obligation of PEST.
(e) Absence of Conflict - PEST is not a party to, bound or
affected by or subject to any agreement which would be
violated, breached or terminated by, or which would result
in the creation or imposition of any Encumbrance upon any of
the Purchased Securities as a consequence of, the execution
and delivery of this Agreement or the consummation of the
transactions contemplated in this Agreement.
(f) Regulatory Approvals - No governmental or regulatory
authorization, approval, order, consent or filing is
required on the part of PEST, in connection with the
execution, delivery and performance of this Agreement and
the performance of PEST's obligations under this Agreement.
(g) No Bankruptcy - No proceedings have been taken, are pending
or authorized by PEST or by any other person in respect to
the bankruptcy, insolvency, liquidation, dissolution or
winding up of PEST.
(h) Litigation - There are no judgements, decrees, injunctions,
ruling or orders of any court, Governmental Authority or
arbitration, or any actions, suits, grievances or
proceedings (whether or not on behalf of PEST) pending or
threatened or PEST which may materially adversely affect
PEST's assets.
(i) Disclosure - The representations and warranties of PEST in
this Agreement are true, complete and correct and do not
contain any untrue or misleading statement of a material
fact or omit to state a material fact necessary to make such
representations and warranties not misleading to the
Purchaser, PWIN Canada and PWIN.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER AND PWIN
4.1 Representations and Warranties of The Purchaser. The
Purchaser hereby represents and warrants to the Vendors as
follows and acknowledges that the Vendors are relying on those
representations and warranties in connection with the Share
Exchange:
(a) Due Incorporation - The Purchaser is a corporation duly
incorporated and validly existing under the laws of the
Province of Ontario.
(b) Capacity to Enter Agreement - The Purchaser has full power,
right and authority to enter into this Agreement and to
perform the obligations under it.
(c) Due Corporate Authorization - The execution and delivery of
this Agreement and the consummation of the transactions
contemplated under it have been duly authorized by all
necessary corporate action on the part of the Purchaser.
(d) Binding Obligation - This Agreement has been duly executed
and delivered by the Purchaser and constitutes a valid and
binding obligation of the Purchaser.
(e) Absence of Conflict - The Purchaser is not a party to, bound
or affected by or subject to any agreement which would be
violated, breached or terminated by, or which would result
in the creation or imposition of any Encumbrance upon any of
the Exchangeable Shares or Exchangeable Warrants as a
consequence of, the execution and delivery of this Agreement
or the consummation of the transactions contemplated in this
Agreement.
(f) Regulatory Approvals - No governmental or regulatory
authorization, approval, order, consent or filing is
required on the part of the Purchaser, in connection with
the execution, delivery and performance of this Agreement
and the performance of the Purchaser's obligations under
this Agreement.
(g) No Bankruptcy - No proceedings have been taken, are pending
or authorized by the Purchaser or by any other person in
respect to the bankruptcy, insolvency, liquidation,
dissolution or winding up of the Purchaser.
(h) Litigation - There are no judgements, decrees, injunctions,
ruling or orders of any court, Governmental Authority or
arbitration, or any actions, suits, grievances or
proceedings (whether or not on behalf of the Purchaser)
pending or threatened or the Purchaser which may materially
adversely affect the Purchaser's assets.
(i) Disclosure - The representations and warranties of the
Purchaser in this Agreement are true, complete and correct
and do not contain any untrue or misleading statement of a
material fact or omit to state a material fact necessary to
make such representations and warranties not misleading to
the Vendors.
(j) Support Agreement - the Purchaser has entered into the
support agreement with PWIN appended hereto as Schedule 3,
pursuant to which PWIN will make available its common shares
for issuance on a redemption or retraction of the
Exchangeable Shares.
4.2 Representations and Warranties of PWIN. PWIN hereby
represents and warrants to the Vendors as follows and
acknowledges that the Vendors are relying on those
representations and warranties in connection with the Share
Exchange:
(a) Due Incorporation - PWIN is a corporation duly incorporated
and validly existing under the laws of the State of Nevada.
(b) Capacity to Enter Agreement - PWIN has full power, right
and authority to enter into this Agreement and to perform
the obligations under it.
(c) Due Corporate Authorization - The execution and delivery of
this Agreement and the consummation of the transactions
contemplated under it have been duly authorized by all
necessary corporate action on the part of PWIN .
(d) Binding Obligation - This Agreement has been duly executed
and delivered by PWIN and constitutes a valid and binding
obligation of PWIN .
(e) Absence of Conflict - PWIN is not a party to, bound or
affected by or subject to any agreement which would be
violated, breached or terminated by, or which would result
in the creation or imposition of any Encumbrance upon its
common shares as a consequence of, the execution and
delivery of this Agreement or the consummation of the
transactions contemplated in this Agreement.
(f) Regulatory Approvals - No governmental or regulatory
authorization, approval, order, consent or filing is
required on the part of PWIN , in connection with the
execution, delivery and performance of this Agreement and
the performance of PWIN's obligations under this Agreement.
(g) No Bankruptcy - No proceedings have been taken, are pending
or authorized by PWIN or by any other person in respect to
the bankruptcy, insolvency, liquidation, dissolution or
winding up of PWIN .
(h) Litigation - There are no judgements, decrees, injunctions,
ruling or orders of any court, Governmental Authority or
arbitration, or any actions, suits, grievances or
proceedings (whether or not on behalf of PWIN ) pending or
threatened or PWIN which may materially adversely affect
PWIN 's assets.
(i) Disclosure - The representations and warranties of PWIN in
this Agreement are true, complete and correct and do not
contain any untrue or misleading statement of a material
fact or omit to state a material fact necessary to make such
representations and warranties not misleading to Vendors.
(j) Support Agreement - PWIN has entered into the support
agreement with the Purchaser appended hereto as Schedule 3,
pursuant to which PWIN will make available its common shares
for issuance on a redemption or retraction of the
Exchangeable Shares.
ARTICLE V
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
5.1 All representations and warranties contained in this
Agreement on the part of each of the parties shall survive the
Closing for a period of one (1) year from the Closing Date, after
which time, if no claim shall have been made against a Party with
respect to any incorrectness or in breach of any representation
or warranty, that Party shall have no further liability under
this Agreement with respect to the representation or warranty.
5.2 All statements contained in any certificate or any
instrument delivered by or on behalf of a Party pursuant to or in
connection with the transactions contemplated by this Agreement
shall be deemed to be made by such Party under this Agreement.
ARTICLE VI
CONDITIONS OF CLOSING
6.1 Conditions for the Purchaser's Benefit. The Purchaser and
PWIN shall not be obliged to complete the Share Exchange unless,
on the Closing Date, each of the following conditions shall have
been satisfied:
(a) Accuracy of Representations - The representations and
warranties of the Vendors and PEST set forth in sections 3.1
and 3.2 respectively, shall be true and correct at the
Closing, except as those representations and warranties may
be affected by the occurrence of events or transactions
expressly contemplated and permitted by this Agreement,
including, without limitation, those in the ordinary course
of business, and the Purchaser shall have received a
certificate from the Vendors confirming the foregoing.
(b) Performance of Obligations - The Vendors shall have
performed all of the obligations hereunder to be performed
by them at or prior to the Closing. The Vendors shall not be
in breach of any agreement on its part contained herein.
(c) Deliveries - The Vendors shall have delivered or caused to
be delivered to the Purchaser the Conveyance Documents, and
shall deliver up to the Purchaser possession of the Shares,
free and clear of any Encumbrances.
(d) Approval - The Vendors shall obtain all requisite
shareholder or regulatory approvals for the Share Exchange,
and shall undertake such corporate actions as may be
necessary to authorize the performance of their obligations
under this Agreement on or before the Closing Date. The
board of directors of PEST shall have approved the transfer
of the Purchased Securities.
(e) Consents, Authorizations and Registrations - All consents,
approvals, orders and authorizations of, from or
notifications to any persons or Governmental Authorities
required in connection with the completion of any of the
transactions contemplated by this Agreement, the execution
of this Agreement, the Closing or the performance of any of
the terms and conditions of this Agreement shall have been
obtained on or before the Closing Date.
There shall be no injunction or order issued preventing, and
no pending or threatened claim, action, litigation or
proceeding, judicial or administrative, or investigation
against any Party by any Governmental Authority or Person
for the purpose of enjoining or preventing the consummation
of this Agreement, or otherwise claiming that this Agreement
or the consummation thereof is improper or would give rise
to proceedings under any statute or rule of law.
(f) No Loss - During the Interim Period, there has been no
material damage to the assets or business of PEST by fire or
other peril, whether or not such damage is covered by
insurance;
(h) No Material Changes - There shall have been no material
adverse changes in the business, assets or financial
condition of Pest during the Interim Period. For the
purposes of this subsection, the term "material adverse
change" shall mean any change in the business, assets,
liabilities or financial condition of PEST that may involve
material reduction, damage, risk to or destruction of the
assets, whether or not the change is covered by insurance.
If any one or more of the foregoing conditions shall not have
been fulfilled on or before the Closing Date, the Purchaser may
terminate this Agreement by notice in writing to the other
Parties in which event the Purchaser shall be released from all
obligations under this Agreement and (unless the Purchaser can
show that the condition relied upon could reasonably have been
performed by the other parties) the other Parties shall also be
released from all obligations hereunder; provided, however, that
the Purchaser shall be entitled to waive compliance with any one
or more of such conditions in whole or in part if it shall see
fit to do so, without prejudice to its rights of termination in
the event of the non-fulfilment of any other condition in whole
or in part.
6.2 Conditions for the Benefit of the Vendors. The Vendors
shall not be obliged to complete the Share Exchange unless, on
the Closing Date, each of the following conditions shall have
been satisfied:
(a) Accuracy of Representations - The representations and
warranties of the Purchaser and PWIN as set forth in
sections 4.1 and 4.2, respectively, shall be true and
correct at the Closing, except as those representations and
warranties may be affected by the occurrence of events or
transactions expressly contemplated and permitted by this
Agreement, and the Vendors shall have received certificates
from the Purchaser and PWIN confirming the foregoing.
(b) Performance of Obligations - the Purchaser and PWIN shall
have performed all of the obligations hereunder to be
performed by it at or prior to the Closing and the Purchaser
and PWIN shall not be in breach of any agreement on its part
contained herein.
(c) Deliveries - the Purchaser shall have delivered or caused to
be delivered to Vendors possession of the Exchangeable
Shares and Exchangeable Warrants, free and clear of any
Encumbrances.
(d) Approval - The Purchaser and PWIN shall have obtained all
requisite shareholder or regulatory approvals for the Share
Exchange, and shall undertake such corporate actions as may
be necessary to authorize the performance of their
obligations under this Agreement on or before the Closing
Date.
(e) Consents, Authorizations and Registrations - All consents,
approvals, orders and authorizations of, from or
notifications to any Persons or Governmental Authorities
required in connection with the completion of any of the
transactions contemplated by this Agreement, the execution
of this Agreement, the Closing or the performance of any of
the terms and conditions of this Agreement shall have been
obtained on or before the Closing Date.
There shall be no injunction or order issued preventing, and
no pending or threatened claim, action, litigation or
proceeding, judicial or administrative, or investigation
against any Party by any Governmental Authority or Person
for the purpose of enjoining or preventing the consummation
of this agreement, or otherwise claiming that this Agreement
or the consummation thereof is improper or would give rise
to proceedings under any statute or rule of law.
(f) No Loss - During the Interim Period, there has been no
material damage to the assets or business of the Purchaser
or PWIN Canada by fire or other peril, whether or not such
damage is covered by insurance.
(g) No Material Changes - There shall have been, in the
reasonable opinion of the Vendors, no material adverse
changes in the assets or financial condition of the
Purchaser or PWIN Canada during the Interim Period. For the
purposes of this subsection, the term "material adverse
change" shall mean any change in the assets, liabilities or
financial condition of the Purchaser that may, in the
reasonable opinion of Vendors involve material reduction,
damage, risk to or destruction of the assets whether or not
the change is covered by insurance.
If any one or more of the foregoing conditions shall not have
been fulfilled on or before the Closing Date, the Vendors may
terminate this Agreement by notice in writing to the Purchaser
and PWIN Canada in which event the Vendors shall be released from
all obligations under this Agreement and (unless the Vendors can
show that the condition relied upon could reasonably have been
performed by the Purchaser) the Purchaser shall also be released
from all obligations hereunder; provided, however, that the
Vendors shall be entitled to waive compliance with any one or
more of such conditions in whole or in part if they shall see fit
to do so, without prejudice to their rights to termination in the
event of the non-fulfilment of any other condition in whole or in
part.
ARTICLE VII
INDEMNIFICATION
7.1 Mutual Indemnification's for Breaches of Warranty, etc.
Subject to section 7.3, the Purchaser and PWIN hereby covenant
and agree with the Vendors and the Vendors hereby covenant and
agree severally with the Purchaser and PWIN (the parties
covenanting and agreeing to indemnify another party under this
Article VII are hereinafter individually referred to as
"Indemnifying Party" and the parties that are being indemnified
by another Party under this Article VII are hereinafter
individually referred to as the "Indemnified Party") to indemnify
and save harmless the Indemnified Party, effective as and from
the Closing Time, from and against any Claims which may be made
or brought against the Indemnified Party and/or which it may
suffer or incur as a result of, or arising out of any
non-fulfilment of any covenant or agreement on the part of the
Indemnifying Party under this Agreement or any Ancillary
Agreement or any incorrectness in or breach of any representation
or warranty of the Indemnifying Party contained in this
Agreement.
7.3 Limitation on Mutual Indemnification. The indemnification
obligations of each of the Parties pursuant to section 7.1 shall
be subject to the following:
(a) the applicable limitation mentioned in Article V respecting
the survival of the representations and warranties of the
Parties;
(b) there shall be no limit as to amount in respect of breaches
of the representations and warranties of the Parties other
than as specifically limited by the provisions of the
section; and
(c) an Indemnifying Party shall not be required to indemnify an
Indemnified Party until the aggregate Claims sustained by
the Indemnified Party exceeds a value of $5,000, in which
case the Indemnifying Party shall be obligated to the
Indemnified party for all Claims without limit as to amount.
7.4 Procedure for Indemnification. The following provisions
shall apply to any Claims for which an Indemnifying Party may be
obligated to indemnify an Indemnified Party pursuant to this
Agreement:
(a) upon receipt from a third party by the Indemnified Party of
notice of a Claim or the Indemnified party becoming aware of
a Claim in respect of which the Indemnified Party proposes
to demand indemnification from the Indemnifying Party, the
Indemnified Party shall give notice to that effect to the
Indemnifying Party with reasonable promptness, provided that
failure to give such notice shall not relieve an
Indemnifying Party from any liability it may have to the
Indemnified Party except to the extent that the Indemnifying
Party is prejudiced thereby;
(b) in the case of Claims arising from third parties, the
Indemnifying Party shall have the right by notice to the
Indemnified party not later than thirty (30) days after
receipt of the notice described in paragraph (i) above to
assume the control of the defense, compromise or settlement
of the Claims, provided that such assumption shall, by its
terms, be without costs to the Indemnified Party and the
Indemnifying Party shall at the Indemnified Party's request
furnish it with reasonable security against any costs or
other liabilities to which it may be or become exposed by
reason of such defense, compromise or settlement;
(c) upon the assumption of control by the Indemnifying Party as
aforesaid, the Indemnifying Party shall diligently proceed
with the defense, compromise or settlement of the Claims at
its sole expense, including employment of counsel reasonably
satisfactory to the Indemnified Party and, in connection
therewith, the Indemnified Party shall co-operate fully, but
at the expense of the Indemnifying Party, to make available
to the Indemnifying Party all pertinent information and
witnesses under the Indemnified Party's control, make such
assignments and take such other steps as in the opinion of
counsel for the Indemnifying Party are necessary to enable
the Indemnifying Party to conduct such defense; provided
always that the Indemnified Party shall be entitled to
reasonable security from the Indemnifying Party for the
expense, costs of other liabilities to which it may be or
may become exposed by reason of such co-operation;
(d) the final determination of any such Claims arising from
third parties, including all related costs and expenses,
will be binding and conclusive upon the Parties as to the
validity or invalidity, as the case may be of such Claims
against the Indemnifying Party hereunder; and
(e) should the Indemnifying Party fail to give notice to the
Indemnified Party as provided in paragraph (ii) above, the
Indemnified Party shall be entitled to make such settlement
of the Claims as in its sole discretion may appear
advisable, and such settlement or any other final
determination of the Claims shall be binding upon the
Indemnifying Party.
ARTICLE VIII
CLOSING ARRANGEMENTS
8.1 Closing. The Closing shall take place at the offices of
Stewart & Associates, Barristers and Solicitors, 1 First Canadian
Place, Suite 700, 100 King Street West, Toronto M5X 1C7,
Ontario, Canada at the Closing Time on the Closing Date.
8.2 Closing Procedures. At the Closing Time:
(a) the Purchaser shall issue and deliver to the Vendors
possession of the Exchangeable Shares and Exchangeable
Warrants;
(b) the Vendors shall deliver up to the Purchaser the Purchased
Securities;
(c) the Parties shall take or shall have taken, as the case may
be, the other actions contemplated to be taken by them at or
before the Closing contemplated in this Agreement.
8.3 Non-Waiver. No investigations made by or on behalf of any
Party at any time shall have the effect of waiving or diminishing
the scope of or otherwise affecting any representation, warranty
or indemnity made by or imposed upon the Parties pursuant to this
Agreement.
ARTICLE IX
GENERAL
9.1 Termination.
(1) This agreement may be terminated at any time prior to the
Closing Date:
(a) by the mutual agreement of the Parties;
(b) by the Parties if:
(i) the Share Exchange shall not have been
completed by October 1, 1999 (or such other date,
if any, as the Parties shall have agreed in
writing), if the failure to complete such purchase
and sale on or before such date is not caused by
any breach of this Agreement by the Party electing
to terminate; or
(ii) the Share Exchange would violate any
non-appealable final order, decree or judgement of
any court or governmental body having competent
jurisdiction.
(2) If this Agreement is terminated by a Party under subsection
9.1(1), such termination shall be without liability of
either Party to the other parties, or to any of their
Vendors, directors, officers, employees, agents, consultants
or representatives provided that if such termination shall
result from the wilful failure of the Party to fulfil a
condition to the performance of the other Parties or to
perform a covenant of this agreement or from a wilful breach
by the party to this Agreement, the Party shall be fully
liable for any and all damages, costs and expenses
(including, but not limited to, reasonable counsel fees and
disbursements) sustained or incurred by the other Parties.
9.2 Expenses Except as otherwise specified herein, all costs
and expenses (including the fees and disbursements of accountants
and legal counsel) incurred in connection with this Agreement and
completion of the transactions contemplated by this Agreement
shall be paid by the Party incurring those expenses.
9.3 Time of Essence. Time shall be of the essence in all
respects of this Agreement.
9.4 Notices. Any notice or other communication which is
required or permitted to be given or made by one Party to the
others hereunder shall be in writing and shall be either
personally delivered to such Parties sent by facsimile.
Any notice shall be sent to the intended recipient at its
address as follows:
(a) to PWIN and the Purchaser:
c/o Stewart Garner and Peter Tassiopoulos
155 University Avenue
Suite 501
Toronto, Ontario
M5N 3N5
Facsimile No.: (416) 368-3870
and to Chapman & Flanagan, Ltd. at:
c/o Dan Chapman
2080 E. Flamingo Road
Suite 112
Las Vegas, Nevada
89119
Facsimile No. (702) 650-5667
and to Stewart & Associates at:
Suite 700, P.O. Box 160
1 First Canadian Place
100 King Street West
Toronto, Ontario
M5X 1C7
Attention: Adam K. Szweras
Facsimile No.: (416) 368-7805
(b) to the Vendors at:
Colony Investments Limited
The Annex, 12 Fritholme Garden
Paget Pg. 04 Bermuda
FMF Investments S.A.
P.O. Box 58, The Arch Plaza
Providenciales, Turks & Caicos Islands
British West Indies
Dane Walton
23 Aylesbury Road
Toronto, Ontario, M9A 2M3
and to Marilyn Bloovol at:
79 Old Forest Hill Road
Toronto, Ontario
M5P 2R6
Facsimile No.: (416) 482-2558
or at such other address as any Party may from time to time
advise the others by notice in writing. Any notice given by
personal delivery shall be deemed to be received on the date of
delivery. Any notice sent by facsimile or similar method of
recorded communication shall be deemed to have been received on
the next Business Day following the date of its transmission.
9.5 Further Assurances. The Parties shall with reasonable
diligence do all things and provide all reasonable assurances as
may be required to complete the transactions contemplated by this
Agreement, and each Party shall provide such further documents or
instruments required by any other Party as may be reasonably
necessary or desirable to give effect to this Agreement and carry
out its provisions, whether before or after the Closing.
9.6 Public Notice. All public notices to third parties and all
other publicity concerning the transactions contemplated by this
Agreement shall be jointly planned and co-ordinated by the
Parties and no Party shall act unilaterally in this regard
without the prior written approval of the other Parties, such
approval not to be unreasonably withheld.
9.7 Amendment and Waiver. No supplement, modification, waiver
or termination of this Agreement shall be binding unless executed
in writing by the party to be bound. No waiver of any of the
Provisions of this Agreement shall constitute a waiver of any
other provision (whether or not similar) nor shall such waiver
constitute a continuing waiver unless otherwise expressly
provided.
9.8 Assignment. This Agreement and the rights or obligations
hereunder or thereunder are not assignable by any Party without
the prior written consent of the other Parties, which consent
shall not be unreasonably withheld. This Agreement shall enure to
the benefit of and be binding upon the Parties and their
respective successors and permitted assigns.
9.9 Severability. Any provision of this Agreement, which is
prohibited or unenforceable in any jurisdiction, shall not
invalidate the remaining provisions hereof. Any such prohibition
or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9.10 Governing Law. The Parties agree that this Agreement shall
be governed by the laws of the Province of Ontario, and the
federal laws of Canada applicable therein, that Ontario will be
the proper forum for any controversy arising in connection with
this Agreement and that the courts of which will be the exclusive
forums for all such suits, actions or proceedings.
9.11 Counterparts. This Agreement may be executed by the Parties
in one or more counterparts, each of which when so executed and
delivered shall be an original and such counterparts shall
together constitute one and the same instrument.
IN WITNESS WHEREOF this agreement has been executed by the
Parties each as of the day and year first before written.
THIS AGREEMENT IS HEREBY EXECUTED on the date set forth
above.
PLAYANDWIN CANADA INC.
Per:
________________________________
A.S.O.
PLAYANDWIN, INC.
Per:
________________________________
A.S.O.
P.E.S.T. CREATIVE GAMING
CORPORATION
Per:
________________________________
A.S.O.
THE VENDORS:
_________________________
Per:_____________________________
Witness
Stewart Garner, Secretary
of P.E.S.T. Creative
Gaming Corporation, on
behalf of the Vendors
pursuant to a power of
attorney granted to him
for this purpose
SCHEDULE 1
DEFINITIONS
"Affiliate and Associate" means an "affiliate" and "associate",
respectively, as those terms are defined in the Business
Corporation Act, 1990 (Ontario), as amended on the date
hereof.
"Agreement" means the Agreement and any instrument supplemental
or ancillary to it.
"Authorized Representatives" means employees, agents, counsel,
accountants and other representatives.
"Business Day" means any day other than a Saturday, Sunday or
statutory holiday in the Province of Ontario.
"Claims" means claims, demands, actions, causes of action,
damages, losses, costs, fines, penalties, interest,
liabilities and expenses, including, without limitation,
reasonable legal fees.
"Closing" means the completion of the Share Exchange pursuant to
this Agreement.
"Closing Date" means September 27, 1999, or such other later
date as may be agreed to by the Parties, provided that such
date shall not be later than October 1, 1999.
"Closing Time" means 2:00 p.m. (Toronto time) on the Closing Date
or such other time on the Closing Date as may be agreed to
by the Parties.
"Conveyance Documents" means all bills of sale, assignments, and
instruments of transfer, assurances, consents, and other
documents as shall be necessary to effectively transfer to
the Purchaser the Shares.
"Encumbrances" means any mortgage, charge, pledge, hypothecate,
lien, encumbrance, restriction, option, right of others or
security interest of any kind.
"Exchangeable Shares" means Class B Special Shares of the
Purchaser, being subordinate, non-voting preferred shares
authorized in an unlimited number, convertible into common
shares of PWIN.
"Exchangeable Warrants" means warrants to purchase one
Exchangeable Share each, exercisable at a price of $1.70 for
eighteen months after the Closing Date.
"Governmental Authorities" means any applicable Canadian or
non-Canadian federal, provincial and municipal agency,
ministry, crown corporation, department, inspector and
official.
"Interim Period" means the period commencing on the date of this
Agreement and ending immediately before the opening of
business on the Closing Date.
"NASD" means the National Association of Securities Dealers.
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"Parties" means the parties to the Agreement and "Party" means
any one of them.
"Permits" means authorizations, registrations, permits, approvals
or licenses that can be issued or granted by Governmental
Authorities.
"Person" means an individual, body corporate, partnership,
trustee, trust, unincorporated association, executor,
administrator or legal representative.
"PEST" means P.E.S.T. Creative Gaming Corporation.
"Purchaser" means Playandwin Canada Inc.
"PWIN" means Playandwin, Inc.
"Share Exchange" has the meaning attributed to it in section 2.2.
"Shares" means the common shares of PEST owned by the Vendors as
set out in Schedule 2 hereto.
"Vendors" means Colony Investments Limited, FMF Investments S.A.
and Dane Walton.
"Warrants" means warrants to purchase one common share of PEST
each exercisable at a price of $0.85 for eighteen (18)
months after the Closing Date.
SCHEDULE 2
THE VENDORS AND THEIR SHAREHOLDINGS
1. COMMON SHARES
<TABLE>
<S> <C> <C>
Name Common Shares of PEST Exchangeable Shares
Held Due
Dane Walton 28,571 14,28
6
FMF Investments 28,571 14,286
S.A.
Colony Investments 57,142 28,571
Limited
</TABLE>
2. SHARE PURCHASE WARRANTS
<TABLE>
<S> <C> <C>
Name PEST Warrants Held Exchangeable
Warrants Due
Dane Walton 14,285.5 7,14
3
FMF Investments 14,285.5 7,143
S.A.
Colony Investments 28,571 14,286
Limited
</TABLE>
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT is made as of the 27th day of September,
1999,
BETWEEN
PLAYANDWIN CANADA INC.
a corporation incorporated under the laws
of the Province of Ontario
(hereinafter referred to as "PWIN Canada")
OF THE FIRST PART
and
PLAYANDWIN, INC.,
a corporation incorporated under the laws
of the State of Nevada
(hereinafter referred to as "PWIN")
OF THE SECOND PART
WHEREAS PWIN Canada has entered into an agreement (the
"Share Exchange Agreement") with three shareholders (the
"Vendors") of P.E.S.T. Creative Gaming Corporation ("PEST") to
acquire their common shares and share purchase warrants of PEST
in exchange for Class B Special Shares of PWIN Canada convertible
into shares of PWIN (the "Exchangeable Shares") and warrants to
purchase Echangeable Shares;
AND WHEREAS PWIN Canada is a wholly-owned subsidiary of
PWIN;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in
consideration of the mutual covenants hereinafter contained and
provided for and other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged by the
Parties), the Parties agree as follows:
1. PWIN Canada will be funded with sufficient resources,
including PWIN common shares, to permit it to satisfy its
obligations under the Share Exchange Agreement with respect to
the Exchangeable Shares.
2. PWIN will not:
(i) take actions that prejudice holders of Exchangeable
Shares, by unduly diminishing the value of that which they
are entitled to receive on the conversion/exchange of their
shares, provided that PWIN shall not be liable hereunder for
reasonable decisions made in the ordinary course of
business, or for fluctuations in market price caused by
factors beyond its control;
(ii) split or consolidate PWIN stock without causing PWIN
Canada to make a corresponding split or consolidation of the
issued and outstanding Exchangeable Shares and Exchangeable
Warrants, provided that such action is also authorized by
the shareholders of the Purchaser including the holders of
the Exchangeable Shares;
(iii) liquidate, wind up or dissolve the Purchaser while
there are Exchangeable Share outstanding.
IN WITNESS WHEREOF this agreement has been executed by the
Parties each as of the day and year first before written.
THIS AGREEMENT IS HEREBY EXECUTED on the date set forth
above.
PLAYANDWIN CANADA INC.
Per:
_________________________________
A.S.O.
PLAYANDWIN, INC.
Per:
_________________________________
A.S.O.
