As filed with the Securities and Exchange Commission on December 20, 1999
Registration No. 333-92591______
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Post Effective Amendment No. 1
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
WAVERIDER COMMUNICATIONS INC.
------------------------------------------------------
(Exact name of registrant as specified in its Charter)
Nevada 33-0264030
- - ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
255 Consumers Road, Suite 500 Toronto, Ontario Canada M2J 1R4 (416) 502-3200
- - -------------------------------------------------------------------------------
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
T. SCOTT WORTHINGTON
255 Consumers Road, Suite 500, Toronto, Ontario Canada M2J 1R4
(416) 502-3200 / Facsimile No.: (416) 502-2968
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all communications to:
DAVID A. BROADWIN, ESQ.
FOLEY, HOAG & ELIOT LLP
One Post Office Square, Boston, Massachusetts 02109-2170
(617) 832-1000 / Facsimile No.: (617) 832-7000
Approximate date of commencement of proposed sale to the public: As soon as
practicable from time to time after the Registration Statement becomes
effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum maximum Amount of
Title of each class of Amount to be offering price aggregate registration
Securities to be registered Registered per share offering fee
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Common Stock, $.001 par value (1) 12,157,777 $1.66 (2) $20,181,909
Warrants to purchase 3,925,925 shares of
Common Stock (3) 3,925,925 $0.05 $196,296
Underwriter's Warrants 444,444 $0.01 $4,444
Total $20,382,649 $5,675 (4)
</TABLE>
(1) Includes 4,370,370 shares of Common Stock issuable upon exercise of
Warrants and Underwriters' Warrants and 380,000 shares of Common Stock
issuable upon exercise of Warrants by certain selling shareholders.
(2) Estimated solely for the purposes of determining the registration fee. In
accordance with Rule 457(c) under the Securities Act of 1933, the above
calculation is based on the closing bid price reported on the OTC Bulletin
Board on December 8, 1999
(3) Includes 222,222 warrants issuable upon exercise of Underwriters' Warrants.
(4) $6,960,000 of shares of Common Stock was previously registered on
Registration Statement No. 333-86251, and a fee of $1,935 was paid in
connection therewith.
In accordance with Rule 416 under the Securities Act of 1933, this
Registration Statement also covers such indeterminate number of additional
shares of WaveRider's common stock, $0.001 par value, as may become issuable to
prevent dilution resulting from stock splits, stock dividends or similar
transactions as set forth in WaveRider's Articles of Incorporation and the terms
of the warrants referred to above.
<PAGE>
This Amendment is filed under Rule 462(d) to amend Part II of the Registration
Statement solely to add certain exhibits.
PART II
Item 16. Exhibits
Exhibit
No. Description
3.1 Articles of Incorporation of WaveRider, incorporated by reference to
Exhibit 3.1 registration statement on Form S-18, File no. 33-25889-LA.
3.2 Bylaws of the Company, incorporated by reference to Exhibit 3.2 to the
annual report on Form 10-KSB for the year ended December 31, 1996.
3.3 Certificate of Amendment to the Articles of Incorporation of the
Company filed with the Nevada Secretary of State on October 8th, 1993,
incorporated by reference to Exhibit 3.3 to the quarterly report on
Form 10-QSB for the period ended September 30th, 1994.
3.4 Certificate of Amendment to the Articles of Incorporation of the
Company filed with the Nevada Secretary of State on October 25th, 1993,
incorporated by reference to Exhibit 2(d) to the registration statement
on Form 8-A, File No. 0-25680.
3.5 Certificate of Amendment to the Articles of Incorporation of WaveRider
filed with the Nevada Secretary of State on March 25th, 1995,
incorporated by reference to Exhibit 2(e) to registration statement on
Form 8-A, File no. 0-25680.
3.6 Certificate of Amendment to the Articles of Incorporation of the
Company, designating the Series A Voting Convertible Preferred Stock,
filed with the Nevada Secretary of State on March 24th, 1997,
incorporated by reference to Exhibit 3.6 on Form 10KSB for the year
ended December 31, 1996.
3.7 Certificate of Amendment to the Articles of Incorporation of the
Company designating the Series B Voting Convertible Preferred Stock,
filed with the Nevada Secretary of State on May 16, 1997.
3.8 Certificate of Amendment to the Memorandum of WaveRider changing the
name to WaveRider Communications Inc., filed with the Nevada Secretary
of State on May 27, 1997.
4.1 Specimen common stock certificate, incorporated by reference to Exhibit
4.1 to registration statement on Form S-18, File no. 33-25889-LA.
4.2 Specimen Class A Common Stock Purchase Warrant Certificate,
incorporated by reference to Exhibit 4.2 on Form 10KSB for the year
ended December 31, 1996.
4.3 Specimen Class B Common Stock Purchase Warrant Certificate,
incorporated by reference to Exhibit 4.3 on Form 10KSB for the year
ended December 31, 1996.
4.4 Specimen Class C Common Stock Purchase Warrant Certificate,
incorporated by reference to Exhibit 4.4 on Form 10KSB for the year
ended December 31, 1996.
4.5 Specimen Class D Common Stock Purchase Warrant Certificate,
incorporated by reference to Exhibit 4.5 on Form 10KSB for the year
ended December 31, 1996.
<PAGE>
4.6 Warrant Terms dated February 10th, 1997, relating to the Class A, Class
B, Class C and Class D, Common Stock Purchase Warrants, incorporated by
reference to Exhibit 4.6 on Form 10KSB for the year ended December 31,
1996.
4.7 Warrant Terms dated April 15, 1998, relating to the Class E Common
Stock Purchase Warrants, incorporated by reference to Exhibit 4.7 on
Form 10KSB for the year ended December 31, 1998.
4.8 Warrant Terms dated June 11, 1998, relating to the Class F Common Stock
Purchase Warrants, incorporated by reference to Exhibit 4.8 on Form
10KSB for the year ended December 31, 1998.
4.9 Warrant Terms dated December 15, 1998, relating to the Class G Common
Stock Purchase Warrants, incorporated by reference to Exhibit 4.9 on
Form 10KSB for the year ended December 31, 1998.
4.10 Warrant Terms dated December 29, 1998, relating to the Common Stock
Purchase Warrants, incorporated by reference to Exhibit 4.10 on Form
10KSB for the year ended December 31, 1998.
4.11 Warrant Terms dated June 30, 1999, relating to the Class H Common Stock
Purchase Warrants, incorporated by reference to Exhibit 4.11 on Form
S-3, File No. 333-82855.
4.12 Warrant Terms dated October 18, 1999, relating to the Common Stock
Purchase Warrants, incorporated by reference to Exhibit 10.1 and 10.2
in Form 10-Q for the quarter ended September 30, 1999.
4.13 Specimen Common Stock Purchase Warrant Certificate
4.14 Specimen Underwriters' Warrant Certificate
5.1 Opinion of Foley, Hoag & Eliot LLP.
10.1 Agreement dated February 2nd, 1997, between Ray Hoag and WaveRider,
incorporated by reference to Exhibit 10.2 on Form 10KSB for the year
ended December 31, 1996.
10.2 Agreement dated February 2nd, 1997, between C. Jeremy Renton and
WaveRider, incorporated by reference to Exhibit 10.21 on Form 10KSB for
the year ended December 31, 1996.
10.3 Stock Option Agreement dated January 22nd, 1997 between WaveRider and
Charlie Rodriguez, incorporated by reference to Exhibit 10.22 on Form
10KSB for the year ended December 31, 1996.
10.4 Stock Option Agreement dated January 22nd, 1997 between WaveRider and
C. Jeremy Renton, incorporated by reference to Exhibit 10.23 on Form
10KSB for the year ended December 31, 1996.
10.5 Stock Option Agreement dated January 22nd, 1997, between WaveRider and
Ray Hoag, incorporated by reference to Exhibit 10.24 on Form 10KSB for
the year ended December 31, 1996.
<PAGE>
10.6 Share Exchange Agreement executed the 13th day of May, 1997 between
WaveRider and the shareholders of Major Wireless Communications Inc.,
("Major Wireless"), with respect to the purchase by the Company of all
the issued and outstanding shares in the capital stock of Major
Wireless, incorporated by reference to Exhibit 2.1 in Form 8-K filed
May 29, 1997.
10.7 Agreement supplemental to the Share Exchange Agreement executed the
13th day of May, 1997 (see 10.6 supra) incorporated by reference to
Exhibit 10.1 in Form 8-K filed May 29, 1997.
10.8 Employee Stock Compensation (1997) Plan incorporated by reference to
Exhibit 99 in Form S-8 filed August 29th, 1997.
10.9 Employee Stock Option (1997) Plan incorporated by reference to Exhibit
99 in Form S-8 filed August 29th, 1997.
10.10 Employment Agreement between WaveRider and D. Bruce Sinclair dated
November 18, 1997 incorporated as Exhibit 10.10 to WaveRider's annual
report on Form 10-KSB, for the year ended December 31, 1997.
10.11 Convertible Debenture Agreement between WaveRider and International
Advisory Services Ltd. and Wyndel Consulting Ltd. Dated December 15,
1998, incorporated by reference to Exhibit 10.11 of Form S-3, File No.
333-70821.
10.12 Letter of termination of the Convertible Debenture Agreement, dated
January 8, 1999, incorporated by reference to Exhibit 10.11 of Form
S-3, File No. 333-70821.
10.13 Common Stock Purchase Agreement between WaveRider and Sovereign
Partners LP and Canadian Advantage Limited Partnership, dated December
31, 1998, including the exhibits to such agreement, incorporated by
reference to Exhibit 10.13 on Form S-3, File No. 333-70821.
10.14 Amendment to the Common Stock Purchase Agreement between WaveRider and
Sovereign Partners LP and Canadian Advantage Limited Partnership, dated
June 14, 1999, incorporated by reference to Exhibit 10.14 on Form S-3,
File No. 333-82855.
10.15 Merger Agreement between WaveRider Communications Inc and TTI Merger
Inc and Transformation Techniques, Inc. and Peter Bonk, incorporated by
reference to Exhibit 10.1 in Form 8-K filed June 30, 1999.
10.16 Employment agreement between Mr. Peter Bonk and WaveRider
Communications (USA) Inc., dated June 11, 1999, incorporated by
reference to Exhibit 10.2 in Form 8-K filed June 30, 1999.
10.17 Loan Agreement between WaveRider Communications Inc. and AMRO
International, S.A. dated October 15, 1999, incorporated by reference
to Exhibit 10.1 in Form 10-Q for the quarter ended September 30, 1999.
10.18 Common Stock Purchase Agreement between WaveRider Communications Inc.
and Radyr Group Investments dated October 18, 1999, incorporated by
reference to Exhibit 10.2 in Form 10-Q for the quarter ended September
30, 1999.
<PAGE>
10.19 Underwriting Agreement between WaveRider Communications Inc. and Groome
Capital.com Inc. dated December 17, 1999.
23.2 Consent of Johnson, Holscher & Company P.C., independent auditors.
23.3 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.4 Consent of Foley, Hoag & Eliot LLP (included in last sentence of
Exhibit 5.1).
24.1 Power of Attorney (contained in the signature page).
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe it meets all the
requirements of filing on Form S-3 and authorized this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, on
December 20, 1999.
WAVERIDER COMMUNICATIONS INC.
By: /s/ D. Bruce Sinclair
D. Bruce Sinclair, President and
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on December 20, 1999.
<TABLE>
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Signature Title Date
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<S> <C> <C>
/s/ D. Bruce Sinclair____ President, Chief Executive Officer December 20, 1999
D. Bruce Sinclair (Principal Executive Officer) and Director
_____________________ Secretary/Director December 20, 1999
Cameron A. Mingay*
_____________________ Director December 20, 1999
Gerry Chastelet*
_____________________ Director December 20, 1999
John Curry*
_____________________ Director December 20, 1999
Guthrie Stewart*
_____________________ Director December 20, 1999
Dennis R. Wing*
* By D. Bruce Sinclair - Attorney in fact
</TABLE>
II-4
Exhibit 10.19
UNDERWRITING AGREEMENT
December 20, 1999
WaveRider Communications Inc.
255 Consumers Road, Suite 500
Toronto, Canada
M2J 1R4
Attention: D. Bruce Sinclair, President & Chief Executive Officer
Dear Sir:
The undersigned, Groome Capital.com Inc. ("Groome" or the "Underwriter"),
understands that WaveRider Communications Inc. ("WaveRider" or the
"Corporation") proposes to create, issue and sell (the "Offering") through the
Underwriter in an offering registered under the U.S. Securities Act of 1933, as
amended, up to 4,444,444 common shares ("Common Shares") and 2,222,222 Common
Share purchase warrants ("Warrants"), subject to the terms and conditions set
out below, at a price of US$1.35 per one Common Share and one-half of one
Warrant (the "Offering Price"). Each whole Common Share and one half of one
Warrant are collectively referred to herein as a "Unit". Subject to adjustment
in certain events, each whole Warrant shall entitle the holder to purchase one
Common Share at a price of US$2.00 at any time prior to 5:00 p.m. (Toronto time)
on December 20, 2001.
Upon and subject to the terms and conditions set forth herein, the Corporation
hereby appoints the Underwriter to act as the Corporation's exclusive
underwriter to effect the sale of the Units to persons (the "Purchasers")
resident in the Qualifying Provinces (as hereinafter defined) and certain
jurisdictions outside of Canada and the United States pursuant to the terms and
conditions hereof and the Underwriter hereby agrees to act as the Underwriter of
the Corporation for such purposes and to effect such sale of the Units on its
behalf.
The Underwriter further understands that contemporaneously with the Offering,
the Corporation proposes to effect an additional offering of up to 2,962,963
Units to certain purchasers through an agent in the United States (the
"International Offering") on the same or substantially the same terms as the
Offering and the Underwriter hereby agrees to provide financial advisory
services to the Corporation in connection with the International Offering.
In consideration of the services to be rendered by the Underwriter in connection
with the Offering, the Corporation shall pay to the Underwriter a commission
(the "Commission") equal to 8.0% of the gross proceeds realized by the
Corporation in respect of the sale of the Units sold pursuant to the Offering
and, in consideration for financial advisory services rendered by the
Underwriter in connection with the International Offering, the Corporation shall
pay to the Underwriter a fee (the "Financial Advisory Fee") equal to US$100,000
provided that minimum gross proceeds of US$2,500,000 are realized by the
Corporation in connection with the International Offering. As additional
compensation for the services provided by the Underwriter, the Corporation shall
also grant to the Underwriter warrants (the "Compensation Warrants") to purchase
up to 444,444 Units at the Offering Price at any time on or prior to December
20, 2001. The obligation of the Corporation to pay the Commission and the
Financial Advisory Fee and to deliver the Compensation Warrants shall arise at
the Closing Time (as hereinafter defined) and the Commission, the Financial
Advisory Fee and the Compensation Warrants shall be fully earned by the
Underwriter at that time (notwithstanding the actual date of payment).
DEFINITIONS
In this Agreement, in addition to the terms defined above, the following terms
shall have the following meanings:
"affiliate", "associate", "distribution", "material change", "material
fact", "misrepresentation", "person" and "subsidiary" have the
respective meanings ascribed to them in the Securities Act (Ontario);
"Agreement" means the agreement resulting from the acceptance by the
Corporation of the offer made hereby;
"Business Day" means a day which is not a Saturday, a Sunday or a
statutory or civic holiday in either the City of Toronto, Ontario;
"Canadian Securities Laws" means all applicable securities laws in each
of the Qualifying Provinces and the respective regulations made
thereunder, together with applicable published fee schedules,
prescribed forms, policy statements, orders, blanket rulings and other
regulatory instruments including, without limitation, Ontario
Securities Commission Rule 71-101;
"Claim" has the meaning ascribed to it in subparagraph 13(b);
"Closing" means the completion on the Closing Date of the issue and
sale by the Corporation of the Units and the purchase by the Purchasers
of the Units as contemplated by this Agreement;
"Closing Date" means December 20, 1999 or such other date as the
Corporation and the Underwriter may agree;
"Closing Time" means 11:00 a.m. (Toronto time) on the Closing Date or
such other time as the Corporation and Underwriter may agree;
"Corporation's Auditors" means PricewaterhouseCoopers LLP or such other
firm of chartered accountants as may from time to time be appointed
auditors of the Corporation;
"Disclosure Documents" means, collectively, the Registration Statement,
the Prospectus and all other documents filed or to be filed by the
Corporation with the SEC in accordance with applicable U.S. Securities
Laws;
<PAGE>
"encumbrance" means any encumbrance, lien, charge, hypothec, pledge,
mortgage, title retention agreement, security interest of any nature,
adverse claim, exception, reservation, easement, restriction, right of
occupation, any matter capable of registration against title, option,
right of pre-emption, privilege or any contract to create any of the
foregoing;
"Environmental Laws" means any Law with respect to any Hazardous
Materials, groundwater, wetlands, landfills, open dumps, storage tanks,
underground storage tanks, solid waste, waste water, storm water
run-off, waste emissions, wells or otherwise concerning pollution or
the protection of the environment;
"Financial Statements" means, collectively, (i) the annual audited
financial statements of the Corporation as at and for the fiscal year
ended December 31, 1998 and the notes thereto and the auditor's report
thereon, and (ii) the unaudited interim financial statements of the
Corporation for the nine months ended September 30, 1999;
"Governmental Entity" means any government or any governmental agency,
bureau, board, commission, department, regulatory agency, or political
subdivision, whether federal, state, provincial or local, domestic or
foreign;
"Hazardous Materials" means each and every element, compound, chemical
mixture, contaminant, pollutant, material, waste or other substance
which is defined, determined or identified as hazardous or toxic under
any Environmental Law or the Release of which is prohibited under any
Environmental Law;
"Indemnified Party" has the meaning ascribed to it in subparagraph
13(b);
"Intellectual Property" has the meaning ascribed to it in subparagraph
7(xviii);
"Law" means any federal, provincial, local or municipal, domestic or
foreign, constitutional provision, statute, law, by-law, rule,
regulation, permit, decree, injunction, judgment, order, or legally
binding ruling, determination, common law rule, finding or writ of any
Governmental Entity or any court of other tribunal;
"Losses" means all claims, demands, proceedings, losses, damages
(whether such damages are based in contract, tort (including
negligence) or otherwise), liabilities, deficiencies, costs and
expenses (including, without limitation, all legal and other
professional fees and disbursements, interests, penalties and amounts
paid in settlement);
"Material Agreements" means, collectively, this Agreement, the
Subscription Agreements and the certificates representing the Warrants
and the Compensation Warrants;
"Material Premises" has the meaning ascribed to it in subparagraph
8(xxxi);
"Material Subsidiaries" means WaveRider Communications (Canada) Inc.,
WaveRider Communications (USA) Inc. and Jet Stream Internet Services
Inc.;
<PAGE>
"Optioned Securities" means, collectively, the Common Shares and
Warrants issuable upon exercise of the Compensation Warrants;
"OTC Bulletin Board" means the OTC Bulletin Board operated by the
National Association of Securities Dealers, Inc.;
"Parties" means the parties to this Agreement and "Party" means any one
of them;
"Prospectus" means the prospectus of the Corporation to be filed with
the SEC in connection with the offer and sale of the Underlying
Securities to be registered pursuant to the Registration Statement, as
the same may from time to time be amended;
"Prospectus Supplement" means the prospectus supplement of the
Corporation to be filed with the SEC under Rule 424 (c) of the U.S.
Securities Act;
"Purchasers" means the persons (which may include the Underwriter) who
as purchasers acquire Units by duly completing, executing and
delivering Subscription Agreements and permitted assignees or
transferees of such persons from time to time;
"Qualifying Provinces" means the Provinces of Alberta, British
Columbia, Ontario and Quebec and "Qualifying Province" means any one of
them;
"Registration Statement" means the registration statement of the
Corporation filed on Form S-3 with the SEC as file number 333-92591
pursuant to which the Underlying Securities and the Optioned Securities
have been registered for resale under applicable U.S. Securities Laws,
as the same may from time to time be amended in accordance with
applicable U.S. Securities Laws;
"Regulation S" means Regulation S under the U.S. Securities Act;
"SEC" means the United States Securities and Exchange Commission;
"Securities Laws" means, collectively, the Canadian Securities Laws and
the U.S. Securities Laws;
"Securities Regulators" means, collectively, the SEC and the securities
commissions or other securities regulatory authorities in the
Qualifying Provinces and "Securities Regulator" means any one of them;
"Subscription Agreement" means a subscription agreement, including all
schedules thereto, in the form agreed upon by the Underwriter and the
Corporation pursuant to which Purchasers agree to subscribe for and
purchase the Units herein contemplated;
"Supplementary Material" has the meaning ascribed thereto in
subparagraph 3(b);
<PAGE>
"to the best of its knowledge, information and belief", with respect to
any party, means that no information has come to such party's attention
which has given such party actual knowledge of the facts or
circumstances referred to; and
"Underlying Securities" means collectively (i) the Common Shares and
Warrants; and (ii) the Common Shares issuable on exercise of the
Warrants;
"U.S. Securities Laws" means, collectively, the U.S. Securities Act,
the United States Securities Exchange Act of 1934, as amended and all
other applicable federal and state securities laws in the United
States, including all "Blue Sky" laws, and all regulations and forms
prescribed thereunder, the United States together with all applicable
published policy statements, blanket orders and rulings of the SEC and
any applicable state securities regulatory authorities;
"United States" means the United States as that term is defined in
Regulation S;
"U.S. Person" means a U.S. Person as that term is defined in Regulation
S; and
"U.S. Securities Act" means the Securities Act of 1933, as amended, of
the United States.
TERMS AND CONDITIONS
1. Sale on Exempt Basis. Subject to the satisfaction of the conditions of
closing set forth in paragraph 10 hereof, the Underwriter shall offer the Units
for sale on behalf of the Corporation in the Qualifying Provinces in compliance
with all applicable Canadian Securities Laws and in such other jurisdictions
outside of Canada and the United States in compliance with all applicable
securities laws of such other jurisdictions.
2. (a) Canadian Filings. Subject to the Corporation receiving from the
Underwriter or the Purchasers, as the case may be, fully completed Subscription
Agreements (including any required appendices thereto) from Purchasers, the
Corporation undertakes to file or cause to be filed with the Securities
Regulators in the Qualifying Provinces and delivered to the Purchasers all
documents, forms and undertakings including, without limitation, the Prospectus
and any Supplementary Material, required to be filed with the Securities
Regulators or delivered to the Purchasers by the Corporation in connection with
the purchase and sale of the Units so that the distribution of the Units may
lawfully occur in the Qualifying Provinces (but on terms that will permit
Underlying Securities acquired by the Purchasers in the Qualifying Provinces to
be sold by such Purchasers at any time in the Qualifying Provinces subject to
applicable Canadian Securities Laws). All fees payable in connection with such
filings and deliveries shall be at the expense of the Corporation.
(b) No General Solicitation. Neither the Corporation nor the Underwriter
shall (i) provide to prospective Purchasers any document or other material that
would constitute an offering memorandum within the meaning of Canadian
Securities Laws other than as contemplated by and in accordance with Ontario
Securities Commission Rule 71-101; or (ii) engage in any form of general
solicitation or general advertising in Canada in connection with the offer and
sale of the Units, including but not limited to, causing the sale of the Units
to be advertised in any printed public media, radio television or
telecommunications, including electronic display or conduct any seminar or
meeting relating to the offer and sale of the Units or Underlying Securities
whose attendees have been invited by general solicitation or advertising.
<PAGE>
3. (a) Deliveries at the Closing Time. The Corporation shall deliver to the
Underwriter on or prior to the Closing Time:
(i) an executed copy of the Registration Statement and such number of
copies of the Prospectus and Prospectus Supplement as the underwriter
shall reasonably request; and
(ii) executed copies of any other documents filed or required to be filed
by the Corporation under applicable U.S. Securities Laws in connection
with the Registration Statement and the Prospectus.
(b) Supplementary Material. The Corporation shall also prepare and deliver
promptly to the Underwriter duly signed copies of all amended or supplementary
registration statements, prospectuses or supplemental statements and related
documents required to be filed by the Corporation under applicable U.S.
Securities Laws required to be filed under paragraph 6 of this Agreement
(collectively, the "Supplementary Material"), such Supplementary Material to be
in form and substance satisfactory to the Underwriter, acting reasonably.
4. Representation as to Registration Statement, Prospectus and Supplementary
Material. Delivery of the Registration Statement, Prospectus and any
Supplementary Material in accordance with paragraph 4 above shall constitute a
representation and warranty by the Corporation to the Underwriter, the
Purchasers and their permitted assigns that at the time of delivery (except
information and statements relating solely to or provided solely by the
Underwriter) no material fact or information has been omitted therefrom which is
required to be stated therein or is necessary to make the statements or
information contained therein not misleading in light of the circumstances under
which they were made. Such delivery shall also constitute the Corporation's
consent to the Underwriter's use of the Registration Statement, Prospectus, any
Supplementary Material and any other public documents supplied to the
Underwriter by the Corporation for the distribution of the Underlying Securities
through the OTC Bulletin Board in compliance with the provisions of this
Agreement and applicable U.S. Securities Laws.
5. Covenants.
(a) The Corporation covenants to the Underwriter and to the Purchasers and
their permitted assigns and acknowledges that each of them is relying on such
covenants in completing the Offering, that the Corporation shall:
(i) duly execute and deliver the Material Agreements at the
Closing Time and comply with and satisfy all terms, conditions
and covenants therein contained to be complied with or
satisfied by the Corporation;
(ii) use its reasonable best efforts to maintain its status as a
reporting company under applicable U.S. Securities Laws and to
continue to be in compliance with its obligations thereunder,
without default;
<PAGE>
(iii) use its reasonable best efforts to maintain a quotation for
the Common Shares on the OTC Bulletin Board or such other
recognized stock exchange(s) or quotation system(s) as the
Corporation may determine, acting reasonably;
(iv) ensure that the Underlying Securities, the Compensation
Warrants and the Optioned Securities shall be duly and validly
created, authorized and issued on payment of the purchase
price therefor, and shall have attributes corresponding in all
material respects to the description thereof set forth in this
Agreement and the Subscription Agreements;
(v) ensure that the Common Shares issued to Purchasers on the
Closing Date and the Common Shares issued upon exercise of the
Warrants and the Compensation Options are duly issued as fully
paid and non-assessable securities in the capital of the
Corporation, and shall have the attributes corresponding in
all material respects to the description thereof set forth in
this Agreement and the Subscription Agreements;
(vi) ensure that at all times prior to the expiry thereof,
sufficient Common Shares are allotted and reserved or
deposited for issuance upon the due exercise of the Warrants
and the Compensation Warrants;
(vii) allow and assist the Underwriter and its representatives to
conduct all due diligence which the Underwriter may reasonably
require to be conducted in order to fulfil its obligations as
Underwriter under applicable Securities Laws;
(viii) not, for period of 120 days from the Closing Date, offer, sell
or otherwise issue or announce any offer, sale or other
issuance of, any voting securities of the Corporation or any
securities convertible into or exchangeable for or exercisable
to acquire voting securities of the Corporation, other than
(A) as contemplated herein; (B) pursuant to the Warrants, the
Compensation Warrants, the Corporation's employee stock option
plans and such other convertible securities, rights and
agreements outstanding as of the date hereof as have been
disclosed in writing to the Underwriter; (C) in connection
with a bona fide acquisition of shares or assets from an arm's
length third party; or (D) in connection with another offering
of Common Shares, without the prior written consent of the
Underwriter, such consent not to be unreasonably withheld; and
(ix) use its best efforts to obtain all approvals and make all
filings, if any, as are required or necessary to ensure that
the Common Shares issuable on exercise of the Warrants and the
Compensation Options are validly quoted for trading on the OTC
Bulletin Board or such other recognized stock exchange(s) or
quotation system(s) as the Common Shares may then be listed or
quoted for trading.
<PAGE>
(b) Underwriter's Covenants. The Underwriter covenants and agrees with
the Corporation (and acknowledges that the Corporation is relying thereon) that
it will:
(i) conduct activities in connection with the Offering in
compliance with all applicable Canadian Securities Laws in the
Qualifying Provinces;
(ii) not sell the Units, solicit subscriptions for Units, trade in
Underlying Securities or otherwise do any act in furtherance
of a trade of Underlying Securities in the United States;
(iii) use its reasonable best efforts to obtain from each Purchaser
an executed Subscription Agreement and all undertakings,
questionnaires and other forms required under applicable
Canadian Securities Laws of the Qualifying Provinces as may be
supplied to the Underwriter by the Corporation for completion
in connection with the Offering;
(iv) not advertise the proposed offering or sale of the Units in
printed public media or on radio, television or
telecommunications, including electronic display;
(v) cause each member of any banking or selling group formed by
them to acknowledge its agreement to be bound by the
provisions of this Agreement;
(vi) not solicit subscriptions for Units except in accordance with
the terms and condition of this Agreement;
(vii) deliver a copy of the Prospectus and Prospectus Supplement to
each Purchaser forthwith upon receipt of same from the
Corporation; and
(viii) pay for the Units at the Closing Time.
6. (a) Material Changes During Distribution. During the period from the date
hereof to the completion of distribution of the Underlying Securities, the
Corporation shall promptly notify the Underwriter (and, if requested by the
Underwriter, confirm such notification in writing) of:
(i) any material change (actual, anticipated, contemplated or
threatened, financial or otherwise) in the business, affairs,
operations, assets, liabilities (contingent or otherwise) or
capital of the Corporation;
(ii) any material fact which has arisen and would have been
required to have been stated in the Registration Statement or
Prospectus had the fact arisen on, or prior to, the date of
such document; and
<PAGE>
(iii) any change in any material fact contained in the Registration
Statement, the Prospectus or the Supplementary Material or any
amendments or supplements thereto which change is, or may be,
of such a nature as to render any material statement in the
Registration Statement, the Prospectus or any Supplementary
Material misleading or untrue or which would result in a
misrepresentation in the Registration Statement, the
Prospectus or Supplementary Material or which would result in
the Registration Statement, the Prospectus or Supplementary
Material not complying (to the extent that such compliance is
required) with applicable Securities Laws or which would
reasonably be expected to have a significant effect on the
market price or value of the Underlying Securities.
During the period from the date hereof to the completion of distribution of the
Underlying Securities, the Corporation shall promptly, and in any event, within
any applicable time limitation, comply with all applicable filing and other
requirements under applicable Securities Laws as a result of such change. The
Corporation shall in good faith discuss with the Underwriter any fact or change
in circumstances (actual, anticipated, contemplated or threatened, and financial
or otherwise) which is of such a nature that there is reasonable doubt as to
whether notice in writing need be given to the Underwriter pursuant to this
paragraph 6.
(b) Change in Securities Laws. If during the period of distribution to
the public of the Underlying Securities, there shall be any change in U.S.
Securities Laws which in the opinion of counsel to the Corporation or of counsel
to the Underwriter requires the filing of Supplementary Material, the
Corporation shall, to the satisfaction of its counsel and the Underwriter's
counsel, promptly prepare and file such Supplementary Material with the
appropriate Securities Regulators in the United States where such filing is
required.
7. Representations and Warranties of the Corporation.
(a) The Corporation represents and warrants to the Underwriter and the
Purchasers, and acknowledges that each of them is relying upon such
representations and warranties in completing the Offering, that:
(i) each of the Corporation and the Material Subsidiaries has been
duly continued and is validly existing under the laws of its
jurisdiction of incorporation, has all requisite power and
authority and is duly qualified to carry on its business as
now conducted and to own its properties and assets and the
Corporation has all requisite power and authority to carry out
its obligations under each of the Material Agreements;
(ii) except for the Material Subsidiaries, the Corporation has no
material subsidiaries and has no investment or proposed
investment in any person which is or would be material to the
business and affairs of the Corporation;
<PAGE>
(iii) the Corporation is a reporting company under U.S. Securities
Laws and is not in default of any requirement thereof, is in
compliance with its timely disclosure obligations under such
legislation and there are no outstanding reports filed under
U.S. Securities Laws on a confidential basis;
(iv) all consents, approvals, permits, authorizations or filings as
may be required under applicable Securities Laws necessary for
the execution and delivery of, and the performance by the
Corporation of its obligations under, each of the Material
Agreements have been made or obtained, as applicable;
(v) this Agreement has been duly authorized, executed and
delivered by the Corporation and constitutes a valid and
binding obligation of the Corporation enforceable against the
Corporation in accordance with its terms;
(vi) at the Closing Time, each of the Material Agreements shall
have been duly authorized, executed and delivered by the
Corporation and each shall constitute a valid and binding
obligation of the Corporation enforceable against the
Corporation in accordance with its terms;
(vii) none of the execution and delivery of the Material Agreements,
the performance by the Corporation of its obligations
hereunder or thereunder, the issue and sale of the Units
hereunder and the consummation of the transactions
contemplated in this Agreement and the Material Agreements,
including the issuance and delivery of the Underlying
Securities and the Optioned Securities do not and will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under,
(whether after notice or lapse of time or both), (A) any
statute, rule or regulation applicable to the Corporation
including, without limitation, applicable Securities Laws; (B)
the constating documents, by-laws or resolutions of the
Corporation which are in effect at the date hereof; (C) any
mortgage, note, indenture, contract, agreement, instrument,
lease or other document to which the Corporation is a party or
by which it is bound; or (D) any judgment, decree or order
binding the Corporation or, the property or assets of the
Corporation in each case which default or breach might
reasonably be expected to materially adversely affect the
business, operations, capital or condition (financial or
otherwise) of the Corporation or its assets;
(viii) at the Closing Time, all necessary corporate action will have
been taken by the Corporation to allot and authorize the
issuance of the Underlying Securities, the Compensation
Warrants, and the Optioned Securities and upon due exercise of
the Warrants and Compensation Warrants, the Common Shares
issuable upon the exercise thereof will be validly issued as
fully paid and non-assessable shares of the Corporation;
<PAGE>
(ix) the authorized capital of the Corporation consists of
100,000,000 Common Shares with a par value of U.S.$0.001 and
5,000,000 preferred shares issuable in series with a par value
of U.S.$0.001, of which 50,473,510 Common Shares and 764,000
preferred shares are issued and outstanding as fully paid and
non-assessable as at December 15, 1999 prior to giving effect
to the Offering and the International Offering;
(x) other than as referred to in the Disclosure Documents, there
has not occurred any material adverse change, financial or
otherwise, in the assets, liabilities (contingent or
otherwise), business, financial condition, capital or
prospects of the Corporation and its subsidiaries since the
effective date of the Financial Statements, and no transaction
has been entered into by the Corporation or any of its
subsidiaries which is or would be material to the Corporation
on a consolidated basis;
(xi) the Financial Statements have been prepared in accordance with
generally accepted accounting principles and fairly present,
in all material respects, the financial condition and results
of operations of the Corporation for the periods then ended;
(xii) except as set forth in Schedule "A" hereto, (A) the
Corporation is the sole registered and beneficial owner of all
issued and outstanding securities of each Material Subsidiary;
and (B) no holder of outstanding shares in the capital of the
Corporation will be entitled to any pre-emptive or any similar
rights to subscribe for any of the Common Shares or other
securities of the Corporation and no rights, warrants or
options to acquire, or instruments convertible into or
exchangeable for any shares in the capital of the Corporation
or any of the Material Subsidiaries are outstanding or are
contemplated;
(xiii) the Corporation and each of its subsidiaries has conducted and
is conducting its business in compliance in all material
respects with all applicable Laws of each jurisdiction in
which such business is carried on, except where the failure to
do so would not have a material adverse effect on the
Corporation;
(xiv) no legal or governmental proceedings are pending to which the
Corporation or any of its subsidiaries or to which the
property of the Corporation or any of its subsidiaries is
subject that would result individually or in the aggregate in
any material adverse change in the operation, business or
condition of the Corporation taken as a whole and, to the best
of its knowledge, information and belief, no such proceedings
have been threatened against or are contemplated with respect
to the Corporation or any of its property;
(xv) the Corporation and each of its subsidiaries has timely filed
all necessary tax returns and notices and has paid or made
provision for all applicable taxes of whatever nature for all
tax years to the date hereof to the extent such taxes have
become due or have been alleged to be due except where the
failure to file such tax returns and notices would not have an
adverse material effect on the Corporation and the Corporation
is not aware of any material tax deficiencies or material
interest or penalties accrued or accruing, or alleged to be
accrued or accruing thereon which have not otherwise been
provided for by the Corporation and its subsidiaries;
<PAGE>
(xvi) the Corporation and its subsidiaries possess all material
certificates, authorizations, permits or licences issued by
the appropriate regulatory authorities necessary to conduct
the business operated by it and has not received any notice of
proceedings relating to the revocation or modification of any
such certificate, authorization, permit or licence which, by
itself or in the aggregate, if the subject of an unfavourable
decision, ruling or finding, would have a material adverse
effect on the conduct of the business, operations, financial
condition or income of the Corporation taken as a whole;
(xvii) to the best of the Corporation's knowledge, information and
belief, none of the directors or officers of the Corporation
or any of its subsidiaries (or such shareholders' respective
principals) is or has ever been subject to prior regulatory,
criminal or bankruptcy proceedings in Canada or elsewhere;
(xviii) the Corporation or one of its subsidiaries has all proprietary
rights provided in law to all patents, trademarks, copyrights,
industrial designs, software, firmware, trade secrets,
know-how, show-how, concepts, information and other
intellectual and industrial property (collectively,
"Intellectual Property") necessary to permit it to conduct its
business, except where the failure to do so would not have a
material adverse effect on the Corporation;
(xix) the Corporation or one of its subsidiaries is the exclusive
owner of or possesses adequate enforceable rights to use the
Intellectual Property free and clear of any encumbrances which
would have a material adverse effect on the Corporation, and
has no knowledge of any claim of adverse ownership in respect
thereof;
(xx) the Corporation is not aware of a claim of any infringement or
breach by the Corporation or any of its subsidiaries of any
industrial or intellectual property rights of any other
person, nor has the Corporation or any of its subsidiaries
received any notice, nor is the Corporation otherwise aware,
that the use of the business names, trademarks, servicemarks,
copyrights and other industrial or intellectual property of
the Corporation or any of its subsidiaries infringes upon or
breaches any industrial or intellectual property rights of any
other person and the Corporation has no knowledge of any
infringement or violation of any of the rights of the
Corporation in such intellectual and industrial property and
is not aware of any state of facts that casts doubt on the
validity or enforceability of any such intellectual or
industrial property rights;
<PAGE>
(xxi) except as disclosed in the Disclosure Documents, there is
presently no material plan in place for retirement bonus,
pension benefits, unemployment benefits, deferred
compensation, severance or termination pay, insurance, sick
leave, disability, salary continuation, legal benefits,
vacation or other employee incentives or compensation that is
contributed to or required to be contributed to, by the
Corporation for the benefit of any current or former director,
senior officer, or consultant of the Corporation;
(xxii) except as disclosed in the Disclosure Documents, neither the
Corporation nor any of its subsidiaries owes any money to, nor
has the Corporation or any of its subsidiaries any present
loans to, or borrowed any monies from, is or otherwise
indebted to any officer, director, employee, shareholder or
any person not dealing at "arms length" (as such term is
defined in the Income Tax Act (Canada)) with the Corporation
except for usual employee reimbursements and compensation paid
in the ordinary and normal course of the business of the
Corporation;
(xxiii) except as disclosed in the Disclosure Documents, neither the
Corporation nor any of its subsidiaries is a party to any
contract, agreement or understanding except in the normal
course of business with any officer, director, employee,
shareholder or any other person not dealing at arm's length
with the Corporation;
(xxiv) except as disclosed in the Disclosure Documents, to the best
of the Corporation's knowledge, information and belief, no
present or former officer, director or shareholder of the
Corporation or any of its subsidiaries has any cause of
action, or other claim whatsoever, against, or owes any amount
to, the Corporation or any of its subsidiaries except for any
liabilities reflected in the Financial Statements and claims
in the ordinary and normal course of the business such as for
accrued vacation pay and accrued benefits under any employee
plans the particulars of which have been disclosed to the
Underwriter;
(xxv) except as disclosed in the Disclosure Documents, there are no
pension, retirement, profit sharing and other employee benefit
plans established by or for the employees of the Corporation
and its subsidiaries nor any other plans, programs, funds,
arrangements and contractual undertakings, whether for the
benefit of a single individual or for more than one
individual, and whether or not funded, which is in the nature
of (i) an employee pension benefit plan, (ii) an employee
welfare benefit plan, or (iii) any incentive or other benefit
arrangement for employees, their beneficiaries and/or their
dependants, including bonus, stock purchase, deferred
compensation, supplemental retirement, severance or other
similar plans;
<PAGE>
(xxvi) all material accruals for unpaid vacation pay, premiums for
unemployment insurance, health premiums, pension plan
premiums, accrued wages, salaries and commissions and employee
benefit plan payments have been reflected in the books and
records of the Corporation;
(xxvii) neither the Corporation nor any of its subsidiaries has made
any contracts with any labour union or employee association
nor made commitments to or conducted negotiations with any
labour union or employee association with respect to any
future agreements and the Corporation is not aware of any
current attempts to organize or establish any labour union or
employee association with respect to any employees of the
Corporation or any of its subsidiaries, nor is there any
certification of any such union with regard to a bargaining
unit;
(xxviii) there has not been and there is not currently any material
disagreement or other difficulty with any of the employees of
the Corporation or any of its subsidiaries which is adversely
affecting or could reasonably adversely affect, in a material
manner, the carrying on of the business of the Corporation or
any of its subsidiaries;
(xxix) to the best of the Corporation's knowledge, information and
belief, the Corporation is in compliance with the provisions
of applicable worker's compensation, applicable employee
health and safety, training or similar legislation in each
jurisdiction where it carries on business;
(xxx) no property or asset of the Corporation or any of its
subsidiaries has been taken or expropriated by any federal,
state, provincial, municipal or other authority nor has any
notice or proceeding in respect thereof been given or
commenced nor is the Corporation aware of any intent or
proposal to give any such notice or commence any such
proceeding;
(xxxi) with respect to each premises which is material to the
Corporation and which the Corporation or any of its
subsidiaries occupies (the "Material Premises"), the
Corporation or one of its subsidiaries has the right to occupy
and use the Material Premises;
(xxxii) each of the leases pursuant to which the Corporation or any of
its subsidiaries occupies any Material Premises is in good
standing and in full force and effect, and none of the
Corporation or any of its subsidiaries (as the case may be)
or, to the best of the knowledge, information and belief of
the Corporation, any other party thereto, is in breach of any
material covenants, conditions or obligations contained
therein;
<PAGE>
(xxxiii) to the best of the Corporation's knowledge, information and
belief, the business of the Corporation and each of its
subsidiaries has been and is in compliance with all applicable
Environmental Laws except where such non-compliance would not
have a material adverse effect on the Corporation; neither the
Corporation nor any of its subsidiaries has used or permitted
to be used, except in compliance with all Environmental Laws,
any of its properties or facilities or any property or
facility which it previously owned or leased, to generate,
manufacture, process, distribute, use, treat, store, dispose
of, transport or handle any Hazardous Materials and neither
the Corporation nor any of its subsidiaries has caused or
permitted, nor has there been any release, of any Hazardous
Materials on, in, around, from or in connection with any of
its properties or assets or their use, or any property or
facility which it previously owned or leased, or any such
Release on or from a facility owned or operated by any third
party but with respect to which the Corporation or one of its
subsidiaries is or may reasonably be alleged to have
liability. All Hazardous Substances and all other wastes and
other materials and substances used in whole or in part by the
Corporation and its subsidiaries have been disposed of,
treated and stored by the Corporation and its subsidiaries in
compliance with all Environmental Laws; the Corporation nor
any of its subsidiaries has received any notice of, nor been
prosecuted for, non-compliance with any Environmental Laws,
and neither the Corporation nor any of its subsidiaries has
settled any allegation of non-compliance prior to prosecution;
and there are no notices, orders or directions relating to
environmental matters requiring, or notifying the Corporation
or one of its subsidiaries that it is or may be responsible
for, any containment, clean-up, remediation or corrective
action, or any work, repairs, construction or capital
expenditures to be made under Environmental Laws with respect
to the business or any property of the Corporation and its
subsidiaries;
(xxxiv) the Corporation and each of its subsidiaries has established a
comprehensive plan which includes appropriate contingency
measures and has taken all commercially reasonable steps to
ensure that their business, systems, processes, products and
services to the extent that they are in the Corporation's
control will operate, in all material respects, prior to,
during and after the calendar year 2000 without error relating
to the date data, or the product of date data, specifically
including any error relating to or which represents or
references different centuries or more than one century, and
all components of same will function, both separately and as a
whole in conjunction with each other, normally, without error
or delay and in substantially the same manner before, during
and after January 1, 2000;
(xxxv) no approvals or filings are required or necessary for the
valid quotation of the Common Shares to be issued to
Purchasers on the Closing Date; and
<PAGE>
(xxxvi) the first trade of the Common Shares (A) comprising the Units;
(B) issuable upon the due exercise of the Compensation
Options; (C) issuable upon the due exercise of the Warrants
comprising the Units; and (D) issuable upon the due exercise
of the Warrants issuable upon exercise of the Compensation
Warrants, in each case through the facilities of the OTC
Bulletin Board, are exempt from the prospectus and
registration requirements of the Canadian Securities Laws of
the Qualifying Provinces (or alternatively, the prospectus and
registration requirements of the Canadian Securities Laws are
inapplicable to such first trade of the Common Shares) and no
documents is required to be filed (other than specified forms
accompanied by requisite filing fees), proceedings taken or
approvals, permits, consents or authorizations obtained under
the Canadian Securities Laws of any of the Qualifying
Provinces to permit such issuance of the Common Shares,
subject to certain usual provisos and specified restrictions.
8. Closing Deliveries. The purchase and sale of the Units shall be completed at
the Closing Time at the offices of Cassels Brock & Blackwell, Toronto, Ontario
or at such other place as the Underwriter and the Corporation may agree upon. At
or prior to the Closing Time, and subject to the satisfaction or waiver of the
conditions set forth in paragraph 9, the Corporation shall duly and validly
deliver to the Underwriter certificates in definitive form representing the
Common Shares and Warrants to be issued and sold on the Closing Date registered
in the names of such Purchasers or as otherwise indicated on their respective
Subscription Agreements, against: (a) payment at the direction of the
Corporation of the aggregate Offering Price therefor in lawful money of the
United States by certified cheque or banker's draft, less an amount equal to the
Commission, the Financial Advisory Fee and the fees and expenses of the
Underwriter payable pursuant to paragraph 11 hereof; and (b) all completed
Subscription Agreements and all appendices thereto, if applicable.
9. Closing Conditions. Each Purchaser's obligation to purchase the Units at the
Closing Time shall be conditional upon the fulfilment at or before the Closing
Time of the following conditions:
(a) the Underwriter shall have received a certificate, dated as of the
Closing Date, signed by the Chief Executive Officer and the Chief Financial
Officer of the Corporation (or such other officer of the Corporation acceptable
to the Underwriter, acting reasonably), certifying for and on behalf of the
Corporation, to the best of the knowledge, information and belief of the person
so signing, that:
(i) since September 30, 1999, (A) there has been no material
adverse change (actual, anticipated, contemplated or
threatened, whether financial or otherwise) in the business,
affairs, operations, assets, liabilities (contingent or
otherwise), capital or financial condition of the Corporation
except as has been disclosed in the Disclosure Documents on a
non-confidential basis; and (B) no transaction has been
entered into by the Corporation which is or would be
materially adverse to the Corporation, or which is other than
in the ordinary course of business, except as has been
disclosed in the Disclosure Documents on a non-confidential
basis;
<PAGE>
(ii) the Corporation has duly complied with all the terms,
covenants and conditions of this Agreement on its part to be
complied with up to the Closing Time, other than those which
have been waived by the Underwriter;
(iii) no order, ruling or determination having the effect of
suspending the sale or ceasing the trading in any securities
of the Corporation (including the Underlying Securities and
the Optioned Securities) has been issued by any Securities
Regulator and is continuing in effect and no proceedings for
that purpose have been instituted or are pending or, to the
knowledge of such offices, contemplated or threatened by any
regulatory authority;
(iv) the representations and warranties of the Corporation
contained in this Agreement are true and correct as of the
Closing Time with the same force and effect as if made at and
as of the Closing Time after giving effect to the transactions
contemplated by this Agreement;
(v) as of the Closing Date after giving effect to the Offering and
the International Offering, the conditions set forth in
subsections 2.1(a) and (b) of Ontario Securities Commission
Rule 7.2 have been satisfied; and
(vi) the Corporation is a "foreign issuer" as such term is defined
in Ontario Securities Commission Rule 71-5B;
(b) the Underwriter shall have received at the Closing Time
certificates dated the Closing Date, signed by appropriate officers of the
Corporation addressed to the Underwriter and the Underwriter' counsel, with
respect to the articles and by-laws of the Corporation and the Corporation, as
applicable, all resolutions of the board of directors or shareholders of the
Corporation relating to each of the Material Agreements and the transactions
contemplated hereby and thereby, the incumbency and specimen signatures of
signing officers and such other matters as the Underwriter may reasonably
request;
(c) each of the Material Agreements shall have been executed and
delivered by the parties thereto in form and substance satisfactory to the
Underwriter and its counsel, acting reasonably;
(d) the Underwriter shall have received a favourable legal opinion
addressed to the Underwriter and the Purchasers, in form and substance
satisfactory to the Underwriter and its counsel, dated the Closing Date, from
Foley, Hoag & Eliot, United States counsel for the Corporation, which counsel in
turn may rely upon the opinions of local counsel where it deems such reliance
proper as to the laws of jurisdictions in which it is not qualified to practise
law, other than the federal laws of the United States and, as to matters of
fact, on certificates of auditors, public officials and officers of the
Corporation, with respect to the following matters:
<PAGE>
(i) the incorporation and subsistence of the Corporation and
WaveRider Communications (USA) Inc. under the laws of the
state of Nevada;
(ii) the authorized capital of each of the Corporation and
WaveRider Communications (USA) Inc. and that the Corporation
is shown on the records of WaveRider Communications (USA) Inc.
as the sole holder of record of all the issued and outstanding
Shares of WaveRider Communications (USA) Inc.;
(iii) each of the Corporation and WaveRider Communications (USA)
Inc. has all requisite corporate power and authority under the
laws of the state of Nevada to carry on its business as
presently carried on and to own its properties;
(iv) the Corporation has all requisite corporate power and
authority to carry out its obligations and the transactions
contemplated by this Agreement and the Material Agreements;
(v) none of the execution and delivery of this Agreement or the
Material Agreements, the performance by the Corporation of its
obligations hereunder and thereunder, the creation, sale or
issuance of the Underlying Securities and Compensation
Warrants, the issuance of the Underlying Securities and the
Optioned Securities, will conflict with or result in any
breach of the certificates of incorporation or by-laws of the
Corporation or any applicable laws of the state of Nevada or
the federal laws of the United States applicable therein;
(vi) each of the Material Agreements has been duly authorized by
the Corporation;
(vii) the Underlying Securities and Compensation Warrants are duly
and validly issued, fully paid and non-assessable;
(viii) 3,925,925 Common Shares have been reserved for issuance on
exercise of the Warrants and the Compensation Warrants and
upon the exercise of the Warrants and Compensation Warrants in
accordance with the respective provisions thereof, such Common
Shares will be duly and validly issued as fully paid and
non-assessable;
(ix) the sale of the Underlying Securities and the Optioned
Securities has been registered under the U.S. Securities Act
on the Registration Statement, the Registration statement has
been declared effective and no stop order has been issued in
respect of the Company or the Underlying Securities or
Optioned Securities and to our knowledge, no such stop order
has been threatened;
(x) the Company is a reporting issuer under the U.S. Exchange Act
of 1934; and
<PAGE>
(xi) such other matters as the Underwriter or its counsel may
reasonably request prior to the Closing Time;
(e) the Underwriter shall have received a favourable legal opinion
addressed to the Underwriter and the Purchasers, in form and substance
satisfactory to the Underwriter and its counsel, dated the Closing Date, from
Cassels Brock & Blackwell, Canadian counsel for the Corporation, which counsel
in turn may rely upon the opinions of local counsel where it deems such reliance
proper as to the laws of jurisdictions other than the federal laws of Canada and
the Province of Ontario and, as to matters of fact, on certificates of auditors,
public officials and officers of the Corporation, with respect to the following
matters:
(i) each of the Material Agreements and the certificates
representing the Warrants and the Compensation Warrants has
been duly executed and delivered by the Corporation and
constitutes a valid and legally binding agreement of the
Corporation enforceable against it in accordance with its
terms, subject to certain standard qualifications as to
enforceability;
(ii) the issuance and sale of the Units by the Corporation to the
Purchasers and the issuance of the Compensation Warrants to
the Underwriter are exempt from the prospectus requirements of
Canadian Securities Laws of the Qualifying Provinces and no
documents are required to be filed (other than specified forms
accompanied by requisite filing fees), proceedings taken or
approvals, permits, consents or authorizations obtained under
the Canadian Securities Laws of any of the Qualifying
Provinces to permit such issuance and sale of the Units,
subject to certain usual provisos and specified restrictions;
(iii) the issuance of the Common Shares issuable upon (A) the due
exercise of the Warrants comprising the Units, (B) the
Compensation Warrants; and (C) the Warrants issuable upon the
due exercise of the Compensation Warrants, are exempt from the
prospectus and registration requirements of the Canadian
Securities Laws of the Qualifying Provinces and no documents
are required to be filed (other than specified forms
accompanied by requisite filing fees), proceedings taken or
approvals, permits, consents or authorizations obtained under
the Canadian Securities Laws of any of the Qualifying
Provinces to permit such issuance of the Common Shares,
subject to certain usual provisos and specified restrictions;
and
(f) the Underwriter shall have received:
(i) certificates of status or similar certificates for the
Corporation and each of the Material Subsidiaries with respect
to the jurisdiction in which it is incorporated;
<PAGE>
(ii) certificates of good standing for the Corporation and each of
the Material Subsidiaries with respect to each jurisdiction in
which the Corporation or the Material Subsidiaries carry on
business;
(iii) a certificate of the registrar and transfer agent of the
Corporation as to the number of issued and outstanding Common
Shares;
(iv) evidence satisfactory to the Underwriter, acting reasonably,
that the Registration Statement and Prospectus have been filed
with the SEC and have become effective; and
(v) evidence satisfactory to the Underwriter, acting reasonably,
that the common stock purchase agreement between the
Corporation and Radyr Group Investments dated October 18, 1999
and the related call option have been terminated.
10. Rights of Termination
(a) Litigation. If any enquiry, action, suit, investigation or other
proceeding whether formal or informal is instituted or threatened or any order
is made by any federal, provincial or other governmental authority in relation
to the Corporation which, in the reasonable opinion of the Underwriter, operates
to prevent or restrict the distribution or trading of the Units or the
Underlying Securities, the Underwriter shall be entitled, at its option and in
accordance with subparagraph 10(g) of this Agreement, to terminate their
obligations under this Agreement (and the obligations of the Purchasers arranged
by it to purchase Units) by notice to that effect given to the Corporation any
time prior to the Closing Time.
(b) Disaster Out Clause. In the event that prior to the Closing Time
there should develop, occur or come into effect any occurrence of national or
international consequence or any event, action, condition, law, governmental
regulation, inquiry or other occurrence of any nature whatsoever which, in the
reasonable opinion of the Underwriter, seriously adversely affects or involves,
or will seriously adversely affect or involve, the Canadian financial markets or
the business, operations or affairs of the Corporation, the Underwriter shall be
entitled at its option, in accordance with subparagraph 10(g) of this Agreement,
to terminate their obligations under this Agreement (and the obligations of the
Purchasers arranged by it to purchase Units) by written notice to that effect
given to the Corporation prior to the Closing Time.
(c) Market Out Clause. If, prior to the Closing Time, the state of the
financial markets becomes such that the Units cannot, in the reasonable opinion
of the Underwriter, be profitably marketed, the Underwriter shall be entitled at
its option, in accordance with subparagraph 10(g) of this Agreement, to
terminate their obligations under this Agreement (and the obligations of the
Purchasers arranged by them to purchase Units) by written notice to that effect
given to the Corporation prior to the Closing Time.
(d) Change in Material Fact. In the event that prior to the Closing
Time there should occur any material change, there should be discovered any
previously undisclosed material fact, or there should occur a change in any
material fact such as is contemplated by subparagraph 6(a), which results or, in
the reasonable opinion of the Underwriter, could reasonably be expected to
result, in the Purchasers of a material number of Units exercising their
contractual right of rescission granted to the Underwriter and the Purchasers in
respect of the Units or the rights of rescission under the Securities Act
(Ontario) or the corresponding provisions of applicable securities legislation
in the other Qualifying Provinces or, in the reasonable opinion of the
Underwriter, has or could reasonably be expected to have a material adverse
effect on the market price or value of the Underlying Securities, the
Underwriter shall be entitled, at its option, in accordance with subparagraph
10(g), to terminate their obligations under this Agreement (and the obligations
of the Purchasers arranged by it to purchase Units) by written notice to that
effect given to the Corporation prior to the Closing Time.
<PAGE>
(e) Cease Trade Order. In the event that any order to cease trading in
securities of the Corporation is made or threatened by a Securities Regulator,
the Underwriter shall be entitled, at its option, in accordance with
subparagraph 10(g) of this Agreement, to terminate its obligations under this
Agreement (and the obligations of the Purchasers arranged by it to purchase
Units) by written notice to that effect given to the Corporation prior to the
Closing Time.
(f) Non-Compliance With Conditions. The Corporation agrees that all
terms and conditions in this Agreement shall be construed as conditions and
complied with so far as the same relate to acts to be performed or caused to be
performed by the Corporation that it will use its best efforts (or all
commercially reasonable efforts, as applicable) to cause such conditions to be
complied with, and any breach or failure by the Corporation to comply with any
of such conditions shall entitle the Underwriter, to terminate its obligations
under this Agreement (and the obligations of the Purchasers arranged by it to
purchase Units) by notice to that effect given to the Corporation at or prior to
the Closing Time. The Underwriter may waive, in whole or in part, or extend the
time for compliance with, any terms and conditions without prejudice to its
rights in respect of any other of such terms and conditions or any other or
subsequent breach or non-compliance, provided that any such waiver or extension
shall be binding upon the Underwriter only if the same is in writing and signed
by the Underwriter.
(g) Exercise of Termination Rights. The rights of termination
contained in subparagraphs 10(a), (b), (c), (d), (e) and (f) are in addition to
any other rights or remedies the Underwriter may have in respect of any default,
act or failure to act or non-compliance by the in respect of any of the matters
contemplated by this Agreement or otherwise. In the event of any such
termination, there shall be no further liability on the part of the Underwriter
to the Corporation or on the part of the Corporation to the Underwriter except
in respect of any liability which may have arisen or may arise after such
termination in respect of acts or omissions prior to such termination under
paragraphs 11, 13 and 14.
11. Expenses. Whether or not the sale of the Units or the issuance of the
Underlying Securities upon exercise of such Units shall be completed, all
reasonable out of pocket expenses of or incidental to the issue and delivery of
such Units and Underlying Securities or incidental to all matters in connection
with the transactions herein set out shall be borne by the Corporation
including, without limitation, expenses in connection with the issuance and sale
of the Units, all filing and registration fees required under Securities Laws,
the qualification of the Underlying Securities for distribution to the public in
the United States, the preparation, filing and delivery of the Registration
Statement, the Prospectus and any Supplementary Material, the fees and expenses
of counsel to the Corporation and all local counsel selected by the Corporation,
the Underwriter's out-of-pocket expenses, the reasonable fees and expenses of
counsel to the Underwriter, and all costs incurred in connection with the
preparation and printing of the Registration Statement, the Prospectus and any
Supplementary Material.
<PAGE>
12. Survival of Representations and Warranties. All warranties, representations,
covenants and agreements herein contained or contained in any documents
submitted pursuant to this Agreement and in connection with the transaction
herein contemplated shall survive the purchase and sale of the Units and the
exercise of such Units for the Underlying Securities by the Purchasers and
continue in full force and effect for the benefit of the Purchasers for a period
of two years from the Closing Date and shall not be limited or prejudiced by any
investigation made by or on behalf of the Underwriter in connection with the
purchase and sale of the Units or the preparation of the Prospectus or
otherwise. For greater certainty, and without limiting the generality of the
foregoing, the provisions contained in this Agreement in any way related to the
indemnification of the Underwriter by the Corporation, or the contribution
obligations of the Underwriter or those of the Corporation, shall survive and
continue in full force and effect, indefinitely.
13. (a) Indemnity of the Corporation. The Corporation hereby agrees to indemnify
and save harmless the Underwriter and each of their directors, officers,
employees and Underwriter from and against all liabilities, claims, actions,
suits, proceedings, losses (other than loss of profits), costs, damages and
expenses in any way caused by, or arising directly or indirectly from, or in
consequence of:
(i) any misrepresentation or alleged misrepresentation (as such
term is defined in the Securities Act (Ontario)) contained
herein or made by the Corporation in connection with the sale
by the Corporation of the Units or the Underlying Securities,
or in any material change report or public document filed or
issued by the Corporation or on its behalf, except any
information or statement relating solely to the Underwriter;
(ii) any information or statement (except any information or
statement relating solely to the Underwriter) contained in the
Registration Statement, the Prospectus or any Supplementary
Material or in any certificate of the Corporation delivered
under this Agreement or pursuant to this Agreement which at
the time and in the light of the circumstances under which it
was made contains or is alleged to contain a
misrepresentation;
(iii) any omission or alleged omission to state in the Registration
Statement, the Prospectus, any Supplementary Material or any
certificate of the Corporation delivered under this Agreement
or pursuant to this Agreement any fact (except facts relating
solely to the Underwriter), whether material or not, required
to be stated in such document or necessary to make any
statement in such document not misleading in light of the
circumstances under which it was made;
<PAGE>
(iv) any order made or enquiry, investigation or proceedings
commenced or threatened by any Securities Regulator based upon
any untrue statement or omission or alleged untrue statement
or alleged omission or any misrepresentation or alleged
misrepresentation (except a statement or omission or alleged
statement or omission relating solely to the Underwriter) in
the Registration Statement, the Prospectus or any
Supplementary Material or based upon any failure to comply
with applicable Securities Laws (other than any failure or
alleged failure to comply by the Underwriter), preventing or
restricting the trading in or the sale or distribution of the
Units or the Underlying Securities; or
(v) the non-compliance or alleged non-compliance by the
Corporation with any applicable Securities Laws, including the
Corporation's non-compliance with any statutory requirement to
make any document available for inspection.
(b) Notification of Claims. If any matter or thing contemplated by this
paragraph (any such matter or thing being referred to as a "Claim") is asserted
against any person or Corporation in respect of which indemnification is or
might reasonably be considered to be provided, such person or Corporation (the
"Indemnified Party") will notify the Corporation or the Corporation, as the case
may be (as applicable, the "Indemnifying Party") as soon as possible of the
nature of such Claim and the Indemnifying Party shall be entitled (but not
required) to assume the defence of any suit brought to enforce such Claim;
provided, however, that the defence shall be conducted through legal counsel
acceptable to the Indemnified Party, acting reasonably, and that no settlement
of any such Claim may be made by the Indemnifying Party or the Indemnified Party
without the prior written consent of the other parties, such consent not to be
unreasonably withheld.
(c) Right of Indemnity in Favour of Others. With respect to any
Indemnified Party who is not a party to this Agreement, the Underwriter or the
Corporation, as applicable, shall obtain and hold the rights and benefits of
this paragraph and paragraph 14 in trust for and on behalf of such Indemnified
Party.
(d) Retaining Counsel. In any such Claim, the Indemnified Party shall
have the right to retain other counsel to act on his, her or its behalf and to
participate in the defence thereof, provided that the fees and disbursements of
such counsel shall be paid by the Indemnified Party unless: (i) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the retention of
the other counsel, (ii) the Indemnifying Party fails to assume the defence of
such Claim on behalf of the Indemnified Party within ten days of receiving
notice of such Claim, or (iii) the named parties to any such Claim (including
any added third or impleaded party) include both the Indemnified Party and the
Indemnifying Party and the Indemnified Party shall have been advised by counsel
that representation of the Indemnified Party by counsel for the Indemnifying
Party is inappropriate as a result of potential or actual differing interests of
those represented; in each of which cases such Indemnifier shall not have the
right to assume the defence of such Claim on behalf of the Indemnified Party but
the Indemnifying Party shall be liable to pay the reasonable fees and
disbursements of counsel to the Indemnified Party; provided that the
Indemnifying Party shall not be obligated to pay fees and expenses of more than
one separate legal firm for all Indemnified Parties, as a group.
<PAGE>
14. (a) Contribution. In order to provide for a just and equitable contribution
in circumstances in which the indemnity provided in paragraph 13 would otherwise
be available in accordance with its terms but is, for any reason, held to be
unavailable to or unenforceable by the Underwriter or enforceable otherwise than
in accordance with its terms, the Corporation, the Corporation and the
Underwriter shall severally contribute to the aggregate of all claims, expenses,
costs and liabilities and all losses (other than loss of profits) of a nature
contemplated in paragraph 13 in such proportions so that the Underwriter is
responsible for the portion represented by the percentage that the aggregate fee
payable by the Corporation to the Underwriter bears to the aggregate offering
price of the Units and the Indemnifying Party is responsible for the balance.
The Underwriter shall not in any event be liable to contribute, in the
aggregate, any amounts in excess of such aggregate fee or any portion of such
fee actually received. However, no party who has engaged in any fraud,
fraudulent misrepresentation or gross negligence shall be entitled to claim
contribution from any person who has not engaged in such fraud, fraudulent
misrepresentation or gross negligence.
(b) Right of Contribution in Addition to Other Rights. The rights to
contribution provided in this paragraph shall be in addition to and not in
derogation of any other right to contribution which the Underwriter may have by
statute or otherwise at law.
(c) Calculation of Contribution. In the event that an Indemnifying
Party may be held to be entitled to contribution from the Underwriter under the
provisions of any statute or at law, the Indemnifying Party shall be limited to
contribution in an amount not exceeding the lesser of:
(i) the portion of the full amount of the loss or liability giving
rise to such contribution for which the Underwriter is
responsible, as determined in subparagraph 14(a) above; and
(ii) the amount of the aggregate fee actually received by the
Underwriter from the Corporation under this Agreement.
(d) Notice. If the Underwriter has reason to believe that a claim for
contribution may arise, they shall give the Indemnifying Party notice of such
claim in writing, as soon as reasonably possible, but failure to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any obligation
which it may have to the Underwriter under this paragraph.
15. Right of First Refusal. Subject to completion of the Offering, the
Underwriter is hereby granted the right of first refusal to act as lead
underwriter of any further offering of securities of the Corporation in Canada
and, to the extent qualified in the United States, to participate as a managing
underwriter in an amount equal to not less than 20%, in any offering of
securities by the Corporation, either wholly or partially in the United States,
including a follow-on issue of Common Shares, in each case, for a period of
eighteen months from the Closing Date.
<PAGE>
16. Advertisements. The Corporation acknowledges that the Underwriter shall have
the right, subject always to paragraphs 1 and 2 of this Agreement, at their own
expense, to place such advertisement or advertisements relating to the sale of
the Units or the Underlying Securities contemplated herein as the Underwriter
may consider desirable or appropriate and as may be permitted by applicable law.
The Corporation and the Underwriter each agree that they will not make or
publish any advertisement in any media whatsoever relating to, or otherwise
publicize, the transaction provided for herein so as to result in any exemption
from the prospectus and registration requirements of applicable securities
legislation in any of the provinces of Canada being unavailable in respect of
the sale of the Units to prospective purchasers.
17. Notices. Unless otherwise expressly provided in this Agreement, any notice
or other communication to be given under this Agreement (a "notice") shall be in
writing addressed as follows:
If to the Corporation at:
WaveRider Communications Inc.
255 Consumers Road, Suite 500
Toronto, Canada
M2J 1R4
Attention:President & Chief Executive Officer
Telecopier: (416)502-2968
in the foregoing case, with a copy to:
Cassels Brock & Blackwell
Scotia Plaza
Suite2100,
40 King Street West
Toronto, Ontario
M5H 3C2
Attention: Cam Mingay
Telecopier: (416) 360-8877
- and to -
Foley, Hoag & Eliot
1 Post Office Square,
Boston, MA
02109
Attention: David Broadwin
Telecopier: (617) 832-7000
<PAGE>
If to Groome Capital.com Inc., at:
Groome Capital.com Inc.
20 Toronto Street
Suite 906
Toronto, Ontario
M5C 2B8
Attention: Jerry Vickers
Telecopier: (416) 861-3060
with a copy to:
Wildeboer Rand Thomson Apps & Dellelce
1 First Canadian Place
Suite 810
Toronto, Ontario
M5X 1A9
Attention: Troy Pocaluyko
Telecopier: (416) 361-1790
or to such other address as any of the parties may designate by notice given to
the others.
Each notice shall be personally delivered to the addressee or sent by telex or
facsimile transmission to the addressee and (i) a notice which is personally
delivered shall, if delivered on a Business Day, be deemed to be given and
received on that day and, in any other case, be deemed to be given and received
on the first Business Day following the day on which it is delivered; and (ii) a
notice which is sent by telecopier or facsimile transmission shall be deemed to
be given and received on the first Business Day following the day on which it is
sent.
18. Time of the Essence. Time shall, in all respects, be of the essence hereof.
19. United States Dollars. All references herein to dollar amounts are to lawful
money of the United States.
20. Headings. The headings contained herein are for convenience only and shall
not affect the meaning or interpretation hereof.
21. Singular and Plural, etc. Where the context so requires, words importing the
singular number include the plural and vice versa, and words importing gender
shall include the masculine, feminine and neuter genders.
<PAGE>
22. Entire Agreement. This Agreement constitutes the only agreement between the
Underwriter and Corporation with respect to the subject matter hereof and shall
supersede any and all prior negotiations and understandings between those
parties, including for greater certainty, the engagement letter dated November
23, 1999 between the Corporation and the Underwriter. This Agreement may be
amended or modified in any respect by written instrument only.
23. Severability. The invalidity or unenforceability of any particular provision
of this Agreement shall not affect or limit the validity or enforceability of
the remaining provisions of this Agreement.
24. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
25. Successors and Assigns. The terms and provisions of this Agreement shall be
binding upon and enure to the benefit of the Corporation, the Underwriter and
the Purchasers and their respective heirs, executors, administrators, successors
and permitted assigns; provided that, except as provided herein or in the
Subscription and Purchase Agreements, this Agreement shall not be assignable by
any party without the written consent of the others.
26. Further Assurances. Each of the parties hereto shall do or cause to be done
all such acts and things and shall execute or cause to be executed all such
documents, agreements and other instruments as may reasonably be necessary or
desirable for the purpose of carrying out the provisions and intent of this
Agreement.
27. Effective Date. This Agreement is intended to and shall take effect as of
the date first set forth above, notwithstanding its actual date of execution or
delivery.
28. Language. The parties hereby acknowledge that they have expressly required
this Agreement and all notices, statements of account and other documents
required or permitted to be given or entered into pursuant hereto to be drawn up
in the English language only. Les parties reconnaissent avoir expressment
demandees que la presente Convention ainsi que tout avis, tout etat de compte et
tout autre document a etre ou pouvant etre donne ou conclu en vertu des
dispositions des presentes, soient rediges en langue anglaise seulement.
29. Counterparts and Facsimile Execution. This Agreement may be executed in any
number of counterparts, which taken together shall form one and the same
agreement, and may be executed and delivered by telecopier or facsimile
transmission, which shall be binding on the parties as though originally
executed and delivered.
<PAGE>
If the Corporation is in agreement with the foregoing terms and conditions,
please so indicate by executing a copy of this letter where indicated below and
delivering the same to the Underwriter.
Yours very truly,
GROOME CAPITAL.COM INC.
Per: /s/ Jerry S. Vickers
--------------------------
Authorized Signing Officer
The foregoing is hereby accepted on the terms and conditions therein set forth.
DATED as of the 20th day of December, 1999.
WAVERIDER COMMUNICATIONS INC.
Per: /s/ D. Bruce Sinclair
--------------------------
Authorized Signing Officer
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE "A"
OUTSTANDING CONVERTIBLE SECURITIES
AS AT DECEMBER 15, 1999
<S> <C>
SERIES "C" CONVERTIBLE PREFERRED SHARES 764,000
WARRANTS
Expiry Exercise
Date Price Quantity
------------------------------------------------
June 11, 2000 $2.50 800,000
October 31, 2003 $1.01 380,000
December 15, 2003 $1.50 500,000
December 29, 2003 $2.00 225,000
December 29, 2003 $2.61 225,000
December 29, 2003 $3.00 375,000
December 29, 2003 $4.00 225,000
June 29, 2004 $2.00 500,000
-------
3,230,000
EMPLOYEE STOCK OPTIONS
(range of $0.25 - $3.44 & average of $1.04) 6,807,175
---------
TOTAL 10,801,175
</TABLE>
