Schedule "A"

                                    PROPOSAL

                                                        Court File No. 32-107046

                            SUPERIOR COURT OF JUSTICE
                         (In Bankruptcy and Insolvency)

                        IN THE MATTER OF THE PROPOSAL OF
                         TRANSFORMATION PROCESSING, INC.
                           of the city of Mississauga,
                         Regional Municipality of Peel,
                           In the Province of Ontario


                                    PROPOSAL

Transformation  Processing,  Inc. (the  "Corporation")  the above-named  debtor,
hereby  submits the following  Proposal  under the Bankruptcy and Insolvency Act
(Canada).

                                     PART I
                                 INTERPRETATION

Definitions

1. In this Proposal, capitalized terms shall have the following meanings:

         (a)      "Act" means the Bankruptcy and Insolvency Act (Canada), as it
                  may be amended from time to time;

         (b)      Business  Day" means any day other than a Saturday or a Sunday
                  or a day observed as a holiday  under the laws of the Province
                  of Ontario or the federal laws of Canada applicable therein;

         (c)      "Claim" means any indebtedness,  liability,  action,  cause of
                  action,  suit,  debt,  account,   bond,  covenant,   contract,
                  counterclaim,  demand,  claims,  right and  obligation  of any
                  nature  whatsoever of the  Corporation to any person,  whether
                  liquidated,  unliquidated,  fixed, contingent, matured, legal,
                  equitable,  present,  future, known or unknown, and whether by
                  guarantee,  surety  or  otherwise,   incurred  or  arising  or
                  relating to the period prior to the Filing Date;

         (d)      "Court" means the Superior Court of Justice (in Bankruptcy and
                  Insolvency);

         (e)      "Court  Approval Date" means the date on which the Court makes
                  an Order approving this Proposal to be granted pursuant to the
                  provisions of the Act;

         (f)      "Creditor"  means any Person,  with the  exception  of Thomson
                  Kernaghan, who holds one or more Claims;

         (g)      "Effective  Date" means the date on which the Final Order
                  becomes effective;

         (h)      "Employees" means all of the employees of the Corporation;

         (i)      "Event of Default" has the meaning given to it in Part VIII of
                  this Proposal;


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         (j)      "Filing  Date" means August 23, 1999,  being the date on which
                  the  Corporation  filed  its  Notice  of  Intention  to Make a
                  Proposal under the Act;

         (k)      "Final  Order"  means  an order of the  Court  approving  this
                  Proposal to be granted  pursuant to the provisions of the Act,
                  the appeal  period  having  expired and no appeal  having been
                  filed, or any appeal  therefrom having been dismissed and such
                  dismissal having become final;

         (l)      "Landlord" means Origin Technology in Business, Inc.;

         (m)      "Lease" means the Agreement signed on June 3, 1998 between the
                  Corporation  (as  Sub-Tenant)  and the  Landlord  covering the
                  Premises for a period of two (2) years, four (4) months, which
                  commenced  on the 1st day of July,  1998 and was  scheduled to
                  terminate on the 30th day of October, 2000;

         (n)      "Maturity  Date"  means  the date on  which  all  payments  to
                  Creditors  have  been made  pursuant  to Part IV and Part V of
                  this Proposal;

         (o)      "Preferred   Creditor"  means  any  Creditor  which  would  be
                  entitled  to  receive  payment  of any  amount  owed  to it in
                  priority to other Creditors and provided in Section 136 of the
                  Act, should the corporation become a bankrupt;

         (p)      "Premises" means the property situated at 55 Explorer Drive,
                  Second Floor, Mississauga, Ontario;

         (q)      "Person" shall have the meaning  ascribed thereto in the
                  Bankruptcy and Insolvency Act (Canada);

         (r)      "Proposal"  means the  Proposal  made  pursuant to the Act, as
                  amended or  supplemented  from time to time,  and includes any
                  schedules thereto;

         (s)      "Proposal  Period" means the period between the Court approval
                  Date and the Maturity Date;

         (t)      "Secured Creditors" shall have the meaning ascribed to it
                  under the Act;

         (u)      "Thomson Kernaghan" shall mean Thomson Kernaghan & Co. Limited
                  who is a creditor of the Corporation  with its principal place
                  of business at 365 Bay Street, 10th Floor,  Toronto,  Ontario,
                  M5H 2V2;

         (v)      "Trustee"  means BDO Dunwoody  Limited,  the trustee  acting
                  in the Proposal of the Corporation; and

         (w)      "Unsecured   Creditor"  means  any  Creditor  other  than  (i)
                  Preferred  Creditors;  and ii) Secured Creditors to the extent
                  of the realizable  value of the security held by such Creditor
                  over the assets of the  Corporation;  whose Claims arose prior
                  to the Filing Date, but shall not include the Claim of Thomson
                  Kernaghan.

Headings

2.       The  division of the  Proposal  into parts,  sections,  paragraphs  and
         subparagraphs, and the insertion of headings herein, is for convenience
         of  reference   only  and  is  not  to  affect  the   construction   or
         interpretation  of this  Proposal.  Unless  otherwise  provided in this
         Proposal,   references  herein  to  parts,  sections,   paragraphs  and
         subparagraphs  are  references  to  parts,  sections,   paragraphs  and
         subparagraphs of this Proposal.

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Number, etc.

3.       In this  Proposal,  where the context  requires,  a word  importing the
         singular  includes  the plural  and vice  versa,  and a work  importing
         gender includes the masculine, feminine and neuter genders.

Date for Action

4.       In the event that any date on which any action is  required to be taken
         hereunder  is not a Business  Day,  such  action will be required to be
         taken on the next succeeding day that is a Business Day.

Successors and Assigns

5.       This Proposal will be binding upon and will enure to the benefit of the
         heirs, administrators, executors, personal representatives,  successors
         and  assigns of all  persons  named or  referred  to herein  including,
         without limitation, all Creditors.

Accounting Principles

6.       Accounting  terms not otherwise  defined have the meanings  assigned to
         them  in  accordance  with  generally   accepted  Canadian   accounting
         principles.

                                     PART II
                       PURPOSE AND EFFECT OF THIS PROPOSAL

Purpose of Proposal

7.       The  purpose  of this  Proposal  is to  effect a  restructuring  of the
         business and affairs of the  Corporation  in the  expectation  that all
         Creditors will derive a greater benefit from the continued operation of
         the  business and affairs of the  Corporation  than would result from a
         forced liquidation of its assets.

Effect of Proposal

8.       This Proposal  restructures  the affairs of the Corporation and amends
         the terms of any and all agreements  between the  Corporation  and the
         Creditors  existing as at the Filing Date and provides  the  essential
         terms upon which all such Claims  will be fully and  finally  resolved
         and settled. During the Proposal Period, and provided that an Event of
         Default has not occurred and is  continuing  hereunder,  all Creditors
         will be stayed from  commencing or continuing any proceeding or remedy
         against the Corporation or any of its property or assets in respect of
         a Claim  including,  without  limitation,  any proceeding or remedy to
         recover  payment  of any  monies  owing to  Creditors,  to  recover or
         enforce any judgment  against the Corporation in respect of a Claim or
         to commence any formal  proceedings  against it other than as provided
         for under this Proposal.


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Persons Affected

9.       This  Proposal  will,  as of the  Effective  Date,  be  binding  on the
         Corporation and all Creditors in the manner provided for in the Act.

                                    PART III
                     CLASSIFICATION AND TREATMENT OF CLAIMS

Classes of Creditors

10.      There  shall be only one  class of  Creditors  whose  Claims  are being
         compromised  under this Proposal,  which shall consist of the Unsecured
         Creditors.

Amendment to Agreements

11.      Notwithstanding  the terms and  conditions  of all  agreements or other
         arrangements with Creditors entered into before the Filing Date, for so
         long  as an  Event  of  Default  has  not  occurred  and is  continuing
         hereunder all such agreements or other  arrangements  will be deemed to
         be amended to the extent  necessary to give effect to all the terms and
         conditions  of  this  Proposal.   IN  the  event  of  any  conflict  or
         inconsistency  between the terms of such agreements or arrangements and
         the terms of this Proposal, the terms of this Proposal will govern. All
         Creditors will provide such acknowledgements, agreements, discharges or
         other documentation as may be necessary to give effect to the intent of
         this Proposal.

Treatment of Claims

12.      The  purposes of this  Proposal,  a holder of a Claim will  receive the
         treatment provided for in this Proposal on account of such Claim.

                                     PART IV
                            UNSECURED CREDITOR CLAIMS

Payment of Unsecured Claims

13.      Within 30 days of the  Effective  Date,  Claims of Unsecured  Creditors
         shall be paid,; up to an aggregate amount  calculated by taking the sum
         of $300,000 and subtracting  all amounts paid to Creditors  pursuant to
         paragraphs 16, 17, 18 and 19 of Part V of this Proposal, as follows:

          (i)  a  dividend  of 100 cents on the  dollar  equal to the  amount of
               claim up to an amount of $2,000 for each Unsecured Creditor;

          (ii) a further  dividend  of 50 cents for  every  dollar of  Unsecured
               Claim in excess of $2,000 up to Unsecured Claims of $5,000; and

          (iii)a further  pro rata  dividend  sharing  with all other  Unsecured
               Claims for  distribution of Unsecured  Claims over $5,000 up to a
               maximum  of 10 cents on each  dollars  of  Unsecured  Claim  over
               $5,000.


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Effect of Payment

14.      Unsecured  Creditors will accept the payments provided for in this Part
         in  complete   satisfaction   of  all  their   Claims  and  all  liens,
         certificates  of pending  litigation,  executions  or any other similar
         charges or actions or proceedings in respect of such Claim will have no
         effect in law or in equity against the property, assets and undertaking
         of the Corporation.

                                     PART V
                     PREFERRED CLAIMS AND MANDATORY PAYMENTS

Payment of Fees

15.      Within 30 days of the Effective  Date,  all proper fees and expenses of
         the Trustee and  reasonable  legal and other  professional  fees on and
         incidental  the  proceedings  arising  out  of  this  Proposal  and  in
         connection   with  the   preparation   of  this  Proposal  and  in  the
         administration of this Proposal, including advice to the Corporation in
         connection  therewith,  will be  paid  in  priority  to all  Claims  of
         Preferred Creditors and Unsecured Creditors.

Preferred Claims

16.      Preferred Claims,  without interest, are to be paid in full priority to
         all Claims of Unsecured Creditors  including,  without limitation,  any
         entitlement  of  Unsecured  Creditors  to the payments to be made under
         Part IV of this Proposal.

Crown Claims

17.      During the Proposal Period,  the Corporation shall pay and keep current
         Her Majesty in Right of Canada and in right of Ontario all amounts of a
         kind that could be subject to a demand under subsection 224(1.2) of the
         Income  Tax  Act or any  substantially  similar  provision  of  Ontario
         legislation.  Any such  claims  outstanding  under  the  provisions  of
         subsection   224(1.2)  of  the  Income  Tax  Act  or  similar  act  and
         legislation  at the Filing  Date  shall be paid  within 6 months of the
         Effective Date.

Employee Claims

18.      All  payments  not  exceeding  $2,000  payable  to  former  or  current
         Employees which would be payable in priority under subsection 136(1)(d)
         of the Act  should  the  Corporation  become  a  bankrupt  will be paid
         immediately  after the Effective Date. It is understood that all claims
         of Employees in excess of $2,000 shall be considered  Unsecured  Claims
         and shall entitle the Employees to vote on this Proposal as such.

Landlord Claims - Disclaimer

19.  Immediately  after the Effective  Date, up to a maximum  amount of 3 months
     rent shall be paid to the  Landlord on account of arrears of rent under the
     Lease for the period immediately prior to the Filing Date. It is understood
     that all Claims of the Landlord in excess of the aforementioned  arrears in
     rent shall be considered an Unsecured  Claim and shall entitle the Landlord

<PAGE>

     to vote as such,  but in no event will the Unsecured  Claim of the Landlord
     be greater than the amount of rent  calculated  by the formula  provided in
     Section  65.2(4)(b)(ii) of the Act.  Specifically,  Section  65.2(4)(b)(ii)
     states that a Landlord's  damages for a disclaimer  of a lease may be filed
     as a proof of claim for an amount equal to the lesser of (i) the  aggregate
     of (a) the rent  provided  for in the Lease for the first year of the Lease
     following  the date on which  the  disclaimer  becomes  effective,  and (b)
     fifteen  percent  of the rent for the  remainder  of the term of the  Lease
     after that year; and (ii) three years' rent.

                                     PART VI
                         PAYMENT PROCESS DURING PROPOSAL

20.      all amounts  payable to be issued by the  Corporation  to any  Creditor
         under  this  Proposal  during  the  Proposal  Period  will be paid  and
         delivered by it to the Trustee at least three  Business Days before the
         dates on which such payments must be made to the Creditors. The Trustee
         will  distribute  all  such  payments  to the  Creditors  on the  dates
         appointed for such payments hereunder and the Creditors will accept all
         such payments in full and complete satisfaction of their Claims.

                                    PART VII
                                EVENTS OF DEFAULT

21.      The non-payment by the Corporation of any of its obligations  hereunder
         within 10 days after  written  notice has been given by the  Trustee to
         the Corporation  that such payment is past due will constitute an Event
         of Default for purposes of Section 62.1 of the Act and otherwise  under
         this Proposal.

                                    PART VIII
                                     TRUSTEE

Confirmation of Appointment

22. BDO Dunwoody Limited will be the Trustee under this Proposal.

Monitor

23.      The Trustee will monitor the business operations of the Corporation for
         all  Creditors  during  the  Proposal  Period  and  perform  all  other
         obligations until this Proposal is either accepted or rejected.

Meeting of Creditors

24.      The Trustee will call one or more meetings of the Creditors, to be held
         within 21 days  after the  filing of this  Proposal  with the  Official
         Receiver,  at such dates, times and places as may be agreed upon by the
         Trustee and the Corporation.

Proofs of Claim

25.      All  Creditors  will be  required  to  submit  a proof  of claim to the
         Trustee  and the face  amount  thereof  will  govern for the purpose of
         voting  at the  meeting  of  Creditors  to be  held  to  consider  this
         Proposal,  unless  dispute or  disallowed  by the chair of the meeting.
         Thereafter, the Trustee will examine all proofs of clam and may require
         further  evidence and support of the Claim.  The  provisions of Section
         135 of the  Act  will  apply  to  all  proofs  of  claim  submitted  by
         Creditors.


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                                     PART IX
                              CONDITIONS PRECEDENT

26.      As provided for in the Act, the  arrangements  et out in this  Proposal
         will  not take  effect  unless  the  conditions  set  forth  below  are
         substantially satisfied on or before the Effective Date:

         (a)      Thomson  Kernaghan  supplies the necessary capital to fund any
                  deficiencies  of  capital  required  for  the  Corporation  to
                  fulfill its  obligations  under this  Proposal but in no event
                  shall  such  amount  be in  excess of  $375,000  (attached  as
                  Schedule A is Thomson  Kernaghan's  Guarantee  with respect to
                  the $375,000);

         (b)      all approvals and consents to the Proposal that may be
                  required have been obtained;

         (c)      the Final Order becomes effective;

         (d)      no order or decree  restraining or enjoining the  consummation
                  of the  transactions  contemplated  by this Proposal will have
                  been issued; and

         (e)      all  agreements  or   instruments   necessary  to  effect  the
                  intention  and  purpose  of  this  Proposal  shall  have  been
                  received  by the  Corporation  in a form  satisfactory  to the
                  Corporation and the Trustee.

                                     PART X
                           APPLICATION FOR FINAL ORDER

Application for Final Order

27.      The Trustee will apply  forthwith to the Court for the Final Order upon
         approval by the Creditors of this Proposal.

                                     PART IX
                                  MISCELLANEOUS

Consents, Waivers and Agreements

28.      On the Effective  Date,  all Creditors will be deemed to have consented
         and agreed to all of the  provisions  of this Proposal in its entirety.
         For greater certainty,  each Creditor will be deemed to have waived any
         default by the Corporation in any provision,  expressed or implied,  in
         any agreement  existing  between the Creditor and the Corporation  that
         has  occurred  on or prior to the  Effective  Date,  and to have agreed
         that, to the extent that there is any conflict  between the  provisions
         of any  such  agreement  and  the  provisions  of  this  Proposal,  the
         provisions  of  this  Proposal  take  precedence  ad  priority  and the
         provisions of any such agreement are amended accordingly.

Further Actions

29.      the  Corporation  and the  Creditors  will execute and deliver all such
         documents  and  instruments  and do all such acts and  things as may be
         necessary or desirable to carry out the full intent and meaning of this
         Proposal and to give effect to the transactions contemplated hereby.


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Performance

30.      All obligations of the Corporation under this Proposal will commence as
         of the Effective  Date.  All terms of this Proposal will take effect as
         of the Effective Date. All  obligations of the  Corporation  under this
         Proposal  will be fully  performed  for the purposes of Section 65.3 of
         the Act upon the Corporation  having made the payments to the Creditors
         provided for herein.

Binding Effect

31.      The provisions of this Proposal will be binding on the Creditors of the
         Corporation,  and  its  respective  heirs,  executors,  administrators,
         successors and assigns, upon issuance of the Final Order.

         Dated at Toronto this 14th day of October, 1999.

                                                 TRANSFORMATION PROCESSING, INC.




                                                 Per:___________________________
                                                       Paul G. Mighton, C.E.O.


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                                  SCHEDULE "A"

                       GUARANTEE OF PAYMENT UNDER PROPOSAL

         THIS AGREEMENT made this 14th day of October, 1999

         BETWEEN:

                         THOMSON KERNAGHAN & CO. LIMITED
                         (the "Guarantor")

         -and-
                         BDO DUNWOODY LIMITED, The trustee acting
                         in the proposal of Transformation Processing, Inc.
                         (the "Trustee")

         WHEREAS,  Transformation Processing, Inc. (the "Corporation"),  did on
the 14th of October , submit to the  Trustee a proposal  to its  creditors  (the
"Proposal"); and

         WHEREAS, the Guarantor has agreed to guarantee payment of an amount, up
to but in no event  exceeding  $375,000,  to the Corporation to enable it to pay
certain of its creditors pursuant to Parts IV and V of the Proposal:

         NOW,  THEREFORE,  in consideration of the premises,  the parties hereto
covenant, promise and agree to and with the other as follows:

         1.       The Guarantor  hereby agrees upon notice from the Trustee that
                  the  conditions  precedent  as provided in Paragraph 26 of the
                  Proposal have been  satisfied,  that it will make available to
                  the  Trustee  such  amounts as are  necessary  to satisfy  the
                  Corporation's obligations to pay Creditors pursuant to Part IV
                  and V of the  Proposal  (the  "Obligations")  but in no  event
                  shall  such  amount  exceed  #300,000  or be paid  before  the
                  Corporation has used its readily  available cash surplus in an
                  attempt to satisfy its Obligations.

         2.       The  Guarantor  hereby  further  agrees  upon  notice from the
                  Trustee that the conditions precedent as provided in Paragraph
                  26 of the  Proposal  have  been  satisfied  that it will  make
                  available  to the Trustee  such  amounts as are  necessary  to
                  satisfy the  Corporation's  obligation  to pay all proper fees
                  and  expenses of the Trustee  including  reasonable  legal and
                  other professional fees incidental to the Proposal,  taxes and
                  disbursements,  pursuant to Paragraph 15 of the Proposal  (the
                  "Fees"),  but in no event shall such amount exceed  $75,000 or
                  be paid before the Corporation has used its readily  available
                  cash surplus in an attempt to pay such Fees.

         3.       The  Trustee  shall  not be bound to take any  proceedings  to
                  enforce the Proposal  before  resorting to its remedy  against
                  the  Guarantor,  and the Trustee shall be at liberty from time
                  to time to allow  monies  payable  under the Proposal to be in
                  arrears or to extend the time for payment thereof, or any part
                  thereof,  without  the  consent  of the  Guarantor,  and  this
                  guarantee  shall  remain in full  force as long as any  monies
                  remain due or unpaid under the said Proposal.

         4.       The Guarantor agrees that the obligations of the Guarautor
                  herein, shall be binding upon it, its successors and assigns.


         IN WITNESS WHEREOF, the parties hereof have executed this guarantee.

SIGNED, SEALED AND DELIVERED                THOMSON, KERNAGHAN & Co., LIMIITED

In the presence of                          By:________________________________
                                                 Authorized Signing Authority

------------------------------                 --------------------------------
(Name of Witness)                                Authorizing Signing Authority