Document:

Prepared by R.R. Donnelley Financial -- Stock Restriction & Registration Rights Agreement

  
 EXHIBIT 10.1 
  
 STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT 
  
 THIS STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of July 16, 2002, by and among CYTRX CORPORATION, a Delaware corporation (the “Company”), and those
shareholders of GLOBAL GENOMICS CAPITAL, INC., a California corporation (“Seller”), appearing as signatories hereto (each, an “Investor” and collectively, the “Investors”). 
  
 R E C I T A L S 
  
 WHEREAS, pursuant to the terms of an Agreement and Plan of Merger, dated as of February 11, 2002 (as the same may be amended, the “Acquisition Agreement”), by and among the Company, GGC Merger Corporation, a California
corporation (“Sub”), and Seller, Sub shall be merged with and into Seller (the “Acquisition”), with the result that each of the outstanding shares of capital stock of Seller will be converted into the right to receive shares of
the common stock of the Company (the “Company Common Stock”); and 
  
 WHEREAS, the Company has agreed, as a
condition precedent to Seller’s obligations under the Acquisition Agreement, to grant the Investors certain registration rights; and 
  
 WHEREAS, the Company and the Investors desire to define such registration rights on the terms and subject to the conditions herein set forth. 
  
 NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the parties hereby agree as follows: 
  
 1.  DEFINITIONS 
  
 As used in this Agreement, the following terms have the respective meanings set forth below: 
  
 Commission:  shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act; 
  
 Effective Date:  shall mean the date on which the Acquisition is consummated; 
  
 Exchange Act:  shall mean the Securities Exchange Act of 1934, as amended; 
  
 Holder:  shall mean any holder of Registrable Securities; 
  
 Initiating Holder:  shall mean any Holder or Holders who in the aggregate are Holders of a number of
Registrable Securities not less than the greater of (i) thirty percent (30%) of the then outstanding Registrable Securities and (ii) One Hundred Thousand (100,000) shares of Company Common Stock included in Registrable Securities; 

  
 Person:  shall mean an individual, partnership,
limited liability company, joint stock company, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof; 
  
 Register, registered and registration:  shall mean a registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and any post-effective amendments filed or required to be filed) and the declaration or ordering of effectiveness of such registration statement; 
  
 Registrable Securities:  shall mean (A) the shares of Company Common Stock (1) issued to the Investors under the Acquisition Agreement or
(2) issuable or issued upon the exercise of Converting Options (as defined in the Acquisition Agreement), and (B) any securities of the Company issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, the
shares of Company Common Stock referred to in clause (A); provided, that Registrable Securities shall not include (i) securities which are registered for sale under a registration statement that has become effective under the Securities Act, (ii)
such securities as are eligible for sale pursuant to Rule 144 (or any successor provision thereto) under the Securities Act (“Rule 144”), or (iii) such securities as are acquired by the Company or any of its subsidiaries; 

 
 Registration Expenses:  shall mean all expenses incurred by the Company in compliance with
Sections 3(a) and (b) hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company); 
  
 Security, Securities:  shall have the meaning set forth in Section 2(1) of the Securities Act; 
  
 Securities Act:  shall mean the Securities Act of 1933, as amended; and 
  
 Selling Expenses:  shall mean all underwriting discounts and selling commissions applicable to the sale
of Registrable Securities and all fees and disbursements of counsel for each of the Holders. 
  
 2.  RESTRICTIONS ON TRANSFER 
  
 (a)  Prior to any
proposed transfer of any Registrable Securities (other than under the circumstances described in Section 3 hereof), the Holder thereof shall give written notice to the Company of its intention to effect such transfer. Each such notice shall describe
the manner of the proposed transfer and, if requested by the Company, shall be accompanied by an opinion of counsel reasonably satisfactory to the Company to the effect that the proposed transfer may be effected without registration under the
Securities Act, whereupon such Holder shall be entitled to transfer the Registrable Securities in accordance with the terms of its notice. Each certificate or instrument transferred as above provided shall bear the legend set forth in Section 2(b),
except 
 

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 that such certificate or instrument shall not bear such legend if (i) such transfer is in accordance with the provisions
of Rule 144 (or any other rule permitting public sale without registration under the Securities Act) or (ii) the opinion of counsel referred to above is to the further effect that the transferee and any subsequent transferee would be entitled to
transfer such Registrable Securities in a public sale without registration under the Securities Act. 
  
 (b)  Each certificate evidencing Registrable Securities issued to any Holder in connection with the Acquisition shall bear a legend in substantially the following form: 
  

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES ACTS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS THEY HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES ACTS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.” 
  
 (c)  In the event that any Registrable Shares shall cease to be subject to the restrictions on transfer set forth in this Agreement, the Company
shall, upon the written request of the Holder thereof, issue to such Holder a new certificate evidencing such Registrable Shares without the legend required by Section 2(b) hereof endorsed thereon. 
  
 3.  REGISTRATION RIGHTS 
  
 (a)  Requested Registration. 
  
 (i)  Request for Registration.    If the Company shall receive from an Initiating Holder, at any time on or after the Effective Date and prior to the second
anniversary of the Effective Date, a written request that the Company effect any registration with respect to all or a part of the Registrable Securities, the Company will: 
  
 (A)  promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and 
  
 (B)  as soon as practicable, use commercially reasonable efforts to effect such registration (including,
without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the
Securities Act) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within ten business days after written notice from the Company is given under Section 3(a)(i)(A) above; provided that
the Company shall not be obligated to effect, or take any action to effect, any such registration pursuant to this Section 3(a): 
 

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 (u)  If the Registrable Securities requested by all
Holders (including the Initiating Holder) to be registered pursuant to such request are less than five percent (5%) of the Company Common Stock issued in the Acquisition to the Investors; 
  
 (v)  If the Company shall have previously effected an underwritten registration with respect to Registrable Securities pursuant to Section 3(b)
hereof, the Company shall not be required to effect any registration pursuant to this Section 3(a) until a period of 90 days shall have elapsed from the effective date of the most recent such previous registration; 
  
 (w)  If, upon receipt of a registration request pursuant to this Section 3(a), the Company is advised in
writing (with a copy to each Initiating Holder) by a recognized national independent investment banking firm selected by the Company that, in such firm’s opinion, a registration at the time and on the terms requested would adversely affect any
public offering of securities of the Company by the Company (other than in connection with benefit and similar plans) or by or on behalf of any stockholder of the Company exercising a demand registration right (collectively, a “Company
Offering”) with respect to which the Company has commenced preparations for a registration prior to the receipt of a registration request pursuant to this Section 3(a), the Company shall not be required to effect a registration pursuant to this
Section 3(a) until the earlier of (i) 30 days after the completion of such Company Offering or (ii) promptly after any abandonment of such Company Offering; provided, however, that the periods during which the Company shall not be
required to effect a registration pursuant to this Section 3(a) together with any periods of suspension under Section 3(g) hereof may not exceed 90 days in the aggregate during any period of 12 consecutive months; 
  
 (x)  In any particular jurisdiction in which the Company would be required to execute a general consent to
service of process in effecting such registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder;

  
 (y)  After the Company has effected three (3) such registrations pursuant to this
Section 3(a) (in the aggregate for all Holders) and such registrations have been declared or ordered effective; provided, that Holders shall not have the right to request an underwritten registration pursuant to this Section 3(a) more than one (1)
time in any six-month period. 
  
 The registration statement filed pursuant to the request of the Initiating Holders
may, subject to the provisions of Section 3(a)(ii) below, include other Securities of the Company which are held by Persons who, by virtue of agreements with the Company, are entitled to include their Securities in any such registration (“Other
Stockholders”). 
 

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 (ii)  Underwriting.    If
the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 3(a). If Other Stockholders request
inclusion in any such registration, the Holders shall offer to include the securities of such Other Stockholders in the underwriting and may condition such offer on their acceptance of the further applicable provisions of this Section 3. The Holders
whose shares are to be included in such registration and the Company shall (together with all Other Stockholders proposing to distribute their securities through such underwriting) enter into underwriting and related agreements in customary form
with the representative of the underwriter or underwriters selected for such underwriting by the Initiating Holders and reasonably acceptable to the Company. Such underwriting agreement will contain such representations and warranties by the Company
and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, including, without limitation, indemnities and contribution to the effect and to the extent provided in Section 3(e)
hereof and the provision of opinions of counsel and accountants’ letters to the effect and to the extent provided in Section 3(d) hereof, and the representations and warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of the Holders. The Company shall cooperate fully with the Holders and the underwriters in connection with any underwritten offering. Notwithstanding any other provision of
this Section 3(a), if the representative advises the Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, the securities of the Company held by Other Stockholders shall be excluded from such
registration to the extent so required by such limitation. If, after the exclusion of such shares, still further reductions are still required, the number of shares included in the registration by each Holder shall be reduced on a pro rata basis
(based on the number of shares held by such Holder), by such minimum number of shares as is necessary to comply with such request; provided, that there shall be no reduction in the number of shares included in the registration by any Holder until
all shares of Other Stockholders have been excluded from such registration. No Registrable Securities or any other securities excluded from the underwriting by reason of the underwriter’s marketing limitation shall be included in such
registration. If any Other Stockholder who has requested inclusion in such registration as provided above disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the underwriter and
the Initiating Holder. The securities so withdrawn shall also be withdrawn from registration. If the underwriter has not limited the number of Registrable Securities or other securities to be underwritten, the Company and officers and directors of
the Company may include its or their securities for its or their own account in such registration if the representative so agrees and if the number of Registrable Securities and other securities which would otherwise have been included in such
registration and underwriting will not thereby be limited. 
  
 (b)  Company
Registration. 
  
 (i)  If the Company shall determine to register any of its equity
securities either for its own account or for the account of Other Stockholders, other than a registration relating solely to benefit plans, or a registration relating solely to a Commission Rule 145 transaction, or a registration on any registration
form which does not permit secondary sales or 
 

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 does not include substantially the same information as would be required to be included in a registration statement
covering the sale of Registrable Securities, the Company will: 
  
 (A)  promptly give to
each of the Holders a written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); and 

 
 (B)  include in such registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made by any Holder within ten (10) business days after the giving of the written notice from the Company described in
clause (i) above, except as set forth in Section 3(b)(ii) below. Such written request shall specify the amount of Registrable Securities intended to be disposed of by a Holder and may specify all or a part of the Holders’ Registrable
Securities. 
  
 Notwithstanding the foregoing, if, at any time after giving such written notice of its intention to
effect such registration and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register such equity securities the Company may, at its election,
give written notice of such determination to the Holders and thereupon the Company shall be relieved of its obligation to register such Registrable Securities in connection with the registration of such equity securities (but not from its obligation
to pay Registration Expenses to the extent incurred in connection therewith as provided herein), without prejudice, however, to the rights (if any) of Holders immediately to request that such registration be effected as a registration under Section
3(a) hereof. 
  
 (ii)  Underwriting.    If the registration of
which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise each of the Holders as a part of the written notice given pursuant to Section 3(b)(i)(A). In such event, the right of each of
the Holders to registration pursuant to this Section 3(b) shall be conditioned upon such Holders’ participation in such underwriting and the inclusion of such Holders’ Registrable Securities in the underwriting to the extent provided
herein. The Holders whose shares are to be included in such registration shall (together with the Company and the Other Stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters selected for the underwriting by the Company or such Other Stockholders, as the case may be. Such underwriting agreement will contain such representations and warranties by the Company and such
other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, including, without limitation, indemnities and contribution to the effect and to the extent provided in Section 3(e) hereof
and the provision of opinions of counsel and accountants’ letters to the effect and to the extent provided in Section 3(d), and the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit
of such underwriters shall also be made to and for the benefit of the Holders whose shares are to be included in such registration. Notwithstanding any other provision of this Section 3(b), if the representative determines that marketing factors
require a limitation on the number of shares to be underwritten, the Company shall so advise all holders of securities requesting registration, and the number of shares of securities that are entitled to be included in 
 

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 the registration and underwriting shall be allocated in the following manner: The
securities of the Company held by officers and directors shall be excluded from such registration and underwriting to the extent required by such limitation, and, if a limitation on the number of shares is still required, the number of shares that
may be included in the registration and underwriting by each of the Holders and such Other Stockholders (other than Other Stockholders who are exercising their demand registration rights under an agreement between such Other Stockholders and the
Company) shall be reduced, on a pro rata basis (based on the number of shares held by such holder), by such minimum number of shares as is necessary to comply with such limitation. In no event will the shares requested for registration by the
Company or by Other Stockholders who are exercising their demand registration rights be reduced until all of the shares requested for registration by the Holders and the Other Stockholders (other than Other Stockholders who are exercising their
demand registration rights under an agreement between such Other Stockholders and the Company) are excluded entirely from such registration. If any of the Holders or any officer or director of the Company or Other Stockholder disapproves of the
terms of any such underwriting, he/she may elect to withdraw therefrom by written notice to the Company and the underwriter. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such
registration. 
  
 (c)  Expenses of Registration.    All
Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to this Section 3 shall be borne by the Company, and all Selling Expenses shall be borne by the Holders of the securities so registered pro rata
on the basis of the number of their shares so registered; provided, however, that if, as a result of the withdrawal of a request for registration by any of the Holders, as applicable, the registration statement does not become effective, the Holders
and Other Stockholders requesting registration may elect to bear the Registration Expenses (pro rata on the basis of the number of their shares so included in the registration request, or on such other basis as such Holders and Other Stockholders
may agree), in which case such registration shall not be counted as a registration pursuant to Section 3(a)(i)(B)(y). 
  
 (d)  Registration Procedures.    In the case of each registration effected by the Company pursuant to this Section 3, the Company will keep the Holders, as applicable, advised in writing
as to the initiation of each registration and as to the completion thereof. At its expense, the Company will: 
  
 (i)  keep such registration effective for a period of 90 days or until the Holders, as applicable, have completed the distribution described in the registration statement relating thereto, whichever first occurs;

  
 (ii)  furnish to each Holder, and to any underwriter before filing with the Commission,
copies of any registration statement (including all exhibits) and any prospectus forming a part thereof and any amendments and supplements thereto (including all documents incorporated or deemed incorporated by reference therein prior to the
effectiveness of such registration statement and including each preliminary prospectus, any summary prospectus or any term sheet (as such term is used in Rule 434 under the Securities Act)) and any other prospectus filed under Rule 424 under the
Securities Act, which documents, other than documents incorporated or deemed incorporated by reference, 
 

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 will be subject to the review of the Holders and any such underwriter for a
period of at least five business days, and the Company shall not file any such registration statement or such prospectus or any amendment or supplement to such registration statement or prospectus to which any Holder or any such underwriter shall
reasonably object within five business days after the receipt thereof; a Holder or such underwriters, if any, shall be deemed to have reasonably objected to such filing only if the registration statement, amendment, prospectus or supplement, as
applicable, as proposed to be filed, contains a material misstatement or omission; 
  
 (iii)  furnish to each Holder and to any underwriter, such number of conformed copies of the applicable registration statement and of each amendment and supplement thereto (in each case including all exhibits) and such
number of copies of the prospectus forming a part of such registration statement (including each preliminary prospectus, any summary prospectus or any term sheet (as such term is used in Rule 434 under the Securities Act)) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents, including without limitation documents incorporated or deemed to be incorporated by reference prior to the
effectiveness of such registration, as each of the Holders or any such underwriter, from time to time may reasonably request; 
  
 (iv)  to the extent practicable, promptly prior to the filing of any document that is to be incorporated by reference into any registration statement or prospectus forming a part thereof
subsequent to the effectiveness thereof, and in any event no later than the date such document is filed with the Commission, provide copies of such document to the Holders, if requested, and to any underwriter, and make representatives of the
Company available for discussion of such document and other customary due diligence matters, and include in such document prior to the filing thereof such information as any Holder or any such underwriter reasonably may request; 

 
 (v)  make available at reasonable times for inspection by the Holders, any underwriter participating
in any disposition pursuant to such registration and any attorney or accountant retained by the Holders or any such underwriter, all financial and other records, pertinent corporate documents and properties of the Company and cause the officers,
directors and employees of the Company to supply all information reasonably requested by the Holders and any such underwriters, attorneys or accountants in connection with such registration subsequent to the filing of the applicable registration
statement and prior to the effectiveness of the applicable registration statement; 
  
 (vi)  use commercially reasonable efforts (x) to register or qualify all Registrable Securities and other securities covered by such registration under such other securities or blue sky laws of such States of the United
States of America where an exemption is not available and as the sellers of Registrable Securities covered by such registration shall reasonably request, (y) to keep such registration or qualification in effect for so long as the applicable
registration statement remains in effect, and (z) to take any other action which may be reasonably necessary or advisable to enable such sellers to consummate the disposition in such jurisdictions of the securities to be sold by such sellers, except
that the 
 

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 Company shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction where it is not so qualified, or to subject itself to taxation in any such jurisdiction, or to execute a general consent to service of process in effecting such registration, qualification or
compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder; 
  
 (vii)  use commercially reasonable efforts to cause all Registrable Securities covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or authorities as may be necessary in the opinion of counsel to the Company and counsel to the Holders of Registrable Securities to enable the Holders thereof to consummate the
disposition of such Registrable Securities; 
  
 (viii)  subject to Section 3(g) hereof,
promptly notify each Holder of Registrable Securities covered by a registration statement (A) upon discovery that, or upon the happening of any event as a result of which, the prospectus forming a part of such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (B)
of the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or the initiation of proceedings for that purpose, (C) of any request by the Commission for (1) amendments to such registration statement
or any document incorporated or deemed to be incorporated by reference in any such registration statement, (2) supplements to the prospectus forming a part of such registration statement or (3) additional information, or (D) of the receipt by the
Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, and at the
request of any such Holder promptly prepare and furnish to it a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not
misleading; 
  
 (ix)  use commercially reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of any such registration, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction; 
  
 (x)  if requested by any Initiating Holder, or any underwriter, promptly incorporate in such registration
statement or prospectus, pursuant to a supplement or post effective amendment if necessary, such information as the Initiating Holder and any underwriter may reasonably request to have included therein, including, without limitation, information
relating to the “plan of distribution” of the Registrable Securities, information with respect to the principal amount or number of shares of Registrable Securities being sold to such 
 

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 underwriter, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering and make all required filings of any such prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be incorporated in
such prospectus supplement or post effective amendment; 
  
 (xi)  furnish to the Holders,
addressed to them, an opinion of counsel for the Company, dated the date of the closing under the underwriting agreement, if any, or the date of effectiveness of the registration statement if such registration is not an underwritten offering, and
use commercially reasonable efforts to furnish to the Holders, addressed to them, a “cold comfort” letter signed by the independent certified public accountants who have certified the Company’s financial statements included in such
registration, covering substantially the same matters with respect to such registration (and the prospectus included therein) and, in the case of such accountants’ letter, with respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to underwriters in underwritten public offerings of securities and such other matters as the Holders may reasonably request;

  
 (xii)  otherwise use commercially reasonable efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first full
calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder; 
  
 (xiii)  provide promptly to the Holders upon request any document filed by the Company with the Commission
pursuant to the requirements of Section 13 and Section 15 of the Exchange Act; and 
  
 (xiv)  use commercially reasonable efforts to cause all Registrable Securities included in any registration pursuant hereto to be listed on each securities exchange on which securities of the same class are then listed, or,
if not then listed on any securities exchange, to be eligible for trading in any over-the-counter market or trading system in which securities of the same class are then traded. 
  
 (e)  Indemnification. 
  
 (i)  The Company will indemnify each of the Holders, as applicable, each of its officers, directors, members and partners, and each person controlling each of the Holders, with respect to
each registration which has been effected pursuant to this Section 3, and each underwriter, if any, and each person who controls any underwriter, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to 
 

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 make the statements therein not misleading, or any violation by the Company of
the Securities Act or the Exchange Act or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and will
reimburse each of the Holders, each of its officers, directors, members and partners, and each person controlling each of the Holders, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based upon information furnished to the Company by the Holders or underwriter. 
  
 (ii)  Each of the Holders will, if Registrable Securities held by it are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers and each underwriter, if any, of the Company’s securities covered by such a registration statement, each person who controls the Company or such underwriter, each Other Stockholder and each of their
officers, directors, members and partners, and each person controlling such Other Stockholder against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document made by such Holder, or any omission (or alleged omission) to state therein a material fact required to be stated therein or
necessary to make the statements by such Holder therein not misleading, and will reimburse the Company and such Other Stockholders, directors, officers, partners, members, persons, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with information furnished to the Company by such Holder; provided, however, that the obligations of each of the
Holders hereunder and under clause (vi) below shall be limited to an amount equal to the net proceeds to such Holder of securities sold as contemplated herein. 
  
 (iii)  Each party entitled to indemnification under this Section 3(e) (the “Indemnified Party”) shall give notice to the party required
to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom; provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld) and the Indemnified Party may participate in such defense at such party’s expense (unless the Indemnified Party shall have reasonably concluded that there may be a conflict of interest between the Indemnifying Party
and the Indemnified Party in such action, in which case the fees and expenses of one such counsel for all Indemnified Parties shall be at the expense of the Indemnifying Party), and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its obligations under this 
 

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 Section 3 unless the Indemnifying Party is materially prejudiced thereby. No
Indemnifying Party, in the defense of any such claim or litigation shall, except with the consent of each Indemnified Party (which consent shall not be unreasonably withheld or delayed), consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom. 
  
 (iv)  If the indemnification provided for in this Section 3(e) is held by a court of competent jurisdiction to
be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage or expense referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue (or alleged untrue) statement of a material fact or the omission (or alleged omission) to state a material fact relates to information supplied by the Indemnifying Party or by the
Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. 
  
 (v)  Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement
entered into in connection with any underwritten public offering contemplated by this Agreement are in conflict with the foregoing provisions, the provisions in such underwriting agreement shall be controlling. 
  
 (vi)  The foregoing indemnity agreement of the Company and Holders is subject to the condition that, insofar as
they relate to any loss, claim, liability or damage made in a preliminary prospectus but eliminated or remedied in the amended prospectus on file with the Commission at the time the registration statement in question becomes effective or the amended
prospectus filed with the Commission pursuant to Commission Rule 424(b) (the “Final Prospectus”), such indemnity or contribution agreement shall not inure to the benefit of any underwriter or Holder (but only if such Holder was required to
deliver such Final Prospectus) if a copy of the Final Prospectus was furnished to the underwriter and was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities
Act. 
  
 (f)  Information by the Holders.    Each of the Holders
holding securities included in any registration shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as 
 

 12 

 shall be reasonably required in connection with any registration, qualification or compliance referred to in this Section
3. 
  
 (g)  Holdback Agreement; Postponement.    Notwithstanding
the provisions of Sections 3(a) and (b), if the Board of Directors of the Company determines in good faith that it is in the best interests of the Company (A) not to disclose the existence of facts surrounding any proposed or pending acquisition,
disposition, strategic alliance or financing transaction involving the Company or (B) for any purpose, to suspend the registration rights set forth herein, the Company may, by notice to the Holders in accordance with Section 6(a), postpone any
registration which is requested pursuant to Section 3(a) for such a period of time as the Board of Directors may determine or suspend sales under an effective registration statement covering the sale of Registrable Securities; provided that such
periods of suspension together with any periods of suspension effected pursuant to Section 3(a)(i)(B)(w) hereof may not exceed 90 days in the aggregate during any period of 12 consecutive months. 
  

(h)  Assignment.    The registration rights set forth in Section 3 hereof may be assigned, in whole or in part, to
any transferee of Registrable Securities who immediately after such transfer holds at least Four Hundred Fifty Thousand (450,000) shares of Company Common Stock that are Registrable Securities hereunder, which transferee shall be considered
thereafter to be a Holder and shall be bound by all obligations and limitations of this Agreement. 
  
 4.  RULE 144 REPORTING 
  
 With a view to making available the benefits of certain
rules and regulations of the Commission which may permit the sale of restricted securities to the public without registration, the Company agrees that it will: 
  
 (i)  make and keep public information available (as those terms are understood and defined in Rule 144) at all times; 
  
 (ii)  use commercially reasonable efforts to file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act; and 
  
 (iii)  so long as there are outstanding any Registrable Securities, furnish to each Holder, upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed as such Holder may reasonably request in availing itself of any rule or regulation of the
Commission allowing such Holder to sell any such securities without registration. 
 

 13 

  
 5.  INTERPRETATION OF THIS AGREEMENT 
  
 (a)  Directly or Indirectly.    Where any provision in this Agreement refers to
action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. 
  
 (b)  Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of
Delaware. 
  
 (c)  Section Headings.    The headings of the
sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof. 
  
 6.  MISCELLANEOUS 
  
 (a)  Notices.

  
 (i)  All communications under this Agreement shall be in writing and shall be delivered
by facsimile or by hand or mailed by overnight courier or by registered or certified mail, postage prepaid: 
  
 (A)  if to the Company, to CytRx Corporation, 154 Technology Parkway Suite 200, Norcross, Georgia 30092, Attention: Chief Executive Officer, (770) 368-0622, or at such other address as it may have furnished in writing to
the Investors; 
  
 (B)  if to the Investors, at the addresses listed on Schedule I
hereto, or at such other addresses as may have been furnished the Company in writing. 
  
 (ii)  Any notice so addressed shall be deemed to be given: (A) with respect to any notice transmitted, delivered or sent by facsimile, the date of actual receipt (with confirmation of transmission of the electronic receipt
deemed conclusive evidence of such receipt, except where the intended recipient has promptly notified the other party that the transmission is illegible); (B) if delivered by hand, on the date of such delivery; (C) if mailed by courier, on the first
business day following the date of such mailing; and (D) if mailed by registered or certified mail, on the third business day after the date of such mailing. 
  
 (b)  Reproduction of Documents.    This Agreement and all documents relating thereto, including, without limitation,
any consents, waivers and modifications which may hereafter be executed may be reproduced by the Investor by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and the Investors may destroy any
original document so reproduced. The parties hereto agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by the Investors in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. 
 

 14 

  
 (c)  Successors and
Assigns.    Except as expressly contemplated in this Agreement, this Agreement may not be assigned by any Investor without the prior written consent of the Company. Subject to the preceding sentence, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each of the parties. 
  
 (d)  Entire Agreement; Amendment and Waiver.    This Agreement constitutes the entire understanding of the parties hereto and supersedes all prior understanding among such parties. This Agreement
may be amended, and the observance of any term of this Agreement may be waived, with (and only with) the written consent of a majority of Independent Directors of the Company and the Holders of a majority of the then outstanding Registrable
Securities. “Independent Directors” shall mean the all directors not appointed by Global Genomics Capital, Inc. as contemplated under the Acquisition Agreement; provided, however, that if there are no such directors then Independent
Directors shall mean all directors. 
  
 (e)  Counterparts.    This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same
agreement. 
  
 (f)  No Inconsistent Agreements.    Unless the
Company receives the prior written consent of the Holders of a majority of the then outstanding Registrable Securities, for so long as any Registrable Securities remain outstanding, the Company will not hereafter enter into any agreement with
respect to its securities which is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement. 
  
 (g)  Remedies.    Each Holder of Registrable Securities, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law would be adequate. 
  
 (h)  Severability.    In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended and understood that all of
the rights and privileges of each of the Holders shall be enforceable to the fullest extent permitted by law. 
  
 [SIGNATURES ON FOLLOWING PAGES] 
 

 15 

  
 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first set forth above. 
  
 
	 CYTRX CORPORATION
 
	 
	 By:
 	 	 

	  	 	 Name
 Title

 
  
 INVESTORS: 
  
 
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 1 

  
 
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 2ARRANGEMENT AGREEMENT

THIS AGREEMENT is made as of the1st day of May, 2002

BETWEEN:

         VERB EXCHANGE INC., a corporation incorporated under the laws of
         British Columbia, with an office in the City of Vancouver, in the
         Province of British Columbia

         (hereinafter referred to as "VERB")

                                     - and -

         AYOTTE MUSIC INC., a corporation continued under the laws of Canada,
         with an office in the City of Vancouver, in the Province of British
         Columbia

         (hereinafter referred to as "AYOTTE")

RECITALS:

A.  The board of directors of each of Ayotte and Verb has determined that it
    would be in the best interests of Ayotte and Verb to combine their
    respective businesses.

B.  Ayotte and Verb have entered into a letter of intent, dated November 27,
    2001 (the "LETTER OF Intent"), pursuant to which Ayotte and Verb have set
    forth the general terms and conditions in respect of which they intend to
    combine their respective businesses, including, without limitation, Ayotte's
    acquisition of certain of the issued and outstanding securities of Verb in
    exchange for certain securities of Ayotte to be issued from treasury (the
    "TRANSACTION").

C.  Verb intends to effect the Transaction by way of a plan of arrangement (the
    "PLAN OF ARRANGEMENT") under the provisions of section 252 of the Company
    Act (British Columbia) on the terms and conditions set forth herein.

D.  If effected, the transactions contemplated by the Letter of Intent,
    including the Transaction, will most likely constitute a reverse takeover of
    Ayotte pursuant to the policies of the TSX Venture Exchange.

E.  Ayotte, although a party to this agreement, is not itself conducting an
    arrangement for the purposes of corporate law in order to effect the
    Transaction.

NOW THEREFORE in consideration of the mutual covenants and agreements herein
contained and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
parties agree as follows:

<PAGE>
                                      -2-

                                   ARTICLE 1
                                 INTERPRETATION

1.1      DEFINITIONS

In this agreement:

"AGREEMENT" means this Agreement (including all Schedules hereto as the same may
be supplemented or amended from time to time.

"ALTERNATIVE COMPANY TRANSACTION" means an amalgamation, merger, arrangement or
other business combination of or involving Verb, the sale, lease, exchange,
transfer or other disposition of any material portion of the assets of Verb, the
adoption of any plan of liquidation or dissolution of or involving Verb, or any
similar transaction of or involving Verb, other than pursuant to this Agreement
and the Plan of Arrangement.

"ARRANGEMENT" means the arrangement under Section 252 of the BCCA on the terms
and conditions set out in this Agreement and the Plan of Arrangement attached as
Schedule "A" and any amendment or variation thereto.

"AYOTTE FINANCIAL STATEMENTS" means the audited financial statements of Ayotte
for the years ended February 28, 2001 and the fiscal period ended December 31,
2001.

"AYOTTE MEETING DATE" means the date of the Ayotte Meeting.

"AYOTTE MEETING" means the extraordinary and annual general meeting of Ayotte
Shareholders and any adjournment thereof to be held to consider and, if deemed
advisable, approve, among other things, the Transaction and all other matters
requiring approval pursuant to the terms and conditions of this Agreement and
the Arrangement.

"AYOTTE RESOLUTIONS" means the resolutions (special or otherwise) of the holders
of Ayotte Shares approving the matters to be considered at the Ayotte Meeting.

"AYOTTE SHAREHOLDERS" means, at any time, the registered holders at that time of
Ayotte Shares.

"AYOTTE SHARES" means the common shares in the capital of Ayotte.

"BCCA" means the Company Act (British Columbia), R.S.B.C. 1996, C-62, as
amended.

"BUSINESS DAY" means any day which is not a Saturday, Sunday or a day on which
banks are not open for business in the relevant place.

"CIRCULAR" means the joint management information circular of Verb and Ayotte,
including all schedules thereto, to be mailed to Ayotte Shareholders and Verb
Securityholders in connection with the Verb Meeting and the Ayotte Meeting,
together with any amendments or supplements thereto.

"COMMISSION" means the British Columbia Securities Commission.

"COMPETING OFFER" means a proposal by a third party to purchase all of the
outstanding common shares of Verb or Ayotte (or sufficient number of such shares
to give such third party de facto control of Verb or Ayotte, as the case may
be), or involving an amalgamation, plan of arrangement, sale of substantially
all of the assets, liquidation or other business combination involving Verb or
Ayotte, as the case may be, the

<PAGE>
                                      -3-

effect of which would be that ownership or de facto control of Verb or Ayotte
would be transferred to a third party.

"COURT" means the Supreme Court of British Columbia.

"DISPOSITION CIRCULAR" the management information circular of Ayotte dated
December 4, 2001, wherein the Ayotte Shareholders were asked to consider and, if
deemed appropriate, approve, amongst other things, the disposition of the then
current core business enterprise of Ayotte.

"DISSENTING SHAREHOLDER" means a Verb Shareholder who exercises the right of
dissent ordered by the Court with respect to the Arrangement.

"EFFECTIVE DATE" means the day on which the Effective Time falls.

"EFFECTIVE TIME" means the point in time when a certified copy of the Final
Order has been accepted for filing by the Registrar.

"EXCHANGE" means theTSX Venture Exchange.

"FINAL ORDER" means the final order of the Court made in connection with the
approval of the Arrangement.

"INTELLECTUAL PROPERTY OF VERB" means all right, title, interest and benefit of
Verb in and to intellectual property of every nature, whether registered or
unregistered, including, without limitation, all world-wide copyrights, patents,
patent rights, trademarks, applications for any of the foregoing, trade names,
service marks and other trade rights, license agreements, marketing rights,
trade secrets, and know how, technology, inventions, engineering and other
proprietary processes, source codes, object codes, computer programs and other
computer software, in whatever media, and data, specifications, prototypes,
designs, records, drawings and calculations, domain names, Internet addresses,
web-sites, licenses, sub-licenses and computer rights, together with all
antecedent derivative works, used in the business of Verb.

"INTERIM ORDER" means the interim court order of the Court made in connection
with the approval of the Arrangement, as the same may be amended, supplemented
or varied by the Court.

"LETTER OF INTENT" means the agreement entered into between Verb and Ayotte and
certain shareholders of Verb dated November 27, 2001, as the same may be amended
from time to time by agreement between the parties.

"MATERIAL ADVERSE EFFECT" means, with respect to any party, any condition, event
or development which is or would reasonably be expected to have a material
adverse effect on the business, affairs, properties, capitalization, prospects
or financial condition of that party and its subsidiaries taken as a whole.

"MEETINGS" means, collectively, the Ayotte Meeting and the Verb Meeting.

"PLAN OF ARRANGEMENT" means the plan of arrangement set out in Schedule "A", as
amended or supplemented from time to time in accordance with any order of the
Court.

"REGISTRAR" means the Registrar of Companies for British Columbia.

"TRANSACTION" means the acquisition of certain of the outstanding securities of
Verb by Ayotte, together with other transactions contemplated in this Agreement.

<PAGE>
                                      -4-

"VERB FINANCIAL STATEMENTS" means the audited financial statements of Verb for
the years ended December 31, 2000 and 2001.

"VERB MEETING" means the extraordinary general meeting of Verb Shareholders and
any adjournment thereof to be held to consider and, if deemed advisable,
approve, among other things, the Arrangement and all other matters requiring
approval pursuant to the terms and conditions of this Agreement, or the Interim
Order.

"VERB MEETING DATE" means the date of the Verb Meeting.

"VERB RESOLUTIONS" means the resolutions (special or otherwise) of the holders
of Verb Shares approving the matters to be considered at the Verb Meeting.

"VERB SECURITYHOLDERS" means, at any time, the registered holders of any
securities of Verb, including shares, options to purchase shares, special
warrants and warrants.

"VERB SHAREHOLDERS" means, at any time, the registered holders of Verb Shares.

"VERB SHARES" means the issued and outstanding common shares in the capital of
Verb.

"VERB SPECIAL WARRANTS" means the issued and outstanding special warrants of
Verb, as more fully described in Schedule "B" hereto.

1.2      CURRENCY

Except where otherwise specified, all sums of money referred to in this
Agreement are expressed in lawful money of Canada.

1.3      INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.

The division of this Agreement into articles, sections, paragraphs and
subparagraphs and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation of this Agreement.
The terms "the Agreement", "hereof", "herein", "hereunder", and similar
expressions refer to this Agreement and the schedules hereto and not to any
particular article, section or other portion hereof and include any agreement,
schedule or instrument supplementary or ancillary hereto. 1.4 NUMBER, ETC.

Unless the context otherwise requires, words importing the singular number only
shall include the plural and vice versa; words importing the use of any gender
shall include all genders; and words importing persons shall include firms and
corporations and vice versa.

1.5      DATE OF ANY ACTION

In the event that any date on which any action required to be taken hereunder by
any of the parties is not a Business Day in the place where the action is
required to be taken, such action shall be required to be taken on the next
succeeding day which is a Business Day in such place.

1.6      ACCOUNTING PRINCIPLES

Whenever in this Agreement reference is made to generally accepted accounting
principles, such reference shall be deemed to be the Canadian generally accepted
accounting principles from time to time

<PAGE>
                                      -5-

approved by the Canadian Institute of Chartered Accountants, or any successor
thereto, applicable as at the date on which such calculation is made or required
to be made in accordance with generally accepted accounting principles.

1.7      SCHEDULES

The following Schedules are attached to and form a part of this Agreement:

        ------------------------------------------------------------------------

        Schedule "A"          Plan of Arrangement
        ------------------------------------------------------------------------

        Schedule "B"          Rights to Acquire Securities of Verb
        ------------------------------------------------------------------------

        Schedule "C"          Rights to Acquire Securities of Ayotte
        ------------------------------------------------------------------------

                                   ARTICLE 2
                                 THE ARRANGEMENT
2.1      IMPLEMENTATION

Ayotte and Verb agree that the Arrangement shall be implemented in accordance
with Section 252 of the BCCA subject to the terms and conditions contained in
this Agreement and the Plan of Arrangement which is attached as Schedule "A".

2.2      EFFECTIVE TIME

The Arrangement shall become effective as of the Effective Time.

2.3      ESCROW RESTRICTIONS

It is recognized that the Ayotte Shares and other securities issued to certain
of the Verb Securityholders pursuant to the Arrangement and this Agreement will
be subject to escrow restrictions in accordance with the rules and policies of
the Exchange. Such securities will be deposited, on the Effective Date, pursuant
to the terms of an escrow agreement in the form required by the Exchange, and
will be released from escrow on the basis of, at the time of, and in the manner
stipulated by the Exchange.

                                   ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

3.1      REPRESENTATIONS AND WARRANTIES OF VERB

Verb represents and warrants to Ayotte as follows, as continuing representations
and warranties which are true and correct on the date hereof or, if any such
representation and warranty is expressed to be made and given in respect of a
particular date other than the date hereto, then such representation and
warranty shall be true and correct on such date, and all representations and
warranties herein shall be true and correct on each day thereafter to and
including the Effective Date with the same effect as if made and given on and as
of each such day, and confirms that Ayotte is relying upon the accuracy of each
of such representations and warranties:

    (a)  Verb is duly organized, validly existing and in good standing under the
         laws of British Columbia and has the necessary corporate power and
         authority to carry on the business

<PAGE>
                                      -6-

         which it now carries on in such jurisdiction and to hold the assets
         which it now holds and to enter into and complete the transactions
         contemplated hereby;

    (b)  This Agreement has been duly and validly executed and delivered by Verb
         and constitutes a legal, valid and binding obligation of Verb,
         enforceable against it in accordance with its terms, except as may be
         limited by laws of general application affecting the rights of
         creditors;

    (c)  The consummation of the transactions contemplated hereby will not
         conflict with, constitute a default under, result in a breach of,
         entitle any person or company to a right of termination under, or
         result in the creation or imposition of any lien, encumbrance or
         restriction of any nature whatsoever, upon or against the property or
         assets of Verb, its constating documents, any contract, agreement,
         indenture or other instrument to which it is a party or by which it is
         bound, any law, judgment, order, writ, injunction or decree of any
         court, administrative agency or other tribunal or any regulation of any
         governmental authority;

    (d)  The authorized capital of Verb consists of two hundred million shares
         divided into one hundred million common shares without par value and
         one hundred million preference shares without par value, of which a
         total of 13,487,383 Verb Shares have been validly issued and are
         outstanding and are fully paid and non-assessable;

    (e)  Except as set forth in Schedule "B" hereto, no person or company has
         any right, agreement or option, present or future, contingent or
         absolute, or any right capable of becoming a right, agreement or
         option, other than provided for herein:

         (i)   to require Verb to issue any shares in its capital or to convert
               any securities of Verb or any other company into shares in the
               capital of Verb;

         (ii)  for the issue or allotment by Verb of any of its authorized but
               unissued share capital; or

         (iii) to require Verb to purchase, redeem or otherwise acquire any of
               its issued and outstanding shares.

    (f)  The directors and officers of Verb as of the date hereof are as
         follows:

        NAME                           POSITION

        Nathanael G. Lineham           President, Chief Executive Officer
                                       and Director

        David Ebert                    Chief Financial Officer

        Lynn Patterson                 Chairman of the Board

        Jeff Durno                     Director and Secretary

        Michael Iverson                Director

        Nelson Young                   Director

        Michael Jackson                Director

        Francis Liang                  Director

        Keith Andrews                  Vice-President of Sales

        Calvin Wang                    Chief Technical Officer

<PAGE>
                                      -7-

        Jeff Warkentin                 Vice-President of Operations

        Kerry Munroe                   Vice-President of Marketing

    (g)  The corporate records of Verb, as required to be maintained by Verb
         under its act of incorporation, are accurate, complete and up-to-date
         in all material respects and all material transactions of Verb have
         been promptly and properly recorded in its books or filed with its
         records. No shares or other securities of Verb have been issued in
         violation of any laws or the articles of Verb;

    (h)  The Verb Financial Statements are true and correct in every material
         respect, as at the date of such statements, and have been prepared in
         accordance with generally accepted accounting principles and fairly
         reflect the business, property, assets and financial position of Verb
         as at the date of the applicable Verb Financial Statements and the
         results of its operations for the periods then ended;

    (i)  Verb does not have any liability, due or accruing, contingent or
         absolute, and is not directly or indirectly subject to any guarantee,
         indemnity or other contingent or indirect obligation with respect to
         the obligation of any other person or company not shown or reflected in
         the Verb Financial Statements, other than any such liability,
         guarantee, indemnity or obligation incurred or assumed by it in the
         course of its normal and ordinary day to day business or in connection
         with the Transaction, and no such liability, guarantee, indemnity or
         obligation has been paid or discharged by Verb after the date of the
         most recent of the Verb Financial Statements other than in the course
         of its normal and ordinary day to day business;

    (j)  Verb has good and marketable title to all of its assets as reflected in
         the most recent of the Verb Financial Statements and except as
         disclosed in the Verb Financial Statements such assets are free and
         clear of any financial encumbrances;

    (k)  Verb holds all permits, licenses, consents and authorizations issued by
         any government or governmental authority which are necessary in
         connection with the operation of its business and the ownership of its
         properties and assets;

    (l)  Canadian and U.S. federal, provincial and state tax filings remain
         outstanding for fiscal 2000 and 2001; Verb's auditors have been
         retained to complete and file all necessary returns in conjunction with
         the completion of their audit of Verb's financial statements;

    (m)  Verb has not declared or paid any dividends of any kind or declared or
         made any other distributions of any kind whatsoever including, without
         limitation, by way of redemption, repurchase or reduction of its
         authorized capital;

    (n)  There has been no material adverse change in the financial condition
         and position of Verb since the date of the most recent of the Verb
         Financial Statements and no damage, loss, destruction or other change
         in circumstances materially affecting the business, property or assets
         of Verb or its right or capacity to carry on business since the date of
         the most recent of the Verb Financial Statements which would result in
         a Material Adverse Effect;

    (o)  Verb has not engaged in any transaction or made any disbursement or
         assumed or incurred any liability or obligation or made any commitment,
         including, without limitation, any forward purchase commitment or
         similar obligation, to make any expenditure which would have a Material
         Adverse Effect on Verb or its operations,

<PAGE>
                                      -8-

         property, assets or financial condition not shown or reflected in the
         most recent of the Verb Financial Statements or since the date of the
         most recent of the Verb Financial Statements, except any commitments
         incurred in the course of its normal and ordinary day to day business;

    (p)  Verb has not purchased, leased or acquired, or agreed to purchase,
         lease or acquire, any additional property or assets and has not sold,
         transferred, disposed, mortgaged, pledged, charged, leased or otherwise
         encumbered, or agreed to sell, transfer, dispose of, mortgage, pledge,
         charge, lease or otherwise encumber, any of its property or assets
         other than in the ordinary course of its business or as shall be set
         out in the Circular;

    (q)  Verb has not waived or surrendered any right of substantial value and
         has not made any gift of money or of any of its property or assets;

    (r)  Verb has carried on its business in the normal course;

    (s)  Verb does not have outstanding any material continuing contractual
         obligations whatsoever relating to or affecting the conduct of its
         business or any of its property or assets or for the purchase, sale or
         leasing of any property other than those contracts set out in the most
         recent of the Verb Financial Statements or as shall be set out in the
         Circular and all such contracts, agreements, indentures, or other
         instruments are in good standing and Verb is entitled to all benefits
         thereunder;

    (t)  Other than as set in the most recent of the Verb Financial Statements
         or as shall be set out in the Circular, Verb is not in default under or
         in breach of, or would, after notice or lapse of time or both, be in
         default under any contract, agreement, indenture or other instrument to
         which it is a party or by which it is bound;

    (u)  Except as set forth in the most recent of the Verb Financial Statements
         or as shall be set out in the Circular, there are no management
         contracts or consulting contracts to which Verb is a party or by which
         it is bound, and other than in ordinary course of its business, no
         amount is payable or has been agreed to be paid by Verb to any persons
         as remuneration, pension, bonus, share of profits or other similar
         benefit and no director, officer or member, or former director, officer
         or member of Verb, nor any associate or affiliate of any such person,
         has any claim of any nature against, or is indebted to Verb;

    (v)  There are no actions, suits, proceedings or investigations pending or,
         to the knowledge of Verb, threatened against or affecting Verb, at law
         or in equity, before or by any court, administrative agency or other
         tribunal or any governmental authority;

    (w)  Verb has the right to use, sell, license, sub-license and prepare
         derivative works for and dispose of and bring actions for the
         infringement or misappropriation of the Intellectual Property of Verb
         and other than as disclosed in the most recent of the Verb Financial
         Statements, Verb has not conveyed, assigned or encumbered any of the
         Intellectual Property of Verb owned or used by or licensed to it;

    (x)  To the best of the knowledge of Verb, the conduct of the business of
         Verb and the use by it of the Intellectual Property of Verb in
         connection therewith has not, does not and will not infringe upon or
         violate the intellectual property or other proprietary rights of any
         other person;

<PAGE>
                                      -9-

    (y)  There are no existing, pending or, to the best of the knowledge of
         Verb, threatened claims or litigation contesting the validity,
         ownership or right to use, sell, license or dispose of any of the
         Intellectual Property of Verb, nor to the best of Verb's knowledge is
         there any basis for such claim;

    (z)  To the best of the knowledge of Verb, no employee of Verb is in
         violation of any term of any non-disclosure, proprietary rights or
         similar agreement between the employee and any former employer or any
         other person;

    (aa) Verb has taken all reasonable steps within its power to ensure that all
         technical information developed by and belonging to Verb for which a
         copyright has not been registered or which has not been patented has
         been kept confidential;

    (bb) All persons having access to or knowledge of the Intellectual Property
         of Verb or information of a confidential nature that is necessary or
         required or otherwise used for or in connection with the conduct of the
         business of Verb have entered into appropriate non-disclosure and
         proprietary rights or similar agreements with Verb;

    (cc) Verb owns or has contractual rights to the proprietary technology
         relating to its business and Verb is not aware of possible infringement
         of a trade secret or patent in connection with such technology;

    (dd) With the exception of Cadium Systems Inc. (the "SUBSIDIARY"), Verb does
         not own any subsidiary and does not own, directly or indirectly, any
         shares or interest in any other corporation, partnership, joint venture
         or firm;

    (ee) The representations and warranties and other factual statements of Verb
         contained in this Agreement, and all information in the Schedules
         hereto, taken as a whole, do not contain any untrue statement of a
         material fact or omit to state a material fact necessary in order to
         make the statements made herein and therein not misleading;

    (ff) Verb is not in possession of any information, documents or material
         under an obligation of confidentiality to any other person. The conduct
         of Verb's business as presently conducted will not violate or conflict
         with the obligations of confidentiality to any such other person; and

    (gg) Verb has no information or knowledge of any facts pertaining to Verb
         which, if known to Ayotte, might reasonably be expected to deter Ayotte
         from completing the transactions contemplated hereby.

3.2
         REPRESENTATIONS AND WARRANTIES OF AYOTTE

Ayotte represents and warrants to Verb as follows, as continuing representations
and warranties which are true and correct on the date hereof or, if any such
representation and warranty is expressed to be made and given in respect of a
particular date other than the date hereof, then such representation and
warranty shall be true and correct on such date, and all representations and
warranties herein shall be true and correct on each day thereafter to and
including the Effective Date with the same effect as if made and given on and as
of each such day, and confirms that Verb is relying upon the accuracy of each of
such representations and warranties:

    (a)  Ayotte is a company duly organized, validly existing and in good
         standing under the laws of Canada and has the necessary corporate power
         and authority to carry on the business

<PAGE>
                                      -10-

         which it now carries on and to hold the assets which it now holds and
         to enter and complete the transactions contemplated hereby;

    (b)  This Agreement has been duly and validly executed and delivered by
         Ayotte and constitutes a legal, valid and binding obligation of Ayotte,
         enforceable against it in accordance with its terms, except as may be
         limited by laws of general application affecting the rights of
         creditors;

    (c)  The consummation of the transactions contemplated hereby will not
         conflict with, constitute a default under, result in a breach of,
         entitle any person or company to a right of termination under, or
         result in the creation or imposition of any lien, encumbrance or
         restriction of any nature whatsoever, upon or against the property or
         assets of Ayotte, its constating documents, any contract, agreement,
         indenture or other instrument to which it is a party or by which it is
         bound, any law, judgment, order, writ, injunction or decree of any
         court, administrative agency or other tribunal or any regulation of any
         governmental authority;

    (d)  Ayotte is a "reporting issuer" within the meaning of the Securities
         Acts of British Columbia and Alberta, and Ayotte is up-to-date and in
         good standing with respect to all filings required to be made with any
         regulatory authority, including the Exchange;

    (e)  As of the date of this Agreement, the authorized capital of Ayotte
         consists of an unlimited number of common shares without par value and
         an unlimited number of preferred shares, of which 16,444,000 Ayotte
         Shares have been validly issued and are outstanding and are fully paid
         and non-assessable;

    (f)  Except as set forth in Schedule "C" hereto, no person or company has
         any right, agreement or option, present or future, contingent or
         absolute, or any right capable of becoming a right, agreement or
         option, other than provided for herein:

         (i)  to require Ayotte to issue any shares in its capital or to convert
              any securities of Ayotte or any other company into shares in its
              capital;

         (ii) for the issue or allotment by Ayotte of any of its authorized but
              unissued share capital; or

         (iii) to require Ayotte to purchase, redeem or otherwise acquire any of
              its issued and outstanding shares.

    (g)  The directors and officers of Ayotte as of the date hereof are as
         follows:

         NAME                          POSITION

         Louis Eisman                  President and Chairman of the Board

         Michael Fugman                Chief Financial Officer and Director

         Donald F. Mazankowski, Jr.    Secretary, General Manager, and Director

    (h)  The corporate records of Ayotte, as required to be maintained by Ayotte
         under its act of incorporation are accurate, complete and up-to-date in
         all material respects and all material transactions of Ayotte have been
         promptly and properly recorded in its books or

<PAGE>
                                      -11-

         filed with its records. No shares or other securities have been issued
         in violation of any laws or the constating documents of Ayotte;

    (i)  The Ayotte Financial Statements are true and correct in every material
         respect, as at the date of such statements, were prepared in accordance
         with generally accepted accounting principles and fairly reflect the
         business, property, assets and financial position of Ayotte as at the
         date of the applicable Ayotte Financial Statements, and the results of
         its operations for the periods then ended;

    (j)  Ayotte does not have any liability, due or accruing, contingent or
         absolute, and is not directly or indirectly subject to any guarantee,
         indemnity or other contingent or indirect obligation with respect to
         the obligation of any other person or company not shown or reflected in
         the Ayotte Financial Statements, other than any such liability,
         guarantee, indemnity or obligation incurred or assumed by it in the
         course of its normal and ordinary day to day business and no such
         liability, guarantee, indemnity or obligation has been paid or
         discharged by Ayotte after the date of the most recent of the Ayotte
         Financial Statements other than in the course of its normal and
         ordinary day to day business;

    (k)  Other than in connection with the completion of the transaction
         contemplated in the Disposition Circular, Ayotte has good and
         marketable title to all of its assets as reflected in the most recent
         of the Ayotte Financial Statements and except as disclosed in the
         Ayotte Financial Statements such assets are free and clear of any
         financial encumbrances;

    (l)  Ayotte holds all permits, licenses, consents and authorizations issued
         by any government or governmental authority which are necessary in
         connection with the operation of its business and the ownership of its
         properties and assets;

    (m)  Ayotte has filed all necessary tax returns in all jurisdictions
         required to be filed by Ayotte, all returns affecting workers'
         compensation with the appropriate agency, corporation capital tax
         returns, if required, and any other material reports and information
         required to be filed by Ayotte with any governmental authority; Ayotte
         has paid all income, sales and capital taxes payable by it; Ayotte has
         withheld and remitted to tax collection authorities such taxes as are
         required by law to be withheld and remitted; Ayotte has paid all
         instalments of corporate taxes due and payable, and there is not
         presently outstanding any notice of re-assessment from any applicable
         tax collecting authority;

    (n)  Ayotte has not declared or paid any dividends of any kind nor declared
         or made any other distributions of any kind whatsoever including,
         without limitation, by way of redemption, repurchase or reduction of
         its authorized capital;

    (o)  There has been no material adverse change in the financial condition
         and position of Ayotte since the date of the most recent of the Ayotte
         Financial Statements, or as shall be set out in the Circular, and no
         damage, loss, destruction or other change in circumstances materially
         affecting the business, property or assets of Ayotte or its right or
         capacity to carry on business since the date of the most recent of the
         Ayotte Financial Statements;

    (p)  Ayotte has not engaged in any transaction or made any disbursement or
         assumed or incurred any liability or obligation or made any commitment,
         including, without limitation, any forward purchase commitment or
         similar obligation, to make any expenditure which would have a Material
         Adverse Effect on Ayotte or its operations, property, assets or
         financial condition not shown or reflected in the most recent of the

<PAGE>
                                      -12-

         Ayotte Financial Statements or since the date of the most recent of the
         Ayotte Financial Statements, except as shall be set out in the
         Circular;

    (q)  Ayotte has not purchased, leased or acquired or agreed to purchase,
         lease or acquire, any additional property or assets and has not sold,
         transferred, disposed, mortgaged, pledged, charged, leased or otherwise
         encumbered, or agreed to sell, transfer, dispose of, mortgage, pledge,
         charge, lease or otherwise encumber, any of its property or assets
         other than as disclosed in the Disposition Circular or the Circular;

    (r)  Ayotte has not waived or surrendered any right of substantial value and
         has not made any gift of money or of any of its property or assets;

    (s)  Ayotte has carried on its business in the normal course;

    (t)  Ayotte does not have outstanding any material continuing contractual
         obligations whatsoever relating to or affecting the conduct of its
         business or any of its property or assets or for the purchase, sale or
         leasing of any property other than those contracts set out in the most
         recent of the Ayotte Financial Statements or as shall be set out in the
         Circular and all such contracts, agreements, indentures, or other
         instruments are in good standing and Ayotte is entitled to all benefits
         thereunder;

    (u)  Ayotte is not in default under or in breach of, or would, after notice
         or lapse of time or both, be in default under any contract, agreement,
         indenture or other instrument to which it is a party or by which it is
         bound. Following the Effective Time, Ayotte will not have any
         continuing contractual obligations of any nature;

    (v)  Except as set forth in the most recent of the Ayotte Financial
         Statements, or in the Circular, as it relates to Mr. Mazankowski, there
         are no management contracts or consulting contracts to which Ayotte is
         a party or by which it is bound, no amount is payable or has been
         agreed to be paid by Ayotte to any person as remuneration, pension,
         bonus, share of profits or other similar benefit, and no director,
         officer or member, or former director, officer or member, of Ayotte,
         nor any associate or affiliate of any such person, has any claims of
         any nature against, or is indebted to Ayotte;

    (w)  There are no actions, suits, proceedings or investigations pending or,
         to the knowledge of Ayotte, threatened against or affecting Ayotte, at
         law or in equity, before or by any court, administrative agency or
         other tribunal or any governmental authority, except as contemplated in
         the Disposition Circular; (x) To the best of the knowledge of Ayotte,
         the conduct of the business of Ayotte has not infringed upon or
         violated the intellectual property or other proprietary rights of any
         other person;

    (y)  Ayotte does not beneficially own, directly or indirectly, shares of any
         other corporate entity or any interest in a partnership, joint venture
         or other business entity;

    (z)  The representations and warranties and other factual statements of
         Ayotte contained in this Agreement, and all information in the
         Schedules hereto, taken as a whole, do not contain any untrue statement
         of a material fact or omit to state a material fact necessary in order
         to make the statements made herein and therein not misleading;

<PAGE>
                                      -13-

    (aa) Ayotte is not in possession of any information, documents or material
         under an obligation of confidentiality to any other person. The conduct
         of Ayotte's business as presently conducted will not violate or
         conflict with the obligations of confidentiality to any such other
         person; and

    (bb) Ayotte has no information or knowledge of any facts pertaining to
         Ayotte which, if known to Verb, might reasonably be expected to deter
         Verb from completing the transactions contemplated hereby.

3.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES

The representations and warranties made by Verb and Ayotte and contained in this
Agreement, or contained in any document or certificate given in order to carry
out the transactions contemplated hereby, will survive the Effective Date and,
notwithstanding any closing or an investigation made by or on behalf of Ayotte
or Verb, or any other person, or any knowledge of Ayotte or Verb, as applicable,
or any other person, shall continue in full force and effect for the benefit of
Ayotte or Verb, as applicable, for a period of six months from the Effective
Date.

                                   ARTICLE 4
                                    COVENANTS
4.1      MUTUAL COVENANTS

Except as contemplated in, and conducted in accordance with the terms and
conditions of, this Agreement and the Plan of Arrangement, each party covenants
and agrees that until the Effective Date, except with the prior written consent
of the other party:

    (a)  it will not declare or pay any dividends or make any distribution of
         its properties or assets to its shareholders or purchase or retire any
         shares of its capital stock;

    (b)  it will not alter or amend or authorize any alteration or amendment to
         its constating documents or bylaws as they exist at the date of this
         Agreement;

    (c)  it will not split, consolidate, exchange or reclassify its shares or
         other securities;

    (d)  it will not engage in any business enterprise or other activity other
         than in the ordinary course of business;

    (e)  it will not acquire or agree to acquire, by amalgamating, plan of
         arrangement, merging, consolidating or entering into a business
         combination with or purchasing or leasing substantially all of the
         assets or otherwise of any business or undertaking or any corporation,
         partnership, association or other business organization or division
         thereof;

    (f)  it will not sell, lease, transfer, mortgage or otherwise dispose of or
         encumber any of its property or assets, real or personal, or agree to
         the same;

    (g)  it will not resolve or propose that it be wound-up, dissolved,
         liquidated, amalgamated or merged into, appoint or agree to the
         appointment of a liquidator, receiver or trustee in bankruptcy for it
         or consent to an order by a court for its winding-up or dissolution;

    (h)  it will not take any action or fail to take any action which would
         cause any of the conditions precedent set forth in Article 5 not to be
         satisfied;

<PAGE>
                                      -14-

    (i)  it will continue to furnish to the other party and to its accountants,
         counsel and other representatives such information relating to the
         financial condition, business, operations, properties, assets and
         affairs of it as may be reasonably requested by the other party, which
         information shall be true, correct and complete in all material
         respects and will not contain an untrue statement of any material fact
         or omit to state any material fact required to be stated therein or
         necessary in order to make the statements therein not misleading in the
         light of the circumstances in which they are made;

    (j)  it will notify the other party in writing:

         (i)   promptly after the occurrence thereof of any material adverse
               change (actual, anticipated, or threatened) with respect to it;
               and

         (ii)  promptly after the occurrence, or failure to occur, of any such
               event, of information of which it becomes aware with respect to
               any event which, if known as of the date of this Agreement, would
               have been required to be disclosed to the other party or which
               would have been likely to cause any of its representations or
               warranties in this Agreement to be untrue or incorrect or result
               in the failure to comply with or satisfy any covenant, condition
               or agreement to be complied with or satisfied by any party herein
               provided, however, that no such notification shall affect the
               representations or warranties of the parties or the conditions to
               the obligations of the parties herein;

    (k)  it will do or refrain from doing all acts and things in order to ensure
         that the representations and warranties in Section 3.1, in the case of
         Verb, and 3.2, in the case of Ayotte, remain true and correct as of the
         Effective Date as if such representations and warranties were made at
         and as of such date;

    (l)  it will use commercially reasonable efforts (including co-operating
         with the other party where applicable) to cause each of the conditions
         precedent set forth in Article 5 hereof to be complied with on or
         before the Effective Date;

    (m)  if for any reason whatsoever, except by reason of a breach by either
         party of its obligations hereunder, the Arrangement cannot be completed
         on the basis contemplated by this Agreement, it will negotiate in good
         faith with the other party to restructure the transactions contemplated
         by this Agreement and the Plan of Arrangement on a mutually acceptable
         basis with a view to the completion of a transaction on as similar a
         basis to the Arrangement as is possible in the circumstances on or
         before June 30, 2002 or such other date as may be agreed upon between
         the parties;

    (n)  it will cooperate with the other party in preparing the Circular as a
         joint management information circular with respect to the Verb Meeting
         and the Ayotte Meeting and the information relating to such party in
         the Circular will not contain an untrue statement of a material fact
         and will not omit to state a material fact that is necessary to make a
         statement not misleading in the light of the circumstances in which it
         is made;

    (o)  it will use its best efforts to ensure that the Verb Meeting and the
         Ayotte Meeting are held on the same date;

    (p)  it will cooperate and use its respective best efforts to obtain, before
         the Effective Date, all authorizations, waivers, exemptions, consents,
         orders and other approvals from domestic or foreign courts,
         governmental or regulatory agencies, boards, commissions or other

<PAGE>
                                      -15-

         authorities, shareholders and third parties as are necessary for the
         consummation of the transactions contemplated hereby;

    (q)  it will support the transactions contemplated herein and in the Plan of
         Arrangement and, without limiting the generality of the foregoing, it
         shall not act or fail to act in any way that might reasonably be
         expected to discourage Verb Shareholders from voting in favour of the
         Verb Resolution or that might encourage Verb Shareholders to vote
         against the Verb Resolution or that might be expected to discourage
         Ayotte Shareholders from voting in favour of the Ayotte Resolutions or
         that might encourage Ayotte Shareholders to vote against the Ayotte
         Resolutions and any public comment (whether oral or written) shall be
         consistent with and supportive of the Arrangement provided, however,
         that nothing herein shall prevent either party from making any written
         disclosure to comply with any legal or regulatory requirement so long
         as such disclosure is made in accordance with Section 7.5.

4.2      COVENANTS OF AYOTTE

Ayotte covenants and agrees that until the Effective Date, except with the prior
written consent of Verb or except as contemplated in, and conducted in
accordance with the terms and conditions of, this Agreement and the Plan of
Arrangement:

    (a)  it will not incur or commit to incur any indebtedness for borrowed
         money except indebtedness of Verb;

    (b)  it will not allot or issue, or enter into any agreement for the
         allotment or issuance, or grant any other rights to acquire, Ayotte
         Shares or other securities or securities convertible into, exchangeable
         for, or which carry a right to acquire, directly or indirectly, Ayotte
         Shares or other securities, except for Ayotte Shares which may be
         issued as contemplated in Schedule "C" hereto;

    (c)  it will not make any employment contracts or other arrangements with
         any officers, agents, servants or employees of Ayotte and prior to the
         Effective Date it will terminate or cancel all such existing contracts
         or arrangements;

    (d)  it will cooperate with Verb in the preparation of the Circular and will
         ensure that the disclosure in the Circular with respect to Ayotte and
         the Ayotte Shares shall constitute full, true and plain disclosure of
         all material facts relating to Ayotte and the Ayotte Shares and will
         not contain any untrue statement of any material fact or omit to state
         any material fact required to be stated therein or necessary in order
         to make any statement therein not misleading in light of the
         circumstances in which it is made (and Ayotte acknowledges that with
         respect to such information in the Circular relating to Ayotte and the
         Ayotte Shares, Verb will rely upon the information provided by or on
         behalf of Ayotte for the purpose of inclusion in the Circular, without
         having to make any independent investigations and Verb will assume no
         responsibility for the accuracy or completeness of such information);

    (e)  subject to Section 4.6, it will not authorize or permit any officers,
         directors or employees, agents, advisers, consultants or other
         representatives of it to:

         (i)  solicit, initiate or encourage (including, without limitation, by
              way of furnishing information) any inquiry or the making of any
              proposal to it or its shareholders from any person which
              constitutes, or may reasonably be expected to lead to (in

<PAGE>
                                      -16-

              either case whether in one transaction or a series of
              transactions), a Competing Offer, or agree to or endorse any of
              the foregoing; or

         (ii) enter into or participate in any discussions or negotiations
              regarding any Competing Offer, or furnish to any other person any
              information with respect to the business, properties, operations,
              prospects or conditions (financial or otherwise) of it or in
              connection with any Competing Offer, or otherwise cooperate in any
              way with, or assist or participate in, facilitate or encourage,
              any effort or attempt by any other person to do or seek to do any
              of the foregoing;

     (f) it will provide Verb with full access to such records of Ayotte and
         furnish Verb with such information with respect thereto and with
         respect to any other matters pertaining to Ayotte as Verb may
         reasonably require; provided that any information which Verb has
         received pursuant to this subparagraph is confidential and will not be
         released to any other party or parties nor will it be used by Verb or
         its directors and officers for their own benefit without the permission
         of Ayotte;

     (g) it will, both before and after the Effective Date, execute and do all
         such further deeds, things and assurances as may be required in the
         reasonable view of Verb's counsel for consummating the transactions
         contemplated herein;

     (h) it will forthwith take steps to convene the Ayotte Meeting at the
         earliest opportunity and shall use its best efforts to obtain the
         approval of its shareholders to the terms of this Agreement; and

     (i) it will forthwith use its best efforts to obtain the necessary approval
         of the Exchange to the terms of this Agreement and the Transaction.

4.3      COVENANTS OF VERB

Verb covenants and agrees that until the Effective Date, except with the prior
written consent of Ayotte or except as contemplated in, and conducted in
accordance with the terms and conditions of, this Agreement and the Plan of
Arrangement:

     (a) it will not incur or commit to incur any indebtedness for borrowed
         money, out of the ordinary course of its business;

     (b) it will not allot or issue, or enter into any agreement for the
         allotment or issuance, or grant any other rights to acquire Verb Shares
         or other securities or securities convertible into, exchangeable for,
         or which carry a right to acquire, directly or indirectly, any Verb
         Shares or other securities, except for Verb Shares which may be issued
         as contemplated in Schedule "B" hereto;

     (c) it will conduct its business diligently and in the ordinary course
         consistent with the manner in which the business generally has been
         operated up to the date of execution of this Agreement;

     (d) it will take all actions required under its constating documents to
         approve the Arrangement and the transfer of the Verb Shares to Ayotte
         as contemplated by this Agreement;

<PAGE>
                                      -17-

     (e) it will provide Ayotte with full access to such records of Verb and
         furnish Ayotte with such information with respect thereto and with
         respect to any other matters pertaining to Verb as Ayotte may
         reasonably require; provided that any information which Ayotte and its
         directors and officers has received pursuant to this subparagraph is
         confidential and will not be released to any other party or parties nor
         will it be used by Ayotte or its directors or officers for their own
         benefit without the permission of Verb;

     (f) it will, both before and after the Effective Date, execute and do all
         such further deeds, acts, things and assurances as may be required in
         the reasonable view of Ayotte's counsel for consummating the
         transactions contemplated herein;

     (g) on or before the Effective Date, it will arrange for those Verb
         Securityholders whose shares in Ayotte are to be held in escrow, to
         execute the escrow agreement referred to in Section 2.3;

     (h) it will, and will arrange for the Verb Securityholders to execute and
         deliver to Ayotte any securities regulatory materials required in
         connection with the transactions contemplated hereby, including,
         without limitation, any documentation or undertaking required by the
         Exchange or any relevant securities regulatory authority;

     (i) it will forthwith take steps to convene the Verb Meeting at the
         earliest opportunity and shall use its best efforts to obtain the
         approval of its shareholders to the terms of this Agreement and the
         Arrangement;

     (j) it will cooperate with Ayotte in the preparation of the Circular and
         will ensure that the disclosure in the Circular with respect to Verb
         and the Verb Shares shall constitute full, true and plain disclosure of
         all material facts relating to Verb and the Verb Shares and Verb
         Special Warrants and will not contain any untrue statement of any
         material fact or omit to state any material fact required to be stated
         therein or necessary in order to make any statement therein not
         misleading in light of the circumstances in which it is made (and Verb
         acknowledges that with respect to such information in the Circular
         relating to Verb, the Verb Shares and the Verb Special Warrants, Ayotte
         will rely upon the information provided by or on behalf of Verb for the
         purpose of inclusion in the Circular, without having to make any
         independent investigations and Ayotte will assume no responsibility for
         the accuracy or completeness of such information);

     (k) it will promptly notify Ayotte of all notices of dissent or written
         objections to the transactions contemplated hereby received from
         dissenting Verb Shareholders and of any withdrawal of such notices of
         dissent or written objections;

     (l) subject to Section 4.6, it will not, and it will not authorize or
         permit any of its officers, directors or employees, agents, advisers,
         consultants or other representatives to:

         (i)  solicit, initiate or encourage (including, without limitation, by
              way of furnishing information) any inquiry or the making of any
              proposal to it or its shareholders from any person which
              constitutes, or may reasonably be expected to lead to (in either
              case whether in one transaction or a series of transactions), a
              Competing Offer, or agree to or endorse any of the foregoing; or

         (ii) enter into or participate in any discussions or negotiations
              regarding any Competing Offer, or furnish to any other person any
              information with respect to its business, properties, operations,
              prospects or conditions (financial or

<PAGE>
                                      -18-

              otherwise) in connection with any Competing Offer, or otherwise
              cooperate in any way with, or assist or participate in, facilitate
              or encourage, any effort or attempt by any other person to do or
              seek to do any of the foregoing.

4.4      SPECIAL MEETINGS

As soon as practicable, the parties will prepare the Circular for mailing to
their respective securityholders and, subject to the issuance of the Interim
Order, Ayotte and Verb will respectively convene the Meetings (with the Verb
meeting being held on the same day and immediately following the Ayotte
meeting). The parties will file the Circular with the appropriate regulatory
authorities in all jurisdictions where the same is required and will mail the
same to the appropriate persons in accordance with applicable law and, in the
case of Verb, the Interim Order. Each party will provide the other on a timely
basis with all such information as may be required to be included in the
Circular which relates to it. The parties will cooperate with each other in
connection with the preparation of documentation for submission to regulatory
authorities and holders of their respective securities and will keep each other
informed of any requests or comments made by regulatory authorities in
connection with such documentation.

4.5 COURT PROCEEDINGS

Verb and Ayotte, together, will arrange for the preparation of the documents to
be filed with the Court for the purposes of obtaining the Interim Order and the
Final Order. In addition, Verb will not object to counsel for Ayotte making such
submissions on the hearing of the motion for the Interim Order and the
application for the Final Order as such counsel deems appropriate, provided that
Verb is advised of the nature of any submissions not reasonably contemplated in
the material to be filed with the Court prior to the hearing.

4.6      FIDUCIARY DUTIES

Nothing contained in this Agreement will prohibit, enjoin or otherwise restrict
the board of directors of Ayotte or Verb or any director of Ayotte or Verb in
the fulfilment of their fiduciary duties, from supporting or facilitating any
Competing Offer or Alternative Company Transaction or from failing to give,
qualifying or otherwise amending any recommendation to be or previously given to
Ayotte Shareholders or Verb Securityholders in connection with the consummation
of the transaction contemplated by this Agreement including, without limitation,
the Arrangement.

4.7      DIRECTORS AND OFFICERS

On the Effective Date, the directors and officers of Ayotte and Verb (which
shall be a wholly-owned subsidiary of Ayotte) shall be as follows, and the
parties agree to obtain such registrations and/or consents to act as may be
required in order to effect such appointments:

<PAGE>
                                      -19-

AYOTTE

Board of Directors      Officers
------------------      --------

Nathanael Lineham       Nathanael Lineham - President & Chief Executive Officer
Lynn Patterson          David Ebert - Chief Financial Officer
Nelson Young            Jeff Durno - Secretary
Jeff Durno
Louis Eisman
Ross Wilmot
Noel Bambrough

VERB

Board of Directors      Officers
------------------      --------

Nathanael Lineham       Nathanael Lineham - President & Chief Executive Officer
David Ebert             David Ebert -  Chief Financial Officer
Francis Liang           Keith Andrews - Vice-President of Sales
                        Calvin Wang - Chief Technical Officer
                        Jeff Warkentin - Vice-President of Operations
                        Kerry Munro - Vice-President of Marketing

                                   ARTICLE 5
                              CONDITIONS PRECEDENT

5.1      MUTUAL CONDITIONS PRECEDENT

The respective obligations of the parties hereto to complete the Arrangement by
filing a certified copy of the Final Order with the Registrar for acceptance are
subject to the satisfaction of, or mutual waiver by the parties on or before the
Effective Time of each of the following conditions, which are for the mutual
benefit of Ayotte and Verb:

     (a) The Interim Order shall have been obtained in form and substance
         satisfactory to each of the parties, acting reasonably;

     (b) The Plan of Arrangement, without amendment or with amendments
         acceptable to Verb and Ayotte acting reasonably, shall have been
         approved at the Verb Meeting by the Verb Shareholders as required by
         the Interim Order;

     (c) The Transaction shall have been approved at the Ayotte Meeting by the
         Ayotte Shareholders;

     (d) The Final Order shall have been obtained in form and substance
         satisfactory to each of the parties, acting reasonably;

     (e) All approvals and consents, regulatory or otherwise, which are required
         in connection with the consummation of the transactions contemplated in
         this Agreement and in the Plan of Arrangement shall have been obtained
         (including, without limitation, the approval of the Transaction by the
         Exchange and the listing or reservation for listing of the Ayotte
         Shares to be issued pursuant to the Plan of Arrangement);

     (f) The time period for the exercise of any right to dissent conferred upon
         Verb Shareholders in respect of the Arrangement shall have expired and
         Verb Shareholders shall not have

<PAGE>
                                      -20-

         exercised (and not abandoned) such right of dissent with respect to
         greater than 10% of the number of outstanding Verb Shares;

     (g) No preliminary or permanent injunction, restraining order, cease
         trading order or order or decree of any domestic or foreign court,
         tribunal, governmental agency or other regulatory authority or
         administrative agency, board or commission, and no law, regulation,
         policy, directive or order shall have been enacted, promulgated, made,
         issued or applied to cease trade, enjoin, prohibit or impose material
         limitations on the Arrangement or the transactions contemplated herein
         or in the Plan of Arrangement and remain in effect and no such action,
         proceeding or order shall, to the best of the knowledge of Verb or
         Ayotte be pending or threatened and, without limiting the generality of
         the foregoing, no person shall have filed any notice of appeal of the
         Final Order, and no person shall have communicated to Verb or Ayotte
         (orally or in writing) any intention to appeal the Final Order which,
         in the reasonable opinion of Verb or Ayotte (on the advice of counsel),
         would make it inadvisable to proceed with the implementation of the
         Arrangement;

     (h) There shall not exist any prohibition at law against the completion of
         the Arrangement; and

     (i) This Agreement shall not have been terminated pursuant to Article 6.

5.2      ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF VERB

The obligation of Verb to complete the Arrangement by filing a certified copy of
the Final Order with the Registrar for acceptance shall be subject to the
satisfaction or waiver by Verb on or before the Effective Time, of the following
conditions, which are for the benefit of Verb and may be waived in whole or in
part by Verb at any time:

     (a) Ayotte shall have performed and not be in material default of any
         covenant contained herein and its representations and warranties shall
         be true and correct as of the date of mailing of the Circular and as of
         the Effective Date and Verb shall have received a certificate of
         Ayotte, dated each such date, signed by the Chief Executive Officer and
         one other senior officer confirming the foregoing;

     (b) Ayotte shall have furnished Verb with a favourable opinion of counsel
         to Ayotte, dated the Effective Date, in form and substance acceptable
         to Verb and its counsel, acting reasonably;

     (c) There shall not exist or have occurred (or been threatened) any change
         (or any condition, event or development involving a prospective change)
         which, singly or in the aggregate, would or does have a Material
         Adverse Effect on Ayotte;

     (d) The issue of the Ayotte Shares pursuant to the Arrangement will have
         been approved by all necessary corporate action to permit such shares
         to be issued as fully paid and non-assessable and such issuance will be
         exempt from the registration and prospectus requirements of applicable
         securities laws in each of the provinces of Canada in which registered
         holders of Verb Shares are resident; and the Ayotte Shares issued
         pursuant to the Arrangement will not be subject to restrictions on
         resale under the securities laws in any of the provinces of Canada in
         which registered holders of Verb Shares are resident, except by reason
         of the existence of any controlling interest in Ayotte pursuant to the
         securities laws of any applicable jurisdiction or by reason of escrow
         requirements

<PAGE>
                                      -21-

         imposed by the Exchange or pursuant to applicable securities law, or as
         otherwise disclosed in the Circular;

     (e) Verb being satisfied, in its sole discretion, with its due diligence
         investigations of Ayotte;

     (f) On the Effective Date, the board of directors of Ayotte shall be
         reconstituted to consist of the individuals set forth in Section 4.7;

     (g) Ayotte shall have completed a consolidation of its common shares of 5
         to 1 (five pre-consolidation shares to equal one post-consolidation
         share) and shall have changed its name to "Verb Exchange Inc.";

     (h) With the exception of the securities disclosed in Schedule "C" as
         continuing after the completion of the Arrangement, Ayotte shall have
         cancelled all existing rights to acquire securities of Ayotte (whether
         pursuant to options, warrants, convertible securities, or otherwise);
         and

     (i) Ayotte shall have adopted a stock option plan, in form acceptable to
         Verb acting reasonably, to come into effect following the completion of
         the Arrangement.

5.3      ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF AYOTTE

The obligation of Ayotte to complete the transactions set forth in the Plan of
Arrangement shall be subject to the satisfaction or waiver by Ayotte, on or
before the Effective Date, of the following conditions, which are for the
benefit of Ayotte and which may be waived by Ayotte, in whole or in part, at any
time:

     (a) Verb shall have performed and not be in default of any covenant
         contained herein and its representations and warranties shall be true
         and correct as of the date of mailing of the Circular and as of the
         Effective Date and Ayotte shall have received a certificate of Verb,
         dated each such date, signed by the President and Chief Financial
         Officer confirming the foregoing;

     (b) Verb shall have furnished Ayotte with a favourable opinion of counsel
         to Verb dated the Effective Date, in form and substance acceptable to
         Ayotte and its counsel, acting reasonably;

     (c) There shall not exist or have occurred (or been threatened) any change
         (or any condition, event or development involving a prospective change)
         which, singly or in the aggregate, would or does have a Material
         Adverse Effect on Verb;

     (d) Verb will have delivered audited financial statements to Ayotte, for
         such periods as may be required by the Exchange;

     (e) The issue of the Ayotte securities to the Verb Securityholders pursuant
         to the Arrangement are able to be made in compliance with and reliance
         on exemptions from the registration and prospectus requirements of the
         applicable securities laws;

     (f) Verb shall have settled or eliminated the debt owed by the Subsidiary
         to AT&T and any debt of Verb owed in relation to such debt of the
         Subsidiary;

<PAGE>
                                      -22-

     (g) Verb shall have entered into a revised agreement with Webley Systems
         Inc. ("WEBLEY") concerning Verb's use of Webley's platform technology,
         on terms no less favourable than those previously granted to Verb;

     (h) Verb will have entered into employment agreements with each of its
         senior officers, on terms no less favourable than their current
         agreements, in forms acceptable to Ayotte acting reasonably;

     (i) On the Effective Date, the board of directors of Ayotte shall be
         reconstituted to consist of the individuals set forth in Section 4.7;

     (j) With the exception of the securities disclosed in Schedule "B" as
         continuing after completion of the Arrangement, Verb shall have
         cancelled all existing rights to acquire securities of Verb (whether
         pursuant to options, warrants, convertible securities, or otherwise);
         and

     (k) Certain Securityholders shall have entered into such escrow agreements
         as may be required by the Exchange, including, if adequate value cannot
         be demonstrated by Verb to the Exchange, a Surplus Security Escrow
         Agreement, as defined in Exchange Policy 5.4.

5.4      SATISFACTION OF CONDITIONS

The conditions set out in Sections 5.1, 5.2 and 5.3 hereof shall be conclusively
deemed to have been satisfied, waived or released upon the filing of the Final
Order with the Registrar for acceptance to give effect to the Plan of
Arrangement pursuant to Section 252 of the BCCA.

5.5      CLOSING

On the Effective Date:

     (a) Verb will deliver to Ayotte:

         (i)  the officers' certificate referred to in Section 5.3(a) hereof;

         (ii) a certified copy of the resolutions of the directors of Verb
              approving the Arrangement;

         (iii) a certified copy of the minutes of a meeting of the shareholders
              of Verb approving the Plan of Arrangement and the transactions
              contemplated under this Agreement;

         (iv) a duly executed share certificate of Verb in the name of Ayotte
              representing all of the issued and outstanding Verb Shares;

         (v)  the escrow agreement(s) referred to in Section 2.3, duly executed
              by those Verb Shareholders whose Ayotte Shares are to be held in
              escrow;

         (vi) the opinion of counsel referred to in Section 5.3(b); and

         (vii) such other documents reasonably required by Ayotte's counsel.

<PAGE>
                                      -23-

    (b)  Ayotte will deliver to Verb:

         (i)  a copy of a letter from the Exchange approving the Transaction;

         (ii) the opinion of counsel referred to in Section 5.2(b);

         (iii) a certified copy of the minutes of the meeting of the
              shareholders of Ayotte approving the Transaction and the
              transactions contemplated under this Agreement;

         (iv) a certified copy of the resolution of the directors of Ayotte
              authorizing the allotment and issuance of the securities of Ayotte
              to be issued to the Verb Securityholders pursuant to the terms of
              this Agreement;

         (v)  the resignations of the current directors of Ayotte and a
              certified copy of the resolution of the directors of Ayotte
              authorizing the appointment of the individuals to the board of
              directors specified in Section 4.7;

         (vi) the officers' certificate of Ayotte referred to in Section 5.2(a);

         (vii) share certificates of Ayotte for the Ayotte Shares registered in
              the names of the Verb Securityholders and, where applicable,
              replacement warrant certificates; and

         (viii) such other documents reasonably required by Verb's counsel.

    (c)  Subject to the terms and conditions hereof, the transactions
         contemplated herein will be closed on the Effective Date at the offices
         of Anfield Sujir Kennedy & Durno, at 1600 - 609 Granville Street,
         Vancouver, British Columbia, V7Y 1C3 or at such other place or places
         as may be mutually agreed upon by Verb and Ayotte.

                                   ARTICLE 6
                            TERMINATION OF AGREEMENT

6.1      TERMINATION BY VERB OR AYOTTE

If, at any time prior to the Effective Time, any representation and warranty or
covenant (which by its terms must be complied with or fulfilled at such time),
made or given by either party in this Agreement is not, in the case of a
representation and warranty, true and correct with the same force and effect as
if given at and as of such time (whether or not the truth and correctness of
such representation and warranty is within such party's control) or, in the case
of a covenant, is not being complied with or fulfilled in all material respects
and if such representation and warranty or covenant is not made true and correct
or complied with or fulfilled in all material respects by action of such party
by the later of: the Business Day in Vancouver prior to the Verb Meeting Date;
and two Business Days in Vancouver from such party receiving notice in writing
to that effect from the other party, the other party may, at the expiry of such
period, by giving notice in writing to such party, terminate this Agreement and
the obligations of the parties hereunder other than those set out in Sections
7.2 (Fees and Expenses) and, in respect of such termination, 7.5 (Public
Announcements).

If any of the conditions set forth in Section 5.1 are not complied with or
waived on or before the date required for the performance thereof, either Ayotte
or Verb upon written notice to the other party, may rescind and terminate this
Agreement and shall have no other right or remedy against the other party

<PAGE>
                                      -24-

except as set forth in Sections 7.2 or 7.5. If any of the conditions set forth
in Sections 5.2 or 5.3 are not complied with or waived on or before the date
required for the performance thereof, the party which has the benefit of such
condition, upon written notice to the other party, may rescind and terminate
this Agreement and shall have no other right or remedy against the other party
except as set forth in Sections 7.2 or 7.5. 6.2 AUTOMATIC TERMINATION

This Agreement shall terminate and the obligations and covenants of the parties
hereunder other than those set out in Section 7.2 (Fees and Expenses) and, in
respect of such termination, 7.5 (Public Announcement) shall terminate at 11:59
p.m. (Vancouver time) on July 31, 2002 unless extended by the parties.

                                   ARTICLE 7
                                     GENERAL
7.1      NOTICES

All notices and other communications hereunder shall be in writing and shall be
delivered by hand to the parties at the following addresses or sent by telecopy
at the following numbers or at such other addresses or telecopier numbers as
shall be specified by the parties by like notice:

    if to Verb:

         Verb Exchange Inc.
         201 - 1166 Alberni Street, Vancouver, British Columbia, V6E 3Z3
         Attention:  Nathanael Lineham
         Facsimile No. (604) 685-8366

     with a copy to:

         Anfield Sujir Kennedy & Durno
         1600 - 609 Granville Street, Vancouver, British Columbia, V7Y 1C3
         Attention:  Jeff Durno
         Facsimile No. (604) 669-3877

    and if to Ayotte:

         Ayotte Music Inc.
         c/o 2200 - 1055 West Hastings Street, Vancouver,
         British Columbia, V6E 2E9
         Attention:  Mr. Louis Eisman
         Facsimile No. (604)  739-8702

    with a copy to:

         Heenan Blaikie LLP
         Suite 2200 - 1055 West Hastings Street, Vancouver,
         British Columbia, V6E 2E9
         Attention:  Mr. Roderick Kirkham
         Fax No. (604) 669-5101

<PAGE>
                                      -25-

The date of receipt of any such notice shall be deemed to be the date of
delivery thereof or, in the case of notice sent by telecopy, the date of
successful transmission thereof unless transmission is received after business
hours, in which case the date of receipt shall be deemed to be the next Business
Day in the place of receipt.

7.2      FEES AND EXPENSES

Each party will be responsible for and bear all of its own fees, costs and
expenses incurred at any time in connection with entering into this Agreement
and consummating the transactions contemplated herein and in the Plan of
Arrangement.

7.3      SUCCESSORS AND ASSIGNS

This Agreement and all the provisions hereof shall be binding upon and enure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Neither party may assign its rights or obligations under this Agreement
or the Arrangement without the prior written consent of the other party.

 7.4     TIME OF ESSENCE

Time shall be of the essence of this Agreement and of each of its provisions.

7.5      PUBLIC ANNOUNCEMENTS

All press releases or other public written communications of any sort by either
of the parties hereto relating to this Agreement or the Arrangement and the
method of release for publication thereof will be provided for review and
comment by the other party hereto. Each party will deal expeditiously with a
request for comments on such written communication provided that the party
issuing such written communication shall not be delayed if to do so would be
contrary to any legal or regulatory requirement. 7.6 GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of
British Columbia and the laws of Canada applicable therein.

7.7      ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, between
the parties hereto with respect to the subject matter hereof. There are no
representations, warranties, covenants or conditions with respect to the subject
matter hereof except as contained herein. For greater certainty, the parties
acknowledge the separate existence of a Loan Agreement dated November 29, 2001
between the parties and such other agreements as may be contemplated thereunder.

7.8 FURTHER ASSURANCES

Each party shall make, do and execute, or cause to be made, done and executed
all such further acts, deeds, agreements, transfers, assurances, instruments or
documents as may be reasonably required in order to implement this Agreement,
the transactions contemplated herein and in the Plan of Arrangement.

<PAGE>
                                      -26-

7.9      AMENDMENT OR WAIVER

Subject to any requirements imposed by law or by the Court, this Agreement may
be supplemented or amended, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, but only by written document
executed by both parties; provided, however, that the terms of this Agreement
may not be supplemented or amended, or any of the provisions waived, in a manner
materially prejudicial to the holders of Verb Shares without their approval at
the Verb Meeting or, following the Meeting, without their approval given in the
same manner as required by law for the approval of the Arrangement or, in either
case, as may be required by the Court. No waiver of any nature, in any one or
more instances, shall be deemed or construed as a further or continued waiver of
any condition or breach of any other term, representation or warranty in this
Agreement. Notwithstanding the foregoing, the Plan of Arrangement may only be
supplemented or amended in accordance with the provisions thereof.

7.10     COUNTERPARTS

This Agreement may be executed in counterparts and may be delivered by
facsimile, each of which shall be deemed an original and all of which together
shall constitute one and the same instrument.

IN WITNESS WHEREOF this Agreement has been executed by the parties hereto.

                                            VERB EXCHANGE INC.

                                            Per:   /s/  Nathanael Lineham
                                                  ------------------------------

                                            AYOTTE MUSIC INC.

                                            Per:   /s/  Louis Eisman
                                                  ------------------------------

<PAGE>

                                  SCHEDULE "A"

              TO THE ARRANGEMENT AGREEMENT DATED AS OF MAY 1, 2002
                BETWEEN VERB EXCHANGE INC. AND AYOTTE MUSIC INC.

                            PLAN OF ARRANGEMENT UNDER
                SECTION 252 OF THE COMPANY ACT (BRITISH COLUMBIA)

                                   ARTICLE 8
                                 INTERPRETATION
8.1      DEFINITIONS

In this Plan of Arrangement:

"ARRANGEMENT AGREEMENT" means the arrangement agreement dated as of May 1, 2002
between Verb and Ayotte to which this Plan of Arrangement is attached as
Schedule "A", as the same may be amended from time to time.

"ARRANGEMENT" means the arrangement under Section 252 of the BCCA on the terms
and conditions set forth in this Plan of Arrangement and any amendment or
variation thereto made in accordance with the terms of the Arrangement
Agreement.

"AYOTTE" means Ayotte Music Inc.

"AYOTTE MEETING" means the extraordinary general meeting of Ayotte Shareholders
and any adjournment thereof to be held to consider and, if deemed advisable,
approve, among other things, the Transaction and all other matters requiring
approval pursuant to the terms and conditions of the Arrangement Agreement.

"AYOTTE SHAREHOLDERS" means, at any time, the registered holders at that time of
Ayotte Shares.

"AYOTTE SHARES" means the common shares in the capital of Ayotte, as constituted
on the date hereof, and upon the completion of a 5:1 share consolidation, as
shall be constituted subsequent to such share consolidation.

"BCCA" means the Company Act (British Columbia), R.S.B.C. 1996, C-62, as
amended.

"BUSINESS DAY" means any day which is not a Saturday, a Sunday or a day on which
banks are not open for business in the relevant place.

"CIRCULAR" means the joint management information circular of Verb and Ayotte,
including any schedules attached thereto, to be mailed to Ayotte Shareholders
and Verb Securityholders in connection with the Ayotte and Verb Meetings,
together with any amendments or supplements thereto.

"COURT" means the Supreme Court of British Columbia.

"DISSENTING SHAREHOLDER" means a Verb Shareholder who exercises the right of
dissent ordered by the Court with respect to the Arrangement.

"EFFECTIVE DATE" means the date on which the Effective Time falls.

<PAGE>
                                      -2-

"EFFECTIVE TIME" means the point in time when a certified copy of the Final
Order has been accepted for filing by the Registrar.

"ESCROW AGREEMENT" means the escrow agreement(s) contemplated under Section 2.3
of the Arrangement Agreement between Ayotte and certain Verb Shareholders in the
form required by the Exchange to be dated as of the Effective Date.

"EXCHANGE" means the Canadian Venture Exchange.

"EXCHANGED SHARES" has the meaning ascribed thereto in Section 3.4 of this Plan
of Arrangement.

"FINAL ORDER" means the final order of the Court made in connection with the
approval of the Arrangement.

"INTERIM ORDER" means the interim order of the Court made in connection with the
approval of the Arrangement, as the same may be amended, supplemented or varied
by the Court.

"PLAN OF ARRANGEMENT" means this plan of arrangement, as amended and
supplemented from time to time in accordance herewith, the terms of the
Arrangement Agreement or any order of the Court.

"TAX ACT" means the Income Tax Act (Canada).

"TRANSACTION" means the acquisition of certain of the issued and outstanding
securities of Verb by Ayotte, together with other transactions contemplated in
the Arrangement Agreement.

"VERB" means Verb Exchange Inc.

"VERB MEETING" means the extraordinary general meeting of Verb Shareholders and
any adjournment thereof to be held to consider and, if deemed advisable,
approve, among other things, the Arrangement and all other matters requiring
approval pursuant to the terms and conditions of the Arrangement Agreement, or
the Interim Order.

"VERB SECURITYHOLDERS" means, at any time, the registered holders of any
securities of Verb, including special warrants, shares, options to purchase
shares and warrants.

"VERB SHAREHOLDERS" means at any time the registered holders at that time of
Verb Shares, excluding Dissenting Shareholders.

"VERB SHARES" means the issued and outstanding common shares in the capital of
Verb.

"VERB SPECIAL WARRANTS" means the issued and outstanding special warrants of
Verb, as set out in Schedule "B" of the Arrangement Agreement.

"VERB WARRANTS" means the issued and outstanding  share purchase  warrants of
Verb, as set out in Schedule "B" of the Arrangement Agreement.

8.2      HEADINGS AND REFERENCES

         The division of this Plan of Arrangement into sections and the
insertion of headings are for convenience of reference only and do not affect
the construction or interpretation of this Plan of Arrangement. Unless otherwise
specified, references to sections are to sections of this Plan of Arrangement.

<PAGE>
                                      -3-

8.3 NUMBERS, ETC.

         Unless the context otherwise requires, words importing the singular
number only shall include the plural and vice versa; words importing the use of
any gender shall include all genders; and words importing person shall include
firms and corporations and vice versa.

8.4      DATE OF ANY ACTION

         In the event that any date on which any action is required to be taken
hereunder by any of the parties is not a Business Day in the place where the
action is required to be taken, such action shall be required to be taken on the
next succeeding day which is a Business Day in such place.

                                   ARTICLE 9
                              ARRANGEMENT AGREEMENT

9.1      PLAN OF ARRANGEMENT

         This Plan of Arrangement is made pursuant to, is subject to the
provisions of, and forms part of the Arrangement Agreement.

                                   ARTICLE 10
                                 THE ARRANGEMENT

10.1     PURPOSE AND EFFECT OF ARRANGEMENT

         Upon completion of the Arrangement, Verb Securitholders will become
securityholders of Ayotte and Verb will become a wholly-owned subsidiary of
Ayotte. Ayotte will thereafter carry on the business currently conducted by
Verb, through Verb, its wholly-owned subsidiary. 10.2 EXCHANGE OF SECURITIES

         On the Effective Date at the Effective Time, the following shall occur
and shall be deemed to occur without any further authorization, act or
formality:

    (a)  in accordance with the calculations and adjustments set forth in
         Section 3.4, all of the outstanding Verb Shares, other than shares held
         by Dissenting Shareholders, will be acquired by Ayotte in exchange for
         the Exchanged Shares;

    (b)  with the exception of the Dissenting Shareholders, each holder of
         issued and outstanding Verb Shares, as of immediately prior to the
         Effective Time, shall be deemed to have delivered to Verb, the
         certificates representing such Verb Shares, duly endorsed for transfer,
         in exchange for their pro rata (exclusive of Verb Shares held by
         Dissenting Shareholders) entitlement to Exchanged Shares, provided that
         the number of Exchanged Shares issued to any Verb Shareholder, if
         calculated to include a fraction of an Ayotte Share, shall be rounded
         to the next whole Ayotte Share;

    (c)  All of the outstanding Class A Verb Special Warrants will be acquired
         by Ayotte in exchange for 700,000 post-consolidation Ayotte Shares;

    (d)  all of the outstanding Class B Verb Special Warrants will be acquired
         by Ayotte in exchange for 132,000 post-consolidation Ayotte Shares and
         132,000 warrants, entitling

<PAGE>
                                      -4-

         the holders to acquire an aggregate of 132,000 additional post-
         consolidation Ayotte Shares at a price of $0.80 per share, on or before
         March 27, 2003;

    (e)  Each holder of issued and outstanding Class A Verb Special Warrants as
         of immediately prior to the Effective Time, shall be deemed to have
         delivered to Verb, certificates representing the Class A Verb Special
         Warrants for cancellation, in exchange for their pro rata entitlement
         to the 700,000 post-consolidation Ayotte Shares, provided that the
         number of Ayotte Shares to be issued to any holder of Class A Verb
         Special Warrants, if calculated to include a fraction of an Ayotte
         Share, shall be rounded to the next whole Ayotte Share;

    (f)  Each holder of issued and outstanding Class B Verb Special Warrants as
         of immediately prior to the Effective Time, shall be deemed to have
         delivered to Verb, certificates representing the Class B Verb Special
         Warrants for cancellation, in exchange for their pro rata entitlement
         to the 132,000 post-consolidation Ayotte Shares and 132,000 warrants of
         Ayotte, provided that the number of Ayotte Shares to be issued to any
         holder of Class B Verb Special Warrants, if calculated to include a
         fraction of an Ayotte Share, shall be rounded to the next whole Ayotte
         Share;

    (g)  Subject to the written consent of the holders of all outstanding Verb
         Warrants as of immediately prior to the Effective Time, the
         certificates evidencing the Verb Warrants shall be deemed to have been
         delivered to Verb for cancellation, in exchange for the allotment and
         issuance by Ayotte of the warrants set forth in Section 2 of Schedule
         "B" of the Arrangement Agreement, under the heading "Rights to Acquire
         Ayotte Shares Post-Transaction".

    (h)  except as provided for in the Arrangement Agreement or herein all
         options, warrants and other rights to acquire Verb Shares or securities
         convertible into Verb Shares that remain in existence immediately prior
         to the Effective Time, if any, shall be immediately cancelled;

    (i)  Verb shall transfer the Verb Shares to Ayotte and shall issue a
         certificate in the name of Ayotte for all of the issued and outstanding
         Verb Shares in exchange for the requisite number of Exchanged Shares.
         Outstanding Verb Special Warrants and Verb Warrants shall be cancelled;

    (j)  Ayotte shall deliver to Verb certificates representing the requisite
         number of Ayotte Shares, or share purchase warrants, as applicable,
         issued in exchange for Ayotte's receipt of all of the issued and
         outstanding Verb Shares and evidence of the cancellation of the Verb
         Special Warrants and Verb Warrants, registered in the names of the Verb
         Securityholders for delivery to the Verb Securityholders subject to the
         conditions of Section 3.3 and Article 4;

    (k)  each Verb Securityholder, as constituted immediately prior to the
         Effective Time, shall cease to be a holder of Verb securities and the
         exchange of the securities held by each Verb Securityholder in exchange
         for securities of Ayotte shall be recorded in the security registers of
         Verb as of the Effective Date;

    (l)  the certificate representing each Verb Share or other security of Verb,
         other than the certificate issued to Ayotte under Section 3.2(g) above
         shall be deemed to have been transferred and cancelled as of the
         Effective Time; and

<PAGE>
                                      -5-

    (m)  each Verb Securityholder, other then Dissenting Shareholders, as
         constituted immediately prior to the Effective Time, shall be deemed to
         have executed and delivered all consents, releases, assignments and
         waivers, statutory or otherwise, required to transfer such securities
         in accordance with the provisions hereof.

10.3     ACQUISITION OF COMMON SHARES OF DISSENTING HOLDERS

         The shares of any Verb Shareholder who, at or prior to the Verb
Meeting, sent a Notice of Dissent (as defined in Section 5.2) to Verb in
accordance with Article 5 below, to whom Verb forwarded a Notice of Intention to
Act (as defined in Section 5.5) following approval of the Arrangement at the
Verb Meeting, and who then forwarded a notice to Verb requiring Verb to purchase
their Verb Shares in accordance with the provisions of Section 5.6 hereof, shall
be, and shall be deemed to be surrendered to Verb for cancellation and cancelled
contemporaneously with the acquisition by Ayotte of Verb securities pursuant to
Section 3.2 on payment of the fair value therefor by Verb to the Dissenting
Shareholder and such holders shall thereupon have no rights or entitlements with
respect to those Verb Shares except as provided in Article 5.

10.4     CALCULATION OF EXCHANGED SHARES

         The aggregate number of Ayotte Shares to be issued by Ayotte to the
Verb Shareholders on the Effective Date (the "EXCHANGED SHARES") in
consideration for Ayotte's acquisition of all of the issued and outstanding
shares of Verb, with the exception of those held by the Dissenting Shareholders,
shall be calculated in accordance with the following formulas:

         ES = 4,320,925 - B - C

    WHERE:

         B     = (F / 2,000,000) X 4,320,925

               WHERE:

               F     = The amount, stated in Canadian dollars (using, where
                     necessary, the purchase exchange rate quoted by the Royal
                     Bank of Canada as of the close of business on the day
                     immediately preceding the Effective Date), that Verb's
                     aggregate liabilities (net of any amounts owing by Verb to
                     Ayotte), including accrued lease obligations and
                     off-balance sheet liabilities, but excluding any accrued
                     liabilities relating to the Transaction or any financing
                     transactions undertaken in order to satisfy the Financing
                     Condition, exceed (US)$200,000 as of the close of business
                     on the day immediately preceding the Effective Date.

               C     = (4,320,925 - B) X (G / H)

                     WHERE:

                     G     = The aggregate number of Verb Shares held by the
                           Dissenting Shareholders.

                     H     = The aggregate number of issued and outstanding
                           Verb Shares immediately prior to the Effective Time,
                           inclusive of those held by the Dissenting
                           Shareholders.

<PAGE>
                                      -6-

Notwithstanding the aforesaid formulas, it is acknowledged that the aggregate
number of Exchanged Shares may differ to a minor extent from what is calculated
using the aforesaid formulas as the aggregate number of Exchanged Shares
issuable to any Verb Shareholder, if calculated to include a fraction, shall be
rounded to the nearest next whole share.

                                   ARTICLE 11
                                  CERTIFICATES

11.1     DELIVERY OF SHARE CERTIFICATES

              On or before the Effective Date:

         (a)  on receipt from Verb of the share certificate registered in the
              name of Ayotte, contemplated to be delivered under Section 3.2(g)
              hereof, (less any shares for which a Notice of Dissent shall have
              been received by Verb and pursuant to which, Verb will repurchase
              the shares for which the Notice of Dissent was received for
              cancellation), Ayotte shall cause a treasury order to be delivered
              to the registrar and transfer agent for Ayotte, ComputerShare
              Investor Services Inc., (the "TRANSFER AGENT") providing for the
              issuance of the Ayotte Shares to be issued pursuant to the
              Arrangement for delivery to such Verb Securityholders in
              accordance with this Section 4.1; provided however that the
              certificates representing the Ayotte Shares of those certain Verb
              Securityholders which are to be held in escrow will be retained by
              the Transfer Agent, to be released to the Verb Securityholders in
              accordance with the terms and conditions of the Escrow Agreement;

         (b)  unless otherwise directed by the applicable Verb Securityholder,
              and as communicated by Verb to Ayotte in writing, the certificates
              evidencing the Ayotte Shares referred to in this Section shall be
              issued and registered in the name of the registered holder of the
              Verb Shares or other Verb securities acquired or cancelled;

         (c)  on and after the Effective Date, any certificate representing Verb
              Shares or other Verb securities shall represent only the right to
              receive Ayotte Shares or other Ayotte securities in accordance
              with this Section; and

         (d)  as soon as practicable following the Effective Date, where a Verb
              Securityholder has not exercised the Right of Dissent in
              accordance with Article 5, Ayotte will cause the Transfer Agent to
              deliver certificates representing the Ayotte Shares or other
              Ayotte securities as contemplated under Section 3.2 above,
              required to be delivered to such holder pursuant to the provisions
              hereof.

                                   ARTICLE 12
                                    AMENDMENT

12.1     GRANT OF RIGHT OF DISSENT

         Notwithstanding Section 3.2, Verb Shareholders may exercise a right of
dissent (the "RIGHT OF DISSENT") pursuant to the provisions of the Interim Order
and this Article 5.

12.2     DISSENT PROCEDURES

         A Verb Shareholder who wishes to exercise his or her Right of Dissent
must give written notice of his or her dissent (a "NOTICE OF DISSENT") to Verb
by depositing such Notice of Dissent with Verb, or mailing it to Verb by
registered mail, at its registered and records office at 1600 - 609 Granville
Street, Vancouver, British Columbia, V7Y 1C3, marked to the attention of Jeff
Durno, or by personally

<PAGE>
                                      -7-

serving it on any director or officer of Verb, in all cases not later than 48
hours before the Verb Meeting. To be valid, a Notice of Dissent must:

    (a)  state that the Verb Shareholder is exercising its Right of Dissent; and

    (b)  specify the number of Verb Shares (which must not be less than all of
         the Verb Shares held by such person) in respect of which such Verb
         Shareholder is exercising its Right of Dissent.

12.3     RIGHT TO VOTE

         The giving of a Notice of Dissent does not deprive a Verb Shareholder
of its right to vote at the Verb Meeting against the resolution approving the
Arrangement. A vote against such resolution or the execution or exercise of a
proxy does not constitute a Notice of Dissent.

12.4     VOTING

         A Verb Shareholder is not entitled to exercise a Right of Dissent with
respect to any Verb Shares if the shareholder votes (or instructs or is deemed,
by submission of any incomplete proxy, to have instructed its proxyholder to
vote) in favour of the resolution approving the Arrangement. A Verb Shareholder,
however, may vote as proxy for a shareholder whose proxy requires an affirmative
vote, without affecting his or her right to exercise the Right of Dissent.

12.5     NOTICE OF INTENTION

         If the resolution approving the Arrangement is passed, Verb will give
each Verb Shareholder that has delivered a valid Notice of Dissent (being the
"DISSENTING SHAREHOLDERS") prior notice of its intention to act (a "NOTICE OF
INTENTION TO ACT") on such resolution.

12.6     PURCHASE OF SHARES

         On receiving a Notice of Intention to Act in accordance with Section
5.5, the Dissenting Shareholder is entitled to require Verb to purchase all of
the Verb Shares in respect of which the Notice of Dissent was given.

12.7     DELIVERY OF SHARES

         The Dissenting Shareholder may only exercise the right under Section
5.6 by delivering to Verb, at the address specified in Section 5.2 within 14
days after Verb gives the Notice of Intention to Act in accordance with Section
5.5:

    (a)  a notice that he or she requires Verb to purchase all the Verb Shares
         referred to in Section 5.6; and

    (b)  the share certificate(s) representing all the Verb Shares referred to
         in Section 5.6,

and thereupon the Dissenting Shareholder is bound to sell those Verb Shares to
Verb and Verb is bound to purchase them.

12.8     PRICE PAID FOR SHARES

         The price to be paid to the Dissenting Shareholder for his or her Verb
Shares will be their fair value as of the day before the date on which the
resolution referred to in Section 5.4 was passed and every Dissenting
Shareholder who has complied with Section 5.7 will be paid the same price.

<PAGE>
                                      -8-

12.9     DETERMINATION OF FAIR VALUE

         The fair value of the Verb Shares shall be determined in accordance
with the provisions of the Interim Order and the BCCA.

12.10    NOTICE

         Any notice required to be given by Verb or a Dissenting Shareholder to
the other in connection with the exercise of the Right of Dissent will be deemed
to have been given and received, if delivered, on the day of delivery, or, if
mailed, on the earlier of the date of receipt and the fifth business day after
the day of mailing, or, if sent by telecopier or other similar form of
transmission, the first business day after the date of transmittal.

12.11    PARTICIPATION

         A holder of Verb Shares who:

    (a)  properly exercises the Right of Dissent by complying with all of the
         procedures (the "DISSENT PROCEDURES") required to be complied with by a
         Dissenting Shareholder, will (i) be bound by the provisions of this
         Section 5.11;

(ii)     be deemed not to have participated in the Arrangement;

(iii)                      as of the Effective Date, cease to have any right as
                           a Verb Shareholder other than the right to be paid
                           the fair value of the Verb Shares by Verb in
                           accordance with the Dissent Procedures; or

    (b)  seeks to exercise the Right of Dissent, but

         (i)  who for any reason does not properly fulfill each of the Dissent
              Procedures required to be completed by a Dissenting Shareholder;
              or

         (ii) subsequent to giving his or her Notice of Dissent acts
              inconsistently with such dissent;

         will be deemed to have participated in the Arrangement on the same
         basis as each non-dissenting Verb Shareholder and will be issued, as of
         the Effective Date, such Exchanged Shares as it is entitled to on the
         basis determined in accordance with Article 3.

                                   ARTICLE 13
                      AMENDMENT OF THE PLAN OF ARRANGEMENT

13.1     AMENDMENT OF THE PLAN OF ARRANGEMENT

    (a)  Verb and Ayotte may jointly amend or supplement this Plan of
         Arrangement at any time and from time to time provided that such
         amendment or supplement must be contained in a written document which
         is filed with the Court and, if made following the Verb Meeting,
         approved by the Court and communicated to the Verb Shareholders in the
         manner, if any, required by the Court. Any amendment or supplement to
         this Plan of Arrangement may be proposed by Verb and Ayotte, jointly,
         at any time prior to or at the Verb Meeting with or without any prior
         notice or communication and, if so proposed and accepted by the persons
         voting at the Verb Meeting, shall become part of this Plan of
         Arrangement for all purposes.

<PAGE>

                                  SCHEDULE "B"

         TO THE ARRANGEMENT AGREEMENT DATED AS OF FEBRUARY 28MAY 1, 2002
                BETWEEN VERB EXCHANGE INC. AND AYOTTE MUSIC INC.

CURRENT RIGHTS TO ACQUIRE VERB SHARES
-------------------------------------

1.  700,000 Class A Special Warrants entitling the holders to acquire 700,000
    post-consolidation Ayotte Shares for no additional consideration, and
    conditional upon completion of the Arrangement.

2.  660,000 Class B Special Warrants entitling the holders to acquire 132,000
    post-consolidation Ayotte Shares and 132,000 warrants, for no additional
    consolidation, and conditional upon completion of the Arrangement.

3.

    a.   1,000,000 warrants exercisable at (US)$0.50 on or before June 26, 2003;

    b.   25,000 warrants exercisable at (US)$0.25 on or before November 30,
         2003;

    c.   125,000 warrants exercisable at (US)$1.00 on or before November 15,
         2002;

    d.   77,342 warrants exercisable at (CDN)$0.25 on or before various dates
         between June, 2003 and September, 2003;

    e.   100,000 warrants exercisable for consideration if Verb is not public on
         or before April, 2003;

    f.   3,754,751 warrants issued in connection with the Cadium acquisition.

RIGHTS TO ACQUIRE AYOTTE SHARES POST-TRANSACTION
------------------------------------------------

1.  Through the Plan of Arrangement, and with the written consent of all
    holders, all Class A Special Warrants will be exchanged for 700,000
    post-consolidation Ayotte Shares.

2.  Through the Plan of Arrangement, and pursuant to the terms of the
    securities, all Class B Special Warrants will be exchanged for 132,000
    post-consolidation Ayotte Shares and warrants entitling the holders to
    acquire an additional 132,000 post-consolidation Ayotte Shares at a price of
    $0.80 per share, on or before March 27, 2003.

3.  Through the Plan of Arrangement, and with the consent of all holders, all
    warrants will either be cancelled or exchanged for the following
    post-consolidation warrants of the Resulting Issuer;

    a.   200,000 warrants @ (US)$2.50 - expiring on June 26, 2002

    b.   25,000 warrants @ (US)$5.00 - expiring on November 15, 2003

    c.   30,000 warrants @ (Cdn)$1.25 - expiring on November 30, 2003(1)

    d.   1,000,000 warrants @ (Cdn)$1.25 - expiring 18 months from Closing(1)

    (1)  If the shares trade at (Cdn)$1.75 for 10 consecutive trading days, the
         warrants must be exercised within 30 days

<PAGE>

                                  SCHEDULE "C"

              TO THE ARRANGEMENT AGREEMENT DATED AS OF MAY 1, 2002
                BETWEEN VERB EXCHANGE INC. AND AYOTTE MUSIC INC.

CURRENT RIGHTS TO ACQUIRE AYOTTE SHARES
---------------------------------------

1.  1,235,000 Share Purchase Warrants exercisable at $0.80 on or before June 14,
    2002.

2.  4,500,624 Special Warrants entitling the holders to acquire, for no
    additional consideration, 4,500,624 Ayotte Shares and 4,500,624 warrants,
    each warrant exercisable at $0.16 on or before April 23, 2003.

RIGHTS TO ACQUIRE AYOTTE SHARES POST-TRANSACTION
------------------------------------------------

1.  247,000 Share Purchase Warrants exercisable at $4.00 on or before June 14,
    2002.

2.  900,125 Special Warrants entitling the holders to acquire, for no additional
    consideration, 900,125 post-consolidation Ayotte Shares and 900,125
    warrants, each warrant exercisable at $0.80 on or before April 23, 2003.

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