SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
FIRST AMENDMENT TO CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Date of Original Report: September 28, 1999
Date of Amended Report: October 28, 1999
Salient Cybertech, Inc.
(Exact name of Registrant as specified in Charter)
Delaware 0-28772 35-1990559
(State or Other Jurisdiction (Commission (IRS Employer)
of Incorporation) File Number) Identification No.)
1715 Stickney Pt. Rd. Suite A-12, Sarasota FL
(Address of Principal Executive Offices)
34231
(Zip Code)
(941) 349-6583
Registrant's Telephone Number, including Area Code
Sloan Electronics, Inc.
(Former name or former address, if changed since last report)
This Current Report on Form 8-K/A is comprised of 147 sequentially
numbered pages, including exhibits. The exhibit index is located at page 31 .
ITEM 1. Changes in Control of the Registrant
See Item 2.
In conjunction with the transaction described in response to Item
Two of this Current Report, Mrs. Kim Adolphe was elected as a member of the
Registrant's Board of Directors. Except for the addition of Mrs. Adolphe,
the Board remained unchanged. The Officers of the Registrant remain unchanged.
Prior to the transaction referred to in Item Two, neither Mrs.Adolphe nor
any person or entity affiliated with her had any relationship with the
Registrant, or its officers, directors or principal stockholders.
Directors and Executive Officers
The only change in the Registrant's Board of Directors resulting
from the change in control of the Registrant was the addition of Kim Adolphe
to the Board.
The following persons are the current Directors and Executive Officers of the
Registrant:
Name Age Position
Larry Provost 51 Chairman of the Board of Directors, Secretary,
Treasurer and Chief Financial Officer.
Paul A. Sloan 41 President, Chief Executive Officer and Director.
Michael Solomon 54 Senior Vice President.
Lester H. Cohen 53 Vice President-Marketing.
Donald Grimes 53 Vice President-Sales
James Vondra 58 Director
Kim Adolphe 41 Director, President of Subsidiary
(Gemini Learning Systems,Inc.)
Jim Marquis 57 Director
Todd Finch 34 Director
Biographies of Directors, Officers and Officers Nominees.
Mr. Larry Provost has been Chairman, Secretary and Chief Financial Officer
of the Registrant since the merger on December 5, 1997. Mr. Provost
was, between 1994 and 1997, President of Production Talent, Inc., a film and
video production company, and President of Vidco, Inc., an equipment leasing
company. Mr. Provost still works with both companies on a part time basis.
Mr. Provost graduated with a B.A. degree in Psychology from New York
University in 1970.
Mr. Paul A. Sloan has been President, Chief Executive Officer and a Director
of the Registrant since the merger on December 5, 1997. Prior to the merger,
<PAGE> 2
Mr. Sloan was President of Sloan Electronics, Inc., and had been since its
inception in 1990. Mr. Sloan co-founded Vorec Corporation in 1986 and served
as design team leader.
Mr. Michael Solomon became Senior Vice President immediately after the merger
on December 5, 1997, a position he held for the two year period prior to the
merger. Mr. Solomon has worked at the New York City Police Department for 15
years. Mr. Solomon founded Pro-Tech Security Systems, a company that installs
and services residential and commercial security systems, after retirement
from the New York City Police Department. Mr. Solomon holds a Master's
Degree in Criminal Justice Administration from New York Institute of
Technology.
Mr. Donald Grimes became Vice President of Sales in November of 1998. Prior
to that, from 1994 to 1998 he was President of Strategic Monitoring Services,
located in Vancouver, Canada. He brings to the Registrant twelve years of
experience in marketing electronic supervision equipment to the corrections
industry. He sits on the advisory board of the Journal for Offender
Monitoring.
Mr. Lester H. Cohen has been Vice President - Marketing of the Registrant
from 1994 through to the present. Mr. Cohen served as New York State Division
of Probation Training Administrator, Chief of Planning Policy and Program
Development for the same department and as a Line Probation Officer in the
Steuben County Probation Department. Mr. Cohen received a Master's Degree in
Social Work from Adelphi University, School of Social Work.
Mr. James Vondra has been a Director of the Registrant since the merger on
December 5, 1997. From 1991 to the present, Mr. Cohen has been a Senior
Systems Analyst for data based management systems (IMS development) produced
by Computer Sciences Corporation, located in Texas. He received a BA in Business
Administration in 1963 from North Texas State University. Mr. Vondra has 29
years experience in data processing and system programming, specializing in
on-line transaction processing systems. He has experience within the
aerospace, manufacturing, financial, and oil and gas business sectors.
Mr. Todd Finch is the President of the Sun-Netscape Alliance Canada, the newly
formed joint venture between America Online Inc. and Sun Microsystems.
Prior to Netscape's aquistition by AOL, Mr. Finch was appointed to lead a team
of internet experts, helping to develop the internet infrastructure, portal
business and commerce landscape for Canada. During the 4 1/2 year tenure,
he developed the initial NetCenter portal strategy, acquired the first
major e-commerce infrastructure relationship for Netscape worldwide, and was
involved in the formation of the Sun-Netscape Alliance in Canada between
<PAGE> 3
America Online (NYSE: AOL) and Sun Microsystems (NASDAQ: SUNW). Prior to
Netscape, Mr. Finch co-founded Visable Decisions Inc. a Toronto based visual-
ization software company where he was Vice President of Worldwide Sales and
Operations. Mr. Finch became a director of the Registrant on October 20, 1999.
Mrs. Kim Adolphe became a Director of the Registrant in September 1999
immediately upon Gemini Learning Systems, Inc.'s ("Gemini") purchase by the
Registrant (See, Item 2). For the past 5 years, she has been President and
CEO of Gemini (See Significant Employees).
Mr. Jim Marquis, elected to Board of Directors of the Registrant on May 22,
1999, is currently Vice President and Board member of Kimchuk, Inc., an
electronics manufacturing and engineering design firm. He also sits on the
Board of Directors of Smartcom, Inc., Thermal Waste Technologies, Smart
Communications, Inc., Investment Funding LLC, and Baron Express LLC and a
partner of Professional Properties. Mr. Marquis has been with Kimchuk, Inc.
since 1971. Mr. Marquis received a BSEE from the University of Bridgeport in
1968 and a MBA from the University of Connecticut in 1974.
Significant Employees.
The Following persons, all of whom are employed by Gemini, the sole
subsidiary of the Registrant, are deemed by management to constitute
significant employees (as that concept is reflected in Securities and Exchange
Commission Regulation S-B):
Name Age Term Position_____________________________
Kim Adolphe 41 * President
Patrick Brackett 33 * Vice President, Product development
Pam Hirtle 36 * Director of Training and Customer Support
Janet Werstroh 37 * Senior Office Administrator
________________________
* Employed at the pleasure of the Board of Directors,
and continuously with Gemini for the last 5 years.
Biographies
Mrs. Adolphe, President and CEO of Gemini since its inception in 1990, runs
Gemini on a day to day basis. Her role is to oversee the strategic direction
of the company and to ensure that the people and processes to accomplish
Gemini's corporate objectives are in place. She has held this position
continuously, on a full time basis, since 1990.
Mrs. Adolphe is a director and alumni member of Canadian Advanced
Technology Alliance (CATA). She was the founding President of the Calgary
<PAGE> 4
UNIX User's Group (CUUG), spearheading the first Internet service in Calgary.
Mrs. Adolphe has published papers in such journals as Canadian Artificial
Intelligence and co-authored an international award-winning paper on the
SWIFT (SoftWare Intelligent Freeform Training) methodology.
Mr. Patrick Brackett has been with Gemini since 1993 as a senior member of the
SWIFT development team. His role is to oversee new software design and
implementation. He is also responsible for evaluating current and emerging
technologies and ensuring that Gemini continues to be well positioned as a
distance education and training solution leader.
Mr. Brackett took over management of product development in 1996. As Vice
President of Product Development, Patrick is responsible for all aspects of
R&D. He has co-authored an international award-winning paper on the SWIFT
methodology.
Ms. Pam Hirtle has been with Gemini since 1993 as a senior member of the SWIFT
development team. She is involved in SWIFT development, particularly as it
pertains to the SWIFT Development Environment. Her responsibilities include
liaison with clients, particularly in the areas of training and support. She
works with various strategic partners in specific projects related to the
enhancement of the SWIFT Development Environment and the SWIFT DTD.
Ms. Janet Werstroh has been with Gemini since 1991 overseeing office
administration, and in more recent years has become involved in beta testing
SWIFT and SWIFT courses, liaison with distributors and clients, web site
maintenance, and assisting the President in the coordination of all marketing
related activities.
Family Relationships.
None of the Directors, Officers, or significant employees of the Registrant
or its Subsidiary are related or affiliates.
Involvement in Certain Legal Proceedings.
During the past five years no current director, person nominated to
become a director, executive officer, promoter or control person of the
Registrant or its Subsidiary has been a party to or the subject of:
(1) Any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of
the bankruptcy or within two years prior to that time;
(2) Any conviction in a criminal proceeding or has been subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
<PAGE> 5
(3) Any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoying, barring suspending or otherwise limiting his involvement in any
type of business, securities or banking activities; and
(4) Been found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or vacated.
Compensation
General
SUMMARY, COMPENSATION TABLE
Annual Compen- Awards Payouts
sation Other Annual Restricted
Compen- Stock Aw SU SA
Name and sation ards OP RS LTIP Other
Position Year Salary($) Bonus ($) (#) ($) ($) ($)
Larry 1999 52,000** 0 **** 0 0 0 0 0
Provost* 1998 52,000*** 0 18,000(1) 0 0 0 0 0
1997 18,000 0 (2) 0 0 0 0 0
Paul 1999 60,000** 0 **** 0 0 0 0 0
Sloan* 1998 60,000(3) 0 (4) 0 0 0 0 0
1997 60,000(5) 0 0 0 0 0 0 0
Lester 1998 0 0 (4) 0 0 0 0 0
Cohen*
Michael 1998 0 0 (4) 0 0 0 0 0
Solomon*
Donald 1999 23,788 0 0 0 0 0 0 0
Grimes* 1998 6,153(6) 0 50,000(7) 0 0 0 0 0
Jim 1999 0 0 **** 0 0 0 0 0
Vondra* 1998 0 0 (4) 0 0 0 0 0
Jim 1999 0 0 *** 0 0 0 0 0
Marquis
Todd
Finch* 1999 0 0 0 0 0 0 0 0
Kim 1999 120,000**(9) 0 3,000(8)(9) 0 0 0 0 0
Adolphe* 1998 67,000(9) 0 3,050(8)(9) 0 0 0 0 0
1997 33,650(9) 0 4,000(8)(9) 0 0 0 0 0
Patrick 1999 90,000**(9) 0 0 0 0 0 0 0
Brackett 1998 55,000(9) 300(9) 0 0 0 0 0 0
1997 55,000(9) 0 787(8)(9) 0 0 0 0 0
<PAGE> 6
SUMMARY COMPENSATION TABLE, Continued
Janet 1999 40,000**(9) 0 0 0 0 0 0 0
Werstroh 1998 29,065(9) 300(9) 0 0 0 0 0 0
1997 25,273(9) 0 0 0 0 0 0 0
Pam 1999 33,600**(9) 0 0 0 0 0 0 0
Hirtle 1998 32,400(9) 500(9) 0 0 0 0 0 0
1997 21,000 0 0 0 0 0 0 0
SUMMARY, COMPENSATION TABLE, continued.
____________________________
*Larry Provost is Chairman, Secretary, Treasurer, and Chief Financial Officer.
Paul Sloan is President, Chief Executive Officer, and Director.
Lester Cohen is VP Marketing, and was a Director until May 22, 1999.
Michael Solomon is Senior VP, and was a Director until May 22, 1999.
Donald Grimes is VP Sales.
Jim Vondra is a Director.
Jim Marquis was elected to the Board of Directors on May 22, 1999.
Todd Finch was elected to the Board of Directors on October 15, 1999.
Kim Adolphe is a Director, having been appointed to the Board on September
24, 1999, and President of Gemini.
Patrick Brackett is VP Product Development for Gemini.
Janet Westroh is Training and Support Officer for Gemini.
Pam Hirtle is Gemini's Office Manager.
**Anticipated annual compensation as of December 31, 1999. In addition, the
Registrant may award stock options to key employees, members of management,
directors and consultants under stock option programs as bonuses based on
service and performance.
***Mr. Provost received $0 as of September 30, 1999. This amount is accrued
and payable by the Registrant.
**** The Directors of the Registrant will receive no cash compensation in
1999. In lieu of cash compensation, the Board of Directors approved a stock
option of 10,000 shares to each Director, said options having not been
issued as of September 30, 1999, and no exercise price having been set for
the options as of September 30, 1999. The options will expire in 2004 for
Mssrs. Sloan and Provost, and in 2009 for Mssrs. Marquis and Vondra.
(1) Mr. Provost received an $18,000 stipend to cover the costs of maintaining
an office; and a 20,000 share stock option exerciseable until 2003 at an
exercise price of $0.32/share (unexercised as of September 30, 1999).
(2) Mr. Provost received an aggregate of 196,350 shares as part of total
compensation during fiscal year 1997.
(3) Mr. Sloan has received $25,000 as of December 31, 1998. The balance of
$35,000 is accrued and payable by the Registrant.
(4) Mssrs. Cohen, Solomon and Vondra each received stock options for 10,000
shares excerciseable until 2008 at a price of $0.25 per share (all shares
unexcercised as of September 30, 1999). Mr. Sloan received a stock option
of 20,000, said share stock option exerciseable until 2003 at an exercise
price of $0.32/share (unexercised as of September 30, 1999)
(5) Mr. Sloan has received $40,000 as of December 31, 1997. The balance of
$20,000 is accrued and payable by the Registrant.
(6) This represents one month's salary.
(7) Mr. Grimes will receive 50,000 shares as a signing bonus contingent upon
one year's service.
<PAGE> 7
(8) Car allowance.
(9) These sums are in Canadian Dollars. The current conversion is $US1 is
equivalent to $CAN1.471. The average conversion rate for each time period
was equivelent to this amount +/-5%.
____________________________________________
Compensation of Directors
Standard Arrangements
The Registrant has no standard arrangements for paying directors.
Historically, the directors have been paid in the form of stock options
(See "Summary, Compensation Table, and footnotes", at pages 6 and 7). In
addition, if required, they are reimbursed for travel expenses and lodging
is arranged for them, at the Registrant's expense. Directors are reimbursed
for all out of pocket expenses incurred in the performance of their roles,
subject to provision of receipts in form and substance adequate to satisfy
Internal Revenue Service audit requirements (e.g., long distance telephone,
postage, etc.).
Other Arrangements
Neither the Registrant nor any of its subsidiaries have any other
arrangements to compensate its directors.
Employment Contracts, Termination of Employment & Change-in-Control
Arrangements
The Registrant does not have any compensatory plan or arrangement,
including payments to be received from the Registrant, with respect to a
named executive officer that results or will result from the resignation,
retirement or any other termination of such executive officer's employment
with the Registrant and its subsidiaries or from a change-in-control of the
Registrant or a change in the named executive officer's responsibilities
following a change-in-control, which, including all periodic payments or
installments, exceeds $100,000.
Revised Stockholder Data
PRINCIPAL STOCKHOLDERS
As of September 30, 1999, the following persons (including any
"group" are, based on information available to the Registrant, beneficial
owners of more than five percent of the Registrant's common stock (its only
class of voting securities):
<PAGE> 8
Name and Address Amount and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership of Class
Common Stock Paul Sloan 2,062,535 6.9%
4266 Higel Ave. Record and Beneficial
Sarasota FL 34242 Owner
Common Stock Kim Adolphe 20,000,000 66.65%
Site 38 RR# 12 Record and Beneficial
Calgary Alta. T3E 6W5 Owner
Security Ownership of Management
As of the date of this Prospectus, the following table discloses,
as to each class of equity securities of the registrant or any of its
parents or subsidiaries other than directors' qualifying shares, beneficially
owned by all directors and nominees, the names of each executive officer (as
defined in Item 402[a][2] of Securities and Exchange Commission regulation
S-B), and directors and executive officers of the registrant as a group, the
total number of shares beneficially owned and the percent of class so owned.
Of the number of shares shown, the associated footnotes indicate the amount
of shares with respect to which such persons have the right to acquire
beneficial ownership as specified in Securities and Exchange Commission Rule
13(d)(1).
Name and Address Amount and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership of Class
Common Stock Larry Provost 1,327,492 (2) 4.42%
116 Teatown Rd. Record and Beneficial
Croton, NY 10520 Owner
Common Stock Paul Sloan 2,082,535 (2) 6.9%
4266 Higel Ave. Record and Beneficial
Sarasota FL 34242 Owner
Common Stock Lester Cohen (1) 598,763 (3) 1.99%
7705 Porto Vecchio Place Record and Beneficial
Delray Beach FL 33446 Owner
Common Stock Margery Cohen Trust (1) 588,763 1.99%
7705 Porto Vecchio Place Record and Beneficial
Delray Beach FL 33446 Owner
Common Stock Michael Solomon 298,626 (3) 1.33%
3 Chippewa Ct. Record and Beneficial
Suffern NY 10901 Owner
Common Stock James Vondra 424,758 (3) 1.42%
216 Overcrest Dr. Record and Beneficial
Benbrook TX 76126 Owner
Common Stock Todd Finch 500,000 1.53%
1096 Algonquin Drive Record and Beneficial
Mississauga, Ontario Owner
L5H 1P4
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT, Continued
Name and Address Amount and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership of Class
Common Stock Kim Adolphe 20,000,000 66.65%
Site 38 RR# 12 Record and Beneficial
Calgary Alta. T3E 6W5 Owner
All Directors & Officers 26,343,437 84.7%
as a group (5 persons)
_______________________________________
(1) Mr. Lester Cohen is the husband of Mrs. Margery Cohen.
(2) Includes stock options (unexercised) for 20,000 common shares.
(3) Includes stock options (unexercised) for 10,000 common shares.
_________________________________________
Certain Relationships and Related Transactions.
The following information pertains to all transaction during the
last two year, or proposed transactions, to which the Registrant was or
is to be a party, in which any of the following persons had or is to have
a direct or indirect material interest: any director or executive officer
of the Registrant: any nominee for election as a director; any principal
security holder listed below; and, any member of the immediate family
(including spouse, parents, children, siblings, and in-laws) of any of the
foregoing persons.
Relationship Nature of Interest Amount of Fiscal
Name to Registrant in the Transaction Interest Year
Ending
Paul Sloan President, CEO, (1) 60,000 1999
And Director, (2) 11,513 1998
Principal Stockholder (3) 60,000 1998
(4) 60,000 1997
Gregory Tuai Owner of 703,234 (5) 68,935 1998
Common shares
(2.34% of
registrant)
Larry Provost Director, and CFO of (6) 52,000 1999
Of Registrant; Owner of (7) 70,000 1998
1,307,492 common shares (8) 114,350 1997
(4.42% of Registrant)
Kim Adolphe Director, President of (9) 123,000 1999
Sole Subsidiary (Gemini), (10) 450,000 1999
Principal Stockholder (11) 70,050 1998
(12) 37,650 1997
_____________________________________________
(1) Anticipated Compensation for the fiscal year ending December 31, 1999,
along with a five year option with respect to 10,000 shares of the Registrant,
option price not having yet been determined, and said option not having yet
been issued.
<PAGE> 10
Certain Relationships and Related Transactions, Footnote Continued.
(2) Mr. Sloan provided office and work space to the Registrant in owned
properties at 2527 Montery St., Sarasota FL and 4266 Higel Avenue, Sarasota
FL during 1998. The total amount paid to him was $11,513.
(3) Mr. Sloan has received $25,000 of his $60,000 salary as of December 31,
1998. The balance of $35,000 is accrued and payable by the Registrant. A
stock option was also issued, said option for 20,000 shares at a price of
$0.32 per share and excerciseable until 2003.( no options have been exercised
as of September 30, 1999).
(4) Mr. Sloan has received $40,000 as of December 31, 1997. The balance of
$20,000 is accrued and payable by the Registrant.
(5) Mr. Greg Tuai, owner of 703,234 Shares in the Registrant (2.34% of the
outstanding Shares), provided outside services to the company as a design
engineer, product developer and consultant through his company, Discovery
Consulting. In 1998 Discovery Consulting invoiced $75,000 for services and
received payment of $18,750 for services. The balance due Discovery Consulting
was $100,370 in December of 1998. In December of 1998, Discovery Consulting
agreed to forgive $50,185 of this amount.
(6) Anticipated Compensation for the fiscal year ending December 31, 1999.
Mr. Provost received $0 as of September 30, 1999. This amount is accrued and
payable by the Registrant. Mr. Provost also received, as Director, a five
year option with respect to 10,000 shares of the Registrant, option price
not having yet been determined, and said option not having yet been issued.
(7) Mr. Provost received a $18,000 stipend to cover the costs of maintaining
an office. The remaining $52,000 represents annual compensation. Mr. Provost
received $0 as of September 30, 1999. This amount is accrued and payable by
the Registrant. A stock option was also issued, said option for 20,000 shares
at a price of $0.32 per share and excerciseable until 2003.( no options
have been exercised as of September 30, 1999).
(8) Mr. Provost received an aggregate of 196,350 shares as part of total
compensation during fiscal year 1997, as well as $18,000, as a Stipend to
cover his costs of maintaining an office.
(9) Anticipated Compensation, in Canadian Dollars, for the fiscal year ending
December 31, 1999, including $3,000 as an automobile allowance.
(10) Mrs. Adolphe was sole owner of Gemini. She will receive 20,000,000
shares of restricted stock of the Registrant, in exchange for 100% of the
outstanding shares of common stock in Gemini. The transaction was valued at
$450,000.
(11) Annual Compensation, in Canadian Dollars, for 1998, including $3,150 as
an automobile allowance.
(12) Annual Compensation, in Canadian Dollars, for 1997, including $4,000 as
an automobile allowance.
________________________________________
<PAGE> 11
Parents of the Registrant
The following table discloses all persons who are parents of the
Registrant (as such term is defined in Securities and Exchange Commission
Regulation C), showing the basis of control and as to each parent, the per-
centage of voting securities owned or other basis of control by its immediate
parent if any.
Basis Percentage of Other Basis
Name for Control Voting Securities owned For Control
Paul Sloan Stock Ownership 10.44% Director and Officer
Kim Adolphe Stock Ownership 66.65% Director
____________________________________
Transactions with Promoters, if Organized Within the Past Five Years
Neither the Registrant nor its Subsidiary was organized within the
past five years.
<PAGE> 12
ITEM 2. Acquisition of Assets
General
The information presented in this ITEM 2 of the Current Report on Form 8-K,
along with the tables found herein refer solely to Gemini Learning Systems,
Inc.("Gemini"), unless otherwise noted. The Registrant's other business, the
development, manufacture and sale of personal monitoring devices is fully
disclosed and discussed in the Annual Report of the Registrant for the
Fiscal year ended December 31, 1999, filed on March 30,1999 with the
Securities and Exchange Commission of the United States (the "SEC") on Form
10-KSB, and updated in the quarterly report on Form 10-QSB filed on May 15,
1999 ( for the quarter ended March 31, 1999) and on August 13, 1999 (for
the quarter ended June 30, 1999) with the SEC. All three documents are
incorporated in their entirety with the exhibits attached to them in this
Current Report on Form 8-K.
DATE AND MANNER OF ACQUISITION
On September 24, 1999, Mrs. Kim Adolphe, a resident of the Canadian Province
of Alberta, exchanged 100% of the outstanding capital stock of Gemini Learning
Systems, Inc. ("Gemini"), a corporation organized and operating under the
laws of the Canadian Province of Alberta, for 20,000,000 shares of the
Registrant's common stock, said stock having a par value of $0.001 per share.
As a result of the said transaction, Mrs. Adolphe became the beneficial
owner of the stock exchanged, which comprises approximately 66.7% of the
Registrant's outstanding common stock. Prior to the foregoing transaction
Mrs. Adolphe had no relationship with the Registrant.
The transaction was structured to meet the tax free exchange provisions of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, and
for accounting purposes, is expected to be treated as a reverse acquisition,
but not resulting in a pooling of interests. The securities were issued in
reliance on the exemptive provisions of the Business Corporations Act of
Canada, Section 4(2) of the Securities Act of 1933 (USA), as amended, and
comparable state and provincial law provisions, based on representations by
the parties, as reflected in the stock exchange agreement.
A copy of the "Share Purchase Agreement" pursuant to which the change in
control was effected, including all schedules thereto, and financial
statements for Gemini, are included as exhibits to this Current Report (see
"Exhibit Index"). Consolidated financial data and pro forma financial
information reflecting the acquisition of the subsidiaries and required by
Item 7(a) will, as permitted by regulations, be provided by amendment to
this Current Report within 60 days after its initial filing.
<PAGE> 13
DESCRIPTION OF THE CORPORATION ACQUIRED
THIS REPORT CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD LOOKING STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
THESE STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS REPORT AND INCLUDE
STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE
REGISTRANT, WITH RESPECT TO (i) THE REGISTRANT'S OR ITS SUBSIDIARY'S PRODUCT
DEVELOPMENT AND FINANCING PLANS, (ii) TRENDS AFFECTING THE REGISTRANT'S OR
ITS SUBSIDIARY'S FINANCIAL CONDITION OR RESULTS OF OPERATIONS, (iii) THE
IMPACT OF COMPETITION AND (iv) THE EXPANSION OF CERTAIN OPERATIONS. ANY
SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND
INVOLVE RISKS AND UNCERTAINTIES, AND ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS.
Gemini Learning Systems, Inc. ("Gemini"), organized under the laws of the
Canadian Province of Alberta in June, 1990, has never been a party to any
material reclassification, merger, consolidation, or purchase or sale of a
significant amount of assets not in the ordinary course of its business.
Gemini is a software applications development company, specializing in
distance education and training solutions. The company created and markets
software technology called SWIFT (SoftWare Intelligent Freeform Training).
The Company is emerging from its development phase, having created an entire
product line based on the SWIFT technology. The company has already begun
to establish clients and a distribution network in Canada, the United
States, the United Kingdom and Europe.
Management's primary objective is for Gemini to become a leader in the
emerging internet/intranet distance education and training industry by
establishing SWIFT as the de facto standard delivery environment. Management
believes that it can obtain this objective through its strategic alliances
and by utilizing its staff of outside consultants, most of whom are the top
professionals in their field (See "Business Development").
Background Information
Gemini began business in the Canadian City of Alberta in 1990. The
corporate aim was to develop a delivery environment for the emerging
internet/intranet distance education and training industry. The corporation
expended over $3,000,000 in developing its SWIFT technology, and a
distribution network.
Gemini, management believes, is ready to become the industry leader
in the delivery of distance education systems, to be utilized both in an
intra-company setting (intranet) and by students over the internet. The
students may be individuals or complex organizations with diverse training
and educational needs to be delivered worldwide to their various locations.
<PAGE> 14
Business Development
The development of the SWIFT technology, eight years in the making, is,
management believes, its primary competitive edge in the business world.
The technology was developed utilizing the talents of many
professionals. The SWIFT poject leaders were Elliot Kimber, Sr. Consultant,
ISOGEN Corp., and Dr. Marlene Jones. Eliot Kimber has over 10 years of
experience designing and building industrial strength publishing systems
based on the principles of generic markup and information reuse. He has
developed systems for customers in a variety of industries including: IBM,
Intel, Tandem Computers, Ameritech, International Correspondence Schools
(ICS), and Cisco Systems. Dr. Jones was a Senior Scientist with Alberta
Research Council's (ARC) Advanced Computing and Engineering Department since
1987. Marlene had more than a decade of experience in applied research in
the field of Adaptive Learning Environments and is internationally
recognized as an expert in the field. Mr. Kimder continues to provide steady
input into the development of Gemini's
product line.
Day to day management of the SWIFT project was by Terry Yasui, Mr.
Yasui brought with him over fifteen years experience in the design,
development, and management of high-technology projects. He was responsible
for the overall management of the SWIFT project including the preparation,
implementation, tracking and updating of all project plan documents through
weekly and monthly progress reports following the IEEE standards.
John Moore, who holds a B.Sc., B.Ed., and an M.A. in Educational Psychology
specializing in "Instructional Design for Higher Education", provided his
expertise in the overall development of the SWIFT interface and multimedia
support requirements.
Dr. Tom Keenan, is the leading consultant for the Post-Secondary Interface
Design Project for SWIFT. Tom is a Professor and Dean in the Faculty of
Continuing Education at the University of Calgary. He holds an Ed.D. in
Higher and Adult Education, an M.A. in Higher and Adult Education, a M.Sc.
in Mathematical Methods and Operations Research, and a B.A. in Mathematics
(Dean's Honour List).
Stuart Williams, who holds a B.Sc. in Physics, a B.Sc. in Mathematics/
Computer Science, and a M.S. in Computer Science and has several years of
programming experience, including extensive work in object-oriented language
design and SGM, implemented the SGML DTD (Document Type Definition) for
SWIFT. He led the design and wrote most of the code for the unique SWIFT
course compiler. Stuart also provides valuable technical input and feedback
to the technical team.
Ruby Loo, who, in addition to a M.Math Computer Science has ten years of
technical experience in a variety of computer science areas, including computer
<PAGE> 15
graphics, color usage, animation, human-computer interaction, and graphical
interface design, was responsible for coordinating all human-computer
interactions aspects of the SWIFT project including usability studies,
mock-ups, evaluations of mock-ups, and the design of the Graphical User
Interfaces.
Jim Tubman, who holds a M.Math Computer Science degree and has extensive
experience in the area of software engineering, object oriented design, and
system development, was involved in the High-Level and Low-Level Design of
SWIFT andimplementation of certain features.
These dedicated individuals were augmented by part time consultants
who were hired as their input in specific areas was required. While many of
the original development team have left the company, Mssrs. Kimber, Kenan,
and Williams have remained as consultants, working with Gemini in its
continual efforts to update the technology and product line.
Management feels that the technology assembled by this team is, at
present unchallenged, and that as the market is penetrated, development
costs and resistance to new products once a benchmark standard is set will
provide an almost monopolistic arena in which to grow.
Current Clients
HYPROTECH Ltd. Calgary, Canada
Albeda College Rotterdam*
*Consortium of 50 colleges
Distribution Partners and Strategic Alliances
Management has always felt that a basic key to the success of any
venture is the development of a local distribution network, sensitive to the
needs of the local clientele and at the same time providing a local presence
for support and service.
As different companies have specific strengths and areas of expertise,
Gemini, in developing SWIFT and maintaining and enhancing its product line,
has always made use of individual consultants and companies and with specific
areas of expertise . To this end, Gemini has, over the years, formed some
especially advantageous strategic alliances.
<PAGE> 16
The key distribution partners and strategic alliances are listed below:
BCS Learning Systems, based in the Netherlands; works closely with Ideals, a
consortium of 16 European Institutes dedicated to advanced training linked to
small and medium sized enterprises and Institutes of higher education. They
represent SWIFT in Europe and were a valuable partner during the
implementation of the international functionality in SWIFT.
CamAxys Limited is Europe's leading supplier of environment, health, and
safety software management systems. They are developing courses
independently and in partnership with Excel (see below) for the environment,
health, and safety industry and have just launched the first course entitled
EnviroDiscovery in partnership with Excel for ISO 14001 compliance. The
Corporation acts as a distribution agent for Gemini's product line.
CCI Learning Solutions Inc. specializes in providing high quality training
services offering over 150 course titles to over 25,000 students per year;
they are Microsoft Certified. They are a SWIFT CCP. Gemini is currently
converting many of CCI's courses for delivery in SWIFT. The courses will be
offered in the SWIFT Library some time in 2000.
Diskover Office Software Ltd.Diskover specializes in content development
using the SWIFT Kit. They have created the entire Office 97 Suite, Level 1
and 2, Windows 95/98 in the SWIFT format, and are continuing to produce
courses in SWIFT, which are sold through the SWIFT Library.
GST Technology Limited, a worldwide provider of Desktop Publishing and
Graphics Software Technology, has licensed millions of copies of their
software to well known publishers worldwide, including Fuji and Canon.
The company is launching a new brand name called "getwise" which Gemini
is currently negotiating to include the Office 97 and 2000 suite, Windows 98,
and other courses created in SWIFT.
Excel Partnership is an international leader in environmental management and
systems training and consulting, and the first EARA (Environmental Auditors
Registration Association) approved trainers for Advanced Environmental
Management Systems Auditors. They are a CCP and have released two
environmental courses in conjunction with CamAxys utilizing SWIFT.
<PAGE> 17
Interactive Advantage Corporation, an Atlanta based company has built a name
and reputation for producing products for an impressive client base including
NCR, Home Depot, and Sterling Software. Their expertise includes development
of CBT, software simulations, certification testing, online references,
multimedia presentations, and information kiosks. They are a CAR and SWIFT
Distributor.
JOT is a registered Trade School with registered Engineering status. Over
the past ten years, Jot has built a solid reputation for developing high
quality course content for a wide range of training solutions. They have an
extensive library of courses with wide market potential and are a Course
Content Provider.
Open Learning Agency is a unique, fully accredited, publicly funded
educational leader providing a wide range of formal and informal educational
and training opportunities for learners around the world. They use SWIFT for
internal development. They have also partnered with Gemini in an R&D project
(see R&D Projects) to enhance various components of SWIFT specific to SGML
Standards.
RAND Worldwide, the world's largest Value Added Reseller of mechanical design
automation tools and services, have launched their first course in SWIFT for
internal use and to resell to their corporate clients.
Management feels that the current group of Strategic and distribution
partners will gratly enhance Gemini's ability to penetrate its target
markets, and grow at a far faster rate than would be possible if Gemini had
tried to develop its markets without the said distributors and alliance
partners.
BUSINESS
Principal Products and Services and their Markets
SWIFT Library
Currently, Gemini offers over 400 course titles available to convert into
SWIFT, and has, in the current fiscal year, launched its own online SWIFT
library (over 30 popular course titles).
SWIFT Kit
The SWIFT Kit provides a Development Environment (DE), Adaptive Learning
Environment (ALE), Adaptive Testing Algorithms, Interface, extensive testing,
tracking and certification capabilities, and Enterprise Learning Manager
(ELMer). Additional SWIFT Kits can be purchased for as many sites as the
client wishes, with a price range of $1995.00 for one license to $1595.00
<PAGE> 18
each, for more than twenty licenses. Annual Support Fees are $3,000.00.
There is also a licensing fee per learner for delivering courses in the ALE.
The DE
All course content can be developed externally to SWIFT using software
programs of the client's choice. The course content is then tagged in SGML
in the DE and compiled into the LE using the SWIFT compiler. The DE includes
a DTD (Document Type Definition) or course structure. The course structure
is a three level hierarchy that promotes consistency and effective
instructional design.
SWIFT 5.0, currently in development, and expected to be released in the next
fiscal year, will provide the capability to map the SWIFT DTD to other DTDs
and vice versa. SWIFT clients and SGML users alike will be able to easily
reuse course content for other applications, thus further leveraging their
investment in SWIFT and SGML.
The ALE
SWIFT provides what management believes to be the only Adaptive Learning
Environment commercially available in the world. The pedagogical
effectiveness of ALEs have been proven by years of research conducted by
educational institutions and government organizations around the world.
The ALE adapts each course to each learner's individual requirements, based
on the goals they choose and by completing a pretest.
Adaptive Testing
One of the problems with traditional exams is that they are of fixed length.
A learner must complete a long series of questions in order for the system
to determine how well they know a subject. This characteristic can cause
frustration for both novices and experts, who may know after a few questions
that the subject matter is either bewildering or trivial. Adaptive testing
allows exams to be significantly shorter than traditional tests, without
losing any predictive power about a learner's master of the
material.
SWIFT Branding
The SWIFT interface can be readily branded for OEM and Corporate identities
with little effort required on Gemini's part.
<PAGE> 19
ELMer
ELMer is an advanced Internet/Intranet delivery, management, and analysis
system for SWIFT courses. ELMer is required for administering Intranet and
Internet courses and can be purchased separately for $7,000.00 per license.
Delivery
The Server, which runs on Windows(TM) 95//98/NT or UNIX platforms, can deliver
and manage large numbers of courses to large numbers of learners
simultaneously. Learners are able to access highly interactive SWIFT courses
over the Internet running a 28.8 or greater modem , with full multimedia
functionality.
Management of System
The Server is controlled either locally or remotely and manages:
- - billing,
- - accreditation,
- - adjust resource consumption,
- - determine average transmission rates,
- - identify fault occurrences.
Analysis of Student Progress
A wide variety of statistical information of learner-based data is
automatically gathered and stored by the Server. The Server can provide:
- - grading and progress reports,
- - progress and content analysis,
- - item analysis,
- - pathways.
Data can also be exported to external applications.
Ecommerce
Gemini has, in the current quarter, launched an Ecommerce solution and can
offer server-hosting or connect to third party Ecommerce sites for SWIFT
Library Distribution through portals, ISP's and web sites.
The customer simply selects a course(s) from the SWIFT Library list,
then submits their financial information once they have placed an order.
<PAGE> 20
Approval takes 26 to 36 seconds. Once the customer has been approved they
can access their course(s) from the SWIFT LE.
Market For Products
Gemini's market opportunity is diversified across a number of market
segments, including multimedia CBT authoring tools, web authoring tools, IT
education and training, courseware development services, internet software,
ecommerce, on-line training.
Gemini operates in a high growth environment. The IT Education &
Training market is a $3.1 Billion established market experiencing moderate
growth of approximately 15% annually through the year 2000. The Multimedia
CBT market is currently growing at the rate of 31% per anum, while the
Internet software market is showing a growth rate of 50% per anum, and the
packaged internet software market is currently growing at the rate of 127%
per anum.
Gemini, management believes, is well positioned to take advantage of the
rapidly growing Internet/Intranet Software market. Gartner Group research
indicates that Interactive Training will make up 20% of corporate Intranet
applications*. The overall market for Internet/Intranet software projected
to be $12 billion by 2000. The market for Internet services is projected to
be $14 billion by 2000**. In addition, the SWIFT SGML Development
Environment (with its multimedia extensions) will enter the CBT Market
Projections multimedia authoring tool market, expected to exceed $165 million
by 2000***._________________________
* IT Symposium presentation, October 1996
** DC, Capturing the Top 10 IT Opportunities, July 1997.
*** IDC, Capturing the Top 10 IT Opportunities, July 1997.
________________________________
In the following table are presented the expected market size for
the markets Gemini specifically targets with its products and marketing
efforts:
All data is in Millions of dollars
Market Segments 1999 2000 2001 2002
Multimedia Authoring Tools
CBT Tools 129.6 165.9 187.0 220.0
IT Education and Training
Network-delivered 1,566.0 1,695.0 1,830.0 1,960.0
Desktop-delivered 3,133.0 3,495.0 3,901.0 4,290.0
Total 4,699.0 5,189.0 5,731.0 6,251.0
<PAGE> 21
Table of Market Size for Gemini's Products, Continues
Internet/Intranet
Internet Software 5,575.0 8,000.0 8,800.0 9,680.0
Packaged Internet Software 2,730.0 4,000.0 4,400.0 4,840.0
Internet Services 10,205.0 14,000.0 15,400.0 16,940.0
Total 18,509.0 26,000.0 28,600.0 31,460.0
Training segment (20%) 3,702.0 5,200.0 5,720.0 6,292.0
Sources: IDC, Dataquest, Gartner Group.
The table presented above, is a 4 year top-down revenue model. What the
model shows is that there is tremendous potential for rapid revenue growth
based on very modest penetration into the various market segments. For
example, in the CBT Authoring Tools segment, where the SWIFT Kits will be m
marketed, achieving a modest 4.0% share of this market would result in $1.9
million in revenue.
As IDC has stated, the packaged Internet software market should reach $4
billion by 2000. SWIFT courses delivered over the Internet and corporate
Intranets represent a distinct opportunity for Gemini. This area will become
the focus of a great deal of the company's resources in the year 2000, and
will likely be the primary area to which investment capital from any public
offering or private placement is directed.
Competitive Advantage
SWIFT overcomes the two primary drawbacks of multimedia
training quoted by Dataquest in the 1996 end-user survey (The Role of
Digital Multimedia in Training in Business, Dataquest, August 1996), the
high cost and initial deployment/updates and lack of interactivity. In
another Dataquest survey (Education and Training: Market Analysis and
Outlook 1996, Dataquest, February 1997) respondents identify time and cost
experiences in producing conventional CBT and TBT multimedia courseware using
conventional tools or custom programming as the key drawback. The table
below summarizes these findings:
Courseware Type
Development Hours Cost per Hour of Elapsed Time per
per Hour of Instruction ($US) Hour of
Instruction Instruction
CBT
(Conventional) 150 to 300 hours $10,000 to 13 to 20 weeks
$45,000
TBT Multimedia 250 to 500 hours $14,000 to 10 to 26 weeks
$55,000
<PAGE> 22
Management believes that Gemini addresses these concerns,
and delivers a solution that is both unique in the industry, and provides a
user/developer friendly environment that is at the same time cost effective.
The SWIFT System provides the same course delivered in a CDROM, Internet,
and Intranet delivery environment, as well as being the only SGML-technology-
based training solution that provides an efficient method for managing,
updating and re-purposing course content, resulting in leveraged investment
over time.
SWIFT has full multi byte character functionality, and is,
management believes, the only commercially available Adaptive Learning
Environment in the world. SWIFT features extensive testing capabilities
including adaptive testing, mandatory questions, and fixed-length testing for
online certification, as well as having the ability to set seven different
question types, including short answer, and feedback specific to learner
interaction.
SWIFT offers an intelligent tutoring system and has upwardly
compatible versions, ensuring that clients benefit over time from Gemini's
ongoing R&D. This last feature is of the utmost significance as the
technology is continually undergoing development and upgrades.
SWIFT has an included management system, which offers a competitive edge
over other delivery systems in that the management systems of other products
start at $50,000 U.S. plus licensing fees.
A key advantage of SWIFT is that SWIFT reduces development
time, management believes, by upwards of 70% as compared to other
technologies, offering a consistent, highly interactive learning environment
requiring only content. SWIFT requires no programmers and software teams,
and exhibits virtually no learning curve for developers.
Distribution Methods of the Products or Services
SWIFT Library Distribution
Gemini intends to meet its corporate and marketing objectives by building
as many titles as possible for the SWIFT Library and marketing those
worldwide, directly, as outlined below, and through distribution and
alliance partners, as previously discussed. This will be accomplished by
partnering with Course Content Providers for building the SWIFT Library
and marketing the SWIFT Library through Portals (Specialized Web Sites),
Internet Service Providers (ISPs), ASPs, OEMs, and Retail Distributors.
<PAGE> 23
Large Corporate Accounts
SWIFT is, to the best of management's knowledge, the only SGML aware
Distance Education and Training solution in the world. SGML users are
typically medium to large corporations and government bodies with
significant training requirements. These organizations have made large
investments to transfer their content into SGML and appear very interested
in leveraging their investment further. By concentrating on the SGML
market, where Gemini has, as discussed earlier, a significant competitive
advantage, Gemini can quickly qualify and target potential clients through
SGML trade shows, publications, conferences, etc. which draw only interested
SGML clients. Gemini has already made several strategic alliances within
the SGML industry (See above, Distribution Partners and Strategic Alliances).
Fortune 1000 Companies
Large Information Technology deployments within Fortune 1000 companies
necessitate a major user training effort and hence an opportunity to
sell SWIFT. These projects usually have a lengthy development cycle with
significant up-front investments and are often behind schedule. There is
usually significant pressure on IT departments to expedite deployment so
that the organization can realize the promised benefits. Inevitably, the
budget and time-frame for developing end-user training is tight. This
scenario plays well for the SWIFT technology; IT groups can avoid the
lengthy and expensive development associated with other tools.
Course Content Providers
Course Content Providers (CCPs) are made up of both private and public
training and education organizations. This industry sector is in
transition due to the rapid growth of the distance education and training
industry resulting in the need to become competitive in a global economy.
The development costs, consistency and course content re-use SWIFT,
providing compelling value to this industry sector. To further entice
CCPs, Gemini also offers a partnering program to selected CCPs that does
not involve purchasing SWIFT.
Course Content Partnering (CP) Program
Gemini launched the CP program in January, 1999 and now has well over 400
courses available for conversion, with over 30 already converted. The
programs entails Gemini (or a Gemini Partner) converting course content
for delivery in SWIFT, and take a higher percentage of the royalties.
<PAGE> 24
Product Positioning
The SWIFT product line is ideally positioned to target the fast growing
Internet/Intranet market, as well as packaged internet software for the
retail market. SWIFT products offer low cost to both developers and end
users as well as many pedagogical distinguishing features.
The SWIFT product line fits into the following fast growing market segments:
- - Turn-key Internet Distance Education and Training solution
- - Online Library
- - Ebusiness
- - Application Service Provider software
- - Internet Software
- - Packaged Internet Software
- - IT Education and Training
Marketing Plan
Direct Sales
Gemini plans to hire a team of sales people to address the target markets
defined above that will consist of:
- - Distributor Sales
- - Inside Sales
- - Large Acct. Sales
Distributor Sales
Gemini will hire sales people to build upon the distribution channels
already in place. The target market, as defined above, includes Retail,
OEM, ISPs, Portals and ASPs).
Marketing will be accomplished through investment in four specific areas:
- - Direct sales - Gemini plans to establish an inside sales team to focus on
the SGML market. This team will have a telemarketing orientation and
will consist of salespeople with 2 to 5 years' experience. Gemini has
created two new product and service "packagings" of SWIFT to support a
"try and buy" selling model without compromising longer term revenue
potential.
- - Distribution recruitment - establishment of a distribution sales team to
recruit distributors and Courseware Authorized Resellers. This team will
consist of more senior sales personnel who possess the skills and experience
<PAGE> 25
to work with prospective distribution partners to develop their business
models around the SWIFT technology.
- - Marketing - conduct direct mail, advertising, conference, and industry
partner marketing, as well as trade show activities, to raise brand
awareness and generate sales and distribution leads. These efforts will be
targeted towards the SGML market, the content developer market and the
training groups within Fortune 1000 companies, government and educational
institutions.
- - R&D - expand the R&D staff to further develop the technology, focusing on
Internet/Intranet delivery. The SWIFT technology will be enriched through
additional authoring functionality and the product line will be broadened
with new modules.
- -In addition, executive business development resources will be focused on
industry partnerships, key distribution prospects and large reference account
opportunities.
SWIFT Library Distributors (SLD)
SLDs must purchase ELMer - a total investment of $7,000,00 U.S.D. which
includes the entire online library. Gemini can provide the hosting
services providing a turn key solution with virtually no administration
required, or set it up remotely. All SLDs receive the same discount
based on the suggested retail price, ensuring a level playing field.
Gemini has designed the distribution program on a sliding scale based on
sales to further motivate marketing efforts by SLDs. Courses are priced
slightly below competitor pricing. We have also provided a multi level
marketing approach for third party Gemini partners to receive royalties
for establishing SLD's. Gemini will hire a direct sales force to establish
distribution channels for the SWIFT library.
Strategic Alliances and Industry Partners
Strategic alliances are defined as course content companies and content
distributors. Gemini has had significant success partnering with Course
Content Providers with access to hundreds of titles already available and
in conversion. Likewise, the company has recently signed a number of high
profile distributors for Internet/Intranet, OEM and Retail (CD-ROM delivery)
(See Distribution Partners and Strategic Alliances, above).
<PAGE> 26
The marketing strategy outlined above, management believes, should build a
broader awareness of the SWIFT technology, creating a pull strategy for
the SWIFT Kit into the lucrative corporate market. As well, Gemini's
strategy should provide a huge incentive for CPs to convert their courses
into SWIFT, help build upon multiple recurring revenue streams, create
healthy cash flow, shorten sales cycles, and build more strategic partners
and alliances.
Status of any Publicly Announced New Product or Service
As outlined herein, Gemini is emerging from its development stage,
and as such the products employing the SWIFT technology, which Gemini plans
to introduce into the general worldwide marketplace, are, by definition,
new products. However, as described above, both the products and the
technology have been available since 1998, have been thoroughly market
tested, and are ready for rollout into the general marketplace (See also,
Distribution Methods of the Products or Services; and, Products and
Services and their Markets, above).
Competitive Business Conditions, Competitive Position in the Industry, and
Methods of Competition
See, Market for Products, above, for a discussion of the Marketplace
in general.
SWIFT uses an entirely different approach in design and licensing than its
closest competitors, products such as Authorware, Toolbook, CBT Express and
Icon Author. The primary areas of divergence between the competitors and
SWIFT is outlined in the table below:
SWIFT
SGML-based, leverage investment HTML-based
over time
Designed for use by course content Development is from scratch
creators, requires content only
CBT interface (Learning Requires expertise in HCI,
Environment) is built-in - virtually no programming, project mgmt,
learning curve, no software teams or pedagogy...
programmers required
Reduces development time and Averages 200 - 250 hours of
costs by about 70%. development for every hour of
finished product.
Provides delivery on CD-ROM, Requires development from scratch
Intranet and Internet for each delivery format
Utilizes ELMer Expensive mgmt systems
International utilization built in Limited internationalization
if at all
<PAGE> 27
The primary areas of divergence between the competitors and SWIFT LE is
outlined in the table below:
SWIFT LE Other Learning Environment
Adaptive learning environment and No adaptivity
adaptive testing algorithms
Internationally awarded intelligent Virtually no pedagogy
tutoring system (Ed Media '95;
World Conference on Educational
Multi-Media and Hypermedia)
effectiveness backed by years of Lead by the nose training
international R&D and usability
studies
Management feels that the SWIFT Technology effectively gives Gemini
a differentiable new technology which has no direct competition. As can be
seen from the table presented above, SWIFT and SWIFT LE bear little
resemblance to the competition in the marketplace except for the fact that
the end user product is somewhat similar.What must be remembered is that
Gemini is primarily marketing a delivery system, not a particular product.
Indeed, most competitors in the industry could market their products using
the SWIFT system for product delivery. In this respect one is drawn to the
logical conclusion that Gemini, with respect to its base technology, has no
direct competitors.
Sources and Availability of Raw Materials and the Names of Principal Suppliers
Gemini's services are not reliant on the availability of raw materials,
but, rather, involve the development of software computer applications,
and interactive data networks. Sources of all materials, internet services,
and equipment are readily available from a large number of suppliers, none
of which would be difficult to replace.
Dependence on One or a Few Major Customers
No customer of Gemini accounts for more than 5% of its business.
<PAGE> 28
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements
or Labor Contracts, Including Duration
Copyright and Trademarks
Gemini has registered the trademark "SWIFT" in Canada, and uses the
mark throughout the world. Gemini plans, in the next quarter to register the
said mark in the United States and in Europe.
All of Gemini's software is believed subject to common law but
unregistered copyrights.
Licenses
Gemini grants its clients licenses for the non-exclusive use of its products.
No one licensee accounts for more than 5% of Gemini's current business,
and there are no outstanding or impending claims under any current licenses,
or to the best of management's knowledge, are any such claims likely.
Other Intellectual Rights
No other patents, trademarks, licenses, franchises, concessions,
royalty agreements or labor contracts are used by Gemini.
Need for Any Government Approval of Principal Products or Services
To the best of Gemini's management's knowledge, there are no special
requirements for government approval of its principal products or services,
not generally applicable to normal business operations.
Effect of Existing or Probable Governmental Regulations on the Business
Gemini is unaware of any probable regulation of its business, other
than as will apply to businesses in general.
Estimate of the Amount Spent During Each of the Last Two Fiscal Years on
Research and Development Activities, and if Applicable the Extent to Which
the Cost of Such Activities are Borne Directly by Customers.
During the past two years management believes Gemini spent
approximately $300,00 on R&D, none of which will be directly borne by
Gemini's customers, but all of which will be indirectly borne by the customer
as reflected in the price of the products of Gemini, a portion of which will
be allocated to the amortized cost of development.
<PAGE> 29
Costs and Effects of Compliance with Federal, State and Local Environmental
Laws.
Gemini is not aware of any expenses directly attributable to
compliance with federal, state or local environment laws or regulations.
Number of Total Employees and Number of Full Time Employee.
Gemini has 4 full time employees, and no part time employees.
Description of Real Estate and Operating Data.
Gemini currently rents approximately 2,104 square feet for its staff, at
Suite 605, 839 - 5th Avenue SW, Calgary, Alberta, Canada T2P 3C8, with a
rent of $7,890 per anum.
Management is of the opinion that its current facilities are
adequate for its immediate needs. As the Company's business increases,
additional facilities may be required, however the current facilities are
expected to suffice until after December 31, 2000.
Equipment
The fixed assets of Gemini as valued for accounting purposes have a
depreciated book value of $21,208, and an non-depreciated book value of
$55,000. The assets are principally comprised of computers, computer
equipment, and software, along with office furniture.
Investment Policies
The Registrant has no investment policies with respect to
investments in real estate or interests in real estate or investments in
real estate mortgages.
Litigation.
Neither Gemini nor the Registrant is a party to any material
litigation.
Operating Subsidiaries of the Registrant
The subsidiary of the Registrant, Gemini, purchased on September
24, 1999, is an emerging company, having emerged from its development phase
this past quarter, and the discussions and tables referring to operations in
this prospectus refer to the revenues generated by the subsidiary.
<PAGE> 30
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION,
CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this item will be provided, together
with the financial statements and pro-forma financial statements pertaining
to the transaction which is the subject of this Current Report, by an
amendment hereto to be filed by the Registrant with the SEC on or before the
sixtieth day following this Current Report.
ITEM 7
Financial Statements and Exhibits
A. Financial Statements
(c) Financial Statements of the Businesses Acquires or to be Acquired
The financial statements and pro forma financial information required for
Gemini in response to this item will, as permitted by applicable SEC rules,
be filed by amendment to this Current report on or before the 60th day
following the date hereof.
B. Exhibits
1. Underwriting Agreements:
None
2. Plan of Acquisition, Reorganization, Liquidation, or Succession:
Purchase and Sale Agreement, Dated September 24, 1999, among Kim
Adolphe, Gemini Learning Systems, Inc. and the Registrant, for the
Purchase of all outstanding Shares in Gemini Learning Systems, Inc.
by the Registrant, page 36
3. Constituent Documents:
.1 Original Articles of Incorporation*
.11 Amendment to Articles of Incorporation, Changing Registrant's Name
From Mas Acquisition I Corp. to Sloan Electronics, Inc.**
___________________
*Incorporated by Reference to the Registrant's registration statement on
Form 10-SB, SEC File Number 000-28772, Filed on September 4, 1996.
**Incorporated by Reference to the Registrant's Report on Form 8-k/A, SEC
File Number 000-28772, Filed on March 18, 1998.
<PAGE> 31
3. Constituent Documents:
.13 Amendment to Articles of Incorporation, Changes in Securities The
Shareholders', provision for the Issue of 20 shares of Preferred
Stock with no par value convertible at the will of the holder into
1,500,000 Common Shares, as an anti-takeover Provision.*
.2 By-Laws of the Registrant**
.21 Current By-Laws of the Registrant***
.3 Plan and Agreement of Merger between Registrant and Sloan Electronic,
Inc.****
.31 Specimen Share Certificate**
.32 Specimen Share Certificate, replacing Original Share Certificate*****
27. Financial Data Schedule:
.1 The Financial Data Schedule required in response to this item will,
as permitted by applicable SEC rules, be filed by amendment to this
Current report on or before the 60th day following the date hereof.
99. Additional Exhibits:
.1 Articles of Incorporation of Gemini Learning Systems, Inc. (Gemini)
and Amendments thereto, at page 58
.2 Bylaws of Gemini, and amendments thereto, at page 68
.3 Due diligence Questionairre (Corporate Profile) completed by Gemini
prior to its purchase (1), at page 88
_______________________
*Incorporated by Reference to the Registrant's registration statement on Form
10-QSB, SEC File Number 000-28772, Filed on August 13, 1999.
**Incorporated by Reference to the Registrant's registration statement on Form
10-SB, SEC File Number 000-28772, Filed on September 4, 1996.
***Incorporated by Reference to the Registrant's Report on Form 10-QSB,
SEC File Number 000-28772, Filed on November 13, 1999.
****Incorporated by Reference to the Registrant's Report on Form 8-k/A,
SEC File Number 000-28772, Filed on March 18, 1998.
*****Incorporated by Reference to the Registrant's Report on Form 10-KSB/A,
SEC File Number 000- 28772, Filed on April 7, 1998.
(1) The accompanying documentation was omitted, as its contents are
described in this Current Report in Item 2, or appended hereto as individual
exhibits.
<PAGE> 32
99 Additional Exhibits:
.4 Unaudited Financial data submitted by Gemini for the periods ended May
31, 1999, 1998, 1997, at page 99
.5 Certifications executed by Gemini at Closing, at page 112
.6 Distribution Agreement between Gemini and Camaxys Limited, at page 128
.7 Trade Mark Documentation, at page 145
Signatures
Pursuant to the requirements of the Securities Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
October 25, 1999
Salient Cybertech, Inc.
By:/s/Larry Provost/s/
_____________________
Larry Provost, Chairman
<PAGE> 33
(BLANK PAGE)
<PAGE> 34
Registration Number: 000-28772
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = == = = = = = = = =
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
FIRST AMENDMENT TO CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
EXHIBITS
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
October 28, 1999.
PAGE> 35
STOCK PURCHASE AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 24th day of September, 1999
BETWEEN:
GEMINI LEARNING SYSTEMS, INC. AND ITS RESPECTIVE UNDERSIGNED
SHAREHOLDERS
(hereinafter collectively called the "Sellers")
OF THE FIRST PART
A N D:
SALIENT CYBERTECH, INC.
a corporation incorporated under the laws of the State of Delaware
(hereinafter called the "Purchaser")
OF THE SECOND PART
WHEREAS, the Sellers control and represent all of the authorized issued and
outstanding shares of capital stock (there being no other securities) of the
Gemini Learning Systems, Inc as listed hereinabove, (herein referred to
as the "Corporation"), and;
WHEREAS, the Purchaser desires to acquire all of the outstanding
shares of the Corporation's Common Stock, and;
AND WHEREAS, the parties hereto agree that this transaction is to be
structured and completed in compliance with all requirements of Section 368(a)
(1)(B) of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, THIS AGREEMENT WITNESSETH THAT, in consideration of
the covenants, agreements, warranties, and payments herein set out and
provided for, the parties hereby respectively covenant and agree as follows.
<PAGE> 36
ARTICLE 1.00 - DEFINED TERMS
1.1 When used herein or in any amendments hereto, the following terms
shall have the following meanings respectively.
"Agreement" means this agreement and all schedules attached to this agreement.
The term includes each case where it may be supplemented or amended from time
to time. The expressions "hereof", "herein", "hereto", "Hereunder",
"hereby" and similar expressions refer to this agreement, and "Article",
"section" and "subsection" mean and refer to the specified Article, section,
and subsection of this agreement.
"books and records" means the accounting books of original entry including
the general ledger, record of cash receipts and disbursements, purchase
journal and banking records.
"Business" means the business presently and heretofore carried on by the
Corporation, consisting of an internet learning systems company located in
Canada and all operations, customers, accounts, goodwill, knowledge and
anything of tangible value as related to the Corporation.
"Business day" means a day other than a Saturday, Sunday or a day that is a
statutory holiday.
"Closing" means the closing of the transaction for purchase and sale
contemplated herein.
"Closing Date" or "Date of Closing" means September 14, 1999 or such other
date as may be mutually agreed upon in writing by the parties hereto.
"Closing Financial Statements" has the meaning ascribed to it in section
4.1.1.
"Common Shares" means the issued and outstanding common shares in the
capital of the Corporation.
"Corporation" means the companies listed hereinabove as the Sellers.
"EBIT" means net earnings before income taxes, as determined by the auditors,
in accordance with GAAP.
"Exchange Shares" mean the shares payable to Seller in the Purchase Price as
shown in Exhibit "A" attached hereto.
"Financial statements" means, collectively, the Closing Financial Statements
defined hereinabove.
<PAGE> 37
"Intercompany Transactions" means, collectively, all transactions of any
nature between the Corporation and any Person associated with or related to
the Corporation or otherwise not dealing with the Corporation on an arms-
length basis.
"GAAP" means generally accepted accounting principles in the United States,
as appropriate and as in effect from time to time, consistently applied.
"NASDAQ" means the National Association of Securities Dealers and Quotations.
"Non Arm's Length Person" means any shareholder director, officer, employee,
affiliate, or associate (as defined in the Securities Act of 1933, as amended)
of the Corporation. This term includes any one or more of the Sellers or
any other Person who does not deal at arm's length with the Corporation or any
one or more of the Sellers within the meaning of such concept as used in the
Income Tax Act (USA).
"Person" includes an individual, a corporation, a joint venture, a
partnership, a trust or trustee, any unincorporated organization, an
association, or any other entity (including any governmental, administrative,
or regulatory authority).
"Permitted Liens" means, at any time, such Liens as the Purchaser may agree,
in writing, shall constitute a Permitted Lien for the purpose of this
Agreement.
"Preferred Shares" mean, preferred convertible voting shares in the capital
of the Purchaser, said shares being convertible at a price of $0.01 per
share one year from the effective date of a Registration Statement to be f
filed with the SEC (defined hereinbelow) no later than 60 days from the
Closing Date.
"Purchased Shares" shall have the meaning attributed thereto in section 3.1
hereof.
"Requirements of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational, governing documents of
such Person. This term includes any law, treaty, regulation or rule, or
determination of an arbitrator or a court or other governmental authority
or agency, in each case applicable to or binding upon such Person or any of
its property or to which such Person or any of its property is subject.
"Rule 144" means rule 144 of the United States Securities and Exchange
Commission.
"SEC" means the Securities and Exchange Commission of the United States.
"Sellers" shall mean, specifically for purposes of this agreement and
identifying the parties thereto, all of the shareholders of the Corporation.
"Subsidiary", in relation to any body corporate, means any corporation of
which issued and outstanding securities are held, other than by way of
security only, by such body corporate, and includes any corporation in like
relation to a Subsidiary.
"this agreement", "this agreement", "herein", "hereto", "hereunder", "hereof",
and similar expressions refer to the within agreement and not to any
particular portion thereof, and include the schedules referred to in
Article 2.00.
"Time of Closing" means two o'clock in the afternoon on the Closing Date.
<PAGE> 38
ARTICLE 2.00 - SCHEDULES
2.1 The following schedules, at time of closing, shall be delivered and
attached to and incorporated in this Agreement by reference and deemed to be
part hereof:
Schedule 4.2.1 - Financial Statements of Corporation
Schedule 4.2.6 - Corporation's Shareholders
Schedule 4.2.22 - Outstanding Obligations of Corporation
Schedule 4.2.23 - Leases of Corporation
Schedule 4.2.26 - Insurance Policies of Corporation
Schedule 4.2.34 - Accounts List of Corporation
Schedule 5.2.1 - Financial Statements of Purchaser
Schedule 5.2.7 - Outstanding Rights to Securities of Purchaser
Schedule 5.2.22 - Outstanding Obligations of Purchaser
Schedule 5.2.33 - Accounts List of Purchaser
Schedule 5.2.37 - Shareholder Credit Facility to Purchaser
Schedule 6.2.4 - Power of Attorney
Schedule 9.9 - Indemnification Agreement
ARTICLE 3.00 - PURCHASE AND SALE
3.1 Subject to the terms and conditions hereof, the Sellers hereby agree to
sell, assign, and transfer to the Purchaser the total number of _____________
common shares of the Corporation (the "Purchased Shares"). The Purchaser
covenants and agrees to purchase from the Sellers the Purchased Shares for
an amount equal in the aggregate to the Purchase Price as set forth in
Exhibit "A".
3.2 The Purchase Price shall be paid in the manner set forth in Exhibit "A"
attached hereto.
3.3 The Sellers hereby represent, warrant, covenant, and acknowledge the
following.
3.3(A) The Purchased Shares is being transferred without registration under
the provisions of Section 5 of the Act.
3.3(B) All of the Purchased Shares will bear legends restricting the
transfer, sale, conveyance, and hypothecation within the jurisdictional
boundaries of the United States. This provision is exclusive of when such
Exchange Shares are registered under the provisions of Section 5 of the act
and under applicable state and provincial securities laws. Moreover, an
opinion of legal counsel may be provided by the Purchaser to certify that
such registration is not required as a result of applicable exemptions
therefrom.
<PAGE> 39
3.3(C) The Sellers shall not transfer any of the Exchanged Shares except in
compliance with all applicable laws.
3.3(D) The Sellers are acquiring the Exchanged Shares for their own account,
for investment purposes only and not with a view to further sale or
distribution, except as permitted by law.
3.3(E) The Sellers have made themselves fully and completely familiar with
all aspects of the Purchaser's business, operations, and financial statements,
as filed with the SEC.
3.4 The Purchaser hereby represents, warrants, covenants and acknowledges
the following.
3.4(A) The Exchange Shares are being transferred without Registration under
the provisions of Section 5 of the Securities Exchange Act of 1934, as
amended (the "Act") or Delaware Blue Sky Law.
3.4(B) All of the Exchange Shares will bear legends restricting the transfer,
sale, conveyance, and hypothecation within the jurisdictional boundaries of
the United States. This provision is exclusive of when such Exchange Shares
are registered under the provisions of Section 5 of the act and under
applicable state and provincial securities laws. Moreover, an opinion of
legal counselmay be provided by the Purchaser to certify that such
registration is not required as a result of applicable exemptions therefrom.
3.4(C) The Purchaser shall not transfer any of the Purchased Shares except
in compliance with all applicable laws.
3.4(D) The Purchaser is acquiring the Purchased Shares for its own account,
for investment purposes only and not with a view to further sale or
distribution.
3.4.1 The Purchaser has executed certain certificates and warranties under
separate documents that shall be incorporated herein as if set forth in this
document and which bear the same date as this Agreement. 3.4.2 Except as
described herein, the Purchaser has no other, outstanding securities of any
class or of any kind or character. There are no outstanding subscriptions,
options, warrants, or other agreements or commitments obligating the
Purchaser to issue or sell any additional shares or options or rights with
respect thereto or any securities convertible into any shares of Stock of any
class.
3.5 The Purchase Price shall be paid and satisfied in full by
the delivery of the issued Exchange Shares at the Times of Closing.
3.6 The certificates representing the shares being exchanged
shall each bear the following legend:
"THESE SHARES HAVE NEITHER BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION (OR WITH THE SECURITIES REGULATORY
AUTHORITIES OF ANY STATE, PROVINCE, OR NATIONAL AUTHORITY). CONSEQUENTLY,
THESE SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS
THEY ARE FIRST REGISTERED UNDER APPLICABLE STATE, PROVINCIAL AND FEDERAL
SECURITIES LAWS OR THE TRANSACTION'S EXEMPTION THEREFROM IS DEMONSTRATED
TO THE FULL SATISFACTION OF THE CORPORATION'S LEGAL COUNSEL."
<PAGE> 40
ARTICLE 4.00 - COVENANTS, REPRESENTATIONS, AND WARRANTIES OF AND
THE CORPORATION
4.1 The Shareholders of the Seller hereby covenant, represent, and warrant,
and the Seller, jointly and severally, represent to the best of their
knowledge, as follows:
4.2.1 Delivered at Closing, warranted to be true and correct to the best
knowledge of the Sellers, and made a part hereof as Schedule 4.2.1 are the
following:
(A) unaudited balance sheet of the Corporation to be acquired as of July 31,
1999, with the related statement of operations and unaudited statement of
cash flow for the period ending July 31, 1999 (such balance sheets,
statements of operations, and other statements are referred to herein as the
"Corporation's Financial Statements").
4.2.2 Corporation has been duly incorporated and organized and is validly
subsisting and in good standing under the laws of Canada.
4.2.3 Corporation has the corporate power to own or lease its property and
carry on the Business. The Corporation is duly qualified as a corporation to
do business under the laws of Canada being the only jurisdictions in which
the nature of its business or the property owned or leased by it makes such
qualification necessary.
4.2.4 At Time of Closing, the authorized capital of the Corporation shall
be represented in a separate certificate which shall be incorporated herein
by reference as consistent with all other documents executed on this date.
4.2.5 At Time of Closing, the authorized capital of the said corporation
shall be duly and validly allotted and issued and outstanding as fully paid
and non-assessable and beneficially owned by the Sellers.
4.2.6 All of the Purchased Shares are owned by the shareholders of the
Corporation as the beneficial owners of record as listed at Schedule 4.2.6.
Such listed shareholders have good and marketable title thereto, free and
clear of all mortgages, liens, charges, security interests, adverse claims,
pledges, encumbrances, and demands whatsoever. This provision includes
voting trusts, shareholders' agreements, options, or other agreements of any
kind. The Sellers represent that said listed shareholders have the absolute
right to transfer the Purchased Shares, and they shall be enjoyed by the
Purchaser free from any interruption or disturbance subject only to the
terms and conditions herein.
4.2.7 The Corporation has no subsidiaries and owns no shares in the capital
of any other corporation and has not agreed to acquire any subsidiary or any
shares of the capital of any other corporation or to acquire or lease any
other business operations. 4.2.8 No person, firm, or corporation has any
agreement, option, or any right or privilege (whether by law, pre-emptive,
or contractual) for the purchase, subscription, allotment, or issuance of
either any of theauthorized stock in the capital of the Corporation or of
any securities of the Corporation. This provision includes convertible
securities, warrants, and convertible obligations of any nature.
4.2.9 Except with respect to product warranties provided by the Corporation
in the ordinary course of business, the Corporation is not a party to or
bound to any person, firm, or corporation. This provision includes any
agreement of guarantee, indemnification, assumption, endorsement, or any
other like commitment of obligations or liabilities (contingent or otherwise)
or indebtedness of any person, firm, or corporation.
<PAGE> 41
4.2.10 There are not now, nor will there be on Closing, any material claims
or potential or contingent claims against the Corporation for product
liability in respect of goods manufactured and/or sold by the Corporation.
4.2.11 The Corporation's Financial Statements have been prepared in
accordance with GAAP and present fairly to include:
4.2.11(A) all the assets, liabilities (whether accrued, absolute,
contingent, or otherwise), and the financial condition of the Corporation as
at the respective dates of the Corporation's Financial Statements; and
4.2.11(B) the sales, earnings, and results of the operations of the
Corporation during the periods covered by the Corporation's Financial
Statements.
4.2.12 The corporate records and minute books of the Corporation contain
complete and accurate minutes of all meetings of and copies of all by-laws
and resolutions passed by the directors and shareholders of the Corporation
since the incorporation of the Corporation. All such meetings have been duly
called and held.The share certificate book with register of shareholders,
register of transfers, register of directors, and other corporate registers
of the Corporation are complete and accurate in all material respects.
4.2.13 The Business has been carried on in the ordinary course since January
1999. Since then, there has been no change in the business operations,
affairs, or condition of the Corporation, financial or otherwise. This
provision includes changes arising as a result of any legislative or
regulatory change, revocation of any license or right to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation, act of God, or otherwise. This provision excludes changes
occurring in the ordinary course of business, which changes have not
materially aversely affected and will not materially aversely affect the
organization, business, properties, prospects, and financial condition of
the Corporation or the ability of the Corporation to carry on Business.
4.2.14 The books and records, financial and otherwise, of the Corporation
fairly and correctly set out and disclose, in all material respects, the
financial position and result of operations of the Corporation as at the
date hereof. All material, financial transactions of the Corporation are
accurately recorded in such books and records.
4.2.15 Execution of this Agreement by the Sellers and delivery of the
Agreement by them to the Purchaser and their performance hereunder has been
duly authorized. No further action is necessary on the part of the
Sellers to make this agreement valid and binding in accordance with its
terms upon the Sellers.
4.2.16 The execution and the consummation of this transaction for purchase
and sale contemplated by this Agreement will not result in a breach of any
term or provision of or constitute any default under the constituting
documents, by-laws, or resolutions of the Corporation. This provision
includes any indenture, agreement, instrument, license, permit, or
understanding to which the Corporation or any one or more of the Sellers is
a party or by which any one or more of them is bound. Nor will the
consummation of this transaction accelerate any commitment or obligation of
the Corporation or result in the creation of any lien or encumbrance upon
any of the assets or property of the Corporation.
4.2.17 This agreement and the consummation of the transactions contemplated
hereby will not result in the violation of any law or regulation or any
applicable order of any court, arbitrator, or governmental authority
having jurisdiction over the Corporation, the Sellers, or their respective
properties or businesses.
4.2.18 No consent, authorization, license, franchise, permit, approval, or
order of any court, governmental agency or body, of any lessor, or of any
person is required for the acquisition by the Purchaser of the Purchased
<PAGE> 42
Shares, including completion of any of the other transactions contemplated
hereby. This provision also includes the continuance of any rights of the
Corporation pursuant to any agreement affecting its assets or the Business
following closing.
4.2.19 The Corporation will not, prior to the Closing Date, hire any new
employees, terminate any employee, or increase the salary or remuneration of
any employee except in the normal course of business.
4.2.20 The aggregate amount of salaries, pension, bonuses, rents, or other
remuneration of any nature paid or payable by the Corporation, subsequent to
the execution of this Agreement and up to the Time of Closing, will be made
only at the regular rates heretofore paid.
4.2.21 No capital expenditures, except in the ordinary course of business,
will be made or authorized by the Corporation after the date hereof and up
to the Time of Closing without the prior written consent of the Purchaser.
4.2.22 Annexed hereto as Schedule 4.2.22 is a complete list of all
outstanding bonds, debentures, mortgages, notes or other evidence of
indebtedness or other security instruments of the Corporation. None of
which are presently in default, and the Corporation is not under any
agreement to and shall not create or issue any bonds, debentures, mortgages,
notes, or other evidence of indebtedness or other security agreements from
the date hereof until Closing without the written consent of the Purchaser.
4.2.23 The Corporation is not a party to any lease or agreement in the
nature of a lease, whether as lessor or lessee, except those leases described
in Schedule 4.2.23 hereto. The schedule specifies the parties to each of
such leases, their dates of execution and expiry dates, any options to
renew, any consents required, the locations of any leased lands and premises,
and the rental payable thereunder. Each of such leases is in good standing
and in full force and effect without amendment thereto, and the Corporation
is not in breach of any of the covenants, conditions, or agreements
contained in each such lease. There are no consents required from or on
behalf of any persons to the transaction contemplated by this Agreement.
4.2.24 The Corporation is not a party to any conditional sales contract,
hire-purchase agreement, or other title retention agreement.
4.2.25 The Corporation is not, and will not be at the Time of Closing, a
party to any agreement to acquire or to acquire any beneficial interest in
any real or immovable property.
4.2.26 The Corporation maintains appropriate policies of insurance, given
the nature of the Business, and such insurance coverage will be continued in
full force and effect to and including the Date of Closing. The Corporation
is not in default with respect to any of the provisions contained in any
such insurance policy, and it has not failed to give any notice or present
any claim under any such insurance policy in due and timely fashion.
Schedule 4.2.26 hereto lists all insurance policies of the Corporation,
specifying the insurance company, insurance agent, policy number, type of
coverage, and amount of coverage.
4.2.27 There are no actions, suits, or proceedings, including product
warranty claims, pending or threatened against or affecting the Corporation,
at law or in equity or before or by any federal, provincial, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign. The Sellers are not aware of any
existing ground on which any such action, suit, or proceeding might be
commenced with any reasonable likelihood of success.
4.2.28 Except for agreements, contracts, and commitments in the ordinary
course of business, the Corporation is not a party to any outstanding
agreement, contract, or commitment, whether written or oral.
4.2.29 All vacation pay, bonuses, commissions, and other emoluments are
accurately reflected and have been accrued in the books of account of the
Corporation.
<PAGE> 43
4.2.30 The Corporation is and at Closing will be in substantial compliance
in all jurisdictions in which it employs persons, with legislation governing
hours of work, termination and severance pay, vacation pay and similar
employee rights, the Worker's Compensation Act, and all such similar
statutes.
4.2.31 The uses of the real properties owned or leased by the Corporation
referred to in this agreement or the schedules hereto are not in material
breach of any statute, by-law, ordinance, regulation, covenant, restriction,
or official plan.
4.2.32 The Corporation owns, possesses, and has a good and marketable title
to its undertaking, property, and assets, being free and clear of any and
all mortgages, liens, pledges, charges, security interests, encumbrances,
actions, claims, or demands of any nature whatsoever or howsoever arising
except as listed at Schedule 4.2.22; the purchase price is based on and
directly correlates to the net tangible worth (being assets less liabilities)
of the Corporation.
4.2.33 The conduct of the Business does not infringe upon the patents, trade
marks, trade names, or copyrights (domestic or foreign) of any other person,
firm, or corporation.
4.2.34 Annexed hereto as Schedule 4.2.34 is a true and complete list showing
the name of each bank, trust company, or similar institution in which the
Corporation has accounts or safe deposit boxes and the names of all persons
authorized to draw thereon or to have access thereto.
4.2.35 The Corporation is conducting the Business in compliance with all
applicable laws, rules and regulations of each jurisdiction in which the
Business is carried on, is not in breach of any such laws, rules or
regulations, except for breaches which in the aggregate are immaterial.
Also the Corporation is duly licensed, registered, or qualified in each
jurisdiction in which it owns or leases property or carries on the Business.
To enable the business to be carried on as now conducted and its property
and assets to be owned, leased, and operated, all such licenses, registrations
and qualifications are valid and subsisting and in good standing. None of
the same will be canceled or amended by virtue of the transaction for
purchase and sale provided for herein.
4.2.36 All facilities and equipment owned and used by the Corporation in
connection with the Business are in good operating condition and are in a
state of good repair and maintenance.
4.2.37 There are not now any loans or other indebtedness outstanding
between the Corporation and the Sellers or either any current or former
directors, officers, shareholders, or employees of the Corporation or any
Non Arms Length Persons. This provision is exclusive of normal salaries,
bonuses, fringe benefits, and the obligation to reimburse for expense
incurred on behalf of the Corporation in the normal course of business
or otherwise disclosed in the Corporation's Financial Statements.
4.2.38 To the best of the Sellers' knowledge, there are no liabilities of
the Corporation of any kind whatsoever, whether or not accrued and whether
or not determined or determinable, in respect of which the Corporation
or the Purchaser may become liable before, on, or after the Closing. This
provision is exclusive of liabilities disclosed on, reflected in, or provided
for in the Financial Statements or incurred in the ordinary course of
business. This provision is also exclusive of those liabilities attributable
to the period from the Corporation's Financial Statements to the actual time
of Closing and are not materially adverse, individually or in the aggregate,
to the Business, operations, affairs or financial condition of the Corporation.
4.2.39 There is not now nor will there be at the Time of Closing any
application pending for the issuance of articles of amendment to the
originating documents of the Corporation.
<PAGE> 44
4.2.40 The Corporation is not in default in the filing of any corporate
return or report that may be required under any federal, provincial and/or
municipal law or regulation.
4.2.41 The Corporation has duly and timely filed all tax returns required
and has paid all taxes and installments of taxes which are due and payable.
This provision includes all assessments, reassessments, and all other
taxes, governmental charges, penalties, interest, and fines due and payable
by it on or before the date hereof. The income tax liability of the
corporation has been not reviewed or determined by the IRS or the applicable
State for all fiscal years up to and including the fiscal year to date.
Adequate provision has been made for taxes payable for the current period of
which tax returns are not yet required to be filed. There are no agreements,
waivers, or other arrangements providing for an extension of time with
respect to the filing of any tax return by, or payment of any tax,
governmental charge, or deficiency against the Corporation in respect of
taxes, governmental charges, or assessments, asserted by such authority.
The Corporation has withheld from each payment made to any of its officers,
directors, employees, former directors, officers, and employees the amount of
all taxes, including but not limited to income tax, and other deductions
required to be withheld therefrom. The Corporation has paid the same to the
proper tax or other receiving officers within the time required under the
applicable tax legislation.
4.2.42 The Sellers have no information or knowledge of any facts relating to
the Sellers, the Business, the Corporation, or the Purchased Shares which, if
known to the Purchaser, might reasonably be expected to deter the Purchaser
from completing the transaction of purchase and sale herein contemplated.
4.2.43 The Corporation shall prepare and file all documents necessary to
achieve regulatory approval from all regulatory agencies by which it is
subject.
ARTICLE 5.00 - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1 The Purchaser covenants, represents, and warrants as follows and
acknowledges that the Sellers are relying upon such covenants,
representations, warranties, and covenants in connection with the sale by
the Sellers of the Purchased Shares.
5.2.1 Delivered at Closing, warranted to be true and correct to the best
knowledge of the Purchaser, and made a part hereof as Schedule 5.2.1 are the
following: All 10K's and 10Q's as filed with the SEC (such balance sheets,
statements of operations, and other statements are referred to herein as the
"Purchaser's Financial Statements").
5.2.2 Purchaser has been duly incorporated and organized and is validly
subsisting and in good standing under the laws of Delaware.
5.2.3 Purchaser has the corporate power to own or lease its property and
carry on the Business. The Corporation is duly qualified as a corporation
to do business under the laws of Delaware, being the only jurisdiction in
which the nature of its business or the property owned or leased by it makes
such qualification necessary.
5.2.4 At time of Closing, the authorized capital of the Purchaser shall
consist of that represented in its most recently filed 10Q as on file with
the SEC.
5.2.5 At time of Closing, the authorized issued capital of the Purchaser
shall be duly and validly allotted and issued and outstanding as fully
paid and non-assessable and beneficially owned by the Purchaser.
5.2.6 The Purchaser has no subsidiaries and owns no shares in the capital of
any other corporation and has not agreed to acquire any subsidiary or any
shares of the capital of any other corporation or to acquire or lease
any other business operations other than has already been disclosed to the
public.
<PAGE> 45
5.2.7 Except as listed at Schedule 5.2.7, no person, firm, or corporation
has any agreement, option, or any right or privilege (whether by law, pre-
emptive, or contractual) for the purchase, subscription, allotment, or
issuance of either any of the authorized stock in the capital or any
securities of the Purchaser other than as disclosed in filings with the SEC.
5.2.8 The Purchaser is not a party to or bound to any person, firm, or
corporation. This provision includes any agreement of guarantee,
indemnification, assumption, endorsement, or any other like commitment of
obligations or liabilities (contingent or otherwise) or indebtedness of any
person, firm, or corporation, other than as set forth in filings with the SEC.
5.2.9 There are not now, nor will there be on Closing, any material claims or
potential or contingent claims against the Purchaser for product liability.
5.2.10 The Purchaser's Financial Statements have been prepared in accordance
with GAAP and present fairly to include:
(A) all the assets, liabilities (whether accrued, absolute, contingent, or
otherwise), and the financial condition of the Purchaser as at the respective
dates of the Purchaser's Financial Statements, and;
(B) the sales, earnings, and results of operations during the periods covered
by the Corporation's Financial Statements.
5.2.11 The corporate records and minute books of the Purchaser contain
complete and accurate minutes of all meetings of and copies of all by-laws
and resolutions passed by the directors and shareholders of the Purchaser
since the incorporation of the Purchaser. All such meetings have been duly
called and held. The share certificate book with register of shareholders,
register of transfers, register of directors, and other corporate registers
of the Purchaser are complete and accurate in all material respects and have
been made available to Seller.
5.2.12 The Purchaser does not have an active business or operations other
than as disclosed in filings with the SEC.
5.2.13 The Purchaser has no inventory other than as disclosed in filings
with the SEC.
5.2.14 The books and records, financial and otherwise, of the Purchaser
fairly and correctly set out and disclose, in all material respects, the
financial position and result of operations of the Purchaser as at the date
hereof. All material, financial transactions of the Purchaser are accurately
recorded in such books and records.
5.2.15 The execution and delivery of this Agreement by the Purchaser as well
as the performance by the Purchaser hereunder have been duly authorized. No
further action will be necessary on the part of the Purchaser to make this
Agreement valid and binding in accordance with its terms upon the Purchaser.
5.2.16 The execution and the consummation of this transaction for purchase
and sale contemplated by this Agreement will not result in a breach of any
term or provision of or constitute any default under the constituting
documents, by-laws, or resolutions of the Purchaser. This provision includes
any indenture, agreement, instrument, license, permit, or understanding to
which the Purchaser is a party or by which any one or more of them is bound.
Nor will the consummation of this transaction accelerate any commitment or
obligation of the Purchaser or result in the creation of any lien or
encumbrance upon any of the assets or property of the Purchaser.
5.2.17 This agreement and the consummation of the transactions contemplated
hereby will not result in the violation of any law or regulation or any
applicable order of any court, arbitrator, or governmental authority
having jurisdiction over the Purchaser.
<PAGE> 46
5.2.18 No consent, authorization, license, franchise, permit, approval, or
order of any court, governmental agency or body, of any lessor, or of any
person is required for the acquisition by the Purchaser of the Purchased
Shares, including completion of any of the other transactions contemplated
hereby. This provision also includes the continuance of any rights of the
Purchaser pursuant to any agreement affecting its assets or the Business
following closing.
5.2.19 The Purchaser will not, prior to the Closing Date, hire any new
employees, terminate any employee, or increase the salary or remuneration of
any employee except in the normal course of business.
5.2.20 The aggregate amount of salaries, pension, bonuses, rents, or other
remuneration of any nature paid or payable by the Purchaser, subsequent to
the execution of this Agreement and up to the Time of Closing, will be made
only at the regular rates heretofore paid.
5.2.21 No capital expenditures, except in the ordinary course of business,
will be made or authorized by the Purchaser after the date hereof and up to
the Time of Closing without the prior written consent of the Seller.
5.2.22 Annexed hereto as Schedule 5.2.22 is a complete list of all outstanding
bonds, debentures, mortgages, notes or other evidence of indebtedness or
other security instruments of the Purchaser. None of which are presently in
default, and the Purchaser is not under any agreement to and shall not
create or issue any bonds, debentures, mortgages, notes, or other evidence of
indebtedness or other security agreements from the date hereof until Closing
without the written consent of the Seller.
5.2.23 The Purchaser is not a party to any lease or agreement in the nature
of a lease, whether as lessor or lessee, except as disclosed as filings with
the SEC.
5.2.24 The Purchaser is not a party to any conditional sales contract, hire-
purchase agreement, or other title retention agreement.
5.2.25 The Purchaser is not, and will not be at the Time of Closing, a party
to any agreement to acquire or to acquire any beneficial interest in any real
or immovable property.
5.2.26 The Purchaser does not maintain any insurance policies, except
Directors and Officers Liability, and Products and Professional Liability,
except as provided in SEC filings.
5.2.27 There are no actions, suits, or proceedings, including product
warranty claims, pending or threatened against or affecting the Purchaser, at
law or in equity or before or by any federal, provincial, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign. The Purchaser is not aware of any
existing ground on which any such action, suit, or proceeding might be
commenced with any reasonable likelihood of success.
5.2.28 Except for agreements, contracts, and commitments in the ordinary
course of business.
5.2.29 All vacation pay, bonuses, commissions, and other emoluments are
accurately reflected and have been accrued in the books of account of the
Purchaser.
5.2.30 The Purchaser is and at Closing will be in substantial compliance in
all jurisdictions in which it employs persons, with legislation governing
hours of work, termination and severance pay, vacation pay and similar
employee rights, the Worker's Compensation Act, and all such similar
statutes.
5.2.31 The Purchaser does not lease any real properties other than as
disclosed in its filings with the SEC.
<PAGE> 47
5.2.32 The Purchaser owns, possesses, and has a good and marketable title to
its undertaking, property, and assets, being free and clear of any and all
mortgages, liens, pledges, charges, security interests, encumbrances,
actions, claims, or demands of any nature whatsoever or howsoever arising.
5.2.33 The conduct of business does not infringe upon the patents, trade
marks, trade names, or copyrights (domestic or foreign) of any other person,
firm, or corporation.
5.2.34 Annexed hereto as Schedule 5.2.33 is a true and complete list showing
the name of each bank, trust company, or similar institution in which the
Purchaser has accounts or safe deposit boxes and the names of all persons
authorized to draw thereon or to have access thereto or in the alternative
that information has been made available for Seller to review.
5.2.35 The Purchaser exists in compliance with all applicable laws, rules
and regulations of each jurisdiction in which the Business is carried on, is
not in breach of any such laws, rules or regulations, except for breaches
in the aggregate are immaterial. Also the Purchaser is duly licensed,
registered, or qualified in each jurisdiction in which it owns or leases
property or carries on the Business. To enable the business to be
carried on as now conducted and its property and assets to be owned, leased,
and operated, all such licenses, registrations and qualifications are valid
and subsisting and in good standing. None of the same will be canceled or
amended by virtue of the transaction for purchase and sale provided for
herein.
5.2.36 All facilities and equipment owned or used by the Purchaser are in
good operating condition and are in a state of good repair and maintenance.
5.2.37 Except as specified at Schedule 5.2.37, there are not any loans or
other indebtedness outstanding between the Purchaser and either the Sellers
or either any current or former directors, officers, shareholders, or
employees of the Purchaser or any Non Arms Length Persons. This provision
is exclusive of normal salaries, bonuses, fringe benefits, and the
obligation to reimburse for expense incurred on behalf of the Purchaser in
the normal course of business.
5.2.38 There are no liabilities of the Purchaser of any kind whatsoever,
whether or not accrued and whether or not determined or determinable, in
respect of which the Purchaser may become liable before, on, or after the
Closing. This provision is exclusive of liabilities disclosed on, reflected
in, or provided for in the Financial Statements or incurred in the ordinary
course of business. This provision is also exclusive of those liabilities
attributable to the period from the Purchaser's Financial Statements to the
actual time of Closing and are not materially adverse, individually or in
the aggregate, to the Business, operations, affairs or financial condition of
the Purchaser.
5.2.39 There is not now nor will there be at the time of Closing any
application pending for the issuance of articles of amendment to the
originating documents of the Purchaser.
5.2.40 The Purchaser is not in default in the filing of any corporate return
or report that may be required under any federal, provincial and/or
municipal law or regulation.
5.2.41 The Purchaser has duly and timely filed or has pending all tax returns
required and has paid all taxes and installments of taxes which are due and
payable. This provision includes all assessments, reassessments, and all
other taxes, governmental charges, penalties, interest, and fines due and
payable by it on or before the date hereof. The income tax liability of the
Purchaser has been not reviewed or determined by the IRS or the applicable
State for all fiscal years up to and including the fiscal year to date.
5.2.42 The Purchaser has no information or knowledge of any facts relating to
the Purchaser which if known to the Sellers might reasonably be expected to
deter the Sellers from completing the transaction and sale herein
contemplated.
<PAGE> 48
ARTICLE 6.00 - COVENANTS OF THE SELLERS
6.1 The Sellers covenant and agree with the Purchaser that on or before
the Closing Date they will do or cause to be done the following.
6.2.1 Take all necessary steps and proceedings required for all of the
Purchased Shares to be duly and regularly transferred to the Purchaser.
6.2.2 Until the time of Closing, continue to operate the business of the
Corporation prudently and in such a manner as to preserve and maintain the
goodwill of the Corporation.
6.2.3 All necessary corporate actions and proceedings by the Purchaser shall
have been taken to permit the due execution and delivery of this Agreement
and the valid transfer of the Purchased Shares to the Purchaser.
ARTICLE 7.00 - COVENANTS OF THE PURCHASER
7.1 The Purchaser covenants and agrees with the Sellers that, on or before
the Closing Date, it will do or cause to be done the following.
7.2.1 All necessary corporate actions and proceedings by the Purchaser shall
have been taken to permit the due execution and delivery of this Agreement
and the valid transfer of the Exchange Shares to the Sellers.
7.2.2 Provide the Sellers, at least four (4) days prior to the Closing Date,
all documents necessary to be attached to the closing certificates previously
forwarded to Seller with said documents numbered and appended to the closing
certificates in a manner to permanently memorialize all documents provided
to Purchaser by Seller.
7.2.3 Cause such board of director seat to be made available to Seller as
specified in Exhibit "A".
7.2.4 Up to the Time of Closing, continue to operate the businesses of the
Purchaser prudently and in such a manner as to preserve and maintain the
goodwill of the Purchaser.
<PAGE> 49
ARTICLE 8.00 - SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES
8.1 The covenants, representations, and warranties of the Sellers contained
in this Agreement and contained in any document or certificate given pursuant
hereto shall survive the Closing herein. Notwithstanding Closing, this
survival is inclusive of any investigation made by or on behalf of the
Purchaser and shall continue in full force and effect for the benefit of the
Purchaser following the Closing Date.
8.2 The covenants, representations and warranties of the Purchaser contained
in this Agreement and contained in any document or certificate given pursuant
hereto shall survive the Closing herein. Notwithstanding Closing, this
survival is inclusive of any investigation made by or on behalf of the
Sellers and shall continue in full force and effect for the benefit of the
Sellers following the Closing Date.
ARTICLE 9.00 - CONDITIONS OF CLOSING
9.1 The sale and purchase of the Purchase Shares is subject to the following
terms and conditions, each of which is hereby declared to be for the
exclusive benefit of the Purchaser to be fulfilled and performed at or prior
to the time of Closing.
9.2 The covenants, representations, and warranties of the Sellers contained
in this Agreement or any schedule hereto or certificate or other document
delivered or given to the Purchaser pursuant to this Agreement, including
without limitation the representations and warranties contained in Article
4.00, shall be true and correct on and as of the Closing Date with the same
force and effect as if they had been made as of the date hereof, each and
every one of which is hereby deemed to be a condition.
9.3 The Sellers shall provide at the time of Closing a certificate, dated
the Closing Date, to the effect that the covenants, representations, and
warranties of the Sellers contained herein are true and correct on and as
of the Closing Date, with the same force and effect as though made on and as
of such date, provided that the acceptance of such certificate and the
closing of the transaction herein provided for shall not be a waiver of
the said covenants, representations, and warranties, which shall continue in
full force and effect as provided herein.
9.4 The Sellers shall have complied with all covenants and agreements herein
agreed to be performed or caused to be performed by them.
9.5 At the Closing Date, there shall have been no material adverse change in
the affairs, assets, liabilities, financial condition, or business of the
Corporation from that shown on or reflected in the Financial Statements.
9.6 Any consent, authorization, licence, franchise, permit, approval, or
order of any court or governmental agency or regulatory body required for the
acquisition by the Purchaser of the Purchased Shares shall have been
obtained.
9.7 The Purchaser shall provide at the time of Closing a certificate, dated
the Closing Date, to the effect that the covenants, representations, and
warranties of the Purchaser contained herein are true and correct on and as
of the Closing Date. This certificate shall have the same force and effect
as though made on and as of such date provided that the acceptance of such
certificate and the closing of the transaction herein provided for shall not
be a waiver of the said covenants, representations, and warranties which shall
continue in full force and effect as provided herein.
<PAGE> 50
9.8 The Purchaser shall have complied with all covenants and agreements
herein agreed to be performed or caused to be performed by it.
9.9 The parties shall execute and deliver an indemnification agreement to be
annexed hereto as Schedule 9.9.
9.10 The parties shall not close and complete this transaction unless both
Sellers and Purchaser have signed a written acknowledgement that the exchange
of shares between them does not create a taxable event for either party.
9.11 The parties hereby agree that the scheduled closing shall be conditional
upon shareholder approval by the shareholders of both companies.
ARTICLE 10.00-CLOSING ARRANGEMENTS
10.1 The closing is scheduled to take place on September 14, 1999 and at the
Time of Closing at such offices as are agreed to in writing among the parties
hereto at least 24 hours prior to the said Closing.
10.2 At the Time of Closing and upon fulfillment of all the conditions set
out in this Agreement, which have not been waived in writing by the Sellers or
the Purchaser, the Sellers shall deliver to the Purchaser proper certificates
for all the Purchased Shares.
ARTICLE 11.00-NOTICE
11.1 Any notice or other document to be given by any party hereto to any
other party shall be in writing and may be given by personal delivery or by
registered mail. Any notice directed to any party shall be addressed to it
as follows:
To the Purchaser:
Salient Cybertech, Inc.
C/O Feingold & Kam, Attorneys at Law
3300 PGA Blvd. Ste 410
Palm Beach Gardens, Florida 33410
To the Sellers and the Corporation:
Peter Markus, Esq.
71 Stony Hill Road
Second Floor
Bethel, Connecticut 06801
11.2 Any notice or other document aforesaid, if delivered, shall be deemed
to have been given or made on the date on which it was delivered or, if
mailed, shall be deemed to have been given and received on the fourth (4th)
business day following the date on which it was mailed. Provided that if
there exists at the time of mailing of a notice hereunder or within four (4)
business days thereafter a labor dispute or other event which would affect
the normal delivery of the notice by an express or postal service, then
such notice will only be effective if actually delivered.
<PAGE> 51
11.3 The parties hereto may change any address for notices hereunder, from
time to time, by notice given in accordance with the foregoing.
ARTICLE 12.00 - GENERAL
12.1 Time shall be of the essence of this Agreement.
12.2 This Agreement may be executed in one or more counterparts, each of
which when so executed shall constitute an original, and all of which
together shall constitute one and the same agreement.
12.3 This Agreement, including the schedules hereto, constitutes the entire
agreement between the parties hereto. There are not and shall not be any
verbal statements, representations, warranties, undertakings, or agreements
between the parties, and this Agreement may not be amended or modified in
any respect except by written instrument signed by the parties hereto.
12.4 This Agreement shall be construed and enforced in accordance with and
the rights of the parties shall be governed by the laws of the State of
Florida. Any and all disputes arising under this Agreement, whether as to
interpretation, performance or otherwise, shall be subject to the exclusive
jurisdiction of the Courts of the State of Florida. Each of the parties
hereto irrevocably submit to the jurisdiction of the Courts of the State of
Florida, Palm Beach County.
12.5 The headings used herein are inserted for convenience of reference
only and shall not affect the construction of or interpretation of this
Agreement.
12.6 Except as otherwise set out in this Agreement, each of the parties
hereto shall pay all of its own costs and expenses of the transaction of
purchase and sale, including all fees and expenses of its accountants,
counsel, and officers.
12.7 In the event that any Article or section of this Agreement is held to
be invalid or unenforceable by a court of competent jurisdiction, such
invalidity or unenforceability shall not affect the remainder of the
provisions hereof. Any such part shall be fully severable, and this
Agreement shall be construed and enforced as if such invalid or unenforceable
part had not been inserted herein. The parties hereby agree that they would
have signed this Agreement without such invalid or unenforceable part
included herein.
12.8 In this Agreement, words importing the singular number only include
the plural and vice versa; words importing the masculine gender include the
feminine and vice versa.
12.9 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal personal representatives,
successors, and permitted assigns.
12.10 Where the date either for the expiration of any time period or for
the closing of anything hereunder expires or falls upon a day which is not a
Business Day, the time so limited extends to and the thing shall be done
on the day next following that is a Business Day.
12.11 The parties hereto agree that no disclosure or public announcement
with respect to this Agreement, or any of the transactions contemplated by
this Agreement, shall be made by any party hereto without the prior
written consent of the other parties hereto.
<PAGE> 52
12.12 An Exhibit "B" shall be annexed hereto as if set forth herein and
said exhibit shall contain terms regarding covenants not to compete,
operations of the Sellers Business and buy back/spin out rights.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first
above written.
SIGNED, SEALED AND DELIVERED )
in the presence of )__________________________
)
) __________________________
) SELLERS
)
)
) __________________________
) BUYER
)
<PAGE> 53
Exhibit "A"
The Purchase Compensation for the Seller shall be 20,000,000 (twenty million)
shares of common stock in the Purchaser, to be paid at closing. An
additional 50,000 shares of stock which shall not be subject to any stock
split, shall be made available for Kim Adolphe to reward key employees of
the Business at her sole and absolute discretion so long as said shares are
issued in conformance with Purchaser's existing non-qualified stock option
plan.
In the event the Business earns three million dollars in gross sales for the
fiscal year ended September 30, 2000 then Seller shall be entitled to an
additional 9,230,000 (nine million two hundred thirty thousand) shares of
common stock ( hereinafter the "First Earn Out Shares") in the Purchaser.
If the Business has gross sales for the fiscal year ended September 30, 2000
which are at least double the Business' gross sales for the fiscal year ended
September 30, 1999 but less than three million dollars then the Seller shall
be entitled to a percentage of the First Earn Out Shares (hereinafter the
"Percentage First Earn Out Shares"). The Percentage First Earn Out Shares
shall be calculated as follows:
1. Gross Sales for fiscal year ended 9/30/99 subtracted from the Gross Sales
for fiscal year ended 9/31/00 = "The Sales Difference"
2. The Sales Difference divided by three million (3,000,000) = "The Base
Sales Difference"
3. The Base Sales Difference shall be multiplied the First Earnout Shares =
Percentage First Earn Out Shares
In the event the Business earns ten million dollars in gross sales for the
fiscal year ended September 30, 2001 then Seller shall be entitled to an
additional 30,730,000 (thirty million seven hundred thirty thousand) shares
of common stock ( hereinafter the "Second Earn Out Shares") in the Purchaser.
If the Business has gross sales for the fiscal year ended September 30, 2001
which are at least double the Business' gross sales for the fiscal year ended
September 30, 2000 and at least quadruple the Business' gross sales for the
fiscal year ended September 30, 1999 but less than ten million dollars then
the Seller shall be entitled to a percentage of the Second Earn Out Shares
(hereinafter the "Percentage Second Earn Out Shares"). The Percentage Second
Earn Out Shares shall be calculated as follows:
1. Gross Sales for fiscal year ended 9/30/00 subtracted from the Gross
Sales for fiscal year ended 9/30/01 ="The Sales Difference"
2. The Sales Difference divided by ten million (10,000,000) = "The Base Sales
Difference"
3. The Base Sales Difference shall be multiplied by the Second Earnout Shares
= Percentage Second Earn Out Shares
Notwithstanding the preceding methods for the Seller to achieve the above
referenced earn outs, the Seller may, instead of the above mentioned formulas,
but not in addition to the above mentioned formulas, obtain earn outs
as follows:
1. If as of September 30, 2000 the prior five trading days average
closing price of the Purchaser's stock is greater than or equal to three
dollars per share (the "First Target Price"), which shall be correspondingly
increased or decreased with any stock split, and the gross revenue of the
Business is at least eighty percent of the total preceding calendar year
revenues of Purchaser, the Seller shall be entitled to the First Earn Out
Shares. However, if the First Target Price is achieved but the Business is
less than eighty percent of the total preceding calendar year revenues of
Purchaser, then earn out will be calculated by proration (the "Proration").
The Proration shall be calculated by reducing the First Earn Out Shares by
the same percentage by which the Business failed to account for eighty
percent of the total preceding calendar year revenues of Purchaser.
<PAGE> 54
2. If as of September 30, 2001 the prior five trading days average closing
price of the Purchaser's stock is greater than or equal to five dollars per
share (the "Second Target Price"), which shall be correspondingly increased
or decreased with any stock split, and the gross revenue of the Business is
at least eighty percent of the total preceding calendar year revenues of
Purchaser, the Seller shall be entitled to the Second Earn Out Shares.
However, if the Second Target Price is achieved but the Business is less
than eighty percent of the total preceding calendar year revenues of
Purchaser, then earn out will be calculated by modified proration (the
"Modified Proration"). The Modified Proration shall be calculated by reducing
the Second Earn Out Shares by the same percentage by which the Business
failed to account for eighty percent of the total preceding calendar year
revenues of Purchaser.
As further consideration for the transaction contemplated herein, the Seller
shall be entitled to the appointment of two board of directors positions to
the board of directors of the Purchaser upon the closing of this transaction,
however, in the event the Seller is not able to obtain the President of
Netscape Canada to be a Board Member to fill one of the two board of director
positions which Seller may appoint, then Seller shall only be entitled
to appoint one board of director position to the board of directors of the
Purchaser upon the closing of this transaction. Seller shall have a minimum
representation equal to 20% of the Board. All values herein are based on the
United States Dollar.
In addition, the Purchaser shall provide seven hundred and fifty thousand
dollars of working capital to the Seller as specified in that certain
Addendum to Letter of Intent entered into between the Purchaser and Seller
on or about August 6, 1999. Said monies shall be provided through the use of
a registration statement or private placement. In the event the Purchaser
does not provide the Seller with seven hundred and fifty thousand dollars
of working capital then the Seller shall have the right to request to have
its business spun out as a separately traded public entity, with the
purchaser retaining a 5% interest in the Seller, said interest to be given,
by way of dividend, to the holder of stock as of September 15, 1999, said
dividend to be issued on a parri passu basis.
In the event the Seller elects to be spun out, all shares in the Purchaser
owned by the Seller after the closing herein, along with any cash received
by the Business or Seller from the Purchaser and any sums realized from the
sale of shares, shall be returned to the Purchaser.
The parties hereto agree that no further acquisitions shall be made by the
Purchaser without the unamous consent of all the directors of the Purchaser.
In addition, an amendment to the By-Laws of the Purchaser shall be presented
at the next annual meeting to reflect the same.
<PAGE> 55
EXHIBIT "B"
A. Seller's and Shareholder's Covenant Not to Compete. In order to
induce the Purchaser to purchase the shares of the Business, the Seller and
Shareholders hereby agrees that until the second anniversary of the closing
under this Agreement, they will not, individually or together with any one
or more other persons or entities, directly or indirectly, engage in or have
any ownership interest in any person, firm, corporation, partnership,
association, agency or business (whether as principal, agent, holder of any
equity security or other instrument convertible into an equity security,
employee, consultant or otherwise) that engages in a business similar to or
competitive with the business currently conducted by the Business or
Purchaser and which is located or operated within the same state as
any current location of the Business. The Sellers and Shareholders agree
that the period provided for and the area encompassed in this Section are
necessary and reasonable in order to protect the Purchaser and the Business
in the conduct of the Business' operation and are also as consideration for
the Purchaser's agreements in Section B. For the period set forth in this
Section, the Sellers and the Shareholders, and each of them, hereby further
agree not to divulge, communicate, or use to the detriment of the Business or
the Purchaser, in any way, any confidential information or trade secrets of
the Business, including, without limitation, personnel information, secret
processes, know-how, customer lists, costs information and technical data.
The Seller and Shareholders acknowledge that the restrictions contained
herein are reasonable and necessary to protect the business and interest
which the Purchaser is acquiring pursuant to this Agreement and are also as
consideration for the Purchaser's agreements in Section B, and that any
violation of these restrictions will cause substantial irreparable injury to
the Business and the Purchaser. The Seller and Shareholders therefore
hereby agree that the Business, the Purchaser, or any one or more of them,
are entitled, in addition to any and all other remedies, to preliminary and
permanent injunctive relief, without posting a bond, to prevent a breach or
contemplated breach of this Section. The existence or any claim or cause of
action against the Business or the Purchaser, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by
the Business or the Buyer of the restrictions contained in this Section.
B. Purchaser's Covenant Not to Compete. In order to induce the Seller
and Shareholders to sell the shares of the Business, and in consideration of
the Sellers' and Shareholders' agreements in Section A, the Purchaser hereby
agree that until the second anniversary of the closing under this Agreement,
they will not, individually or acting together or with one or more other
persons or entities, directly or indirectly, engage in or have any ownership
interest in any person, firm, corporation, partnership, association, agency
or business (whether as principal, agent, holder of any equity security or
other instrument convertible into an equity security, employee, consultant or
otherwise) that engages in a business similar to that currently engaged in
by the Business. The Buyer agrees that the period provided for, and the
areas encompassed, in this Section are necessary and reasonable in order to
induce the Sellers to sell the shares of and to protect the Sellers' and
Shareholders interest following the sale and are also as consideration for
the Sellers' agreements in Section A. For the period of the covenant set
forth in this Section, the Purchaser hereby further agrees not to divulge,
communicate, or use to the detriment of the Sellers in any way, any
confidential information or trade secrets, including, without limitation,
personnel information, secret processes, know-how, customer lists, cost
information and technical data.
The Purchaser acknowledges that the restrictions contained herein are
reasonable and necessary to protect the business and interest of the Sellers
following the sale of the Business' shares to the Purchaser pursuant to
this Agreement and are also as consideration for the Sellers' agreements in
Section A, and that any violation of these restrictions will cause substantial
irreparable injury to the Sellers. The Purchaser therefore hereby agrees
that the Sellers or any one or more of them, are entitled, in addition to
any and all other remedies, to preliminary and permanent injunctive relief
to prevent a breach or contemplated breach of this Section. The existence
of any claim or cause of action against the Sellers, whether predicated upon
this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Sellers of the restrictions contained in this Section.
C. Operation of the Business. The Purchaser and Seller agree that after
the execution of this Agreement, Seller, shall maintain all daily operations
of the Business which shall include but not be limited to the following: (1)
<PAGE> 56
hiring and firing decisions regarding the Business (2) payment of all bills
regarding the Business (3) determining the acquisition candidates for the
Business (4) determining the salaries of employees of the Business (5)
determining all employment contracts for the Business. In the event that
Seller determines that there is an acquisition candidate for the Business to
acquire, the decision with regards to the appropriate acquisition targets of
the Business shall be in the discretion of Seller provided all lawful board
approval is obtained from the Purchaser, said approval not to be unreasonably
withheld.Purchaser further agrees that all profits of the Business, unless
otherwise provided for herein, shall be retained in the business, so long as
the business does not deviate substantially from its annual budget (to be
unanimously agreed to by the Board of Directors of the Purchaser). The said
funds, within the constraints mentioned herein, may be used as the Sellers
shall direct for a three year period commencing on date of the filing of the
Registration Statement on Form SB2 or the Report on Form 8K, which ever is
sooner. It is further agreed that the Purchaser shall in no way interfere
with the running of the business for a three year period except as provided
herein, provided such running of the business is done in a lawful manner.
D. The Seller shall be responsible for paying to the Purchaser fifty
thousand dollars (the "First Fiscal Expenses") within thirty days of the
expiration of September 30, 2000 to represent Seller's portion of the
expenses of Purchaser for the first fiscal year of the Business being owned
by Purchaser. Seller shall be responsible for paying to the Purchaser
seventy five thousand dollars (the "Second Fiscal Expenses") within thirty
days of the expiration of September 30, 2001 to represent Seller's portion
of the expenses of Purchaser for the second fiscal year of the Business being
owned by Purchaser. In the event the gross revenues of the Business exceed
three million five hundred thousand dollars during the time period of
September 30, 1999 to September 30, 2000 then the Second Fiscal Expenses
shall be increased from seventy five thousand dollars to one hundred and
twenty five thousand dollars.
E. Buy Back Rights and Stock Dividend Rights. If the Business obtains a
five times growth in calendar year annual revenues within a period of two
calendar years from the date of closing then, the Seller shall have the
right to present a resolution to the Board of Directors of Purchasers to vote
for the approval of the Business being spun out as a separately traded
public company. If the Business fails to obtain one million two hundred
thousand dollars in calendar year annual revenues within a period of two
calendar years from the date of closing, then Purchaser shall have the right
to the return of all of the Purchase Compensation provided to Business and
eighty-five percent of all capital stock of the Business shall be returned
to Seller from Purchaser. The rights granted to the Purchaser and
Seller in this paragraph letter E shall only be valid for a period of two
calendar years from the date of execution of this Agreement.
It is further agreed that for a three year period, except as otherwise
provided herein, Seller shall have the right to 2 seats on the Business'
Board of Directors, and that the by-laws of the Business shall be amended
such that a 90% majority of Board's votes shall be required to pass any
resolution with respect to the acquisition of further assets, or
the raising of monies by the Business, or with respect to any matter which
materially impacts upon the Business. It is further agreed that the Seller
shall have a 20% representation on the Purchaser's Board of Directors.
<PAGE> 57
ALBERTA ARTICLES OF INCORPORATION
1. NAME OF CORPORATION:
GEMINI LEARNING SYSTEMS INC.
2. THE CLASSES, AND ANY MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS
AUTHORIZED TO ISSUE:
1,000 SHARES NO PAR VALUE
3. RESTRICTIONS ON SHARE TRANSFER (IF ANY):
FIRST RIGHT OF REFUSAL TO EITHER PARTY
4. NUMBER, OR MINIMUM AND MAXIMUM NUMBER, OF DIRECTORS THAT THE
CORPORATION MAY HAVE:
MINIMUM OF TWO, MAXIMIM OF FIVE
5. IF THE CORPORATION IS RESTRICTED FROM CARRYING ON A CERTAIN BUSINESS, OR
RESTRICTED TO CARRYING ON A CERTAIN BUSINESS, SPECIFY THE RESTRICTION (S):
N/A
6. OTHER RULES OR PROVISIONS (IF ANY):
A) THE RIGHT TO TRANSFER SHARES IS RESTRICTED,
B) THE NUMBER OF SHAREHOLDERS IS TO BE NO MORE THAN 50,
C) THE PUBLIC CAN NOT BE INVITED TO SUBSCRIBE TO THE CORPORATIONS SECURITIES
7. DATE:
90 05 28
YEAR MON DAY
INCORPORATORS NAMES: ADDRESS (INCLUDING POSTAL CODE)SIGNATURE
MARGARET KIM MASSIE 528-21 AVE. S.W. T250H1 /s/ MARGARET KIM MASSIE/s/
CALGARY, ALTA
SHERI ANNE BYRNE 3331 OAKWOOD DRIVE SW /s/ SHERI ANNE BYRNE/s/
CALGARY, ALTA T2V4V6
<PAGE> 58
BUSINESS CORPORATIONS ACT
ARTICLES OF AMENDMENT
1. NAME OF CORPORATION GEMINI LEARNING SYSTEMS INC.
2. CORPORATE ACCESS NUMBER 204234413
3. THE ARTICLES OF THE ABOVE-NAMED CORPORATION ARE AMENDED AS FOLLOWS:
Item 2 of the Articles of Incorporation of the Corporation be amended by
substituting the said Item with the following pursuant to s. 167(1)(d) of the
Business Corporations Act:
"(a) the corporation is authorized to issue an unlimited number of a
class of shares designated as "Class A Common Voting Shares" and having
attached thereto the following rights, privileges, restrictions and
conditions:
(i) The holders of the Class A Common Voting Shares shall be entitled to
receive notice of and to attend any meeting of the shareholders of the
Corporation and shall be entitled to one vote for each Class A Common Voting
Share held;
(ii) Subject to the prior rights and privileges attaching to any other
classes of shares of the Corporation and to the provisions of subparagraph
(iii) hereof, the Class A Common Voting Shares shall carry the right to
receive any dividend declared by the Corporation for the holders of Class A
Common Voting Shares; and
(iii) Subject to the prior rights and privileges attaching to any other
class of shares of the Corporation, the Class A Common Voting Shares shall,
ranking on a parity with the Class B Common Voting Shares, carry the right
to receive the remaining assets in the event of the liquidation, dissolution
or winding-up of the Corporation.
(b) the corporation is authorized to issue an unlimited number of a class
of shares designated as "Class B Common Voting Shares" and having attached
thereto the following rights, privileges, restrictions and conditions:
(i) The holders of the Class B Common Voting Shares shall be entitled to
receive notice of and to attend any meeting of the shareholders of the
Corporation and shall be entitled to one vote for each Class B Common Voting
Share held;
(ii) Subject to the prior rights and privileges attaching to any other
classes of shares of the Corporation and to the provisions of subparagraph
(iii) hereof, the Class B Common Voting Shares shall carry the right to
receive any dividend declared by the Corporation for the holders of Class B
Common Voting Shares; and
(iii) Subject to the prior rights and privileges attaching to any other
class of shares of the Corporation, the Class B Common Voting Shares shall,
ranking on a parity with the Class A Common Voting Shares, carry the right
to receive the remaining assets in the event of the liquidation, dissolution
or winding-up of the Corporation.
(c) The Corporation is authorized to issue an unlimited number of a
class of shares designated as "Class C Common Non-voting Shares" and having
attached thereto the following rights, privileges, restrictions and
conditions:
(i) Except as otherwise expressly provided in the Business Corporations
Act (Alberta), the holders of the Class C Common Non-voting Shares shall
not be entitled to receive notice of, to attend or to vote at any meeting of
the shareholders of the Corporation;
<PAGE> 59
(ii) Subject to the prior rights and privileges attaching to any other
class of shares of the Corporation and to the provisions of subparagraph
(iii) hereof, the Class C Common Non-voting Shares shall carry the right to
receive any dividend declared by the Corporation for the holders of Class C
Common Non-Voting Shares; and
(iii) The Class C Common Non-Voting Shares shall not be entitled to
receive the remaining assets in the event of the liquidation, dissolution
or winding-up of the Corporation.
(d) The Corporation is authorized to issue an unlimited number of a
class of shares designated as "Class D Common Non-voting Shares" and having
attached thereto the following rights, privileges, restrictions and
conditions:
(i) Except as otherwise expressly provided in the Business Corporations
Act (Alberta), the holders of the Class D Common Non-voting Shares shall not
be entitled to receive notice of, to attend or to vote at any meeting of the
shareholders of the Corporation;
(ii) Subject to the prior rights and privileges attaching to any other
class of shares of the Corporation and to the provisions of subparagraph
(iii) hereof, the Class D Common Non-voting Shares shall carry the right to
receive any dividend declared by the Corporation for the holders of Class D
Common Non-Voting Shares; and
(iii) The Class D Common Non-Voting Shares shall not be entitled to
receive the remaining assets in the event of the liquidation, dissolution or
winding-up of the Corporation.
(e) The Corporation is authorized to issue an unlimited number of a
class of shares designated as "Class E Non-voting Preferred Shares" having
attached thereto the following rights, privileges, restrictions and
conditions:
(i) Except as otherwise expressly provided in the Business Corporations
Act (Alberta), the holders of the Class E Non-voting Preferred Shares shall
not be entitled to receive notice of, to attend or to vote at any meeting of
the shareholders of the Corporation;
(ii) Subject to the prior rights and privileges attaching to any other
class of shares of the Corporation and to the provisions of subparagraph
(iii) hereof, Class E Non-voting Preferred Shares shall carry the right to
receive any dividend declared by the Corporation for the holders of that
class of the Class E Non-voting Preferred Shares;
(iii) The Class E Non-voting Preferred Shares shall not be entitled to
receive the remaining assets in the event of the liquidation, dissolution or
winding-up of the Corporation;
(iv) The Corporation may redeem all or from time to time part of the
outstanding Class E Non-voting Preferred Shares on payment to the holders
thereof, for each share to be redeemed, of the stated capital thereon
together with all unpaid dividends, which shall have accrued thereon and
which, for such purpose, shall be treated as accruing up to the date of such
redemption; and
(v) The directors may make and enforce such reasonable regulations
governing the manner of the redemption of the preferred shares as the
directors may in their discretion deem advisable.
Item 3 of the Articles of Incorporation of the Corporation be amended by
substituting the said Item with the following pursuant to s. 167(1) of the
Business Corporations Act:
The right to transfer shares of the Corporation shall be restricted in that
no shares of the Corporation shall be transferred without the express
consent of a majority of the directors of the Corporation, signified by a
resolution passed by the Board, or without the previous consent in writing of
all the directors of the Corporation.
Item 6 of the Articles of Incorporation of the Corporation be amended by
substituting the said Item with the following pursuant to s. 167(m) of the
Business Corporations Act:
<PAGE> 60
(a) That tile number of shareholders of the Corporation, exclusive of
persons who are in its employment and exclusive of persons who, having been
formerly in the employment of the Corporation, were, while in that employment,
and have continued after the termination of that employment to be,
shareholders of the Corporation, is limited to not more than fifty, two or
more persons who are the joint registered owners of one or more shares
being counted as one shareholder.
(b) That any invitation to the public to subscribe for securities of the
Corporation is prohibited.
(c) That the directors may from time to time, in such amounts and on
such terms as it deems expedient to charge, mortgage, hypothecate or pledge
all or any of the currently owned or subsequently acquired real or personal,
movable, or immovable, property of the Corporation, including book debts,
rights, powers, franchises and undertakings, to secure any debt obligations
or any money borrowed, or other debt or liability of the Corporation.
4. Date Name Signature
June 29, 1999 Stephen G. Jenuth /s/Stephen G. Jenuth/s/
Solicitor
<PAGE> 61
BUSINESS CORPORATIONS ACT
ARTICLES OF AMENDMENT
1. NAME OF CORPORATION: GEMINI LEARNING SYSTEMS INC.
2. CORPORATE ACCESS NUMBER: 204234413
3. THE ARTICLES OF THE ABOVE-NAMED CORPORATION ARE AMENDED AS FOLLOWS:
Item 2 of the Articles of Incorporation of the Corporation be amended by by
substituting the said Item with the following pursuant to S. 167(1)(d) of
the Business Corporations Act:
"(a) the corporation is authorized to issue an unlimited number of a class
of shares designated as "Class A Common Voting Shares" and having attached
thereto the following rights, privileges, restrictions and conditions:
(i) The holders of the Class A Common Voting Shares shall be entitled to
receive notice of and to attend any meeting of the shareholders of the
Corporation and shall be entitled to one vote for each Class A Common
Voting Share held;
(ii) Subject to the prior rights and privileges attaching to any other
classes of shares of the Corporation and to the provisions of subparagraph
(iii) hereof, the Class A Common Voting Shares shall carry the right to
receive any dividend declared by the Corporation for the holders of Class A
Common Voting Shares; and
(iii) Subject to the prior rights and privileges attaching to any other
class of shares of the Corporation, the Class A Common Voting Shares shall,
ranking on a parity with the Class B Common Voting Shares, carry the right
to receive the remaining assets in the event of the liquidation, dissolution
or winding-up of the Corporation.
(b) the corporation is authorized to issue an unlimited number of a
class of shares designated as "Class B Common Voting Shares" and having
attached thereto the following rights, privileges, restrictions and
conditions:
(i) The holders of the Class B Common Voting Shares shall be entitled
to receive notice of and to attend any meeting of the shareholders of the
Corporation and shall be entitled to one vote for each Class B Common
Voting Share held;
(ii) Subject to the prior rights and privileges attaching to any other
classes of shares of the Corporation and to the provisions of subparagraph
(iii) hereof, the Class B Common Voting Shares shall carry the right to
receive any dividend declared by the Corporation for the holders of Class B
Common Voting Shares; and
(iii) Subject to the prior rights and privileges attaching to any other
class of shares of the Corporation, the Class B Common Voting Shares shall,
ranking on a parity with the Class A Common Voting Shares, carry the right
to receive the remaining assets in the event of the liquidation, dissolution
or winding-up of the Corporation.
(c) The Corporation is authorized to issue an unlimited number of a
class of shares designated as "Class C Common Non-voting Shares" and having
attached thereto the following rights, privileges, restrictions and
conditions:
(i) Except as otherwise expressly provided in the Business Corporations
Act (Alberta), the holders of the Class C Common Non-voting Shares shall not
be entitled to receive notice of, to attend or to vote at any meeting of the
shareholders of the Corporation;
<PAGE> 62
(ii) Subject to the prior rights and privileges attaching to any other
class of shares of the Corporation and to the provisions of subparagraph
(iii) hereof, the Class C Common Non-voting Shares shall carry the right to
receive any dividend declared by the Corporation for the holders of Class
C Common Non-Voting Shares; and
(iii) The Class C Common Non-Voting Shares shall not be entitled to
receive the remaining assets in the event of the liquidation, dissolution or
winding-up of the Corporation.
(d) The Corporation is authorized to issue an unlimited number of a
class of shares designated as "Class D Common Non-voting Shares" and having
attached thereto the following rights, privileges, restrictions and
conditions:
(i) Except as otherwise expressly provided in the Business Corporations
Act (Alberta), the holders of the Class E Common Non-voting Shares shall
not be entitled to receive notice of, to attend or to vote at any meeting of
the shareholders of the Corporation;
(ii) Subject to the prior rights and privileges attaching to any other
class of shares of the Corporation and to the provisions of subparagraph
(iii) hereof, the Class D Common Non-voting Shares shall carry the right to
receive any dividend declared by the Corporation for the holders of Class D
Common Non-Voting Shares; and
(iii) The Class D Common Non-Voting Shares shall not be entitled to
receive the remaining assets in the event of the liquidation, dissolution or
winding-up of the Corporation.
(e) The Corporation is authorized to issue an unlimited number of a
class of shares designated as "Class E Non-voting Preferred Shares" having
attached thereto the following rights, privileges, restrictions and
conditions:
(i) Except as otherwise expressly provided in the Business Corporations
Act (Alberta), the holders of the Class E Non-voting Preferred Shares shall
not be entitled to receive notice of, to attend or to vote at any meeting
of the shareholders of the Corporation;
(ii) Subject to the prior rights and privileges attaching to any other
class of shares of the Corporation and to the provisions of subparagraph
(iii) hereof, Class E Non-voting Preferred Shares shall carry the right to
receive any dividend declared by the Corporation for the holders of that
class of the Class E Non-voting Preferred Shares;
(iii) The Class E Non-voting Preferred Shares shall not be entitled to
receive the remaining assets in the event of the liquidation, dissolution or
winding-up of the Corporation;
(iv) The Corporation may redeem all or from time to time part of the
outstanding Class E Non-voting Preferred Shares on payment to the holders
thereof, for each share to be redeemed, of the stated capital thereon
together with all unpaid dividends, which shall have accrued thereon and
which, for such purpose, shall be treated as accruing up to the date of such
redemption; and
(v) The directors may make and enforce such reasonable regulations
governing the manner of the redemption of the preferred shares as the
directors may in their discretion deem advisable.
Item 3 of the Articles of Incorporation of the Corporation be amended by
substituting the said Item with the following pursuant to S. 167(1) of the
Business Corporations Act:
The right to transfer shares of the Corporation shall be restricted in that
no shares of the Corporation shall be transferred without the express
consent of a majority of the directors of the Corporation, signified by
a resolution passed by the Board, or without the previous consent in
writing of all the directors of the Corporation.
Item 6 of the Articles of Incorporation of the Corporation be amended by
Substituting the said Item with the following pursuant to S, 167(m) of
the Business Corporations Act:
<PAGE> 63
(a) That the number of shareholders of the Corporation, exclusive of
persons who are in its employment and exclusive of persons who, having been
formerly in the employment of the Corporation, were, while in that
employment, and have continued after the termination of that employment to
be, shareholders of the Corporation, is limited to not more than fifty, two
or more persons who are the joint registered owners of one or more shares
being counted as one shareholder.
(b) That any invitation to the public to subscribe for securities of the
Corporation is prohibited.
(c) That the directors may from time to time, in such amounts and on
such terms as it deems expedient to charge, mortgage, hypothecate or pledge
all or any of the currently owned or subsequently acquired real or
personal, movable, or immovable, property of the Corporation, including
book debts, rights, powers, franchises and undertakings, to secure any debt
obligations or any money borrowed, or other debt or liability of the
Corporation.
4. Date Name Signature
June 29,1999 Stephen G. Jenuth /s/Stephen G. Jenuth/s/
Solicitor
<PAGE> 64
CORPORATE ACCESS NUMBER: 204234413
Alberta
BUSINESS CORPORATIONS ACT
CERTIFICATE
OF
AMENDMENT AND REGISTRATION
OF RESTATED ARTICLES
GEMINI LEARNING SYSTEMS INC.
AMENDED ITS ARTICLES ON 1999/07/02.
(SEAL)
<PAGE> 65
20423441
Corporate Access No.
Alberta
BUSINESS CORPORATIONS ACT
Form 2
CERTIFICATE OF INCORPORATION
GEMINI LEARNING SYSTEMS INC.
Name of Corporation
I HEREBY CERTIFY THAT THE ABOVE-MENTIONED CORPORATION, THE ARTICLES
OF INCORPORATION OF WHICH ARE ATTACHED, WAS INCORPORATED UNDER
THE BUSINESS CORPORATIONS ACT OF THE PROVINCE OF ALBERTA.
(ILLEGABLE)
(SIGNATURE) ___________
______________________
Registrar of Corporations
June 5, 1990
Date of Incorporation
(SEAL)
<PAGE> 66
Certified Copy
Name/Structure Change Alberta Corporation - Registration Statement
Service Request Number: 1287320
Corporate Access Number: 204234413
Previous Legal Entity Name: GEMINI LEARNING SYSTEMS INC
Previous French Equivalent Name:
Legal Entity Name: GEMINI LEARNING SYSTEMS INC.
French Equivalent Name:
Legal Entity Status: Active
Alberta Corporation Type: Named Alberta Corporation
Nuans Report Number: PRE-CONV
Nuans Report Date: 1990/06/05
French Name Nuans Report Number:
French Name Nuans Report Date:
Classes Of Shares and any
Maximum Number(within each class): SEE SCHEDULE "A", ATTACHED.
Restrictions On Share Transfers: SEE SCHEDULE "B", ATTACHED.
Minimum Number Of Directors: 2
Minimum Number Of Directors: 5
Restrictions On Business To: N/A
Restrictions On Business From: N/A
Other Provisions: SEE SCHEDULE "C", ATTACHED.
Section And Subsection of Act Change Made
Under: 167(1)(D),167(1),167(M)
Directors Issue Shares In Series:
Professional Endorsement Provided:
Future Dating Required:
Amendment Date: 1999/07/02
Annual Returns
File Year Date Filed
1998 1999/02/25
1997 1998/12/13
1996 1996/06/14
Attachments
Attachment Type Microfilm Bar Code Date Recorded
Share Capital ELECTRONIC 1999/07/02
Restrictions on Share Transfers ELECTRONIC 1999/07/02
Other Rules or Provisions ELECTRONIC 1999/07/02
Registration Authorized By: STEPHEN G. JENUTH
SOLICITOR
<PAGE> 67
BY-LAW NO. ONE
a by-law relating generally to the
transaction of the business and affairs of
GEMINI LEARNING SYSTEMS INC
(hereinafter referred to as the "corporation")
CONTENTS
Article
One Interpretation
Two General
Three Directors and Officers
Four Meetings Of Shareholders
Five Shares
Six Financial Disclosure
Seven Divisions Of The Corporation
Eight Dividends
Nine Notices
Ten Effective Date And Repeal
<PAGE> 68
ARTICLE ONE
INTERPRETATION
1.01 Definitions - In this by-law and in all other by-laws of the
Corporation, unless the context otherwise requires:
(a) "Act" means the Business Corporations Act, RSA 1980, C B-15 and any
statute that may be substituted therefor, as from time to time amended, and
a reference to a particular provision or provisions of the Act shall be
deemed to be a reference to such provision or provisions as the same may
be thereafter from time to time amended or supplemented;
(b) "articles" means the articles of incorporation and/or continuance by
which the Corporation was incorporated or continued dated June 5 , 1990 , as
the same may be from time to time restated, amended, or otherwise altered in
accordance with the Act;
(c) "by-law" means this by-law and "bylaws" means this by-law and any
other by-laws of the Corporation hereafter passed as from time to time
amended;
(d) "Corporation" means the corporation incorporated or continued under
the Act under the name GEMINI LEARNING SYSTEM INC.
(e) "meetings of shareholders" includes an annual meeting of shareholders,
a special meeting of shareholders and a meeting of any class or classes of
shareholders;
(f) "officer" includes persons appointed as an assistant officer; and
terms in this by-law and all other by-laws of the Corporation not otherwise
defined in this section 1.01 shall, if applicable, have the respective
meanings ascribed thereto in the Act.
1.02 Number and Gender - In this by-law and in all other by-laws of the
Corporation, unless the context otherwise requires, words importing the
singular number shall include the plural and vice versa, and words
importing any of the masculine, feminine or neuter genders shall include the
other genders.
1.03 Interpretation Not Affected By Headings - The use of headings in this
by-law is for convenience of reference only and shall not affect the
interpretation of the provisions hereof.
<PAGE> 69
ARTICLE TWO
GENERAL
2.01 Registered Office - Until changed by articles of amendment, the
registered office of the Corporation shall remain in the place specified in
the articles and at such address therein as the board of directors may
designate from time to time by resolution.
2.02 Corporate Seal - If the Corporation uses a corporate seal it shall
be in the form adopted by resolution of the board of directors from time to
time.
2.03 Financial Year - The financial year of the Corporation shall end on
such date as the board of directors may designate from time to time by
resolution.
2.04 Banking Arrangements - The banking business of the Corporation, or
any part thereof, shall be transacted with such bank, trust company or
other firm or corporation carrying on in whole or in part business of a
banking nature, as the board of directors may designate, appoint or authorize
from time to time by resolution and all such banking business, or any part
thereof, shall be transacted on the Corporation's behalf by such one or more
officers and/or other persons as the board of directors may designate,
direct or authorize from time to time by resolution and to the extent therein
provided.
2.05 Execution of Documents - Deeds, transfers, assignments, contracts,
obligations, certificates and other instruments to be signed on behalf of
the Corporation shall be signed by the President or a Vice-President or
the General Manager or a director and by the Secretary, an Assistant
Secretary, the Treasurer, an Assistant Treasurer, the Secretary-Treasurer,
or any other director.
Notwithstanding any provisions to the contrary contained in the by-laws, the
board of directors may at any time and from time to time authorize and
direct both the manner in which and the person or persons or any class
thereof by whom any deed, transfer, assignment, contract, obligations,
certificate or instrument or any class thereof may or shall be signed on
behalf of the Corporation and the person or persons so authorized and
directed may, but need not be, a director of the Corporation or one of the
above-mentioned officers and, if the business and operations of the
Corporation be divided into divisions pursuant to Article Seven hereof, the
board of directors or the chief executive officer of a Division may
authorize and direct a person or persons to sign in the manner aforesaid on
behalf of the Corporation.
2.06 Loans And Guarantees - The Corporation may not give financial
assistance by means of a loan, guarantee or otherwise except as permitted
under the Act.
2.07 Use of Corporation's Name - The Corporation shall set out its full
corporate name in all contracts, invoices, negotiable instruments and orders
for goods or services issued or made by or on behalf of the Corporation.
2.08 Voting Rights In Other Bodies Corporate - The signing officers of
the Corporation may execute and deliver proxies and arrange for the issuance
of voting certificates or other evidence of the right to exercise the voting
rights attaching to any securities held by the Corporation. Such instruments,
certificates or other evidence shall be in favour of such person or such
persons as may be determined by the officers executing such proxies or
arranging for the issuance of voting certificates or such other evidence of
the right to exercise such voting rights. In addition, the Board, or failing
the Board, the signing officers of the Corporation, may from time to time
direct the manner in which and the person or persons by whom any particular
voting rights or class of voting rights may or shall be exercised.
<PAGE> 70
ARTICLE THREE
DIRECTORS AND OFFICERS
3.01 Number of Directors - Until changed by articles of amendment, the
number of directors shall be ____________ or shall be not less than the
minimum and not more than the maximum number, as the case may be, specified
in the articles. If the articles provide for a minimum and maximum number of
directors, the number of directors may be changed from time to time within
such limits by resolution of the board of directors. If at any time
there shall be authorized only one director of the Corporation, then,
subject always to any specific provisions in that behalf in the Act, the
references in the by-laws to "board of directors" and "directors" shall be
deemed to be references to "the sole director" of the Corporation, mutatis
mutandis.
3.02 Powers Of Directors To Manage - Subject to any unanimous
shareholders' agreement, the directors and affairs of the Corporation shall
manage the business and affairs of the Corporation
3.03 Qualifications Of Directors
(a) The following persons are disqualified from being directors of the
Corporation:
(i) anyone who is less than eighteen years of age;
(ii) anyone who:
A. is a dependent adult as defined in the Dependent Adults Act or is
the subject of a certificate of incapacity under that Act,
B. is a formal patient as defined in the Mental Health Act,
C. is the subject of an order under The Mentally Incapacitated Persons
Act appointing a committee of his person or estate or both, or
D. has been found to be a person of unsound mind by a court elsewhere
than in Alberta;
(ii) a person who is not an individual; or
(iv) a person who has the status of a bankrupt.
(b) An officer or employee of the Corporation serving on the board of
directors at the date of retirement from the Corporation's employ shall be
eligible for re-election as a director for the next succeeding term of
office only.
(c) Subject to the provisions of the Act relating to holding corporations,
at least half of the directors shall be resident Albertans.
(d) A director ceases to hold office when he dies or upon his written
resignation (which resignation shall become effective at the time that it is
sent to the Corporation, or at the time specified in the resignation,
whichever is later), or when he becomes disqualified in accordance with this
section 3.03 or when he is removed from office in accordance with the Act
by the passing of an ordinary resolution to that effect at a special meeting
of shareholders.
(e) A director need not be a shareholder.
<PAGE> 71
3.04 Election Of Directors
(a) The shareholders of the Corporation shall, by ordinary resolution at
the first meeting of shareholders and at each succeeding annual meeting at
which an election of directors is required, elect directors to hold office
for a term expiring not later than the close of the third annual meeting of
shareholders following the election.
(b) It is not necessary that all directors elected at a meeting of
shareholders hold office for the same term.
(c) A director not elected for an expressly stated term ceases to hold
office at the close of the first annual meeting of shareholders following
his election.
(d) Notwithstanding the provisions of section 3.05(b) hereof, but
subject to the other provisions in that behalf contained in the Act, a
quorum of directors may fill a vacancy among the directors, except a vacancy
resulting from an increase in the number or minimum number of directors, as
the case may be, or from a failure to elect the number of minimum number of
directors, as the case may be, required by the articles.
(e) If there is not a quorum of directors, or if there has been a failure
to elect the number or minimum number of directors, as the case may be,
required by the articles, the directors then in office shall forthwith call
a special meeting of shareholders to fill the vacancy and, if they fail to
call a meeting or if there are no directors then in office, the meeting may
be called by any shareholder.
3.05 Quorum For Directors' Meetings
(a) The quorum for a meeting of directors shall be fixed by a resolution
of the directors and, where the articles provide for a fixed number of
directors, the quorum may be less than a majority of such number of directors,
and where the articles provide for a minimum and maximum number of directors,
the quorum may be less than the minimum number of directors.
(b) Subject to the provisions of the Act relating to holding corporations,
the directors shall not transact business at a meeting of directors unless
at least half of the directors present are resident Canadians.
(c) Notwithstanding sub-section (b), directors may transact business at
a meeting of directors where at least half of Canadian resident directors
are not present if:
(i) a resident Canadian director who is unable to be present approves in
writing or by telephone or other communications facilities the business
transacted or to be transacted at the meeting; and
(ii) at least half of resident Canadian directors would have been present
had that director been present at the meeting.
<PAGE> 72
3.06 Meetings By Telephone - A director may, if all the directors of the
Corporation consent, participate in a meeting of directors or of a committee
of directors by means of such telephone or other communications facilities
as permit all persons participating in the meeting to hear each other, and a
director participating in such a meeting by such means is deemed to be
present at that meeting.
3.07 Resolution In Lieu Of Meeting - A resolution in writing, signed by
all the directors entitled to vote on that resolution at a meeting of
directors or committee of directors, is as valid as if it had been passed
at a meeting of directors or committee of directors.
3.08 Calling Of Meetings Of Directors - Meetings of the board of directors
shall be called and held from time to time at such place within or outside
Alberta, at such time and on such day as the Chairman of the Board, if any,
or the President or a Vice-President or any two directors or the board of
directors may determine, and the Secretary or any other officer or assistant
officer of the Corporation shall call meetings when so directed or authorized.
Notice of every meeting so called shall be given by mail, telegraph,
telephone or other communications facility or delivered personally to each
director at least forty-eight (48) hours before the time when the meeting
is to be held. A notice of a meeting of directors need not specify the
purpose of or the business to be transacted at the meeting unless the Act
requires such matter to be specified.
3.09 Chairman Of Meetings - The Chairman of the Board, or if none, the
President or, in his absence, a Vice- President, shall be chairman of any
meeting of the board. If no such officer be present, the directors present
shall choose one of their numbers to be chairman.
3.10 Waiver Of Notice - A director may, either before or after the
meeting, waive a notice of a meeting of directors; and attendance of a
director at a meeting of directors is a waiver of notice of the meeting,
except where a director attends a meeting for the express purpose of
objecting to the transaction of any business on the grounds that the meeting
is not lawfully called.
3.11 Dissent
(a) A director who is present at a meeting of directors or committee of
directors is deemed to have consented to any resolution or action taken
thereat unless:
(i) He requests that his abstention or dissent be or his abstention or
dissent is entered in the minutes of the meeting;
(ii) He sends his written dissent to the secretary of the meeting before
the meeting is adjourned;
(iii) He sends his dissent by registered mail or delivers it to the
registered office of the Corporation immediately after the meeting is
adjourned; or
(iv) He otherwise proves that he did not consent to the resolution or
action.
(b) A director who votes for or consents to a resolution is not entitled
to dissent under subsection (a).
3.1 Votes To Govern - At all meetings of the board of directors, every
question to be decided shall be decided upon by a majority of the votes cast
on the question and in case of an equality of votes the chairman shall be
entitled to a second or casting vote.
3.13 Remuneration Of Directors - The directors shall be paid such
remuneration, if any, as the board of directors may from time to time
determine. Any remuneration so payable to a director who is also an officer
or employee of the Corporation shall be in addition to his salary as such
officer or employee, as the case may be. In addition, the board of directors
<PAGE> 73
may by resolution from time to time award special remuneration out of the
funds of the Corporation to any director who performs any special work or
service for, or undertakes any special mission on behalf of, the Corporation
outside the work or services ordinarily required of a director of the
Corporation. The directors shall also be paid such sums in respect of their
out-of-pocket expenses incurred in attending board, committee or
shareholders' meetings or otherwise in respect of the performance by them
of their duties as the board of directors may from time to time determine.
No confirmation by the shareholders of any such remuneration or payment
shall be required.
3.14 Disc1osure Of Interested Director Contracts - No director shall be
disqualified by reason of being a director from, or be required to vacate
his office as a director by reason of, holding any other office or place of
profit with or with respect to the Corporation or any body corporate in
which the Corporation is or proposes to become a shareholder, or by reason
of contracting with or being otherwise in any way directly or indirectly
interested or concerned in any contract or arrangement made or proposed
to be made with the Corporation, nor shall any director be liable to account
to the Corporation or any of its shareholders or creditors, for any profit
arising from any such office or place of profit; and, subject always to the
provisions in that regard contained in the Act, no contract or arrangement
entered into by or on behalf of the Corporation in which any director shall
be in any way directly or indirectly interested shall be avoided or voidable
and no director shall be liable to account to the Corporation or any
of its shareholders or creditors for any profit realized by or from any
such contract or arrangement by reason of any fiduciary relationship.
No director or officer shall be obliged to make any declaration of interest
with respect to the contract or proposed contract with the Corporation in
which such director or officer is in any way directly or indirectly
interested except such declaration as is required by the Act, nor, subject
to such provisions, shall any director be obliged to refrain from voting in
respect of any such contract. The provisions of this section 3.14 are in
supplement of and not by way of limitation upon the rights in that regard
conferred upon directors by the Act.
<PAGE> 74
3.15 Limitation Of Liability - Except as otherwise provided in the Act,
no director or officer for the time being of the Corporation shall be liable
for the acts, receipts, neglects or defaults of any other director, officer
or employee or for joining in any receipt or act for conformity, or for any
loss, damage or expense happening to the Corporation through the
insufficiency or deficiency of title to any property acquired by, for, or on
behalf of the Corporation, or for the insufficiency or deficiency of any
security in or upon which any of the monies of the Corporation shall be
placed out or invested, or for any loss or damage arising from the
bankruptcy, insolvency or tortious acts of any person, including any person
with whom any monies, securities or effects shall be lodged or deposited,
or for any loss, conversion, misapplication or misappropriation of, or any
damage resulting from any dealings with, the monies, securities or other
assets of the Corporation, or for any other loss, damage or misfortune
whatsoever which may happen in the execution of the duties of his office or
in relation thereto, unless the same are occasioned by his own willful
neglect or default; provided, however, that nothing in this section 3.15
shall relieve any director or officer, in the exercising of his powers and
in the discharging of his duties, from his duty to act honestly and in
good faith with a view to the best interests of the Corporation and to
exercise the care, diligence and skill that a reasonably prudent person
would exercise in comparable circumstances.
3.16 Delegation By Directors - The directors may appoint from their
number a managing director who is a resident Canadian or a committee of
directors and, subject to the provisions of the Act in that regard, may
delegate to such managing director or committee any of the powers of the
directors and, subject to the provision of the Act relating to holding
corporations, at least half of the members of any such committee must be
resident Canadians.
3.17 Indemnification Of Directors
(a) Except in respect of an action by or on behalf of the Corporation or
body corporate to procure a judgment in its favour, the Corporation shall
indemnify a director or officer of the Corporation, a former director or
officer of the Corporation or a person who acts or acted at the Corporation's
<PAGE> 75
request as a director or officer of a body Corporate of which the Corporation
is or was a shareholder or creditor, and his heirs and legal representatives,
against all costs, charges and expenses, including an amount paid to settle
an action or satisfy a judgment, reasonably incurred by him in respect of any
civil, criminal or administrative action or proceeding to which he is made a
party by reason of being or having been a director or officer of the
Corporation or body corporate, as the case may be, if:
(i) He acted honestly and in good faith with a view to the best interests
of the Corporation; and
(ii) In the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, he had reasonable grounds for believing
that his conduct was lawful.
(b) The Corporation may with the approval of a court indemnify a person
referred to in sub-section (a) in respect of an action by or on behalf of
the Corporation or body corporate to procure a judgment in its favour, to
which he is made a party by reason of being or having been a director or
an officer of the Corporation or body corporate, against all costs, charges
and expenses reasonably incurred by him in connection with such action if
he fulfills the conditions set out in clauses (a)(l) and (ii).
(c) Notwithstanding anything in this section, the Corporation shall
indemnify any person referred to in subsection (a) who has been
substantially successful in the defense of any civil, criminal or
administrative action or proceeding to which he is made a party by reason
of being or having been a director or officer of the Corporation or body
corporate against all costs, charges and expense. Reasonably incurred by him
in respect of such action or proceeding.
(d) The Corporation may purchase and maintain insurance for the benefit
of any person referred to in this section against any liability incurred by
him in his capacity as a director of officer of the Corporation for failing
to exercise the care, diligence and skill that a reasonably prudent person
would exercise in comparable circumstances.
3.18 Authority To Appoint Officers
(a) Subject to the articles or any unanimous shareholder agreement, the
directors may designate the offices of the Corporation and may appoint to
fill such offices persons of full capacity, and may specify their duties
and, subject to certain exceptions in the Act, may delegate to them powers
to manage the business of the Corporation.
<PAGE> 76
(b) A director may be appointed to any office of the Corporation.
(c) Two or more offices of the Corporation may be held by the same person.
(d) Except for the Chairman of the Board, if any, and the President, an
officer need not be a director.
(e) The officers shall be appointed at the first meeting of the board of
directors after the election of directors by the shareholders but, in
default of such election or appointment, the then incumbents shall hold
office until their successors are elected or appointed.
3.19 Terms Of Office And Remuneration - The terms of employment and
remuneration of the officer selected or appointed by the board of directors
shall be approved by the board of directors, or any officer designated by
it, from time to time. The board of directors may remove at its pleasure any
officer of the Corporation. Otherwise, each officer elected or appointed by
the board of directors shall hold office until his successor is elected or
appointed, except that the respective term of office of the Chairman of the
Board and of the President shall expire if and when he shall cease to be a
director.
3.20 Chairman Of The Board - The Chairman of the Board, if any, shall,
when present, preside at all meetings of the directors and shall have such
other powers and duties as may from time to time be assigned to him by the
board of directors.
3.21 President - The President shall, when present, preside at all
meetings of shareholders and, in the absence of a Chairman of the Board,
at all meetings of the board of directors. The President shall be the chief
executive officer of the Corporation and shall be charged, subject to the
authority of the board of directors, with general supervision of the business
and affairs of the Corporation.
ARTICLE FOUR
MEETINGS OF SHAREHOLDERS
4.01 Calling Of Meetings - The annual meeting of shareholders shall be
held at such time and on such day in each year as the board of directors may
from time to time determine, for the purpose of receiving the reports and
statements required by the Act to be placed before the annual meeting,
electing directors and appointing auditors, and for the transaction of such
other business as may properly be brought before the meeting. The directors
shall call an annual meeting of shareholders not later than eighteen (18)
<PAGE> 77
months after the Corporation comes into existence and subsequently not later
than fifteen (15) months after holding the last preceding annual meeting,
and may at any time call a special meeting of shareholders.
4.02 Place Of Meetings- Meetings of shareholders shall be held at the
registered office of the Corporation or at such place within Alberta that
the directors determine. Notwithstanding the foregoing, a meeting of
shareholders of the Corporation may be held outside Alberta if all the
shareholders entitled to vote at that meeting so agree, and a shareholder
who attends a meeting of shareholders held outside Alberta is deemed to have
so agreed except when he attends the meeting for the express purpose of
objecting to the transaction of any business on the grounds that the
meeting is not lawfully held.
4.03 Notices - Notice of the time and place of each meeting of
shareholders shall be given by sending such notice not less than twenty one
(21) or not more than fifty (50) days before the meeting to the auditor of
the Corporation, to each director and to each shareholder entitled to vote at
the meeting, in each case addressed to them at their last known address as
registered on the records of. The Corporation or its transfer agent. Notice
of a special meeting of shareholders or of an annual meeting of shareholders
at which business is to be transacted other than consideration of the
financial statements and auditors' report and the election of directors and
appointment of auditors shall state the nature of the business in sufficient
detail to permit the shareholder to form a reasoned judgment thereon and the
text of any special resolution to be submitted to such meeting. A notice of
meeting is not required to be sent to shareholders who were not registered
on the records of the Corporation or its transfer agent on the record date
referred to in section 4.04 hereof, but failure to receive a notice does
not deprive a shareholder of the right to vote at such meeting.
4.04 Record Date - The directors may, in accordance with the provisions
of the Act, fix in advance record dates for the purpose of determining
shareholders entitled to receive payment of a dividend, to participate in a
liquidation distribution, to receive notice of or vote at a meeting or for
any other purpose but, if no such record date is so fixed,
(a) The record date for the determination of shareholders entitled to
receive notice of a meeting of shareholders shall be;
(i) At the close of business on the day immediately preceding the day on
which the notice is given, or
(ii) If no notice is given, the day on which the meeting is held; and
<PAGE> 78
(b) The record date for any other purpose shall be the close of business
on the day on which the directors pass the resolution relating thereto.
4.05 Waiver Of Notice - A shareholder and any other person entitled to
attend a meeting of shareholders may in any manner waive notice of a meeting
of shareholders, and attendance of any such person at a meeting of
shareholders is a waiver of notice of the meeting, except where he attends
a meeting for the express purpose of objecting to the transaction of any
business on the grounds that the meeting is not lawfully called.
4.06 Other Rights of Shareholders Regarding Meetings: - Shareholders are
entitled to submit proposals to the Corporation and discuss proposals at an
annual meeting of shareholders, to vote at meetings of shareholders if
recorded on a list of shareholders prepared by the Corporation and to
requisition the holding of a meeting of shareholders in each case all in
accordance with the relevant provisions of the Act and any specific
provisions in that regard contained in the articles.
4.07 Chairman And Secretary - The President or in his absence a Vice-
President who is a director shall be the chairman of any meeting of
shareholders. If no such officer be present within fifteen (15) minutes
after the time fixed for holding the meeting, the persons present and
entitled to vote thereat shall choose one of their number to be chairman.
The Secretary of the Corporation shall be the secretary of the meeting of
shareholders but if the Secretary is not present, the chairman shall appoint
some person who need not be a shareholder to act as secretary of the
meeting.
4.08 Persons Entitled To Be Present - The only persons entitled to attend
a meeting of shareholders shall be those entitled to vote thereat, the
auditor of the Corporation and others who, although not entitled to vote,
are entitled or required under any provisions of the Act or the by-laws of
the Corporation to be present at the meeting. Any other person shall be
admitted only on the invitation of the chairman.
4.09 Quorum - In the case of a Corporation with only one (1) shareholder,
a quorum shall be one (1) shareholder, and in all other cases two (2)
individuals present in person entitled to vote thereat and either holding
or representing by proxy not less than ten (10%) per cent of the shares
entitled to vote thereat shall constitute a quorum for the transaction of
business at any meeting of shareholders and if such quorum is present at the
opening of the meeting the business of the meeting may proceed,
notwithstanding that a quorum is not present throughout the meeting.
4.10 Resolution In Lieu Of Meeting - Except in circumstances in which the
auditor or a director submits a written statement in accordance with a
meeting of shareholders as permitted by the Act,
<PAGE> 79
(a) a resolution in writing signed by all the shareholders entitled to
vote on that resolution at a meeting of shareholders is as valid as if it
had been passed at a meeting of the shareholders; and
(b) a resolution in writing dealing with all matters required by the Act
to be dealt with at a meeting of shareholders, and signed by all the
shareholders entitled to vote at that meeting, satisfies all the
requirements of the Act relating to meetings of shareholders.
4.11 Votes To Govern - At all meetings of the shareholders, every
question to be decided shall be decided upon by a majority of the votes
cast on the question and in case of an equality of votes the chairman shall
be entitled to a second or casting vote.
4.12 Votes Of Joint Shareholders - If shares are held in the names of two
or more persons, any one of them present in person or represented by proxy
at a meeting of shareholders may, in the absence of the other or others
or in the absence of communication from the other or others, vote such
shares, but in case more than one of them be present in person or
represented by proxy, they shall vote together on the shares jointly held
and if they fail to agree to vote together on the shares jointly held,
no vote shall be counted in respect of such shares.
4.13 Proxies - If immediately prior to the calling of a meeting of
shareholders the Corporation has not less than fifteen (15) shareholders,
two or more joint holders being counted as one shareholder, the Corporation
shall comply with the procedure for the solicitation of proxies prescribed
by the Act; otherwise, the Corporation need not comply with such procedure.
The Corporation shall comply with the provisions contained in the Act with
respect to the execution, validity, revocation and deposit of proxies.
4.14 Show Of Hands And Ballot - Voting at a meeting of shareholders shall
be by show of hands except where a ballot is demanded by a shareholder or
proxyholder entitled to vote at such meeting and such demand may be made
either before or after any vote by show of hands.
4.15 Meetings By Telephone - A shareholder or any other person entitled
to attend a meeting of shareholders may participate in the meeting by means
of telephone or other communications facilities that permit all persons
participating in the meeting to hear each other.
<PAGE> 80
ARTICLE FIVE
SHARES
5.01 Issue - Subject to any pre-emptive rights authorized by the articles,
shares of the Corporation may be issued at such times and to such persons
and for such consideration as the directors may determine. Shares issued
by the Corporation are non-assessable and the holders are not liable to the
Corporation or to its creditors in respect thereof.
5.02 Consideration - A share shall not be issued until it is fully paid
in money or in property or past services that is the fair equivalent of the
money that the Corporation would have received if the share had been issued
for money. In determining whether property or past services is the fair
equivalent of a money consideration, the directors may take into account
reasonable charges and expenses or organization and re-organization and
payments for property and past services reasonably expected to benefit the
Corporation. For the purposes of this section, "property" does not include a
promissory note or a promise to pay.
5.03 Security Certificate - Every security holder is entitled, at his
option, to a security certificate that complies with the Act (including the
display thereon of information as to the rights, privileges, restrictions
and conditions attaching to the shares represented thereby) or a non-
transferable written acknowledgement of his right to obtain such a security
certificate from the Corporation in respect of its securities held by him
and, subject to the foregoing, it shall be in such form or forms as the
board of directors shall from time to time by resolution approve and shall
be signed by any two officers or directors or as the board of directors may
otherwise from time to time direct and need not be under corporate seal.
ARTICLE SIX
FINANCIAL DISCLOSURE
6.01 Financial Disclosure - The Corporation and its directors and
officers, as the case may be, shall prepare or cause to be prepared and
shall approve financial statements and shall distribute and submit the
same to the shareholders and, if applicable, shall file such financial
statements with the Director appointed under the Act, all in accordance
with the provisions of, and they shall each comply with, all other relevant
provisions of the Act.
<PAGE> 81
6.02 Appointment of Auditors - The shareholders shall appoint a duly
qualified auditor In accordance with the Act unless the shareholders resolve
not to appoint an auditor in accordance with the Act.
ARTICLE SEVEN
DIVISIONS OF THE CORPORATION
7.01 Authority To Create And Transact Business By Divisions - The board
of directors may determine from time to time that the business and operations
of the Corporation be divided into divisions based upon character or
type of operations of or the type of products manufactured or distributed
by or the type of services provided by the Corporation or upon such other
basis of division and under such divisional names as the board of directors
may consider advisable. Subject always to the provisions of section 2.07,
the Corporation may transact business and execute contracts under its own
corporate name, or if authorized by the board of directors, under one or
more trade names approved for such purpose in such manner as may be
authorized by the board of directors; and, likewise, any division into which
any of the business or operations' of the Corporation may have been divided
may likewise transact business and execute contracts and other legal
documents and sign cheques and do all other acts and things necessary or
appropriate for and on behalf of the Corporation under one or more trade
names if approved by the board of directors and in such manner as may be
authorized by the board of directors.
7.02 Designation And Appointment Of Divisional Officers - The board of
directors may, by resolution, designate and appoint officers of a particular
division with such official titles as the board of directors may from time
to time determine. Such divisional officers shall not be general officers
of the Corporation, except upon election or appointment to such additional
corporate office, and shall serve in such respective capacities at the
pleasure of the board of directors.
7.03 Duties Of Divisional Officers - The duties, responsibilities and
limitations of any divisional officers of the Corporation shall be such as
the board of directors may from time to time deem proper and the authority
of such officers shall be limited to acts and transactions pertaining to
the business which such division is authorized to transact and perform,
provided, however, that if the same individual is elected or appointed to
a general office of the Corporation pursuant to section 3.18, the foregoing
shall not limit his acts under the general powers and duties of such general
corporate office.
ARTICLE EIGHT
DIVIDENDS
8.01 Declaration And Payment Of Dividends - The Corporation shall not
declare or pay a dividend if there are reasonable grounds for believing
that
<PAGE> 82
(a) it is, or would after the payment be, unable to pay its liabilities
as they become due; or
(b) the realizable value of its assets would thereby be less than the
aggregate of its liabilities and stated capital of all classes,
but subject to the foregoing, the Corporation may pay a dividend in money or
property or by issuing full paid shares of the Corporation.
8.02 Method Of Payment - Dividends may be declared by resolution of the
board of directors, which resolution shall specify the method of payment
thereof.
8.03 Record Date - A record date for the purpose of determining
shareholders entitled to receive the payment of dividends may be fixed by
the board of directors in accordance with or, in lieu thereof, shall be
determined by, as the case may be, the relevant provisions of section 4.04.
ARTICLE NINE
NOTICES
9.01 Method Of Giving Notice - A notice or document required by the Act
or regulations thereunder, the articles or the by-laws to be sent to a
shareholder or director of the Corporation may be sent by prepaid mail
addressed to, or may be delivered personally to, as the case may be,
(a) the shareholder at his latest address as shown in the records of the
Corporation or its transfer agent; and
(b) the directors at his latest address as shown in the records of the
Corporation or in the last notice of directors or notice of change of
directors as filed in accordance with the Act.
A notice or document so sent shall be deemed to be received by him at the
time it would be delivered in the ordinary course of mail unless there are
reasonable grounds for believing that the shareholder or director did not
receive the notice or document at that time or at all.
9.02 Omissions And Errors - The accidental omission to give any notice to
any shareholder, director, officer or auditor or the non-receipt of any
notice by a shareholder, director, officer or auditor or any error in any
notice not affecting the substance thereof shall not invalidate any action
taken at any meeting held pursuant to such notice or otherwise founded
thereon.
9.03 Notice To Joint Shareholder - All notices with respect to any shares
registered in more than one name may, if more than one address appears on
the books of the Corporation in respect of such joint holding, be given to
such joint shareholders at the first address so appearing and notice so
given shall be sufficient notice to all the holders of such shares.
9.04 Waiver Of Notices Generally - Where a notice or document is required
by the Act or regulations thereunder to be sent, the notice may be waived or
the time for the notice may be waived or abridged at any time with the
consent in writing of the person entitled thereto.
9.05 Signature To Notice - The signature to any notice to be given by the
Corporation may be lithographed, written, printed or otherwise mechanically
reproduced.
<PAGE> 83
ARTICLE TEN
EFFECTIVE DATE AND REPEAL
10.01 This by-law shall come into force and take effect, subject to
confirmation by the shareholders in accordance with the Act, upon enactment
by the directors of the Corporation and, upon such enactment, all prior by-
laws and resolutions, insofar as they are inconsistent with the provisions
of this by-law, are repealed. The repeal of such by-laws and resolutions
shall not in any way affect the validity of any act done or right,
privilege, obligation or liability acquired or incurred thereunder prior to
such repeal or the validity of any act done or agreement made pursuant
thereto prior to such repeal. All directors, officers and other persons
acting under any repealed by-law or resolution shall continue to act as if
elected or appointed under the provisions of this by-law.
ENACTED by the board of directors, the 5th day of June, 1990
WITNESS the corporate seal of the Corporation.
/s/Kim Adolphe/s/ (c/s) /s/Sherri Byrne/s/
President Secretary
<PAGE> 84
BY-LAW NO. TWO
BORROWING POWERS
The directors of the Corporation are hereby authorized from time to time:
(a) to borrow money upon the credit of the Corporation in such amounts
and on such terms as may be deemed expedient by obtaining loans or advances
or by way of overdraft or otherwise;
(b) to issue debentures or other securities of the Corporation;
(c) to pledge or sell such debentures or other securities for such sums
and at such prices as may be deemed expedient;
(d) to mortgage, hypothecate, charge or pledge, or give security in any
manner whatever upon, all or any of the property, real and personal,
immovable and moveable, undertaking and rights of the Corporation, present
and future, to secure any debentures or other securities of the Corporation,
present or future or any money borrowed or to be borrowed or any obligation
or liability of the Corporation, present or future;
(e) to the extent permitted by the Act, give a guarantee on behalf of
the Corporation to secure performance of any present or future Indebtedness,
liability or obligation of any person; and
(f) to delegate to such officer(s) or director(s) of the Corporation as
the directors may designate all or any of the foregoing powers to such extent
and in such manner as the directors may determine.
Nothing in this section limits or restricts the borrowing of money by the
Corporation on bills of exchange or promissory notes made, drawn, accepted or
endorsed by or on behalf of the Corporation.
This by-law shall remain in force and be binding upon the Corporation as
regards any party acting on the faith thereof until a copy certified by the
Secretary of the Corporation under the Corporation's seal of a by-law
repealing or replacing this by-law shall have been received by such party
and duly acknowledged in writing.
ENACTED by the board of directors the 5th day of June,1990
WITNESS the corporate seal of the Corporation.
/s/Kim Adolphe/s/ (c/s) /s/Sherri Byrne/s/
President Secretary
<PAGE> 85
BY-LAW AUTHORIZING BORROWING AND PLEDGING
Gemini Learning Systems, Inc.
(Name of Company)
Incorporated under______________________________________
(Name of Act)
BE IT AND IT IS HEREBY ENACTED as a By-law of the Company as follows:
BY.LAW NO.__________________
1. That the Directors of the Company may from time to time:
(a) borrow money upon the credit of the Company by obtaining loans or
advances or by way of overdraft or otherwise;
(b) issue, sell or pledge securities of the Company including bonds,
debentures, debenture stock, for such sums on such terms and at such prices
as they may deem expedient;
(c) assign, transfer, convey, hypothecate, mortgage, pledge, charge or
give security in any manner upon all or any of the real or personal, moveable
or immovable property, rights, powers, chooses in action, or other assets,
present or future, of the Company to secure any such securities or other
securities of the Company or any money borrowed or to be borrowed or any
obligations or liabilities as aforesaid or otherwise of the Company
heretofore, now or hereafter made or incurred directly or indirectly or
otherwise; and
(d) without in any way limiting the powers herein conferred upon the
Directors, give security or promises to give security, agreements, documents
and instruments in any manner or form under the Bank Act or otherwise
to secure any money borrowed or to be borrowed or any obligations or
liabilities as aforesaid or otherwise of the Company heretofore, now or
hereafter made or incurred directly or indirectly or otherwise.
2. That any or all of the foregoing powers may from time to time be
delegated by the Directors to any one or more of the directors or officers
of the Company.
<PAGE> 86
3. That this By-law shall remain in force and be binding upon the
Company as regards any person acting on the faith thereof until such person
has received written notification from the Company that this By-law has
been repealed or replaced.
ENACTED this 24th day of Aug., 1994
/s/Kim Adolphe/s/
CERTIFICATE
I hereby certify that the foregoing is a true copy of a By-law of
GEMINI LEARNING SYSTEMS INC.
(Name of Company)
(hereinafter called the "Company") duly enacted by the Directors of the
Company; that the said By-law was duly confirmed and sanctioned by the
Shareholders in the manner required by law; and that the said By-law is
now in full force and effect.
WITNESS my hand and seal of the Company this 24 day of Aug, 1994
(Corporate Seal)
/s/Kim Adolphe/s/
Secretary
<PAGE> 87
CORPORATE PROFILE
OF
Gemini Learning Systems Inc.
PREPARED ON AND ACCURATE AS OF:
August 10, 1999
<PAGE> 88
1. Name, address, telephone, e-mail and fax numbers of the Company.
Gemini Learning Systems Inc. 403 262-8649 (tel) web site: www.gemini.com email
[email protected] 403 261-4688 (Fax)
2. Date and state or country of incorporation.
June 1990, Alberta Canada
3. Authorized capitalization (number and classes of shares authorized).
5 classes with 1,000 authorized
4. Issued and fully paid capital shares.
NOTE: PLEASE PROVIDE US WITH THE MINUTES BOOK OF THE
COMPANY TO REVIEW AND TO COPY THE MATERIAL NEEDED FOR
EXHIBITS TO SEC AND NASD DOCUMENTATION.
5. The nature of the Company's business.
Distance Education and Training Software Development.
Has the nature of the Company's business changed in any way since its
inception? Yes, we began as a UNIX and Open Systems training and consultant
firm.
Are any future changes in the nature of the Company's business contemplated?
No.
Please attach two copies of each brochure, catalog, price list and any other
available literature describing the Company's products or services.
6. Name of each person who caused the Company to be formed, whether
presently associated with the Company or not.
KIM ADOLPHE
7. Names of the initial or controlling shareholders of the Company,
number of shares owned, and the consideration received by the Company
therefor. If any shares were issued for services or other consideration
other than cash, please describe the nature of the services performed, and
the cash value that you ascribed to such consideration. Please also
indicate the date of each sale.
<PAGE> 89
Name & Address Amount of Stock Consideration Paid Date Acquired
Not applicable.
8. Names of each person who owns a debt instrument of the Company. Please
include the complete branch address of the bank or other lender, the
original face amount, the principal amount that remains outstanding, the
interest rate, the due date or payment schedule, the collateral security for
the obligation, if any, and the original date on which the loan was made.
Note Payable to Wayne Adolphe
Box 14, site 38, RR12, Calgary, Alberta T3B 6W3
Original Amount - $80,000
Outstanding - $50,000
9. Has the Company ever operated under any other name(s)? If so, please
list. No.
10. Does the Company use any trademarks or trade names? If so, please
describe. In what jurisdictions have these been registered? Attach any
copyright material or trade mark (service mark) registration material.
(NOTE: ANY TRADE OR SERVICE MARKS REQUIRING REGISTRATION BY US SHOULD BE
INDICATED SEPARATELY)
SWIFT (SoftWare Intelligent Freeform Training) is a registered trademark in
Canada.
11. What limitations, if any, are placed upon the Company's ability to
market its products or services? None.
Is it limited to a particular geographic area, or by any restrictions
contained in any patents, licenses, franchise rights, or other contractual
obligations?
No.
If so, please attach copies of each such agreement.
<PAGE> 90
12. Please list in detail all physical facilities, including offices,
laboratories, studios, computer centers, and other facilities, and any
significant items of equipment that you consider significant to the Company's
activities.
We are a small software development company. We have a 2,000 sq. ft. office
that we lease. We have a significant amount of development computers and
servers for delivering our online library, software development, content
creation and administration which are owned outright.
Include copies of any leases, and a detailed current inventory; square
footage of physical facilities. (On shore and foreign should each be
addressed).
13. With regard to any rental properties listed above, describe the terms,
rental and duration of each lease, including renewal options, if any. With
regard to any properties listed above that are owned by the Company, please
describe the type of deed and the nature of any mortgage obligations.
Please attach copies of any leases.
See attached lease.
14. Please describe the approach used by the Company in making its
sales, including which principal officer of the Company is primarily
responsible for this area.
We are just launching our Internet product and online library. Our approach
has been to establish distributors and build strategic alliances as opposed
to direct sales. This has been handled by the President of the Company.
List the various advertising media used, if any, and describe any
arrangements with salesperson, distributors, manufacturer's representatives
or other outside marketing agencies.
Web site, direct mail, press releases, brochures. We have distribution
agreements in place with a number of companies. As our revenues are also
derived from royalties on courses created and sold through our clients we
also have course licensing agreements as part of the distribution agreement.
If marketing activities have not yet commenced, please describe the proposed
marketing program in detail. If any contractual obligations are involved
with distributors or outside marketing organizations, please attach copies.
PLEASE BE SURE TO INCLUDE WEB SITES AND WEB SITE INFORMATION.
<PAGE> 91
In addition to the marketing activities we described which will continue to
be a key strategy, we will also be hiring sales and market personnel for
distribution sales and corporate client sales upon conclusion of financing.
15. Please list and describe all patents, trademarks, franchises,
copyrights, licenses and other rights or agreements important to the
business of the Company, and attach copies of each.
SWIFT is a registered trademark. Other agreements have already been
identified above.
16. (a) Attach hereto a statement of profit or loss for each of the last
five years (or since inception, if later), and a balance sheet as of the
end of the most recent fiscal year. If the Company operates more than
one division, department, or subsidiary, or if it markets more than one
major product line or type of service, break down sales, expenses, and
profit or loss by division or product line, and give the percentage of
the total that you attribute to each. (I KNOW THESE ARE IN PREPARATION-
THIS QUESTION IS FOR MY INTERNAL "CHECKLIST" OF INFORMATION RECEIVED AND
PENDING) See attached.
(b). If checked here (X), the balance sheet and the statements of profit and
loss for the last three years must be audited. and all statements prepared
in conformity with, and including all notes and schedules required by,
Regulation S-X of the Rules and Regulations of the Securities and Exchange
Commission. In addition, the statements must be dated as of the date required
for the latest quarterly orannual report filed with the Securities and
Exchange Commission
That is being completed.
17. (a) List the major suppliers of the products sold by the Company, or of
the raw materials required to manufacture its products. Include the
approximate volume purchased by the Company from each last year, and the
percentage of the Company's sales accounted for by the purchases from each.
(IF YOU USE ONE MAIN COMPANY FOR WEBSITE ARTWORK, IT BELONGS HERE; AS WOULD
ANY MAIN SOURCES OF MATERIAL USED IN WEBSITES OR AD PREPARATION OR
PROGRAMMING, ETC.)
We do not sell or license other products. We maintain our own web site. We
use consultants from time to time for software development and some artwork
but not terribly relevant.
<PAGE> 92
18. Does the Company use the services of sub-contractors to manufacture
any of its products or perform its services (web site, etc.), to any
significant degree? ( )Yes (x) No. If yes, please describe the nature of
the work performed, the name and location of the sub-contractor, the degree
of dependence of the Company upon the work performed by any one company,
and the availability of alternate sources for this work. Are any sub-
contractors under long-term contract? If so, please attach copies.
19. To what industries or consumer groups does the Company principally
market its products or services? What percentage of its total sales are made
to each?
Not relevant at this stage. We are just launching our ecommerce site for the
virtual market at large. A number of courses from our SWIFT Library will
also be launched in September. Some of the distributors involved
include Canon, GST Technology, Dann, Stratetic Profits, Manitoba Telephone
Services.
20. List below each customer that accounted for 10% or more of the Company's
business during the last fiscal year, and the volume of their purchases from
the Company, in cash and as a percentage of the Company's gross sales.
Name & Address Volume % of Sales
Rand Worldwide $2
Interactive Advantage
Do any of the customers listed above have long-term purchase contracts from
the Company? If so, please attach copies hereto.
As Gemini receives royalties on all courses created, all our sales
incorporate a licensing contract. These are usually created once a course is
developed. We control that with keys. The contract for Rand is attached.
We have not created one with Interactive yet.
21. List below the five companies that the Company considers to be the
largest competitors in its field, or, if such is the case, check here (x )
to indicate that they are too numerous to mention.
22. Attach hereto a complete list of all persons who are, or during the
last five years have been, officers, directors, founders, organizers or
owners of 10% or more of the Company's common stock. For each person, include:
Not applicable.
<PAGE> 93
23. Total number of full-time employees in the Company (4). Total number
of part-time employees, if any (0). Please list below the major categories
of employees, such as administrative, sales, accounting, production,
shipping, etc., and the number of employees in each.
Needless to say we all wear a number of hats, however..
Category Number of Employees
Management/marketing/sales 1
R&D/ System Admin. 1
Support/testing/training 1
Admin/testing/course conversion 1
We use consultants or have partner relationships for various other
development as mentioned above.
Please list below any categories of specialized or technical personnel,
such as M.D.'s, Ph.D's, engineers, scientists, researchers, technicians,
and the number of employees in each. Indicate also whether these include,
or are in addition, to, the principal executive officers of the Company.
1 - researcher not a executive officer, but listed above.
24. Does the company have any employee stock option or stock purchase
plan? ( )Yes (x )No. If yes, please attach a copy.
This will be incorporated upon the closing of contract for acquisition or
investment by a third party.
25. Does the Company have an employee pension plan, bonus or profit
sharing plan?
( )Yes (x) No. If yes, attach a copy of each.
Will be incorporating a bonus and profit sharing plan.
26. Please list all additional employee or director fringe benefits,
such as retirement fund, health insurance, etc., and describe in detail.
Two employees have blue cross plan which is a medical plan that covers
things like prescriptions, eye glasses, dental up to 80%. See attached.
27. Are any of the Company's employees represented in any manner by a
labor union or other similar organization? ( )Yes (x ) No. If yes, please
list all such organizations below, the number of employees
represented by each, and attach copies of all union contracts.
<PAGE> 94
28. Describe the Company's labor relations in detail. If the answer to
question 27 is no, has the Company ever experienced any union organizing
activity? There been any history of strikes, grievances, or other labor
difficulty? Is there, or do you anticipate any difficulty in obtaining
qualified personnel? Has there beenany experience of unusually high
personnel turnover?
No.
29. In the last five years, has the Company made any significant
acquisitions or divestitures of other companies, subsidiaries, plants,
assets, operations of personnel? ( ) yes (x) No. If yes, describe in detail.
30. Have any of the persons listed in response to Item 22 of this
questionnaire ever
Not applicable.
31. How many shares of the Company's common stock are authorized? 1000.
How many shareholders of record does the Company have? 3. If the Company is
privately held, please list all shareholders below, with the number of
shares held by each. (Note) please provide me with a complete list of
all shareholders, with consideration paid, shares owned, and date shares
purchased.(Include all founders, officers, etc.)
Name & Address Number of Shares Owned
Kim Adolphe 950
Brad Flock 50 $36,500.00 paid
Alan James 2 $10,000.00 paid
Todd Finch currently in negotiation
32. Describe the Company's insurance coverage in detail. Has the Company
ever been denied insurance for which it made application? ( )Yes (x ) No. If
yes please describe in detail.
Business Insurance- Coverage $100,000.00
Deductible $500.00
Liability $2,000,000.00 expect employee benefits
$3,000,000.00
Insurance plan is attached.
<PAGE> 95
33. Is the Company a defendant in any litigation, or is any litigation, to
the Company's knowledge, pending or threatened against it? ( )yes (x ) No.
If yes, describe in detail, and proved the name, address and telephone number
of the attorney who represents the Company in each matter described.
34. Please attach two copies of each brochure, catalog, mailer, publicity
release, newspaper or magazine article, literature and any other printed
matter currently available that describes the Company or its products,
services or personnel.
35. Attach copies of each of the following:
(a) Any material contract or agreement of any kind not called for elsewhere
herein;
(b) Any employment agreements with key personnel;
(c) Any stockholder's agreement;
(d) Anything unusual in the Company's minutes, bylaws, or articles of
incorporation, such as pre-emptive rights, cumulative voting, or anything
else that may confer a special privilege upon any stockholder, limit the
rights of any stockholder, or in any way affect or limit the Company's
ability to do business profitably. A copy of all Corporate papers, including
directors minutes, by-laws, etc. should be attached.
36. PLEASE complete the above for any subsidiaries.
37. Please detail the arrangements (including any agreements and credit
lines (with terms of repayment) made for the manufacture of products.
38. Please describe and enclose any assignments of patents, trademarks
etc. from any company to the Company, and any ownership interests of
management or employees of the Company in the assignor.
39. Assuming that no further financing is available, what specific
alternatives are available to the Company in order to continue expansion and
growth?
Gemini has several other avenues for expansion including private placement
and a public offering. We had been working with Goepel McDermid, a well
known brokerage firm and are confident that monies could easily be raised.
Aa Telco, Intrigna owned by Bell Canada and Manitoba Telephone company is
interested in purchasing a percentage of Gemini, but we have not reached
the negotiating stage yet. We have also been courted by a number of venture
capital firms and Global Equity Fund Ltd. who presented a agreement to put
together funding or an acquition for a percentage of the company.
<PAGE> 96
40. (a) Describe in detail how any shares sold to date were sold, and the
exemption from registration claimed? Describe also any registration of shares
in any State prior to or after the sale of shares. Provide a copy of all
marketing material used to sell shares, and all subscription agreements
and any other documents used by the company in evaluating shareholders.
All information regarding sales of shares has been listed above. There are
no other instances of selling shares nor anything that applies in the states.
(b) Please provide the following information with reference to the foregoing:
Name of underwriter or marketing company(ies) retained:
Not applicable.
Number of shares offered ( )
Offering price ( )
Date(s) of offering: ___________________.
(c) If the Company has had a public offering of its securities at any time
during the last five years, please attach a copy of the prospectus or offering
circular.
41. (a) Please supply the name, address and telephone number of any
attorneys other than this firm who have advised the Company with respect to
matters of securities law, and describe the function of each:
Not applicable.
42. Is the Company subject to the reporting requirements of Section 12(g)
of the Securities Exchange Act of 1934? ( )Yes ( )No. If yes, is the Company
up to date in filing all required reports with the Securities and Exchange
Commission? ( )Yes ( )No.
<PAGE> 97
The Company is currently preparing materials to be filed with the
Securities and Exchange Commission in accordance with the rules and
regulations of the Securities and Exchange Commission. The information
provided by the Company on this questionnaire may be used, in whole or in
part, as needed to comply with these rules an regulations.
This questionnaire was completed or reviewed by the undersigned, and
to the best of my knowledge, all of the information provided herein is
complete, correct and not misleading.
__________________________________
Kim Adolphe
By: ______________________ By: ______________________
(Please print Name and Title) (Please print Name and Title)
<PAGE> 98
GEMINI LEARNING SYSTEMS INC.
Financial Statements (Unaudited - See Notice to Reader)
May 31, 1999
Glen J. Diduck
Chartered Accountant
<PAGE> 99
GLEN J. DIDUCK
CHARTERED ACCOUNTANT
1603 10th Avenue S.W
Calgary, Alberta T3C OJ7
FAX-(403)244-7030
TEL.-(403) 244-4757
Notice to Reader
I have compiled the balance sheet of Gemini Learning Systems Inc. as at May
31, 1999 and the statement of loss and retained earnings for the year then
ended from information provided by management. I have not audited, reviewed
or otherwise attempted to verify the accuracy or completeness of such
information. Readers are cautioned that these statements may not be
appropriate for their purposes.
/s/Glen J. Diduck/s/
July 13, 1999 CHARTERED ACCOUNTANT
Calgary, Alberta
<PAGE> 100
Gemini Learning Systems Inc.
Balance Sheet as at May 31, 1999
(Unaudited - See Notice to Reader)
1999 1998
ASSETS
CURRENT
Cash $ 2,375 $ -
Accounts receivable 24,533 29,085
Prepaid expense. and
sundry assets 3,409 3,409
Income taxes recoverable 94,650 84,172
124,967 116,666
RESEARCH AND DEVELOPMENT 1,392,316 1,188,748
Less accumulated amortization 516,593 377,361
875,723 811,387
CAPITAL ASSETS 21,808 32,025
$ 1,022,498 $ 960,078
LIABILITIES
CURRENT
Bank indebtedness $ - $ 6,949
Accounts payable and accrued
liabilities 66,411 82,427
Capital Lease Obligations 1,515 7,144
67,926 96,520
LONG-TERM DEBT
Capital lease obligations,
net of current portion $ - $ 1,516
Notes payable 61,470 68,523
Due to shareholders 48,875 26,575
178,271 193,134
SHAREHOLDERS' EQUITY
CAPITAL STOCK
Authorized
26,000 common shares
issued
1,000 common shares 10 10
RETAINED EARNINGS 844,217 766,934
844,227 766,944
$ 1,022,498 $ 960,078
<PAGE> 101
Gemini Learning Systems Inc.
Statement of Loss and Retained Earnings
for the year ended May 31, 1999
(Unaudited - See Notice to Reader)
1999 1998
REVENUE $ 250,143 $ 142,594
GENERAL AND ADMINISTRATIVE
EXPENSES
Wages and benefits 177,233 125,516
Consulting, sub-contract and
materials 66,617 74,653
Office 38,821 30,406
Rent 25,258 26,710
Bank Charges and Interest 7,860 14,484
Telephone 5,842 8,187
Travel 5,363 7,375
Automotive 3,250 2,925
Bad debts - 884
Amortization 149,449 132,213
Capitalization of research &
development (217,936) (243,759)
261,757 179,594
LOSS BEFORE OTHER (10,614) (37,000)
OTHER
Recovery of scientific
research tax credit: 88,897 84,172
NET INCOME 77,283 47,172
RETAINED EARNINGS, beginning
of year 766,934 719,762
RETAINED EARNINGS, end
of year $ 844,217 $ 766,934
<PAGE> 102
GEMINI LEARNING SYSTEMS INC,
Financial Statements
(Unaudited - See Notice to Reader)
AS RESTATED
May 31, 1998
Glen J. Diduck
Chartered Accountant
<PAGE> 103
GLEN J. DIDUCK
CHARTERED ACCOUNTANT 1603 10TH AVENUE S.W.
CALGARY,ALBERTA T3C OJ7
FAX. (403) 244-7030
TEL. (403) 244-4757
Notice to Reader
AS RESTATED
I have compiled the balance sheet of Gemini Learning Systems Inc. as at May
31, 1998 and the statement of income and retained earnings for the year then
ended from information provided by management. I have not audited, reviewed
or otherwise attempted to verify the accuracy or completeness of such
information. Readers are cautioned that these statements may not be
appropriate for their purposes.
/s/ GLEN J. DIDUCK/s/
December 1, 1998 CHARTERED ACCOUNTANT
<PAGE> 104
Gemini Learning System Inc.
Statement of Loss and Retained Earnings (Deficit)
for the year ended May 31, 1998
(Unaudited - See Notice to Reader)
As Restated
1998 1997
REVENUE $ 142,594 $ 219,356
GENERAL AND ADMINISTRATIVE
EXPENSES
Wages and benefits 125,516 114,362
Consulting, sub-contract and
materials 74,653 50,116
Office 30,406 30,607
Rent 26,710 20,773
Bank Charges and Interest 14,484 20,205
Telephone 8,187 8,220
Travel 7,375 5,226
Automotive 2,925 6,040
Bad debts 884 106,879
Amortization 132,213 107,755
Capitalization of research &
development (243,759) (204,890)
179,594 265,293
LOSS BEFORE INCOME TAXES (37,000) (45,937)
RECOVERY OF SCIENTIFIC RESEARCH
TAX CREDITS 84,172 75,202
NET INCOME 47,172 29,265
RETAINED EARNINGS, beginning
of year 719,762 690,497
RETAINED EARNINGS, end
of year $ 766,934 $ 719,762
<PAGE> 105
Gemini Learning Systems Inc.
Balance Sheet as at May 31, 1998
(Unaudited See Notice to Reader)
As Restated
1998 1997
ASSETS
CURRENT
Accounts receivable $ 29,085 $ 8,307
Prepaid expenses and sundry
assets 3,409 3,410
Income taxes recoverable 84,172 75,202
116,666 86,919
RESEARCH AND DEVELOPMENT 1,188,748 944,989
Less accumulated amortization 377,361 258,485
811,387 686,504
CAPITAL ASSETS 32,025 39,912
$ 960,078 $ 813,335
LIABILITIES
CURRENT
Bank Indebtedness $ 6,949 $ 68,772
Accounts payable and accrued-
liabilities 82,427 5,431
Capital Lease Obligations 7,144 10,691
96,520 84,894
LONG-TERM DEBT
Capital lease obligations,
net of Current portion 1,516 8,669
Notes payable 68,523 -
Due to shareholders 26,575 -
193,134 93,563
SHAREHOLDERS' EQUITY
CAPTIAL STOCK
Authorized 26,000 common shares
Issued 1,000 common shares 10 10
RETAINED EARNINGS 766,934 719,762
766,944 719,772
$ 960,078 $ 813,335
APPROVED ON BEHALF OF THE BOARD
_______________________Director
<PAGE> 106
Gemini Learning Systems Inc.
Notes to the Financial Statements May 31,1998
(Unaudited - See Notice to Reader) As Restated
1. RESTATEMENT OF FINANCIAL STATEMENTS
The accompanying financial statements have been restated to reflect a change
in accounting for research and development expenditures. All research and
development expenditures net of refundable income tax credits have been
capitalized and are being amortized on a ten year straight line basis. This
change has been applied retroactively. The result of this change in
accounting policy has resulted in Research and Development in the net amount
of $811,387 (1997-$686,504), being capitalized. Correspondingly retained
earnings has increased by $811,387 (1997-$686,504), and amortization expense
has increased by $118,876 (1997-$94,500).
<PAGE> 107
GEMINI LEARNING SYSTEMS INC.
Financial Statements (Unaudited)
May 31, 1997
Glen J. Diduck
Chartered Accountant
<PAGE> 108
GLEN J. DIDUCK
CHARTERED ACCOUNTANT 1603 10TH AVENUE S.W.
CALGARY, ALBERTA T3C 0J7
FAX. (403) 244.7030
TEL. (403) 244-4757
Notice to Reader
I have compiled the balance sheet of Gemini Learning Systems Inc. as at May
31, 1997 and the statement of loss and retained earnings for the year then
ended from information provided by management. I have not audited, reviewed
or otherwise attempted to verify the accuracy or completeness of such
information. Readers are cautioned that these statements may not be
appropriate for their purposes.
The Prior years financial statements were prepared by other accountants. No
opinion is or was expressed thereon.
/s/Glen J. Diduck/s/
September 5, 1997 CHARTERED ACCOUNTANT
<PAGE> 109
Gemini Learning Systems Inc.
Balance Sheet as of May 31,1997
(Unaudited - See Notice to Reader)
1997 1996
ASSETS
CURRENT
Accounts receivable $ 8,307 $ 29,576
Prepaid expenses 3,410 3,109
Income taxes recoverable 75,202 165,327
86,919 198,012
LONG-TERM INVESTMENTS
Investment in subsidiary - 1,000
CAPITAL ASSETS 39,912 26,448
$ 126,831 $ 225,460
LIABILITIES
CURRENT
Bank indebtedness $ 68,772 $ 63,761
Accounts payable and accrued
liabilities 5,431 14,739
Capital Lease Obligations 10,691 9,153
84,894 87,653
LONG-TERM DEBT
Capital lease obligations, net
of current portion $ 8,669 $ -
Notes payable - 22,557
Due to shareholders - 857
93,563 111,067
SHAREHOLDERS' EQUITY
CAPTIAL STOCK
Authorized
26,000 common shares
Issued 10
common shares 10 10
RETAINED EARNINGS 33,258 114,383
33,268 114,393
$ 126,831 $ 225,460
APPROVED ON BEHALF OF THE BOARD
_______________________Director
<PAGE> 110
Gemini Learning Systems Inc.
Statement of Loss and Retained Earnings
for the year ended May 31, 1997
(Unaudited - See Notice to Reader)
1997 1996
SALES $ 219,356 $ 312,089
COST OF SALES 50,116 221,142
GROSS PROFIT 169,240 90,947
GENERAL AND ADMINISTRATIVE EXPENSES
Wages and benefits 114,362 91,663
Office 30,607 26,561
Rent 20,773 19,365
Bank Charges and Interest 20,205 6,275
Telephone 8,220 7,001
Automotive 6,040 6,330
Travel 5,226 1,591
Bad debts 106,879 -
Amortization 13,255 2,467
325,567 161,253
LOSS BEFORE INCOME TAXES (156,327) (70,306)
RECOVERY OF SCIENTIFIC RESEARCH
INCOME TAX CREDITS 75,202 94,244
NET INCOME (LOSS) (81,125) 23,938
RETAINED EARNINGS, beginning
of year 114,383 90,445
RETAINED EARNINGS, end
of year $ 33,258 $ 114,383
<PAGE> 111
Certification of Adoption by Board of Directors
This Certification of Adoption by Board of Directors is made this 23rd day
of September 1999 by Gemini Learning Systems Inc. ("Seller") for the purpose
of making certain representations and warranties for a transaction whereby
Salient Cybertech, Inc, shall be purchasing all of the stock, rights, title
and interest to the Seller and all the business related thereto. The Seller
warrants and represents the following:
1. Attached is a copy of the minutes and resolution adopted by the Board of
Directors of Seller notifying and approving the transaction between Salient
Cybertech, Inc. and Seller.
Gemini Learning Systems, Inc.
Name of Seller
/s/ Kim Adolphe____________
Seller, and Sole Director
and Shareholder of Gemini
Learning Systems Inc.
<PAGE> 112
Resolutions of the Board of Directors and Shareholders
of
Gemini Learning Systems, Inc.
WHEREAS the Board of Directors of the Corporation have entered into
negotiations with Salient Cybertech, Inc. (SALIENT), a corporation
registered in the State of Delaware, whereby SALIENT wishes to purchase all
the outstanding shares of the Corporation:
AND WHEREAS the Shareholders of the Corporation unanimously agree that the
said purchase is in the best interest of the Corporation, and have by
unanimous agreement directed the Board of Directors to effect the steps
necessary for the said purchase pursuant to the Agreement appended
hereto;
BE IT RESOLVED THAT:
1. This Corporation enter into the Share Purchase Agreement appended
hereto upon the terms and conditions therein;
2. The Officers of the Corporation are hereby directed, authorized, and
empowered to take all actions on behalf of the Corporation necessary or
desirable to effect the foregoing;
3. The Corporation hereby consents to SALIENT utilizing the names
"Gemini" or "SWIFT" in any manner it sees fit for any purpose whatsoever,
including, without limiting the generality of the foregoing, in its name and
style.
4. The Corporation directs that upon the consummation of the
transaction, any and all actions by the Officers and Board of Directors in
effecting the said transaction are hereby ratified, and declared as of the
times and dates as may be mentioned in any closing documents or ancillary
documents.
5. The Corporation further directs that the Board of Directors of
provide to SALIENT any and all documentation SALIENT may require as post
closing documentation, and hereby specifically ratify the transfer of shares
from Kim Adolphe to SALIENT, as required by the abovementioned Purchase and
Sale Agreement.
<PAGE> 113
6. The Shareholders confirm that Kim Adolphe is the sole Director,
Officer, and Shareholder in the Corporation.
THE UNDERSIGNED being all the shareholders of the Corporation, and Kim
Adolphe, the only Director of the Corporation, hereby signs the foregoing
resolution this 23rd day of September 1999.
SHAREHOLDERS:
DIRECTORS:
/s/Kim Adolphe/s/_____________
Kim Adolphe, President and
Secretary
/s/Kim Adolph/s/ _____________
Kim Adolphe, Sole Director and
Sole Shareholder
I, Kim Adolphe, the sole Director of the Corporation, and Secretary of the
Corporation hereby Certify under the Seal of the Corporation that the
foregoing resolutions were properly introduced, seconded, and passed on
September 23, 1999 in Alberta.
/s/ Kim Adolphe/s/
Kim Adolphe
(Seal)
<PAGE> 114
CERTIFICATE OF AUTHORITY
This certificate of Authority is made this 24th day of Sept, 1999 by Gemini
Learning Systems Inc. ("Seller") for the purpose of making certain
representations and warranties for a transaction whereby Salient Cybertech,
Inc., shall be purchasing all of the stock, rights, title and interest to
the Seller and all the business related thereto. The Seller warrants and
represents the following:
All corporate action necessary to approve the execution, delivery and
performance of any acquisition agreement in connection with the transaction
has been obtained.
The Board of Directors of the Seller has duly authorized the execution,
delivery and performance of this transaction and no other corporate action
is required on the part of the Seller in order to authorize the execution,
delivery and performance of any agreement related thereto.
Gemini Learning Systems Inc.
Name of Seller
/s/Kim Adolphe/s/
Name of Person Signing
President and CEO
Title
Sept., 24, 1999
Date
<PAGE> 115
CERTIFICATE OF CORPORATE ORGANZATION
This certificate of corporate organization is made this 24th day of Sept,
1999 by Gemini Learning Systems Inc. ("Seller") for the purpose of making
certain representations and warranties for a transaction whereby Salient
Cybertech, Inc., shall be purchasing all of the stock, rights, title and
interest to the Seller and all the business related thereto. The Seller
warrants and represents the following:
1. The Seller owns the following subsidiary entities: None
2. The jurisdiction of each subsidiary is: None
3. Besides the information in paragraphs number one and two, the
seller has no other legal, equitable or beneficial ownership in any entities.
Gemini Learning Systems Inc.
Name of Seller
/s/Kim Adolphe/s/
Name of Person Signing
President and CEO
Title
September 24, 1999
Date
<PAGE> 116
CERTIFICATE OF GOOD STANDING
This certificate of Good Standing is made this 24th day of Sept., 1999 by
Gemini Learning Systems Inc. ("Seller") for the purpose of making certain
representations and warranties for a transaction whereby Salient Cybertech,
Inc., shall be purchasing all of the stock, rights, title and interest to
the Seller and all the business related thereto. The Seller warrants and
represents the following:
Seller represents that the Seller is duly qualified and in good standing
as a foreign corporation in all jurisdictions where qualification is required
except for those jurisdictions where the failure to be so qualified will not
have a material adverse effect.
Gemini Learning Systems Inc.
Name of Seller
/s/Kim Adolphe/s/
Name of Person Signing
President and CEO
Title
Sept., 24, 1999
Date
<PAGE> 117
CERTIFICATE OF NO VIOLATIONS
This certificate of No Violations is made this 24th day of Sept.,1999 by
Gemini Learning Systems Inc. ("Seller") for the purpose of making certain
representations and warranties for a transaction whereby Salient Cybertech,
Inc., shall be purchasing all of the stock, rights, title and interest to
the Seller and all the business related thereto The Seller warrants and
represents the following:
1. The transaction will not violate any material agreement to which the
Seller is a party.
2 The transaction will not violate in any material respect any
agreement to which the Seller is a party.
3. The transaction will not violate in any material respect any
material agreement to which the Seller is a party.
4. The transaction will not violate any agreement to which the company
is a party except for any such violation which will not be material
to the Seller.
5. The transaction will not violate any agreement to which the Seller
is a party except for such violations which in the aggregate will
not be immaterial to the Seller.
6. The transaction will not violate any agreement to which the seller is a
party except for such violations of immaterial agreements which in
the aggregate will not be material to the Seller.
Gemini Learning Systems Inc.
Name of Seller
/s/Kim Adolphe/s/
Name of Person Signing
President and CEO
Title
Sept., 24, 1999
Date
<PAGE> 118
CERTIFICATE AS TO STATUS OF SELLER'S STOCK
This certificate as to Status of Seller's stock is made this 24th day of
Sept., 1999 by Gemini Learning Systems Inc. ("Seller") for the purpose of
making certain representations and warranties for a transaction whereby
Salient Cybertech, Inc., shall be purchasing all of the stock, rights, title
and interest to the Seller and all the business related thereto. The Seller
warrants and represents the following:
1. The only stock issuance's in Seller since June, 1990 were of certain
limited types, such as issuance's upon the exercise of options or
warrants or the conversion of convertible debt securities which, in
each case, were outstanding on such date;
2. As to the amount of such options, warrants, convertible securities
and rights that were outstanding on such date, they are as follows:
3. That no options, warrants, convertible securities or similar rights
to acquire stock were issued since such date.
4. The total number of shares in Company as of Sept 24th, 1999 is 1500
shares.
5. Besides those shares disclosed in paragraph number four and those
issuance's disclosed in paragraphs number one, two and three, there
are no other outstanding rights or interests in seller.
6. The only outstanding shares are those being sold to Salient, and
represented in the attached Certificate.
Gemini Learning Systems Inc.
Name of Seller
/s/Kim Adolphe/s/
Name of Person Signing
President and CEO
Title
Sept., 24, 1999
Date
<PAGE> 119
SHARE CERTIFICATE
Number Shares
A-4 1,000
GEMINI LEARNING SYSTEMS INC.
INCORPORATED UNDER THE BUSINESS CORPORATION ACT (ALBERTA)
This Certifies that --------------- MARGARET KIM ADOLPHE --------------------
is the registered holder of ------------One Thousand---------------(1000)----
- --Class "A" Common
Voting
Fully paid and non-assessable share(s), without par value, in the Capital of
the Corporation.
The transfer of the shares represented by this certificate is
subject to the restrictions contained in the articles of the
Corporation.
The shares represented by this Certificate have rights, privileges,
restrictions or conditions attached thereto and the Corporation will furnish
to a shareholder, on demand and without charge, a full copy of the text of:
(i) the rights, privileges, restrictions or conditions attached to each class
authorized to be issued and to each series in so far as the same have been
fixed by the directors, and (ii) the authority of the directors to fix the
rights, privileges, restrictions or conditions of subsequent series.
In Witness Whereof the said Corporation has caused this Certificate to be
signed by its duly authorized officers.
Dated this 2nd day of July A.D. 1999
/s/MARGARET KIM ADOLPHE/s/ /s/MARGARET KIM ADOLPHE/s/
Authorized Officer Authorized Officer
President Secretary
<PAGE> 120
SHARE CERTIFICATE
Number Shares
A-3 500
GEMINI LEARNING SYSTEMS INC.
INCORPORATED UNDER THE BUSINESS CORPORATION ACT (ALBERTA)
This Certifies that --------------- MARGARET MASSIE-KIM ADOLPHE--------------
is the registered holder of ------------FIVE HUNDRED-------------(500)-------
Class "A" Common
Voting
Fully paid and non-assessable share(s), without par value, in the Capital of
the Corporation.
The transfer of the shares represented by this certificate is
subject to the restrictions contained in the articles of the
Corporation.
The shares represented by this Certificate have rights, privileges,
restrictions or conditions attached thereto and the Corporation will furnish
to a shareholder, on demand and without charge, a full copy of the text of:
(iii) the rights, privileges, restrictions or conditions attached to each
class authorized to be issued and to each series in so far as the same have
been fixed by the directors, and (iv) the authority of the directors to fix
the rights, privileges, restrictions or conditions of subsequent series.
In Witness Whereof the said Corporation has caused this Certificate to be
signed by its duly authorized officers.
Dated this 22nd day of January A.D. 1994
/s/MARGARET KIM ADOLPHE/s/ /s/MARGARET KIM ADOLPHE/s
Authorized Officer Authorized Officer
President Secretary/Treasurer
<PAGE> 121
CORPORATE DOCUMENT CERTIFICATION
This Corporate Document Certification is made this 24th day of Sept. 1999 by
Gemini Learning Systems Inc ("Seller") for the purpose of making certain
representations and warranties for a transaction whereby Salient Cybertech,
Inc. shall be purchasing all of the stock, rights, title and interest to the
Seller and all the business related thereto. The Seller warrants and
represents the following:
1. The attached documents consist of a true and accurate copy of
Seller's articles of incorporation.
2. The attached documents consist of a true and accurate copy of
Seller's bylaws and/or all documents governing the operation of
Seller.
3. The attached documents consist of true and accurate copies of all of
the corporate minutes of Seller since inception. "See post closing
undertaking".
4. The attached consists of a true and correct copy of the Seller's
share register as it exists as of today's date. "See post closing
undertaking".
Gemini Learning Systems Inc.
Name of Seller
Kim Adolphe
Name of Person Signing
President and CEO
Title
September 24, 1999
Date
SEE PAGES 59-88 OF THESE EXHIBITS FOR THE DOCUMENTIONS MENTIONED HEREIN
<PAGE> 122
ENVIRONMENTAL CERTIFICATE
This environmental certificate is made this 24th day of Sept., 1999 by
Gemini Learning Systems Inc. ("Seller") for the purpose of making certain
representations and warranties for a transaction whereby Salient Cybertech,
Inc., shall be purchasing all of the stock, rights, title and interest to
the Seller and all the business related thereto. The Seller warrants and
represents the following;
1. The Seller's business has all of the required environmental permits
and authorizations.
2. The Seller's business is in compliance with all applicable
environmental laws, permits and authorizations.
3. There are no environmental claims pending or threatened against the
Seller.
4. There are no actions or circumstances pertaining to the Seller's
business that may give rise to any future environmental claims.
5. All locations on which the Seller's business may have conducted
contain no environmentally risky activities.
Gemini Learning Systems Inc.
Name of Seller
/s/Kim Adolphe/s/
Name of Person Signing
President and CEO
Title
Sept., 24, 1999
Date
<PAGE> 123
(Letterhead)
Bernabe Diaz
71 Stony Hill Rd.
2nd Floor
Bethel CT 06801
Dated Sept. 24, 1999
Larry Provost, Chairman
Paul Sloan, President
Salient Cybertech, Inc.
P0 Box 35287
Sarasota FL 34242
Re: Opinion of Counsel of Gemini Learning Systems, Inc. ("Gemini")
Dear Gentlemen:
The undersigned has been retained to act as legal counsel on behalf of
Gemini for the transaction whereby Salient Cybertech, Inc. ("Salient")
shall acquire all of the common stock of Gemini, as well as all rights,
title and interest into any assets or business conduct by Gemini. It is
understood that this opinion letter shall be relied upon by Salient, in
order for it to complete its acquisition of Gemini.
As counsel for Gemini, I have reviewed the following:
1. All tax returns for the last three years.
2. All bank statements for the last three years.
3. All software and computer related contracts and agreements.
4. All agreements whether written or verbal which had a gross aggregate
value in excess of $1,000.
5. All bulk sale transfer laws, as may be applicable in this transaction.
6. The Articles of Incorporation, Bylaws and all other organizational
documents of Gemini.
7. The annual and interim financial statements of Gemini for the last
three years.
8. The Canadian and American laws applicable to this transaction.
9. I have conducted a search of all American and Canadian public records
regarding Gemini.
10. The stock transfer ledger and books of Gemini.
In addition to the above, I have conducted interviews with each of the
employees of Gemini regarding all of the matters encompassed in paragraphs
1 - 10 hereinabove. Based on all of the information that I have received and
based upon my review of the closing documentation for Salient's acquisition
of Gemini, I have reached the following opinions:
<PAGE> 124
1. Gemini is a legal entity that has the authority to enter into a
transaction to sell itself to Salient.
2. All of the agreements and certifications executed by Gemini with
regards to its sale to Salient are true, accurate and correct.
3. Based on the manner in which the transaction between Salient and
Gemini is structured, said transaction is in compliance with all
American and Canadian laws.
4. The transaction between Salient and Gemini shall not cause any
material adverse tax effects to Gemini.
5. Based upon my review of the law in America and Canada, the
transaction contemplated between Salient and Gemini is in the best
interest of each of their respective shareholders.
The opinions expressed herein are valid as of the date of this letter. In
the event the laws of either American or Canada were to change subsequent to
the date of this letter, the opinion of this letter may be materially
effected.
Sincerely,
/s/Bernabe B. Diaz/s/
_______________________________
Counsel for Gemini
Bernabe B. Diaz
<PAGE> 125
CERTIFICATE REGARDING TAXES AND PENDING LITIGATIONS
This certificate of litigation and tax is made this 24th day of Sept., 1999
by Gemini Learning Systems Inc. ("Seller") for the purpose of making certain
representations and warranties for a transaction whereby Salient Cybertech,
Inc., shall be purchasing all of the stock, rights, title and interest to the
Seller and all the business related thereto. The Seller warrants and
represents the following:
1. There are no pending lawsuits against the Seller.
2. There are no pending or anticipated claims, either administrative,
regulatory, legal or equitable against he Seller or any of its
officers or directors.
3. Neither the Seller nor its officers or directors have any outstanding
tax liability as of today's date.
Gemini Learning Systems Inc.
Name of Seller
/s/Kim Adolphe/s/
Name of Person Signing
President and CEO
Title
Sept., 24, 1999
Date
<PAGE> 126
Board of Directors Approval and Waiver of Meeting
I, ____________________, a duly elected Board of Directors member of
Salient Cybertech, Inc. hereby approve the following:
The closing of the Gemini Learning Systems, Inc. acquisition and the terms
thereof as set forth in the Closing Document, which I have read and approve.
Further, I authorize Chairman Larry Provost to make modifications to the
Closing Document should modifications be required at the closing.
Subject to a satisfactory closing of the Gemini acquisition, I approve Kim
Adoiphe be named a Director to fill the vacant seat on the Salient Cybertech,
Inc. Board of Directors.
Subject to a satisfactory closing of the Gemini acquisition and the
execution of a stock acquisition and consulting agreement between Kim Adolphe
and Todd Finch, the issuance of stock and stock options to Todd Finch and
the replacement of Salient stock to Kim Adolphe that is made available to
Todd Finch as inducement for him to become a Board member and consultant to
Salient Cybertech, Inc.
I hereby waive notice as well as attendance of a Board of Directors meeting
on this item due to time and travel constraints.
Name
Signature
Identical Originals executed by each and every Director of the Registrant
<PAGE> 127
PRODUCT/SERVICE DISTRIBUTION AGREEMENT
FOR DISTRIBUTORS
THIS AGREEMENT, entered into this 28th day of Oct., 1997
by
GEMINI LEARNING SYSTEMS INC.
having a mailing address at
Suite 605
839 - 5th Avenue S.W
Calgary, Alberta T2P 3C8
Canada
(hereinafter referred to as "GEMINI")
AND
CAMAXYS LIMITED
having a mailing address at
#8 The Meadow,
Meadow Lane, St. Ives,
Cambridgeshire, PEI7 4LG
(Hereinafter referred to as "DISTRIBUTOR")
This distribution agreement entails the following terms and conditions:
A. GENERAL
A 1. GEMINI grants non-exclusive distribution lights to the DISTRIBUTOR.
It is agreed that GEMINI and the DISTRIBUTOR are forming an alliance, to
Cooperate with one another to further enhance the market development of
GEMINI'S SWIFT TM (SoftWare Intelligent Freeform Training) products and
services.
Limited exclusivity is offered to the DISTRIBUTOR according to the conditions
contained in Appendix A.
In signing this agreement, the DISTRIBUTOR accepts the following definition
of their role in GEMINI multi-channel product distribution philosophy.
<PAGE> 128
The DISTRIBUTOR's market focus is the sale of GEMINI's SWIFT product line to
end-user target markets.
It is understood that the DISTRIBUTOR may sell GEMINI's SWIFT product line
for any purpose which the customer sees fit. (see Appendix C)
The DISTRIBUTOR recognizes that GEMINI may authorize course added resellers
(CAR's) partners (see Appendix B) to produce courses for resale. It is not
the intention of GEMINI that this category of distribution re-sell the
entire SWIFT product line. The DISTRIBUTOR may also sell SWIFT to CAR's.
The DISTRIBUTOR recognizes that GEMINI may authorize other partners to sell
the SWIFT product line. Should this occur:
The DISTRIBUTOR recognizes that this action is intended to open new markets
for GEMINI's products that the DISTRIBUTOR is not intended to address.
<PAGE> 129
A 7. Confidential information shared among both parties will not be shared
with third parties without prior written permission by the respective party.
This provision shall survive the termination of this agreement. (see
Appendix D)
A 8. This contract cannot be reassigned without GEMINI's permission.
A 9. The DISTRIBUTOR will ensure that all GEMINI's trademarks, copyrights,
and other intellectual property rights are protected. Any improper or
wrongful use will immediately be brought to GEMINI's attention.
A 10. At Gemini's discretion, Gemini may ask for appropriate lines of
credit or cash payment to ensure continuation of shipments.
A 11. Each party will inform the other within 30 days of any actual or
proposed change in ownership or any sale or transfer of any substantial
portions of the DISTRIBUTOR property or assets.
A 12. The warranties contained in the Software License and the warranties
delivered with any other software products supplied by GEMINI are the only
warranties to be extended by the DISTRIBUTOR to its dealers and/or customers
for these products.
A 13. Title and/or ownership for all software products remains with GEMINI
and no transfer to the DISTRIBUTOR or any other third party is implied by
this agreement. The DISTRIBUTOR shall not make any copies of the products
except as allowed in this agreement.
A 14. The DISTRIBUTOR acknowledges that import of GEMINI's products may be
subject to compliance with the Export and Import Permits Act in Canada and
agrees to indemnify GEMINI against any claim, demand, action, proceeding,
investigation, loss, liability, cost or expense by the DISTRIBUTOR retail
dealers, or customers arising out of or related to any violation of the Act.
A 15. If there is any material breach of any of the terms and conditions
of this Agreement, GEMINI reserves the right to terminate the agreement with
30 days written notice to allow the DISTRIBUTOR to rectify the breach(es).
A 16. This agreement shall ensure to the benefit of and be binding upon
the parties hereto and their permitted successors and assignees.
A 17. The content of this document is confidential and should not be
disclosed to any third party. (see Appendix D)
A 18. The DISTRIBUTOR agrees that this agreement shall be interpreted by
Laws of the Province of Alberta.
<PAGE> 130
A 19. GEMINI agrees to indemnify the DISTRIBUTOR against any claim, demand,
action, proceeding, investigation, loss, or expense resulting from a breach
of third party copyright by GEMINI.
B. PRODUCTS
B 1. The DISTRIBUTOR has the rights to market GEMINI's products and
services in the assigned territories. (see Appendix C)
B 2. GEMINI may add other SWIFT standard products to the aforementioned
list through a mutual agreement on the following points with the DISTRIBUTOR:
- - Agreed Test Marketing/Marketing Plan, and/or Business Plan by the
DISTRIBUTOR for the product.
- - Mutually acceptable internationalization of the product by GEMINI.
- - Product performance and revenue criteria agreement between GEMINI
and the DISTRIBUTOR.
- - Support infrastructure commitment by the DISTRIBUTOR and GEMINI.
- - Mutual agreement on end-user pricing guidelines, transfer prices
and payment terms.
B 3. GEMINI will be responsible for supplying products to the DISTRIBUTOR's
Clients with the reasonable working criteria in the following respects:
- - Products will be in working order with no fatal error which prevents
a customer from using the product at all.
- - Products with non-fatal problems will be corrected using support and
maintenance version release procedures.
- - Products will support international characteristics available from
the respective vendors to GEMINI.
If the products do not meet this criteria, GEMINI will be responsible for
fixing the problem or removing the products from the DISTRIBUTOR's portfolio.
<PAGE> 131
C. SUPPORT
C 1. GEMINI agrees to provide the following support to the DISTRIBUTOR:
- - Training is mandatory.
- - Support for proposal development presentation and conference
participation.
- - Technical consultation and coordination out of Calgary expenses
borne by the DISTRIBUTOR.
Product and marketing communications to the DISTRIBUTOR.
GEMINI agrees to maintain the technical currency of SWIFT within planned
computer operating Systems and programming language environments as other
development tools used by SWIFT provide capability.
C 2. The DISTRIBUTOR agrees to provide the following support to their
customers unless otherwise negotiated with GEMINI. (see Appendix D)
Country specific nationalization extensions to the product.
Installation, training, and technical product support.
Product updates and product information communications.
Coordination and project management of customer-oriented product problems
with GEMINI.
The DISTRIBUTOR agrees to attend a technical training course in Calgary, or a
mutually agreed upon locale, as appropriate.
C 3. The DISTRIBUTOR agrees to provide full end-user details, including
company name, full company address, phone number, fax number and a contact
name, for each product purchased.
C 4. The DISTRIBUTOR agrees that GEMINI maintains the right to support
these customers directly in the event of: customer dissatisfaction,
termination of this agreement, and/or the company no longer exists or is
filing for bankruptcy.
C 5. GEMINI agrees not to use the end-user information supplied by the
DISTRIBUTOR for means other than those agreed in Section C.3., or otherwise
mutually agreed, during the term of this agreement.
<PAGE> 132
D 1. GEMINI will be responsible for providing product updates and fixes
to the DISTRIBUTOR for its customers.
D 2. The DISTRIBUTOR agrees to maintain on-site demonstration facility
for each GEMINI product they represent.
D 3. a) Product trials -- The DISTRIBUTOR guarantees that non-disclosure
agreements, (see Appendix E) be signed and originals returned prior to
providing any product trials. A copy of this agreement would be
automatically provided to GEMINI. The DISTRIBUTOR will assist its customer
with product installation and grant a maximum trial period not exceeding 30
days. Extensions may be approved at the DISTRIBUTOR's discretion as required.
b) The DISTRIBUTOR will make reasonable efforts to ensure that unlicensed
software is not retained by the potential client.
D 4. The DISTRIBUTOR will be responsible for freight charges for regular
shipments of products, trial orders, literature, etc. as well as any import
duties and taxes. Such shipments are F.O.B. Calgary, Canada.
D 5. GEMINI will provide the DISTRIBUTOR with a current version of the
latest demonstration version for each product.
D 6. Shipment of product to customers will be effected by GEMINI unless
otherwise agreed to by both parties.
E. MARKETING
E 1. a) GEMINI agrees to supply the following information to the
DISTRIBUTOR:
- - Copies of ad flyers, user lists, magazine articles, and other
marketing information in English.
- - Copies of Product and necessary technical documentation in hardcopy
and machine readable form in English.
- - Copies of all GEMINI press releases and press clippings.
- - Progress reports on product development.
<PAGE> 133
b) The DISTRIBUTOR will provide a monthly report to GEMINI summarizing
the following:
Status of the monthly and quarterly forecasts as per Section F.2.
Copies of advertisements, press articles and details of promotion efforts
including seminars and trade shows.
Action plans for the following quarter.
c) Any variation in packaging by the DISTRIBUTOR must have prior
written approval by GEMINI. Any advertising of SWIFT by the DISTRIBUTOR must
prominently display the SWIFT logo.
E 2. The DISTRIBUTOR will be responsible for all English to non-English
translation of product documentation and marketing material.
E 3. GEMINI agrees to include the DISTRIBUTOR as its product
DISTRIBUTOR's in its marketing, promotions and advertising as appropriate.
E 4. The DISTRIBUTOR will participate in trade shows, publicity, sales
seminars where appropriate, and advise GEMINI of all such intentions 60 days
in advance, unless circumstances make this impractical.
F. FINANCIAL
F 1. Appendix A outlines the discounts applicable to targets committed to
by the DISTRIBUTOR and the definition and criteria for limited exclusivity.
F 2. The DISTRIBUTOR will supply quarterly forecasts to GEMINI for each
quarter at least 1 day prior to the start of that period.
F 3. a) The normal payment terms to the client will be 30 days net
from the shipping date of product ordered. Any variation to this arrangement
will require prior permission from GEMINI.
b) The DISTRIBUTOR specifically agrees that payment to GEMINI is NOT
dependent on having received payment from the customer.
F 4. GEMINI will bill the client directly, outside of Canada billing will
be in United States Dollars.
<PAGE> 134
F 5. a) During the term of this agreement, the DISTRIBUTOR agrees to
keep all reasonable records and books of account and reasonably specific
entries relating to GEMINI products. GEMINI may, at its own expense, cause
an audit to be made of the applicable records in order to verify statements
issued by the DISTRIBUTOR.
b) Any such audit shall be conducted by a mutually agreed upon
independent certified public accountant (other than on a contingent fee
basis) and shall be conducted during regular business hours at the
DISTRIBUTOR's offices and in such a manner as not to interfere with the
DISTRIBUTOR's normal business activities.
F 6. Should material discrepancies be found and verified, the DISTRIBUTOR
agrees to compensate GEMINI for the audit and any payments due to GEMINI.
F 7. In the event that GEMINI makes any claim with respect to such an
audit, GEMINI agrees to make available to the DISTRIBUTOR its records and
reports pertaining to the audit, prepared for GEMINI by third parties.
G. ESCROW
In the event that one of the following events should occur, then upon
notification to the escrow agent, the DISTRIBUTOR or user could obtain the
source code.
1) The owner of the software is unable or unwilling to devote resources
to performing the required maintenance according to the terms of the
agreement: or
2) The owner of the software has ceased doing business: or
3) All copies of the source code have been lost or destroyed.
<PAGE> 135
H. APPENDICES
H 1. The following appendices form an integral part of this Agreement:
Appendix A - Commission Structure, Limited Exclusivity
Appendix B - SWIFT Partner Description
Appendix C - Assigned Territories, Authorized Product Line
Appendix D - Non-disclosure agreement
Appendix F - Product Price List
Appendix F - SWIFT Licensing Guide
In witness whereof, the parties have executed this Agreement as of the date
set forth above. All signed copies of the Agreement shall be deemed originals.
The parties hereto agree that this agreement shall be executed in the
English language.
GEMINI LEARNING SYSTEMS INC. CamAxys Limited
By By
/s/Kim Adolphe/s/ /s/Alan David James/s/
Signature Signature
Kim Adolphe Alan David James
Printed Name Printed Name
October 28, 1997 November 5th, 1997
(Corporate Seal) (Corporate Seal)
APPENDIX A
COMMISSION STRUCTURE, LIMITED EXCLUSIVITY
COMMISSION STRUCTURE
SWIFT (SoftWare Intelligent Freeform Training)
GEMINI's SWIFT End-User Courses
<PAGE> 136
Refer to APPENDIX "E"
PRICING CHANGES
In the event of GEMINI announcing changes to the Price List for any product
included in this agreement, the DISTRIBUTOR may register open quotations
with GEMINI to be honored at the previous pricing for a period of up
to 90 days. Fixed term price commitments (such as government annual
contracts) will be honored until their expiry.
OTHER GEMINI PROFESSIONAL SERVICES
If desired, GEMINI will provide quotes for Professional Services work to
DISTRIBUTORS. The DISTRIBUTOR may apply a mark-up to the end user (15% to
30% suggested) on these quotations.
<PAGE> 137
APPENDIX B
SWIFT TM
PARTNER DESCRIPTIONS
DISTRIBUTORS
5) May also be a CAR
CARS (Course Added Resellers)
I) Develop SWIFT End-User courses
2) Pay full price for SWIFT Kit
3) Site licenses for Corporate clients must be approved by Branch
Office/Head Office.
4) Must pay annual support fee
SWIFT SIDECARS
1) Develop one course per Kit
2) SWIFT Certification course
3) Final version of course compiled at place of purchase
4) After final compile, six months recompiling allowed to fine-tune the
course
5) Free recompiling of course for new SWIFT releases
AUTHORIZED PRODUCT LINE
SWIFT for Windows 95, 3.1 and NT
Gemini's SWIFT End-user courses for Windows 3.1, NT, and 95
PAYMENT PLAN
COST
SWIFT Kit: $ 20,000.00(US)
Annual support $ 3,000.00(US)
U.S. Conversion: x 1.4
Sub Total 2,2OO.00(Canadian)
Deposit $ 5,640.00(Canadian)
TOTAL $ 26,560.00(Canadian)
<PAGE> 138
BALANCE OWING:
The balance of $26,560.00 (Canadian) to be paid through 50% of gross profit
revenues of SWIFT related sales after Gemini's standard licensing fees are
paid. CamAxys must complete SWIFT training before year end.
SWIFT DESIGNER'S COURSE OUTLINE
Course Objectives
After completing this course, attendees will be able to:
- - recognize what the SWIFT Adaptive Learning and Adaptive Testing
Environment provides
- - create an effective outline for your SWlFT course,
- - create a demo course with at least 2 topics, 2 or 3 modules, and 8
to 10 concepts for your SWIFT course,
- - efficiently interpret course compiler error messages,
- - write a variety of effective questions and feedback,
- - use pools in questions to capitalize on the Adaptive Testing,
- - write effective regular expressions for short answer questions,
- - apply effective pedagogical methods to your course.
Prerequisites
experience using MS-Windows
Course Length
28 hours
Course Components
- - Overview of SWIFT
- - the elements of SWIFT
- - SWIFT advantages
<PAGE> 139
- - the SWIFT ALE
- - Using the Learning Environment - Learning "SWIFT LE"
- - Beginning the Development of a SWIFT Course
- - starting from other formats
- - designing the course
- - Developing goals, objectives, the outline, mapping goals to the
outline, and determining mastery
- - Developing the Concept
- - challenges to developing the concept content
- - concept components
- - GML
- - tags used in SWIFT
- - Putting it All Together
- - marking up the course
- - using the Course Compiler
- - Course Compiler error messages
- - Adding Examples, Supplemental Instruction, and (hrt)
- - Adding Graphics, Multimedia and Hypertext
- - Writing Questions
- - t/f, multiple choice, matching and graphical selection questions
- - short answer questions and regular expressions
- - Other Components in Adaptive Testing
- - Validating questions
- - Fixed-length testing
- - Using and Creating Styles pre defined styles
- - defining fonts and the Font Chooser
- - user defined styles
- - using special characters
- - Testing Your Course
<PAGE> 140
APPENDIX D
NON-Disclosure Agreement between the Parties
<PAGE> 141
APPENDIX E
PRODUCT PRICE LIST
SWIFT TM
PRODUCT PRICE LIST
PRODUCT & SERVICES PRICE
1) SWIFT Kit $ 20,000.00
2) *Annual Support Fee (includes technical
support, free SWIFT upgrades and 50%
discount on new releases) $ 3,000.00
3) SWIFT LE (Learning Environment) Licenses See SWIFT Licensing Guide
4) SWIFT SIDECAR $ 3,000.00 per course
4) Training Course $ 1,795.00 per person
5) **Consulting Services $ 105.00 per hour
6) SWIFT Courses See SWIFT Course Library
Prices are subject to change. All Pricing is in U.S. dollars.
* Annual support fee is charged with SWIFT Kit.
** Course content development, instructional design, and total training
solutions.
<PAGE> 142
APPENDIX F
SWIFT LICENSING GUIDE
SWIFT TM (SoftWare Intelligent Freeform Training)
LICENSING GUIDE
The following guide outlines the four licensing levels for the SWIFT
Learning Environment (LE). This is a ONE-TIME FEE valid from date of
purchase of the SWIFT LE version.
LEVEL ONE: Single Learner Application (Single User-Single System-Single
Course)
$100.00 U.S.
This allows the client to install SWIFT LE to a single system to deliver
their courses to a single user anywhere on CD-ROM, 3.5 diskette or network.
This is a multi-user or multi-system license. This applies
when a company is purchasing single copies of the LE for access to courses
on an individual basis.
LEVEL TWO: Learning Center (Unlimited Users - Single System - Specific
Location)
$6,200.00 U.S.
This level is designed for a specific location designated for training with
unlimited users. The SWIFT LE will be licensed to a specific system at a
specific location only. This will permit as many users as required
to use the system with no further licensing costs. This DOES NOT allow for
the loading of the SWIFT LE on multiple systems. (The fee for licensing will
become negotiable where multiple system installation is required and network
delivery is not applicable.)
LEVEL THREE: Location Delivery (Unlimited Users - Unlimited Systems -
Specific Location)
$12,400.00 U.S.
This is applied to a situation where the client requires delivering the
product to a large audience at a specified location either by direct download
of the course from the clients system or through a client-server network.
The SWIFT LE will be licensed to unlimited systems at a specific location
only.
LEVEL FOUR: Open Delivery (Unlimited Users - Unlimited Systems -
Unlimited Locations)
$153,700.00 U.S.
<PAGE> 143
This license would allow a company to install the SWIFT LE by direct
download or client server to anyone, anywhere, anytime within their
organization. There are no restrictions to the method of delivery
or to the number of users. This license level is useful to companies
requiring delivery of courses to a large number of users without placing
restricting demands on training time or location. Once a client has purchased
the appropriate licensing there is no further licensing fees required for
the SWIFT LE version.
<PAGE> 144
APPL'N. NO 709 529 REGISTRATION NO. TMA442,700
FILING DATE: 13 JULY 1992
REGISTRATION DATE: 12 MAY 1995
REGISTRANT:
GEMINI LEARNING SYSTEMS INC,
NUMBER 1750,101 SIXTH AVENUE SOUTH
WEST,
CALGARY,
ALBERTA
T2P3P4
REP FOR SERVICE:
PAUL J. DUNN,
306 TENTH STREET NORTH WEST,
CALGARY,
ALBERTA T2N 1V8
TRADE MARK
SWIFT
WARES
1) Software namely; computer based educational software.
SERVICES:
(1) Operation of a business dealing in the development of educational
software to end user specifications.
Used in Canada since MAR 1990 on wares and on services.
<PAGE> 145
Consumer and
Corporate Affairs Canada
Trade-marks
CERTIFICATE OF
REGISTRATION
442700
I hereby certify that the trade-mark identified in the attached extract from
the register of trade-marks has been registered as appears therefrom, and
that the said extract is a true copy of the record of its registration.
In accordance with the provisions of the Trade-marks Act, this trade-mark is
subject to renewal every 15 years from the registration date shown on the
attached extract.
MAY 12, 1995
Date
(ILLEGABLE SIGNATURE)
Registrar of Trade-marks
<PAGE> 146
(PAGE LEFT INTENTIONALLY BLANK))
<PAGE> 147
