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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-SB/A
Amendment No. 1
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b) OR 12 (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
TRANSFORMATION PROCESSING INC.
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(Name of Small Business Issuer its charter)
NEVADA 95-4583945
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(State or other jurisdiction of (I.R.S. employer
Incorporation or Organization) identification no.)
5500 EXPLORER DRIVE, SUITE 2000
MISSISSAUGA, ONTARIO L4W 5C7
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(Address of principal executive offices) (Zip code)
Registrant's Telephone number, including area code (905) 206-1366
Securities to be registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAMES OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
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NONE N/A
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Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.001 PER SHARE
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(Title of Class)
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ITEM 1. DESCRIPTION OF BUSINESS
(a) Business Development
In April 1996, Messrs. Paul G. Mighton, Gary G. McCann and Vladamir
Stepanoff (the "Founders") caused Transformation Processing Inc. ("TPI
- -Ontario") to be incorporated under the laws of the Province of Ontario,
Canada for the purpose of providing computer-related services utilizing
computer software incorporating technology developed by Mr. Stepanoff. In
July 1996, Mr. Stepanoff assigned his ownership rights in a copyright
covering the computer software used to perform the computer related services
to TPI-Ontario. On August 20, 1996 (the "Closing Date"), the Founders, as
the holders of the outstanding common shares of TPI-Ontario, entered into a
transaction with Samuel Hamann Graphix, Inc., a corporation which had been
incorporated under the laws of the State of Nevada ("SHG-Nevada") on August
7, 1996, whereby the Founders exchanged their common shares of TPI-Ontario
for an aggregate of 5,901,050 shares of the outstanding common stock, par
value $.001 per share ("Common Stock"), of SHG-Nevada. As a result of such
transaction, which has been accounted for as a reverse acquisition (the
"Reverse Acquisition"), TPI-Ontario became a wholly-owned subsidiary, and
the Founders acquired control, of SHG-Nevada.
On the Closing Date, Mr. Mighton was informed by certain financial
consultants engaged by TPI-Ontario that Samuel Hamann Graphix, Inc., a
California corporation ("SHG-California"), had been merged with and into
SHG-Nevada (the "Merger"), with SHG-Nevada being the surviving corporation.
Investigation by the Company subsequent to the Closing Date revealed that
although (a) SHG-Nevada and SHG-California entered into an agreement and plan of
merger dated August 14, 1996 (the "Merger Agreement"), providing for the Merger
to be effective upon the approval of the Merger Agreement by the parties thereto
and the filing of articles of merger with the Secretary of State of the State of
Nevada (the "Nevada Secretary of State") and (b) articles of merger dated
August 14, 1996 complying with Nevada law were executed by such parties (the
"Nevada Merger Articles"), neither the Nevada Merger Articles nor articles of
merger complying with California law were filed with the appropriate authorities
of the States of Nevada and California prior to the Closing Date (which filings
were necessary under applicable law to effect the Merger).
In March 1997, SHG-Nevada amended its articles of incorporation to change
its corporate name to Transformation Processing Inc. (hereinafter referred to as
the "Company" or "TPI"). In July 1997, the Company caused the Nevada Articles
of Merger to be filed with the Nevada Secretary of State. On February 19,
1998, the Company effected the merger of TPI-Ontario with and into the Company.
On June 3, 1998, the Company effected the merger of SHG-California into the
Company.
(b) Business of the Issuer
The Company is a development stage company. The Company's business
consists of providing computer-related services to corporate customers in Canada
and the United States. The
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Company currently groups the services it offers as follows: client/server
migration services, year 2000 ("Year 2000") remediation services and groupware
services.
This Form 10-SB Registration Statement contains certain forward-looking
statements that are subject to significant risks and uncertainties. There
are a number of important factors that could cause actual results to differ
materially from historical results and results anticipated by the forward
looking statements contained in the following discussion. Such factors and
risks include, but are not limited to, intense competition, price cutting and
profit margins, dependence on key personnel, the economic environment, the
ability to develop, market, support and acquire new computer-related services
and products and the ability of the Company to manage its growth.
CLIENT/SERVER MIGRATION SERVICES
The Company has developed software for the automatic migration of "legacy"
computer application source code and data used on past and current IBM
"mid-range" computers (often referred to as "minicomputers," as compared to
desktop or microcomputers) to a format compatible with a wide range of open
"client/server" computing systems from various manufacturers. A client/server
system is a network consisting of a "server" computer and one or more "client"
computers in which processing, data storage and accessibility to data bases are
shared among the individual computers comprising the network. The Company
provides transformation services, utilizing the Company's migration software,
and support services to end-users seeking to transform their closed proprietary
systems to open client/server systems.
BACKGROUND. Historically, the information technology ("IT") industry
has lacked consistent industry standards. Major vendors of computer hardware
and software products designed and sold proprietary products, which often were
not compatible with those offered by other vendors. This had the effect of
locking customers into a line of products offered by a single vendor controlled
by a small number of specialized employees, which made changing to a competitive
vendor, or the mixing and matching of products from a variety of vendors,
extremely difficult or impossible. Over time, the inability of most computer
manufacturers to provide all the software necessary to keep pace with the
evolution of technology led to the adoption of cross-industry standard software
and the advent of enterprise-wide "open" networks. These industry changes,
combined with the demand for more competitive and cost effective systems, have
caused a shift from the older proprietary systems (known as "legacy systems" in
IT terminology) to open, client/server systems. The Company believes that the
management of most large business organizations will migrate a substantial
portion of their existing application software to client/server systems, because
such systems are recognized as the best IT infrastructure for current business
realities and objectives. International Data Corporation, an IT industry
analyst, predicts that, in one form or another, 85% of application software will
be client/server enabled by the Year 2000.
The Company believes that most corporate information still resides on
closed legacy systems, consisting of a centralized "mainframe" or mid-range
computer and a group of remote "dumb" terminals (i.e., a keyboard and monitor,
having no local processing power, used to enter
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data into the central computer). Closed mainframe systems usually utilize MVS
operating systems developed by IBM and "external binary coded decimal
interchange code" computer languages to store and retrieve data. These types of
older computer languages do not comply with the American Standard Code for
Information Interchange ("ASCII," pronounced "Ask-Key"), a computer code which
is the international standard for client/server systems. As compared to the
newer open systems, legacy systems require a great deal of expertise to access,
do not facilitate information sharing, are slow to access and are increasingly
expensive to maintain. Users that decide to migrate to open client/server
systems are faced with the problem that a significant percentage (the Company
believes as much as 80%) of the proprietary code in existing application and
data files is incompatible with the new open systems. Large organizations
usually have many different types of computers utilizing many different
operating systems and languages and different sets of data bases and files. The
rapid deployment of client/server systems and desktop computers, which utilize
Windows NT-Registered Trademark-, Windows 95-Registered Trademark-, Windows
3.x-Registered Trademark-, Novell NetWare -Registered Trademark- and
OS/2-Registered Trademark- operating systems and languages, has created a
communications barrier between mainframe computers operating on MVS and
mid-range computers utilizing UNIX-Registered Trademark-, AS/400-Registered
Trademark- and DEC operating systems, on the one hand, and client/server
networks utilizing desktop computers, on the other. The Company believes that
the ability of users to access mainframe and mid-range computer data and files
has become a critical factor in an organization's daily operations. Different
computing systems (and operating systems) must be able to communicate with each
other.
A complete re-write of legacy code for a mainframe computing system
usually requires the transformation of millions of lines of code ("LOC"). A
single computer programmer is generally capable of rewriting about 10 LOC per
day, making this approach time-consuming, financially impracticable and
uncertain of delivering a high-quality product.
The Company believes that a large market has developed for software
services which will enable mainframe and midrange computers to seamlessly
connect to client/server systems. Existing applications and data that are
important to an organization's operations must be transformed to a format that
is compatible with the new open systems. Accordingly, there is a demand for
transformation services that will automatically migrate a user's critical
applications and data currently residing in legacy code, into code that is
compatible with the new open client/servers systems.
Traditional approaches to migration software have included "emulation"
(sometimes called "re-hosting") and "conversion." Emulation moves application
code and data to a new hardware system by simulating the original legacy
environment by hardware or software means. Under the emulation approach, data
is only accessible through legacy logic and, in essence, the new hardware simply
mimics the old hardware. The conversion method essentially converts one legacy
computer language to another (e.g. "RPG" to "COBOL") and runs in the same
fashion as the original system with few architectural improvements or new
benefits to the end-user. The Company believes that the emulation and
conversion methods have been generally found to be unsatisfactory in meeting
corporate objectives.
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SERVICES OFFERED. The Company offers transformation services which enable
companies to automatically migrate legacy application programs and data to any
open system environment, using technology which the Company believes to be
superior to that which is used in the emulation and conversion methods. The
Company's software disassembles existing application source code at the
operating system level, then automatically translates and reassembles the code
so as to be useable in an open system environment.
The Company's current migration software, the "TRANSFORM SERIES-TM-",
addresses the largest segment of the mid-range computer system market, the
IBM mid-range computer market (having an "installed-base" of over 500,000
installations) and includes TRANSFORM/3X-TM-, which addresses the IBM System
34 and System 36 market, and the TRANSFORM/400-TM-, which addresses the IBM
System 38 and IBM AS/400 market. Each of TPI's migration programs
encompasses a battery of automatic code translators which transform legacy
application source code into machine-independent code-components, except that
certain application software functions originally coded for particular
functions, such as telecommunications, graphics and office automation
functions, may require manual adjustment and/or redesign of the program.
Software that has been automatically transformed using the applicable
Transform Series program and any software required to be manually transformed
must be integrated to assure that the automatically converted software and
the manually transformed software will function as a whole (the "Transformed
Software"). The Transformed Software will only execute on a customer's
client/server system in conjunction with the Company's software function
support products, offered under the trademark ORB/400-TM- (also known as
"Deployment Products"). The Deployment Products consist of software that
permits Transformed Software to execute on the "server" computer ("Server
Software") and software that permits users of the "client" computers to
access Transformed Software available on the server computer ("Client
Software").
The Company typically provides transformation and support services
pursuant to a software conversion agreement. Such agreement provides that
the Company will use its migration software to automatically transform the
customer's legacy source code to a format that can be used by the customer's
client/server system and, if necessary, will manually transform ("rewrite")
any of the customer's legacy code that cannot be automatically transformed
using the migration software. The customer has the option to separately
perform manual transformation. If the customer elects this option, the
Company disclaims responsibility for the integration of the automatically
transformed software and the rewritten software.
The pricing of software conversion agreements is dependent on the number
of Lines of Code (LOC) to be converted. In the conversion process, there are
three fundamental components. First is project scoping or assessment,
secondly the translation phase and the final component is the testing and
implementation phase. The Company provides assessments to customers on a
fixed price basis. The assessment phase is priced according to the scope of
the environment. A typical system size would be in the area of 1,500,000 LOC
priced at $10,000 to $20,000. The Company has completed several asssessments
priced in this range.
Price proposals have been issued to numerous companies on the
translation phase. This pricing is done on a price per LOC. The Company's
pricing in this phase of a project will range between $0.50 to $0.70
per line of code. Although the Company has not provided pricing to the market
as it relates to the testing phase, this area is typically priced
on a time and materials basis. The median gross amount payable under a
typical software conversion agreement for an IBM System 36 or AS/400 System
would be approximately $500,000. Sales to smaller sites will range from
$100,000 to $200,000 and larger agreements are expected to range
from $700,000 to $1 million range. There can be no assurance that the
Company will be able to price such agreements as anticipated.
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The Deployment Products are made available to a customer pursuant to the
software conversion agreement with such customer, provided the customer has
executed the Company's form of Deployment Product license agreement, which
licenses the customer to install one copy of the Server Software on its
server computer and to install a specified number of copies of the Client
Software on its client computers. A customer may install the Deployment
Products on more than one computer system provided it executes a separate
license agreement for each such computer system. Each license agreement
provides for the payment of a one-time license fee and annual maintenance fees.
Software support services, consisting of advice and assistance in the
use of the Transformed Software and the Deployment Products and the
correction of defects in the execution of such software, are available under
each software conversion agreement by telephone without additional charge
during the 90 days following delivery of the Transformed Software to the
customer. Thereafter, support services are provided without additional
charge so long as the annual maintenance fees under the applicable license
agreement are current. Otherwise, customers requesting support services are
charged TPI's applicable hourly rate for professional services.
The Company also offers other professional services in connection with a
customer's migration from a legacy system to a client/server system, including
consulting services to assist in the selection of the optimum client/server
environment and/or the implementation of a physical assets (computer hardware)
management system; education as to client/server systems; and network and
software skills training. These additional services are provided under the
Company's form of professional services agreement either at the Company's
applicable hourly rates for such services or a negotiated fee. Also, see
"GROUPWARE SERVICES" below.
BUSINESS STRATEGY. While the Company is offering its transformation and
support services directly to end-users, the Company believes that the largest
percentage of its revenues will be generated by providing transformation
services to IT vendors in the hardware, database and application software
sectors of the IT industry ("IT Vendors"). Such IT vendors have many strategic
partners who can enhance their revenue potential by utilizing the Company's
services to facilitate end-user migration to, and the installation of, their
products.
To implement this strategy, TPI plans to negotiate formal strategic
alliances with important IT Vendors having a vested interest in the migration
from IBM mid-range computer systems; to perform technology reviews with such IT
Vendors; participate in the first migration project with each such IT Vendor;
and gain access to, and acceptance from, strategic partners of such IT Vendors
by seeking to successfully complete each such project. There can be no
assurance that TPI will be able to successfully implement this strategy or that
the implementation of such strategy will generate significant revenues or
income.
As discussed above, TPI's current transformation services address the IBM
mid-range computing device marketplace. The Company expects this marketplace
to be large enough to sustain TPI's business objectives for many years to come.
However, to assure long-term growth,
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TPI will have to enter the transformation processing market for mainframe
computing systems. The offering of services to facilitate migration from
mainframe systems would increase TPI's market. Currently, TPI plans to enter
this market by identifying the best software migration toolsets developed by
third parties and seeking to obtain licenses to either use such software to
perform transformation services for mainframe customers and/or to customize and
remarket such tool-sets to mainframe customers. The Company has not yet
identified such software tools.
MARKETING AND SALES. The Company believes that the following factors will
assist it to implement its business strategy:
(a) customer demand to move toward client/server systems appears to
the Company to be strong and customer awareness of the Year 2000 problem has
focused attention on the need to address problems inherent in legacy systems
(see "YEAR 2000 REMEDIATION SERVICES," below);
(b) the Company believes, based on its knowledge of the industry,
that no competitor's migration software transforms legacy code to a
client/server format in as rapid, comprehensive and effective a method as the
Company's software;
(c) the Company believes that if it positions itself as a provider of
transformation services in the migration process and as a facilitator for
strategic partners to sell their own products, the Company will not be perceived
as a competitive threat to the major IT Vendors with whom the Company may desire
to negotiate strategic alliances; and
(d) the marketplace is easily identified and targeted in terms of
end-users.
Given these factors, TPI expects to generate revenues from services and software
licenses as the result of service agreements with end-users and strategic
alliances it expects to enter into with major IT Vendors.
TPI hopes to generate awareness of its services through the efforts of its
in-house sales force and outside sales representatives; implementation of its
referral program (described below); direct mail, especially to independent
software vendors; advertising in publications that are focused on TPI's market
(e.g., NEWS/400); targeted advertising, broadcasting and corporate/services
message delivery on the Internet.
The amount of time required to close a software conversion agreement for a
client/server migration project (from the time of submission of a proposal to
the prospective customer to execution of the contracts) varies depending on the
configuration of the customer's legacy system, the number of LOC to be
transformed and the target client/server system. Typically, a large project
takes longer to close than a smaller project. The Company anticipates that the
sales cycle for most of its client/server migration projects will be from three
to four months.
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The Company anticipates that the sizes and volumes of its software
conversion agreements will increase over time as initial projects are secured
and completed and can serve as reference sites to validate the performance and
functionality of the Company's services and software for prospective customers
(the "Referral Program"). The Company anticipates that its Referral Program
will result in shorter closing times for agreements and increased market
penetration. To date, the Company has entered into five software conversion
agreements, of which two have been completed and three are in the process of
being performed or are awaiting performance. There can be no assurance that the
Company will obtain any agreements through implementation of its Referral
Program. See "YEAR 2000 REMEDIATION SERVICES - MARKETING AND SALES" as to
Company's plan to use Year 2000 projects to cross-sell post-Year 2000
client/server migration projects.
The Company's sales force currently consists of four sales persons who are
employees and report to the Company's Vice-President-Sales. Such employees are
compensated on a salary plus commission basis. To augment its sales force, the
Company has entered into Referral Program agreements with MCW Business Systems
Ltd. ("MCW"), a company that provides sales representation services in Canada,
and Y2K Plus Inc. ("Y2K"), a company that provides sales representation services
in the United States. Under such agreements, MCW and Y2K personnel will
receive extensive training relating to TPI services. MCW and Y2K use an
"account management team" approach to the provision of hardware, software and
professional services and have committed to offering TPI services through
account executives located throughout Canada and the United States. The
Referral Program agreements provide that each of MCW and Y2K will be compensated
based on a percentage of the fees charged for referrals of new customers that
result in the execution of service agreements with such customers which are
fully performed by TPI.
YEAR 2000 REMEDIATION SERVICES
The Company offers Year 2000 remediation consulting and training services
to commercial and industrial end-users of mainframe and mid-range computing
systems. Currently, the Company is targeting manufacturing companies and
companies in the financial, insurance and healthcare industries.
BACKGROUND. Adding impetus to the demand for transformation services has
been the inability of many computer systems to properly interpret dates for the
Year 2000 and beyond. This is a pervasive, time-critical problem confronting
the computer user community as a whole. The essence of the problem is simple.
System components that store the year within a date as a two-digit number (a
standard even in client/server systems) are unable to properly process
transactions with dates beyond 1999. Many application programs that use
projected dates are failing at present, and without timely and apt management of
this problem, entire computer systems could be adversely affected.
Year 2000 remediation is, in essence, a mammoth project that has been
avoided or ignored for the past 20 years. A mid-range computer utilizes one to
two million LOC, while many mainframe computers utilize tens of millions of LOC.
If such code is to be utilized in the Year 2000
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and thereafter, it all must be scanned and date impacted LOC must be "repaired."
The Securities and Exchange Commission ("SEC") has estimated that the cost to
U.S. corporations to resolve the problem to be in excess of $600 billion. The
entry of TPI into the Year 2000 remediation services business was a natural
adjunct to its client/server migration software business.
SERVICES OFFERED. In March 1997, the Company decided to offer Year 2000
remediation services. The Company initially decided to offer "scan and repair"
services to companies requiring Year 2000 remediation services, as a
subcontractor to IT Vendors providing Year 2000 project management remediation
services. Such services were to be rendered commencing in September 1997 at a
scan and repair "factory" to be located at the Company's facility in
Mississauga, Ontario. The decision was also made not to develop a Year 2000
conversion tool set based on the Company's existing proprietary technology, but
to continuously search for, and seek to license, the best available Year 2000
software remediation tools. More recently, the Company has observed that while
there is no shortage of Year 2000 software conversion tools, there is a
significant demand for the application of state-of-the-art project management
methodologies that permit Year 2000 conversion projects to be performed in the
shortest possible time, in some cases at a fixed cost, and with the least
disruption to a customer's continuing operations. Accordingly, the Company
decided to offer a full range of services, based largely on the project
management methodology it employs in providing client/server transformation
services.
The Company now offers the following Year 2000 remediation services:
Rapid Assessment and Delivery for Year 2000-SM- ("RAD/2000"), which
involves the application of an accelerated project management methodology and
the best available software tools (as determined by the Company) to assess,
remediate, deliver and test Year 2000 compliant systems in 60 to 90 days cycles,
using small groups or "cells" of software professionals working in parallel on
desktop computers (rather than on the customer's mainframe or mid-range
computing system) to achieve assessment and remediation of the application
source code. This solution is "iterative" in that knowledge gained from each
phase of remediation, delivery and testing will be continuously used to refine
the assessment phase of a project plan.
Mobile Lab/2000-SM-, which involves the establishment at a customer's
premises, within a period of six weeks, for a fixed price, of a Year 2000
remediation facility specifically designed to meet the customer's Year 2000
requirements. The center can be connected to a customer's net work or
established as an independent group, using the customer's newly acquired
existing technology, and have the customer's staff support the project or have
the Company manage the project. The Company believes that the fixed cost of
this solution will be attractive to most customers because over the next two
years the demand for Year 2000 remediation services will far exceed the supply
and the price for such services will rise significantly as January 1, 2000 gets
closer. In addition, the Mobile/Lab 2000 solution does not require the removal
of application source code and data from the customer's premises.
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Boot Camp/2000-SM- is a five week training course offered by the Company,
that can be conducted at the Company's facility in Mississauga, Ontario or at a
customer's premises, for the purpose of training the customer's existing
IT personnel to support the customer's Year 2000 project. The course
involves four weeks of classroom training and one week of apprenticeship
training in the application of the Company's RAD/2000-SM- methodology and
licensed software tools to the customer's Year 2000 project. The Company
believes that this is the appropriate solution for customers that cannot recruit
a sufficient number of already qualified personnel to staff its Year 2000
project.
Mobile Lab/2000-SM- and Boot Camp/2000-SM- are based on the concept that,
wherever possible, existing technology and personnel should be deployed while
maintaining a reasonable cost structure.
The Company has entered into a strategic affiliation arrangement with
Allegiant Legacy Solutions, Inc. ("ALS") pursuant to which the Company
licenses, on a non-exclusive basis, the right to use and sublicense the use
of Adapt 2000-TM- software remediation tools developed by ALS. The term of
the license is one year and automatically renews upon payment and acceptance
of the annual renewal fee. The Company is authorized under its agreements
with ALS to use the Adapt 2000 software to perform Year 2000 remediation
services and to relicense the software to end-users at such license fees as
the Company may determine. If the Company utilizes Adapt 2000 to perform
Year 2000 remediation services it is obligated to process a minimum of two
million LOC per year for a three year period at each site at which it
performs remediation services and to make quarterly royalty payments to ALS
based on the number of LOC processed. If the Company sublicenses the Adapt
2000 software it is required to pay ALS 50% of the scheduled LOC fee and 50%
of ALS's listed one-time license fee of $12,900.
The Company has also entered into an informal strategic alliance with
Deevan Computer Services Inc. ("Deevan"), an IT consulting company that provides
asset management services to end-users, to offer hardware evaluation and
procurement services under the name Asset/2000-SM-. Deevan has informed the
Company that 60% of the computer hardware currently in use is not Year 2000
compliant and must be either replaced or repaired and that 10% of existing
hardware cannot be repaired. Deevan will offer Year 2000 computer hardware
evaluation, procurement and installation services in conjunction with the
software remediation services offered by the Company.
BUSINESS STRATEGY. The Company's strategy is to successfully position
itself as a provider of Year 2000 remediation services over the next 24
months so as to take advantage of what the Company deems to be a significant
opportunity to attain accelerated growth, which would be difficult to attain
under normal IT industry conditions. Over such period, the Company estimates
that revenues generated by Year 2000 remediation services will represent in
excess of 50% of gross revenues. There can be no assurance, however, that
the Company will be able to successfully implement this business strategy or,
if it is able to gain a share of the Year 2000 services market, that it will
realize the anticipated growth in revenues.
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MARKETING AND SALES. The Company intends to implement substantially the
same marketing and sales plan described under "CLIENT/SERVER MIGRATION
SERVICES - MARKETING AND SALES" above to access the market for Year 2000
remediation services, e.g., the Company will seek to utilize strategic
business relationships with IT Vendors and the implementation of its Referral
Program to access the market. The Company believes also, that to the extent
it is selected to perform major Year 2000 remediation projects and
successfully completes such projects, it will be in a preferred position to
be selected to perform post-Year 2000 client/server migration projects by the
same customers, by reason of knowledge of the computer systems and businesses
of such customers gained by the Company in performing such projects, and by
prospective customers, based on the Company's demonstrated ability to
successfully implement major conversion projects. However, there can be no
assurance that the Company will be selected to perform any major Year 2000
remediation projects or, if selected, that it will be able to successfully
implement such projects. Moreover, there can be no assurance that the
Company will be selected to perform any major post-Year 2000 projects.
GROUPWARE SERVICES
Groupware is a type of software designed to allow users on a client/server
network to use the same software and work on the same project at the same time.
Notes-Registered Trademark- ("Notes") is a groupware product of Lotus
Development Corporation, an IBM subsidiary ("Lotus"), that, among other
applications, allows users to work on the same document and exchange electronic
mail. Notes permits the integration of information from desktop computer
applications, relational databases, legacy systems and the World Wide Web.
Notes contains an application development environment, a document database and
sophisticated messaging system which permit the development of custom
applications for improving business processes in areas such as product
development, customer service, sales and account management.
The Company has entered a "business partner" agreement with Lotus, pursuant
to which the Company has been designated a "Consultant." As a Consultant, the
Company undertakes to promote the sale of Lotus products and is authorized to
provide business process or technology consulting and custom application
development services using Lotus technologies. As a business partner, the
Company is required, among other things, to be using Lotus products internally,
be connected to Lotus electronically via the Lotus Notes Network/Partner
Information Network and have a "certified Lotus professional" on staff. Lotus
provides the Company with software development tools, information, marketing
services and support .
The Company has also entered into a value-added reseller agreement with
IntellAgent Control Corporation ("ICC"), a provider of sales force automation
software, which has appointed the Company as a non-exclusive distributor in the
United States for such software, which runs on Lotus Notes. Such software
includes artificial intelligence-like features which enables the marketing and
sales personnel of an organization to obtain the latest data concerning a
customer or sales prospect stored in any database on the organization's
enterprise-wide computer system. The Company has acquired a license for such
software product from ICC and the right to grant
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sublicenses of the product, and provide custom application development and
support services with respect to such product to end-users.
Groupware services consist of consulting, analysis, custom application
software development and implementation of Notes software solutions and
specific application programs which operate in the Notes environment and the
training of customer personnel in the use of such software. In this
connection, the Company has entered into a professional services
subcontracting agreement with GE IT Solutions/Universal Data Consultants
("UDC") pursuant to which the Company has agreed to provide classroom
instruction and related professional services, as a subcontractor of UDC, to
end-users with whom UDC has prime groupware development contracts. The
services to be provided by the Company under a particular prime contract are
to be specified in a statement of work to be executed by UDC and the Company,
which statement of work will specify the amounts or rates of compensation for
the Company's performance of such services as well as other specific terms
and conditions applicable to the Company's performance of the services. Each
subcontracting agreement is terminable by either party on 30 days prior
written notice and UDC may terminate the services to be performed by the
Company at any time upon written notice to the Company. To date, the Company
has completed 14 subcontracts under the subcontract agreement and is in the
process of performing nine subcontracts.
Groupware services are rendered under the Company's form of professional
services agreement at fees based on time and materials estimated to be expended
by the Company in the performance of such services plus a reasonable profit.
BUSINESS STRATEGY. Since the Company's core business is to assist
customers to migrate to open client/server systems, the Company believes it
can enhance its ability to attract customers for its core business and
increase its revenues by assisting such customers with the development of
application software that can greatly enhance the use and productivity of
their client/server systems. The Company believes that the rights it has
obtained under its agreements with Lotus and ICC will enable it to implement
such strategy.
MARKETING AND SALES. The Company intends to implement substantially the
same marketing and sales plan described under "CLIENT/SERVER MIGRATION
SERVICES -- MARKETING AND SALES" above. TPI is currently developing a sales
strategy and partnering plan with ICC which the Company believes will
increase its Notes sales force automation software business. The Company
anticipates that sales referrals will come from both ICC, the Toronto offices
of Lotus and the implementation of its Referral Program. In addition, the
Company intends to sponsor information seminars to create interest and
generate sales leads.
BACKLOG
Since the Company is primarily a provider of services, it does not deem
purchase order backlog to be material to its operations.
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<PAGE>
COMPETITION
The market in which the Company competes is characterized by intense
competition. The Company faces competition from other providers of
computer-related services, most of which have significantly greater financial,
technological, marketing and personnel resources than the Company. In addition,
the Company believes that the significant size of the market for legacy code
transformation services and Year 2000 remediation services will lead to the
emergence of a number of additional competitors. The Company's competitors
include Keane Computer, IBM, Cap Gemini, Viasoft Solutions, LGS Group and many
others.
There are currently over one hundred companies providing Year 2000
remediation services in the United States and Canada. Most do not offer the
range of services which the Company offers but only one or two discrete
services. Moreover, there is a consensus in the IT industry that the demand for
Year 2000 remediation services is so great, and the available remediation
resources are so limited, that all of the necessary remediation cannot be
completed by January 1, 2000.
The markets for computer-related services are characterized by rapidly
changing technology and evolving industry standards, often resulting in the
obsolence of software and related services or short life cycles for software and
related services. While the Company is not currently aware of any competitor
offering client/server migration services that transforms legacy codes to a
format usable in client/server systems as rapidly and comprehensively as the
Company's software, the development of technologies that might adversely affect
the market for client/server systems or that permit the development of software
that outperforms the Company's software could have a material effect on the
Company's potential market share and revenues.
The Company believes that it competes on the basis of the value to its
markets of its proprietary software and project management methodology and its
comprehensive offering of computer-related services. Furthermore, the Company
is constantly seeking to acquire and develop new services and products and to
further develop and enhance its existing software. The Company's success will
depend on its continued ability to provide needed information technology and to
successfully market its services.
INTELLECTUAL PROPERTY
In July 1996, TPI-Ontario acquired the intellectual property rights for
"IBM midrange migration tools" software from Vladimir Stepanoff, Vice
President - Technology and a director of the Company. All enhancements of
such software are wholly owned by the Company.
Prior to April 1, 1996, the Company's date of incorporation, Mr.
Stepanoff entered into an agreement with Raconix Corporation ("Raconix")
pursuant to which he granted certain rights in such technology. To obtain
clear title to such technology, as of the Closing Date, the Company issued
455,000 shares of Common Stock to Jaford Holdings Ltd. and 100,000 shares of
Common Stock and a promissory note in the principal amount of $72,500 to
Innovations Ontario Corp. (which companies had liens on such marketing
rights) and 150,000 shares of Common Stock and a promissory note in the
principal amount of $116,000 to Ronald Content as successor in interest to
Raconix. See Notes 1 and 4 of the Notes to the Audited Financial Statements.
The Company does not have any patents or registered copyrights to
protect its proprietary technology. In addition, none of the trade or
service marks utilized by the Company are registered with any United States
or foreign trademark registry. The Company employs various methods to
protect its technology and the associated documentation including
confidentiality agreements with its employees and license agreements with its
customers and strategic partners. Such methods may not afford adequate
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<PAGE>
protection and there can be no assurance that others will not independently
develop such technology or software incorporating technology that significantly
out performs the Company's software.
EMPLOYEES
The Company has 30 employees, all of whom are full-time, of which five are
executive officers, four are engaged in marketing and sales, three are engaged
in administration and the balance are technical personnel engaged in providing
the Company's computer-related services. The Company considers its relations
with its employees to be satisfactory.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis should be read in conjunction with
the Company's audited financial statements as of July 31, 1997 and for the
period from April 1, 1996 (date of incorporation) to July 31, 1997 (the "1997
Fiscal Period") and the notes thereto and the Company's unaudited financial
statements as of April 30, 1998 and for the nine month periods ended April
30, 1998 and 1997 and the notes thereto, all of which financial statements
are included elsewhere in this form 10-SB.
RESULTS OF OPERATIONS
Results of Operations for the period April 1, 1996 (date of
incorporation) to July 31, 1996 were not material. Accordingly, the Company
has reported results of operations for the 16-month period from April 1, 1996
to April 30, 1997 ("the 1997 Interim Period"). Operations actually commenced
in October of 1996 when the Company moved into a permanent facility (see item
3, Description of Property).
NET LOSSES
For the 1997 Fiscal Period the Company incurred a net loss of
$2,784,536. For the nine-month period ended April 30, 1998 and 1997, the
Company incurred net losses of $2,133,599 and $2,358,920, respectively.
Cumulative losses from April 1, 1996 through April 30, 1998 (the "Development
Period") were $4,918,135. Explanations of these results are set forth below.
The Company expects to continue to incur operating losses until such time, if
ever, as it generates substantial revenues from the performance of its
service offerings.
REVENUE
For the 1997 Fiscal Period the Company's revenue was $47,317. Cumulative
revenue during the Development Period was $462,662. For the nine-month period
ended April 30, 1998 the Company's revenue was $415,345 as compared to
$24,072 for the same period ended April 30, 1997. The Company saw continuing
gains in the Groupware business and recording of its first Year 2000 revenue.
Conversion Services, the Company's core business accounted for $43,084 or 10%
of gross revenue for the nine-month period ended April 30, 1998, as compared
to $14,786 or 61% for the same period in 1997. The Company expects activity
in the Year 2000 area to increase for the fiscal year ending July 31, 1998.
There can be no assurance that the Company's expectations will be realized.
The Company expects to generate revenue from (a) the performance of (i)
transformation services for end-users of IBM midrange computing systems and
application software development services related to client/server migration;
(ii) Year 2000 consulting, analysis, remediation and training services; and
(iii) groupware services, consisting primarily of the performance of
application software development services relating to Lotus Notes and ICC
products and related instructional services; and (b) the licensing of the
Company's proprietary software and ICC software products. The Company is not
able to project the amount or proportion of revenue expected to be received
from each of the foregoing activities as the
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<PAGE>
Company has not offered each of its services for a sufficient period of time to
have such knowledge.
During the autumn of 1996, the Company positioned itself to market
transformation services utilizing the Company's client/server migration
software, targeting the IBM mid-range computer market. In this connection,
the Company planned to enhance its client/server migration software in the
1997 Fiscal Period. Such plan received less attention during such period as
the Company directed its attention to the opportunity presented by the demand
for the Year 2000 remediation services. Because of the scope of the Year 2000
problem and the significant dollar volumes are expected to be expended by
users of information technology to remediate the problem, the Company has
shifted its marketing and sales efforts to promoting Year 2000 remediation
services. The Company has negotiated relationships with a vendor of Year 2000
software conversion tools and a company providing computer hardware
assessment services to support these efforts. By April 1997, the Company was
offering Year 2000 remediation services. The Company has entered into
agreements with Canadian and United States sales representation companies to
implement the Company's marketing and sales strategies. Currently, the
Company is bidding on Year 2000 remediation projects ranging in size from
$100,000 to $1,000,000. There can be no assurance that the Company will enter
into any firm contracts with respect to any of such projects.
EXPENSES
The Company is in the development stage and since April 1, 1996 has
incurred costs relating to the start up of operations, such as the costs of
raising capital, establishing a facility, recruiting personnel, acquiring and
installing furniture and equipment, acquiring development and accounting
software, developing its client/server migration software and marketing and
sales efforts.
For the 1997 Fiscal Period, cost of consulting services accounted for
$11,271. For the nine-month periods ended April 30, 1998 and 1997, cost of
consulting services expenses were $141,899 and $10,078 respectively. The
cumulative cost of consulting services for the Development Period accounted
for $153,170 or 3% of total expenses. The Company anticipates managed growth
in this area as people are added to satisfy consulting services provided to
our customers. As the employment market becomes more competitive as the
result of channeling human resources toward the Year 2000 problem, the
Company expects to pay a premium for skilled consultants and engineers. These
consulting services will be allocated to projects in which the Company has
signed contracts.
Cost of software transformation services accounted for $192,729 of total
expenses for the 1997 Fiscal Period. The cumulative cost of software
transformation services for the Development Period was $497,265 or 10% of
total expenses. For the nine-month periods ended April 30, 1998 and 1997,
software transformation services expenses were $304,536 and $172,895
respectively. The Company anticipates adding people to this area by the
fiscal year ending July 31, 1998, but, only if contracts are in hand. This
growth will depend on the volume of transformation services and year 2000
remediation services being provided by the Company.
Software development costs accounted for $218,212 during the 1997
Fiscal Period. For the nine months ended April 30, 1998 and 1997 software
development costs amounted to $329,806 and $131,683, respectively. The
cumulative amount of software development costs incurred during the
Development Period amounted to $548,018 or 11% of total expenses. The Company
intends to continue to incur software development costs to enable it to offer
client/server migration services, which targets a broad range of
client/server systems. The cost of software development is expected to
increase as the Company seeks to further develop and enhance its
client/server software. The
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<PAGE>
Company believes that development of translators to transform application
source code from any type of machine language to a format useable on any
client/server system will serve as the benchmark of the Company's ability to
respond effectively to end-user requirements.
The Company relates the variable cost of consulting services,
transformation services and software developments to revenues. The Company
believes that, as a percentage of revenues, these costs will vary due to the
nature of the project and the specific services required satisfying
customer's requirements. The Company anticipates that revenues based on a
mature service offering (e.g. client/server migration services) will yield a
higher profit margin, while Year 2000 remediation and groupware development
projects may require a higher degree of manpower and travel costs.
Transformation services and Year 2000 remediation services are based on the
number of LOC to be processed or repaired, while consulting and application
software development services are provided on time and materials basis to
assure profitability.
General and administrative expense accounted for $1,565,388 of expenses
for the nine-month period ended April 30, 1998 compared to $533,969 for the
nine-month period in 1997. General and administrative expenses accounted for
$874,425 during the 1997 Fiscal Period and the cumulative amount of general
and administrative expenses incurred during the Development Period amounted
to $2,439,813 or 47% of total expenses. General and administrative expenses
consisted primarily of salaries and benefits, consulting fees, travel,
investor and public relations, office and equipment rents, professional
services, office and telephone expenses. The Company believes that it may
incur significant costs related to the registration of its Common Stock under
Section 12 of the Securities Exchange Act of 1934, as amended. Such status
may increase professional fees significantly and the cost of investor
relations may increase as reports and other investor information are required
to be filed with the SEC or otherwise made publicly available. The Company
anticipates that general and administrative expense (as percentage of total
costs and expenses) will decline as the Company's operations expand.
For the nine-month period ending April 30, 1998 the Company incurred two
unusual expenses. The first was the settlement of an outstanding issue
regarding the distribution of additional shares of the Company to Jaford
Holdings Limited ("Jaford") in relation to software marketing rights. The
Company elected to pay $259,500 in cash to settle the dispute. In turn, the
Company received full release from Jaford with no further exposure to the
Company. In the second instance, the Company negotiated an out of court
settlement with IBS Conversions, Inc. ("IBS") concerning an outstanding
lawsuit filed by IBS with the District Court of Illinois. The Settlement
Agreement called for the payment of approximately $90,000 to IBS over a
period of six months. In return, the Company received full release from IBS
of any future claims.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its activities through April 30, 1998 primarily
from the net proceeds of private placements of its securities and, to a
lesser extent, from cash flow from operations and the proceeds of two bank
loans. The outstanding principal balance of the loans is currently
approximately $70,957 and the loans bear interest at an annual rate equal to
2.5% over the bank prime rate of interest in effect from time to time.
Repayment of the loans, together with interest thereon, is secured by a lien
on substantially all of the assets of the Company and the Company's executive
officers and directors guarantee repayment of the loans.
At April 30, 1998, the Company had a deficit accumulated during the
Development Period of ($4,918,135), current assets of $618,405, current
liabilities of $1,459,492 and available cash of $274,206. During the
three-month period ended April 30, 1998, the Company issued convertible
debentures with two private placement investors sponsored by Thomson
Kernaghan a registered
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<PAGE>
broker dealer. The convertible debt will require the issuance of common stock
at date of conversion, not cash resources of the Company. The Company will
continue to raise capital through these vehicles to fund operating activities
and other capital requirements. Failure to obtain such equity capital could
have a material adverse impact on the Company's ability to expand its
operations. There can be no assurance that equity capital will be available
to the Company on acceptable terms or at all. In addition, the Company's
auditors, in their report on the Company's financial statements as of July
31, 1997 and for the sixteen month period then ended, have expressed
substantial doubt as to the Company's ability to continue as a going concern
if the Company is unsuccessful in obtaining additional financing.
In addition, implementation of the Company's business plan subsequent to
the Company's year end will require capital resources substantially greater
than those currently available to the Company. The company may determine,
depending on the opportunities available to it, to seek additional debt or
equity financing to fund the cost of continuing expansion. To the extent that
the Company finances expansion through the issuance of additional equity
securities, any such issuance would result in dilution of the interests of
the Company's stockholders. Additionally, to the extent that the Company
incurs indebtedness or issues debt securities to finance expansion
activities, it will be subject to all of the risks associated with incurring
substantial indebtedness, including the risks that interest rates may
fluctuate and cash flow may be insufficient to pay the principal of, and
interest on, any such indebtedness.
On October 23, 1997, TPI made an offering of 400,000 shares of Common
Stock for $200,000 ($.50 a share); on October 31, 1997, an offering of
100,000 Shares of Common Stock for $50,000 ($.50 a share); on December 10,
1997, an offering of 997,778 shares of Common Stock for $220,000 ($.22 a
share) and on January 26, 1998, an offering of 444,445 shares of Common Stock
for $100,000 ($.22 a share). The offerings were made in Canada pursuant to
the claim of exemption under Rule 504 under the Securities Act. These
offerings appear to exceed the limitation of said Rule of a maximum of $1
million in any one year period. TPI intends to file a registration statement
offering rescission to the purchasers of these offerings. The closing market
for TPI Common Stock on August 27, 1998 was $.56 1/4.
The Company has no current arrangements with respect to, or sources of,
additional financing, and it is not contemplated that its existing
stockholders will provide any portion of the Company's future financing
requirements. There can be no assurance that any additional financing will be
available to the Company on acceptable terms, or at all. The inability of the
Company to obtain financing when needed will have a material adverse effect
on the Company, including possibly requiring the Company to significantly
curtail or cease its operations.
INFLATION
The Company believes that the impact of inflation and changing prices on
its operations since commencement of operations has been negligible.
SEASONALITY
The Company does not deem its revenues to be seasonal. Nevertheless
revenues may be affected by the budgeting practices of corporate end-users of
IT. Such companies tend to make IT expenditures early in their fiscal year,
when new budgets have been approved, or late in their fiscal year, to protect
previously budgeted expenditures. In addition, the performance of Year 2000
remediation services may reduce the amount of revenues the Company would
otherwise generate from the performance of client/server migration services
and affect the Company's ability to service such business. The Company
believes that the potential reduction of client/server migration revenues
will be more than offset by revenues generated by the performance of Year
2000 remediation services and the opportunity to cross-sell other services to
consumers of Year 2000 remediation services.
17
<PAGE>
ITEM 3. DESCRIPTION OF PROPERTY
The Company leases approximately 5,477 square feet of office and
production space (the "Leased Premises") in Mississauga, Ontario under a
lease expiring on September 30, 2001 at an annual base rental of
approximately $23,000 plus additional rent equal to real estate taxes,
utility and operating costs allocable to the Leased Premises. The Company
has the option to extend the lease for an additional 60 month term upon
written notice to the landlord given at least six months' prior to the
expiration of the current term of lease at a rental equal to the greater of
the annual base rent for the original term and the market rent for the Leased
Premises prevailing at the time the option is exercised. The Company has the
right to terminate the lease at any time after the 36th month of the original
term by giving the landlord at least nine months' prior written notice and
paying the landlord approximately $18,000.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of February 20,
1998, with respect to the beneficial ownership of the Company's outstanding
Common Stock by (i) each person known by the Company to be the owner of the
more than 5% of such outstanding Common Stock; (ii) each director; (iii) the
executive officer named in the Summary Compensation Table (see Item 6,
"Executive Compensation"); and (iv) all directors and executive officers as a
group:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE
OF OF
BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP PERCENTAGE OF CLASS (2)
- ---------------- --------------------- -------------------
<S> <C> <C>
Joter Holdings 4,936,050(3) 32.0
Diversified
Technologies Ltd. 965,000(3) 6.3
Vladimir Stepanoff 1,633,683(3) 10.6
Paul G. Mighton 1,633,683(3) 10.6
Gary G. McCann 1,633,684(3) 10.6
John G. McGee 1,000,000(3) 6.5
All directors and
executive officers
as a group (5 persons) 5,901,050(3) 38.3
</TABLE>
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<PAGE>
- --------------------
(1) Unless otherwise noted, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them. Each such person is deemed to be
the beneficial owner of shares of Common Stock held by such person (but not
held by any other person) on February 20, 1998, and any shares of Common Stock
which such person has the right to acquire pursuant to securities exercisable
or exchangeable for, or convertible into, Common Stock, within 60 days from
such date. At such date, none of such persons held any options, or warrants
to purchase Common Stock or securities exchangeble for or convertible into
Shares of Common Stock. The address of each beneficial owner is in care of
the Company, Suite 200, 2121 Argentia Road, Mississauga, Ontario, Canada.
(2) Based on 15,418,505 shares of Common Stock outstanding at the close of
business on February 20, 1998.
(3) Joter Holdings ("Joter") is a proprietorship, of which Gary G. McCann is
the proprietor. Joter holds the following shares of Common Stock as nominee
for Paul G. Mighton, Gary G. McCann, Vladimir Stepanoff and John G. McGee,
executive officers and directors of the Company: 1,392,433 shares, 1,392,434
shares, 1,392,433 shares, and 758,750 shares, respectively. The shareholders
of Diversified Technologies Ltd., a British Virgin Islands corporation
("DTL"), are Paul G. Mighton, Gary G. McCann, Vladimir Stepanoff and John G.
McGee. DTL holds the following shares of Common Stock as nominee for Messrs.
Mighton, McCann, Stepanoff and McGee: 241,250 shares, 241,250 shares, 241,250
shares and 241,250 shares, respectively.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Set forth below are the names of all directors and executive officers of
the Company along with certain information relating to the business experience
of each of the listed directors and officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------- ------- ------------------------------
<S> <C> <C>
PAUL G. MIGHTON 45 CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
DOUGLAS WOOLRIDGE 39 PRESIDENT AND CHIEF OPERATING
OFFICER
GARY G. MCCANN 46 EXECUTIVE PRESIDENT, SECRETARY AND
A DIRECTOR
VLADIMIR STEPANOFF 56 VICE PRESIDENT - TECHNOLOGY AND A
DIRECTOR
JOHN G. MCGEE 47 VICE PRESIDENT - FINANCE AND CHIEF
FINANCIAL OFFICER
</TABLE>
PAUL G. MIGHTON served as Chairman of the Board of Directors and Chief
Executive Officer of TPI-Ontario from its date of incorporation in April 1996
until TPI-Ontario was merged into the Company in February 1998 and has served
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<PAGE>
in the same positions with the Company since August 1996. From February 1995
to June 1996, Mr. Mighton served as Executive Vice President and Chief
Operating Officer of Agensys Canada Limited ("ACL"), an IT company. From
April 1993 to February 1995, he served as a Vice President of Co-Operators
Data Services Canada Ltd., a provider of IT services, in its Systems Services
Division. From 1991 to April 1993, Mr. Mighton was National Director of the
Healthcare Systems Division of Information Systems Management Corporation, a
provider of data processing services to health care organizations.
DOUGLAS WOOLRIDGE has served as President and Chief Operating Officer of
the Company since September 1997. From July 1994 to July 1997, he served as
Chief Information Officer for The R-M Trust Company, a Canadian financial
services provider. From August 1992 to June 1994, Mr. Woolridge served as the
director of IE Consulting Inc., an independent management consulting firm
("IE"). From August 1989 to August 1992, he served as a consulting manager for
the IT consulting practice of IE.
GARY G. MCCANN has Served as Executive Vice President of the Company
since September 1997 and as a director since August 1996. From August 1996
to September 1997, he served as President and Chief Operating Officer of the
Company . From February 1996 to August 1996, Mccann was involved in the
founding and organization of TPI- Ontario. From July 1995 to February 1996,
he served as President and a director of Mantis Information Technology Ltd.,
a privately held provider of IT consulting and support services. From
December, 1994 to April 1996, Mr. Mccann Served as Vice President, Technology
and Business Development of ACL. From July 1991 to December 1994, Mr. Mccann
served as a general manager of Sykes Enterprises Inc. of Canada, the
Toronto-based subsidiary of a United States company engaged in providing
computing systems integration services ("SEIC") and from July 1992 to
December 1994, he also served as a Vice President of Sykes Enterprises, Inc.,
the parent of SEIC. Mr. Mccann holds a Bachelor of Commerce degree in finance
and accounting from the University of Windsor, Ontario, Canada.
VLADIMIR STEPANOFF has served as Vice President-Technology and a director
of the Company since August 1996 and held the same positions with TPI-Ontario
from April 1996 until it was merged into the Company in February 1998. From
April 1994 to August 1996, he served as President and director of Cyberplan
Inc., a Canadian-based company engaged in the development and licensing of
automatic transformation software. Mr. Stepanoff was the founder of Cyberplan,
Inc., which was the successor to Cyberplan Enrg., a firm of which Mr. Stepanoff
was the sole proprietor from 1984 to April 1994. Cyberplan Enrg. developed the
transformation software which Cyberplan Inc. continued to develop and license.
Mr. Stepanoff has a Bachelor of Science Degree (with Honors) in mathematics and
physics from the University of British Columbia.
JOHN G. MCGEE has served as Vice President-Finance and Chief Financial
Officer of the Company since October 1996. From May 1991 to October 1996, he
served as President and Chief Executive officer and was the principal
stockholder of Equitable Lease Corporation, an Ontario, Canada equipment leasing
company.
All directors hold office until the next annual meeting of stockholders of
the company and the election and qualification of their respective successors.
Directors currently receive no cash compensation for serving on the Board of
Directors. Officers are elected annually by the Board of Directors and serve at
the discretion of the Board.
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<PAGE>
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth all compensation for all services
rendered to the Company during the Company's fiscal year ended July 31, 1997
by the Company's Chief Executive Officer. No other executive officer of the
Company received annual salary and bonuses in excess of $100,000 during
Fiscal 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- ------------------ ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Paul G. Mighton,
Chairman of the Board 1997 $79,264 -0- -0-*
and Chief Executive
Officer
</TABLE>
* The cost to the Company of personal benefits, including premiums for life
insurance and any other perquisites, to such executive does not exceed 10% of
such executive's annual salary and bonus.
COMPENSATION OF DIRECTORS
No compensation is paid by the Company to any of its directors for services
in such capacity. Currently, all of the Company's directors are executive
officers of the Company.
EMPLOYMENT CONTRACTS
On January 1, 1997, the Company entered into employment agreements with
each of Messrs. Paul G. Mighton, Gary G. McCann, Vladimir Stepanoff and John G.
McGee, the Company's executive officers. Such agreements do not provide for a
fixed period of employment and provide that an employee's employment may be
terminated at any time, without notice, for "cause" (as defined in each
agreement), or at any time, upon at least 30 days prior notice, the Company or
the employee may terminate such employment, and, without notice upon
payment of six months base salary and certain other amounts to the employee, the
Company may terminate such employee's employment. The agreements provide for
participation in employee benefit programs, vacation and reimbursement of
expenses, including for use of the employee's vehicle. Each of the agreements
contains provisions prohibiting the employee from competing with the Company for
a period of six months following termination of employment and from disclosing
confidential information of the Company while employed by the Company and
thereafter.
Mr. Mighton's employment agreement provides that he will be paid an annual
salary of approximately $110,000; Mr. McCann's employment agreement provides
that he will be paid in annual salary of approximately $95,000; Mr. Stepanoff's
employment agreement provides that he will be paid an annual salary of
approximately $66,000; and Mr. McGee's employment agreement that he will be paid
an annual salary of approximately $88,000.
Douglas Woolridge, the Company's President and Chief Operating Officer, has
entered into an agreement with the Company pursuant to which he currently
receives an annual salary of approximately $62,000.
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<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In consideration for the transfer to the Company of the ownership
interest in certain technology and certain services provided to the Company,
the Company issued 4,936,050 and 965,000 shares of Common Stock to Joter and
DTC(1), respectively, which hold such shares as nominees for the benefit of
the following executive officers and directors of the Company: Paul Mighton,
Gary G. McCann, Vladimir Stepanoff and John McGee. See Item 4, "Security
Ownership of Certain Beneficial Owners and Management."
From August 1, 1996 through July 11, 1997, the Company made advances to
Messrs. Paul G. Mighton, Gary G. McCann and Vladimir Stepanoff, executive
officers, directors and principal stockholders of the Company aggregating
$115,227. On July 31, 1997, Messrs. Mighton, McCann and Stepanoff executed
demand promissory notes payable to the Company in the respective principal
amounts of $61,452, $37,829 and $15,946, representing the aggregate amounts
borrowed by such persons from the Company. The notes bear interest at the
annual rate of 4%.
The Company has paid for the account of Mantis Information Technology
Ltd ("Mantis"), a corporation of which Gary G. McCann is the sole
stockholder, certain obligations for consulting services incurred by Mantis
and has rendered invoices to Mantis in the aggregate amount of approximately
$12,000 for funds advanced. As of the date hereof, such invoices remain
outstanding.
Messrs. Mighton, McCann, Stepanoff and McGee have personally guaranteed
the payment to a bank of certain purchase money equipment loans made to the
Company by such bank. The outstanding principal balance of the loans is
currently approximately $80,000. The loans bear interest at 2.5% over the
bank's prime rate in effect from time to time (currently 4.25% per annum).
See Item 2, "Management's Discussion and Analysis or Plan of Operations --
Liquidity and Capital Resources."
- -----------
(1) Such shares were issued in exchange for shares of TPI-Ontario
on August 20, 1996.
The officers of the Company have executed employment agreement with the
Company. See Item 6, "Executive Compensation--Employment Contracts."
ITEM 8. DESCRIPTION OF SECURITIES
GENERAL
The Company is authorized to issue 50,000,000 shares of common stock,
par value $0.001 per share (the "Common Stock"), and 5,000,000 shares of
preferred stock, par value $0.001 per share (the "Preferred Stock"). As of
February 20, 1998, there were 15,418,505 shares of Common Stock outstanding
held by approximately 200 holders of record. No shares of Preferred Stock
are issued or outstanding.
COMMON STOCK
Holders of shares of Common Stock are entitled to one vote for each
share held of record on all matters to be voted on by stockholders. There are
no preemptive, subscription, conversion or redemption rights pertaining to
the Common Stock. All of the outstanding shares of Common Stock are duly and
validly issued, fully paid and non-assessable. Holders of shares of Common
Stock are entitled to receive dividends when, as and if declared by the Board
of Directors from funds legally available therefor and to share ratably in
the assets of the Company available upon liquidation, dissolution or winding
up, subject to any superior rights of the holders of Preferred Stock, if
issued.
22
<PAGE>
PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of the
shares of Preferred Stock in one or more series, with each series to have such
designations, rights and preferences as may be determined from time to time by
the Board of Directors. Accordingly, the Board of Directors is empowered,
without any action by the stockholders, to issue shares of Preferred Stock with
dividend, liquidation, conversion, voting or other rights which could adversely
affect the voting power or other rights of the holders of the Common Stock. In
addition, the issuance of shares of Preferred Stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company. Although the Company does not currently
intend to issue any shares of Preferred Stock, there can be no assurance that
the Company will not do so in the future.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED SHAREHOLDER MATTERS
The Company's Common Stock has been traded in the over-the-counter market
and quoted on the Over-the-Counter Electronic Bulletin Board ("OTCBB") under
the symbol "TPII" since August 21, 1996. The following table sets forth the
high and low bid prices of the Common Stock as reported by the OTCBB for the
periods indicated. The prices indicate inter-dealer quotations, without retail
mark-up, mark-down or commission, and may not represent actual transactions.
<TABLE>
<CAPTION>
BID PRICES
----------
PERIOD LOW HIGH
------ -- ----
<S> <C> <C>
FISCAL 1997
-----------
First Quarter
(August 21, 1996 to October 31, 1996) $2.63 $4.78
Second Quarter
(November 1, 1996 to January 31, 1997) 0.56 3.19
Third Quarter
(February 1, 1997 to April 30, 1997) 0.63 1.06
Fourth Quarter
(May 1, 1997 to July 31, 1997) 0.69 1.22
FISCAL 1998
-----------
First Quarter
(August 1, 1997 to October 31, 1997) 0.30 0.75
Second Quarter
(November 1, 1997 to January 31, 1998) 0.38 0.75
</TABLE>
As of February 20, 1998, there were approximately 200 holders of record of
the Common Stock. The Company reasonably believes that there are approximately
an additional 300 beneficial holders of its Common Stock.
23
<PAGE>
The Company has never paid any cash dividends on its Common Stock and has
no present intention to do so. The Company intends to retain all earnings for
use in its business.
ITEM 2. LEGAL PROCEEDINGS
On December 23, 1997, IBS Conversions, Inc., an Illinois corporation
("IBSC"), commenced an action against the Company in the United States
District Court for the Northern District of Illinois, Eastern Division
(Docket No. 97C8892), seeking to permanently enjoin the Company from using
and disclosing certain information and software alleged to be trade secrets
of IBSC and seeking to recover compensatory damages of at least $290,000 and
punitive damages and attorneys' fees in amounts to be determined by the
court. The complaint alleges, among other things, that: (a) IBSC entered into
a "North American Strategic Affiliation Agreement" with the Company in or
about February 1997, pursuant to which IBSC granted a license to the Company
to use certain software development tools and a related project management
methodology in connection with the Company's plan to offer Year 2000
remediation services; (b) in consideration for such license, the Company
agreed to pay IBSC the sum of $100,000 per year for a period of three years;
and (c) the Company breached such agreement and misappropriated the software
development tools and methodology, which IBSC deems to be trade secrets, by
failing to make such payments to IBSC; failing to use its best efforts to
market IBSC products; and marketing the products of competitors of IBSC.
The Company has moved to dismiss one of the causes of action set forth in
the complaint and has denied the other material allegations of the complaint.
The court has not yet rendered a decision on the Company's motion.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
NOT APPLICABLE
Item 4. Recent Sales of Unregistered Securities
The following discussion includes certain information as to transactions
which occurred prior to the current Management's assumption of control of the
Registrant on the Closing Date and is based on information which Management
believes to be reasonably accurate, but not all of which does it have direct
knowledge.
On the Closing Date, in satisfaction of gross proceeds of $155,000
received by, and certain services rendered, to TPI-Ontario, in the period
April 11 to July 25, 1996, the Registrant issued 160,000 shares of Common
Stock to 15 investors. TPI-Ontario received such gross proceeds pursuant to a
private offering prior to the Closing Date. The 160,000 shares of Common
Stock were issued in reliance on the exemption from registration provided by
Rule 504 of Regulation D promulgated under the Act.
On the Closing Date, Samuel Hamann Graphix Inc. ("SHGI") issued
4,936,050 shares of Common Stock to Joter and 965,000 shares of Common Stock
to DTL, in exchange for common shares of TPI-Ontario, which common shares
were issued as of April 1, 1996. Joter and DTL, which are controlled by
Messrs. Mighton, McCann and Stepanoff, executive officers and directors of
the Registrant, acquired the common shares of TPI-Ontario in consideration
for certain rights in technology transferred to, and certain services
rendered to, TPI-Ontario prior to the Closing Date, which shares, for
accounting purposes are deemed to have been issued in exchange for nominal
consideration as "founder's shares". Such shares were issued to management in
reliance on the exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended (the "Act").
Prior to the Closing Date, SHGI issued 740,469 shares of Common Stock.
The Registrant has no records concerning the transactions in which such
shares were issued or the consideration received by the Company in respect of
such issuances.
Prior to the Closing Date (from August 9 through August 19, 1996), SHGI
issued, pursuant to a private offering, an aggregate of 1,465,000 shares of
Common Stock in consideration for gross proceeds of $14,654 received by SHGI
from investors. These transactions were not disclosed to current management
of the Registrant prior to or on the Closing Date. Present management is not
aware of the exemption relied on for the issuance of such shares; however,
Samuel Hamann Graphix Inc. filed a Form D dated August 16, 1996 claiming
exemption under Rule 504. Management believes that SHGI relied on Rule 504 of
Regulation D under the Act in issuing such securities.
24
<PAGE>
On the Closing Date, SHGI issued 1,888,000 shares of Common Stock to
certain consultants in consideration for certain services rendered in
connection with the reverse acquisition. Current management of the Registrant
is uncertain of the exemption relied on for the issuance of such shares, but
believes prior management relied on the exemption from registration provided
by Section 4(2) of the Act.
On the Closing Date, SHGI issued 455,000 shares of Common Stock to
Jaford Holdings Ltd., 100,000 shares of Common Stock to Innovations Ontario
Corp. and 150,000 shares of Common Stock to Ronald Content, in consideration
for the release by such companies and individual of certain claims with
respect to marketing rights as to the technology previously transferred to
the Registrant by Vladimir Stepanoff, an executive officer and director of
the Registrant. Prior to the incorporation of TPI-Ontario, Mr. Stepanoff had
granted marketing rights with respect to such technology to Raconix, of which
Mr. Content was the sole shareholder. Ronald Content is a sophisticated
investor, who was involved in the operations of the Registrant and received
the shares for investment. The shares were issued in reliance on the exemption
from registration provided by Section 4(2) of the Act. See Item 1,
"Description of Business -- Intellectual Property."
On November 25, 1996, the Registrant issued options to purchase 15,000
shares of Common Stock at an exercise price of $1.99 expiring on November 27,
1997, to a public relations firm, in consideration for certain services. The
options were issued in reliance on the exemption from registration provided
by Section 4(2) of the Act. The holder of the option, as the Registrant's
public relations firm, was fully familiar with the Registrant's operations
and is a sophisticated investor.
On August 23, 1996, Registrant issued 500,000 units to Mayfair Advisory
Group Limited in consideration for gross proceeds of $500,000. Each unit
consisted of one share of Common Stock and a Common Stock purchase warrant
(the "Warrants"). When issued, the Warrants had a per share exercise price
of $1.00, were exercisable for a period of two years, commencing 30 days
after the closing of the offering, and were redeemable on 20 days prior
written notice at a redemption price of $.005 per Warrant. Pursuant to an
amendment to the terms of the Warrants dated August 26, 1998, the warrants
will not be exercisable until a registration statement has become effective
covering the Common Stock issuable upon the exercise thereof; the term of
such warrants has been extended through six months following the effective
date of such registration statement, and the exercise price has been reduced
to $.80 per share of Common Stock, subject to certain adjustments in the
event the market for the Company's Common Stock is less than $.80 at the time
of the exercise, but in no event shall the exercise price be reduced below
$.50 per share. The Common Stock and the Warrants were issued in reliance on
the exemption from registration provided by Rule 504 of Regulation D under
the Act.
On January 27, 1997, Registrant issued 208,333 shares of Common Stock to
Olive Investments, in consideration for gross proceeds of $150,000. These
shares were issued in reliance on the exemption from registration provided by
Rule 504 of Regulation D under the Act.
On March 6, 1997, Registrant issued 501,030 shares of Common Stock to
Thomson Kernaghan & Co., Ltd. ("Thomson Kernaghan") in consideration for
gross proceeds of $375,000. These shares were issued in reliance on the
exemption from registration provided by Rule 504 of Regulation D under the
Act.
25
<PAGE>
On June 27, 1997, Registrant issued 100,000 units to Pinetree Capital
Corp. ("Pinetree") in consideration for gross proceeds of $70,000. The units
were issued to Pinetree pursuant to a Subscription Agreement by and between
TPI and Pinetree (the "Subscription Agreement") by which Pinetree subscribed
for a minimum of 700,000 units and a maximum of 1,000,000 units. The
Subscription Agreement was later amended to lower the minimum to 100,000
units. Pinetree purchased the foregoing securities for its own account. Each
unit consisted of one share of Common Stock and a common stock purchase
warrant expiring two years from the date of issuance, and exercisable at
$1.00 per share during the first year and $1.50 per share during the second
year. These securities were issued in reliance on the exemption from
registration provided by Rule 506 of Regulation D under the Act.
On August 1, 1997, Registrant sold to Thomson Kernaghan an 8%
convertible subordinated debenture due July 31, 1998 in the principal amount
of $108,750 the "Debenture" for a gross purchase price of $108,750. The
Debenture was converted, on August 28, 1997, into 198,000 shares of Common
Stock at the conversion rate of $0.55 per share. The Debenture was issued in
reliance on the exemption from registration provided by Rule 504 of
Regulation D, under the Act and the shares of Common Stock issued on
conversion of the Debenture were issued in reliance on the exemption from
registration provided by Section 3(a)(9) of the Act.
On September 4, 1997, Registrant issued 589,000 shares of Common Stock
to Thomson Kernaghan in consideration for gross proceeds of $125,000 ($.21 a
share). These shares were issued in reliance on the exemption from
registration provided by Rule 504 of Regulation D under the Act.
On September 26, 1997, Registrant issued 400,000 shares of Common Stock
to Thomson Kernaghan in consideration for gross proceeds of $200,000 ($.50 a
share). These shares were issued in reliance on the exemption from
registration provided by Rule 504 of Regulation D under the Act.
On October 23, 1997, Registrant issued 400,000 shares of Common Stock to
Thomson Kernaghan in consideration for gross proceeds of $200,000 ($.50 a
share). These shares were issued in reliance on the exemption from
registration provided by Rule 504 of Regulation D under the Act.
On October 31, 1997, Registrant issued 100,000 shares of Common Stock to
Thomson Kernaghan in consideration for gross proceeds of $50,000 ($.50 a
share). These shares were issued in reliance on the exemption from
registration provided by Rule 504 of Regulation D under the Act.
On December 10, 1997, Registrant issued 997,778 shares of Common Stock
to Thomson Kernaghan in consideration for gross proceeds of $220,000 ($.22 a
share). These shares were issued in reliance on the exemption from
registration provided by Rule 504 of Regulation D under the Act.
On January 26, 1998, Registrant issued 444,445 shares of Common Stock to
Thomson Kernaghan in consideration for gross proceeds of $100,000 ($.22 a
share). These shares were issued in reliance on the exemption from
registration provided by Rule 504 of Regulation D under the Act.
On April 14, 1998, the Registrant sold 6% Convertible Debentures, due
April, 2000, in the aggregate principal amount of $1,000,000 and issued
warrants to purchase 301,228 shares of Common Stock for gross proceeds of
$1,000,000 (of which $550,000 had a conversion rate of 70% of the 5-day
average closing bid price and $450,000 had a conversion rate of 80% of the
5-day average closing asked price) as follows: Canadian Advantage LP
($275,000); Dominion Capital Fund ($275,000); Fetu Holdings ($250,000); and
Livingston Asset Management ($200,000). Each of the above claim the status as
accredited investors as organizations described in section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the
securities purchased, with total assets in excess of $5,000,000. Each
purchased its debentures and warrants for investment. Canadian Advantage LP
("Canadian") was issued warrants to purchase 16,500 shares of Common Stock at
$1.50 per share through April 14, 2000 and warrants to purchase 66,338 shares
of Common Stock at $.456 per share through April 14, 2000; Dominion Capital
Fund ("Dominion") was issued a like number of identical warrants; Fetu
Holdings ("Fetu") was issued like warrants to purchase 15,000 shares at $1.50
and 60,307 shares at $.456, and Livingston Asset Management ("Livingston")
was issued like warrants to purchase 12,000 shares at $1.50 and 48,245 shares
at $.456. On May 14, 1998, an aggregate of $125,000 of Debentures, plus
interest, were converted into 111,270 shares of Common Stock as follows:
Dominion and Canadian each converted $34,375 in principal plus interest into
30,599 shares of Common Stock, Fetu converted $31,250 in principal plus
interest into 27,818 shares of Common Stock and Livingston converted $25,000
in principal plus interest into 22,254 shares of Common Stock. On May 15,
1998 an aggregate of $175,000 of Debentures plus interest were converted into
154,822 shares of Common Stock as follows: Dominion and Canadian each
converted $48,125 in principal plus interest into 42,576 shares of Common
Stock, Fetu converted $43,750 in principal plus interest into 38,706 shares
of Common Stock and Livingston converted $35,000 in principal plus interest
into 30,964 shares of Common Stock. On July 8, 1998, an aggregate of $300,000
of such Debentures were converted into 468,567 shares of Common Stock as
follows: Dominion and Canadian each converted $82,500 of principal plus
interest into 128,856 shares of Common Stock, Fetu converted $75,000 of
principal plus interest into 117,142 shares of Common Stock and Livingston
converted $60,000 plus interest into 93,713 shares of Common Stock.
The Debentures, the warrants and the Common Stock issued on conversion
of the Debentures were issued in reliance upon the exemption set forth in
Sections 4(2) of the Act and Rule 506 thereunder. Such securities were
purchased for investment and not with a view to the public distribution
thereof. The Common Stock issued upon conversion of the Debentures were
further issued in reliance on Section 3(a)(9) of the Act. In both the
issuance of the Debentures and the Common Stock the certificates representing
such securities bear a legend preventing resale in the absence of
registration with the Commission or an exemption therefrom.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's By-Laws provide for indemnification of officers and directors
to the fullest extent permitted by Nevada law. In addition, under the Company's
Articles of Incorporation, no director or officer is to be personally liable to
the Company or its stockholders for damages for breach of fiduciary duty as a
director or officer, except for damages for breach of fiduciary duty resulting
from (a) acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or (b) the illegal payment of certain dividends and
certain stock redemptions or repurchases.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors and officers of the Company pursuant to the foregoing
provisions or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission such indemification is against public
policy as expressed in the Act and is therefore unenforceable.
26
<PAGE>
INDEX TO FINANCIAL STATEMENTS
-----------------------------
PERIOD FROM APRIL 1, 1996
(DATE OF INCORPORATION)
TO
JULY 31, 1997
------------------------
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
INDEPENDENT AUDITOR'S REPORT . . . . . . . . . . . . . . . . . . . . . . F-1
FINANCIAL STATEMENTS:
BALANCE SHEET AS OF JULY 31, 1997 . . . . . . . . . . . . . . . . . F-2
Statement of Operations for the period from
April 1, 1996 (date of incorporation) to July 31, 1997 . . . . F-3
Statement of Stockholders' Equity for the period from
April 1, 1996 (date of incorporation) to July 31, 1997 . . . . F-4
Statement of Cash Flows for the period from
April 1, 1996 (date of incorporation) to July 31, 1997 . . . . F-5
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . F-6
FOR THE NINE MONTHS ENDED APRIL 30, 1998
(UNAUDITED)
-----------------------------------
Financial Statements:
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . F-11
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . F-12
Statement of Stockholders' Deficiency . . . . . . . . . . . . . . . F-13
Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . F-14
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . F-15
</TABLE>
27
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Transformation Processing Inc.
We have audited the accompanying balance sheet of Transformation Processing Inc.
(a development stage company) as of July 31, 1997, and the related statements of
operations, stockholders' equity, and cash flows for the period from April 1,
1996 (date of incorporation) to July 31, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Transformation Processing Inc.
as of July 31, 1997, and the results of its operations and its cash flows for
the period from April 1, 1996 (date of incorporation) to July 31, 1997 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 10 to the
financial statements, the Company has had limited operations, has a working
capital deficiency and has a deficit accumulated during the development stage
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 10. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
September 4, 1997, except for the second paragraph of
Note 11, as to which the date is September 26, 1997,
the last two paragraphs of Note 7, as to which the date
is November 18, 1997, the first paragraph of Note 1,
as to which the date is February 19, 1998, and the last
paragraph of Note 11, as to which the date is August 25, 1998
F-1
<PAGE>
TRANSFORMATION PROCESSING INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
<TABLE>
<CAPTION>
=====================================================================================================
JULY 31, 1997
- -----------------------------------------------------------------------------------------------------
ASSETS (Note 3)
<S> <C>
Current Assets:
Cash $ 16,431
Time deposits (Note 1) 23,368
Accounts receivable 3,674
Due from related parties (Note 4) 127,405
Prepaid expenses and other current assets 3,399
- -----------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 174,277
Property and Equipment, net (Notes 1 and 2) 109,077
Software Marketing Rights, net (Notes 1 and 4) 606,340
Other Assets 4,684
=====================================================================================================
TOTAL ASSETS $ 894,378
=====================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 25,904
Accrued expenses and other current liabilities 88,582
Current maturities of loan payable - bank (Note 3) 36,259
Current maturities of notes payable - stockholders (Note 5) 85,793
- -----------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 236,538
Loan Payable - bank, net of current maturities (Note 3) 21,137
Notes Payable - stockholders, net of current maturities (Note 5) 28,195
- -----------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 285,870
- -----------------------------------------------------------------------------------------------------
Commitments and Contingencies (Notes 6 and 11)
Stockholders' Equity (Notes 1, 7, 8 and 11):
Preferred stock - $.001 par value; authorized 5,000,000 shares, none issued
Common stock - $.001 par value; authorized 50,000,000 shares,
issued and outstanding 12,169,282 shares 12,169
Additional paid-in capital 3,358,020
Deficit accumulated during the development stage (2,784,536)
Cumulative foreign currency translation adjustments (Note 1) 22,855
- -----------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY 608,508
=====================================================================================================
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 894,378
=====================================================================================================
</TABLE>
The accompanying notes and independent
auditor's report should be read in
conjunction with the financial statements
F-2
<PAGE>
TRANSFORMATION PROCESSING INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
===============================================================================================
PERIOD FROM APRIL 1, 1996 (DATE OF INCORPORATION) TO JULY 31, 1997
- -----------------------------------------------------------------------------------------------
<S> <C>
Revenue - consulting services (Note 1) $ 47,317
- -----------------------------------------------------------------------------------------------
Costs and expenses:
Cost of consulting services 11,271
Cost of software transformation services (Note 1) 192,729
Software development 218,212
General and administrative 874,425
Noncash consulting costs (Notes 1 and 7) 1,536,341
- -----------------------------------------------------------------------------------------------
2,832,978
- -----------------------------------------------------------------------------------------------
Loss from operations (2,785,661)
Interest income, net of interest expense of $2,419 1,125
===============================================================================================
Net loss $ (2,784,536)
===============================================================================================
Net loss per common share (Note 1) $ (.27)
===============================================================================================
Weighted average number of common shares outstanding (Note 1) $ 10,161,665
===============================================================================================
</TABLE>
The accompanying notes and independent
auditor's report should be read in
conjunction with the financial statements
F-3
<PAGE>
TRANSFORMATION PROCESSING INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
======================================================================================================================
PERIOD FROM APRIL 1, 1996 (DATE OF INCORPORATION) TO JULY 31, 1997
- ----------------------------------------------------------------------------------------------------------------------
DEFICIT
ACCUMULATED FOREIGN
ADDITIONAL DURING THE CURRENCY STOCK-
COMMON STOCK PAID-IN DEVELOPMENT TRANSLATION HOLDERS'
SHARES AMOUNT CAPITAL STAGE ADJUSTMENTS EQUITY
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common
stock to founders (Note 7) 5,901,050 $ 5,901 $ (5,901) - - -
Issuance of common
stock for cash (Note 7) 1,469,363 1,469 1,215,657 - - $1,217,126
Issuance of options to
purchase common
stock issued for services
(Note 8) - - 27,362 - - 27,362
Issuance of common
stock in reverse acquisition
(Notes 1 and 7) 2,205,869 2,206 13,484 - - 15,690
Issuance of common
stock for services in
reverse acquisition
(Notes 1 and 7) 1,888,000 1,888 1,534,453 - - 1,536,341
Issuance of common
stock for intangible asset
(Notes 1 and 4) 705,000 705 572,965 - - 573,670
Net loss - - - $(2,784,536) - (2,784,536)
Cumulative foreign currency
translation adjustments
(Note 1) - - - - $22,855 22,855
- ----------------------------------------------------------------------------------------------------------------------
Balance at July 31, 1997 12,169,282 $12,169 $3,358,020 $(2,784,536) $22,855 $ 608,508
======================================================================================================================
</TABLE>
The accompanying notes and independent
auditor's report should be read in
conjunction with the financial statements
F-4
<PAGE>
TRANSFORMATION PROCESSING INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
=================================================================================================
PERIOD FROM APRIL 1, 1996 (DATE OF INCORPORATION) TO JULY 31, 1997
- -------------------------------------------------------------------------------------------------
<S> <C>
Cash flows from operating activities:
Net loss from development stage operations $(2,784,536)
Adjustments to reconcile net loss from development stage operations
to net cash used in operating activities:
Depreciation and amortization 197,483
Issuance of options to purchase common stock for services 27,588
Issuance of common stock for services in reverse acquisition 1,549,056
Changes in operating assets and liabilities:
Increase in accounts receivable (3,705)
Increase in time deposits (23,561)
Increase in prepaid expenses and other current assets (3,426)
Increase in other assets (4,723)
Increase in accounts payable 26,116
Increase in accrued expenses and other current liabilities 89,317
- ------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (930,391)
- ------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment (124,733)
Purchase of intangible assets (24,156)
Advances to related parties (129,621)
- ------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES (278,510)
- ------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from loan payable - bank 73,158
Repayments of loan payable - bank (15,054)
Repayment of notes payable - stockholders (74,924)
Net proceeds from issuance of common stock 1,240,109
- ------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,223,289
- ------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 2,043
- ------------------------------------------------------------------------------------------------
Net increase in cash and cash at end of period $ 16,431
================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 2,419
================================================================================================
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITY:
The Company issued 705,000 shares of common stock (valued at $573,670) and
promissory notes in exchange for an intangible asset.
===============================================================================
The accompanying notes and independent
auditor's report should be read in
conjunction with the financial statements
F-5
<PAGE>
TRANSFORMATION PROCESSING INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
===============================================================================
1. PRINCIPAL BUSINESS On August 20, 1996, Samuel Hamann Graphix, Inc.
ACTIVITY AND acquired all of the outstanding common stock of
SIGNIFICANT Transformation Processing Inc. ("Ontario"), a
ACCOUNTING Canadian corporation. For accounting purposes the
POLICIES: acquisition has been treated as a recapitalization
of Ontario with Ontario as the acquirer (reverse
acquisition) (see Note 7). Samuel Hamann
Graphix, Inc. changed its name to Transformation
Processing Inc. (the "Company"). On
February 19, 1998, Ontario merged into the
Company. The accompanying financial statements
reflect this merger as if it had occurred on
July 31, 1997.
The Company is an information technology
company that develops and markets software and
services that enable companies worldwide to
automatically migrate their application
programs and data from legacy systems to open
systems and client/server environments. The
Company has expanded its operations from
providing legacy code migration services to
three lines of business: client/server
migration, year 2000, and groupware services.
The Company is targeting customers located
throughout Canada and the United States. For
the period ended July 31, 1997, all operations
of the Company were conducted in Canada. At
July 31, 1997, all of the Company's assets are
located in Canada.
The statement of operations includes the results
of operations of the Company for the 16-month
period from April 1, 1996 to July 31, 1997. The
results of operations for the period from April 1,
1996 to July 31, 1996 were not material.
Revenue from fixed-price contracts is recognized
ratably over the period of performance in
accordance with the American Institute of
Certified Public Accountants' Statement of
Position 91-1, SOFTWARE REVENUE RECOGNITION.
Revenue from customer training, technical support
and other services is recognized as the service is
performed. The Company provides technical support
at no charge for the first 90 days and, under
certain circumstances, at no charge if certain
other fees are current. Revenue from the sale of
deployment product licenses is recognized after
installation of the product.
Property and equipment is recorded at cost.
Depreciation is provided for by the straight-line
method over the estimated useful lives of the
related assets.
The cost of software marketing rights of
approximately $780,000 (which includes
approximately $207,000 of notes payable plus
approximately $573,000 in common stock issued)
included in the accompanying balance sheet is
being amortized by the straight-line method over
four years. Amortization expense charged to
operations in the period ended July 31, 1997 and
included in cost of software transformation
services in the accompanying statement of
operations was approximately $180,000.
The preparation of financial statements in
conformity with generally accepted accounting
principles requires the use of estimates by
management affecting reported amounts of assets
and liabilities and revenue and expenses and the
disclosure of contingent assets and liabilities.
Actual results could differ from these estimates.
Loss per share is based on the weighted-average
number of shares of common stock outstanding
during the year.
F-6
<PAGE>
TRANSFORMATION PROCESSING INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
===============================================================================
Management does not believe that any recently
issued, but not yet effective, accounting
standards if currently adopted would have a
material effect on the accompanying financial
statements.
The Company's functional currency is the Canadian
dollar. Balance sheet accounts are translated into
U.S. dollars using current exchange rates in
effect at the balance sheet date and revenue and
expense accounts are translated using an average
exchange rate for the period. The gains and losses
resulting from translation are included in
stockholders' equity.
The Company is required to maintain, as a
compensating balance, an amount equal to the
amount available to the Company under a standby
letter of credit which expires September 30, 1997.
The estimated fair value of the Company's loan
from the bank approximates its carrying amount due
principally to its short-term maturity. It is not
practicable to estimate the fair value of the
Company's loans from stockholders due to the
Company's inability to estimate interest rates
without incurring excessive costs.
2. PROPERTY AND EQUIPMENT: Property and equipment, at cost, consists of the
following:
<TABLE>
<CAPTION>
Estimated
Useful Life
---------------------------------------------------------------------
<S> <C> <C>
Machinery and equipment $ 18,098 5 years
Computer equipment 66,258 5 years
Furniture and fixtures 40,833 7 years
---------------------------------------------------------------------
125,189
Less accumulated depreciation 16,112
---------------------------------------------------------------------
$109,077
=====================================================================
</TABLE>
3. LOAN PAYABLE - BANK: The Company is obligated under an installment loan
with a bank payable in monthly installments of
$3,021 plus interest through February 1, 1999.
The loan bears interest at the bank's prime rate
(4.75% at July 31, 1997) plus 2.5%. The loan is
collateralized by substantially all of the
Company's assets.
Future maturities of the loan payable are as
follows:
<TABLE>
<CAPTION>
Year ending July 31,
1998 $36,259
1999 21,137
-------------------------------------------------------------------
<S> <C>
57,396
Less current maturities 36,259
-------------------------------------------------------------------
$21,137
===================================================================
</TABLE>
F-7
<PAGE>
TRANSFORMATION PROCESSING INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
===============================================================================
4. RELATED PARTY Amounts due from officers of approximately
TRANSACTIONS: $115,000 represent advances made to the officers.
These loans which were noninterest-bearing
through July 31, 1997, but bear interest at 4%
per annum subsequent to July 31, 1997, are
payable on demand.
Amounts due from an affiliate of approximately
$12,000 represent advances made to a company that
has a stockholder who is a stockholder and officer
of the Company.
The Company acquired the software marketing
rights in exchange for 705,000 shares of common
stock and notes payable. The rights have been
valued at the fair value of the shares of
common stock ($.81 per common share) and
notes payable at the date of issue.
5. NOTES PAYABLE - Notes payable - stockholders consist of the
STOCKHOLDERS: following:
<TABLE>
<CAPTION>
<S> <C>
Note payable - noninterest-bearing, payable in
monthly installments of $5,639 through
December 1, 1998. $ 95,863
Note payable - noninterest-bearing, due on demand. 18,125
-------------------------------------------------------------------
113,988
Less current maturities 85,793
-------------------------------------------------------------------
$ 28,195
===================================================================
</TABLE>
Future maturities of notes payable are as follows:
<TABLE>
<CAPTION>
Year ending July 31,
<S> <C>
1998 $ 85,793
1999 28,195
-------------------------------------------------------------------
$ 113,988
===================================================================
</TABLE>
6. COMMITMENTS AND The Company is obligated under a noncancelable
CONTINGENCIES: operating lease for office space expiring
September 30, 2001. Approximate minimum future
payments under this lease are
payable as follows:
<TABLE>
<CAPTION>
Year ending July 31,
<S> <C>
1998 $23,000
1999 23,000
2000 23,000
2001 23,000
2002 4,000
------------------------------------------------------------------
$96,000
==================================================================
</TABLE>
F-8
<PAGE>
TRANSFORMATION PROCESSING INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
===============================================================================
The lease is subject to escalation for the
Company's proportionate share of increases in real
estate taxes and other operating expenses. The
lease has an option to renew for five years at a
base rent, as defined. Rent expense for the period
ended July 31, 1997 amounted to $37,522.
The Company's lease commitment is guaranteed with
a standby letter of credit which expires September
30, 1997.
The Company is involved in litigation whereby
it is alleged that the Company breached a license
agreement by failing to pay sums due under the
license agreement. The Plaintiff seeks
compensatory damages of at least $290,000 and
punitive damages in an unspecified amount. The
Company has moved to dismiss one of the causes
of action in the complaint and has denied the
other material allegations of the complaint.
The financial statements do not include any
adjustments that may result from the outcome of
this litigation.
7. STOCKHOLDERS' EQUITY: The Company is authorized to issue 5,000,000
shares of preferred stock, with rights and
preferences to be determined by the Company's
board of directors. As of July 31, 1997, no
shares of preferred stock had been issued.
The Company issued shares of common stock for cash
as follows:
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Stockholders'
Shares Amount Capital Equity
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
April 20, 1996 160,000 $ 160 $ 136,196 $ 136,356
August 23, 1996 500,000 500 493,155 493,655
January 27, 1997 208,333 208 147,998 148,206
March 6, 1997 219,780 220 123,039 123,259
March 6, 1997 281,250 281 246,237 246,518
June 27, 1997 100,000 100 69,032 69,132
----------------------------------------------------------------------------------------
1,469,363 $1,469 $1,215,657 $1,217,126
========================================================================================
</TABLE>
On April 1, 1996, the Company issued 5,901,050
shares of common stock to its founders for
certain technology and services, which were
valued at a nominal amount.
On August 20, 1996, the Company issued 2,205,869
shares of common stock to the stockholders of
Samuel Hamann Graphix, Inc. in a transaction
accounted for as a reverse acquisition (see Note
1).
As part of the reverse acquisition (see Note 1)
the Company issued 1,888,000 shares of common
stock to certain consultants for services. These
shares have been valued at the fair value at the
date of issuance ($.81 per common share).
Accordingly, the Company recorded a charge to
operations at the time of issuance of $1,536,341.
Certain share issuances prior to the reverse
acquisition were made by Samuel Hamann Graphix,
Inc. and the details of consideration for the
issuances were not known by the Company. The
Company has addressed the situation by initiating
an audit of issued and outstanding shares of
common stock. The Company is auditing records
received from prior management reflecting shares
issued, transferred or sold, apparently without
fair consideration to the Company.
The Company issued stop transfer instructions as
of November 18, 1997 concerning approximately
1,844,000 shares of common stock. These shares are
part of the 1,888,000 shares of common stock
issued to the consultants discussed in the
preceding paragraph. The stop order transfers will
remain until the holders of the shares of common
stock are able to satisfy the Company's concerns.
F-9
<PAGE>
8. STOCK OPTIONS AND At July 31, 1997, options to purchase 15,000
STOCK WARRANTS: shares of common stock at an exercise price of
$1.99 per share are outstanding and are
exercisable through November 27, 1997. The Company
valued these options at $1.88 per option. The
Company recorded a charge to operations of
approximately $27,500 at the time of issuance.
At July 31, 1997, warrants to purchase 600,000
shares of common stock at prices ranging from
$1.00 to $1.50 per share are outstanding and
exercisable. The warrants expire at various dates
through June 23, 1999.
9. INCOME TAXES: The Company recorded a deferred income tax asset
for the tax effect of net operating loss
carryforwards and the temporary difference between
the carrying amount and tax bases of certain
intangible assets, aggregating approximately
$562,000. In recognition of the uncertainty
regarding the ultimate amount of income tax
benefits to be derived, the Company has recorded a
valuation allowance of $562,000 at July 31, 1997.
The Company has a net operating loss carryforward
of approximately $1,103,000 available to offset
taxable income through the year 2012.
10. GOING CONCERN: The Company is in the development stage, has a
limited operating history, has not generated
significant revenue through July 31, 1997, has a
working capital deficiency and has a deficit
accumulated during the development stage at
July 31, 1997.
The Company's financial statements have been
prepared on the assumption that the Company will
continue as a going concern. Management believes
that the development, marketing and initial sales
of certain of its technologies will occur before
July 31, 1998, thus generating working capital.
The Company is also considering other financing
alternatives which will allow the Company to
continue as a going concern. If there is no or
insufficient revenue from the commercial
applications of the Company's technologies during
the year ending July 31, 1998 or additional
financing cannot be obtained, there is substantial
doubt about the Company's ability to continue as a
going concern. The financial statements do not
include any adjustments that might result from the
outcome of this uncertainty.
11. SUBSEQUENT EVENTS: On August 1, 1997, the Company issued a $108,750
8% convertible subordinated debenture. The
debenture was converted into 198,000 shares of
common stock in August 1997. At the date of the
issuance of the debenture the value of the
underlying common shares was approximately
$160,000. Accordingly, the Company recorded a
charge to operations at the time of issuance of
the debenture of approximately $52,000.
On September 4, 1997 and September 26, 1997, the
Company received proceeds of $325,000 related to
the issuance of 989,000 shares of common stock.
On October 23, 1997 the Company made an
offering of 400,000 shares of common stock for
$200,000; on October 31, 1997, an offering of
100,000 shares of common stock for $50,000; on
December 10, 1997, an offering of 997,778
shares of common stock for $220,000; on January
26, 1998, an offering of 444,445 shares of
common stock for $100,000. These offerings were
made pursuant to the claim of exemption under
Rule 504 under the Securities Act of 1934.
These offerings appear to exceed the limitation
of Rule 504 of a maximum of $1 million in any
one year period. The Company intends to file a
registration statement offering rescission to
the purchasers of these offerings.
F-10
<PAGE>
TRANSFORMATION PROCESSING INC.
(a DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
Unaudited
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
April 30, 1998
- -------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Current Assets:
Cash $ 274,206
Accounts receivable 216,904
Due from related parties 122,343
Prepaid expenses and other current assets 4,952
- -------------------------------------------------------------------------------------------------------
Total current assets 618,405
Property and Equipment, net of
accumulated depreciation of $44,435 164,224
Software Marketing Rights, net 442,826
Deferred debt cost, net (Note 3) 171,549
- -------------------------------------------------------------------------------------------------------
Total Assets $ 1,397,004
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities
Accounts payable $ 362,474
Accrued expenses and other current liabilities 130,031
Convertible debt, net (Note 3) 782,098
Settlement liability 87,155
Current maturities of loan payable - bank 54,228
Notes payable - stockholders 43,506
- -------------------------------------------------------------------------------------------------------
Total current liabilities 1,459,492
Loan Payable - bank, net of current maturities 16,729
- -------------------------------------------------------------------------------------------------------
Total liabilities 1,476,221
- -------------------------------------------------------------------------------------------------------
Stockholders' Deficiency (Notes 1, 2 and 3)
Preferred stock - $.001 par value; authorized 5,000,000 shares
none issued
Common stock - $.001 par value; authorized 50,000,000 shares
issued and oustanding 15,298,505 shares 15,299
Additional paid-in capital 4,776,342
Deficit accumulated during the development stage (4,918,135)
Cumulative foreign currency translation adjustments 47,277
- -------------------------------------------------------------------------------------------------------
Stockholders' Deficiency (79,217)
- -------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficiency $ 1,397,004
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
F-11
<PAGE>
TRANSFORMATION PROCESSING INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
Unaudited
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Period from Nine-month
April 1, 1996 Period ended Cumulative amounts
(date of incorporation) April 30,1998 from inception
to April 30,1997
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Revenue $ 24,072 $ 415,345 $ 462,662
- --------------------------------------------------------------------------------------------------------------------------------
Expenses
Cost of consulting services 10,078 141,899 153,170
Cost of software transformation services 172,895 304,536 497,265
Software development 131,683 329,806 548,018
General and administrative 533,969 1,565,388 2,439,813
Noncash consulting costs 1,536,341 1,536,341
- --------------------------------------------------------------------------------------------------------------------------------
Total Expenses 2,384,966 2,341,630 5,174,607
- --------------------------------------------------------------------------------------------------------------------------------
Loss from operations (2,360,894) (1,926,285) (4,711,945)
Interest income (expense), net 1,974 (207,314) (206,190)
- --------------------------------------------------------------------------------------------------------------------------------
Net loss $ (2,358,920) $ (2,133,599) $ (4,918,135)
- --------------------------------------------------------------------------------------------------------------------------------
Net loss per common share $ (0.24) $ (0.15)
- --------------------------------------------------------------------------------------------------------
Weighted average number of common shares outstanding 9,697,753 14,187,071
- --------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
F-12
<PAGE>
<TABLE>
<CAPTION>
TRANSFORMATION PROCESSING INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIENCY
- ------------------------------------------------------------------------------------------------------------------------------------
Nine month period ended April 30, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at July 31, 1997 12,169,282 $ 12,169 $ 3,358,020 $ (2,784,536)
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of common
stock for cash (Note 2) 3,129,223 $ 3,130 $ 970,108
Recognition of beneficial
conversion feature of
convertible debt $ 348,214
Issuance of warrants
to purchase common stock $ 100,000
Net loss $ (2,133,599)
Cumulative foreign currency
translation adjustment
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at April 30, 1998 15,298,505 $ 15,299 $ 4,776,342 $ (4,918,135)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------
--------------------------------------
Foreign Stock-
Currency holders'
Translation Equity
Adjustments (Deficiency)
- -----------------------------------------------------------------------------
<S> <C> <C>
Balance at July 31, 1997 $ 22,855 $ 608,508
- --------------------------------------------------------------------------
Issuance of common
stock for cash (Note 2) $ 973,238
Recognition of beneficial
conversion feature of
convertible debt $ 348,214
Issuance of warrants
to purchase common stock $ 100,000
Net loss (2,133,599)
Cumulative foreign currency $ 24,422 24,422
translation adjustment
- --------------------------------------------------------------------------
Balance at April 30, 1998 $ 47,277 $(79,217)
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
</TABLE>
See notes to financial statements
F-13
<PAGE>
TRANSFORMATION PROCESSING INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
Unaudited
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Period from Nine-month
April 1, 1996 Period ended
(date of incorporation) April 30, 1998
to April 30, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss from development stage operations $ (2,358,920) $ (2,133,599)
Adjustments to reconcile net loss from development stage operations
to net cash used in operating activities
Depreciation and amortization 147,093 173,522
Amortization of beneficial conversion feature of convertible debt 0 161,905
Issuance of options to purchase common stock for services 27,588 0
Issuance of common stock for services in reverse acquisition 1,549,056 0
Changes in operating assets and liabilities:
Increase in accounts receivable (39,492) (216,585)
(Increase) decrease in time deposits (23,368) 23,736
(Increase) decrease in prepaid expenses and other current assets (5,395) (1,577)
(Increase) decrease in other assets (5,797) 0
Increase in accounts payable 12,438 341,865
Increase in settlement liability 0 88,526
Decrease in due to related party 0 0
Increase in accrued expenses and other current liabilities 0 42,101
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (696,797) (1,520,106)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment (117,807) (89,308)
Purchase of intangible assets (24,156) 0
Advances to related parties (105,036) 0
- -----------------------------------------------------------------------------------------------------------------------------------
Cash used in investing activities (246,999) (89,308)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Debt issue costs 0 (85,000)
Proceeds from loan - bank 73,158 50,978
Repayments of loan payable - bank (7,803) (30,059)
Repayments of notes payable - stockholders 0 (67,810)
Proceeds from issuance of common stock 1,118,636 1,003,045
Proceeds from issuance of convertible debenture 0 1,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,183,991 1,871,154
- -----------------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (19,361) (3,965)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in cash 220,834 257,775
Cash at beginning of period 0 16,431
- -----------------------------------------------------------------------------------------------------------------------------------
Cash at end of period $ 220,834 $ 274,206
===================================================================================================================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 0 $ 4,582
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------
Cumulative
amounts
from inception
- ---------------------------------------------------------------------------------------------
<S> <C>
Cash flows from operating activities:
Net loss from development stage operations $(4,918,135)
Adjustments to reconcile net loss from development stage operations
to net cash used in operating activities
Depreciation and amortization 368,944
Amortization of beneficial conversion feature of convertible debt 161,905
Issuance of options to purchase common stock for services 27,195
Issuance of common stock for services in reverse acquisition 1,527,017
Changes in operating assets and liabilities:
Increase in accounts receivable (223,543)
(Increase) decrease in time deposits 0
(Increase) decrease in prepaid expenses and other current asset (5,104)
(Increase) decrease in other assets 0
Increase in accounts payable 373,568
Increase in settlement liability 89,823
Decrease in due to related party 0
Increase in accrued expenses and other current liabilities 134,010
- ---------------------------------------------------------------------------------------------
Net cash used in operating activities (2,464,318)
- ---------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment (214,041)
Purchase of intangible assets (24,156)
Advances to related parties (129,621)
- ---------------------------------------------------------------------------------------------
Cash used in investing activities (367,818)
- ---------------------------------------------------------------------------------------------
Cash flows from financing activities:
Debt issue costs (85,000)
Proceeds from loan - bank 124,136
Repayments of loan payable - bank (45,113)
Repayments of notes payable - stockholders (142,734)
Proceeds from issuance of common stock 2,243,154
Proceeds from issuance of convertible debenture 1,000,000
- ---------------------------------------------------------------------------------------------
Net cash provided by financing activities 3,094,443
- ---------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 11,899
- ---------------------------------------------------------------------------------------------
Net increase in cash 274,206
Cash at beginning of period
- ---------------------------------------------------------------------------------------------
Cash at end of period $ 274,206
=============================================================================================
Supplemental Disclosure of Cash Flow Information:
cash paid during the period for interest $ 7,001
- ---------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
F-14
<PAGE>
TRANSFORMATION PROCESSING INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION, EVENTS, AND REVERSE ACQUISITION
The financial statements of Transformation Processing Inc., ("the Company")
included herein have been prepared pursuant to generally accepted
accounting principles and have not been examined by independent public
accountants. In the opinion of management all adjustments which are of a
normal recurring nature necessary to present fairly the results of
operation have been made. Pursuant to Securities and Exchange Commission
("SEC") rules and regulations, certain information and footnote disclosure
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
from these statements unless significant changes have taken place since the
end of the most recent fiscal year. The disclosure contained herein should
be read in conjunction with the financial statements and notes included in
the Company's audited financial statements for the period ended July 31,
1997. The results of operations for the nine-month period ended April 30,
1998 and the period ended April 30, 1997 are not necessarily indicative of
the results to be expected for the full year.
On August 20, 1996, Samuel Hamann Graphix, Inc. acquired all of the
outstanding common stock of Transformation Processing Inc. ("Ontario"), a
Canadian corporation. For accounting purposes the acquisition has been
treated as a recapitalization of Ontario with Ontario as the acquirer
(reverse acquisition). Samuel Hamann Graphix, Inc. changed its name to
Transformation Processing Inc. (the "Company"). In February 1998, Ontario
merged into the Company. The accompanying financial statements reflect this
merger as if it had occurred on July 31, 1997.
Loss per share is based on the weighted-average number of shares of common
stock outstanding during the periods.
2. STOCKHOLDERS' EQUITY
The company issued shares of common stock for cash, net of expenses,
as follows:
<TABLE>
<CAPTION>
Common Stock Additional Paid-in Capital Stockholders' Equity
Shares Amount
<S> <C> <C> <C> <C>
August 28, 1997(1) 198,000 $198 $88,496 $88,694
September 4, 1997 589,000 589 121,450 122,039
September 26, 1997 400,000 400 195,779 196,179
October 23, 1997 400,000 400 199,600 200,000
</TABLE>
F-15
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
October 31, 1997 100,000 100 49,900 50,000
December 10, 1997 997,778 998 215,327 216,326
January 26, 1998 444,445 445 99,556 100,000
----------------------------------------------
3,129,223 $3,130 $970,108 $973,238
----------------------------------------------
----------------------------------------------
</TABLE>
- -------------
(1) Represents shares issued in connection with conversion of convertible
subordinated debenture.
3. EQUITY TRANSACTIONS and SUBSEQUENT EVENTS
On April 14, 1998 the Company issued for total consideration of $1,000,000
6% Convertible Debentures. Of the $1.000,000 Convertible Debentures,
$550,000 are convertible to common stock at 70% (seventy percent) of the
five day average bid price immediately preceding the date of conversion.
$450,000 of the debentures are convertible to common stock at 80% (eighty
percent) of the five day average closing ask price immediately preceding
the date of conversion. In addition, the Company granted warrants to
purchase 241,228 shares of common stock at a purchase price of $0.46
per share and, warrants to purchase 60,000 shares of common stock at a
purchase price of $1.50 per share.
The amount attributable to the beneficial conversion feature relating to
the issuance of the convertible debenture is being amortized over the
minimum period the debentures are convertible, thirty days. The Company
incurred a charge to operations related to the recognition of the
beneficial conversion feature of the convertible debt (interest expense)
of $161,920 for the period ended April 30, 1998 and, will incur an
additional charge of $186,294 for the period ending July 31, 1998.
The deferred charges of $186,294 are reflected on the balance sheet as a
reduction to the carrying value of the convertible debt. In addition, the
Company incurred debt issue costs of approximately $185,000 in relation to
the April 14, 1998 convertible debentures, which will be amortized using
the straight-line method over the term of the conversion period, two years.
These charges include legal fees of approximately $12,000, placement fees
of $73,000 and $100,000 attributable to the warrants issued to the
debenture holders.
On May 21, 1998, the Company issued for cash, two $250,000 6% Convertible
Debentures totaling $500,000. These debentures are convertible to common
stock at 80% (eighty percent) of the five day average closing ask price
immediately proceeding the date of conversion. In addition, the Company
granted warrants to purchase 50,200 shares of common stock at a purchase
price of $1.99 per share. In addition, the Company incurred debt issue
costs of approximately $22,000 in relation to the May 21,1998 convertible
debentures, which will be amortized using the straight-line method over
the term of the conversion period, two years. These charges include legal
fees of approximately $2,000 and, placement fees of $20,000. The Company
will recognize a charge to operations for the beneficial conversion
feature.
On July 10, 1998, the Company issued for cash, two $250,000 6% Convertible
Debentures totaling $500,000. These debentures are convertible to common
stock at 80% (eighty percent) of the five day average closing ask price
immediately proceeding the date of conversion. In addition, the Company
granted warrants to purchase 68,306 shares of common stock at a purchase
price of $1.46 per share. In addition, the Company incurred debt issue
costs of approximately $21,000 in relation to the July 10, 1998 convertible
debentures, which will be amortized using the straight-line method over the
term of the conversion period, two
F-16
<PAGE>
years. These charges include legal fees of approximately $1,000 and,
placement fees of $20,000. The Company will recognize a charge to
operations for the beneficial conversion feature.
On October 23, 1997 the Company made an offering of 400,000 shares
of common stock for $200,000; on October 31, 1997, an offering of
100,000 shares of common stock for $50,000; on December 10, 1997,
an offering of 997,778 shares of common stock for $220,000; on
January 26, 1998, an offering of 444,445 shares of common stock for
$100,000. These offerings were made pursuant to the claim of
exemption under Rule 504 under the Securities Act of 1934. These
offerings appear to exceed the limitation of Rule 504 of a maximum
of $1 million in any one year period. The Company intends to file a
registration statement offering rescission to the purchasers of
these offerings.
4. COMMITMENTS
The Company entered into an agreement with Martin E. Janis & Company
("Janis") to provide the Company with public and investor
relations services. Under the terms of the agreement, the Company will
grant Janis 150,000 common shares of the Company as compensation for
services that had not been provided as of April 30, 1998. The common
stock will be restricted under Rule 144 of the Securities Act.
5. SETTLEMENT LIABILITY
The Company reached an out of court settlement with IBS Conversions, Inc.
("IBS") concerning an outstanding lawsuit filed by IBS with the district
court of Illinois. The Settlement Agreement called for the payment of
approximately $90,000 to IBS over a period of six months. In return, the
Company received the full release of IBS. The Company agreed to pay $30,000
on June 26, 1998 and, $12,000 on the 26th of each consecutive month until
fully paid.
F-17
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
TRANSFORMATION PROCESSING INC.
------------------------------
(Registrant)
Date: August 27, 1998 By: /s/ Paul G. Mighton
-------------------------------------
Paul G. Mighton, Chief Executive Officer
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
EXHIBITS
*3.1 Articles of Incorporation of Samuel Hamann Graphix, Inc. (Nevada) as
amended.
*3.2 Articles of Merger between Samuel Hamann Graphix, Inc. (Nevada) and
Samuel Hamann Graphix, Inc. (California).
*3.3 By-laws of Transformation Processing Inc. (Nevada).
*3.4 Articles of Merger between of TPI (Ontario) and TPI (Nevada).
*10.1 Employment Agreement between TPI and Gary McCann dated January 1,
1997.
*10.2 Employment Agreement between TPI and John McGee dated January 1, 1997.
*10.3 Employment Agreement between TPI and Paul G. Mighton dated January 1,
1997.
* Filed herewith.
<PAGE>
*10.4 Employment Agreement between TPI and Vladimir Stepanoff dated January
1, 1997.
*10.5 Letter Agreement dated September 29, 1997 as amended January 6,
1998 between Douglas Woolridge and TPI.
*10.6 Real Estate Lease Agreement dated October 1, 1996 between TPI and Royal
Trust Corporation of Canada, and Landlord's release of Security
Interest.
*10.7 Form of Software Conversion Agreement.
*10.8 Form of Professional Services Agreement.
*10.9 Form of Deployment Products License Agreement.
*10.10 Form of Software License Agreement.
*10.11 Business Partner Agreement between Lotus Development Corporation
and TPI.
*10.12 Bill of Sale and Assignment of Copyright, dated July 17, 1996 between
CyberPlan Enrg. and TPI as amended as of March 10, 1998.
*10.13 Referral Program Agreement dated November 18, 1997 between Y2K Plus
and TPI.
*10.14 Referral Program Agreement dated November 1, 1997 between MCW
Business Systems Ltd. and TPI.
*10.15 Teaming Agreement dated April 21, 1997 between SHL Systemhouse Inc.
and TPI.
*10.16 Software License Agreement, Value Added Reseller Agreement and
addendum dated April 23, 1997 between IntellAgent Control Corporation
and TPI.
*10.17 Professional Services Subcontract Agreement dated May 15, 1997 between
GE IT Solutions/Universal Data Consultants and TPI.
*10.18 Settlement Agreement and Release, among Ronald A. Content, Raconix
Corporation, Raconix Europe Limited and TPI each dated June 16, 1997.
*10.19 Demand Promissory Notes dated July 31, 1997, payable to TPI made by
Gary G. McCann, Paul Mighton and Vladimir Stepanoff.
*10.20 Customer Agreements and Small Business Loan Registrations, between
the Bank of Nova Scotia and TPI pertaining to purchase money bank
loans and Financing Change Statement and Verification Statement.
*10.21 Guarantees of Bank loans, dated January 30, 1997 and November 27,
1997 by Gary G. McCann, Paul Mighton, Vladimir Stepanoff and John
McGee in favor of the Bank of Nova Scotia.
*10.22 Program Product License Agreement, dated October 21, 1997, between
Allegient Legacy Solutions, Inc. and TPI.
*21.1 Subsidiaries of the Registrant.
* Filed herewith.
<PAGE>
EXHIBIT INDEX
3.1 Articles of Incorporation of Samuel Hamann Graphix, Inc. (Nevada) as
amended.
3.2 Articles of Merger between Samuel Hamann Graphix, Inc. (Nevada) and
Samuel Hamann Graphix, Inc. (California).
3.3 By-laws of Transformation Processing Inc. (Nevada).
3.4 Articles of Merger between of TPI (Ontario) and TPI (Nevada).
10.1 Employment Agreement between TPI and Gary McCann dated January 1,
1997.
10.2 Employment Agreement between TPI and John McGee dated January 1, 1997.
10.3 Employment Agreement between TPI and Paul G. Mighton dated January 1,
1997.
<PAGE>
EXHIBIT INDEX
10.4 Employment Agreement between TPI and Vladimir Stepanoff dated January
1, 1997.
10.5 Letter Agreement dated September 29, 1997 as amended January 6,
1998 between Douglas Woolridge and TPI.
10.6 Real Estate Lease Agreement dated October 1, 1996 between TPI and Royal
Trust Corporation of Canada, and Landlord's release of Security
Interest.
10.7 Form of Software Conversion Agreement.
10.8 Form of Professional Services Agreement.
10.9 Form of Deployment Products License Agreement.
10.10 Form of Software License Agreement.
10.11 Business Partner Agreement between Lotus Development Corporation
and TPI.
10.12 Bill of Sale and Assignment of Copyright, dated July 17, 1996 between
CyberPlan Enrg. and TPI as amended as of March 10, 1998.
10.13 Referral Program Agreement dated November 18, 1997 between Y2K Plus
and TPI.
10.14 Referral Program Agreement dated November 1, 1997 between MCW
Business Systems Ltd. and TPI.
10.15 Teaming Agreement dated April 21, 1997 between SHL Systemhouse Inc.
and TPI.
10.16 Software License Agreement, Value Added Reseller Agreement and
addendum dated April 23, 1997 between IntellAgent Control Corporation
and TPI.
10.17 Professional Services Subcontract Agreement dated May 15, 1997 between
GE IT Solutions/Universal Data Consultants and TPI.
10.18 Settlement Agreement and Release, among Ronald A. Content, Raconix
Corporation, Raconix Europe Limited and TPI each dated June 16, 1997.
10.19 Demand Promissory Notes dated July 31, 1997, payable to TPI made by
Gary G. McCann, Paul Mighton and Vladimir Stepanoff.
10.20 Customer Agreements and Small Business Loan Registrations, between
the Bank of Nova Scotia and TPI pertaining to purchase money bank
loans and Financing Change Statement and Verification Statement.
10.21 Guarantees of Bank loans, dated January 30, 1997 and November 27,
1997 by Gary G. McCann, Paul Mighton, Vladimir Stepanoff and John
McGee in favor of the Bank of Nova Scotia.
10.22 Program Product License Agreement, dated October 21, 1997, between
Allegient Legacy Solutions, Inc. and TPI.
21.1 Subsidiaries of the Registrant.
<PAGE>
ARTICLES OF INCORPORATION
OF
SAMUEL HAMANN GRAPHIX, INC.
The undersigned incorporator being a natural person more than 18 years of
age acting as the sole incorporator of the above-named corporation (the
"Corporation") hereby adopts the following articles of incorporation for the
Corporation:
ARTICLE I
NAME
The name of the Corporation shall be: Samuel Hamann Graphix, Inc.
ARTICLE II
PERIOD OF DURATION
The Corporation shall continue in existence perpetually unless sooner
dissolved according to law.
ARTICLE III
PURPOSES AND POWERS
The purposes for which the Corporation is organized are:
(a) To seek, investigate, acquire interests in, and dispose of business
opportunities, ventures, and assets; to own and operate any lawful enterprise;
and, to acquire, hold, and dispose of tangible or intangible personal property;
(b) To acquire by purchase or otherwise, own, hold, lease, rent,
mortgage, or otherwise, to trade with and deal in real estate, lands, and
interests in lands, and all other property of every kind and nature;
(c) To acquire, sell, and otherwise dispose of or deal in stock, bonds,
mortgages, securities, notes, and commercial paper for corporations and
individuals;
(d) To borrow money and to execute notes and obligations and security
contracts therefor, and to lend any of the monies or funds of the Corporation
and to take evidence of indebtedness therefor, and also to negotiate loans: to
carry on general mercantile and merchandise business; and to purchase, sell and
deal in such goods, supplies, and merchandise as are necessary or desirable in
connection therewith;
(e) To guarantee the payment of dividends or interest on any other
contract or obligation of any corporation whenever proper or necessary for the
business of the Corporation in the judgment of its directors;
<PAGE>
(f) To do all and everything necessary, suitable, convenient, or proper
for the accomplishment of any of the purposes or the attainment of any one or
more of the objects herein enumerated, or incidental to the powers therein
named, or which shall at any time appear conducive or expedient for the
protection or benefit of the Corporation, with all the powers hereafter
conferred by the laws under which this Corporation is organized; and
(g) To conduct any lawful business for which a corporation may be
organized under the laws of Nevada.
ARTICLE IV
AUTHORIZED SHARES
The Corporation is authorized to issue a total of 55,000,000 shares
consisting of 5,000,000 shares of preferred stock having a par value of $0.001
per share and 50,000,000 shares of common stock having a par value of $0.001 per
share. The powers, preferences, rights, qualifications, limitations, or
restrictions of the shares of stock of each class and series which the
Corporation is authorized to issue, is as follows:
(a) Preferred Stock. Shares of Preferred Stock may be issued from time
to time in one or more series as may be determined by the board of directors.
Each series shall be distinctly designated. All shares of any one series of the
Preferred Stock shall be alike in every particular, except that there may be
different dates from which dividends thereon, if any, shall be cumulative, if
made cumulative. The powers, preferences, participating, optional, and other
rights of each such series and the qualifications, limitations, or restrictions
thereof, if any, may differ from those of any and all other series at any time
outstanding. Except as hereinafter provided, the board of directors of this
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of each particular
series of preferred Stock, the designation, powers, preferences, and relative
participating, optional, and other rights, and the qualifications, limitations,
and restrictions thereof, if any, of such series, including, without limiting
the generality of the foregoing the following:
(i) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute, each series, which number may be
increased (except as otherwise fixed by the board of directors) or decreased
(but not below the number of shares thereof outstanding) from time to time by
action of the board of directors;
(ii) The rate and times at which, and the terms and conditions
upon which dividends, if any, on shares of the series shall be paid, the extent
of preferences or relations, if any, of such dividends to the dividends payable
on any other class or classes of stock of the Corporation or on any series of
Preferred Stock and whether such dividends shall be cumulative or
non-cumulative;
(iii) The right, if any, of the holders of shares of the same
series to convert the same into, or exchange the same for any other class or
classes of the Corporation and the terms and conditions of such conversion or
exchange;
(iv) Whether shares of the series shall be subject to redemption,
and the redemption price or prices including, without limitation, a redemption
price or prices payable in shares of any class or classes of stock of the
Corporation, cash or other property and the time or times at which, and
2
<PAGE>
the terms and conditions on which, shares of the series may be redeemed;
(v) The rights, if any, of the holders of shares of the series
upon voluntary or involuntary liquidation, merger, consolidation, distribution,
or sale of assets, dissolution, or winding up of the Corporation;
(vi) The terms of any sinking fund or redemption or purchase
account, if any, to be provided for shares of the series; and
(vii) The voting powers, if any, of the holders of shares of the
series which may, without limiting the generality of the foregoing, include (A)
the right to more or less than one vote per share on any or all matters voted on
by the shareholders, and (B) the right to vote as a series by itself or together
with other series of preferred Stock or together with all series of Preferred
Stock as a class, on such matters, under such circumstances, and on such
conditions as the board of directors may fix, including, without limitation, the
right, voting as a series by itself or together with other series of Preferred
Stock or together with all series of Preferred Stock as a class, to elect one or
more directors of the Corporation in the event there shall have been a default
in the payment of dividends on any one or more series of Preferred Stock or
under such other circumstances and on such conditions as the board of directors
my determine.
(b) Common Stock. The Common Stock shall have the following powers,
rights, qualifications, limitations and restrictions.
(i) After the requirements with respect to preferential dividends
on Preferred Stock, if any, shall have been met and after the Corporation shall
comply with all the requirements, if any, with respect to the setting aside of
funds as sinking funds or redemption or purchase accounts and subject further to
any other conditions which may be required by the laws of the state of Nevada,
then, but not otherwise, the holders of Common Stock shall be entitled to
receive such dividends, if any, as may be declared from time to time by the
board of directors;
(ii) After distribution in full of the preferential amount to be
distributed to the holders of Preferred Stock, if any, in the event of voluntary
or involuntary liquidation, distribution or sale of assets, dissolution, or
winding up of the Corporation, the holders of the Common Stock shall be entitled
to receive all the remaining assets of the Corporation, tangible and intangible,
of whatever kind available for distribution to stockholders, ratably in
proportion to the number of shares of the Common Stock held by each; and
(iii) Except as may otherwise be required by law or these articles
of incorporation, in all matters as to which the vote or consent of stockholders
of the Corporation shall be required or be taken, including, any vote to amend
the articles of incorporation to increase or decrease the par value of any class
of stock, effect a stock split or combination of shares, or alter or change the
powers, preferences, or special rights of any class or series of stock, the
holders of the Common Stock shall have one vote per share of Common Stock on all
such matters and shall not have the right to cumulate their votes for any
purpose.
(c) Other Provisions.
(i) The board of directors of the Corporation shall have authority
to authorize the issuance, from time to time without any vote or other action by
the stockholders of any or all shares of the
3
<PAGE>
Corporation of any class at any time authorized, and any securities convertible
into or exchangeable for such shares, in each case to such persons and for such
consideration and on such terms as the board of directors from time to time in
its discretion lawfully may determine; provided, however, that the consideration
for the issuance of shares of stock of the Corporation having par value shall
not be less than such par value. Shares so issued, for which the full
consideration determined by the board of directors has been paid to the
Corporation, shall be fully paid stock, and the holders of such stock shall not
be liable for any further call or assessment thereon.
(ii) Unless otherwise provided in the resolution of the board of
directors providing for the issue of any series of Preferred Stock, no holder of
shares of any class of the Corporation or of any security or obligation
convertible into, or of any warrant, option, or right to purchase, subscribe
for, or otherwise acquire, shares of any class of the Corporation. whether now
or hereafter authorized, shall, as such holder, have any preemptive right
whatsoever to purchase, subscribe for, or otherwise acquire shares of any class
of the Corporation, whether now or hereafter authorized.
(iii) Anything herein contained to the contrary notwithstanding,
any and all right, title, interest and claim in and to any dividends declared or
other distributions made by the Corporation, whether in cash, stock, or
otherwise, which are unclaimed by the stockholder entitled thereto for a period
of six years after the close of business on the payment date, shall be and be
deemed to be extinguished and abandoned; and such unclaimed dividends or other
distributions in the possession of the Corporation, its transfer agents or other
agents or depositories, shall at such time become the absolute property of the
Corporation, free and clear of any and all claims of any person whatsoever.
(iv) The Corporation expressly elects not to be governed by the
provisions of sections 78.378 to 78.3793, inclusive, and sections 78.411 to
78.115, inclusive, of the Nevada Revised Statutes, including any amended or
successor provision thereto, which provisions shall not apply to the Corporation
or any of its Stockholders.
ARTICLE V
LIMITATION ON LIABILITY
A director or officer of the Corporation shall have no personal liability to
the Corporation or its stockholders for damages for breach of fiduciary duty as
a director or officer, except for damages for breach of fiduciary duty resulting
from (a) acts or omissions which involve intentional misconduct, fraud, or a
knowing violation of law, or (b) the payment of dividends in violation of
section 78.300 of the Nevada Revised Statutes as it may from time to time be
amended or any successor provision thereto.
ARTICLE VI
PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the Corporation's resident office in the state of Nevada is
502 East John Street, Suite E, Carson City, state of Nevada. The name of its
initial resident agent in the state of Nevada is CSC Services of Nevada, Inc.
Either the resident office or the resident agent may be changed in the manner
provided by law.
4
<PAGE>
ARTICLE VII
AMENDMENTS
The Corporation reserves the right to amend, alter, change, or repeal all or
any portion of the provisions contained in these articles of incorporation from
time to time in accordance with the laws of the state of Nevada, and all rights
conferred on stockholders herein are granted subject to this reservation.
ARTICLE VIII
ADOPTION AND AMENDMENT OF BYLAWS
The initial bylaws of the Corporation shall be adopted by the board of
directors. The power to alter, amend, or repeal the bylaws or adopt new bylaws
shall be vested in the board of directors, but the stockholders of the
Corporation may also alter, amend, or repeal the bylaws or adopt new bylaws. The
bylaws may contain any provisions for the regulation or management of the
affairs of the Corporation not inconsistent with the laws of the state of Nevada
now or hereafter existing.
ARTICLE IX
DIRECTORS
The governing board of the Corporation shall be known as the board of
directors. The number of directors comprising the board of directors shall be
fixed and may be increased or decreased from time to time in the manner provided
in the bylaws of the Corporation, except that at no time shall there be less
than one nor more than eleven directors. The original board of directors shall
consist of three people. The name and address of the person who is to serve as
the initial director until the first annual meeting of stockholders and until
his successor is elected and shall qualify is as follows:
Name Address
Nathan Gould 23 East 74th Street
New York, New York 10021
Gaius Villard 23 East 74th Street
New York, New York 10021
Michael Johnson 1295 2nd Avenue
Salt Lake City, Utah 84102
5
<PAGE>
ARTICLE X
INCORPORATOR
The name and mailing address of the incorporator signing these articles of
incorporation is:
Name Address
C. Woodgate 502 East John Street, Suite E
Carson City, Nevada 89706
The undersigned, being the incorporator of the Corporation herein before
named, hereby makes and files these articles of incorporation, declaring that
the facts herein are true.
Dated this 7th day of August, 1996.
/s/ C. Woodgate
------------------------------
C. Woodgate
STATE OF NEVADA )
:ss.
COUNTY OF Carson City )
I, Nancy McClain, a notary public, hereby certify that on the 7th day of
August 1996, appeared before me C. Woodgate, personally known to me to be the
subscriber to the above instrument, who acknowledged to me that she is the
person who signed the above instrument as the incorporator and that the
statements contained herein are true.
/s/ Nancy L. McClain
------------------------------
NOTARY PUBLIC
Residing in Carson City
------------------
My commission Expires:
12/1/96
- ----------------------
6
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF
INCORPORATION
(After Issuance of Stock)
Samuel Hamann Graphix, Inc.
(Name of Corporation)
WE THE UNDERSIGNED GARY G. McCANN, PRESIDENT & COO AND VLADIMIR
STEPANOFF, VICE PRESIDENT & SECRETARY OF SAMUEL HAMANN GRAPHIX INC.
DO HEREBY CERTIFY:
THAT THE BOARD OF DIRECTORS OF SAID CORPORATION AT A MEETING DULY CONVENED,
HELD ON THE 4TH DAY OF SEPTEMBER, 1996, ADOPTED A RESOLUTION TO AMEND THE
ORIGINAL ARTICLES AS FOLLOWS:
ARTICLE ONE IS HEREBY AMENDED TO READ AS FOLLOWS:
TRANSFORMATION PROCESSING INC.
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 11,345,884; that the said
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/s/ Gary G. McCann
------------------------------------
Gary G. McCann, President
/s/ Vladimir Stepanoff
------------------------------------
Vladimir Stepanoff, Vice President &
Secretary
Province of ONTARIO
ss.
Country of CANADA
On March 3, 1997, Gary McCann and Vladimir Stepanoff, personally appeared before
me, a Notary Public, and acknowledged that they executed the above instrument.
/s/
----------------------------------
seal of Notary Signature of Notary
<PAGE>
Exhibit 3.2
ARTICLES OF MERGER
THESE ARTICLES OF MERGER are made and entered into as of the 14th day of
August, 1996, by and between SAMUEL HAMANN GRAPHIX, INC., a Nevada corporation,
(hereinafter referred to as "SHG"), and SAMUEL HAMANN GRAPHIX, INC., a
California corporation (hereinafter referred to as "Graphix").
ARTICLE I. PLAN OF MERGER
Pursuant to these Articles of Merger, it is intended and agreed that Graphix
will be merged into SHG, and SHG will be the surviving corporation. The terms,
conditions, and understandings of the Merger are set forth in the Agreement and
Plan of Merger between SHG and Graphix dated August 13, 1996 ("Plan of Merger"),
a true and correct copy of which is attached hereto as Exhibit "A" and
incorporated herein by this reference.
ARTICLE II. DIRECTOR APPROVAL
The Plan of Merger has been duly adopted and approved by the boards of
directors of SHG and Graphix in accordance with the laws of the states under
which they are organized.
ARTICLE III. STOCKHOLDER APPROVAL
Graphix has authorized 10,000,000 shares of common stock, no par value, of
which 2,183,950 shares are issued and outstanding, each of which is entitled to
one vote or an aggregate for all common stock of 2,183,950 votes. The Plan of
Merger was submitted to the stockholders of Graphix for approval in accordance
with the laws of the state of California. Of the 2,183,950 issued and
outstanding shares of Graphix common stock, there were 1,458,500 undisputed
votes for approval of the proposed Plan of Merger. The number of votes cast for
approval of the proposed Plan of Merger by the common stock entitled to vote
thereon was sufficient for approval pursuant to the laws of the state of
California.
SHG has authorized 50,000,000 shares of common stock, $0.001 par value, of
which no shares are issued and outstanding, and 5,000,000 shares of preferred
stock, par value $0.001, of which no shares are issued and outstanding. The Plan
of Merger was duly approved and adopted by the board of directors of SHG in
accordance with the Nevada Revised Statutes, and no stockholder approval of SHG
is required under such statutes since there is no common stock or preferred
stock of SHG issued and outstanding.
ARTICLE IV. AMENDMENT TO ARTICLES
The Articles of Incorporation of SHG as the surviving corporation shall be
its certificate of incorporation as currently in effect, without change or
amendment.
IN WITNESS WHEREOF, the undersigned corporations, acting through their
respective presidents and secretaries, have executed these Articles of Merger as
of the date first-above written.
<PAGE>
SAMUEL HAMANN GRAPHIX, INC.
ATTEST: A Nevada Corporation
/s/ Gaius Villard By: /s/ Nathan Gould
- ------------------------- -----------------------------
Gaius Villard, Secretary Nathan Gould, President
SAMUEL HAMANN GRAPHIX, INC.
ATTEST: A California corporation
/s/ Gaius Villard By: /s/ Nathan Gould
- ------------------------- -----------------------------
Gaius Villard, Secretary Nathan Gould, President
STATE OF UTAH )
:ss.
COUNTY OF Salt Lake )
I, Kirk A. Granat, a notary public, hereby certify that on the 14th day of
August 1996, personally appeared before me the president of Samuel Hamann
Graphix, Inc., a Nevada corporation ("SHG"), and the president of Samuel Hamann
Graphix, Inc., a California corporation ("Graphix"), who being by me first duly
sworn, declared that he is the person who signed the foregoing document as the
president, respectively, of SHG and Graphix and that the statements therein
contained are true.
/s/ Kirk A. Granat
-------------------------------
NOTARY PUBLIC
Residing in Salt Lake
-------------------
STATE OF UTAH )
:ss.
COUNTY OF Salt Lake )
I, Kirk A. Granat, a notary public, hereby certify that on the 14th day of
August 1996, personally appeared before me the secretary of Samuel Hamann
Graphix, Inc., a Nevada corporation ("SHG"), and the secretary of Samuel Hamann
Graphix, Inc., a California corporation ("Graphix"), who being by me first duly
sworn, declared that he is the person who signed the foregoing document as the
secretary, respectively, of SHG and Graphix and that the statements therein
contained are true.
/s/ Kirk A. Granat
-------------------------------
NOTARY PUBLIC
Residing in Salt Lake
-------------------
2
<PAGE>
Exhibit 3.3
BY-LAWS
OF
SAMUAL HAMMAN GRAPHIX, INC.
A NEVADA CORPORATION
<PAGE>
TABLE OF CONTENTS
ARTICLE I OFFICES 1
Section 1.01 Registered Office 1
Section 1.02 Locations of Office 1
ARTICLE II STOCKHOLDERS 1
Section 2.01 Annual Meeting 1
Section 2.02 Special Meeting 1
Section 2.03 Place of Meetings 1
Section 2.04 Notice of Meetings 2
Section 2.05 Waiver of Notice 2
Section 2.06 Fixing Record Date 2
Section 2.07 Voting Lists 2
Section 2.08 Quorum 3
Section 2.09 Vote Required 3
Section 2.10 Voting of Stock 3
Section 2.11 Proxies 3
Section 2.12 Written Consent to Action by Stockholders 4
ARTICLE III DIRECTORS 4
Section 3.01 Number, Term, and Qualifications 4
Section 3.02 Vacancies and Newly Created Directorships 4
Section 3.03 General Powers 5
Section 3.04 Regular Meetings 5
Section 3.05 Special Meetings 5
Section 3.06 Meetings by Telephone Conference Call 5
Section 3.07 Notice 5
Section 3.08 Quorum 5
Section 3.09 Manner of Acting 5
Section 3.10 Compensation 6
Section 3.11 Presumption of Assent 6
Section 3.12 Resignations 6
Section 3.13 Written Consent to Action by Directors 6
Section 3.14 Removal 6
ARTICLE IV OFFICERS 6
Section 4.01 Number 6
-ii-
<PAGE>
Section 4.02 Election, Term of Office, and Qualification 6
Section 4.03 Subordinate Officers, Etc. 7
Section 4.04 Resignations 7
Section 4.05 Removal 7
Section 4.06 Vacancies and Newly Created Offices 7
Section 4.07 The Chairman of the Board 7
Section 4.08 The President 7
Section 4.09 The Vice Presidents 8
Section 4.10 The Secretary 8
Section 4.11 The Treasurer 9
Section 4.12 Chief Executive Officer or General Manager 10
Section 4.13 Salaries 10
Section 4.14 Surety Bonds 10
ARTICLE V EXECUTION OF INSTRUMENTS, BORROWING OF MONEY,
AND DEPOSIT OF CORPORATE FUNDS 11
Section 5.01 Execution of Instruments 11
Section 5.02 Loans 11
Section 5.03 Deposits 11
Section 5.04 Checks, Drafts, etc. 11
Section 5.05 Bonds and Debentures 11
Section 5.06 Sale, Transfer, etc. of Securities 12
Section 5.07 Proxies 12
ARTICLE VI CAPITAL SHARES 12
Section 6.01 Stock Certificates 12
Section 6.02 Transfer of Stock 12
Section 6.03 Regulations 13
Section 6.04 Maintenance of Stock Ledger at Principal Place of Business 13
Section 6.05 Transfer Agents and Registrars 13
Section 6.06 Closing of Transfer Books and Fixing of Record Date 13
Section 6.07 Lost or Destroyed Certificates 13
ARTICLE VII EXECUTIVE COMMITTEE AND OTHER COMMITTEES 14
Section 7.01 How Constituted 14
Section 7.02 Powers 14
Section 7.03 Proceedings 14
Section 7.04 Quorum and Manner of Acting 14
Section 7.05 Resignations 15
Section 7.06 Removal 15
-iii-
<PAGE>
Section 7.07 Vacancies 15
Section 7.08 Compensation 15
ARTICLE VIII INDEMNIFICATION, INSURANCE, AND OFFICER
AND DIRECTOR CONTRACT 15
Section 8.01 Indemnification: Third Party Actions 15
Section 8.02 Indemnification: Corporate Actions 16
Section 8.03 Determination 16
Section 8.04 Advances 16
Section 8.05 Scope of Indemnification 16
Section 8.06 Insurance 17
Section 8.07 Officer and Director Contracts 17
ARTICLE IX FISCAL YEAR 18
ARTICLE X DIVIDENDS 18
ARTICLE XI AMENDMENTS 19
CERTIFICATE OF SECRETARY 19
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BY-LAWS
OF
SAMUAL HAMMAN GRAPHIX, INC.
ARTICLE I
OFFICES
Section 1.01 Registered Office. The initial registered office shall be in
the city of Carson City, county of Carson City, state of Nevada. The registered
office may be changed from time to time by resolution of the board of directors,
subject to compliance with the laws of the state of Nevada.
Section 1.02 Locations of Offices. The corporation may also have offices at
such other places both within and without the state of Nevada as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II STOCKHOLDERS
Section 2.01 Annual Meeting. The annual meeting of the stockholders shall
be held for the purpose of electing directors and for the transaction of such
other business as may come before the meeting on the second Tuesday of the
fourth month following the end of the corporation's fiscal year or at such other
time designated by the board of directors and as is provided for in the notice
of the meeting, beginning with the year following the year in which the articles
of incorporation are filed; provided, that whenever such date falls on a legal
holiday, the meeting shall be held on the next succeeding business day. If the
election of directors shall not be held on the day designated herein for the
annual meeting of the stockholders, or at any adjournment thereof, the board of
directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as may be convenient.
Section 2.02 Special Meetings. Special meetings of the stockholders may be
called at any time by the chairman of the board, the president, or by the board
of directors, or in their absence or disability, by a vice president. Special
meetings may also be called on the written request of the holders of not less
than one-tenth of all the shares entitled to vote at the meeting, such written
request to state the purpose or purposes of the meeting and to be delivered to
the president or secretary.
Section 2.03 Place of Meetings. The board of directors may designate any
place, either within or without the state of incorporation, as the place of
meeting for any annual meeting or for any special meeting called by the board of
directors. A waiver of notice signed by all stockholders entitled to vote at a
meeting may designate any place, either within or without the state of
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incorporation, as the place for the holding of such meeting. If no designation
is made, the place of meeting shall be at the principal office of the
corporation.
Section 2.04 Notice of Meetings. The secretary or assistant secretary, if
any, shall cause notice of the time, place and purpose or purposes of all
meetings of the stockholders (whether annual or special), to be mailed at least
ten days, but not more than sixty days, prior to the meeting, to each
stockholder of record entitled to vote.
Section 2.05 Waiver of Notice. Any stockholder may waive notice of any
meeting of stockholders (however called or noticed, whether or not called or
noticed and whether before, during, or after the meeting), by signing a written
waiver of notice or a consent to the holding of such meeting, or an approval of
the minutes thereof. Attendance at a meeting, in person or by proxy, shall
constitute waiver of all defects of notice regardless of whether waiver,
consent, or approval is signed or any objections are made, unless attendance is
solely for the purpose of objecting, at the beginning, of the meeting, to the
transaction of any business because the meeting, is not lawfully called or
convened. All such waivers, consents, or approvals shall be made a part of the
minutes of the meeting.
Section 2.06 Fixing Record Date. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting, of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or stockholders entitled to receive payment of any dividend
or other distribution or allotment of any rights or entitled to exercise any
rights in respect to any chance, conversion, or exchange of stock, or for the
purpose of any other lawful action, the board of directors may fix in advance a
date as the record date for any such determination of stockholders, such date in
any case to be not more than sixty days and, in case of a meeting of
stockholders, not less than ten days prior to the date on which the particular
action requiring such determination of stockholders is to be taken. If no record
date is fixed for the determination of stockholders entitled to notice of or to
vote at a meeting the day preceding the date on which notice of the meeting is
mailed shall be the record date. For any other purpose, the record date shall be
the close of business on the date on which the resolution of the board of
directors pertaining thereto is adopted. When a determination of stockholders
entitled to vote at any meeting of stockholders has been made as provided in
this section, such determination shall apply to any adjournment thereof. Failure
to comply with this section shall not affect the validity of any action taken at
a meeting of stockholders.
Section 2.07 Voting Lists. The officers of the corporation shall cause to
be prepared from the stock ledger at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. The list shall be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. The original stock ledger shall be the only evidence
as to who are the stockholders entitled to examine the stock ledger,
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the list required by this section, or the books of the corporation, or to vote
in person or by proxy at any meeting of stockholders.
Section 2.08 Quorum. Stock representing one-half of the voting power of all
outstanding stock of the corporation entitled to vote, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except as otherwise provided by
statute or by the articles of incorporation. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 2.09 Vote Required. Except as provided in section 3.01 of these
by-laws regarding election of directors, when a quorum is present at any
meeting, the vote of the holders of stock having a majority of the voting power
present in person or represented by proxy shall decide any question brought
before such meeting, unless the question is one on which by express provision of
the statutes of the state of Nevada or of the articles of incorporation a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 2.10 Voting of Stock. Unless otherwise provided in the articles of
incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, subject to the modification of
such voting rights of any class or classes of the corporation's capital stock by
the articles of incorporation.
Section 2.11 Proxies. At each meeting of the stockholders, each stockholder
entitled to vote shall be entitled to vote in person or by proxy; provided,
however, that the right to vote by proxy shall exist only in case the instrument
authorizing such proxy to act shall have been executed in writing by the
registered holder or holders of such stock, as the case may be, as shown on the
stock ledger of the corporation or by his attorney thereunto duly authorized in
writing. A stockholder may authorize another person or persons to act for him as
proxy by transmitting or authorizing the transmission of a telegram, cablegram,
or other means of electronic transmission to the person who will be the holder
of the proxy or to a firm which solicits proxies or like agent who is authorized
by the person who will be the holder of the proxy to receive the transmission.
Any such telegram, cablegram, or other means of electronic transmission must
either set forth or be submitted with information from which it can be
determined that the telegram, cablegram, or other electronic transmission was
authorized by the stockholder. If it is determined that the telegram, cablegram,
or other electronic transmission is valid, the persons appointed by the
corporation to count the votes of the stockholders and determine the validity of
proxies and ballots or other persons
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making those determinations must specify the information upon which they relied.
Any copy, communication by telecopier, or other reliable reproduction of the
original writing or electronic transmission authorized by this section may be
substituted for the original writing, or transmission for any purpose for which
the original writing or transmission could be used, if the copy, communication
by telecopier, or other reproduction is a complete reproduction of the entire
original writing or transmission. Any instrument authorizing a proxy to act
shall be delivered at the beginning of the stockholders meeting to the secretary
of the corporation or to such other officer or person who may, in the absence of
the secretary, be acting as secretary of the meeting. In the event that any such
instrument shall designate two or more persons to act as proxy, a majority of
such persons present at the meeting, or, if only one be present, that one shall
(unless the instrument shall otherwise provide) have all of the powers conferred
by the instrument upon all persons so designated. Persons holding stock in a
fiduciary capacity shall be entitled to vote the stock so held. Persons whose
shares are pledged shall be entitled to vote their pledged shares, unless the
transfer by the pledgor in the books of the corporation to perfect the pledge of
shares shall have expressly empowered the pledgee to vote thereon, in which case
the pledgee, or his proxy, may represent such stock and vote thereon. No proxy
shall be voted or acted on after six months from its date, unless the proxy
provides for a longer period.
Section 2.12 Written Consent to Action by Stockholders. Unless otherwise
provided in the articles of incorporation any action required to be taken at any
annual or special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice, and without a vote, if a consent
in writing setting forth the action so taken shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
ARTICLE III
DIRECTORS
Section 3.01 Number, Term, and Qualifications. The number of directors
which shall constitute the whole board shall be not less than one nor more than
eleven. Within the limits above specified, the number of directors shall be
determined by resolution of the board of directors or by the stockholders at the
annual meeting of the stockholders or a special meeting called for such purpose,
except as provided in section 3.02 of this article, and each director elected
shall hold office until his successor is elected and qualified. Directors need
not be residents of the state of incorporation or stockholders of the
corporation. Each directorship shall be filled by election of a nominee for each
such directorship by a plurality of the vote cast at any meeting of stockholders
in which directors are elected.
Section 3.02 Vacancies and Newly Created Directorships. Vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director,
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and the directors so chosen shall hold office until the next annual election and
until their successors are duly elected and shall qualify. If there are no
directors in office, then an election of directors may be held in the manner
provided by statute.
Section 3.03 General Powers. The business of the corporation shall be
managed under the direction of its board of directors which may exercise all
such powers of the corporation and do all such lawful acts and things as are not
by statute, the articles of incorporation, or by-laws directed or required to be
exercised or done by the stockholders.
Section 3.04 Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than this by-law immediately following, and
at the same place as, the annual meeting of stockholders. The board of directors
may provide by resolution, the time and place either within or without the state
of incorporation, for the holding of additional regular meetings without other
notice than such resolution.
Section 3.05 Special Meetings. Special meetings of the board of directors
may be called by or at the request of the chairman of the board, president, vice
president or any two directors. The person or persons authorized to call special
meetings of the board of directors may fix any place, either within or without
the state of incorporation, as the place for holding any special meeting of the
board of directors called by them.
Section 3.06 Meetings by Telephone Conference Call. Members of the board of
directors may participate in a meeting of the board of directors or a committee
of the board of directors by means of conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
Section 3.07 Notice. Notice of any special meeting shall be given at least
three days prior thereto by written notice delivered personally or mailed to
each director at his regular business address or residence, or by telegram,
cablegram, or other means of electronic transmission, including telecopier. If
mailed, such notice shall be deemed to be delivered when deposited in United
States mail so addressed, with postage thereon prepaid. If notice be given by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. If notice is given by cablegram or other
means of electronic transmission, such notice shall be deemed to be delivered at
the time actually transmitted. Any director may waive notice of any meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting solely for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
Section 3.08 Quorum. A majority of the number of directors comprising the
board from time to time shall constitute a quorum for the transaction of
business at any meeting of the board of directors, but if less than a majority
is present at a meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice.
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Section 3.09 Manner of Acting. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, and individual directors shall have no power as such.
Section 3.10 Compensation. By resolution of the board of directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the board of directors, and may be paid a fixed sum for attendance at each
meeting of the board of directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 3.11 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting, unless he shall file
his written dissent to such action with the person acting as the secretary of
the meeting before the adjournment thereof or shall forward such dissent by
registered or certified mail to the secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
Section 3.12 Resignations. A director may resign at any time by delivering
a written resignation to either the president, a vice president, the secretary
or assistant secretary, if any. The resignation shall become effective on its
acceptance by the board of directors; provided, that if the board has not acted
thereon within ten days from the date presented, the resignation shall be deemed
accepted.
Section 3.13 Written Consent to Action by Directors. Any action required to
be taken at a meeting of the directors of the corporation or any other action
which may be taken at a meeting of the directors or of a committee, may be taken
without a meeting, if a consent in writing, setting forth the action so taken,
shall be signed by all of the directors, or all of the members of the committee,
as the case may be. Such consent shall have the same legal effect as a unanimous
vote of all the directors or members of the committee.
Section 3.14 Removal. At a meeting expressly called for that purpose, one
or more directors may be removed by a vote of two-thirds of the shares of
outstanding stock of the corporation entitled to vote at an election of
directors.
ARTICLE IV
OFFICERS
Section 4.01 Number. The officers of the corporation shall be a president,
a secretary, a treasurer, and such other officers as may be appointed by the
board of directors, including, a chairman of the board, chief executive,
operating, or financial officer, one or more vice presidents, an assistant
secretary, an assistant treasurer, or a general manager.
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Section 4.02 Election, Term of Office and Qualifications. The officers
shall be chosen by the board of directors annually at its annual meeting. In the
event of failure to choose officers at an annual meeting of the board of
directors, officers may be chosen at any regular or special meeting of the board
of directors. Each such officer (whether chosen at an annual meeting of the
board of directors to fill a vacancy or otherwise) shall hold his office until
the next ensuing annual meeting of the board of directors and until his
successor shall have been chosen and qualified, or until his death or until his
resignation or removal in the manner provided in these by-laws. Any one person
may hold any two or more of such offices. No person holding two or more offices
shall act in or execute any instrument in the capacity of more than one office,
unless there is only one such person. The chairman of the board, if any, shall
be and remain director of the corporation during the term of his office. No
other officer need be a director.
Section 4.03 Subordinate Officers, Etc. The board of directors from time to
time may appoint such other officers or agents as it may deem advisable, each of
whom shall have such title, hold office for such period, have such authority and
perform such duties as the board of directors from time to time may determine.
The board of directors from time to time may delegate to any officer or agent
the power to appoint any such subordinate officer or agents and to prescribe
their respective titles, terms of office, authorities and duties. Subordinate
officers need not be stockholders or directors.
Section 4.04 Resignation. Any officer may resign at any time by delivering
a written resignation to the board of directors, the president, or the
secretary. Unless otherwise specified therein, such resignation shall take
effect upon delivery.
Section 4.05 Removal. Any officer may be removed from office at any special
meeting of the board of directors called for that purpose or at a regular
meeting by the vote of a majority of the directors, with or without cause. Any
officer or agent appointed in accordance with the provisions of section 4.03
hereof may also be removed, either with or without cause, by any officer upon
whom such power of removal shall have been conferred by the board of directors.
Section 4.06 Vacancies and Newly Created Offices. If any vacancy shall
occur in any office by reason of death, resignation, removal, disqualification
or any other cause, or if a new office shall be created, then such vacancies or
newly created offices may be filled by the board of directors at any regular or
special meeting.
Section 4.07 The Chairman of the Board. The chairman of the board, if there
be such an officer, shall have the following powers and duties:
(a) He shall preside at all stockholders' meetings;
(b) He shall preside at all meetings of the board of directors;
and
(c) He shall be a member of the executive committee, if any.
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Section 4.08 The President. The president shall have the following powers
and duties:
(a) If no chief executive or operating officer or general manager has been
appointed, he shall be the chief executive officer of the corporation, and,
subject to the direction of the board of directors, shall have general charge of
the business, affairs and property of the corporation and general supervision
over its officers, employees and agents.
(b) If no chairman of the board has been chosen, or if such officer is
absent or disabled, he shall preside at meetings of the stockholders and board
of directors.
(c) He shall be a member of the executive committee, if any.
(d) He shall be empowered to sign certificates representing stock of the
corporation, the issuance of which shall have been authorized by the board of
directors.
(e) He shall have all power and perform all duties normally incident to the
office of a president of a corporation and shall exercise such other powers and
perform such other duties as from time to time may be assigned to him by the
board of directors.
Section 4.09 The Vice Presidents. The board of directors may, from time to
time, designate and elect one or more vice presidents, one of whom may be
designated to serve as executive vice president. Each vice president shall have
such powers and perform such duties as from time to time may be assigned to him
by the board of directors or the president. At the request or in the absence or
disability of the president, the executive vice president or, in the absence or
disability of the executive vice president, the vice president designated by the
board of directors or, in the absence of such designation by the board of
directors, by the president, as senior vice president, shall perform all the
duties of the president, and when so acting, shall have all the powers of, and
be subject to all the restrictions on, the president.
Section 4.10 The Secretary. The secretary shall have the following powers
and duties:
(a) He shall keep or cause to be kept a record of all of the proceedings of
the meetings of the stockholders and of the board of directors in books provided
for that purpose.
(b) He shall cause all notices to be duly given in accordance with the
provisions of these by-laws and as required by statute.
(c) He shall be the custodian of the records and of the seal of the
corporation, and shall cause such seal (or a facsimile thereof) to be affixed to
all certificates representing stock of the corporation prior to the issuance
thereof and to all instruments, the execution of which on behalf of the
corporation under its seal shall have been duly authorized in accordance with
these by-laws, and when so affixed he may attest the same.
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(d) He shall see that the books, reports, statements, certificates and
other documents and records required by statute are properly kept and filed.
(e) He shall have charge of the stock ledger and books of the corporation
and cause such books to be kept in such manner as to show at any time the amount
of the stock of the corporation of each class issued and outstanding, the manner
in which and the time when such stock was paid for, the names alphabetically
arranged and the addresses of the holders of record thereof, the amount of stock
held by each holder and time when each became such `holder of record; and he
shall exhibit at all reasonable times to any director, on application, the
original or duplicate stock ledger. He shall cause the stock ledger referred to
in section 6.04 hereof to be kept and exhibited at the principal office of the
corporation, or at such other place as the board of directors shall determine,
in the manner and for the purpose provided in such section.
(f) He shall be empowered to sign certificates representing stock of the
corporation, the issuance of which shall have been authorized by the board of
directors.
(g) He shall perform in general all duties incident to the office of
secretary and such other duties as are given to him by these by-laws or as from
time to time may be assigned to him by the board of directors or the president.
Section 4.11 The Treasurer. The Treasurer shall have the following powers
and duties:
(a) He shall have charge and supervision over and be responsible for the
monies, securities, receipts and disbursements of the corporation.
(b) He shall cause the monies and other valuable effects of the corporation
to be deposited in the name and to the credit of the corporation in such banks
or trust companies or with such banks or other depositories as shall be selected
in accordance with section 5.03 hereof.
(c) He shall cause the monies of the corporation to be disbursed by checks
or drafts (signed as provided in section 5.04 hereof) drawn upon the authorized
depositories of the corporation, and cause to be taken and presented vouchers or
other records for all monies disbursed.
(d) He shall render to the board of directors or the president, whenever
requested, a statement of the financial condition of the corporation and of all
of his transactions as treasurer, and render a full financial report at the
annual meeting of the stockholders, if called on to do so.
(e) He shall cause to be kept correct books of account of all the business
and transactions of the corporation and exhibit such books to any directors on
request during business hours.
(f) He shall be empowered from time to time to require from all officers or
agents of the corporation reports or statements giving such information as he
may desire with respect to any and all financial transactions of the
corporation.
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He shall perform in general all duties incident to the office of treasurer
and such other duties as are given to him by these by-laws or as from time to
time may be assigned to him by the board of directors or the president.
Section 4.12 Chief Executive Officer or General Manager. The board of
directors may employ and appoint a chief executive or operating officer or
general manager who may, or may not, be one of the officers or directors of the
corporation. Such officer or manager, if any, shall have the following powers
and duties.
(a) He shall be the chief executive officer of the corporation and, subject
to the directions of the board of directors, shall have general charge of the
business affairs and property of the corporation and general supervision over
its officers, employees and agents.
(b) He shall have the exclusive management of the business of the
corporation and of all of its dealings, but at all times subject to the control
of the board of directors.
(c) Subject to the approval of the board of directors or the executive
committee, if any, he shall employ all employees of the corporation, or delegate
such employment to subordinate officers, or such division chiefs, and shall have
authority to discharge any person so employed.
(d) He shall make a report to the president and directors quarterly, or
more often if required to do so, setting forth the result of the operations
under his charge, together with suggestions looking to the improvement and
betterment of the condition of the corporation, and shall perform such other
duties as the board of directors shall require.
Section 4.13 Salaries. The salaries or other compensation of the officers
of the corporation shall be fixed from time to time by the board of directors
except that the board of directors may delegate to any person or group of
persons the power to fix the salaries or other compensation of any subordinate
officers or the agents appointed in accordance with the provision of section
4.03 hereof. No officer shall be prevented from receiving any such salary or
compensation by reason of the fact that he is also a director of the
corporation.
Section 4.14 Surety Bonds. In case the board of directors shall so require,
any officer or agent of the corporation shall execute to the corporation a bond
in such sums and with such surety or sureties as the board of directors may
direct, conditioned upon the faithful performance of his duties to the
corporation, including responsibility for negligence and for the accounting of
all property, monies or securities of the corporation which may come into his
hands.
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ARTICLE V
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY
AND DEPOSIT OF CORPORATE FUNDS
Section 5.01 Execution of Instruments. Subject to any limitation contained
in the articles of incorporation or these by-laws, the president or any vice
president or the general manager, if any, may, in the name and on behalf of the
corporation, execute and deliver any contract or other instrument authorized in
writing by the board of directors. The board of directors may, subject to any
limitation contained in the articles of incorporation or in these by-laws,
authorize in writing any officer or agent to execute and deliver any contract or
other instrument in the name and on behalf of the corporation; any such
authorization may be general or confined to specific instances.
Section 5.02 Loans. No loan or advance shall be contracted on behalf of the
corporation, no negotiable paper or other evidence of its obligation under any
loan or advance shall be issued in its name, and no property of the corporation
shall be mortgaged, pledged, hypothecated, transferred or conveyed as security
for the payment of any loan, advance, indebtedness or liability of the
corporation, unless and except as authorized by the board of directors. Any such
authorization may be general or confined to specific instances.
Section 5.03 Deposits. All monies of the corporation not otherwise employed
shall be deposited from time to time to its credit in such banks or trust
companies or with such bankers or other depositories as the board of directors
may select, or as from time to time may be selected by any officer or agent
authorized to do so by the board of directors.
Section 5.04 Checks, Drafts, Etc. All notes, drafts, acceptances, checks,
endorsements, and, subject to the provisions of these by-laws, evidences of
indebtedness of the corporation shall be signed by such officer or officers or
such agent or agents of the corporation and in such manner as the board of
directors from time to time may determine. Endorsements for deposit to the
credit of the corporation in any of its duly authorized depositories shall be in
such manner as the board of directors from time to time may determine.
Section 5.05 Bonds and Debentures. Every bond and debenture issued by
the corporation shall be evidenced by an appropriate instrument which shall
be signed by the president or a vice president and by the secretary and
sealed with the seal of the corporation. The seal may be a facsimile,
engraved or printed. Where such bond or debenture is authenticated with the
manual signature of an authorized officer of the corporation or other trustee
designated by the indenture of trust or other agreement under which such
security is issued, the signature of any of the corporation's officers named
thereon may be a facsimile. In case any officer who signed, or whose
facsimile signature has been used on any such bond or debenture, shall cease
to be an officer of the corporation for any reason before the same has been
delivered by the corporation, such bond or debenture may nevertheless be
adopted by the corporation and issued and delivered as though the person who
signed it or whose facsimile signature has been used thereon had not ceased
to be such officer.
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Section 5.06 Sale, Transfer, Etc. of Securities. Sales, transfers,
endorsements and assignments of stocks, bonds and other securities owned by or
standing in the name of the corporation, and the execution and delivery on
behalf of the corporation of any and all instruments in a writing incident to
any such sale, transfer, endorsement or assignment, shall be effected by the
president, or by any vice president, together with the secretary, or by any
officer or agent thereunto authorized by the board of directors.
Section 5.07 Proxies. Proxies to vote with respect to stock of other
corporations owned by or standing in the name of the corporation shall be
executed and delivered on behalf of the corporation by the president or any vice
president and the secretary or assistant secretary of the corporation, or by any
officer or agent thereunder authorized by the board of directors.
ARTICLE VI
CAPITAL SALARIES
Section 6.01 Stock Certificates. Every holder of stock in the corporation
shall be entitled to have a certificate, signed by the president or any vice
president and the secretary or assistant secretary, and sealed with the seal
(which may be a facsimile, engraved or printed) of the corporation, certifying
the number and kind, class or series of stock owned by him in the corporation;
provided, however, that where such a certificate is countersigned by (a) a
transfer agent or any assistant transfer agent, or (b) registered by a
registrar, the signature of any such president, vice president, secretary, or
assistant secretary may be a facsimile. In case any officer who shall have
signed, or whose facsimile signature or signatures shall have been used on any
such certificate, shall cease to be such officer of the corporation, for any
reason, before the delivery of such certificate by the corporation, such
certificate may nevertheless be adopted by the corporation and be issued and
delivered as though the person who signed it, or whose facsimile signature or
signatures shall have been used thereon, has not ceased to be such officer.
Certificates representing stock of the corporation shall be in such form as
provided by the statutes of the state of incorporation. There shall be entered
upon the stock books of the corporation at the time of issuance of each share,
the number of the certificate issued, the name and address of the person owning
the stock represented thereby, the number and kind, class or series of such
stock and the date of issuance thereof. Every certificate exchanged or returned
to the corporation shall be marked "canceled" with the date of cancellation.
Section 6.02 Transfer of Stock. Transfers of stock of the corporation shall
be made on the books of the corporation by the holder of record thereof, or by
his attorney thereunto duly authorized by a power of attorney duly executed in
writing and filed with the secretary of the corporation or any of its transfer
agents, and on surrender of the certificate or certificates, properly endorsed
or accompanied by proper instruments of transfer, representing such stock.
Except as provided by law, the corporation and transfer agents and registrars,
if any, shall be entitled to treat the holder of record of any stock as the
absolute owner thereof for all purposes, and accordingly shall not be bound to
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recognize any legal, equitable or other claim to or interest in such stock on
the part of any other person whether or not it or they shall have express or
other notice thereof.
Section 6.03 Regulations. Subject to the provisions of the articles of
incorporation, the board of directors may make such rules and regulations as
they may deem expedient concerning the issuance, transfer, redemption and
registration of certificates for stock of the corporation.
Section 6.04 Maintenance of Stock Ledger at Principal Place of Business. A
stock ledger (or books where more than one kind, class or series of stock is
outstanding) shall be kept at the principal place of business of the
corporation, or at such other place as the board of directors shall determine,
containing the names alphabetically arranged of original stockholders of the
corporation, their addresses, their interest, the amount paid on their shares,
and all transfers thereof and the number and class of stock held by each. Such
stock ledgers shall at all reasonable hours be subject to inspection by persons
entitled by law to inspect the same.
Section 6.05 Transfer Agents and Registrars. The board of directors may
appoint one or more transfer agents and one or more registrars with respect to
the certificates representing stock of the corporation, and may require all such
certificates to bear the signature of either or both. The board of directors may
from time to time define the respective duties of such transfer agents and
registrars. No certificate for stock shall be valid until countersigned by a
transfer agent, if at the date appearing thereon the corporation had a transfer
agent for such stock, and until registered by a registrar, if at such date the
corporation had a registrar for such stock.
Section 6.06 Closing of Transfer Books and Fixing of Record Date.
(a) The board of directors shall have power to close the stock ledgers of
the corporation for a period of not to exceed sixty days preceding the date of
any meeting of the stockholders, or the date for payment of any dividend, or the
date for the allotment of rights, or capital stock shall go into effect, or a
date in connection with obtaining the consent of stockholders for any purpose.
(b) In lieu of closing the stock ledgers as aforesaid, the board of
directors may fix in advance a date, not exceeding sixty days preceding the date
of any meeting of stockholders, or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or a date in connection with
obtaining any such consent, as a record date for the determination of the
stockholders entitled to a notice of, and to vote at, any such meeting and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion, or exchange of capital stock or to give such consent.
(c) If the stock ledgers shall be closed or a record date set for the
purpose of determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed or such record date shall be
set at least ten days immediately preceding such meeting.
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<PAGE>
Section 6.07 Lost or Destroyed Certificates. The corporation may issue a
new certificate for stock of the corporation in place of any certificate
theretofore issued by it, alleged to have been lost or destroyed, and the board
of directors may, in their discretion, require the owner of the lost or
destroyed certificate or his legal representatives, to give the corporation a
bond in such form and amount as the board of directors may direct, and with such
surety or sureties as may be satisfactory to the board, to indemnify the
corporation and its transfer agents and registrars, if any, against any claims
that may be made against it or any such transfer agent or registrar on account
of the issuance of such new certificate. A new certificate may be issued without
requiring any bond when, in the judgment of the board of directors, it is proper
to do so.
ARTICLE VII
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 7.01 How Constituted. The board of directors may designate an
executive committee and such other committees as the board of directors may deem
appropriate, each of which committees shall consist of one or more directors.
Members of the executive committee and of any such other committee shall be
designated annually at the annual meeting of the board of directors; provided,
however, that at any time the board of directors may abolish or reconstitute the
executive committee or any other committee. Each member of the executive
committee and of any other committee shall hold office until his successor shall
have been designated or until his resignation or removal in the manner provided
in these by-laws.
Section 7.02 Powers. During the intervals between meetings of the board of
directors, the executive committee shall have and may exercise all powers of the
board of directors in the management of the business and affairs of the
corporation, except for the power to fill vacancies in the board of directors or
to amend these by-laws, and except for such powers as by law may not be
delegated by the board of directors to an executive committee.
Section 7.03 Proceedings. The executive committee, and such other
committees as may be designated hereunder by the board of directors, may fix its
own presiding and recording officer or officers, and may meet at such place or
places, at such time or times and upon such notice (or without notice) as it
shall determine from time to time. It will keep a record of its proceedings and
shall report such proceedings to the board of directors at the meeting of the
board of directors next following.
Section 7.04 Quorum and Manner of Acting. At all meetings of the executive
committee, and of such other committees as may be designated hereunder by the
board of directors, the presence of members constituting a majority of the total
authorized membership of the committee shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the act of a majority
of the members present at any meeting at which a quorum is present shall be the
act of such committee. The members of the executive committee, and of such other
committees as may be
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designated hereunder by the board of directors, shall act only as a committee
and the individual members thereof shall have no powers as such.
Section 7.05 Resignations. Any member of the executive committee, and of
such other committees as may be designated hereunder by the board of directors,
may resign at any time by delivering a written resignation to either the
president, the secretary, or assistant secretary, or to the presiding officer of
the committee of which he is a member, if any shall have been appointed and
shall be in office. Unless otherwise specified therein, such resignation shall
take effect upon delivery.
Section 7.06 Removal. The board of directors may at any time remove any
member of the executive committee or of any other committee designated by it
hereunder either for or without cause.
Section 7.07 Vacancies. If any vacancy shall occur in the executive
committee or in any other committee designated by the board of directors
hereunder, by reason of disqualification, death, resignation, removal or
otherwise, the remaining members shall, until the filling of such vacancy,
constitute the then total authorized membership of the committee and continue to
act, unless such committee consisted of more than one member prior to the
vacancy or vacancies and is left with only one member as a result thereof. Such
vacancy may be filled at any meeting of the board or directors.
Section 7.08 Compensation. The board of directors may allow a fixed sum and
expenses of attendance to any member of the executive committee, or of any other
committee designated by, it hereunder, who is not an active salaried employee of
the corporation for attendance at each meeting, of the said committee.
ARTICLE VIII
INDEMNIFICATION, INSURANCE, AND
OFFICER AND DIRECTOR CONTRACTS
Section 8.01 Indemnification: Third Party Actions. The corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action, suit, or
proceedings, whether civil, criminal, administrative, or investigative, except
an action by or in the right of the corporation, by reason of the fact that he
is or was a director, officer, employee, or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust, or other
enterprise, against expenses, including attorney's fees, judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in connection
with the action, suit, or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction, or on a
plea of nolo contendere
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or its equivalent, does not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and with respect to any
criminal action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
Section 8.02 Indemnification: Corporate Actions. The corporation shall have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses, including attorney's
fees, actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit, if he acted in good faith and in a manner he
reasonably believed to be or not opposed to the best interests of the
corporation. Indemnification shall not be made for any claim, issue, or matter
as to which such a person shall have been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the corporation, unless and
only to the extent that the court in which the action or suit was brought or
other court of competent jurisdiction determines on application that in view of
all circumstances of the case, is fairly and reasonably entitled to indemnity
for such expenses as the court deems proper.
Section 8.03 Determination. To the extent that a director, officer,
employee, or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in sections
8.01 and 8.02 hereof, or in defense of any claim, issue, or matter therein, he
must be indemnified against expenses, including attorney's fees, actually and
reasonably incurred by him in connection the defense. Any indemnification under
sections 8.01 and 8.02, unless ordered by a court or advanced pursuant to
section 8.04, must be made by the corporation only as authorized in the specific
case on a determination that indemnification of the director, officer, employee,
or agent is proper in the circumstances. The determination must be made (i) by
the board of directors by a majority vote of a quorum consisting of directors
who were not parties to the act, suit, or proceeding; (ii) if a majority vote of
a quorum consisting of directors who are not parties to the act, suit, or
proceeding so orders, by independent legal counsel in a written opinion; (iii)
if a quorum consisting of directors who are not parties to the act, suit, or
proceeding cannot be obtained, by independent legal counsel in a written
opinion; or (iv) by the stockholders by a majority vote of a quorum of
stockholders at any meeting duly called for such purpose.
Section 8.04 Advances. Expenses incurred in defending a civil or criminal
action, suit, or proceeding may be paid by the corporation as they are incurred
and in advance of the final disposition of the action, suit, or proceeding on
receipt of an undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the corporation.
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Section 8.05 Scope of Indemnification. The indemnification and advancement
of expenses authorized in or ordered by the corporation pursuant to sections
8.01, 8.02. 8.04.
(a) does not exclude any other rights to which a person seeking
indemnification or advancement of expenses, including corporate personnel other
than directors or officers, may be entitled under the articles of incorporation
or any by-law, agreement, vote of stockholders or disinterested directors, or
otherwise for either an action in his official capacity or an action in another
capacity while holding his office, except that indemnification, unless ordered
by a court pursuant to section 8.02 or for the advancement of expenses made
pursuant to section 8.04, may not be made to or on behalf of any director or
officer if a final adjudication establishes that his acts or omissions involved
intentional misconduct, fraud, or a knowing violation of law and was material to
the case of action; and
(b) continues for a person who has ceased to be a director, officer,
employee, or agent and inures to the benefit of the heirs, executors, and
administrators of such a person.
Section 8.06 Insurance. The corporation may purchase and maintain insurance
or make other financial arrangements on behalf of any person who is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, or other enterprise
against any liability asserted against him and incurred by him in any such
capacity as a director, officer, employee, or agent, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against any such liability and expenses. The other financial arrangements
made by the corporation pursuant to this section 8.06 may include the creation
of a trust fund, the establishment of a program of self-insurance, the securing
of its obligation of indemnification by granting a security interest or other
lien on any assets of the corporation, the establishment of a letter of credit,
guarantee, or surety, all as may be determined by resolution of the board of
directors; provided, that no financial arrangement made pursuant to this section
8.06 may provide protection for a person adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable for
intentional misconduct, fraud, or a knowing violation of law, except with
respect to the advancement of expenses or indemnification ordered by a court.
(a) Any insurance or other financial arrangement made on behalf of a person
pursuant to this section 8.06 may be provided by the corporation or any other
person approved by the board of directors, even if all or part of the other
person's stock or other securities is owned by the corporation.
(b) In the absence of fraud, the decision of the board of directors as to
the propriety of the terms and conditions of any insurance or other financial
arrangement made pursuant to this section 8.06 and the choice of the person to
provide the insurance or other financial arrangement is conclusive, and the
insurance or other financial arrangement is not void or voidable and does not
subject any director approving it to personal liability for his action even if a
director approving the
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insurance or other financial arrangement is a beneficiary of the insurance or
other financial arrangement.
Section 8.07 Officer and Director Contracts. No contract or other
transaction between the corporation and one or more of its directors or
officers, or between the corporation and any corporation, firm, or association
in which one or more of the corporation's directors or officers are directors,
officers, or financially interested, including, but not by way of limitation,
the making of a loan to, or advancing the credit of the corporation for the
benefit of, a director, officer, or affiliate of a director or officer, is
either void or voidable solely on the basis of such relationship or solely,
because any such director or officer is present at the meeting of the board of
directors or a committee thereof which authorized or approved the contract,
transaction, or loan, or because the vote or votes of common or interested
directors are counted for such purpose, if:
(a) the fact of the common directorship or financial interest is disclosed
or known to the board of directors or committee and noted in the minutes and the
board or committee shall authorize, approve, or ratify the contract transaction,
or loan in good faith by a vote sufficient for the purpose without counting the
vote or votes of such director or directors.
(b) the fact that the common directorship or financial interest is
disclosed or known to the stockholders and they approve or ratify the contract,
transaction, or loan in good faith by a majority vote of stockholders holding a
majority of shares entitled to vote (the votes of the common or interested
directors or officers must be counted in any such vote of stockholders).
(c) the fact of the common directorship or financial interest is not
disclosed or known to the director or officer at the time the transaction is
brought before the board of directors of the corporation for action; or
(d) the contract, transaction, or loan is fair as to the corporation at the
time it is authorized or approved.
ARTICLES IX
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors.
ARTICLE X
DIVIDENDS
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The board of directors may from time to time declare, and the corporation
may pay, dividends on its outstanding stock in the manner and upon the terms and
conditions provided by the articles of incorporation and by law.
ARTICLE XI
AMENDMENTS
All by-laws of the corporation, whether adopted by the board of
directors or the stockholders, shall be subject to amendment, alteration, or
repeal, and new by-laws may be made, except that no by-law adopted or amended
by the stockholders shall be altered or repealed by the board of directors.
CERTIFICATE OF SECRETARY
The undersigned does hereby certify that she is the secretary of SAMUAL
HAMMAN GRAPHIX, INC., a corporation duly organized and existing under and by
virtue of the laws of the state of Nevada; that the above and foregoing by-laws
of said corporation were duly and regularly adopted as such by the board of
directors of said corporation by unanimous consent dated August 31, 1993, and
that the above and foregoing by-laws are now in full force and effect and
supersede and replace any prior by-laws of the corporation.
DATED this 20th day of August, 1996.
/s/ Gary G. McCann
--------------------------
Gary G. McCann, Secretary
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Exhibit 3.4
ARTICLES OF MERGER
OF
TRANSFORMATION PROCESSING INC.
(A Canadian Corporation)
AND
TRANSFORMATION PROCESSING INC.
(A Nevada Corporation)
To the Secretary of State
State of Nevada
Pursuant to the Provisions of Chapter 92A, Nevada Revised Statutes, the
foreign corporation and the domestic corporation herein named adopt the
following Articles of Merger.
1. Annexed hereto and made a part hereof is the Plan of Merger (the "Plan of
Merger") for merging Transformation Processing Inc., a business corporation
organized under the laws of the province of Ontario, Canada ("TPI Canada"), with
and into Transformation Processing Inc., a business corporation organized under
the laws of the State of Nevada ("TPI Nevada"). The Plan of Merger has been
adopted by the Board of Directors of TPI Canada and by the Board of Directors of
TPI Nevada.
2. The merger of TPI Canada with and into TPI Nevada is permitted by the
laws of the jurisdiction of organization of TPI Canada and has been authorized
in compliance with said laws, under which TPI Canada is governed.
3. The Plan of Merger was approved by the board of directors of TPI Canada,
pursuant to the provisions of the laws of its jurisdiction.
4. The Plan of Merger was approved by the Board of Directors of TPI Nevada
pursuant to Section 180 of Chapter 92A, Nevada Revised Statutes.
5. No amendments to the Articles of Incorporation are effected by the merger
herein provided for.
<PAGE>
Signed on February 5 , 1998.
TRANSFORMATION PROCESSING INC.
(a corporation of the province of Ontario, Canada)
By: /s/ Gary McCann
------------------------------
Gary McCann, President
By: /s/ Vladimir Stepanoff
------------------------------
Vladimir Stepanoff, Secretary
TRANSFORMATION PROCESSING INC.
(a Nevada corporation)
By: /s/ Paul Mighton
------------------------------
Paul Mighton, President
By: /s/ Gary McCann
------------------------------
Gary McCann, Secretary
<PAGE>
Exhibit 10.1
Transformation Processing Inc. (TPI)
2121 Argentia Road, Suite 200
Mississauga, Ontario
L5N 2X4
TRANSFORMATION PROCESSING INC. (TPI)
MANAGEMENT EMPLOYMENT CONTRACT
AGREEMENT made and entered into at the City of Mississauga, in the Province of
Ontario, Canada, this 1st day of January, 1997.
BY AND BETWEEN: Transformation Processing Inc. ("TPI"), body corporate under
the laws of Ontario, having an office at 2121 Argentia Road, Suite 200,
Mississauga, Ontario L5N 2X4.
PARTY OF THE FIRST PART
AND: Gary G. McCann (the "Employee"),
and domiciled at: 2041 Watson Drive
Burlington, Ontario
L7R 3X4
PARTY OF THE SECOND PART
RECITALS
A. Employer is in the business of Software Development and Professional Services
and TPI is otherwise engaged in the business of Information Technology.
B. Employee has agreed to provide services as Executive Vice President to
Employer and to enter into this agreement with Employer.
NOW THEREFORE, Employer and Employee do hereby stipulate, covenant and agree as
follows:
1. EMPLOYMENT
Employer hereby employs Employee and Employee hereby accepts employment upon
the terms and conditions set forth in this Agreement. Employee hereby
warrants and covenants that he is not bound by any legal obligation
inconsistent with him entering into this Agreement.
<PAGE>
2. DUTIES AND RESPONSIBILITIES
TPI retains the professional services of the Employee as Executive Vice
President, responsible for
1. Creation and execution of TPI business plan and mission statement;
2. Oversee hiring and administration of development and administrative
staff;
3. Handling day to day operations concerning several lines of business;
4. Acting responsibly as a member of the Board of Directors;
5. Promoting TPI through membership in industry associations;
6. Continually demonstrating moral and ethical standards of business
conduct.
Employee hereby warrants and covenants that he is not bound by any legal
obligation inconsistent with him entering into this Agreement.
Employee is employed to provide services as Executive Vice President
responsible for performing the tasks accepted within the framework and time
schedule of all projects to the satisfaction of TPI.
3. SERVICE
Employee agrees that he will service Employer faithfully and to the best of
his ability and devote his full working time to the business affairs of
Employer and the promotion of Employer's business, in accordance with
Employer's directions, instructions and specifications. Employee shall be
bound by and shall faithfully observe and abide by all the rules and
regulations of Employer from time to time in force which are brought to his
notice or of which he should reasonably be aware.
The Employee agrees to represent himself as an employee of TPI for the
purposes of this agreement and for any other agreements TPI makes with the
Client regarding the Employee, whether verbal or written, in which this
agreement may result. The Employee hereby understands and agrees not to
promote or market himself to the Client as anything other than Executive
Vice President of TPI. Employee agrees not to participate or hold office
with any other organization at the time of his employ with TPI and prior
to the effective date of this contract declare that this is the status as
he joins the company.
4. SAFE PERFORMANCE OF DUTIES
In the position of Executive Vice President, the Employee may operate a
motor vehicle on a regular and ongoing basis in the course of carrying out
his duties under the terms of this Agreement. Any insobriety while
performing under this Agreement or any use of illegal drugs shall be cause
for immediate termination.
5. TERM
The employment of the Employee hereunder shall begin on the 1st day of
January, 1997 and shall continue until otherwise terminated as provided for
in this agreement.
<PAGE>
6. COMPENSATION AND BENEFITS
In consideration for services rendered by Employee hereunder, he shall
receive:
a) Salary. Employer shall provide, a salary (26 installments) of five
thousand one hundred and fifty-three dollars and eighty-five cents
($5153.85) gross pay for the period during which Employee is employed,
through and including the date of termination of employment in accordance
with the termination provisions herein set forth.
b) Auto Expenses. Employer shall also pay on a monthly basis, expenses for
the use of the Employees personal conveyance in the amount of $0.35 per
kilometre. This amount adjusts to $0.33 per kilometre after 5000
kilometres per year. This expense is payable on condition of providing
the necessary administrative forms as per Employer policy.
c) Vacation. Employee shall be entitled each year to a vacation with pay in
accordance with Employer policy.
d) Expenses. Employee shall be reimbursed for all authorized traveling and
other out of pocket expenses actually and properly incurred by him in
connection with his duties hereunder. For all such expenses employee will
provide original receipts, otherwise the employee will be responsible for
paying his own expenses.
e) Benefits. Employee shall participate in all employee benefit plans as are
provided by Employer from time to time: provided he is otherwise eligible
to participate and desires to be covered and so participates; provided
further that nothing herein shall be construed to obligate Employer in
any manner to put into effect any plans not presently in existence or to
provide special benefits to Employee.
7. TERMINATION
a. For Cause. The Board of Directors shall have the right at any time, for
cause, to terminate the employment of Employee without notice. For purposes
of this Agreement, "for cause" shall include, but not be limited to, the
following:
Breach of any provision of this Agreement by Employee;
Insobriety of Employee while performing duties under this Agreement;
Any act of dishonesty or falsification of reports, records or
information submitted to Employer by Employee;
Misrepresentation of TPI to clients;
Use of illegal drugs.
<PAGE>
b. Pursuant to Notice. Employer may terminate this Agreement upon the
giving of 30 days' notice in addition to the minimum statutory notice.
Notwithstanding the foregoing, Employer may terminate this Agreement
immediately upon paying Employee 6 months base salary plus the minimum
statutory requirements in lieu of such notice and upon making the benefit
plan contributions necessary to maintain Employee's participation for the
minimum period prescribed by law in all benefit plans provided to Employee
by Employer immediately prior to the termination of this Agreement. Employee
agrees that Employer may deduct from any payment of salary in lieu of notice
hereunder Employee's benefit plan contributions which were regularly made
during the term of this Agreement in accordance with the terms of all
benefit plans to be maintained hereunder for the minimum period prescribed
by law.
c. Employer may from time to time , advance monies to Employee in
anticipation of possible bonus entitlement in accordance with Exhibit A of
this Agreement. As permitted by Regulation 325, Section 14 of the Employment
Standards Act, Employee hereby gives his written authorization to deduct
such advances from any amounts payable by Employer to Employee under
Section 7(b) above.
d. The parties confirm that the notice and pay in lieu of notice provision
contained in Section 7(b) is fair and reasonable and the parties agree that
upon any termination of this Agreement by Employer in accordance with
Section 7(b) or upon any termination of this Agreement by Employee, Employee
shall have no action, cause of action, claim or demand against Employer or
any other person as a consequence of such termination.
e. Duties Upon Termination. In the event the employment of Employee is
terminated for any reason whatsoever including the expiration of the term of
this Agreement, Employee shall deliver immediately to Employer all customer
lists, correspondence, letters, contracts, call reports, price lists,
manuals, mailing lists, investor lists,(hard copy or electronically stored)
advertising materials, ledgers, supplies, equipment, cheques, petty cash,
and all other materials and records of any kind that may be in Employees
possession or under his control which belong to the Employer by the
Employee, including any and all copies of such items previously described
in this paragraph.
f. Termination by Employee. Employee may terminate this Agreement upon
giving 30 days written notice to Employer. In such event, Employer's only
obligations to Employee shall be to continue to employ Employee during the
period of notice under this Section 7(f) or pay employee in lieu of such
notice an amount equal to Employee's base salary for the period of notice
under this Section 7(f). In the event this Agreement is terminated by
Employee under this Section 7(f) the provisions of Sections 7(e) and 8 shall
continue to apply.
8. RESTRICTIVE COVENANT
Employee acknowledges and recognizes that the list of customers ( whether
now existing or developed during the period of his/her employment by
him/her or at his/her discretion) and business methodology of Employer are a
valuable, special and unique asset of Employer and were acquired or will be
hereafter acquired at considerable expense to Employer and that said lists
and business methodologies are confidential and are a valuable trade and
business secrets and assets belonging to Employer and TPI.
<PAGE>
Furthermore, it is stipulated and agreed by Employee that during the term of
this Agreement Employee will be placed in a position by Employer to become
acquainted with its confidential and privileged information relating to
customer files and special customer information, production methods and
techniques, promotional materials and information and confidential
processes, designs, ideas, machinery, plans, devices or materials, and other
similar matters treated by Employer and TPI as confidential (the
"Confidential Information") and that the use of the Confidential Information
by persons or entities other than Employer and TPI against Employer and TPI
might seriously damage Employer and TPI in its business. As a consequence of
the above, in return for the consideration of his employment and the payment
of his salary and receipt of other benefits, that in the event of
termination of his employment for any reason whatsoever, Employee agrees
as follows:
a. Not to Divulge Confidential Information. During the term of his
employment under this Agreement and thereafter, Employee shall not, without
the prior written consent of Employer, divulge, furnish or make accessible
to any third person, company or other organization (other than in the
regular course of business of Employer), any of the Confidential
Information concerning Employer or TPI.
b. Not to Compete. Employee will not, directly or indirectly, for a period
of up to six months following the termination of Employee's employment ("the
restrictive period"); engage in competition with Employer, successors or
assigns in the Territory to in or with respect to Employer's "customers" or
provide information, solicit or sell for, own, or organize any interest in,
either directly or indirectly or through any affiliate or subsidiary
corporation, partnership or other entity, or become engaged by, act as agent
for or in any manner assist, any person, corporation or other entity that is
directly or indirectly in competition with Employer, its successors or
assigns in the Territory or with respect to Employer's "customers" as
defined on this paragraph. Employee does further agree that within the
restrictive period, Employee will not in any way divert or attempt to divert
from Employer any business whatsoever and Employee does further agree that
during said restrictive period he will not influence or attempt to influence
any of the customers of Employer not to do business with Employer, and
Employee does further agree that he will not make or permit the making of
any public announcement or statement of any kind that Employee was formerly
employed or connected with Employer, which announcement has as its purpose
directly or indirectly the intent to violate the provision of this
Agreement. The term "customer" as used herein, shall mean any person or
entity to which the Employer provides or has provided within a period of one
year prior to Employee's termination, materials, or services for the
furtherance of such entity or person's business or any person or entity that
within said period of one year Employee pursued or communicated with for the
purposes of obtaining business for Employer.
c. Enforcement. It is stipulated that a breach by Employee of the
restrictive covenants set forth herein will cause irreparable damage to
Employer, and that in the event of any breach of the provisions under
subparagraphs (a) and (b) above, Employer, in addition to any other
remedies it has, shall be entitled to any and all of the following remedies:
i) An injunction restraining the Employee from violating or continuing to
violate the restrictive covenants contained herein. It is further
stipulated that the existence of any claim or cause of action on the part
of Employee against Employer, whether arising from this Agreement or
otherwise, shall in no way
<PAGE>
constitute a defense to the enforcement of the restrictive covenants
contained herein, and the restrictive period for which Employer is
entitled to an injunction shall be extended in an amount which equals
the time period during which Employee is or has been in violation of
the restrictive covenants contained herein.
ii) Liquidated damages in the amount of $300.00 per day for each day
during which Employee is in violation of the covenants contained herein
after notice of breach thereof and Employee does specifically acknowledge
and stipulate that liquidated damages in such amount are fair and
reasonable in that it may be difficult for Employer to determine the
extent of the damages actually incurred in the event of the breach of the
restrictive covenants contained herein by Employee.
9. PROVISIONS WHICH OPERATE FOLLOWING TERMINATION
Notwithstanding any termination of this Agreement for any reason whatsoever
and with or without cause, the provisions of all sections and any other
provisions of this Agreement necessary to give efficacy thereto shall
continue in full force and effect following such termination.
10. OTHER EMPLOYMENT
Employee shall devote his entire time, attention and energy to Employer's
business. While employed hereunder, Employee shall not, directly or
indirectly, either individually or through any corporation, partnership or
other business entity, engage or be interested in any other business, and he
may not engage in any activity whatsoever, regardless of where located,
detrimental to the business interests of Employer. For the purposes of this
restriction, the Employee will be considered to be engaged or interested in
businesses detrimental to the business interests of the Employer if he
participates in such businesses as a stockholder, director, officer,
employee, partner, consultant, individual proprietor, lender or agent,
except that nothing herein shall preclude Employee from holding not more
than ten (10%) percent of the outstanding shares of any publicly traded
shares of any publicly held company, registered on a national securities
exchange, which may be so engaged in a trade or business of employer.
Provided, however, that Employer may participate as a stockholder, director,
officer or employee of Employer or TPI.
11. ENTIRE AGREEMENT
This Agreement sets forth the entire understanding between the parties with
respect to the terms of Employee's employment, and supersedes any prior
Agreements, whether written or oral, concerning the subject matter. There
are no representations, warranties, conditions, undertakings, or collateral
agreements expressed or implied statutory between the parties other than an
expressly set forth in this Agreement. This Agreement cannot be amended
except by a writing signed by both parties provided, however, that Exhibit A
may be amended by Employer without Employee's consent as provided in said
exhibit and, further, Employer may, from time to time amend Employer's Rules
and Regulations which are incorporated by reference.
12. NO WAIVER
<PAGE>
No waiver of any term or provision of this Agreement shall be deemed to be
a waiver of any subsequent breach of such term or provision of this
Agreement.
13. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the province of Ontario and the laws of Canada applicable therein.
14. ATTORNMENT
For the purpose of all legal proceedings this Agreement shall be deemed to
have been performed in the Province of Ontario and the Courts of the
Province of Ontario shall have jurisdiction to entertain any action arising
under this Agreement. Employer and Employee each hereby attorns to the
jurisdiction of the courts of the Province of Ontario provided that nothing
herein contained shall prevent Employer from proceeding at its election
against Employee in the Courts of any other province or country.
15. NOTICES
Any notice that may be given hereunder shall be sufficient if in writing
and mailed by certified mail, return receipt, requested, to Employee at
2041 Watson Drive, Burlington, Ontario, L7R 3X4 and to Employer at
2121 Argentia Road, Suite 200, Mississauga, Ontario, L5N 2X4 or at such
place as either party by written notice designates.
16. HEIRS AND ASSIGNS
This Agreement may be assigned by Employer only, and shall be binding upon
the parties hereto, their successors and heirs, wherever the context admits
or requires.
17. SEVERANCE CLAUSE
The parties agree that each of the parts and provision of this Agreement
are severable and the invalidity or unenforceability of any one or more of
the provisions or parts of this Agreement shall not affect the validity
and/or enforceability of any other part or provision of this Agreement.
18. LEGAL FEES
In the event the Employer must enforce any of the rights herein granted to
it through a lawyer, then Employee shall be liable for any and all
reasonable legal fees, expenses and court costs, in connection with the
enforcement of Employer's rights hereunder.
19. GENDER
Any reference in this Agreement to the masculine or neuter shall include
the masculine, the feminine and the neuter where appropriate.
<PAGE>
20. ACKNOWLEDGMENT
Employee acknowledges that this Agreement has been executed by him without
coercion by Employer and pursuant to the advice of Employee's own
independent counsel, and that no representations of any kind have been made
by Employer as in inducement to obtain Employee's execution of this
Agreement other than those representations specifically contained in this
written document.
IN WITNESS WHEREOF, the parties hereto have executed this agreement at the place
and as of the date first herein above written.
Transformation Processing Inc. (TPI)
By: /s/ Paul Mighton Date: January 1, 1997
---------------------------------
Gary G. McCann
Employee: /s/ Gary G. McCann Date: January 1, 1997
---------------------------
<PAGE>
Exhibit 10.2
Transformation Processing Inc. (TPI)
2121 Argentia Road, Suite 200
Mississauga, Ontario
L5N 2X4
TRANSFORMATION PROCESSING INC. (TPI)
MANAGEMENT EMPLOYMENT CONTRACT
AGREEMENT made and entered into at the City of Mississauga, in the Province
of Ontario, Canada, this 1st day of January, 1997.
BY AND BETWEEN: Transformation Processing Inc. ("TPI"), body corporate under
the laws of Ontario, having an office at 2121 Argentia Road, Suite 200,
Mississauga, Ontario L5N 2X4.
PARTY OF THE FIRST PART
AND: John G. McGee (the "Employee"),
and domiciled at: 1629 Stancombe Crescent
Mississauga, Ontario
L5N 4R2
PARTY OF THE SECOND PART
RECITALS
A. Employer is in the business of Software Development and Professional Services
and TPI is otherwise engaged in the business of Information Technology.
B. Employee has agreed to provide services as Vice President and Chief Financial
Officer to Employer and to enter into this agreement with Employer.
NOW THEREFORE, Employer and Employee do hereby stipulate, covenant and agree as
follows:
1. EMPLOYMENT
Employer hereby employs Employee and Employee hereby accepts employment
upon the terms and conditions set forth in this Agreement. Employee
hereby warrants and covenants that he is not bound by any legal
obligation inconsistent with him entering into this Agreement.
2. DUTIES AND RESPONSIBILITIES
<PAGE>
TPI retains the professional services of the Employee as Vice President
and Chief Financial Officer, responsible for
1. All financial preparations on behalf of TPI;
2. All financial reporting requirements for securities and operations;
3. Preparation of all client contracts;
4. Interfacing with investors and Employer appointed investor relations
firms;
5. Continually demonstrating moral and ethical standards of business
conduct.
Employee hereby warrants and covenants that he is not bound by any
legal obligation inconsistent with him entering into this Agreement.
Employee is employed to provide services as Vice President and Chief
Financial Officer responsible for performing the tasks accepted within
the framework and time schedule of all projects to the satisfaction of
TPI.
3. SERVICE
Employee agrees that he will service Employer faithfully and to the
best of his ability and devote his full working time to the business
affairs of Employer and the promotion of Employer's business, in
accordance with Employer's directions, instructions and specifications.
Employee shall be bound by and shall faithfully observe and abide
by all the rules and regulations of Employer from time to time in
force which are brought to his notice or of which he should reasonably
be aware.
The Employee agrees to represent himself as an employee of TPI for the
purposes of this agreement and for any other agreements TPI makes with
the Client regarding the Employee, whether verbal or written, in which
this agreement may result. The Employee hereby understands and agrees
not to promote or market himself to the Client as anything other than
Vice President and Chief Financial Officer of TPI. Employee agrees not
to participate or hold office with any other organization at the time
of his employ with TPI and prior to the effective date of this contract
declare that this is the status as he joins the company.
4. SAFE PERFORMANCE OF DUTIES
In the position of Vice President and Chief Financial Officer, the
Employee may operate a motor vehicle on a regular and ongoing basis in
the course of carrying out his duties under the terms of this
Agreement. Any insobriety while performing under this Agreement or any
use of illegal drugs shall be cause for immediate termination.
5. TERM
The employment of the Employee hereunder shall begin on the 1st day of
January, 1997 and shall continue until otherwise terminated as provided
for in this agreement.
6. COMPENSATION AND BENEFITS
In consideration for services rendered by Employee hereunder, he shall
receive:
2
<PAGE>
a) Salary. Employer shall provide, a salary (26 installments) of four
thousand and six hundred and fifteen dollars and thirty-eight cents
($4615.38) gross pay for the period during which Employee is employed,
through and including the date of termination of employment in
accordance with the termination provisions herein set forth.
b) Allowance: Employer shall also provide on a monthly basis a car
allowance for the use of the Employee's personal conveyance in the
amount of seven hundred dollars ($700.00). This allowance is payable on
condition of providing the necessary adminsitrative forms as per
Employer policy.
c) Vacation. Employee shall be entitled each year to a vacation with
pay in accordance with Employer policy.
d) Expenses. Employee shall be reimbursed for all authorized traveling
and other out of pocket expenses actually and properly incurred by him
in connection with his duties hereunder. For all such expenses employee
will provide original receipts, otherwise the employee will be
responsible for paying his own expenses.
e) Benefits. Employee shall participate in all employee benefit plans
as are provided by Employer from time to time: provided he is otherwise
eligible to participate and desires to be covered and so participates;
provided further that nothing herein shall be construed to obligate
Employer in any manner to put into effect any plans not presently in
existence or to provide special benefits to Employee.
7. TERMINATION
a. For Cause. The Board of Directors shall have the right at any time,
for cause, to terminate the employment of Employee without notice. For
purposes of this Agreement, "for cause" shall include, but not be
limited to, the following:
Breach of any provision of this Agreement by Employee;
Insobriety of Employee while performing duties under this Agreement;
Any act of dishonesty or falsification of reports, records or
information submitted to Employer by Employee;
Misrepresentation of TPI to clients;
Use of illegal drugs.
b. Pursuant to Notice. Employer may terminate this Agreement upon the
giving of 30 days' notice in addition to the minimum statutory notice.
Notwithstanding the foregoing, Employer may terminate this Agreement
immediately upon paying Employee 3 months base salary plus the minimum
statutory requirements in lieu of such notice and upon making the
benefit plan contributions necessary to maintain Employee's
participation for the minimum period prescribed by law in all benefit
plans provided to Employee by Employer immediately prior to the
termination of this Agreement. Employee agrees that Employer may
deduct from any payment of salary in lieu of notice hereunder
Employee's benefit plan contributions which were regularly made
during the term of this
3
<PAGE>
Agreement in accordance with the terms of all benefit plans to be
maintained hereunder for the minimum period prescribed by law.
c. Employer may from time to time, advance monies to Employee in
anticipation of possible bonus entitlement in accordance with Exhibit A
of this Agreement. As permitted by Regulation 325, Section 14 of the
Employment Standards Act, Employee hereby gives his written
authorization to deduct such advances from any amounts payable by
Employer to Employee under Section 7(b) above.
d. The parties confirm that the notice and pay in lieu of notice
provision contained in Section 7(b) is fair and reasonable and the
parties agree that upon any termination of this Agreement by Employer
in accordance with Section 7(b) or upon any termination of this
Agreement by Employee, Employee shall have no action, cause of action,
claim or demand against Employer or any other person as a consequence
of such termination.
e. Duties Upon Termination. In the event the employment of Employee is
terminated for any reason whatsoever including the expiration of the
term of this Agreement, Employee shall deliver immediately to Employer
all customer lists, correspondence, letters, contracts, call reports,
price lists, manuals, mailing lists, investor lists (hard copy or
electronically stored), advertising materials, ledgers, supplies,
equipment, cheques, petty cash, and all other materials and records of
any kind that may be in Employees possession or under his control which
belong to the Employer by the Employee, including any and all copies of
such items previously described in this paragraph.
f. Termination by Employee. Employee may terminate this Agreement upon
giving 30 days written notice to Employer. In such event, Employer's
only obligations to Employee shall be to continue to employ Employee
during the period of notice under this Section 7(f) or pay employee in
lieu of such notice an amount equal to Employee's base salary for the
period of notice under this Section 7(f). In the event this Agreement
is terminated by Employee under this Section 7(f) the provisions of
Sections 7(e) and 8 shall continue to apply.
8. RESTRICTIVE COVENANT
Employee acknowledges and recognizes that the list of customers
(whether now existing or developed during the period of his/her
employment by him/her or at his/her discretion) and business
methodology of Employer are a valuable, special and unique asset of
Employer and were acquired or will be hereafter acquired at
considerable expense to Employer and that said lists and business
methodologies are confidential and are a valuable trade and business
secrets and assets belonging to Employer and TPI. Furthermore, it is
stipulated and agreed by Employee that during the term of this
Agreement Employee will be placed in a position by Employer to become
acquainted with its confidential and privileged information relating to
customer files and special customer information, production methods and
techniques, promotional materials and information and confidential
processes, designs, ideas, machinery, plans, devices or materials, and
other similar matters treated by Employer and TPI as confidential (the
"Confidential Information") and that the use of the Confidential
Information by persons or entities other than Employer and TPI against
Employer and TPI might seriously damage Employer and TPI in its
business. As a consequence of the above, in return for the
consideration of his employment and the payment of his salary and
4
<PAGE>
receipt of other benefits, that in the event of termination of his
employment for any reason whatsoever, Employee agrees as follows:
a. Not to Divulge Confidential Information. During the term of his
employment under this Agreement and thereafter, Employee shall not,
without the prior written consent of Employer, divulge, furnish or
make accessible to any third person, company or other organization
(other than in the regular course of business of Employer), any of
the Confidential Information concerning Employer or TPI.
b. Not to Compete. Employee will not, directly or indirectly, for a
period of up to six months following the termination of Employee's
employment ("the restrictive period"); engage in competition with
Employer, successors or assigns in the Territory to in or with respect
to Employer's "customers" or provide information, solicit or sell for,
own, or organize any interest in, either directly or indirectly or
through any affiliate or subsidiary corporation, partnership or other
entity, or become engaged by, act as agent for or in any manner assist,
any person, corporation or other entity that is directly or indirectly
in competition with Employer, its successors or assigns in the
Territory or with respect to Employer's "customers" as defined in this
paragraph. Employee does further agree that within the restrictive
period, Employee will not in any way divert or attempt to divert from
Employer any business whatsoever and Employee does further agree that
during said restrictive period he will not influence or attempt to
influence any of the customers of Employer not to do business with
Employer, and Employee does further agree that he will not make or
permit the making of any public announcement or statement of any kind
that Employee was formerly employed or connected with Employer, which
announcement has as its purpose directly or indirectly the intent to
violate the provision of this Agreement. The term "customer" as used
herein, shall mean any person or entity to which the Employer provides
or has provided within a period of one year prior to Employee's
termination, materials, or services for the furtherance of such entity
or person's business or any person or entity that within said period of
one year Employee pursued or communicated with for the purposes of
obtaining business for Employer.
c. Enforcement. It is stipulated that a breach by Employee of the
restrictive covenants set forth herein will cause irreparable damage to
Employer, and that in the event of any breach of the provisions under
subparagraphs (a) and (b) above, Employer, in addition to any other
remedies it has, shall be entitled to any and all of the following
remedies:
i) An injunction restraining the Employee from violating or
continuing to violate the restrictive covenants contained herein. It
is further stipulated that the existence of any claim or cause of
action on the part of Employee against Employer, whether arising from
this Agreement or otherwise, shall in no way constitute a defense to
the enforcement of the restrictive covenants contained herein, and the
restrictive period for which Employer is entitled to an injunction
shall be extended in an amount which equals the time period during
which Employee is or has been in violation of the restrictive covenants
contained herein.
ii) Liquidated damages in the amount of $300.00 per day for each
day during which Employee is in violation of the covenants contained
herein after notice of breach thereof and Employee does specifically
acknowledge and stipulate that liquidated damages in such amount are
fair and reasonable in that it may be difficult for Employer to
determine the extent of the damages actually incurred in the event of
the breach of the restrictive covenants contained herein by Employee.
5
<PAGE>
9. PROVISIONS WHICH OPERATE FOLLOWING TERMINATION
Notwithstanding any termination of this Agreement for any reason
whatsoever and with or without cause, the provisions of all sections
and any other provisions of this Agreement necessary to give efficacy
thereto shall continue in full force and effect following such
termination.
10. OTHER EMPLOYMENT
Employee shall devote his entire time, attention and energy to
Employer's business. While employed hereunder, Employee shall not,
directly or indirectly, either individually or through any corporation,
partnership or other business entity, engage or be interested in any
other business, and he may not engage in any activity whatsoever,
regardless of where located, detrimental to the business interests of
Employer. For the purposes of this restriction, the Employee will be
considered to be engaged or interested in businesses detrimental to the
business interests of the Employer if he participates in such
businesses as a stockholder, director, officer, employee, partner,
consultant, individual proprietor, lender or agent, except that nothing
herein shall preclude Employee from holding not more than ten (10%)
percent of the outstanding shares of any publicly traded shares of any
publicly held company, registered on a national securities exchange,
which may be so engaged in a trade or business of employer. Provided,
however, that Employer may participate as a stockholder, director,
officer or employee of Employer or TPI.
11. ENTIRE AGREEMENT
This Agreement sets forth the entire understanding between the parties
with respect to the terms of Employee's employment, and supersedes any
prior Agreements, whether written or oral, concerning the subject
matter. There are no representations, warranties, conditions,
undertakings, or collateral agreements expressed or implied statutory
between the parties other than an expressly set forth in this
Agreement. This Agreement cannot be amended except by a writing signed
by both parties provided, however, that Exhibit A may be amended by
Employer without Employee's consent as provided in said exhibit and,
further, Employer may, from time to time amend Employer's Rules and
Regulations which are incorporated by reference.
12. NO WAIVER
No waiver of any term or provision of this Agreement shall be deemed to
be a waiver of any subsequent breach of such term or provision of this
Agreement.
13. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the province of Ontario and the laws of Canada applicable
therein.
14. ATTORNMENT
For the purpose of all legal proceedings this Agreement shall be deemed
to have been performed in the Province of Ontario and the Courts of the
Province of Ontario shall have jurisdiction to entertain any action
arising under this Agreement. Employer
6
<PAGE>
and Employee each hereby attorns to the jurisdiction of the courts of
the Province of Ontario provided that nothing herein contained shall
prevent Employer from proceeding at its election against Employee in
the Courts of any other province or country.
15. NOTICES
Any notice that may be given hereunder shall be sufficient if in
writing and mailed by certified mail, return receipt, requested, to
Employee at 1629 Stancombe Crescent, Mississauga, Ontario, L5N 4R2 and
to Employer at 2121 Argentia Road, Suite 200, Mississauga, Ontario, L5N
2X4 or at such place as either party by written notice designates.
16. HEIRS AND ASSIGNS
This Agreement may be assigned by Employer only, and shall be binding
upon the parties hereto, their successors and heirs, wherever the
context admits or requires.
17. SEVERANCE CLAUSE
The parties agree that each of the parts and provisions of this
Agreement are severable and the invalidity or unenforceability of any
one or more of the provisions or parts of this Agreement shall not
affect the validity and/or enforceability of any other part or
provision of this Agreement.
18. LEGAL FEES
In the event the Employer must enforce any of the rights herein granted
to it through a lawyer, then Employee shall be liable for any and all
reasonable legal fees, expenses and court costs, in connection with the
enforcement of Employer's rights hereunder.
19. GENDER
Any reference in this Agreement to the masculine or neuter shall
include the masculine, the feminine and the neuter where appropriate.
20. ACKNOWLEDGMENT
Employee acknowledges that this Agreement has been executed by him
without coercion by Employer and pursuant to the advice of Employee's
own independent counsel, and that no representations of any kind have
been made by Employer as in inducement to obtain Employee's execution
of this Agreement other than those representations specifically
contained in this written document.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this agreement at the place
and as of the date first herein above written.
Transformation Processing Inc. (TPI)
By: /s/ Paul Mighton Date: January 1, 1997
---------------------- -----------------
John G. McGee
Employee: Date: January 1, 1997
/s/ John G. McGee
---------------------- -----------------
8
<PAGE>
Transformation Processing Inc. (TPI)
2121 Argentia Road, Suite 200
Mississauga, Ontario
L5N 2X4
TRANSFORMATION PROCESSING INC. (TPI)
MANAGEMENT EMPLOYMENT CONTRACT
AGREEMENT made and entered into at the City of Mississauga, in the Province of
Ontario, Canada, this 1st day of January, 1997.
BY AND BETWEEN: Transformation Processing Inc. ("TPI"), body corporate under the
laws of Ontario, having an office at 2121 Argentia Road, Suite 200, Mississauga,
Ontario L5N 2X4.
PARTY OF THE FIRST PART
AND: Paul G. Mighton (the "Employee"),
and domiciled at: 6655 Snowgoose Lane
Mississauga, Ontario
L5N 5H9
PARTY OF THE SECOND PART
RECITALS
A. Employer is in the business of Software Development and Professional Services
and TPI is otherwise engaged in the business of Information Technology.
B. Employee has agreed to provide services as Chariman and Chief Executive
Officer to Employer and to enter into this agreement with Employer.
NOW THEREFORE, Employer and Employee do hereby stipulate, covenant and agree as
follows:
1. EMPLOYMENT
Employer hereby employs Employee and Employee hereby accepts employment
upon the terms and conditions set forth in this Agreement. Employee
hereby warrants and covenants that he is not bound by any legal
obligation inconsistent with him entering into this Agreement.
<PAGE>
2. DUTIES AND RESPONSIBILITIES
TPI retains the professional services of the Employee as Chairman and
Chief Executive Officer, responsible for
1. Creation and management of executive team covering administration,
marketing, development and finance;
2. Public relation functions both for marketing and investment
purposes;
3. Duties as Chairman of the Board of Directors;
4. Upholding and abiding by the rulings of the Board of Directors;
5. Creation and execution of TPI mission statements, and business
plans;
6. Continually demonstrating moral and ethical standards of business
conduct.
Employee hereby warrants and covenants that he is not bound by any
legal obligation inconsistent with him entering into this Agreement.
Employee is employed to provide services as Chairman and Chief
Executive Officer responsible for performing the tasks accepted within
the framework and time schedule of all projects to the satisfaction of
TPI.
3. SERVICE
Employee agrees that he will service Employer faithfully and to the
best of his ability and devote his full working time to the business
affairs of Employer and the promotion of Employer's business, in
accordance with Employer's directions, instructions and specifications.
Employee shall be bound by and shall faithfully observe and abide by
all the rules and regulations of Employer from time to time in force
which are brought to his notice or of which he should reasonably be
aware.
The Employee agrees to represent himself as an employee of TPI for the
purposes of this agreement and for any other agreements TPI makes with
the Client regarding the Employee, whether verbal or written, in which
this agreement may result. The Employee hereby understands and agrees
not to promote or market himself to the Client as anything other than
Chairman and Chief Executive Officer of TPI. Employee agrees not to
participate or hold office with any other organization at the time of
his employ with TPI and prior to the effective date of this contract
declare that this is the status as he joins the company.
4. SAFE PERFORMANCE OF DUTIES
In the position of Chairman and Chief Executive Officer, the Employee
may operate a motor vehicle on a regular and ongoing basis in the
course of carrying out his duties under the terms of this Agreement.
Any insobriety while performing under this Agreement or any use of
illegal drugs shall be cause for immediate termination.
5. TERM
<PAGE>
The employment of the Employee hereunder shall begin on the 1st day of
January, 1997 and shall continue until otherwise terminated as provided
for in this agreement.
6. COMPENSATION AND BENEFITS
In consideration for services rendered by Employee hereunder, he shall
receive:
a) Salary. Employer shall provide, a salary (26 installments) of six
thousand three hundred and forty-six dollars and fifteen cents
($6346.15) gross pay for the period during which Employee is employed,
through and including the date of termination of employment in
accordance with the termination provisions herein set forth.
b) Auto Expenses. Employer shall also pay on a monthly basis, expenses
for the use of the Employees personal conveyance in the amount of $0.35
per kilometre. This amount adjusts to $0.33 per kilometre after 5000
kilometres per year. This expense is payable on condition of providing
the necessary administrative forms as per Employer policy.
c) Vacation. Employee shall be entitled each year to a vacation with
pay in accordance with Employer policy.
d) Expenses. Employee shall be reimbursed for all authorized traveling
and other out of pocket expenses actually and properly incurred by him
in connection with his duties hereunder. For all such expenses employee
will provide original receipts, otherwise the employee will be
responsible for paying his own expenses.
e) Benefits. Employee shall participate in all employee benefit plans
as are provided by Employer from time to time: provided he is otherwise
eligible to participate and desires to be covered and so participates;
provided further that nothing herein shall be construed to obligate
Employer in any manner to put into effect any plans not presently in
existence or to provide special benefits to Employee.
7. TERMINATION
a. For Cause. The Board of Directors shall have the right at any time,
for cause, to terminate the employment of Employee without notice. For
purposes of this Agreement, "for cause" shall include, but not be
limited to, the following:
Breach of any provision of this Agreement by Employee;
Insobriety of Employee while performing duties under this
Agreement;
Any act of dishonesty or falsification of reports, records or
information submitted to Employer by Employee;
Misrepresentation of TPI to clients;
Use of illegal drugs.
<PAGE>
b. Pursuant to Notice. Employer may terminate this Agreement upon the
giving of 30 days' notice in addition to the minimum statutory notice.
Notwithstanding the foregoing, Employer may terminate this Agreement
immediately upon paying Employee 6 months base salary plus the minimum
statutory requirements in lieu of such notice and upon making the
benefit plan contributions necessary to maintain Employee's
participation for the minimum period prescribed by law in all benefit
plans provided to Employee by Employer immediately prior to the
termination of this Agreement. Employee agrees that Employer may deduct
from any payment of salary in lieu of notice hereunder Employee's
benefit plan contributions which were regularly made during the term of
this Agreement in accordance with the terms of all benefit plans to be
maintained hereunder for the minimum period prescribed by law.
c. Employer may from time to time, advance monies to Employee in
anticipation of possible bonus entitlement in accordance with Exhibit A
of this Agreement. As permitted by Regulation 325, Section 14 of the
Employment Standards Act, Employee hereby gives his written
authorization to deduct such advances from any amounts payable by
Employer to Employee under Section 7(b) above.
d. The parties confirm that the notice and pay in lieu of notice
provision contained in Section 7(b) is fair and reasonable and the
parties agree that upon any termination of this Agreement by Employer
in accordance with Section 7(b) or upon any termination of this
Agreement by Employee, Employee shall have no action, cause of action,
claim or demand against Employer or any other person as a consequence
of such termination.
e. Duties Upon Termination. In the event the employment of Employee is
terminated for any reason whatsoever including the expiration of the
term of this Agreement, Employee shall deliver immediately to Employer
all customer lists, correspondence, letters, contracts, call reports,
price lists, manuals, mailing lists, investor lists,(hard copy or
electronically stored) advertising materials, ledgers, supplies,
equipment, cheques, petty cash, and all other materials and records of
any kind that may be in Employees possession or under his control which
belong to the Employer by the Employee, including any and all copies of
such items previously described in this paragraph.
f. Termination by Employee. Employee may terminate this Agreement upon
giving 30 days written notice to Employer. In such event, Employer's
only obligations to Employee shall be to continue to employ Employee
during the period of notice under this Section 7(f) or pay employee in
lieu of such notice an amount equal to Employee's base salary for the
period of notice under this Section 7(f). In the event this Agreement
is terminated by Employee under this Section 7(f) the provisions of
Sections 7(e) and 8 shall continue to apply.
8. RESTRICTIVE COVENANT
Employee acknowledges and recognizes that the list of customers
(whether now existing or developed during the period of his/her
employment by him/her or at his/her discretion) and business
methodology of Employer are a valuable, special and unique asset of
Employer and were acquired or will be hereafter acquired at
considerable expense to Employer and that said lists and business
methodologies are confidential and are a valuable trade and business
secrets and assets belonging to Employer and TPI.
<PAGE>
Furthermore, it is stipulated and agreed by Employee that during the
term of this Agreement Employee will be placed in a position by
Employer to become acquainted with its confidential and privileged
information relating to customer files and special customer
information, production methods and techniques, promotional materials
and information and confidential processes, designs, ideas, machinery,
plans, devices or materials, and other similar matters treated by
Employer and TPI as confidential (the "Confidential Information") and
that the use of the Confidential Information by persons or entities
other than Employer and TPI against Employer and TPI might seriously
damage Employer and TPI in its business. As a consequence of the above,
in return for the consideration of his employment and the payment of
his salary and receipt of other benefits, that in the event of
termination of his employment for any reason whatsoever, Employee
agrees as follows:
a. Not to Divulge Confidential Information. During the term of his
employment under this Agreement and thereafter, Employee shall not,
without the prior written consent of Employer, divulge, furnish or make
accessible to any third person, company or other organization (other
than in the regular course of business of Employer), any of the
Confidential Information concerning Employer or TPI.
b. Not to Compete. Employee will not, directly or indirectly, for a
period of up to six months following the termination of Employee's
employment ("the restrictive period"); engage in competition with
Employer, successors or assigns in the Territory to in or with respect
to Employer's "customers" or provide information, solicit or sell for,
own, or organize any interest in, either directly or indirectly or
through any affiliate or subsidiary corporation, partnership or other
entity, or become engaged by, act as agent for or in any manner assist,
any person, corporation or other entity that is directly or indirectly
in competition with Employer, its successors or assigns in the
Territory or with respect to Employer's "customers" as defined on this
paragraph. Employee does further agree that within the restrictive
period, Employee will not in any way divert or attempt to divert from
Employer any business whatsoever and Employee does further agree that
during said restrictive period he will not influence or attempt to
influence any of the customers of Employer not to do business with
Employer, and Employee does further agree that he will not make or
permit the making of any public announcement or statement of any kind
that Employee was formerly employed or connected with Employer, which
announcement has as its purpose directly or indirectly the intent to
violate the provision of this Agreement. The term "customer" as used
herein, shall mean any person or entity to which the Employer provides
or has provided within a period of one year prior to Employee's
termination, materials, or services for the furtherance of such entity
or person's business or any person or entity that within said period of
one year Employee pursued or communicated with for the purposes of
obtaining business for Employer.
c. Enforcement. It is stipulated that a breach by Employee of the
restrictive covenants set forth herein will cause irreparable damage to
Employer, and that in the event of any breach of the provisions under
subparagraphs (a) and (b) above, Employer, in addition to any other
remedies it has, shall be entitled to any and all of the following
remedies:
i) An injunction restraining the Employee from violating or
continuing to violate the restrictive covenants contained
herein. It is further stipulated that the existence of any
claim or cause of action on the part of Employee against
Employer, whether arising from this Agreement or otherwise,
shall in no way
<PAGE>
constitute a defense to the enforcement of the restrictive
covenants contained herein, and the restrictive period for
which Employer is entitled to an injunction shall be extended
in an amount which equals the time period during which
Employee is or has been in violation of the restrictive
covenants contained herein.
ii) Liquidated damages in the amount of $300.00 per day for
each day during which Employee is in violation of the covenants
contained herein after notice of breach thereof and Employee does
specifically acknowledge and stipulate that liquidated damages in such
amount are fair and reasonable in that it may be difficult for Employer
to determine the extent of the damages actually incurred in the event
of the breach of the restrictive covenants contained herein by
Employee.
9. PROVISIONS WHICH OPERATE FOLLOWING TERMINATION
Notwithstanding any termination of this Agreement for any reason
whatsoever and with or without cause, the provisions of all sections
and any other provisions of this Agreement necessary to give efficacy
thereto shall continue in full force and effect following such
termination.
10. OTHER EMPLOYMENT
Employee shall devote his entire time, attention and energy to
Employer's business. While employed hereunder, Employee shall not,
directly or indirectly, either individually or through any corporation,
partnership or other business entity, engage or be interested in any
other business, and he may not engage in any activity whatsoever,
regardless of where located, detrimental to the business interests of
Employer. For the purposes of this restriction, the Employee will be
considered to be engaged or interested in businesses detrimental to the
business interests of the Employer if he participates in such
businesses as a stockholder, director, officer, employee, partner,
consultant, individual proprietor, lender or agent, except that nothing
herein shall preclude Employee from holding not more than ten (10%)
percent of the outstanding shares of any publicly traded shares of any
publicly held company, registered on a national securities exchange,
which may be so engaged in a trade or business of employer. Provided,
however, that Employer may participate as a stockholder, director,
officer or employee of Employer or TPI.
11. ENTIRE AGREEMENT
This Agreement sets forth the entire understanding between the parties
with respect to the terms of Employee's employment, and supersedes any
prior Agreements, whether written or oral, concerning the subject
matter. There are no representations, warranties, conditions,
undertakings, or collateral agreements expressed or implied statutory
between the parties other than an expressly set forth in this
Agreement. This Agreement cannot be amended except by a writing signed
by both parties provided, however, that Exhibit A may be amended by
Employer without Employee's consent as provided in said exhibit and,
further, Employer may, from time to time amend Employer's Rules and
Regulations which are incorporated by reference.
12. NO WAIVER
<PAGE>
No waiver of any term or provision of this Agreement shall be deemed to
be a waiver of any subsequent breach of such term or provision of this
Agreement.
13. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the province of Ontario and the laws of Canada applicable
therein.
14. ATTORNMENT
For the purpose of all legal proceedings this Agreement shall be deemed
to have been performed in the Province of Ontario and the Courts of the
Province of Ontario shall have jurisdiction to entertain any action
arising under this Agreement. Employer and Employee each hereby attorns
to the jurisdiction of the courts of the Province of Ontario provided
that nothing herein contained shall prevent Employer from proceeding at
its election against Employee in the Courts of any other province or
country.
15. NOTICES
Any notice that may be given hereunder shall be sufficient if in
writing and mailed by certified mail, return receipt, requested, to
Employee at 6655 Snowgoose Lane, Mississauga, Ontario, L5N 5H9 and to
Employer at 2121 Argentia Road, Suite 200, Mississauga, Ontario, L5N
2X4 or at such place as either party by written notice designates.
16. HEIRS AND ASSIGNS
This Agreement may be assigned by Employer only, and shall be binding
upon the parties hereto, their successors and heirs, wherever the
context admits or requires.
17. SEVERANCE CLAUSE
The parties agree that each of the parts and provisions of this
Agreement are severable and the invalidity or unenforceability of any
one or more of the provisions or parts of this Agreement shall not
affect the validity and/or enforceability of any other part or
provision of this Agreement.
18. LEGAL FEES
In the event the Employer must enforce any of the rights herein granted
to it through a lawyer, then Employee shall be liable for any and all
reasonable legal fees, expenses and court costs, in connection with the
enforcement of Employer's rights hereunder.
19. GENDER
Any reference in this Agreement to the masculine or neuter shall
include the masculine, the feminine and the neuter where appropriate.
20. ACKNOWLEDGMENT
<PAGE>
Employee acknowledges that this Agreement has been executed by him
without coercion by Employer and pursuant to the advice of Employee's
own independent counsel, and that no representations of any kind have
been made by Employer as in inducement to obtain Employee's execution
of this Agreement other than those representations specifically
contained in this written document.
IN WITNESS WHEREOF, the parties hereto have executed this agreement at the place
and as of the date first herein above written.
Transformation Processing Inc. (TPI)
By: /s/ Gary McCann Date: January 1, 1997
-----------------------------
Paul G. Mighton
Employee: /s/ Paul G. Mighton Date: January 1, 1997
------------------------
<PAGE>
Exhibit 10.4
Transformation Processing Inc. (TPI)
2121 Argentia Road, Suite 200
Mississauga, Ontario
L5N 2X4
TRANSFORMATION PROCESSING INC. (TPI)
MANAGEMENT EMPLOYMENT CONTRACT
AGREEMENT made and entered into at the City of Mississauga, in the Province
of Ontario, Canada, this 1st day of January, 1997.
BY AND BETWEEN: Transformation Processing Inc. ("TPI"), body corporate under
the laws of Ontario, having an office at 2121 Argentia Road, Suite 200,
Mississauga, Ontario L5N 2X4.
PARTY OF THE FIRST PART
AND: Vladimir Stepanoff (the "Employee"),
and domiciled at: 119 chemin de l'Horizon
St. Sauveur, Quebec
J0R 1R1
PARTY OF THE SECOND PART
RECITALS
A. Employer is in the business of Software Development and Professional
Services and TPI is otherwise engaged in the business of Information
Technology.
B. Employee has agreed to provide services as Vice President, Technology to
Employer and to enter into this agreement with Employer.
NOW THEREFORE, Employer and Employee do hereby stipulate, covenant and agree
as follows:
1. EMPLOYMENT
Employer hereby employs Employee and Employee hereby accepts employment
upon the terms and conditions set forth in this Agreement. Employee
hereby warrants and covenants that he is not bound by any legal
obligation inconsistent with him entering into this Agreement.
<PAGE>
2. DUTIES AND RESPONSIBILITIES
TPI retains the professional services of the Employee as Vice President,
Technology, responsible for
1. Continuing development of migration software for TPI;
2. Hiring and administration of development staff;
3. Working within the parameters of the development plan for TPI;
4. Acting responsibly as a member of the Board of Directors;
5. Managing projects including identification of staffing and equipment
requirements, liasing with the client and setting time tables;
6. Continually demonstrating moral and ethical standards of business
conduct.
Employee hereby warrants and covenants that he is not bound by any legal
obligation inconsistent with him entering into this Agreement.
Employee is employed to provide services as Vice President, Technology
responsible for performing the tasks accepted within the framework and
time schedule of all projects to the satisfaction of TPI.
3. SERVICE
Employee agrees that he will service Employer faithfully and to the best
of his ability and devote his full working time to the business
affairs of Employer and the promotion of Employer's business, in
accordance with Employer's directions, instructions and
specifications. Employee shall be bound by and shall faithfully observe
and abide by all the rules and regulations of Employer from time to
time in force which are brought to his notice or of which
he should reasonably be aware.
The Employee agrees to represent himself as an employee of TPI for the
purposes of this agreement and for any other agreements TPI makes with
the Client regarding the Employee, whether verbal or written, in which
this agreement may result. The Employee hereby understands and agrees
not to promote or market himself to the Client as anything other than
Vice President, Technology of TPI. Employee agrees not to participate or
hold office with any other organization at the time of his employ with
TPI and prior to the effective date of this contract declare that this
is the status as he joins the company.
4. SAFE PERFORMANCE OF DUTIES
In the position of Vice President, Technology, the Employee may operate
a motor vehicle on a regular and ongoing basis in the course of carrying
out his duties under the terms of this Agreement. Any insobriety while
performing under this Agreement or any use of illegal drugs shall be
cause for immediate termination.
5. TERM
The employment of the Employee hereunder shall begin on the 1st day of
January, 1997
<PAGE>
and shall continue until otherwise terminated as provided for in this
agreement.
6. COMPENSATION AND BENEFITS
In consideration for services rendered by Employee hereunder, he shall
receive:
a) Salary. Employer shall provide, a salary (26 installments) of three
thousand and seventy-six dollars and ninety-two cents ($3076.92)
gross pay for the period during which Employee is employed, through
and including the date of termination of employment in accordance
with the termination provisions herein set forth.
b) Auto Expenses. Employer shall also pay on a monthly basis, expenses
for the use of the Employees personal conveyance in the amount of
$0.35 per kilometre. This amount adjusts to $0.33 per kilometre
after 5000 kilometres per year. This expense is payable on
condition of providing the necessary administrative forms as per
Employer policy.
c) Vacation. Employee shall be entitled each year to a vacation with pay
in accordance with Employer policy.
d) Expenses. Employee shall be reimbursed for all authorized traveling
and other out of pocket expenses actually and properly incurred by
him in connection with his duties hereunder. For all such expenses
employee will provide original receipts, otherwise the employee will
be responsible for paying his own expenses.
e) Benefits. Employee shall participate in all employee benefit plans as
are provided by Employer from time to time: provided he is otherwise
eligible to participate and desires to be covered and so
participates; provided further that nothing herein shall be
construed to obligate Employer in any manner to put into effect any
plans not presently in existence or to provide special benefits to
Employee.
7. TERMINATION
a. For Cause. The Board of Directors shall have the right at any time,
for cause, to terminate the employment of Employee without notice.
For purposes of this Agreement, "for cause" shall include, but not
be limited to, the following:
Breach of any provision of this Agreement by Employee;
Insobriety of Employee while performing duties under this
Agreement;
Any act of dishonesty or falsification of reports, records or
information submitted to Employer by Employee;
Misrepresentation of TPI to clients;
Use of illegal drugs.
b. Pursuant to Notice. Employer may terminate this Agreement upon the
giving of 30
<PAGE>
days' notice in addition to the minimum statutory notice.
Notwithstanding the foregoing, Employer may terminate this Agreement
immediately upon paying Employee 6 months base salary plus the
minimum statutory requirements in lieu of such notice and upon
making the benefit plan contributions necessary to maintain
Employee's participation for the minimum period prescribed by law in
all benefit plans provided to Employee by Employer immediately prior
to the termination of this Agreement. Employee agrees that Employer
may deduct from any payment of salary in lieu of notice hereunder
Employee's benefit plan contributions which were regularly made
during the term of this Agreement in accordance with the terms of
all benefit plans to be maintained hereunder for the minimum period
prescribed by law.
c. Employer may from time to time, advance monies to Employee in
anticipation of possible bonus entitlement in accordance with
Exhibit A of this Agreement. As permitted by Regulation 325, Section
14 of the Employment Standards Act, Employee hereby gives his
written authorization to deduct such advances from any amounts
payable by Employer to Employee under Section 7(b) above.
d. The parties confirm that the notice and pay in lieu of notice
provision contained in Section 7(b) is fair and reasonable and the
parties agree that upon any termination of this Agreement by
Employer in accordance with Section 7(b) or upon any termination of
this Agreement by Employee, Employee shall have no action, cause of
action, claim or demand against Employer or any other person as a
consequence of such termination.
e. Duties Upon Termination. In the event the employment of Employee is
terminated for any reason whatsoever including the expiration of the
term of this Agreement, Employee shall deliver immediately to
Employer all customer lists, correspondence, letters, contracts,
call reports, price lists, manuals, mailing lists, investor
lists,(hard copy or electronically stored) advertising materials,
ledgers, supplies, equipment, cheques, petty cash, and all other
materials and records of any kind that may be in Employees
possession or under his control which belong to the Employer by the
Employee, including any and all copies of such items previously
described in this paragraph.
f. Termination by Employee. Employee may terminate this Agreement upon
giving 30 days written notice to Employer. In such event, Employer's
only obligations to Employee shall be to continue to employ Employee
during the period of notice under this Section 7(f) or pay employee
in lieu of such notice an amount equal to Employee's base salary for
the period of notice under this Section 7(f). In the event this
Agreement is terminated by Employee under this Section 7(f) the
provisions of Sections 7(e) and 8 shall continue to apply.
8. RESTRICTIVE COVENANT
Employee acknowledges and recognizes that the list of customers
(whether now existing or developed during the period of his/her
employment by him/her or at his/her discretion) and business
methodology of Employer are a valuable, special and unique asset of
Employer and were acquired or will be hereafter acquired at
considerable expense to Employer and that said lists and business
methodologies are confidential and are a valuable trade and business
secrets and assets belonging to Employer and TPI. Furthermore, it is
stipulated and agreed by Employee that during the term of this
<PAGE>
Agreement Employee will be placed in a position by Employer to
become acquainted with its confidential and privileged information
relating to customer files and special customer information,
production methods and techniques, promotional materials and
information and confidential processes, designs, ideas, machinery,
plans, devices or materials, and other similar matters treated by
Employer and TPI as confidential (the "Confidential Information")
and that the use of the Confidential Information by persons or
entities other than Employer and TPI against Employer and TPI might
seriously damage Employer and TPI in its business. As a consequence
of the above, in return for the consideration of his employment and
the payment of his salary and receipt of other benefits, that in the
event of termination of his employment for any reason whatsoever,
Employee agrees as follows:
a. Not to Divulge Confidential Information. During the term of his
employment under this Agreement and thereafter, Employee shall not,
without the prior written consent of Employer, divulge, furnish or
make accessible to any third person, company or other organization
(other than in the regular course of business of Employer), any of
the Confidential Information concerning Employer or TPI.
b. Not to Compete. Employee will not, directly or indirectly, for a
period of up to six months following the termination of Employee's
employment ("the restrictive period"); engage in competition with
Employer, successors or assigns in the Territory to in or with
respect to Employer's "customers" or provide information, solicit or
sell for, own, or organize any interest in, either directly or
indirectly or through any affiliate or subsidiary corporation,
partnership or other entity, or become engaged by, act as agent for
or in any manner assist, any person, corporation or other entity
that is directly or indirectly in competition with Employer, its
successors or assigns in the Territory or with respect to Employer's
"customers" as defined on this paragraph. Employee does further
agree that within the restrictive period, Employee will not in any
way divert or attempt to divert from Employer any business
whatsoever and Employee does further agree that during said
restrictive period he will not influence or attempt to influence any
of the customers of Employer not to do business with Employer, and
Employee does further agree that he will not make or permit the
making of any public announcement or statement of any kind that
Employee was formerly employed or connected with Employer, which
announcement has as its purpose directly or indirectly the intent to
violate the provision of this Agreement. The term "customer" as used
herein, shall mean any person or entity to which the Employer
provides or has provided within a period of one year prior to
Employee's termination, materials, or services for the furtherance
of such entity or person's business or any person or entity that
within said period of one year Employee pursued or communicated with
for the purposes of obtaining business for Employer.
c. Enforcement. It is stipulated that a breach by Employee of the
restrictive covenants set forth herein will cause irreparable damage
to Employer, and that in the event of any breach of the provisions
under subparagraphs (a) and (b) above, Employer, in addition to any
other remedies it has, shall be entitled to any and all of the
following remedies:
i) An injunction restraining the Employee from violating or
continuing to violate the restrictive covenants contained herein.
It is further stipulated that the existence of any claim or cause
of action on the part of Employee against Employer, whether
arising from this Agreement or otherwise, shall in no way
constitute a defense to the enforcement of the restrictive
covenants contained
<PAGE>
herein, and the restrictive period for which Employer is entitled
to an injunction shall be extended in an amount which equals the
time period during which Employee is or has been in violation of
the restrictive covenants contained herein.
ii) Liquidated damages in the amount of $300.00 per day for each
day during which Employee is in violation of the covenants
contained herein after notice of breach thereof and Employee does
specifically acknowledge and stipulate that liquidated damages in
such amount are fair and reasonable in that it may be difficult
for Employer to determine the extent of the damages actually
incurred in the event of the breach of the restrictive covenants
contained herein by Employee.
9. PROVISIONS WHICH OPERATE FOLLOWING TERMINATION
Notwithstanding any termination of this Agreement for any reason
whatsoever and with or without cause, the provisions of all sections and
any other provisions of this Agreement necessary to give efficacy thereto
shall continue in full force and effect following such termination.
10. OTHER EMPLOYMENT
Employee shall devote his entire time, attention and energy to
Employer's business. While employed hereunder, Employee shall not,
directly or indirectly, either individually or through any
corporation, partnership or other business entity, engage or be
interested in any other business, and he may not engage in any
activity whatsoever, regardless of where located, detrimental to the
business interests of Employer. For the purposes of this
restriction, the Employee will be considered to be engaged or
interested in businesses detrimental to the business interests of
the Employer if he participates in such businesses as a stockholder,
director, officer, employee, partner, consultant, individual
proprietor, lender or agent, except that nothing herein shall
preclude Employee from holding not more than ten (10%) percent of
the outstanding shares of any publicly traded shares of any publicly
held company, registered on a national securities exchange, which
may be so engaged in a trade or business of employer. Provided,
however, that Employer may participate as a stockholder, director,
officer or employee of Employer or TPI.
11. ENTIRE AGREEMENT
This Agreement sets forth the entire understanding between the
parties with respect to the terms of Employee's employment, and
supersedes any prior Agreements, whether written or oral, concerning
the subject matter. There are no representations, warranties,
conditions, undertakings, or collateral agreements expressed or
implied statutory between the parties other than an expressly set
forth in this Agreement. This Agreement cannot be amended except by
a writing signed by both parties provided, however, that Exhibit A
may be amended by Employer without Employee's consent as provided in
said exhibit and, further, Employer may, from time to time amend
Employer's Rules and Regulations which are incorporated by reference.
12. NO WAIVER
No waiver of any term or provision of this Agreement shall be deemed
to be a waiver of
<PAGE>
any subsequent breach of such term or provision of this Agreement.
13. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the province of Ontario and the laws of Canada
applicable therein.
14. ATTORNMENT
For the purpose of all legal proceedings this Agreement shall be
deemed to have been performed in the Province of Ontario and the
Courts of the Province of Ontario shall have jurisdiction to
entertain any action arising under this Agreement. Employer and
Employee each hereby attorns to the jurisdiction of the courts of
the Province of Ontario provided that nothing herein contained shall
prevent Employer from proceeding at its election against Employee in
the Courts of any other province or country.
15. NOTICES
Any notice that may be given hereunder shall be sufficient if in
writing and mailed by certified mail, return receipt, requested, to
Employee at 119 Chemin de l'Horizon, St. Sauveur, Quebec, J0R 1R1
and to Employer at 2121 Argentia Road, Suite 200, Mississauga,
Ontario, L5N 2X4 or at such place as either party by written notice
designates.
16. HEIRS AND ASSIGNS
This Agreement may be assigned by Employer only, and shall be
binding upon the parties hereto, their successors and heirs,
wherever the context admits or requires.
17. SEVERANCE CLAUSE
The parties agree that each of the parts and provisions of this
Agreement are severable and the invalidity or unenforceability of
any one or more of the provisions or parts of this Agreement shall
not affect the validity and/or enforceability of any other part or
provision of this Agreement.
18. LEGAL FEES
In the event the Employer must enforce any of the rights herein
granted to it through a lawyer, then Employee shall be liable for
any and all reasonable legal fees, expenses and court costs, in
connection with the enforcement of Employer's rights hereunder.
19. GENDER
Any reference in this Agreement to the masculine or neuter shall
include the masculine, the feminine and the neuter where appropriate.
20. ACKNOWLEDGMENT
<PAGE>
Employee acknowledges that this Agreement has been executed by him
without coercion by Employer and pursuant to the advice of
Employee's own independent counsel, and that no representations of
any kind have been made by Employer as an inducement to obtain
Employee's execution of this Agreement other than those
representations specifically contained in this written document.
IN WITNESS WHEREOF, the parties hereto have executed this agreement at the
place and as of the date first herein above written.
Transformation Processing Inc. (TPI)
By: /s/ Paul Mighton Date: January 1, 1997
--------------------
Vladimir Stepanoff
Employee: /s/ Vladimir Stepanoff Date: January 1, 1997
--------------
<PAGE>
Exhibit 10.5
January 6, 1997
Mr. Douglas Woolridge
2264 Constance Drive
Oakville, Ontario
L6J 6G4
Dear Doug:
We have reviewed the offer of employment entered into the 29th day of September,
1997 between yourself and Transformation Processing Inc.
This letter will serve to confirm that all elements of the agreement be set
aside with the exception of the cash component which will remain at $7,000
calculated on a monthly basis.
Thus, the offer letter dated September 29, 1997 is considered null and void.
Sincerely,
TRANSFORMATION PROCESSING INC.
John McGee
Vice President/Chief Financial Officer
Acknowledged and agreed this 9th day of January, 1998.
/s/ Douglas Woolridge
_____________________
Douglas Woolridge
TRANSFORMATION PROCESSING INC.
2121 Argentia Road, Suite 200, Mississauga, Ontario, Canada L5N 2X4
Telephone: 905 812 7907 Facsimile: 905 812 7920
<PAGE>
Mr. Doug Woolridge
2264 Constance Drive
Oakville, Ontario
L6J 6G4
September 29, 1997
Dear Doug:
This letter will finalize our agreement in terms of the details of your
participation as TPI's President and Chief Operating Officer.
You will be on a management consulting contract commencing September 10, 1997
until December 10, 1997. On a go-forward basis when revenue targets are met,
you will become TPI's full-time President and COO, as an employee.
1. For the initial 90-day period commencing September 11, 1997 to December 11,
1997, you will be compensated at a rate of $12,000.00 per month. Seven
thousand in cash and the remaining 5,000 in shares.
2. In securing in excess of $1.0 million U.S. in revenue within the first 90
days, you will be compensated with 150,000 stock option shares of TPI at
$0.50/share.
3. Should you attain a revenue target of $5.0 million U.S. by the end of
Fiscal Year 1997 (July 31, 1998), you will be compensated with an
additional 250,000 control block common shares.
4. Should you attain a revenue target in excess of $5.0 million U.S. by the
end of Fiscal 1997, you will be compensated with an additional 50,000
control block common shares for each additional $1.0 million U.S. of
revenue.
5. Past 90 days from commencement of your assignment, your basic salary will
be moved to $12,000.00/month or $144,000.00 per annum.
6. By November 1, 1997, you will develop an overall product development plan
with vertical expansion recommendations that will be presented to the Board
for approval.
Doug, I feel this is a great starting point for us both and I look forward to a
mutually beneficial and successful relationship with TPI.
By virtue of our signatures on this letter, these terms and conditions will be
binding.
/s/ Paul G. Mighton /s/ Doug Woolridge
- ----------------------------------- -----------------------------------
Paul G. Mighton, Chairman & CEO Doug Woolridge
September 29, 1997 September 29, 1997
- ----------------------------------- -----------------------------------
Date Date
<PAGE>
Exhibit 10.6
THIS LEASE dated the 3rd day of September, 1996
BETWEEN:
ROYAL TRUST CORPORATION OF CANADA, as Trustee
(hereinafter called "Landlord")
- and -
TRANSFORMATION PROCESSING INC.
(hereinafter called "Tenant")
ARTICLE I
1.0 LEASE SUMMARY
1.1 Premises: a portion of the 2nd Floor, being Suite 200 at the Building,
municipally known as 2121 Argentia Road, Mississauga, Ontario;
1.2 Term: five (5) years;
1.3 (a) Commencement Date: October 1, 1996;
(b) Expiry Date: September 30, 2001;
1.4 Basic Rent: $5.55 per square foot of Rentable Area of the Premises per
annum;
1.5 Rentable Area of Premises: approximately 5,477 square feet, provided,
however, that if, upon measurement of the Rentable Area of the Premises in
accordance with the terms of this Lease, it is determined that the Rentable
Area is greater than 5,750.85 square feet, Tenant shall have the right
exercisable within two (2) days after receipt of the Landlord's architect's
certificate, to reduce the size of the Premises so that the Rentable Area
does not exceed 5,750.85 square feet;
1.6 Rent Deposit: $13,381.22, to be applied towards the first one (1) month's
Basic Rent and Additional Rent and the balance, to be held by Landlord as
prepaid rent and applied in accordance with section 7.2;
1.7 Use of Premises: Office premises, in keeping with first class
office building standards;
1.8 Address of Tenant: at the Premises
1.9 Address of Landlord: c/o RT Realty Advisors
Suite 3700, Royal Trust Tower,
P.O. Box 49, Toronto-Dominion Centre,
77 King Street West,
Toronto, Ontario
M5K 1E7
1.10 Special Provisions: see Schedule "F".
ARTICLE II
2.0 LEASE OF PREMISES
2.1 Net Lease
It is the intent of the parties hereto that this Lease be absolutely net to
Landlord and Landlord not be responsible for any expense or obligations of any
kind whatsoever in respect of the Premises or the Project.
2.2 Premises
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
Premises.
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2.3 Use Prior to Commencement Date
If Tenant uses or occupies the whole or any part of the Premises in any way
prior to the Commencement Date, all the terms and conditions contained in this
Lease shall apply to such period.
2.4 Acceptance of Premises
Tenant shall accept the Premises in the state and condition in which they
are received from Landlord.
2.5 Licence to Use Common Facilities
Landlord grants to Tenant the non-exclusive licence during the Term to use
for their intended purposes, such portions of the Common Facilities as Landlord
determines to be required for the use of the Premises during such hours as the
Common Facilities are open for use, as determined by Landlord from time to time.
2.6 Quiet Enjoyment
Subject to Tenant's complying with all of the terms of this Lease, Tenant
may peaceably possess and enjoy the Premises for the Term without interruption
by Landlord or any person claiming through Landlord.
ARTICLE III
3.0 TENANT'S COVENANTS
3.1 Tenant to Pay Rent
Tenant shall pay as rent Basic Rent and Additional Rent (collectively
called "Rent"), without prior demand and without deduction, set-off or abatement
whatsoever. Basic Rent shall be paid in equal monthly instalments in advance on
the first day of each and every month during the Term. For any partial month(s)
during the Term Rent shall be computed on a per diem basis. If Basic Rent is
described as an amount per square foot, then the Basic Rent shall be adjusted
upon the determination of the Rentable Area of the Premises.
3.2 Post-Dated Cheques
On the first day of each lease year, Tenant shall deliver to Landlord
post-dated cheques for all payments of Basic Rent and estimates of Additional
Rent or any portions thereof payable during the balance of such Fiscal Year.
3.3 Taxes Payable by Tenant
(a) Tenant shall pay to Landlord all Taxes Charged against or in respect of
the Premises based on assessments if available or otherwise as determined by
Landlord, acting reasonably, and its Proportionate Share of Taxes Charged
against the Common Facilities, and all applicable Sales Taxes.
(b) Landlord (and not Tenant) may contest and appeal any Taxes or
assessments. Tenant will cooperate with Landlord in respect of any such contest
and appeal and shall provide to Landlord such information and execute such
documents as Landlord requests to give full effect to the foregoing.
3.4 Tenant's Payment of Operating Costs and Utilities
Tenant shall pay to Landlord: (i) Excess Costs charged by Landlord, (ii)
its Proportionate Share of Operating Costs, and (iii) all Utility Costs.
Tenant shall execute and deliver any agreements required by Landlord in
respect of the supply of any Utilities to the Premises. Tenant's use of any such
Utilities shall not exceed the available capacity of the existing systems from
time to time.
3.5 Monthly Payments of Additional Rent
Landlord may from time to time by written notice to Tenant estimate or
re-estimate all or any portion of Additional Rent for the current or upcoming
Fiscal Year or part thereof. The amounts so estimated shall be payable by Tenant
in advance in equal monthly instalments on the same days as the monthly payments
of Basic Rent. As soon as practical after the expiration to each Fiscal Year or
part thereof, Landlord shall furnish to Tenant a statement of the actual amounts
payable by Tenant with reasonable detail, which statement shall be final and
binding. Within 15 days after delivery of such statement, either Tenant shall
pay to Landlord the amounts shown on the statement to be owed or Landlord shall
credit Tenant's account with any overpayment.
<PAGE>
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3.6 Use of Premises
Tenant covenants that it shall not use and shall not permit the Premises to
be used for any purpose other than the Use as provided in section 1.7 above.
3.7 Compliance with Laws
Tenant shall be solely responsible for obtaining from all authorities
having jurisdiction all necessary permits, licences and approvals as may be
necessary to permit Tenant to occupy the Premises and conduct its business
thereon, as required by all applicable Laws. Tenant shall comply at its own
expense with all applicable Laws respecting the use, condition and occupation of
the Premises, and all leasehold improvements, fixtures, equipment and contents
thereof.
3.8 Prohibited Uses
Tenant shall not permit any part of the Premises to be used during the Term
for any of the following businesses or activities: (i) any retail, wholesale
sales activities or any auction; (ii) any vending machines or other coin
operated, mechanical or electrical serving or dispensing machines whatsoever for
the sale or supply of food or beverages (other than food or beverages such as
are routinely served in office premises without charge to employees such as
coffee and soft drinks); (iii) sale of tickets for theatre or other
entertainment events or lotteries; (iv) any business which would result in
people waiting in Common Facilities to enter the Premises; (v) any type of
business or business practice which would, in the sole opinion of Landlord, tend
to lower the character or image of any part of the Project; (vi) any use which
in any way contravenes any restrictive covenants in leases granted by Landlord
or other agreements or arrangements with other tenants; or (vii) any business or
activity not in compliance with all Laws.
3.9 Maintenance and Repairs of Premises
Tenant at its expense shall perform such maintenance, repairs and
replacements as required to keep the Premises, all contents thereof and all
services and equipment located in or primarily serving the Premises (not part of
the Common Facilities), in first-class appearance and condition, and in
accordance with all Laws and Landlord's reasonable requirements, subject only to
the obligations of Landlord expressly provided in section 4.4. For the purposes
of this section 3.9 the Premises shall include, without limitation, all
leasehold improvements, perimeter walls and glass and doors. Landlord may enter
the Premises at any time to view the state of repair and condition thereof and
Tenant shall promptly perform according to Landlord's notice any maintenance,
repairs or replacements in accordance with Tenant's obligations hereunder.
3.10 Approval of Repairs and Alterations
Tenant shall not make any repairs, replacements, changes, additions,
improvements or alterations (hereinafter referred to as "Alterations") to the
Premises without complying with the provisions of Schedule "D".
3.11 Ownership and Removal of Leasehold Improvements
Upon installation, all Leasehold Improvements become the property of
Landlord but Landlord shall not have any responsibility in respect of the
maintenance, repair or replacement thereof. Tenant shall not remove any
Leasehold Improvements from the Premises at any time except that, at the expiry
or earlier termination of the Term, Tenant shall remove any or all Leasehold
Improvements in or about the Premises as required by Landlord ("Remove(d)") and
shall repair all damage resulting from, and shall restore the Premises to their
condition prior to, the installation and removal thereof (collectively called
"Restore(d)"):
Notwithstanding the foregoing, Tenant shall not be obligated to Remove any
Leasehold Improvements installed prior to the Commencement Date and Restore the
Premises and shall not be required to Remove any Leasehold Improvements
installed after the Commencement Date, provided such Leasehold Improvements were
approved by Landlord, and provided that at the time same were approved by
Landlord, Landlord advised Tenant in writing that such Leasehold Improvements
need not be Removed at the expiry or earlier termination of the Term.
3.12 Vacating of Possession
Upon the expiry or earlier termination of the Term, Tenant shall deliver to
Landlord vacant possession the Premises in such condition in which Tenant is
required to keep the Premises during the Term pursuant hereto and shall leave
the premises in neat and clean condition and shall deliver to Landlord all keys
for the Premises and all keys or combinations to locks on doors or vaults in the
Premises.
<PAGE>
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3.13 Removal of Trade Fixtures
At the expiry or earlier termination of the Term Tenant shall remove its
trade fixtures and repair all damage resulting from the installation or removal
of such trade fixtures. If at the expiry or earlier termination of the Term
Tenant does not remove its trade fixtures at the option of Landlord, such trade
fixtures or property shall become the absolute property of Landlord or may be
disposed of by Landlord without any compensation to Tenant.
3.14 Overholding by Tenant
If Tenant remains in possession of the Premises after the expiry of the
Term, this Lease shall not be deemed to be renewed and Tenant shall be deemed
to be occupying the Premises as a monthly tenant on the same terms as set
forth in this Lease insofar as they are applicable to a monthly tenancy except
the monthly Basic Rent shall be twice the monthly Basic Rent payable during
the last twelve months of the Term.
3.15 Tenant's Effect On Other Insurance
(a) If the cost of any insurance policies of Landlord on the Project is
increased as a result of anything done or permitted by Tenant anywhere on the
Project, Tenant shall pay the full amount of such increase (as determined by
Landlord's insurer) to Landlord forthwith upon demand.
(b) If there is an actual or threatened cancellation of or adverse change
in any policy of insurance of Landlord on the Project by reason of anything done
or permitted by Tenant anywhere on the Project, and if Tenant fails to remedy
the situation giving rise to such actual or threatened cancellation or change
within twenty-four (24) hours after notice from Landlord, then Landlord may, at
its option, either (i) terminate this Lease forthwith by written notice; or,
(ii) remedy the situation giving rise to such actual or threatened cancellation
or change, all at the cost of Tenant to be paid to Landlord forthwith upon
demand, and for such purpose Landlord shall have the right to enter upon the
Premises without further notice.
3.16 Tenant's Insurance
(a) Tenant shall, at its expense, maintain in full force and effect at all
times such insurance as would be maintained by a prudent tenant of premises such
as the Premises, which insurance shall include at least all of the following:
(i) comprehensive general liability insurance on an occurrence basis with
respect to any use and occupancy of or things on all or any part of the Premises
or Project by Tenant, with coverage for any occurrence of not less than Five
Million Dollars ($5,000,000) or such higher amount as Landlord may reasonably
require on not less than one (1) month's notice; (ii) all risks insurance
covering the leasehold improvements, trade fixtures and contents on the
Premises, for not less than the full replacement cost thereof and with a
replacement cost endorsement; (iii) broad form comprehensive boiler and
machinery insurance on all insurable objects which are the property or
responsibility of Tenant, for not less than the full replacement cost thereof
and with a replacement cost endorsement; (iv) business interruption insurance in
such amounts as required by Landlord; (v) Tenant's legal liability insurance for
the full replacement cost of the Premises; and (vi) any other insurance against
such risks and in such amounts as Landlord may from time to time reasonably
require.
(b) Each of Tenant's insurance policies shall name Landlord as an
additional named insured, and shall be taken out with insurers and shall be in
such form and on such terms as are satisfactory to Landlord from time to time.
Without limiting the generality of the foregoing, each of Tenant's insurance
policies shall contain: (i) the standard mortgage clause as may be required by
any mortgagee of Landlord; (ii) a waiver by the insurer of any rights of
subrogation to which such insurer might otherwise be entitled against Landlord
or any person for whom Landlord is in law responsible; (iii) an undertaking by
the insurer that no material change adverse to Tenant or Landlord or any
mortgagee of Landlord will be made and the policy will not lapse or be
terminated, except after not less than thirty (30) days' written notice to
Tenant and Landlord and to any mortgagee of Landlord; (iv) a provision stating
that Tenant's insurance policy shall be primary and shall not call into
contribution any other insurance available to Landlord; (v) a joint loss
endorsement, where applicable; (vi) a severability of interests clause and a
cross-liability clause; and (vii) a waiver, in respect of the interests of
Landlord and any mortgagee of Landlord, of any provision with respect to any
breach of any warranties, representations, declarations or conditions contained
in the said policy.
(c) Tenant shall ensure that Landlord has at all times certified copies of
Tenant's insurance policies which are in good standing and in compliance with
Tenant's obligations hereunder.
(d) Tenant hereby releases Landlord and its servants, agents, employees,
contractors and those for whom Landlord is in law responsible from all losses,
damages and claims of any kind in respect of which Tenant is required to
maintain insurance hereunder or is otherwise insured.
<PAGE>
-5-
3.17 Landlord's Right to Place Tenant's Insurance
If Tenant fails to maintain in force, or pay any premiums for, any
insurance required to be maintained by Tenant hereunder, then Landlord, without
prejudice to any of its other rights and remedies hereunder, shall have the
right but not the obligation to effect such insurance on behalf of Tenant and
the cost thereof and all other reasonable expenses incurred by Landlord in that
regard shall be paid by Tenant to Landlord forthwith upon demand.
3.18 Landlord's Non-Liability and Indemnity
(a) Tenant agrees that Landlord shall not be liable or responsible in any
way for any injury or death to any person or for any loss or damage to any
property at any time on or about the Premises or any property owned by or being
the responsibility of Tenant on or about the Project, no matter how the same
shall be caused and whether or not resulting from the negligence of Landlord or,
any person for whom Landlord is in law responsible.
(b) Tenant shall indemnify Landlord and all of its servants, agents,
employees, contractors and persons for whom Landlord is in law responsible
against any and all liabilities, claims, damages, losses and expenses, including
all reasonable legal fees and disbursements, arising from: (i) any breach by
Tenant of any of the provisions of this Lease; (ii) any act or omission of any
person on the Premises or any use or occupancy of or any things in the Premises;
(iii) any act or omission of Tenant on the Premises or elsewhere on or about the
Project; or (iv) any injury or death of persons, or any loss or damage to
property of Tenant or any of its servants, agents, employees, invitees,
licensees, subtenants, contractors or persons for whom Tenant is in law
responsible, on the Premises or elsewhere on or about the Project.
3.19 Status Statement
Upon written request, Tenant shall deliver to Landlord (or to whom Landlord
may direct) a certificate in such form as requested by Landlord stating (if such
is the case, or stating the manner in which such may not be the case) among
other things: (i) that this Lease is unmodified and in full force; (ii) the
commencement and expiry of the Term and the dates to which Rent has been paid;
(iii) any default by Landlord under this Lease.
3.20 Subordination
This Lease and Tenant's rights shall be subject and subordinate to any and
all Mortgages, on the Project or any part thereof now or in the future. Tenant
shall on notice from Landlord or holder of a Mortgage attorn to and become a
tenant of the holder of any such Mortgage upon the same terms and conditions as
set forth herein and shall execute promptly on request any subordination and/or
attornment documents as requested from time to time by Landlord or any
Mortgagee.
3.21 Registration
Unless requested or consented to by Landlord, Tenant shall not register
this Lease or any short form, caveat or notice thereof.
ARTICLE IV
4.0 LANDLORD'S COVENANTS
4.1 Operation of Project by Landlord
Landlord shall operate the Project as would a prudent owner having regard
to its size, age, location and character.
4.2 Cleaning
Landlord may at its sole option, provide cleaning services to the Premises
substantially in accordance with prevailing standards for office buildings of a
similar standard in the area in which the Project is located. Landlord shall not
be liable for any loss or damage caused in performance of any cleaning services.
4.3 Heating and Air-Conditioning
Landlord shall heat and cool the Premises during the appropriate heating
and air-conditioning seasons for the normal use of the Premises during Business
Hours. Landlord shall not be liable for any damages, direct or indirect,
resulting from or contributed to by any interruption or cessation in supply of
any utilities or heating, ventilating, air-conditioning and humidity control.
Without limiting the generality of the foregoing, Landlord shall not be liable
for and Tenant shall indemnify Landlord against any and all indirect or
consequential damages or damages for personal discomfort or illness of Tenant or
any
<PAGE>
-6-
persons permitted by it to be on the Premises, by reason of the suspension,
defectiveness or non operation of any utilities, heating, ventilating,
air-conditioning or humidity control.
4.4 Landlord's Repairs
Subject to Tenant's obligations hereunder, to the extent that the failure
to do so would materially detrimentally affect access to or use of the Premises,
on reasonable notice from Tenant Landlord shall repair: (i) defects in the
structure of the Project and exterior walls of the Building; (ii)
transportation, electrical, mechanical and drainage equipment and systems
forming part of the Project but not located within the Premises and not serving
exclusively the Premises. Landlord's costs of compliance with this section 4.4
shall be included in Operating Costs. Provided that to the extent that such
repair is necessitated directly or indirectly by any act or omission of Tenant,
Tenant shall be solely responsible for the cost of such repairs and shall
indemnify Landlord in respect thereof.
4.5 Landlord's Suspension of Utilities
In order to effect any maintenance, repairs, replacements or alterations to
any Utilities, heating, ventilating, air-conditioning or humidity control
equipment or systems, or any other part of the Project, Landlord shall have the
right to modify or temporarily discontinue or suspend the operation of any such
Utilities, equipment or systems as required from time to time.
4.6 Landlord's Insurance
Landlord shall obtain and maintain in full force and effect during the Term
with respect to the Project insurance against such occurrences and in such
amounts, on such terms and with such deductible(s) as would a prudent owner of
such a project, the cost for which shall be included in Operating Costs. Such
insurance may include, without limitation: (i) insurance on the Building and any
improvements therein which Landlord desires to insure, against damage by fire
and other risks covered by extended coverage fire insurance policies or, at
Landlord's option, all risks insurance; (ii) boiler and machinery insurance;
(iii) rental income insurance; (iv) public liability insurance; and (v) such
other insurance and in such amounts and on such terms as Landlord, in its
discretion, may reasonably determine. Notwithstanding that Tenant shall be
contributing to the costs of such insurance pursuant to the terms of this Lease,
Tenant shall not have any interest in or any right to recover any proceeds under
any of Landlord's insurance policies.
ARTICLE V
5.0 DAMAGE AND DESTRUCTION
5.1 Damage to Premises
If there is damage or destruction ("Damage") to the Premises, unless this
Lease is terminated pursuant to section 5.2 below, Tenant, commencing as soon as
practicable but without interfering with Landlord's repairs, shall diligently
perform such repairs as are Tenant's responsibility pursuant hereto. If all or
any part of the Premises are rendered untenantable, Basic Rent shall abate in
proportion to the portion of the Premises rendered untenantable from the date of
the damage until such portion becomes tenantable.
5.2 Damage to Project
If there is Insured Damage to 25% or more of the Rentable Area of the
Project or Insured Damage to the Project which would take longer than 180 days
to repair, or if there is any Uninsured Damage to the Project which would take
longer than 30 days to repair, in either case whether or not, there is any
damage to the Premises, Landlord may, at its option, by notice given to Tenant
within 60 days after such Damage, terminate this Lease as of a date specified in
such notice, which date shall be not less than 30 days after the giving of such
notice. In the event of such termination Tenant shall surrender vacant
possession of the Premises by not later than the said date of termination, and
Rent shall be apportioned to the effective date of termination. If Landlord does
not so elect to terminate this Lease, Landlord shall diligently proceed to
repair and rebuild the Project to the extent of its obligations pursuant to
section 4.4 hereof.
ARTICLE VI
6.0 ASSIGNMENT, SUBLETTING AND CHANGE OF CONTROL
6.1 Consent Required
(a) Tenant shall not effect a Transfer without the prior written consent of
Landlord in each instance, which consent shall not be unreasonably withheld
unless Landlord exercises its right to terminate this Lease in accordance with
section 6.2. The provisions of this Article VI shall apply to any Transfer
which might occur by inheritance or operation of law.
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(b) It is agreed that it shall be reasonable for Landlord to withhold its
consent to a Transfer unless Landlord is satisfied that: (i) the proposed
Transferee has a good business and personal reputation; (ii) the proposed
Transferee has good financial strength at least equal to that of Tenant at the
date of this Lease, and at least sufficient to satisfy all of the obligations of
Tenant hereunder; (iii) the proposed Transferee is not an existing occupant of
any part of the Project and has not then recently been a prospect involved in
bona fide negotiations with Landlord for the leasing of any premises in the
Project and is not in any way affiliated with such existing occupant or bona
fide prospect; and (iv) the Transfer would not result in a breach of any
agreement by which Landlord is bound with respect to any part of the Project.
(c) If Landlord withholds, delays or refuses to give consent to any
Transfer, whether or not Landlord is entitled to do so, Landlord shall not be
liable for any losses or damages in any way resulting therefrom and Tenant shall
not be entitled to terminate this Lease.
(d) All requests to Landlord for consent to any Transfer shall be made to
Landlord in writing together with a copy of the agreement pursuant to which the
proposed Transfer will be made ("Transfer Agreement"), accompanied by such
information in writing as a landlord might reasonably require ("information").
Tenant shall pay all costs of Landlord considering/processing the request for
consent.
6.2 Landlord's Termination Option
Notwithstanding the other provisions herein, Landlord shall have the
option, to be exercised by written notice to Tenant within fifteen (15) days
after the receipt of such request, Information and Transfer Agreement, to
terminate this Lease as it relates to the portion of the Premises which is the
subject of the proposed Transfer ("Transferred Premises") effective as of the
date on which the proposed Transfer was to have occurred. If Landlord elects to
terminate this Lease Tenant shall have the right, to be exercised by written
notice to Landlord within 10 days after receipt of Landlord's notice to withdraw
the request for consent, in which case Tenant shall not proceed with such
Transfer, the Landlord's notice shall be null and void and this Lease shall
continue in full force and effect. If Landlord terminates this Lease as it
relates only to a portion of the Premises, Tenant shall be responsible for
demising such portion, to the extent that it would have been responsible
pursuant to the Transfer Agreement. Tenant hereby grants to Landlord and any
others entitled to use the same, to use for their intended purposes all portions
of the Premises in the nature of common areas (such as corridors, washrooms,
lobbies etc.).
6.3 Terms of Transfer
In the event of a Transfer Landlord shall have the following rights, in
default of any of which no such Transfer shall occur or be effective: (i) to
require the Transferee to enter into an agreement with Landlord in writing and
under seal to be bound by all of Tenant's obligations under this Lease, and to
waive any right it, or any person on its behalf, may have to disclaim, repudiate
or terminate this Lease pursuant to any bankruptcy, insolvency, winding-up or
other creditors' proceeding, and to waive any rights, pursuant to subsection
39(2) of the Landlord and Tenant Act (Ontario) and any amendments thereto and
any other statutory provisions of the same or similar effect, to pay any Rent
less than any amount payable hereunder; (ii) to receive all amounts to be paid
to Tenant under the agreement in respect of such Transfer.
6.4 Effect of Transfer
No consent of Landlord to a Transfer shall be effective unless given in
writing and executed by Landlord. No transfer and no consent by Landlord to any
Transfer shall constitute a waiver of the necessity to obtain Landlord's consent
to any subsequent or other Transfer. In the event of any Transfer or any consent
by Landlord to any Transfer, Tenant shall not thereby be released from any of
its obligations hereunder but shall remain bound by all such obligations
pursuant to this Lease for the balance of the Term and renewal or extension
terms, if any. Any default by and Transferee under the terms of this Lease shall
constitute a default of Tenant hereunder. If this Lease is terminated as a
result of any action of any transferee, Tenant shall nevertheless remain
responsible for fulfilment of all obligations hereunder for what would have been
the balance of the Term but for such termination, and shall upon Landlord's
request enter into a new lease of the Premises for such balance of the Term. The
restrictions on Transfer as aforesaid shall apply to any mortgaging, charging or
otherwise Transferring of the Premises or this Lease to secure any obligation of
Tenant.
6.5 No Advertising of Premises
Tenant shall not advertise this Lease, the Premises, the business or
fixtures or contents therein for sale.
6.6 Corporate Tenant
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The transfer of the majority of the issued shares, or any transfer,
issuance or division of any shares of the Tenant or of any affiliate of the
corporation sufficient to transfer control to others than the then present
shareholders of the Tenant shall be deemed to be a Transfer.
6.7 Assignment by Landlord
If Landlord sells, leases, mortgages or otherwise disposes of the Project
or any part thereof or assigns its interest in this Lease, to the extent that
the purchaser or assignee agrees with Landlord to assume the covenants and
obligations of Landlord hereunder, Landlord shall thereupon be released from all
liability pursuant to the terms of this Lease.
ARTICLE VII
7.0 DEFAULT AND REMEDIES
7.1 Default and Remedies
(a) Upon an Event of Default the then current and the next three (3)
months' Rent shall be forthwith due and payable and Landlord shall have the
right to immediately distrain for same, and, in addition to any other rights to
which Landlord is entitled hereunder or at law, Landlord shall have the
following rights, which are cumulative and not alternative, namely: (i) to
terminate this Lease; (ii) as agent of Tenant to relet the Premises and take
possession of any property thereon and store, sell or dispose of same, and to
make alterations to the Premises to facilitate their reletting, all of the
foregoing being at Tenant's expense and risk; (iii) to remedy any default of
Tenant and, in such case, Tenant shall pay to Landlord forthwith upon demand all
reasonable costs of Landlord in remedying or attempting to remedy any such
default plus 15% of such costs for administration; and (iv) to obtain damages
from Tenant including, without limitation, if this Lease is terminated, all
deficiencies between all amounts which would have been payable by Tenant for
what would have been the balance of the Term, but for such termination, and all
net amounts actually received by Landlord for reletting the Premises for such
period, after deducting all costs of reletting and alterations to the Premises
to facilitate their reletting, and any legal expenses incurred as a result of
such default.
(b) Arrears of Rent shall bear interest from their due dates until payment
at the rate of 5% per annum in excess of the Prime Rate.
(c) Tenant hereby waives and renounces the benefit of any present or future
statute taking away or limiting Landlord's right of distress. All Tenant's
personal property on the Premises shall at all times be the unencumbered
property of Tenant, except for the security interest Tenant hereby grants to
Landlord in the form annexed hereto as Schedule "E".
7.2 Rent Deposit
(a) The Rent Deposit shall be held without interest as a prepayment of the
last months Rent payable by Tenant. If at any time any Rent shall be overdue
Landlord may, at its option, apply all or any portion of the Rent Deposit to the
payment of the said Rent. If Tenant defaults in the performance of any of its
obligations under this Lease then Landlord, at its option, may apply all or any
part of the Rent Deposit on account of any losses sustained by Landlord as a
result of such default. If any part of the Rent Deposit is so applied, then
Tenant shall, within three (3) days after demand, remit to Landlord a sufficient
amount to restore the Rent Deposit to the original sum required to be deposited.
(b) Landlord may deliver all or such portion of the Rent Deposit remaining
on hand to any purchaser, mortgagee or assignee of Landlord's interest in the
Premises or the Project and thereupon Landlord shall be discharged from any
further liability with respect to the Rent Deposit.
(c) No waiver of any of Tenant's obligations under this Lease or of any of
Landlord's right's in respect of any default by Tenant hereunder shall be deemed
to have occurred as a result of any condoning, overlooking or delay by Landlord
in respect of any default by Tenant or by any other act or omission of Landlord.
Tenant's obligations under this Lease shall survive the expiry or earlier
termination of this Lease and shall remain in full force and effect until fully
complied with.
7.3 Impossibility of Performance
If and to the extent that either party shall be delayed in the fulfilment
of any obligation under this Lease, other than the payment by Tenant of any
Rent, by reason of unavailability of material, equipment, utilities, services or
by reason of any Laws, or by reason of any other similar cause beyond its
control and not avoidable by the exercise of reasonable foresight (excluding the
inability to pay for the performance of such obligation), then the party being
delayed shall be entitled to extend the time for fulfilment of such obligation
by a time equal to the duration of such delay and the other party shall not be
entitled to any compensation for any loss or inconvenience occasioned thereby.
The party delayed will,
<PAGE>
-9-
however, use its best efforts to fulfil the obligation in question as soon as is
reasonably practicable by arranging an alternate method of providing the work,
services or materials.
7.4 Allocation
Landlord may allocate payments received from Tenant among items of Rent
then due and payable by Tenant. No acceptance of payment by Tenant of any amount
less than the full amount payable to Landlord, and no direction or other written
instruction respecting any payment by Tenant shall be deemed to constitute
payment in full of any obligation of Tenant.
ARTICLE VIII
8.0 CONTROL OF PROJECT
8.1 Landlord's Control
The Project is at all times under the exclusive control and management of
Landlord. Without limiting the generality of the foregoing, Landlord shall have
the right to obstruct or close off or restrict entry to all or any part of the
Project for purposes of performing any maintenance, repairs or replacements or
for security purposes or to prevent the accrual of any rights to any person or
the public or any dedication thereof, provided that in exercising any such right
Landlord shall endeavor to minimize interference with Tenant's access to and use
of the Premises.
8.2 Alterations of the Project
At any time or times Landlord shall have the right to make any changes in,
additions to, deletions from or relocations of any part of the Project, obstruct
or close off areas for maintenance, repair or replacement, security reasons or
to prevent the accrual of rights (any of which are herein referred to as
"Changes") as Landlord shall consider desirable. Landlord shall be responsible
for the direct cost incurred by Tenant if Landlord relocates the Premises, but
not for any indirect costs or losses of Tenant. Any relocated premises shall be
substantially the same, and otherwise reasonably comparable to, the Premises.
Landlord shall make any such Changes as expeditiously as is reasonably possible
and so as to interfere as little as is reasonably possible with Tenant's
business on the Premises.
8.3 Use of Common Facilities
Tenant shall not obstruct any Common Facilities including driveways,
laneways or access routes, or to park vehicles in any portion of the Common
Facilities other than such areas as expressly authorized by Landlord, and
Landlord shall have the right, at Tenant's expense payable on demand, to remove
any such obstruction or improperly parked vehicles, without liability.
8.4 Rules and Regulations
Tenant and all persons under its control shall comply with all Rules which
shall be deemed to be incorporated into this Lease. Landlord shall act
reasonably in enforcing such Rules.
8.5 Access to Premises
(a) Without limiting any other rights Landlord may have pursuant hereto or
at law, Landlord shall have the right to enter the Premises at any time: (i) to
examine the Premises, to perform any maintenance, repairs or alterations to any
part of the Project or to any equipment and services serving any part of the
Project; (ii) in cases of emergency; (iii) to read any meters; (iv) to show the
Premises to prospective purchasers and lenders and (during the last (12) twelve
months of the Term) to prospective tenants.
8.6 Expropriation
(a) If the Project or any part thereof shall be expropriated (which
includes a sale by Landlord to any authority with the power to expropriate)
then, other than any award to which Tenant is entitled for relocation costs and
business interruption, all Tenant's other rights in respect of such
expropriation are hereby assigned to Landlord and all compensation resulting
from such expropriation shall be the absolute property of Landlord
<PAGE>
ARTICLE IX
9.0 MISCELLANEOUS
9.1 Notices
-10-
All notices, approvals, consents or other instruments to be given under
this Lease shall be in writing and delivered in person or sent, by prepaid
registered Canadian mail addressed to the Address for Service of Notice as
provided in section 1.1 hereof. All such notices shall be conclusively deemed to
have been given and received upon the day the same is personally delivered or,
if mailed as aforesaid, four (4) business days (excluding Saturdays, Sundays,
holidays and days upon which regular postal service is interrupted or
unavailable for any reason) after the same is mailed as aforesaid.
9.2 Complete Agreement
There are no covenants, representations, agreements, warranties or
conditions in any way relating to this Lease or the tenancy created hereby,
expressed or implied, collateral or otherwise, except as expressly set forth
herein, and this Lease constitutes the entire agreement between the parties and
may not be modified except by subsequent written agreement duly executed by
Landlord and Tenant.
9.3 Time of the Essence
Time is of the essence of all terms of this Lease.
9.4 Applicable Law
This Lease shall be governed by and interpreted in accordance with the laws
of the Province of Ontario and the Courts of Ontario shall have jurisdiction to
determine any matters arising hereunder.
9.5 Severability
If any provision of this Lease is illegal, unenforceable or invalid, it
shall be considered separate and severable and all the remainder of this Lease
shall remain in full force and effect as though such provision had not been
included in this Lease but such provision shall nonetheless continue to be
enforceable to the extent permitted by law.
9.6 Section Numbers and Headings
The table of contents and all section numbers and headings of this Lease
are inserted for convenience only and shall in no way limit or affect the
interpretation of this Lease. References in this Lease to section numbers refer
to the applicable section of this Lease, unless a statute or other document is
specifically referred to.
9.7 Interpretation
Whenever a word importing the singular or plural is used such word shall
include the plural and singular respectively. If any party is comprised of more
than one entity, the obligations of each of such entities shall be joint and
several. Words importing persons of either gender or firms or corporations shall
include persons of the other gender and firms or corporations as applicable.
Subject to the express provisions contained in this Lease, words such as
"hereof", "herein", "hereby", "hereafter", and "hereunder" and all similar words
or expressions shall refer to this Lease as a whole and not to any particular
section or portion hereof.
9.8 Successors
This Lease enures to the benefit of and binds Landlord, its successors and
assigns and Tenant and its heirs, executors, administrators and permitted
successors, assigns and its other legal representatives subject to the terms of
this Lease.
9.9 Monetary Amounts
Except as may be otherwise expressly provided herein, all monetary amounts set
out in this Lease are in Canadian currency and are exclusive of any applicable
Sales Taxes.
<PAGE>
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IN WITNESS WHEREOF the parties have executed this Lease.
ROYAL TRUST CORPORATION OF CANADA,
as Trustee
Per: /s/ R. V. Hawkins
----------------------------------------------
Name: R.V. Hawkins
Title: A. S. P.
Per: /s/ W. H. Blackstone
----------------------------------------------
Name: W. H. Blackstone
Title: A. S. P.
I/We have authority to bind the Corporation
TRANSFORMATION PROCESSING, INC.
Per: /s/ Gary G. McCann
----------------------------------------------
Name: Gary G. McCann
Title: President and Chief Operating Officer
Per:
----------------------------------------------
Name:
Title:
I/We have authority to bind the Corporation
<PAGE>
SCHEDULE 'A'
LEGAL DESCRIPTION OF PROJECT
Lot 5, Plan M-230, Mississauga
<PAGE>
SCHEDULE 'B'
DEFINITIONS
Where used in this Lease, the following words or phrases shall have the
meanings set forth in the balance of this Article.
"Additional Rent" shall mean all amounts (other than Basic Rent) due and
payable pursuant to the provisions of this Lease or pursuant to any other
obligation to Landlord, all of which shall be deemed to accrue on a per diem
basis. Tenant shall promptly deliver to Landlord upon request evidence of due
payment of all payments of Additional Rent required to be paid by Tenant
hereunder.
"Building" means 2121 Argentia Road, Mississauga, Ontario.
"Business Hours" means normal business hours for the Project as determined
by Landlord from time to time.
"Charged" means levied, confirmed, charged, assessed or imposed.
"Common Facilities" means all areas, facilities, systems, improvements,
furniture, fixtures and equipment in or on the Project to the extent that the
same are designated or intended by Landlord to be part of the Common Facilities
from time to time.
"Event of Default" means the occurrence of any one of the following:
(i) Tenant fails to make any payment of Rent when due and such default
continues for five (5) days after such payment was due;
(ii) Tenant fails to observe or perform any obligation of Tenant pursuant
to this Lease other than the payment of any Rent, and such default
continues for fifteen (15) days, or such shorter period as expressly
provided herein, after notice thereof to Tenant;
(iii) Tenant fails to install and maintain in the Premises at all times
during the Term, in good order and condition, first-class trade
fixtures including furnishings and equipment adequate and appropriate
for the business to be conducted on the Premises;
(iv) any of Landlord's insurance policies on the Project are actually or
threatened to be cancelled or adversely changed as a result of any use
of or articles on or about the Premises;
(v) Tenant shall purport to make a Transfer affecting the Premises, or the
Premises shall be used by any person or for any purpose, other than in
compliance with this Lease;
(vi) Tenant or any other occupant of the Premises makes an assignment for
the benefit of creditors or becomes bankrupt or insolvent or takes the
benefit of any statute for bankrupt or insolvent debtors or makes any
proposal or arrangement with creditors, or Tenant makes any sale in
bulk of any property on the Premises (other than in conjunction with a
Transfer approved in writing by Landlord and made pursuant to all
applicable legislation), or steps are taken for the winding up or
other termination of Tenant's existence or liquidation of its assets;
(vii) a trustee, receiver, receiver-manager, or similar person is appointed
in respect of the assets or business of Tenant or any other occupant
of the Premises;
(viii) Tenant attempts to or does abandon the Premises or remove or dispose
of any goods from the Premises, so that there would not be sufficient
goods on the Premises subject to distress to satisfy all arrears of
Rent and all Rent payable hereunder for a further period of at least
six (6) months, or, subject to section 4 of Schedule F, attached to
this Lease, if the Premises are vacant or unoccupied for a period of
two (2) consecutive days or more without the prior written consent of
Landlord or if the Premises are used for any purposes other than as
set out in section 3.6 of the Lease;
(ix) this Lease or any other property of Tenant is at any time seized or
taken in execution which remains unsatisfied for a period of five (5)
days or more;
(x) termination or re-entry by Landlord is permitted under any provision
of this Lease or at law;
"Excess Costs" means costs in the nature of Operating Costs, such as
utilities charges, (excluding the costs of heating, ventilating and
air-conditioning, provided Tenant gave landlord not less than twenty-four (24)
hours notice of its need for heating, ventilating and air conditioning outside
Business Hours), security costs incurred by reason of the conduct of business on
the Premises outside Business Hours (which is not permitted without Landlord's
prior consent), or by reason of the particular use of occupancy of the Premises
or any of the Common Facilities by Tenant, its employees, agents or
<PAGE>
-2-
persons having business with Tenant, in excess of the costs which would
otherwise have been incurred for such items, plus fifteen percent (15%) of the
amount thereof.
"Fiscal Year" means the period used by Landlord for fiscal purposes in
respect of the Project, as selected by Landlord from time to time.
"Insured Damage" means damage against which Landlord is insured or required
to be insured pursuant hereto.
"Landlord" means the Landlord named on page 1 and includes any owner,
mortgagee and every indemnity, exclusion or release of liability and waiver of
subrogation contained in this Lease for the benefit of Landlord shall extend to
and benefit all of Landlord's, owners' and mortgagees' officers, directors,
servants, agents, employees, and others for whom any of them is in law
responsible. Solely for such purpose, and to the extent that Landlord expressly
chooses to enforce the benefits of this section for the foregoing persons, it is
agreed that Landlord is the agent or trustee for such persons.
"Laws" means all statutes, regulations, by-laws, orders, rules,
requirements and directions of all governmental authorities having jurisdiction.
"Leasehold Improvements" includes, without limitation, all fixtures,
installations, alterations and additions from time to time made or installed in
or about the Premises, and includes all of the following, whether or not they
are trade fixtures or easily removable: doors, partitions and hardware;
mechanical, electrical and utility installations; carpeting, drapes, other floor
and window coverings and drapery hardware; heating, ventilating,
air-conditioning and humidity control equipment; lighting fixtures; built-in
furniture and finishings; counters in any way connected to the Premises or to
any utility services located therein. The only exclusions from "Leasehold
Improvements" are free-standing furniture, trade fixtures and equipment not in
any way connected to the Premises or to any utilities systems located therein.
"Mortgages" means any mortgages, trust deeds and charges affecting the
Project or any part thereof and includes all renewals, extensions, modifications
and replacements thereof from time to time.
"0perating Costs" means all expenses and costs of every kind incurred by or
on behalf of Landlord in operating, maintaining, repairing, replacing, insuring
and managing (collectively called "Operating") the Project, including without
limitation and without duplication: (i) remuneration of employees engaged in
Operating the Project; (ii) heating, ventilating, air-conditioning and humidity
control of the Project and fire sprinkler maintenance and monitoring, if any, of
the Project; (iii) cleaning, janitorial services, window cleaning and waste
removal; (iv) Operating elevators and escalators; (v) costs of supplying
utilities to the Project including, water, gas, electricity and sewer charges
(excluding Utilities charged to individual tenants) including costs of such
utilities, fittings, connections and meters and all other work in connection
therewith; (vi) landscaping and Operating outside areas, including snow and ice
clearing and removal and salting of driveways and parking areas and of sidewalks
adjacent to the Project; (vi) depreciation or amortization of any capital costs
and interest on undepreciated or unamortized capital cost at two (2%) percent in
excess of the prime rate of interest; (vii) costs incurred by Landlord for the
purpose of reducing Operating Costs or Taxes, whether or not successful; (viii)
capital taxes in respect of Landlord's ownership or other interest in the
Project, or any similar tax charged in the future in lieu thereof or in addition
thereto by any governmental authority, which Landlord may be liable to pay; (ix)
Sales Taxes payable by Landlord on the purchase of goods and services included
in Operating Costs; (x) the rental value of space occupied by Landlord for
management, supervisory or administrative purposes relating to the Project; and
(xi) a management fee of five (5%) percent of gross amounts received or
receivable by Landlord in respect of the Project for all items, including all
such items as are included in this Lease as Rent.
"Operating Costs" shall exclude or shall be reduced by the following: (i)
proceeds of insurance and damages received by Landlord from third parties to the
extent of costs otherwise included in Operating Costs; (ii) contributions from
parties other than tenants of the Project, if any, in respect of Operating
Costs, such as contributions made by parties for sharing the use of Common
Facilities, but not including rent or fees charged directly for the use of any
Common Facilities such as parking fees and rent for Storage Areas; (iii)
expenses incurred by Landlord in respect of other tenants' leasehold
improvements; (iv) repairs or replacements to the extent that the cost of the
same is recovered by Landlord pursuant to original construction warranties; and
(v) repairs or replacements to the structural portions of the Building, as
determined by Landlord's structural engineer.
"Premises" shall extend from the upper surface of the structural subfloor
to the lower surface of the structural ceiling within the boundaries of the
useable area of the Premises. The Premises shall exclude the exterior faces of
all perimeter walls, windows and doors of the Premises, notwithstanding the
manner in which Rentable Area is measured.
"Project" means those lands described in Schedule "A" hereto and all
structures, improvements, equipment, fixtures and facilities located thereon
from time to time, as all of same may be expanded, reduced or otherwise altered
by Landlord from time to time.
<PAGE>
-3-
"Proportionate Share" means a fraction the numerator of which is the
Rentable Area of the Premises and the denominator of which is the aggregate
Rentable Area of leasable areas within the Project, or such portion of the
Project to which Landlord shall allocate such items of which Tenant is required
to pay the Proportionate Share.
"Rentable Area" of the Premises or any Leasable Areas shall be: (i) with
respect to premises comprising a full floor leased pursuant to one lease, the
Useable Area of such premises; and (ii) with respect to premises which are less
than a full floor, the Useable Area of such premises plus the relevant
proportion, as determined by Landlord acting reasonably, of the area of all or
any portion of the Common Facilities not included in any leased area. Every
Rentable Area and Useable Area shall be as determined by the Landlord from time
to time and such determination shall be conclusive and binding.
"Rules" means the rules and regulations made by Landlord from time to time
(and as amended) for the management and operation of the Project.
"Sales Taxes" means all business transfer, multi-stage sales, sales, use,
consumption, value-added or other similar taxes imposed by any taxing authority
upon Landlord, Tenant, or in respect of this Lease, or the payments made by
Tenant hereunder or the goods and services provided by Landlord hereunder
including, the rental of the Premises and the provision of administrative
services to Tenant hereunder.
"Storage Areas" means all areas designated by Landlord from time to time to
be used exclusively or primarily for storage purposes.
"Taxes" means all taxes, rates, duties, levies, fees, charges, local
improvement rates, commercial concentration taxes, levies and assessments
whatever ("Taxes") levied, assessed or charged against or in respect of the
Project or any part thereof or against Landlord in respect of any of the same or
in respect of any rental or other compensation receivable by Landlord in respect
of the same, and including all taxes which may be incurred by or imposed upon
Landlord or the Project in lieu of or in addition to the foregoing including,
without limitation, any Taxes on real property rents or receipts as such any
Taxes based in whole or in part on the value of the Project and any licence f6e
measured by rents or other charges payable by occupants of space in the Project.
"Tenant" includes any of its employees, servants, agents, invitees,
licensees, subtenants, concessionaires, contractors or persons for whom Tenant
is in law responsible.
"Transfer" means an assignment of this Lease in whole or in part, a
sublease, licence or parting with or sharing possession of all or any part of
the Premises, a sale, conveyance or other disposition of this Lease, including a
mortgage, charge, debenture, a sale, transfer (including by bequest or
inheritance) of the majority of the issued shares in the capital stock or any
transfer, issuance or division of any shares of the corporation or of any
affiliate of the corporation sufficient to transfer control to others than the
then present shareholders of the corporation; a party making a Transfer is
referred to as a "Transferor" and a party taking a Transfer is referred to as a
"Transferee."
"Uninsured Damage" means any damage which is not Insured Damage.
"Utility Costs" means all costs of supplying water, electricity, gas, and
any other utilities ("Utilities") to or in respect of the Premises, and all
costs for all fittings, connections and meters and all work performed in
connection with any services or Utilities provided to the Premises.
<PAGE>
SCHEDULE 'C'
RULES AND REGULATIONS
1. Tenant agrees:
(i) not to display anything visible from the exterior of the Premises
except for a building standard sign on the main entry door to the
Premises, to be installed by Landlord at Tenant's cost;
(ii) not to allow any garbage to accumulate in or about the Project and
will at all times keep the Premises in a clean and neat condition and
to comply with Landlord's regulations respecting the storage and
removal of waste;
(iii) not to cause or permit any waste or damage to the Premises nor permit
any overloading of the floors thereof and shall not use or permit to
be used any part of the Promises for any dangerous, noxious or
offensive activity or goods and shall not do or bring anything or
permit anything to be done or brought on or about the Project which
results in undue noise or vibration, fumes or odours or which Landlord
may reasonably deem to be hazardous or a nuisance or annoyance to any
other tenants or any other persons permitted to be on the Project, and
Tenant shall immediately take steps to remedy, remove or desist from
any activity, equipment or goods on the Premises to which Landlord
objects on a reasonable basis. Tenant shall take every reasonable
precaution to protect the Premises and the Project from risk of damage
by fire, water or the elements or any other cause;
(iv) not to permit any of its employees, servants, agents, contractors or
persons having business with Tenant, to obstruct any Common Facilities
or use or permit to be used any Common Facilities for other than their
intended purposes;
(v) not to use any advertising, transmitting or other media or devices
which can be heard, seen, or received outside the Premises, or which
could interfere with any communications or other systems outside the
Premises;
(vi) to be solely responsible for any contaminant, pollutant or toxic
substance at any time affecting the Premises resulting from any act or
omission of Tenant or any other person on the Premises or any activity
or substance on the Premises during the Term, and any period prior to
the Term during which the Premises were used or occupied by or under
the control of Tenant, and shall be responsible for the clean-up and
removal of any of the same and any damages caused by the occurrence,
clean-up or removal of any of the same, and Tenant shall indemnify
Landlord in respect thereof;
(vii) to ensure that all deliveries to and from the Premises, and loading
and unloading of goods, merchandise, refuse, materials and any other
items, shall be made only by way of such areas as Landlord may from
time to time designate and shall be subject to all applicable rules
and regulations made by Landlord from time to time pursuant hereto;
(viii) to comply with all rules and regulations from time to time made by
Landlord in respect of window coverings on the interior of the
Premises, in order to maximize the efficiency of the climate control
equipment in or serving the Premises or to maintain an attractive
uniform appearance of the Project from the exterior thereof;
(ix) to discontinue immediately upon Landlord's request any business or
conduct which may harm or tend to harm the business or reputation of
Landlord or reflect or tend to reflect unfavourably on the Project,
Landlord or other tenants or occupations thereof, or which might
confuse or mislead or tend to confuse or mislead the public;
(x) to keep the Premises in a good state of preservation and cleanliness
and permit Landlord or its agents at all reasonable times to enter
upon the Premises for the purpose of examining the said state of
cleanliness;
(xi) to maintain the Premises, at its expense, in a clean, orderly and
sanitary condition and free of insects, rodents, vermin and other
pests;
(xii) to cause its employees, agents and contractors to park only in the
parts of the Common Areas and Facilities, if any, designated by
Landlord as employee parking;
(xiii) not use the plumbing facilities for any other purposes than those
for which they are constructed;
(xiv) not use any part of the Premises for lodging, sleeping or any illegal
purposes.
<PAGE>
-2-
(xv) not cause or permit any machines selling merchandise or rendering
services to be present on the Premises;
(xvi) not permit on the Premises any transmitting device or erect an aerial
on any exterior walls of the Premises or any of the Common Areas and
Facilities or other audio-visual or mechanical devices that can be
seen outside the Premises.
2. Any damage caused to any part of the Project by reason of windows being left
open or by interference with the heating or air-conditioning appliances, or by
reason or any other misconduct or neglect upon the part of Tenant or any other
person or servant under its control shall be repaired and borne by Tenant.
3. No moving of any furniture or fixtures shall take place without making prior
arrangements with Landlord.
4. Tenant shall not do or permit anything to be done to the Premises or bring or
keep anything therein which will in any way increase risk of fire or the rate of
fire insurance on the Project or obstruct or interfere with the rights of other
tenants or in any other way injure or annoy them or Landlord, or violate any act
at variance with the Laws or with any insurance upon the Project, or any part
thereof, or violate or act in conflict with any of the rules and ordinances of
the Board of Health or with any statute or municipal by-law.
5. Landlord may at any time and from time to time during the tem of the Lease
keep the entrance doors to the Project locked after business hours and request
identification before admitting persons after such time.
6. The parking of cars in the parking facilities will be subject to the
regulations of Landlord.
<PAGE>
SCHEDULE 'D'
ALTERATIONS
Tenant shall not make any repairs, replacements, changes, additions,
improvements, decorations or alterations (hereinafter in this Schedule 'D'
referred to as "Alterations") to the Premises without Landlord's prior written
consent, which consent shall not be unreasonably withheld, except in the case of
structural, mechanical or electrical Alterations or Alterations which are
visible from the exterior of the Project in which case Landlord's consent may be
unreasonably withheld.
2. With its request for Landlord's consent, Tenant shall submit to Landlord
details of the proposed Alterations including plans and specifications prepared
by qualified architects ("Plans"), and such Alterations shall be completed in
accordance with such Plans approved in writing by Landlord.
3. Unless expressly authorized in writing by Landlord to the contrary, all
Alterations which might cost in excess of $10,000.00 to complete or which might
affect the structure or entrance or mechanical or electrical systems of the
Project or the Premises, shall be conducted under the supervision of a qualified
architect or engineer approved by Landlord, such approval not to be unreasonably
withheld.
4. All Alterations shall be performed at Tenant's cost, promptly and in a good
and workmanlike manner and in compliance with Landlord's rules and regulations,
by competent contractors or workmen who shall be first approved in writing by
Landlord, which approval shall not be unreasonably withheld and, to the extent
required by Landlord, all Alterations shall be performed by Landlord, or persons
designated by Landlord, and under Landlord's supervision; for all Alterations
performed by Landlord or at Landlord's expense or under Landlord's supervision,
Tenant shall pay forthwith upon request all amounts paid or payable by Landlord
to third parties and all reasonable charges of Landlord for its own personnel
plus 15% of such amounts and charges for Landlord's inspection and supervision.
5. All Alterations shall be planned and completed in compliance with all Laws
and Tenant shall, prior to commencing any Alterations, obtain at its expense,
all necessary permits and licences and provide evidence thereof satisfactory to
Landlord.
6. Tenant shall, prior to the commencement of any such Alterations, furnish to
Landlord at Tenant's expense such evidence as reasonably required by Landlord of
the projected cost of Alterations and Tenant's ability to pay for same as and
when due, together with such indemnification against costs, liens and damages as
Landlord shall reasonably require including, if required by Landlord, a
performance bond in such terms and issued by such company as shall be acceptable
to Landlord in its sole discretion in an amount at least equal to the estimated
cost of such Alterations, guaranteeing completion within a reasonable time of
such Alterations free and clear of any liens or encumbrances.
7. All Alterations, the making of which might disrupt other tenants or occupants
of the Project or the public, shall be performed outside Business Hours.
8. If Tenant performs any such Alterations without compliance with all of the
foregoing provisions of this Schedule "D", Landlord shall have the right to
require Tenant to remove such Alterations forthwith.
9. Tenant shall pay to Landlord forthwith upon request all of Landlord's
reasonable costs including, without limitation, fees of architects, engineers
and designers, incurred in dealing with Tenant's request for Landlord's
consent to any Alterations, whether or not such consent is granted, and in
inspecting and supervising any such Alterations and Landlord shall have the
right to require Tenant to pay Landlord a deposit on account of such costs as
a precondition to Landlord's granting such consent.
10. Tenant shall make all payments and take all steps as may be necessary to
ensure that no lien is registered against the Project or any portion thereof as
a result of any work, services or materials supplied to Tenant or the Premises.
Tenant shall cause any such registrations to be discharged or vacated
immediately after notice from Landlord, or within ten (10) days after
registration, whichever is earlier. Tenant shall indemnify and save harmless
Landlord from and against any liabilities, claims, liens, damages, costs and
expenses, including legal expenses, arising in connection with any work,
services or materials supplied to Tenant or the Premises. If Tenant fails to
cause any such registration to be discharged or vacated as aforesaid then, in
addition to any other rights of Landlord, Landlord may, but shall not be obliged
to, discharge the same by paying the amount claimed into court, and the amounts
so paid and all costs incurred by Landlord, including legal fees and
disbursements, shall be paid by Tenant to Landlord forthwith upon demand.
<PAGE>
SCHEDULE 'E'
This Security Agreement dated the 3rd day of September, 1996.
BETWEEN:
TRANSFORMATION PROCESSING INC. (hereinafter called "Tenant") - and -
ROYAL TRUST CORPORATION OF CANADA, as Trustee
(hereinafter called "Landlord")
WHEREAS:
(i) Tenant and Landlord have entered into a lease dated the 3rd
day of September, 1996 ("Lease") respecting certain premises
being Suite 200 ("Premises") at the project known as 2121
Argentia Road, Mississauga, Ontario; and
(ii) To induce Landlord to enter into the Lease with Tenant, Tenant
agreed to enter into this Security Agreement and to give to
Landlord the Security Interest set out herein:
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
whereof is hereby acknowledged by Tenant, Tenant hereby agrees as follows:
1. Tenant hereby grants to Landlord a security interest ("Security Interest") in
the Lease and all of its personal property of any kind including, without
limiting the generality of the foregoing, all goods, chattels, trade fixtures,
furniture, equipment, inventory, stock-in-trade, chattel paper, instruments,
documents of title, supplies, securities, the business and undertaking on the
Premises, accounts receivable, book debts, sublease rents and all licence fees,
intangibles and all proceeds derived from dealing with any of the foregoing
(herein collectively called "Collateral") which are or may be at any time
hereafter on the Premises or elsewhere, to secure the payment of all amounts and
performance of all obligations to be respectively paid and performed by Tenant
to or for the benefit of Landlord including, without limitation, the payment of
all Rent and the fulfilment of the other obligations of Tenant under the Lease
and any amendments thereto from time to time. Except for the Security Interest,
Tenant agrees that all Collateral on the Premises shall be the unencumbered
property of Tenant. Tenant agrees that the Security Interest shall attach to the
Collateral forthwith upon the execution hereof and that, to the extent necessary
to give full effect to this Security Agreement, this Security Agreement is
intended to constitute a Security Agreement as defined in the Personal Property
Security Act (Ontario). This Security Agreement is separate from and shall
survive the termination, expiry or disclaimer of the Lease.
2. On default by Tenant under the Lease, Landlord may itself or by its agents or
employees, or by a receiver or any replacement thereof appointed in writing by
Landlord, take possession of the Collateral, carry on the business on the
Premises, in such manner as Landlord or such receiver determines, and realize
upon the Collateral and enforce its rights under the Security Interest by any
remedy or proceedings authorized or permitted hereby or at law including,
without limitation, all rights and remedies available to a secured party under
the Personal Property Security Act (Ontario) and any other similar statutes;
included in such rights of Landlord is the right to recover the reasonable
expenses of retaking, holding, repairing, processing, preparing for disposition
and disposing of the Collateral and all other reasonable expenses, including
legal costs, incurred by Landlord. Landlord may exercise any rights as provided
by this Security Agreement on the Premises and for such purpose may lock the
Premises, change any locks on the Premises and by any means exclude Tenant from
all or any parts of the Premises and Landlord shall not thereby be terminating
the Lease in the absence of express written notice terminating the Lease.
3. This Security Interest shall not be deemed to have been satisfied, discharged
or redeemed by reason of Tenant not being indebted to Landlord at any time or
from time to time and no payment shall reduce the amount secured by this
Security Interest except to the extent expressly approved by Landlord in
writing.
4. This Security Interest is given in addition to, and not as an alternative to,
and may be exercised by Landlord without prejudice to, any other rights of
Landlord under the Lease or at law including, without limitation, Landlord's
right of distress.
5. "Rent", as used herein, means all amounts of any kind whatever payable by
Tenant to Landlord pursuant to the Lease; provided that for the purposes of the
Personal Property Security Act (Ontario) and any other similar statutes, all
Rent falling due after any particular point in time shall be deemed to be future
advances.
6. This Security Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
successors, and assigns.
7. Tenant acknowledges the suggestion of Landlord that, before executing this
Security Agreement, Tenant should obtain independent legal advice.
<PAGE>
-2-
Tenant did obtain independent legal advice.
TRANSFORMATION PROCESSING, INC.
Per: /s/ Gary G. McCann
--------------------------------------------
Name: Gary G. McCann
Title: President and Chief Operating Officer
Per:
--------------------------------------------
Name:
Title:
I/We have authority to bind the Corporation
<PAGE>
SCHEDULE "F"
SPECIAL PROVISIONS
1. Early Access Period
Provided this Lease is fully executed and delivered to Landlord by no later than
September 9, 1996 and Landlord's Work is substantially completed (which Landlord
agrees to commence upon execution of this Lease and thereafter continue to
complete as expeditiously as reasonably possible), Tenant shall be permitted
non-exclusive access on September 16, 1996, in common with Landlord and its
agents, to perform Tenant's Work ("Early Access Period"). Tenant acknowledges
that during this Early Access Period, Landlord may be completing of Landlord's
Work and Tenant agrees not to interfere with such completion. Tenant agrees that
during this Early Access Period, Tenant shall be bound by all of the provisions
of this Lease, including, without limitation, all of Tenant's covenants set out
in Article III and that prior to Tenant having access to the Premises, Tenant
shall deliver to Landlord the certified copies of Tenant's insurance policies as
contemplated in section 3.16(c) of this Lease. Notwithstanding the foregoing,
during the Early Access Period, Tenant shall not be required to pay Basic Rent,
Operating Costs or Taxes.
2. Signage
Landlord shall, at its expense, install a Building standard sign (which sign
shall bear the suite number of the Premises and one (1) name of the Tenant, in
accordance with the Landlord's uniform scheme of the Building) on: (i) the main
entry door of the Premises, and (ii) the front and rear Building directory
boards. Otherwise Tenant shall not erect, install or display any sign or display
on or visible from the exterior of the Premises.
3. Conditions to Tenant's Rights
Provided:
(a) Tenant pays the Rent and other sums payable hereunder and
performs each and every of the covenants, provisos and
agreements herein contained on the part of Tenant to be paid
and performed, punctually and in accordance with the
provisions of this Lease;
(b) Tenant has not become insolvent or bankrupt, and has not made
any assignment for the benefit of creditors and has not,
becoming bankrupt or insolvent, taken the benefit of any Act
now or hereafter in force for bankrupt or insolvent debtors;
(c) a petition in bankruptcy has not been filed against Tenant and
a receiving order has not been made against Tenant, and no
proceedings have been commenced respecting the winding-up or
termination of the existence of Tenant;
(d) no receiver or other person has taken possession or effective
control of the assets or business of Tenant or a substantial
portion thereof pursuant to any security or other agreement or
by any other means whatsoever, and there are no outstanding
writs of execution against Tenant,
(e) Tenant has not assigned the Lease or sublet or permitted a
change in occupancy of any portion or portions of the
Premises, and there has been no change in ownership of the
majority of the capital stock of Tenant and no change in the
name under which the business on the Premises is conducted;
and
(f) Tenant has continuously occupied all of the Premises for the
conduct of business in accordance with the terms of this
Lease;
then and only then shall the rights conferred under sections 4, 5 and 6 of this
Schedule '"F" be applicable.
4. Option to Extend
(a) Subject to section 3 above, Tenant shall have the option to extend
this Lease for one (1) further term of five (5) years (the "Extension Term").
Such extension shall be on the terms and conditions of Landlord's then current
standard form of lease for the Project, and (i) there shall be no further right
to extend after the expiry of the Extension Term, (ii) the Basic Rent shall be
such increased amount as determined pursuant to subsection (b) of this section,
and (iii) there shall be no tenant's allowance or rent-free period for the
Extension Term and the Premises shall be accepted by Tenant in "as is" condition
at the commencement of the Extension Term without Landlord being required to
perform any work. Such right to extend shall be exercisable by notice to
Landlord by not later than six (6) months, and not earlier than twelve (12)
months, prior to the expiry of the original Term hereof, failing which such
right shall be null and void and forever extinguished.
<PAGE>
-2-
(b) The Basic Rent for the Extension Term shall be the greater of (i) the
Basic Rent payable hereunder in respect of the twelve (12) months immediately
preceding the commencement of the Extension Term, and (ii) the market rent for
the Premises ("Market Rent"). As used herein, "Market Rent" means the annual
rental which could reasonably be obtained by Landlord for the Premises from a
willing tenant or willing tenants dealing at arms' length with Landlord in the
market prevailing for a term commencing on the commencement date of the
Extension Term, having regard to all relevant circumstances including the size
and location of the Premises, the facilities afforded, the terms of the lease
thereof (including its provisions for Additional Rent), the condition of the
Premises and the extent and quality of the improvements therein (disregarding
Tenant's trade fixtures and also disregarding any deficiencies in the condition
and state of repair of the Premises as a result of Tenant's failure to comply
with its obligations hereunder in respect of the maintenance and repair of the
Premises) and the use of the Premises and having regard to rentals currently
being obtained for space in the Building and for comparable space in other
buildings comparably located. The Market Rent for the Extension Term shall be as
agreed upon between Landlord and Tenant or, failing agreement by Landlord and
Tenant by not later than three (3) months prior to the expiry of the Term
hereof, the Market Rent shall be established in the manner set out in subsection
(c) of this section. In the event that the Basic Rent payable during the
Extension Term has not been determined prior to the commencement of the
Extension Term, then until such determination has been made Tenant shall pay
Basic Rent at a rate equal to one hundred and fifty (150%) percent of the Basic
Rent payable during the last year of the original Term hereof. Upon
determination of the Basic Rent for the Extension Term either Landlord shall pay
to Tenant any excess, or Tenant shall pay to Landlord any deficiency, in the
payments of Basic Rent previously made by Tenant.
(c) Either Landlord or Tenant (the "Requesting Party") shall be entitled to
notify the other party hereto (the "Receiving Party") of the name of an expert
for the purpose of determining the Market Rent. Within fifteen (15) days after
such notice from the Requesting Party, the Receiving Party shall notify the
Requesting Party either approving the expert proposed by the Requesting Party or
naming another expert for the purpose of determining the Market Rent. Should the
Receiving Party fail to give notice to the Requesting Party within the said
fifteen (15) day period, the expert named in the notice given by the Requesting
Party shall perform the expert's functions hereinafter set forth. If Landlord
and Tenant are unable to agree upon the selection of the expert within fifteen
(15) days after such notice from the Receiving Party to the Requesting Party,
then either party shall be entitled to apply to a court to appoint an expert in
the same manner as an arbitrator may be appointed by a court under the
Arbitrations Act of Ontario. The expert appointed, either by Landlord and/or
Tenant or by a court, shall be qualified by education, experience and training
to value real estate for rental purposes in the Province of Ontario and have
been ordinarily engaged in the valuation of real property in the municipality in
which the Project is located for at least the immediately preceding five (5)
years. Within thirty (30) days after being appointed the expert shall make a
determination of the Market Rent for the Extension Term, without receiving
evidence from either Landlord or Tenant. The cost of such determination shall be
borne by the Tenant. The determination of the expert as to the Market Rent shall
be conclusive and binding upon Landlord and Tenant and not subject to appeal.
5. Tenant's Right to Cease Operations on the Premises
Provided Tenant is not in default beyond the applicable cure period, if any,
expressly provided for in this Lease, and provided Tenant has given Landlord not
less than two (2) months prior written notice, it shall not be considered an
"Event of Default' if the Premises are vacant and unoccupied for a period in
excess of two (2) consecutive days.
6. Early Termination Right
Subject to section 3 above of this Schedule "F", provided Tenant has given
Landlord at least nine (9) months prior written notice (the "Termination
Notice"), Tenant shall have the right (the "Termination Right") to terminate
this Lease effective at the expiration of the thirty-sixth (36th) month of the
Term (the "Termination Date"). Such termination shall only be effective if
Tenant has:
(a) paid to Landlord by certified cheque contemporaneously with
providing the Termination Notice an amount (the "Termination Payment") equal to
Four Dollars and Sixty Cents ($4.60) per square foot of Rentable Area of
Premises (plus GST); and
(b) on or before the Termination Date, deliver to Landlord vacant
possession of the Premises in accordance with the and subject to the terms of
this Lease.
7. Parking
During the Term, Landlord agrees that it shall not charge Tenant or its
visitors a fee for the use of the parking areas that form part of the Common
Facilities.
8. Building Facilities and Access
(a) Subject to sections 7.3 of this Lease and Landlord's reasonable
rules and regulations, maintenance procedures and security requirements, Tenant,
its employees and agents, shall be
<PAGE>
-3-
permitted access to the Premises and to at least one (1) Building elevator,
twenty-four (24) hours per day, seven (7) days per week, three hundred
sixty-five (365) days per year. Outside Business Hours, it is anticipated that
access shall be by means of keys to the entrance door. The initial set of keys
are to be issued and paid for by Landlord, provided, however, that any
replacement locks and keys requested by Tenant will be provided at its expense.
(b) Tenant shall be entitled to install and maintain at its sole cost
and expense any new or updated security, access or video-conferencing systems in
the Premises as it deems necessary or advisable, subject to Landlord's approval,
which approval shall not be unreasonably withheld or delayed and provided
further that Landlord shall at all times have means of access to the Premises.
9. Letter of Credit
(a) The Tenant hereby delivers to the Landlord an irrevocable and
unconditional letter of credit issued by a Schedule 1 Canadian chartered bank in
the amount of $32,232.15 for a term of one (1) year commencing October 1, 1996.
Such letter of credit shall be in such form as is approved in writing in advance
by the Landlord and shall be, and shall state that it is, transferrable by the
Landlord to any assignee of this Lease, or any purchaser of the property, from
the Landlord, which transfer shall be valid and effective upon notice thereof to
the issuer of the letter of credit.
(b) The said letter of credit shall be held by the Landlord as security
for: (i) the due and punctual payment of all rent and all other amounts of any
kind whatsoever payable under this Lease by the Tenant whether to the Landlord
or otherwise in respect of the Premises; (ii) the prompt and complete
performance of all obligations contained in this Lease on the part of the Tenant
to be kept, observed and performed, and (iii) the indemnification of the
Landlord in respect of any losses, costs or damages incurred by the Landlord
arising out of any failure by the Tenant to pay any rent or other amounts
payable under this Lease or resulting from any failure by the Tenant to observe
or perform any of the other obligations contained in this Lease.
(c) If at any time during the term of the letter of credit the Tenant
defaults in the payment of any rent or other amounts payable under this Lease or
in the performance of any of its other obligations under this Lease, then the
Landlord at its option may, in addition to any and all other rights and remedies
provided for in this Lease or at law, draw down the full amount of the letter of
credit, less any reduction thereof as set out above, whereupon the proceeds
thereof may be applied by the Landlord, at its option, either as liquidated
damages in compensation for the money spent by the Landlord with respect to the
demised premises, or towards the payment of all rent and other amounts payable
by the Tenant under this Lease and the performance of all other obligations of
the Tenant under this Lease and all losses, costs and damages incurred by the
Landlord in respect thereof. If Landlord draws down the letter of credit, Tenant
shall within twenty-four (24) hours thereafter deliver to Landlord a replacement
letter of credit in an amount equal to the amount drawn down by Landlord.
(d) The rights of the Landlord hereunder in respect of the letter of
credit shall continue in full force and effect and shall not be waived,
released, discharged, impaired or affected by reason of the release or discharge
of the Tenant in any receivership, bankruptcy, insolvency, winding-up or other
creditors proceedings, including, without limitation, any proceedings under the
Bankruptcy and Insolvency Act (Canada) or the Companies Creditors Arrangement
Act (Canada), or the surrender, disclaimer, repudiation or termination of this
Lease in any such proceedings and shall continue with respect to the periods
prior thereto and thereafter as if the Lease had not been surrendered,
disclaimed, repudiated or terminated.
(e) The letter of credit shall be, and shall state that it is, payable
to the Landlord upon delivery to the issuer of a certificate of the Landlord
that there has been failure in payment of rent or any other amounts or in the
performance of any other obligations of the Tenant pursuant to this Lease, and
shall be without any conditions attached to payment.
<PAGE>
This Security Agreement dated the 3rd day of September, 1996.
BETWEEN:
TRANSFORMATION PROCESSING INC.
(hereinafter called "Tenant")
- and -
ROYAL TRUST CORPORATION OF CANADA, as Trustee
(hereinafter called "Landlord")
WHEREAS:
(i) Tenant and Landlord have entered into a lease dated the 3rd
day of September, 1996 ("Lease") respecting certain premises
being Suite 200 ("Premises") at the project known as 2121
Argentia Road, Mississauga, Ontario; and
(ii) To induce Landlord to enter into the Lease with Tenant, Tenant
agreed to enter into this Security Agreement and to give to
Landlord the Security Interest set out herein:
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
whereof is hereby acknowledged by Tenant, Tenant hereby agrees as follows:
1. Tenant hereby grants to Landlord a security interest ("Security Interest") in
the Lease and all of its personal property of any kind including, without
limiting the generality of the foregoing, all goods, chattels, trade fixtures,
furniture, equipment, inventory, stock-in-trade, chattel paper, instruments,
documents of title, supplies, securities, the business and undertaking on the
Premises, accounts receivable, book debts, sublease rents and all licence fees,
intangibles and all proceeds derived from dealing with any of the foregoing
(herein collectively called "Collateral") which are or may be at any time
hereafter on the Premises or elsewhere, to secure the payment of all amounts and
performance of all obligations to be respectively paid and performed by Tenant
to or for the benefit of Landlord including, without limitation, the payment of
all Rent and the fulfilment of the other obligations of Tenant under the Lease
and any amendments thereto from time to time. Except for the Security Interest,
Tenant agrees that all Collateral on the Premises shall be the unencumbered
property of Tenant. Tenant agrees that the Security Interest shall attach to the
Collateral forthwith upon the execution hereof and that, to the extent necessary
to give full effect to this Security Agreement, this Security Agreement is
intended to constitute a Security Agreement as defined in the Personal Property
Security Act (Ontario). This Security Agreement is separate from and shall
survive the termination, expiry or disclaimer of the Lease.
2. On default by Tenant under the Lease, Landlord may itself or by its agents or
employees, or by a receiver or any replacement thereof appointed in writing by
Landlord, take possession of the Collateral, carry on the business on the
Premises, in such manner as Landlord or such receiver determines, and realize
upon the Collateral and enforce its rights under the Security Interest by any
remedy or proceedings authorized or permitted hereby or at law including,
without limitation, all rights and remedies available to a secured party under
the Personal Property Security Act (Ontario) and any other similar statutes;
included in such rights of Landlord is the right to recover the reasonable
expenses of retaking, holding, repairing, processing, preparing for disposition
and disposing of the Collateral and all other reasonable expenses, including
legal costs, incurred by Landlord. Landlord may exercise any rights as provided
by this Security Agreement on the Premises and for such purpose may lock the
Premises, change any locks on the Premises and by any means exclude Tenant from
all or any parts of the Premises and Landlord shall not thereby be terminating
the Lease in the absence of express written notice terminating the Lease.
3. This Security Interest shall not be deemed to have been satisfied, discharged
or redeemed by reason of Tenant not being indebted to Landlord at any time or
from time to time and no payment shall reduce the amount secured by this
Security Interest except to the extent expressly approved by Landlord in
writing.
4. This Security Interest is given in addition to, and not as an alternative to,
and may be exercised by Landlord without prejudice to, any other rights of
Landlord under the Lease or at law including, without limitation, Landlord's
right of distress.
5. "Rent", as used herein means all amounts of any kind whatever payable by
Tenant to Landlord pursuant to the Lease; provided that for the purposes of the
Personal Property Security Act (Ontario) and any other similar statues, all Rent
falling due after any particular point in time shall be deemed to be future
advances.
6. This Security Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
successors, and assigns.
<PAGE>
-2-
7. Tenant acknowledges the suggestion of Landlord that, before executing this
Security Agreement, Tenant should obtain independent legal advice.
Tenant did obtain independent legal advice.
TRANSFORMATION PROCESSING, INC.
Per: /s/ Gary G. McCann
------------------------------------
Name: Gary G. McCann
Title: President and Chief Operating Officer
September 10, 1996
Per:
------------------------------------
Name:
Title:
I/We have the authority to bind the Corporation
<PAGE>
Exhibit 10.7
SOFTWARE CONVERSION AGREEMENT
THIS SOFTWARE CONVERSION AGREEMENT is effective as of this day of
, 19 and is entered into between Transformation Processing Inc.
("TPI"), a corporation having its principal place of business at the address set
forth below, and _______________ (the "Customer"), having a place of business
at the address set forth below.
RECITALS
A. The Customer has certain software libraries, data and applications (the
"Customer Applications") which execute on the computer system described in
Schedule A (the "Source Computer System").
B. The Customer wants to hire TPI to provide software conversion services that
allow the Customer Applications") to execute on the target computer system
described in Schedule B (the "Target Computer System").
C. TPI uses an automated process to perform the conversion service. The
software that is converted through the automated process is called the
"Processed Software."
D. Software that cannot be converted through the automated process will have
to be converted manually. The software that is converted by manual process
is called (the "Rewritten Software").
E. Processed Software and Rewritten Software and collectively called the
"Converted Software".
F. The Customer's Converted Software will only execute on the Target Computer
System in conjunction with certain software function support licensed by
TPI (the "Deployment Products").
G. Customer's Applications are described in Schedule C.
AND WHEREAS the Customer wants to hire TPI to provide the conversion
services described in this contract and have the remarketing rights for the
Deployment Products, subject to the execution of a Deployment Product License
Agreement or Deployment Product Royalty Agreement between TPI and the Customer.
NOW THEREFORE THE PARTIES AGREE AS FOLLOWS:
1. AUTOMATED CONVERSION: TPI agrees to convert the Customer Applications
described in Schedule C so that it will execute on the Target Computer
System and to deliver the Processed Software and/or Converted Software to
the Customer. In consideration of
<PAGE>
these conversion services, the Customer agrees to pay TPI the fees on the
dates described in Schedule F.
2. MANUAL CONVERSION: TPI intends to use an automated process to convert the
Customer Applications referred to in Schedule C. Schedule D refers to
certain software code associated with the Customer Applications which are
not capable of being converted by TPI's automated process. When the
Customer executes Schedule D and delivers it to TPI, Schedule D will
become part of this Agreement. TPI agrees to manually convert the code
described in that Schedule and deliver the Rewritten Software to the
Customer. In consideration of these services, the Customer agrees to pay
TPI the fees on the dates described in Schedule D. If the Customer elects
to produce the Rewritten Software itself, the Customer alone shall be
responsible for the integration of the Processed Software with the
Rewritten Software (together the "Converted Software") and for the
performance of the whole system together, and TPI shall provide no support
to the Customer in this regard unless otherwise agreed to by TPI in
writing,
3. DEPLOYMENT PRODUCT LICENSE: The Processed Software and the Rewritten
Software (together the "Converted Software") will only execute when used in
conjunction with certain software function support supplied by TPI (the
"Deployment Products").
The Deployment Products include software functionality for a computer
called a Server ("Server Software"). The Deployment Products also include
software functionality which accommodates end user access to that
functionality provided by the Server Software ("Client Software"). The
Deployment Products are available under license from TPI for a specified
number of concurrent users for both the Server Software and Client Software
as specified in Schedule B. The license grants the Customer to install one
(1) copy of the Server Software on the computer called a Server and to
install the Client Software on the Customer's computers and workstations
licensed under the Deployment Product License Agreement or Deployment
Product Royalty Agreement. The Customer agrees that it will only use the
Converted Software after execution of a TPI standard Deployment Product
License Agreement or Deployment Product Royalty Agreement for the
Deployment Products. The Customer may resell or install the Converted
Software on more than one (1) computer system provided that a separate
Deployment Product License Agreement or Deployment Product Royalty
Agreement for the Deployment Products is executed between the parties.
4. THIRD PARTY LICENSES: The Customer acknowledges that it may be necessary
to add certain third party software processes and programs during the
conversion process or to use such processes and programs during the
execution of the Converted Software. In the event that the Customer is not
the sole owner of the Customer Applications, the Customer shall be
responsible for obtaining a license to use such processes and programs on
the Target Computer System.
--
<PAGE>
5. SUPPORT: Subject to the terms of this agreement, TPI will provide the
Customer with the following support services for the Processed Software or
Converted Software and/or Deployment Products:
(a) TPI will provide advice and assistance in the use of the Processed
Software and/or Converted Software and Deployment Products; and
(b) TPI will use all reasonable efforts to correct any defect in the
execution of the Processed Software and/or Converted Software and
Deployment Products.
The support services will be provided by telephone (with long distance
charges payable by the Customer) during regular business hours of the TPI
office providing support services.
The Customer must be willing to assist TPI with additional information or
provide access to the Customer Applications which TPI may reasonably
request. During the first ninety (90) days following the delivery to the
Customer, there will be no charge for the support services. Thereafter,
there will be no charge for the support services if the support fees
identified in the Deployment Products License Agreement or Deployment
Product Royalty Agreement are current. Otherwise, TPI shall be entitled to
charge the Customer for support time at TPI's applicable hourly rate.
Charges will apply if TPI is asked to resolve problems caused by the
Customer not operating the Processed Software and/or Converted Software and
Deployment Products as described in the user manual, "online" documentation
and/or TPI provided materials, or when TPI determines that the cause of the
problem is by nature the responsibility of the Customer.
Any supplemental software code and/or updates provided to the Customer as
part of the Support Services shall be considered part of the Converted
Software or the Deployment Products and are subject to the terms and
conditions of this Agreement. With respect to technical information
Customers provide to TPI as part of the Support Services, TPI may use such
information for its business purposes, including product support and
development.
The Customer is expected to be familiar with the operating systems that the
Converted Software and Deployment Products execute under, the third-party
database management system used for data storage, and any other third-party
software utilized. TPI may charge the Customer for any support services
(whether during the first ninety (90) days or otherwise) which arise out of
the Customer's misunderstanding of the Target Computer System as described
in Schedule B.
6. INABILITY TO DO CONVERSIONS: If TPI determines that it is unable to provide
the Processed Software or Converted Software to the Customer, TPI may
refund all monies received from the Customer under this agreement and
return the software and data files submitted
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<PAGE>
for conversion whereupon this agreement shall terminate, the Customer shall
cease all further use of the Converted Software and each party shall have
no liability or obligation of any nature to the other.
7. CODE LINES TO BE CONVERTED: The fees charged for the conversion services as
specified in the agreement have been established relying on the quantity
and character of the executable code, without comments, to be converted on
an automated basis (as specified in Schedule C) and a rewritten basis (as
specified in Schedule D). Any difference between the actual quantity and
character of the code specified in this contract will entitle TPI to revise
its fees (as per its published fee schedule) for the Processed Software,
and Rewritten Software.
8. CURRENCY. TAXES AND PAYMENT TERMS. All references in this agreement to
dollars are expressed in Canadian currency except where otherwise noted and
all amounts payable to TPI shall be paid in Canadian dollars. The
conversion fees do not include any taxes or duties which, if applicable,
will be billed in addition to the conversion fees and shall be payable by
the Customer upon invoice. All amounts owing under this agreement which
are not paid when due shall bear interest at the lesser of the highest rate
permitted at law and the Prime Rate plus 2% per annum until paid in full.
The Prime Rate shall be the rate of interest per annum charged from time to
time during the currency of this agreement by the Bank of Montreal (the
"Bank") for demand loans in Canadian funds made at the main branch of the
Bank in Toronto, Ontario CANADA (and if at any time there is more than one
such prime commercial lending rate of the Bank, the Prime Rate shall be the
highest prime commercial lending rate of the Bank.
9. OBLIGATIONS OF THE CUSTOMER: The Customer agrees to deliver the software to
be converted under this Agreement to TPI as object code, source code and
data. The Customer represents and warrants to TPI that the Customer has
the right to convert the Customer's software as contemplated in this
agreement. If the Customer is not the owner of the software being
converted, the Customer may require a license from the owner of the
software to convert and execute the software under the Target Computer
System and the Customer shall be responsible for obtaining such licenses.
10. CONFIDENTIAL INFORMATION: Both parties acknowledge that the Customer
Applications, software ideas, concepts, know-how and techniques employed by
each other in performing the conversion services (the "Confidential
Information") are trade secrets which required substantial efforts to
create and develop. Both parties acknowledge that each other may provide
confidential software and information which is clearly marked as
confidential by the respective party (the "Confidential Information").
Each party agrees to use the Confidential Information of the other in
confidence with the same degree of care it uses with its own Confidential
Information (using at least a reasonable standard of care) and not to
disclose such Confidential Information in any form whatsoever except to
those of its employees and subcontractors who have a need to use the same
in the normal
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<PAGE>
course of their work and who have agreed to abide by the provisions of this
Agreement. Neither party shall acquire any ownership rights or other
rights relating to the other party's Confidential Information or other
property as a result of the execution or performance of this contract and
regardless of whether the Customer's software and the software used by TPI
both appear in the Converted Software.
11. RETENTION OF COPIES: TPI may, but is not required to, retain copies of the
software delivered by the Customer to TPI and the Converted Software as
evidence of the conversion services performed by TPI under this agreement.
If the Customer wants the return of this software, TPI will do so provided
that the Customer first executes a release prepared by TPI.
12. LIMITED WARRANTY: TPI shall give written notice (the "Delivery Notice") to
the Customer when TPI considers delivery of the Converted Software to the
Customer to have been completed. The Customer will be entitled to a refund
of all amounts paid to TPI trader this agreement if
(a) the Converted Software does not produce the same substantive output as
the Customer's original Customer Applications and if the Customer
gives written notice of such defect to TPI within thirty (30) days
following delivery of the Delivery Notice describing the defect with
sufficient precision to enable TPI to recreate or simulate such defect
(and failing the delivery of such notice), the Customer shall be
deemed to have accepted the Converted Software;
(b) TPI fails to remedy the defect within ninety (90) days following the
Delivery Notice; and
(c) the Customer discontinues use of the Converted Software and returns
copies of the Converted Software and System Software within ninety
(90) days following delivery of the Delivery Notice.
The term "substantive output" means the results produced by the software
when it is executed and not the manner or format in which those results are
presented (unless the manner or format in which those results are presented
materially reduces the usefulness of the Converted Software to the
Customer). The Customer acknowledges that any defect in the Customer
Applications will not be remedied by the conversion services provided under
this agreement and that TPI does not contract to make good any such defect
unless specifically agreed to in writing by TPI.
TPI does not offer any warranty with respect to the Converted Software or
its installation other than the right to obtain a refund in the
circumstances specifically described above.
TPI DISCLAIMS ALL OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING
BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE AND THE WARRANTY AGAINST LATENT DEFECTS, WITH RESPECT TO
THE
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<PAGE>
CONVERTED SOFTWARE WITHOUT LIMITING THE GENERALITY OF THE FOREGOING. TPI
MAKES NO REPRESENTATION OF WARRANTY:
WITH RESPECT TO THE CHARACTERISTICS OF EXECUTION OF THE CONVERTED SOFTWARE
(a) (EXCLUDING RESPONSE TIME, CHARACTERISTICS OF USE OF MACHINE TIME AND
OTHER OPERATING FUNCTIONS WITH ANY PARTICULAR EQUIPMENT);
(b) THAT THE FUNCTIONS CONTAINED IN THE CONVERTED SOFTWARE WILL SATISFY
ALL THE NEEDS OF THE CUSTOMER, OR
(c) THE OPERATION OF THE CONVERTED SOFTWARE WILL ALWAYS BE ERROR FREE OR
UNINTERRUPTED OR THAT ALL DEFECTS AND PROGRAMMING ERRORS IN THE
CONVERTED SOFTWARE WILL BE DETECTED OR CORRECTED.
13. RESPONSIBILITY OF THE CUSTOMER: The Customer is the only party responsible
for the use of the Converted Software for the Customer's activities. The
Customer agrees to use the necessary verification controls and operating
techniques to satisfy its needs with respect to error detection, security,
back-up and restart in case of failure or destruction of the Customer's
original software or the Converted Software or any of the customer's files
and data, whether the same occurs during or after conversion. The Customer
agrees to keep one (1) copy of all material delivered to TPI and to bear
the risk of loss, damage or theft of any material delivered to TPI. TPI
strongly recommends that the Customer test the Converted Software before
operation with the Customer's software or data.
14. EXCLUSION OF LIABILITY: IN NO EVENT SHALL TPI OR ITS SUPPLIERS BE LIABLE
FOR ANY LOSS OR DAMAGE WHATSOEVER, INCLUDING, WITHOUT LIMITATION, DAMAGES
FOR LOSS OF REVENUE OR PROFITS, BUSINESS INTERRUPTION, LOSS OF SOFTWARE OR
INFORMATION, FAILURE TO REALIZE EXPECTED SAVINGS OR ANY OTHER PECUNIARY
LOSS OF ANY NATURE WHATSOEVER INCLUDING INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGE, EVEN IF TPI HAS BEEN ADVISED OF THE POSSIBILITY OF SAME, RESULTING
FROM USE OF, OR INABILITY TO USE, THE CONVERTED SOFTWARE, FROM ANY SERVICE
PROVIDED UNDER THIS AGREEMENT, FROM ANY DELAY IN THE SUPPLY OF SUCH
SERVICE OR FROM ANY OMISSION TO DO SO BY TPI, ITS SUBSIDIARIES,
AFFILIATES, EMPLOYEES, AGENTS, OFFICERS OR DIRECTORS, OR ANY OTHER PARTY
FOR WHICH TPI MAY BE RESPONSIBLE AT LAW. SOME JURISDICTIONS DO NOT ALLOW
THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY.
IN NO EVENT SHALL THE TOTAL LIABILITY OF TPI TO THE CUSTOMER FOR ALL
DAMAGES. LOSSES AND CAUSES OF ACTION UNDER ANY LEGAL THEORY (INCLUDING,
WITHOUT LIMITATION, CONTRACT, FUNDAMENTAL BREACH OR BREACH OF A FUNDAMENTAL
TERM, TORT OR NEGLIGENCE) EXCEED THE AMOUNTS PAID BY THE CUSTOMER TO TPI
UNDER THIS AGREEMENT DURING THE YEAR PRECEDING THE MAKING OF THE CLAIM.
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<PAGE>
15. INDEMNIFICATION BY THE CUSTOMER: The Customer agrees to defend TPI against
any action, suit or claim against TPI by any third party resulting from use
of the Converted Software by the Customer, from use of any Customer
provided data or computer program by TPI, from the conversion of any
software or data files supplied by the Customer to TPI, from any service
provided under this Agreement, from any delay in the supply of such
services or from any omission to do so. The Customer agrees to indemnify
and hold TPI harmless from and against all damages, liabilities, losses and
expenses, including reasonable attorney's fees and all court costs,
incurred by TPI as a result of any such action, suit or claim.
16. TERMINATION: The parties shall be entitled to terminate this agreement if
either party fails to abide by any of the terms and conditions of this
agreement and such failure continues for ten (10) days after written notice
to remedy such failure. This agreement will automatically terminate
without notice if either party becomes bankrupt or insolvent, or makes an
assignment for the benefit of its creditors, or if a liquidation order is
made against either party or if either party takes advantage of any statue
relating to insolvency. bankruptcy or arrangements with creditors. Upon
termination of this agreement, the Customer shall cease all further use of
the Converted Software and return to TPI all originals and all
reproductions of the Converted Software in its possession or control and
any notes relating thereto. Instead of such return TPI may, at its option,
require the Customer to destroy such originals, reproductions and notes,
and provide TPI with satisfactory evidence of such destruction. Those
provisions of this agreement which by their nature arc intended to survive
the termination of this agreement (including, without limitations, sections
10, 12, 14 and 15) shall survive the termination of this agreement.
17. NOTICE: Any notice required or permitted under this agreement shall be
given to the address for notice set out below or to such other address of
which notice is given. Such notice may be given by personal delivery
(including courier delivery), prepaid mail or facsimile. Such notice shall
be considered received on the date of actual receipt at the address for
notice.
18. ASSIGNMENT: This agreement can only be assigned with the prior written
consent of TPI and upon the conditions stipulated by TPI.
19. OTHER TERMS: This agreement sets forth the entire understanding between the
parties, relating to the subject matter hereof and there are no agreements,
promises, representations or understandings between the parties other than
as set forth herein. No amendment or modification of this agreement shall
be effective unless in writing and signed by the parties to his agreement.
No term, covenant or condition of this agreement shall be deemed to have
been waived by either party to this agreement unless such waiver is in
writing, and then such waiver shall apply only to the specific event or
circumstances described in such waiver. This agreement shall be governed
by laws in force at the Customer's address for notice set below. The
section headings in this agreement are for
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<PAGE>
convenience of reference and do not affect the meaning of sections. This
agreement shall enure to the benefit of, and be binding upon, the parties
hereto and their respective legal personal representatives, successors and
permitted assigns.
20. LANGUAGE: The parties hereto have requested that this agreement be drafted
in English. Les parties aux presents ont exige que le present contrat soit
redige en langue anglaise.
IN WITNESS WHEREOF THE PARTIES HAVE SIGNED THIS AGREEMENT AS OF THE DATE
STATED ON PAGE ONE HEREOF BY THEIR OFFICERS DULY AUTHORIZED AS THEY SO DECLARE.
Transformation Processing Inc.
- -----------------------------------
Name of Customer (Please Print)
By: By:
-------------------------------- --------------------------------
Signature Signature
- ----------------------------------- -----------------------------------
Name of Signing Officer (Please Print) Name of Signing Officer (Please Print)
- ----------------------------------- -----------------------------------
Title Title
- ----------------------------------- Transformation Processing Inc.'s
Customer's Address for Notice: Address for Notice:
2121 Argentia Road, Suite 200
- ----------------------------------- Mississauga, Ontario
CANADA L5N 2X4
- -----------------------------------
Telephone:_________________________ Telephone: (905) 817-7907
Facsimile:_________________________ Facsimile: (905) 812-7920
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<PAGE>
SCHEDULE A
SOURCE COMPUTER SYSTEMS
CPU
System Serial # Model Memory Disk
------ -------- ----- ------ ----
Example
TERMINALS
Manufacturer
Name M/C Type Model Local /Remote/Interface Type
---- -------- ----- ----------------------------
Example
PRINTERS
Manufacturer
Name M/C Type Model Local /Remote/Interface Type
---- -------- ----- ----------------------------
Example
TAPE DRIVES
Manufacturer
Name M/C Type Model Local /Remote/Interface Type
---- -------- ----- ----------------------------
Example
OPERATING SYSTEM
Operating System Version
---------------- -------
Example
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<PAGE>
COMPILER VERSION
Compiler System Version
--------------- -------
Example
OTHER VERSION
Other System Version
------------ -------
Example
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<PAGE>
SCHEDULE C
CUSTOMER APPLICATION
The Customer Applications may be Submitted in a soft-copy media format by
initialing here:
Language #Programs/Objects Total Lines
OCL
CL
RPGII
RPGII-1/2
RPGIII
COBOL
BASIC
DFU
FMT
Other
- --------------------- ------------ ----------------- ------------- -------------
File/Member Name No. Of Records Total Megabytes Source Type Description
- --------------------- ------------ ----------------- ------------- -------------
- --------------------- ------------ ----------------- ------------- -------------
- --------------------- ------------ ----------------- ------------- -------------
- --------------------- ------------ ----------------- ------------- -------------
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<PAGE>
SCHEDULE D
REWRITTEN SOFTWARE
If this Schedule D is executed by the Customer and delivered to TPI, Schedule D
will become part of this Agreement. TPI agrees to perform the following
Rewritten Software conversions associated ,with the Processed Software and the
Customer agrees, to pay the fees described below:
- ---------------------------------------- --------------------------------------
Description of Code to be
Manually Converted Rewritten Software Fee
- ---------------------------------------- --------------------------------------
TO BE DEFINED INCLUDED IN $75,000.00 CONVERSION FEE
- ---------------------------------------- --------------------------------------
- ---------------------------------------- --------------------------------------
- ---------------------------------------- --------------------------------------
- ---------------------------------------- --------------------------------------
Payment Terms:
The Rewritten Software fee does not include any taxes or duties which, if
applicable, will be billed in addition to these fees and shall be payable by the
Customer upon invoice.
The Customer agrees that TPI will perform the Rewritten Software conversions
described above and that the Customer will pay the fee as provided above.
Date:____________________________ _______________________________
Name of Customer (Please Print)
By:____________________________
(Signature)
_______________________________
Name of Signing Officer (Please Print)
_______________________________
Title
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<PAGE>
SCHEDULE E
PRICE AND TERMS OF PAYMENT
The fees and terms of payment under this agreement are as follows:
1. Conversion Services
Conversion Fees: The fees to be paid to TPI for the conversion and
development services provided under this Agreement (the "Conversion Fees") are
as follows:
For conversion of the Source Computer Applications Software: $75,000.00
For the development of the Rewritten Software: $ 0.00
The fees referred to for the Rewritten Software apply only if the
Customer has elected to have TPI develop the Manual Software (see
Schedule D).
B. Payment Terms: The Conversion Fees shall be paid to TPI's follows:
1. Phase 1: For services during a ninety (90) day proof of concept which
includes conversion of approximately 260,000 lines of source computer
applications. Payment terms are $8,000.00 payable to TPI on May 1,
1997; $8,000.00 payable to TPI on June 1, 1997; and $9,000.00 payable
upon Customer acceptance of Phase I.
(ii) Phase 2: For services to convert approximately 2,.550,000 lines of
source computer applications payment terms are S10,000.00 per month
payable at the end of each of the first five (5) months of Phase 2.
All fee quoted exclude applicable taxes which will be invoiced and are due
coincident with the fee schedule as documented.
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<PAGE>
Exhibit 10.8
PROFESSIONAL SERVICES AGREEMENT
THIS AGREEMENT is made as of the (the "Effective Date") between TRANSFORMATION
PROCESSING INC., a corporation whose head office is situated in Mississauga,
Ontario ("TPI") and ("Customer").
BACKGROUND:
A. Customer has a requirement for certain computer-related services as more
particularly set out in the Statement of Services (the "Services").
B. TPI is a company which provides computer-related services including the
Services.
C. This Agreement sets out the terms and conditions upon which Customer will
obtain, and TPI will provide, the Services.
NOW THEREFORE, in consideration of the foregoing background and other good and
valuable consideration which each party hereto acknowledges receiving, Customer
and TPI agree as follows:
1. PROVISION OF SERVICES. Customer hereby engages TPI to provide, and TPI in
consideration of the amounts to be paid to it hereunder agrees to provide, the
Services in accordance with the terms of this Agreement. It is contemplated
that Customer's requirement for Services will evolve during the term of this
Agreement. TPI and Customer may enter into addenda to this Agreement in the
form set out from time to time to reflect changes to the Services.
2. MANAGEMENT AND REPORTING. The parties each agree to designate an
individual from their respective companies with adequate authority and full
technical competence to deal with matters relating to the performance of this
Agreement (each, being a "Project Manager"). Specifically, the Project Managers
will, on behalf of their respective parties, in accordance with the spirit of
this Agreement, use reasonable efforts to co-ordinate the performance of their
respective obligations pursuant to this Agreement.
3. CUSTOMER RESPONSIBILITIES. Customer shall make available, at no cost to
TPI, such resources as may be set out in the Services in the form set out and
attached to this Agreement.
4. FEES. The fees and the manner of payment for the provision of the Services
is detailed the Services attached.
5. OWNERSHIP OF INTELLECTUAL PROPERTY. Customer acknowledges that TPI and/or
TPI's licensor, as applicable, are the owners of all intellectual property
rights in any software tools, related written materials, logos, names and other
support materials provided pursuant to this Agreement. Subject to Services,
Customer expressly acknowledges that all intellectual property rights resulting
from TPI's performance under this Agreement shall be the property of TPI and
Customer agrees to sign, and to cause its employees to sign, such documentation
as requested by TPI to confirm such ownership.
6. LIMITATION OF LIABILITY. The limitation of liability provisions of this
Agreement reflect an informed voluntary allocation of the risks (known and
unknown) that may exist in connection with the provision and performance of the
Services hereunder by TPI and Customer acknowledges that such voluntary risk
allocation represents a material part of the agreement reached between TPI and
Customer. Should TPI be in breach of any obligation, Customer agrees that
Customer's remedies will be limited to those set forth in this Agreement. No
action, regardless of form, arising out of this Agreement may be brought by
Customer more than 12 months after
<PAGE>
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the facts giving rise to the cause of action have occurred, regardless of
whether those facts by that time are known to, or reasonably ought to have been
discovered by, Customer.
(a) DIRECT DAMAGES ONLY. Subject to the restrictions in this Section 6 and
subject to Customer's election, if so entitled in law, to rescind or be
discharged from this Agreement, in the event of any breach by TPI of its
obligations under this Agreement, including any breach of a fundamental
term or a fundamental breach, Customer's exclusive remedy shall be to
receive from TPI payment for actual and direct damages to a maximum amount
equal to the amount paid hereunder by Customer to TPI in the three (3)
months' prior to the time that the applicable cause of action arose; less
the amount of any damages already paid or to which Customer is or may be
entitled by reason of any claim arising out of a breach (including
fundamental breach) by TPI of this Agreement, or otherwise, whether based
in contract, tort (including negligence), or otherwise.
(b) NO INDIRECT DAMAGES, ETC. IN NO EVENT, WHETHER BASED IN CONTRACT, TORT OR
OTHERWISE, SHALL TPI BE LIABLE FOR ANY CLAIM FOR: (A) PUNITIVE, EXEMPLARY,
OR AGGRAVATED DAMAGES; (B) DAMAGES FOR LOSS OF PROFITS OR REVENUE, FAILURE
TO REALIZE EXPECTED SAVINGS, BUSINESS INTERRUPTION, OR LOSS OF USE OR LACK
OF AVAILABILITY OF CUSTOMER FACILITIES, INCLUDING ITS COMPUTER RESOURCES
AND ANY STORED DATA; (C) INDIRECT, CONSEQUENTIAL OR SPECIAL DAMAGES; OR (D)
CONTRIBUTION OR INDEMNITY IN RESPECT OF ANY CLAIMS AGAINST CUSTOMER.
7. NO WARRANTY. Subject to the Services, all deliverables including Services
provided by TPI are provided "as is" without any representation, warranty or
condition of any kind, including but not limited to the implied warranties or
conditions of merchantability, fitness for a particular purpose,
non-infringement of third party rights, and those arising by statute or
otherwise in law or from a course of dealing or usage of trade. The entire risk
as to the quality and performance of the deliverables provided hereunder.
Should any deliverable prove defective, Customer (and not TPI nor any authorized
representative of TPI) assumes the entire cost of all necessary servicing,
repair or correction. Customer expressly acknowledges that neither TPI nor its
respective employees, agents and independent contractors have provided any
warranty or made any representation of any kind and have NOT represented or
warranted that the deliverables shall be sufficient or appropriate to allow
Customer to meet its specific needs. TPI does not warrant that your use of any
software provided hereunder will be uninterrupted or that the operation of any
software provided will be error-free or secure.
8. CONFIDENTIALITY. Each of TPI and Customer shall use reasonable efforts
(and, in any event, that are no less than the efforts used to protect its own
Confidential Information) to protect from disclosure such information that is
the Confidential Information of the other. Each of TPI and Customer shall
divulge such Confidential Information only to its employees or agents who
require access to it for the purposes of this letter agreement or as otherwise
provided in this letter agreement. "Confidential Information" means all data
and information relating to the business and management of either party,
including proprietary and trade secrets, and technology to which access is
obtained hereunder by the other party, provided, however, that Confidential
Information shall not include any data or information which: (i) is or becomes
publicly available through no fault of the other party; (ii) is already in the
rightful possession of the other party prior to its receipt from the other
party; (iii) is independently developed by the other party; (iv) is rightfully
obtained by the other party from a third party; (v) is disclosed with the
written consent of the party whose information it is; or (vi) is disclosed
pursuant to court order or other legal compulsion. Each party acknowledges and
agrees with the other party that the breach by it of this Section 8 would cause
serious and irreparable harm to the other party and which could not adequately
be compensated for in damages and in the event of a breach by a party of any of
such provisions, such party hereby consents to an injunction being issued
against it restraining it from any further breach of such provision, but such
action shall not be construed so as to be in derogation of any other remedy
which the other party may have in the event of such a breach.
9. TERMINATION.
(a) Either party shall have the right on notice to the other party to terminate
this Agreement if:
<PAGE>
-3-
(i) the other party should fail to pay an amount to the other when due
hereunder and such breach is not cured within thirty (30) days after
written notice of such is given to it by the other party;
(ii) the other party shall file a voluntary petition in bankruptcy or
insolvency or shall petition for reorganization under any bankruptcy
law (and such is not dismissed within ten (10) days);
(iii) the other party shall consent to involuntary petition in bankruptcy
or if a receiving order is given against it under the Bankruptcy and
Insolvency Act or the comparable law of any other jurisdiction (and
such is not dismissed within ten (10) days);
(iv) there shall be entered an order, judgment or decree by a court of
competent jurisdiction, upon the application of a creditor,
approving a petition seeking reorganization or appointing a
receiver, trustee or liquidator of all or a substantial part of the
other party's assets and such order, judgment or decree continues in
effect for a period of thirty (30) consecutive days; provided,
however, that such order, judgment or decree may remain in effect
for longer than such thirty (30) days, if the other party is
diligently appealing such order, judgment or decree; or
(v) the other party shall fail to perform any of the other material
obligations set forth in this Agreement and such default in the case
of a default which is remediable continues for a period of thirty
(30) days after written notice of such failure has been given by the
non-defaulting party.
(b) Notwithstanding Section 9(a), TPI may forthwith terminate this Agreement if
Customer is in breach of any of Sections 3, 5 and 8 of this Agreement. TPI
shall provide written notice of such termination as soon as practicable but
written notice shall not be a necessary prerequisite to such termination.
(c) Upon the termination of this Agreement, without prejudice to any other
rights which the parties may have:
(i) each party shall immediately deliver to the other any of the other's
Confidential Information provided hereunder (including the TPI's
software tools and any modifications or improvements thereto to TPI)
then in its possession or control, if any, and shall deliver a
corresponding officer's certificate;
(ii) each party shall refrain from further use of such Confidential
Information and Customer shall promptly sign such documentation
deemed necessary by TPI for the purpose of confirming the ownership
of its software tools and the intellectual property rights therein
(including any modifications or improvements thereto); and
(iii) Each party shall forthwith pay all sums owing to the other
hereunder.
10. SURVIVAL. The provisions of Sections 3, 4, 5, 6, 7, 8 and 9(c), and
Sections 10 to 17 shall survive the termination of this Agreement.
11. NON-SOLICITATION OF EMPLOYEES. During the term of this Agreement and for a
period of one (1) year thereafter, each of TPI and Customer agrees not to hire
or allow its respective affiliates to hire:
(a) any employee of the other party; or
(b) any person who was an employee of the other party during the previous six
(6) months, who was directly involved in the provision of deliverables or
any of the related services provided hereunder unless otherwise mutually
agreed to by the parties.
12. APPLICABLE LAW. This Agreement shall be interpreted, construed, and
governed by and in accordance with the laws of the Province of Ontario and the
federal laws of Canada applicable therein (other than any conflict of law rules
that would result in the choice of laws of another jurisdiction) and shall be
treated, in all respects, as an
<PAGE>
-4-
Ontario contract. The parties agree to submit to the non-exclusive jurisdiction
of the courts of Ontario. Customer has required that this Agreement and all
documents relating thereto be drawn-up in English. Les parties ont demande que
cette convention ainsi que tous les documents qui s'y rattachent soient rediges
en anglais. The parties expressly exclude the application of the United Nations
Convention on Contracts for the International Sale of Goods.
13. ENTIRE AGREEMENT. This Agreement and the Statement of Services attached
constitute the entire agreement between the parties pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, oral or written, between the parties.
14. FORCE MAJEURE. Dates and times by which TPI is required to render
performance under this Agreement shall be automatically postponed to the extent
and for the period that TPI is prevented from meeting them by reason of any
cause beyond its reasonable control, provided TPI notifies Customer of the
commencement and nature of such cause and uses its reasonable efforts to render
performance in a timely manner.
15. ASSIGNMENT, ETC. TPI may assign this Agreement, or any of its rights or
obligations hereunder, in whole or in part, subject to providing prior written
notice to Customer. Customer may assign this Agreement, or any of its rights or
obligations hereunder, in whole or in part, with the prior written consent of
TPI. This Agreement shall enure to the benefit of and be binding upon each of
Customer and TPI and their respective successors and permitted assigns.
16. MISCELLANEOUS. In the event that one or more of the provisions is found to
be illegal or unenforceable, this Agreement shall not be rendered inoperative
but the remaining provisions shall continue in full force and effect. Except as
otherwise provided herein, no term or provision hereof shall be deemed waived
and no breach excused unless such waiver or consent shall be in writing and
signed by the party claimed to have waived or consented. Any consent by any
party to, or waiver of, a breach by the other, whether expressed or implied,
shall not constitute a consent to, waiver of, or excuse for any other different
or subsequent breach.
17. NOTICE. Any notice or other communication (a "Notice") required or
permitted to be given, provided or made hereunder shall be in writing and shall
be well and sufficiently given or made if either delivered in person; or sent by
any electronic means of sending messages, including facsimile transmission which
produces a permanent paper record (an "Electronic Transmission"), charges
prepaid and confirmed by prepaid first class mail:
With Notice to TPI at: With Notice to Customer at:
2121 Argentia Road, Suite 200
Mississauga, Ontario
L5N 2X4
Telephone No. (905) 812-7907 Telephone No.
Telecopier No. (905) 812-7920 Telecopier No.
Attention: Douglas Woolridge Attention:
President & COO
Any Notice given or made in accordance with the above shall be deemed to have
been given or made and to have been received:
(i) on the Business Day following delivery, if delivered as aforesaid; and
<PAGE>
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(ii) on the day of sending if sent by Electronic Transmission during normal
Business hours of the addressee on a Business Day and, if not, then on the
first Business Day after the sending thereof.
Either Party may from time to time change its address to another address for
notice by giving Notice to the other Party in accordance with the provisions of
this Section. "Business Day" means any day from Monday to Friday inclusive,
except statutory or civic holidays observed in Ontario Canada.
IN WITNESS WHEREOF the Parties have duly executed this Agreement.
TRANSFORMATION PROCESSING INC.
By: /s/ Douglas Woolridge
------------------------------------------
DOUGLAS WOOLRIDGE, PRESIDENT & COO
COMPANY NAME
By: /s/
------------------------------------------
CONSIGNEE'S NAME/TITLE
<PAGE>
Exhibit 10.9
DEPLOYMENT PRODUCT
LICENSE AGREEMENT
THIS DEPLOYMENT PRODUCT LICENSE AGREEMENT is effective as of this th
day of , 199 and is entered into between TRANSFORMATION
PROCESSING INC. ("TPI"), a corporation having its principal place of business
at the address set forth below, and (the "User") having a place of business
at the address set forth below.
RECITALS
A. The User has certain software libraries, data and applications (the "User
Applications") which execute on the computer system described in Schedule A
(the "Target Computer System").
B. The User Applications use the technology licensed by TPI so that they will
execute under the Target Computer System.
C. The User Applications will only execute on the Target Computer System, in
conjunction with certain software function support licensed by TPI (the
"Deployment Products").
D. The execution of this license agreement is a condition of TPI providing the
User with the Deployment Products.
THE PARTIES HERETO AGREE AS FOLLOWS:
1. DELIVERY OF DEPLOYMENT PRODUCT: The Deployment Products include software
functionality for a computer called a Server ("Server Software"). The
Deployment Products also include software functionality that accommodates
end user access to that functionality provided by the Server Software
("Client Software"). The Deployment Products are available under license
from TPI for a specified number of concurrent users for both the Server
Software and Client Software as specified in Schedule B. The license
grants the User to install one (1) copy of the Server Software on the
computer called a Server and to install the Client Software on the User's
computer and workstations licensed under this Agreement.
2. SEPARATION OF COMPONENTS: The Deployment Products (Server Software and
Client Software) are licensed as a single product. The Deployment Products
and its component parts may not be separated for use by more than one (1)
User. The Deployment Products and its component parts may not be separated
for use on more than one (1) computer or server.
3. DEPLOYMENT PRODUCT LICENSE: There is an initial license fee and annual
support fees which must be paid under the Deployment Product License
Agreement, each of which is calculated in part on the number of concurrent
system users. The User may resell or install the
- --------------------------------------------------------------------------------
TRANSFORMATION PROCESSING INC. DATE DEPLOYMENT PRODUCT LICENSE AGREEMENT
<PAGE>
Deployment Products on more than one (1) computer or server provided that a
separate Deployment Product License Agreement is entered into for each such
installation.
(a) The Server Software and the components and their updates is
licensed for one (1) and the same Server.
(b) The Client Software and the components and their updates is
licensed for one (1) and the same client.
4. RESTRICTIONS: The User may only use the Deployment Products so long as
this license is in force. The User shall not:
(a) rent, lease, loan or distribute the Deployment Products; or
(b) use, copy, modify, merge or transfer the Deployment Products, or
any copy thereof, in whole or in part, except as expressly
provided in this agreement.
This license is restricted to the use of the Deployment Products in
conjunction with that number of concurrent system users on the computer
system described in Schedule A. If the User wishes to upgrade this license
to permit the use of the Deployment Products in conjunction with a larger
number of concurrent system users or on a system other than the computer
system described in Schedule A, TPI will upgrade this license upon payment
and execution of such supplementary license agreements.
5. SUPPORT: Subject to the terms of this agreement, TPI will provide the User
with the following support services for the Deployment Products:
(a) TPI will provide advice and assistance in the use of the
Deployment Products; and
(b) TPI will use all reasonable efforts to correct any defect in the
execution of the Deployment Products.
The support services will be provided by telephone (with long distance
charges payable by the User) during regular business hours of the TPI
office providing support services.
The User must be willing to assist TPI with additional information or
provide access to the User Applications which TPI may reasonably request.
During the first ninety (90) days following the delivery to the User, there
will be no charge for the support services. Thereafter, there will be no
charge for the support services if the support fees identified in the
Deployment Product License Agreement are current. Otherwise, TPI shall be
entitled to charge the User for support time at TPI s applicable hourly
rate. Charges will apply if TPI is asked to resolve problems caused by the
User not operating the Deployment Products as described in the user manual
"online" documentation and/or TPI provided materials or when TPI determines
that the cause of the problem is by nature the responsibility of the User.
Any supplemental software code and/or updates provided to the User as part
of the Support Services shall be considered part of the Deployment Products
and are subject to the terms and conditions of this Agreement. With
respect to technical information Users provide to TPI as part of the
Support Services, TPI may use such information for its business purposes,
including product support and development.
- --------------------------------------------------------------------------------
TRANSFORMATION PROCESSING INC. DATE DEPLOYMENT PRODUCT LICENSE AGREEMENT
<PAGE>
The User is expected to be familiar with the operating systems that the
Deployment Products execute under, the third-party database management
system uses for data storage, and any other third-party software utilized.
TPI may charge the User for any support services (whether during the first
ninety (90) days or otherwise) which arise out of the User's
misunderstanding of the Target Computer System as described in Schedule A.
6. LICENSES FEES: The User agrees to pay to TPI the one-time initial license
fee and the annual support fees described in Schedule B as the same become
due under this Agreement. The one-time initial license fee is due upon
execution of this Agreement. The first annual support fee is payable upon
execution of this Agreement. Subsequent annual support fees are due on
each anniversary of the date of this Agreement.
7. CURRENCY, TAXES AND PAYMENT TERMS: All references in this agreement to
dollars are expressed in U.S.A. currency except where otherwise noted and
all amounts payable to TPI shall be paid in U.S.A. dollars. The fees
payable under this Agreement do not include any taxes or duties which, if
applicable, will be billed in addition to the fees and shall be payable by
the User upon invoice. All amounts owing under this Agreement which are
not paid when due shall bear interest at the lesser of the highest rate
permitted at law and the Prime Rate plus 2% per annum until paid in full.
The Prime Rate shall mean the prime commercial lending rate of interest per
annum charged from time to time during the currency of this Agreement by
the Bank of Montreal (the "Bank") for demand loans in Canadian funds made
at the main branch of the Bank in Toronto, Ontario (and if at any time
there is more than one (1) such prime commercial lending rate of the Bank,
the Prime Rate shall be the highest prime commercial lending rate of the
Bank).
8. CONFIDENTIALITY: The User acknowledges that the Deployment Products and the
whole of the ideas, concepts, know-how and techniques contained therein
(collectively the "Confidential Information") are trade secrets which
required substantial efforts to create and develop. The User agrees not to
use the Confidential Information except as permitted under this Agreement.
The User may not reverse engineer, decompile, or disassemble the Deployment
Products, except and only to the extent that such activity is expressly
permitted by applicable law, notwithstanding this limitation. The User
agrees to hold the Confidential Information in confidence with the same
degree of care it uses with its own confidential information (using at
least a reasonable standard of care) and not to disclose such Confidential
Information in any form whatsoever except to those of its employees and
subcontractors who have a need to use the same in the normal course of
their work and who have agreed to abide by the provisions of this
Agreement.
9. DISCLAIMER OF WARRANTY: THE DEPLOYMENT PRODUCTS ARE PROVIDED "AS IS" AND
WITHOUT WARRANTY OF ANY KIND. TPI DISCLAIMS ALL WARRANTIES, EITHER EXPRESS
OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND THE WARRANTY
AGAINST LATENT DEFECTS; ANY WARRANTY AGAINST INFRINGEMENT WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, TPI MAKES NO WARRANTY: (A) WITH RESPECT
TO THE CHARACTERISTICS OF EXECUTION OF THE DEPLOYMENT PRODUCTS (INCLUDING
RESPONSE TIME, CHARACTERISTICS OF USE OF MACHINE TIME AND OTHER OPERATING
FUNCTIONS WITH ANY PARTICULAR EQUIPMENT); (B) THAT THE FUNCTIONS CONTAINED
IN THE DEPLOYMENT PRODUCTS WILL
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TRANSFORMATION PROCESSING INC. DATE DEPLOYMENT PRODUCT LICENSE AGREEMENT
<PAGE>
SATISFY THE NEEDS OF THE USER; (C) THAT THE OPERATION OF THE DEPLOYMENT
PRODUCT WILL BE ERROR FREE OR UNINTERRUPTED; OR (D) THAT DEFECTS AND
PROGRAMMING ERRORS IN THE DEPLOYMENT PRODUCTS WILL BE DETECTED OR
CORRECTED. NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY TPI OR A TPI
REPRESENTATIVE SHALL CREATE A WARRANTY OR IN ANY WAY INCREASE THE SCOPE OF
THIS WARRANTY. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED
WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY.
10. LIMITATION OF LIABILITY: UNDER NO CIRCUMSTANCES, INCLUDING NEGLIGENCE,
SHALL TPI OR ITS SUPPLIERS BE LIABLE FOR ANY LOSS OR DAMAGE WHATSOEVER THAT
RESULTS FROM THE USE OF OR INABILITY TO USE THE DEPLOYMENT PRODUCTS,
INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF REVENUE OR PROFITS,
BUSINESS INTERRUPTION, LOSS OF SOFTWARE OR INFORMATION, FAILURE TO REALIZE
EXPECTED SAVINGS OR ANY OTHER PECUNIARY LOSS OF ANY NATURE WHATSOEVER
INCLUDING INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES, EVEN IF TPI OR A TPI
REPRESENTATIVE HAS BEEN ADVISED OF THE POSSIBILITY OF SAME. SOME
JURISDICTIONS DO NOT ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY FOR
INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATION OR EXCLUSION
MAY NOT APPLY. IN NO EVENT SHALL THE TOTAL LIABILITY OF TPI TO THE USER
FOR ALL DAMAGES, LOSSES, AND CAUSES OF ACTION UNDER ANY LEGAL THEORY
(INCLUDING, WITHOUT LIMITATION, CONTRACT, FUNDAMENTAL BREACH OR BREACH OF A
FUNDAMENTAL TERM, TORT OR NEGLIGENCE) EXCEED THE AMOUNTS PAID BY THE USER
TO TPI UNDER THIS AGREEMENT DURING THE YEAR PRECEDING THE MAKING OF THE
CLAIM.
11. RESPONSIBILITY OF USER: The User is the only party responsible for the use
of the Deployment Products. The User agrees to use the necessary
verification controls and operating techniques to satisfy its needs with
respect to error detection, security, back-up and restart in case of
failure or destruction of the User s software, the Deployment Products or
any of the User s files and data. TPI strongly recommends that the User
test the Deployment Products before operation with the User s software and
data.
12. INDEMNIFICATION BY USER: The User agrees to defend TPI against any action,
suit or claim against TPI by any third party resulting from the use of, or
inability to use, the Deployment Products by the User and the User agrees
to indemnify and hold TPI harmless from and against all damages,
liabilities, losses and expenses, including reasonable attorney s fees and
all court costs, incurred by TPI as a result of any such action, suit or
claim.
13. TERM: This Agreement and the license granted hereunder shall come into
force upon execution of this Agreement and payment of the initial license
fee, and shall remain in force until this Agreement is terminated. The
User may terminate this Agreement at any time by discontinuing any further
use of the Deployment Products and returning to TPI all copies of the
Deployment Products. TPI shall be entitled to terminate this Agreement by
giving written notice of termination if the User fails to pay any amount
owing under this Agreement or fails to abide by any of the terms of this
agreement and such failure continues for ten (10) days after written notice
to remedy such failure is given. This Agreement will automatically
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TRANSFORMATION PROCESSING INC. DATE DEPLOYMENT PRODUCT LICENSE AGREEMENT
<PAGE>
terminate without notice if the User becomes bankrupt or insolvent, or
makes an assignment for the benefit of its creditors, or if a liquidation
order is made against the User or if the User takes advantage of any
statute relating to insolvency, bankruptcy, or arrangements with creditors.
Upon termination of this Agreement, the User shall cease all further use of
the Deployment Products and return to TPI all copies of the Deployment
Products in its possession or control. Instead of such return, TPI may, at
its option, require the User to destroy such copies and provide TPI with
satisfactory evidence of such destruction. Those provisions of this
Agreement which by their nature are intended to survive the termination of
this Agreement (including, without limitation, Sections 8, 9 and 11) shall
survive the termination of this Agreement.
14. NOTICE: Any notice required or permitted under this Agreement shall be
given to the address for notice set out below or to such other address of
which notice is given. Such notice may be given by personal delivery
(including courier delivery), prepaid mail or facsimile. Such notice shall
be considered received on the date of actual receipt at the address for
notice.
15. ASSIGNMENT: The license granted by this Agreement extends only to the User
and not to any other person, firm, partnership, corporation or other
entity, even if such may constitute a subsidiary or an affiliate of the
User. This Agreement can only be assigned with the prior written consent
of TPI and upon the conditions stipulated by TPI.
16. SOFTWARE TRANSFER: The User may permanently transfer all of the Users
rights under this Agreement, provided the User retains no copies, transfers
all of the Deployment Products (including all component parts, the media
and printed materials, any upgrades, and this Agreement), notice of the
User's name, company and address and the name, company and the address of
the company to whom the User is transferring the rights granted herein, and
the recipient agrees to the terms of this Agreement. If the Deployment
Products have been upgraded by TPI, any transfer must include all prior
versions of the Deployment Products. If the Deployment Products are
received as part of a subscription, any transfer must include all prior
deliverables of Deployment Products and all other subscription
deliverables.
17. OTHER TERMS: This agreement sets forth the entire understanding between
the parties relating to the subject matter hereof, and there are no
agreements, promises, representations or understandings between the parties
other than as set forth herein. No amendment or modification of this
agreement shall be effective unless in writing and signed by the parties to
this Agreement. No term, covenant or condition of this Agreement shall be
deemed to have been waived by either party to this Agreement unless such
waiver is in writing, and then such waiver shall only to the specific
event or circumstance described in such waiver. This Agreement shall be
governed by the laws in force at the User's address for notice set forth
below. The section headings in this Agreement are for convenience of
reference and do not affect the meaning of sections. This Agreement shall
enure to the benefit of, and be binding upon, the parties hereto and their
respective legal personal representatives, successors and permitted
assigns.
18. LANGUAGE: The parties hereto have requested that this agreement be drafted
in English. Les parties aux presentes ont exige que le present contrat
soit redige en langue anglaise.
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TRANSFORMATION PROCESSING INC. DATE DEPLOYMENT PRODUCT LICENSE AGREEMENT
<PAGE>
IN WITNESS WHEREOF THE PARTIES HAVE SIGNED THIS AGREEMENT AS OF THE DATE
STATED ON PAGE ONE HEREOF BY THEIR OFFICERS DULY AUTHORIZED AS THEY SO DECLARE.
USER TRANSFORMATION PROCESSING INC.
2121 Argentia Road
Suite 200
Mississauga, Ontario
Canada
L5N 2X4
By:________________________________ By:___________________________________
(Signature) (Signature)
___________________________________ ______________________________________
Name of Signing Officer (Please Print) Name of Signing Officer (Please Print)
___________________________________ ______________________________________
Title (Please Print) Title (Please Print)
___________________________________ TRANSFORMATION PROCESSING INC.
USER'S ADDRESS FOR NOTICE: ADDRESS FOR NOTICE:
2121 Argentia Road, Suite 200
Mississauga, Ontario
Same as above. Canada L5N 2X4
TELEPHONE: (919) 875-3095 TELEPHONE: (905) 812-7907
FACSIMILE: (919) 954-7135 FACSIMILE: (905) 812-7920
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TRANSFORMATION PROCESSING INC. DATE DEPLOYMENT PRODUCT LICENSE AGREEMENT
<PAGE>
SCHEDULE A
TARGET COMPUTER SYSTEMS
CPU
SYSTEM SERIAL # MODEL / MEMORY / DISK
----------------------------------------------------------------------
EXAMPLE
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
TERMINALS
MANUFACTURER
NAME M/C TYPE MODEL LOCAL /REMOTE/INTERFACE TYPE
----------------------------------------------------------------------
EXAMPLE
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
PRINTERS
MANUFACTURER
NAME M/C TYPE MODEL LOCAL /REMOTE/INTERFACE TYPE
----------------------------------------------------------------------
EXAMPLE
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
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TRANSFORMATION PROCESSING INC. DATE DEPLOYMENT PRODUCT LICENSE AGREEMENT
<PAGE>
TAPE DRIVES
MANUFACTURER
NAME M/C TYPE MODEL LOCAL /REMOTE/INTERFACE TYPE
----------------------------------------------------------------------
EXAMPLE
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
OPERATING SYSTEM
OPERATING SYSTEM VERSION
---------------------------
EXAMPLE
---------------------------
---------------------------
---------------------------
COMPILER VERSION
COMPILER SYSTEM VERSION
---------------------------
EXAMPLE
---------------------------
---------------------------
---------------------------
OTHER VERSION
OTHER SYSTEM VERSION
---------------------------
EXAMPLE
---------------------------
---------------------------
---------------------------
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TRANSFORMATION PROCESSING INC. DATE DEPLOYMENT PRODUCT LICENSE AGREEMENT
<PAGE>
SCHEDULE B
LICENSE FEES AND ANNUAL SUPPORT FEES
Based on the number of concurrent users identified in Schedule B (the "Target
Computer System"), the initial license fees and annual support fees payable to
TPI for the use of the Deployment Products granted under this Agreement are as
follows. Amounts are expressed in the U.S.A. currency.
1. DEPLOYMENT PRODUCTS INITIAL FEE
(a) SERVER SOFTWARE: A one-time initial license fee will be charged at a
rate of $695.00 per concurrent user. The total number of concurrent
users is identified as two (2).
The one-time initial license fee is $ 1390.00.
(b) CLIENT SOFTWARE: A one-time initial license fee will be charged at a
rate of $295.00 per concurrent user. The total number of concurrent
users is identified as two(2).
The one-time initial license fee is $ 590.00.
DEPLOYMENT PRODUCT SUPPORT FEE
(a) SERVER SOFTWARE: The annual support fee is charged at a rate of 15%
of the one-time initial license fee. The first payment is due upon
execution of this Agreement. Subsequent payments are due on each
Anniversary Date of this Agreement.
The annual support fee is $ 208.50.
(b) CLIENT SOFTWARE: The annual support fee is charged at a rate of 10% of
the one-time initial license fee. The first payment is due upon
execution of this Agreement. Subsequent payments are due on each
Anniversary Date of this Agreement.
The annual support fee is $ 59.00.
The one-time initial license fee and annual support fees do not include any
taxes or duties which, if applicable, will be charged in addition to those fees
set out in this Agreement
Prices are subject to change with thirty (30) days prior written notice.
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TRANSFORMATION PROCESSING INC. DATE DEPLOYMENT PRODUCT LICENSE AGREEMENT
<PAGE>
Exhibit 10.10
SYSTEM SOFTWARE LICENSE AGREEMENT
THIS SYSTEM SOFTWARE LICENSE AGREEMENT is effective as of this _____
DAY of ______________, 19___ and is entered into between Transformation
Processing Inc. ("TPI"), a corporation having its principal place of business at
the address set forth below, and _________________ (the "User") having a place
of business at the address set forth below.
RECITALS
A. The User has certain software libraries which execute on the computer
system described in Schedule "A" (the "Original System").
B. The User's software libraries have been converted (the "Converted
Software") using theTransform/3X technology licensed by TPI so that they
will execute under UNIX on the computer system described under Schedule "B"
(the "Target UNIX System").
C. The Converted Software will only execute on the Target UNIX System if it is
executed in conjunction with certain function support software (the "System
Software") and a hardware key (the "Key") to be provided by TPI.
D. The execution of this license agreement is a condition of TPI providing the
User with the System Software and Key.
THE PARTIES HERETO AGREE AS FOLLOWS:
1. DELIVERY OF SYSTEM PRODUCT: Upon the execution of this agreement and
payment to TPI of the initial fee described below, TPI will provide the
User with a copy of the System Software, a Key which enables one copy of
the System Software to execute on the Target UNIX System and a copy of the
documentation (the "Documentation") made available by TPI for use by
licensed users of the System Software. In this agreement, the System
Software, Key and Documentation are collectively referred to as the "System
Product". The User may only use the System Product on the terms and
conditions contained in this agreement and so long as the license granted
under this agreement is in force.
2. LICENSE: TPI grants to the User, and the User accepts, a personal,
non-transferable and non-exclusive right to use the System Product, subject
to the terms of this agreement. The User may (a) use the System Product
only on a single Target UNIX System, (b) modify those functions of the
System Software delivered by TPI to the User in source code, and (c) copy
the System Software into any machine readable form for back-up purposes
only. Title to the System Product, including copyright and other property
rights therein, will not pass to the User. The User does not acquire any
interest or right in or to the System Product, except the right to use and
copy the same strictly in accordance with the provisions of this agreement.
The User agrees to reproduce any copyright, trade-mark, ownership,
confidentiality or other similar notices contained on the System Product on
any copy of the System Product.
3. RESTRICTIONS: The User may only use the System Product so long as this
license is in force. The User shall not (a) rent, lease, loan or distribute
the System Product, (b) reverse engineer, decompile or disassemble the
System Software or Key, (c) use, copy, modify, merge or transfer the System
Product,
- --------------------------------------------------------------------------------
SYSTEM LICENSE 1 TRANSFORMATION PROCESSING INC.
<PAGE>
or any copy thereof, in whole or in part, except as expressly provided in
this agreement. The User acknowledges and agrees that the System Product
and license are restricted to the execution of software which previously
executed on the Original System and which was converted using the
Transform/3X technology to execute on the Target UNIX System. This license
is restricted to the use of the System Product in conjunction with that
number of concurrent system users on the Target UNIX System described in
Schedule "B". If the User wishes to upgrade this license to permit the use
of the System Product in conjunction with a larger number of concurrent
system users or on a system other than the Target UNIX System, TPI will
upgrade this license upon payment of TPI's upgrade fee and execution of
such supplementary license agreement as TPI may require. Any upgrade of
this license to include a system other than the Target UNIX System is
subject to the availability of appropriate porting and other software
necessary to achieve such upgrade. It may also be necessary for the User to
obtain a license from the owner of the software which previously executed
on the Original System to execute the Converted Software on the Target UNIX
System.
4. SUPPORT: If the User encounters problems in using the System Product, TPI
recommends that the User first contact the party which converted the
Converted Software. In most cases, that party is in the best position to
identify the problem and provide a solution. For problems related to the
System Product which are not solved by the party which provided the
conversion services, the User may use the telephone support services
provided by TPI. This support service will provide advice and assistance
concerning the use of the System Product. This support service is provided
free of charge during the first 90 days following delivery of the System
Product to the User. After 90 days, the User will be charged at the then
applicable hourly rate for advice or assistance which, in the opinion of
TPI, would not have been required by the User had the User referred to the
Documentation or operated the System Product in accordance with the
Documentation. The User is expected to be familiar with UNIX and TPI may
charge the User for any support services (whether during the first 90 days
or otherwise) which arise out of the User's misunderstanding of the UNIX
system which the User is using. The support services will be provided by
telephone (with long distance charges payable by the User) during regular
business hours of the TPI office providing the support services. The
support services will be provided only on the condition that the User has a
modem and that, upon request by TPI, the User allows TPI to log on by modem
to the User s computer and have access to the Converted Software and System
Software which is experiencing the problem and any additional information
or software which TPI may reasonably request. There is no assurance that
TPI will be able to detect or correct any defect or programming error in
the System Product encountered by the User.
The User shall have access to TPI's System Product bulletin board and TPI
shall send technical bulletins to the User at the same time as such
bulletins are sent to other users of the System Product generally. If TPI
updates the System Product to correct any defect in the System Product, TPI
will send a copy of the updated release to the User, free of charge, at the
same time as TPI supplies the same to its other users generally. The User
agrees to install and use the updated release when received and destroy
all but the immediately preceding release of the System Product. Updated
releases of the System Product shall not include enhancements to the System
Product and TPI may charge a fee for any enhanced version of the System
Product offered to the User. TPI shall be under no obligation to provide
support services to the User when there are overdue payments owing by the
User to TPI or in relation to problems caused by modifications to the
System Software made by any party other than TPI. Any services provided by
TPI with respect to problems caused by such modifications will be charged
at the applicable hourly rate of TPI.
5. LICENSES FEES: The User agrees to pay to TPI the initial fee and the
annual fees described in Schedule "C" as the same become due under this
agreement. The initial fee is payable upon execution of this agreement and
the annual fees are payable on each anniversary of the date of this
agreement.
6. CURRENCY, TAXES AND PAYMENT TERMS: All references in this agreement to
dollars are expressed in United States currency except where otherwise
noted and all amounts payable to TPI shall be paid in United States
dollars. The fees payable under this agreement do not include any taxes or
duties which,
- --------------------------------------------------------------------------------
SYSTEM LICENSE 2 TRANSFORMATION PROCESSING INC.
<PAGE>
if applicable, will be billed in addition to the fees and shall be payable
by the User upon invoice. All amounts owing under this agreement which are
not paid when due shall bear interest at the lesser of the highest rate
permitted at law and the Prime Rate plus 2% per annum until paid in full.
The Prime Rate shall mean the prime commercial lending rate of interest per
annum charged from time to time during the currency of this agreement by
the Bank of Montreal (the "Bank") for demand loans in United States funds
made at the main branch of the Bank in Toronto, Ontario (and if at any time
there is more than one such prime commercial lending rate of the Bank, the
Prime Rate shall be the highest prime commercial lending rate of the Bank).
7. CONFIDENTIALITY: The User acknowledges that the System Product and the
whole of the ideas, concepts, know-how and techniques contained therein
(collectively the "Confidential Information") are trade secrets which
required substantial efforts to create and develop. The User agrees not to
use the Confidential Information except as permitted under this agreement.
The User agrees to hold the Confidential Information in confidence with the
same degree of care it uses with its own confidential information (using at
least a reasonable standard of care) and not to disclose such Confidential
Information in any form whatsoever except to those of its employees and
subcontractors who have a need to use the same in the normal course of
their work and who have agreed to abide by the provisions of this
agreement.
8. DISCLAIMER OF WARRANTY: THE SYSTEM PRODUCT IS PROVIDED "AS IS" AND
WITHOUT WARRANTY OF ANY KIND. TPI DISCLAIMS ALL WARRANTIES, EITHER EXPRESS
OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND THE WARRANTY
AGAINST LATENT DEFECTS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
TPI MAKES NO WARRANTY: (A) WITH RESPECT TO THE CHARACTERISTICS OF
EXECUTION OF THE DEVELOPMENT PRODUCT (INCLUDING RESPONSE TIME,
CHARACTERISTICS OF USE OF MACHINE TIME AND OTHER OPERATING FUNCTIONS WITH
ANY PARTICULAR EQUIPMENT), (B) THAT THE FUNCTIONS CONTAINED IN THE
DEVELOPMENT PRODUCT WILL SATISFY THE NEEDS OF THE DEVELOPER , (C) THAT THE
OPERATION OF THE DEVELOPMENT PRODUCT WILL BE ERROR FREE OR UNINTERRUPTED,
OR (D) THAT DEFECTS AND PROGRAMMING ERRORS IN THE DEVELOPMENT PRODUCT WILL
BE DETECTED OR CORRECTED. NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN
BY TPI OR A TPI REPRESENTATIVE SHALL CREATE A WARRANTY OR IN ANY WAY
INCREASE THE SCOPE OF THIS WARRANTY. SOME JURISDICTIONS DO NOT ALLOW THE
EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY.
9. LIMITATION OF LIABILITY: UNDER NO CIRCUMSTANCES, INCLUDING NEGLIGENCE,
SHALL TPI OR ITS SUPPLIERS BE LIABLE FOR ANY LOSS OR DAMAGE WHATSOEVER THAT
RESULTS FROM THE USE OF OR INABILITY TO USE THE DEVELOPMENT PRODUCT,
INCLUDING, WITHOUT LIMITATION, DAMAGAES FOR LOSS OF REVENUE OR PROFITS,
BUSINESS INTERRUPTION, LOSS OF SOFTWARE OR INFORMATION, FAILURE TO REALIZE
EXPECTED SAVINGS OR ANY OTHER PECUNIARY LOSS OF ANY NATURE WHATSOEVER
INCLUDING INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES, EVEN IF TPI OR A TPI
REPRESENTATIVE HAS BEEN ADVISED OF THE POSSIBILITY OF SAME. SOME
JURISDICTIONS DO NOT ALLOW THE LIMITATION OR EXCLUSION OF LIABLILITY FOR
INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATION OR EXCLUSION
MAY NOT APPLY. In no event shall the total liability of TPI to the
Developer for all damages, losses, and causes of action under any legal
theory (including, without limitation, contract, fundamental breach or
breach of a fundamental term, tort or negligence) exceed the amounts paid
by the Developer to TPI under this agreement during the year preceding the
making of the claim.
10. RESPONSIBILITY OF USER: The User is the only party responsible for the use
of the System Product for the User's activities. The User agrees to use
the necessary verification controls and operating techniques to satisfy its
needs with respect to error detection, security, back-up and restart in
case of failure or destruction of the User's software, the System Product
or any of the User's files and data. TPI strongly recommends that the User
test the System Product before operation with the User's software and data.
- --------------------------------------------------------------------------------
SYSTEM LICENSE 3 TRANSFORMATION PROCESSING INC.
<PAGE>
11. INDEMNIFICATION BY USER: The User agrees to defend TPI against any action,
suit or claim against TPI by any third party resulting from the use of, or
inability to use, the System product by the User and the User agrees to
indemnify and hold TPI harmless from and against all damages, liabilities,
losses and expenses, including reasonable attorney's fees and all court
costs, incurred by TPI as a result of any such action, suit or claim.
12. TERM: This agreement and the license granted hereunder shall come into
force upon execution of this agreement and payment of the initial fee and
shall remain in force until this agreement is terminated. The User may
terminate this agreement at any time by discontinuing any further use of
the System Product and returning to TPI all copies of the System Product.
TPI shall be entitled to terminate this agreement by giving written notice
of termination if the User fails to pay any amount owing under this
agreement or fails to abide by any of the terms of this agreement and such
failure continues for ten (10) days after written notice to remedy such
failure is given. This agreement will automatically terminate without
notice if the User becomes bankrupt or insolvent, or makes an assignment
for the benefit of its creditors, or if a liquidation order is made against
the User or if the User takes advantage of any statute relating to
insolvency, bankruptcy, or arrangements with creditors. Upon termination of
this agreement, the User shall cease all further use of the System Product
and return to TPI all copies of the System Product in its possession or
control. Instead of such return, TPI may, at its option, require the User
to destroy such copies and provide TPI with satisfactory evidence of such
destruction. Those provisions of this agreement which by their nature are
intended to survive the termination of this agreement (including, without
limitation, sections 8, 9 and 11) shall survive the termination of this
agreement.
13. U.S GOVERNMENT RESTRICTED RIGHTS: This section applies if the System
Product is licensed to the U.S government or one of its agencies or
instrumentalities:
"The System Product and Documentation are provided with RESTRICTED RIGHTS.
Use, duplication or disclosure by the U.S. Government is subject to
restrictions as set forth in subparagraph (c)(1)(ii) of The Rights in
Technical Data and Computer Software clause at DFARS 252.227-7013 or
subparagraphs (c)(1) and (2) of the Commercial Computer Software-Restricted
Rights at 48 CFR 52.227-19, as applicable. The contractor/manufacturer is
Transformation Processing Inc., 2121 Argentia Road, Suite 200, Mississauga,
Ontario, Canada L5N 2X4"
14. NOTICE: Any notice required or permitted under this agreement shall be
given to the address for notice set out below or to such other address of
which notice is given. Such notice may be given by personal delivery
(including courier delivery), prepaid mail or telecopy. Such notice shall
be considered received on the date of actual receipt at the address for
notice.
15. ASSIGNMENT: The license granted by this agreement extends only to the User
and not to any other person, firm, partnership, corporation or other
entity, even if such may constitute a subsidiary or an affiliate of the
User. This agreement can only be assigned with the prior written consent of
TPI and upon the conditions stipulated by TPI.
16. OTHER TERMS: This agreement sets forth the entire understanding between
the parties relating to the subject matter hereof, and there are no
agreements, promises, representations or understandings between the parties
other than as set forth herein. No amendment or modification of this
agreement shall be effective unless in writing and signed by the parties to
this agreement. No term, covenant or condition of this agreement shall be
deemed to have been waived by either party to this agreement unless such
waiver is in writing, and then such waiver shall only to the specific
event or circumstance described in such waiver. This agreement shall be
governed by the laws in force at the User's address for notice set forth
below. The section headings in this agreement are for convenience of
reference and do not affect the meaning of sections. This agreement shall
enure to the benefit of, and be binding
- --------------------------------------------------------------------------------
SYSTEM LICENSE 4 TRANSFORMATION PROCESSING INC.
<PAGE>
upon, the parties hereto and their respective legal personal
representatives, successors and permitted assigns.
17. LANGUAGE: The parties hereto have requested that this agreement be drafted
in English. Les parties aux presentes ont exige que le present contrat soit
redige en langue anglaise.
In witness whereof the parties have signed this agreement as of the date
stated on page 1 hereof by their officers duly authorized as they so declare.
________________________________ TRANSFORMATION PROCESSING INC.
Full Legal Name of Customer
By: /s/ By: /s/ Gary McCann
_____________________________ _____________________________
_______________________________ Gary McCann
Name of Signing Officer President & C.O.O.
_______________________________
Title
_______________________________
User's Address for Notice: TPI's Address for Notice:
_______________________________ 2121 Argentia Road, Suite 200
_______________________________ Mississauga, Ontario
_______________________________ Canada L5N 2X4
_______________________________
TELEPHONE: ________________ TELEPHONE: (905) 812-7907
TELECOPIER: ________________ TELECOPIER: (905) 812-7920
SYSTEM LICENSE
SCHEDULE "A"
ORIGINAL SYSTEM
- --------------------------------------------------------------------------------
SYSTEM LICENSE 5 TRANSFORMATION PROCESSING INC.
<PAGE>
A. COMPUTER. The Converted Software originally ran on the following computer:
IBM System 34 / / IBM System 36 /X/ IBM System 38 / / IBM AS/400 / /
B. LANGUAGE. The Converted Software was originally written in the following
language:
RPG II /X/ RPG III / / RPG 400 / / OCL / / CL / / COBOL /X/
SCHEDULE "B"
TARGET UNIX SYSTEM
A. COMPUTER The Converted Software is to be run on the following computer:
Make: ______________
Model: ______________
B. OPERATING SYSTEM The computer described above operated with the following
operating system:
Operating System: _______________
C. CONCURRENT SYSTEM USERS The computer will be operated with the following
number of concurrent System Users:
Number of Concurrent System Users: _____________
SCHEDULE "C"
FEES AND TERMS OF PAYMENT
Based on the information in Schedule "A" and "B", the initial fee and
annual fees payable for the license to use the System Product granted under this
agreement are as follows. Amounts are expressed in the United States currency.
INITIAL FEE: a non-recurring initial license fee of US $_______________. The
initial fee shall be paid by the User prior to delivery to the
User of the System Product.
ANNUAL FEES: On each anniversary of the date of this agreement (the
"Anniversary Date"), the User shall pay an annual license fee to
TPI equal to 18% of the published initial fee chargeable by TPI
on the Anniversary Date for the granting of a license to use the
System Product in the circumstances described in Schedules "A"
and "B" (subject to adjustment in the case of any change in the
number of concurrent system users over that described in section
C of Schedule "B").
The initial fee and annual fees do not include any taxes or duties which, if
applicable, will be billed to the User in addition to the initial fee and the
annual fee.
- --------------------------------------------------------------------------------
SYSTEM LICENSE 6 TRANSFORMATION PROCESSING INC.
<PAGE>
Exhibit 10.11
LOTUS DEVELOPMENT CORPORATION
BUSINESS PARTNER AGREEMENT
Name of Business Partner:Transformation Processing Inc. (the "Business Partner")
-------------------------------------------------------
Site Address: 2121 Argentia Road
-------------------------------------------------------
Suite 200
-------------------------------------------------------
Mississauga, Ontario L5N2X4 (the "Site")
-------------------------------------------------------
This Agreement contains general terms governing the acceptance by Lotus of
Business Partner as a Lotus Business Partner and the participation by Business
Partner at the Site specified above in the Lotus Business Partner Program. Such
appointment and participation are subject to this Agreement and the specific
terms and conditions of each "Program Track" then in effect. The Program Track
terms and conditions are incorporated herein by reference and are available to
Business Partner upon request (the "Program Track Terms").
By executing this Agreement, Business Partner agrees to abide by the all the
terms and conditions set forth herein and in each Program Track in which
Business Partner has enrolled. In the event of any conflict between the terms
of this Agreement and any Program Track, the particular Programs Track shall
control. This Agreement shall be effective upon the date of its execution by
Lotus (the "Effective Date").
BUSINESS PARTNER LOTUS DEVELOPMENT CORPORATION
By: /s/ Gary G. McCann By: /s/ Joy Langley
------------------------------- -------------------------------
Name: Gary G. McCann Name: Joy Langley
----------------------------- -----------------------------
Title: Vice President - Operations Title: Director - Business Partners
---------------------------- Services
----------------------------
Effective
Date:
-----------------------------
Return to:
Lotus Development Corporation
Attn.: Business Partner Marketing
55 Cambridge Parkway
Cambridge, MA 02142
Page 1 of 4
<PAGE>
GENERAL TERMS
APPOINTMENT; PROGRAM BENEFITS.
(a) Appointment. Lotus accepts Business Partner in the Lotus Business Partner
Program (the "Program")
(b) Program Participation. Lotus will make available to Business Partner
programs and services in accordance with the applicable Program Track Terms of
the Business Partner Program.
(c) Site Specific Benefits. Business Partner acknowledges that the benefits
and privileges of Program participation extend to Business Partners operation at
the Site only. Additional sites may be added upon the written mutual agreement
of the parties.
(d) Program Track Terms subject to change. Lotus may change any of the Program
Track Terms for any Program Track without prior notice to Business Partner;
provided, however, that Business Partner shall be permitted to terminate this
Agreement and its participation in the entire Program or terminate its
participation solely in the affected Program Track(s) without cause upon any
material change by Lotus in these terms.
2. MARKETING ACTIVITIES, PRODUCTS AND SERVICES.
(a) Promotional Materials. Lotus shall make available to Business Partner the
promotional and informational materials that Lotus makes generally available to
participants in the Program Track(s) in which Business partner is enrolled.
Business Partner shall use such materials solely for the purposes of promoting
Lotus software products ('Lotus Products") to Business Partner's customers or
prospective customers. Business Partner shall not make any representations or
statements regarding Lotus Products or services inconsistent with those
contained in the promotional materials delivered by Lotus or those known by
Business Partner to be contained in Lotus' marketing literature and advertising
copy.
(b) Seminars. Business partner may participate in seminars offered for
Business Partner personnel to obtain and maintain technical expertise. Such
participation may be available to a limited number of Business Partners
employees and may be based on program applicability.
(c) Lotus Logos. Subject to the applicable Program Track Terms, Lotus hereby
grants Qualified Business Partner a non-exclusive, revocable right to use the
Lotus Business Partner Logo, and other Program related logos as Business Partner
may qualify to use under the applicable Program Track Terms (collectively, the
"Logos") only on Business Partners company business cards, letterhead and in
related sales, marketing and promotional materials, subject to the color and
size restrictions determined by Lotus from time to time. The Logos may not be
used on Business Partner's products or product packaging, without further
written authorization from Lotus. Business Partner agrees to submit to Lotus,
upon request, samples of its use of the Logos for Lotus' inspection and
evaluation.
3. SOFTWARE.
(a) Lotus Products. Lotus may from time to time make Lotus Products available
to Business Partner for internal use, demonstration, evaluation, and "beta"
testing. Except as otherwise set forth in this Agreement, all such software
shall be subject to the software agreement accompanying the soft ware. Business
Partner shall not commercially distribute, or otherwise provide for free to
third parties, any Lotus Products or other software or materials provided under
the Program.
(b) Pre-Release Software. In the event that Lotus makes any pre-release or
beta software (the "Pre-release Software") and/or related documentation (the
"Documentation") available to Business Partner in connection with any Program
Track:
(i) Business Partner agrees to use the Pre-release Software and
Documentation solely for testing and evaluation purposes.
(ii) Business Partner agrees with Lotus that the Pre-release Software and
the Documentation are Lotus Confidential Information subject to the
terms of Section 7 of this Agreement and constitute trade secrets of
Lotus. Unless otherwise specifically agreed by Lotus in writing,
Business Partner (A) shall not copy the Pre-release Software or the
Documentation except for one back-up copy in computer readable form;
and (B) shall, at Lotus' request, promptly return to Lotus or destroy
all Pre-release Software media, Documentation or other related
materials furnished to Business Partner by Lotus under this Agreement;
and (C) shall not reverse engineer, decompile or disassemble the
Pre-release Software.
(iii) In view of the developmental nature of Pre-release Software, Business
Partner accepts any Pre-release Software and Documentation "AS IS,"
without warranties of any nature.
4. PAYMENT TERMS.
Business Partner shall pay all fees associated with its participation in the
Program (the "Program Fees") Business Partner agrees to pay all shipping and
related insurance charges, as well as any tax, however characterized, including
customs duties and tariffs, arising out of this Agreement or the use of any
products, other than taxes assessed on Lotus' net income.
5. LIMITED WARRANTY.
EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THE APPLICABLE LOTUS PRODUCT
SOFTWARE AGREEMENT, LOTUS DISCLAIMS ALL WARRANTIES WITH REGARD TO ANY PRODUCTS
OR SERVICES (INCLUDING PRE-RELEASE SOFTWARE AND DOCUMENTATION), RECEIVED UNDER
THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
6. LIMITATION OF LIABILITY.
NEITHER PARTY SHALL BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL,
TORT OR COVER DAMAGES, INCLUDING, WITHOUT LIMITATION, DAMAGES RESULTING FROM THE
USE OR INABILITY TO USE THE LOTUS PRODUCTS OR SERVICES, DELAY OF DELIVERY OR
LOSS OF PROFITS, DATA, BUSINESS OR GOODWILL, WHETHER OR NOT SUCH PARTY HAS BEEN
ADVISED OR IS AWARE OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL
Page 2 of 4
<PAGE>
LOTUS' LIABILITY EXCEED THE PROGRAM FEES PAID BY BUSINESS PARTNER. This
limitation on monetary damages will not apply to claims relating to death or
personal injury which arise out of products deemed to be consumer goods under
applicable law. Some states or provinces do not allow the exclusion or
limitation of implied warranties or limitation of liability for incidental or
consequential damages, so the above exclusion or limitation may not apply to
you.
7. CONFIDENTIAL INFORMATION.
(a) No Disclosure. During the term of this Agreement and for a period of three
(3) years thereafter, neither Lotus nor Business Partner shall disclose to any
third party any information of the other party identified in writing as
confidential or proprietary at the time of disclosure or, if disclosed orally,
confirmed in writing by the disclosing party as such within fifteen (1 5) days
after its disclosure ("Confidential Information), without the prior written
consent of the other party and then only to the extent specified in such
consent. The parties shall limit access to Confidential Information of the
other to those employees and independent contractors who have entered into
appropriate confidentiality agreements and shall ensure compliance with the
terms of such agreements. Confidential Information may be copied and
disseminated within the receiving party's own organization only to the extent
reasonably required for the purposes hereof.
(b) Exceptions. The restrictions on disclosure of Confidential Information
described in Paragraph 7(a) do not extend to any item of information which (i)
is publicly known at the time of its disclosure, (ii) is lawfully received by
the receiving party from a third party not bound in a confidential relationship
to the disclosing party, (iii) is published or otherwise made known to the
public by the disclosing party, or (iv) was generated or developed independently
by the receiving party. Either party may disclose Confidential Information to
the extent required by law provided that the party so required must give the
other party prompt notice and make a reasonable effort to obtain a protective
order.
8. TERM AND TERMINATION; SURVIVAL.
(a) Term. The initial term of this Agreement shall begin on the Effective Date
and shall continue for one year, unless earlier terminated as set forth below.
This Agreement may be renewed, annually, in accordance with the Program renewal
policy.
(b) Termination. Either party may terminate this Agreement or participation in
any individual Program Track:
(i) without cause upon ninety (90) days' prior written notice to the other
party.
(ii) fourteen (1 4) days after written notice of material breach of this
Agreement if such breach is not cured within such period.
(c) Rights upon termination. Termination of this Agreement shall not relieve
Business Partner of any then-accrued payment obligation to Lotus. Business
Partner shall not have any right to any indemnity or payment of compensation or
damages resulting from Lotus' termination of this Agreement and expressly waives
any and all rights to the same. Business Partner shall not be entitled to a
refund of any Program Fees paid for products or services received under or in
connection with this Agreement upon the expiration or termination of this
Agreement.
(d) Actions upon termination. Upon expiration or termination of this
Agreement:
(i) Business Partner shall immediately return all copies of Lotus
Products, Pre-release Software and Documentation provided by Lotus
under this Agreement, destroy any additional copies made by Business
Partner and certify in writing that such actions have been taken;
(ii) Business Partner agrees to cease using the Logos and to delete them
from all materials on which they appear;
(iii) each party shall return to the other any Confidential Information,
including any copies thereof, together with a letter certifying that
all such Information has been returned or destroyed.
(e) Surviving Sections. The provisions of Sections 3, 5, 6, 7, 8(c), 8(d),
8(e) and 9 of this Agreement shall survive any termination of this Agreement for
any reason.
9. INDEMNITY.
Business Partner shall indemnify, defend and hold Lotus harmless from and
against all liabilities, claims or demands (including reasonable attorneys'
fees) arising out of or in connection with Business Partners performance of this
Agreement.
10. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement and those agreements and documents
expressly referenced herein, set forth the complete and exclusive agreement and
understanding between the parties as to the subject matter hereof. Any waiver,
amendment or modification of this Agreement will not be effective unless
contained in a writing signed by the party or parties to be bound, and any
variance from or addition to the terms of this Agreement contained in any
Business Partner purchase order or other written notification will be of no
effect.
(b) RELATIONSHIP OF PARTIES. The parties hereto are independent contractors.
(c) ASSIGNMENT. Business Partner may not assign its rights or delegate its
duties under this Agreement.
(d) No transfer of title. Nothing done pursuant to this Agreement shall
transfer to Business Partner title to any intellectual property rights
(including, without limitation, any trademark, patent or copyright) in or to any
Lotus Products or any other software application, or any associated
documentation or training materials, provided to Business Partner by Lotus.
Business Partner shall not manufacture, duplicate, translate, reverse engineer
or decompile such products, applications or materials, or information relating
thereto. Any violation by Business Partner of any Lotus intellectual property
right shall be sufficient grounds for immediate termination of this Agreement by
Lotus.
(e) Waiver. Any consent or waiver of a provision or breach shall not
constitute a consent to or a waiver of any other provision or breach, or as a
consent to waive such provision or breach in the future. No failure or delay by
either party in exercising any right, power or remedy will operate as a waiver
of same.
(f) Illegality; Invalidity. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be modified or reformed
to the fullest extent possible under applicable law so as to effect the original
intent of the parties.
Page 3 of 4
<PAGE>
11. NOTICES.
Any notice hereunder shall be deemed to be sufficiently given and any delivery
hereunder deemed made when delivered in person or sent by registered or
certified mail or courier addressed to the Business Partner at the address
stated above and to Lotus at 55 Cambridge Parkway, Cambridge, MA 02154, Attn:
Legal Department or at such changed address as either party shall have specified
by written notice.
12. EXPORT LICENSING.
Business Partner acknowledges that Lotus' products, technical data, and know-how
are subject to all applicable law and regulations governing exports from the
United States and subsequent re-exports ("Export Laws"), including but not
limited to the U.S. Export Administration Act of 1979, as amended or succeeded.
Business Partner shall fully comply with the Export Laws and shall, upon
reasonable request by Lotus, furnish Lotus with all requested certifications or
assurances relating to Business Partners compliance with the Export Laws.
13. GOVERNING LAW.
The validity of this Agreement, the construction and enforcement of its terms,
and the interpretation of the rights and duties of the parties shall be governed
(a) by the laws of The Commonwealth of Massachusetts, excluding its conflicts of
laws principles, if Business Partner is a U.S. corporation and (b) by the laws
of the jurisdiction in which the Lotus entity signing the Agreement resides, if
Business Partner is not a US corporation.
Page 4 of 4
<PAGE>
Exhibit 10.12
Bill of Sale (without Warranties)
For good and valuable consideration (receipt of which is acknowledged):
Vladimir Stepanoff, CyberPlan Enrg.
(the "Seller") hereby sells and transfers possession of the following goods in
their present condition and location:
a) IBM Midrange Migration Tools computer software identified in
Appendix A,
b) 726,800 shares of Raconix Corporation.
to:
Transformation Processing Inc. (TPI)
(the "Buyer"):
The Seller warrants that it owns and has the right to sell the goods to the
Buyer and that the goods are sold free and clear of all encumbrances but makes
no representations and gives no warranties as to merchantability of the goods or
as to their fitness for any particular purpose or as to their safe use.
The Buyer acknowledges examining the goods and buying them "as and where is"
completely at the Buyer's risk and promises not to make any claims against the
Seller based upon alleged express or implied representations, warranties, or
collateral agreements as to the merchantability of the goods or as to their
fitness for any particular purpose or as to their safe use.
The total price for the goods is 100,000 Transformation Processing Inc. common
shares delivered on the following schedule: 20,000 shares upon delivery of the
Ralston conversion, and the remaining 80,000 shares delivered at 20,000 shares
per quarter until the final 80,000 shares has been realized.
Executed in duplicate on July 17, 1996 at Mississauga, Ontario.
Signed and delivered in the presence of:
/s/Vladimir Stepanoff
- ------------------------------- -----------------------------------
Seller
Vladimir Stepanoff, CyberPlan Enrg.
/s/ Gary G. McCann
- ------------------------------- -----------------------------------
Buyer
Gary G. McCann
President and COO
Transformation Processing Inc.(TPI)
<PAGE>
Assignment of Copyright
For good and valuable consideration (receipt of which is acknowledged):
Vladimir Stepanoff, CyberPlan Enrg.
(the "Assignor") hereby assigns all copyright in:
IBM Midrange Migration Tools software
(the "Work"), as identified in the Bill of Sale, to:
Transformation Processing Inc. (TPI)
(the "Assignee"):
The Assignor warrants to the Assignee that:
a) copyright exists in the Work,
b) the Assignor owns all the copyright in the Work;
c) the Assignor has the right to assign the copyright in the Work;
d) there is no dispute or pending dispute over the existence or
ownership of copyright in the work;
e) the Assignee can register and dispose of the copyright in the Work
in the Assignee's own name.
Executed in duplicate on July 17, 1996 at Mississauga, Ontario.
Signed and delivered in the presence of:
/s/ Vladimir Stepanoff
- -------------------------- -------------------------------------
Assignor
Vladimir Stepanoff,
CyberPlan Enrg.
/s/ Gary G. McCann
- -------------------------- -------------------------------------
Buyer
Gary G. McCann
President and COO
Transformation Processing Inc.(TPI)
<PAGE>
Appendix A
IBM Mid-Range Migration Tools
This is Appendix A to the Bill of Sale for "IBM Mid-Range Migration Tools"
All CyberPlan computer software works copyrighted since November 1994, these
works not being derivative works of earlier CyberPlan copyrights. More
specifically:
Object Request Manager and associated Analytical and Generation Tools and Data
Application Module API
User Interface API
Session Support API
AS/400 Command Language Analyzer
AS/400 Command Language to C Translator
AS/400 RPG Language to C Translator
AS/400 Data File DDS Translators for Field Reference, Physical and Logical Files
AS/400 1/0 Drivers Generators for Informix and Memory Tables
AS/400 Data Translator Generators for Informix and Memory Tables
Associated Transformation Utilities
July 17, 1996
<PAGE>
Exhibit 10.13
REFERRAL PROGRAM
BETWEEN
Y2K PLUS INC. (Y2K PLUS)
AND
TRANSFORMATION PROCESSING INC. (TPI)
I. INTRODUCTION
- ---------------
A. REFERRAL PROGRAM
This Referral Program (the "Program") has been designed to provide Y2K PLUS
management and sales personnel with monetary rewards for their efforts for
selling or referring customers to TPI (the "Referral Fee"). The plan is
designed to achieve the following objectives:
1. Leverage the strategic relationship between TPI and Y2K PLUS.
2. To compensate Y2K PLUS, and its Account Managers, Sales Managers and Branch
Managers for performing sales functions that result in the successful
delivery of services to Y2K PLUS customers by TPI.
3. To reward lead referrals from Y2K PLUS employees to TPI.
4. To compensate TPI employees for handling the sales and coordination details
of these referrals.
B. EFFECTIVE DATE
The Program is effective as of January 9, 1998.
II. REFERRAL FEE
- ----------------
The Referral Fee will be paid to Y2K PLUS by TPI for referrals or sales that
result in the delivery of profitable services to NEW customers. The Referral
Fee will be distributed to Y2K PLUS. Y2K PLUS will then reward Account
Managers, Sales Managers and Branch Managers as a percentage of the Referral Fee
as it sees fit.
A. REFERRAL FEE
The amount of Referral Fee paid to Y2K PLUS will depend on the pricing structure
required to win the business. TPI will provide list pricing to Y2K PLUS
employees prior to the close of the sale. The Referral Fee will be paid to Y2K
PLUS according to the following schedule:
Confidential Information Page 1
<PAGE>
--------------------------------------------------
Type of Lead Referral Fee Paid to Y2K
PLUS as a Percentage of
the Total Sales Price
--------------------------------------------------
Products 18 %
--------------------------------------------------
Services 18 %
--------------------------------------------------
Joint Ventures Negotiable
--------------------------------------------------
B. TERMS
The Referral Fee will be paid to Y2K PLUS on the 31st of the following month
after the service has been delivered to the Y2K PLUS account. TPI will continue
to pay the Referral Fee on subsequent TPI related sales to the Y2K PLUS account
for a period of two years from the date of first order.
III. PROGRAM DEFINITIONS
- ------------------------
A. REFERRALS
To qualify for the Referral Fee the following criteria must be met:
1. It is a new opportunity that is currently not being worked by a TPI
employee.
2. The Y2K PLUS employee notifies TPI of the scope of work and key contact.
3. All needs assessment, proposal generation, sales registration and
coordination functions are performed by a TPI employee.
4. TPI delivers the service.
5. TPI bills the customer.
TPI is responsible for managing the project requirements of the customer. TPI
will regularly notify the Y2K PLUS Account Executive of progress with the
account, customer satisfaction and Referral Fee.
IV. POLICIES AND PRACTICES
- --------------------------
A. APPLICABILITY
1. The Program applies to all products and services referred to or sold after
November 14, 1997, by Y2K PLUS which are performed by TPI.
Confidential Information Page 2
<PAGE>
B. PROGRAM EXCEPTIONS
All exceptions, adjustments, additions or modifications to the Program require
the prior approval of Y2K PLUS and TPI in writing. Either party reserves the
right to cancel the program at any time.
C. PROCEDURES
TPI will provide Y2K PLUS with a list of current services and pricing.
TPI will:
1. Confirm client is new to TPI
2. Confirm dates available for the services with the client
3. Confirm order with Y2K PLUS sales personnel
4. Log the date of the initial Referral
On receipt of confirmation, Y2K PLUS personnel will forward the Purchase Order
to Y2K PLUS head office for processing.
D. PAYMENT
TPI will generate monthly payment reports indicating the Client, services and
Referral Fee paid/payable.
E. CONFIDENTIALITY
Details of the Program and Referral Fee are to be held as confidential
information by Y2K PLUS and TPI.
Y2K PLUS INC. TRANSFORMATION PROCESSING INC.
/s/ Dave Ehlke /s/ Douglas Woolridge
- ----------------------------------- -----------------------------------
Dave Ehlke Douglas Woolridge
President President & COO
November 18, 1997 November 18, 1997
- ----------------------------------- -----------------------------------
Date Date
Confidential Information Page 3
<PAGE>
Exhibit 10.14
REFERRAL PROGRAM
BETWEEN
MCW BUSINESS SYSTEMS LTD. (MCW)
AND
TRANSFORMATION PROCESSING INC. (TPI)
I. INTRODUCTION
- ---------------
A. REFERRAL PROGRAM
This Referral Program (the "Program") has been designed to provide MCW
management and sales personnel with monetary rewards for their efforts for
selling or referring customers to TPI (the "Referral Fee"). The plan is
designed to achieve the following objectives:
1. Leverage the strategic relationship between TPI and MCW.
2. To compensate MCW, and its Account Managers, Sales Managers and Branch
Managers for performing sales functions that result in the successful
delivery of services to MCW customers by TPI.
3. To reward lead referrals from MCW employees to TPI.
4. To compensate TPI employees for handling the sales and coordination details
of these referrals.
B. EFFECTIVE DATE
The Program is effective as of November 1, 1997.
II. REFERRAL FEE
- ----------------
The Referral Fee will be paid to MCW by TPI for referrals or sales that result
in the delivery of profitable services to NEW customers. The Referral Fee will
be distributed to MCW. MCW will then reward Account Managers, Sales Managers
and Branch Managers as a percentage of the Referral Fee as it sees fit.
A. REFERRAL FEE
The amount of Referral Fee paid to MCW will depend on the pricing structure
required to win the business. TPI will provide list pricing to MCW employees
prior to the close of the sale. The Referral Fee will be paid to MCW according
to the following schedule:
Confidential information Page 1
<PAGE>
-------------------------------------------------
Type of Lead Referral Fee Paid to MCW
as a Percentage of the
Total Sales Price
-------------------------------------------------
Products 15 %
-------------------------------------------------
Services 10 %
-------------------------------------------------
Joint Ventures Negotiable
-------------------------------------------------
B. TERMS
The Referral Fee will be paid to MCW on the 31st of the following month after
the service has been delivered to the MCW account. TPI will continue to pay the
Referral Fee on subsequent TPI related sales to the MCW account for a period of
two years from the date of first order.
III. PROGRAM DEFINITIONS
- ------------------------
A. REFERRALS
To qualify for the Referral Fee the following criteria must be met:
1. It is a new opportunity that is currently not being worked by a TPI
employee.
2. The MCW employee notifies TPI of the scope of work and key contact.
3. All needs assessment, proposal generation, sales registration and
coordination functions are performed by a TPI employee.
4. TPI delivers the service.
5. TPI bills the customer.
TPI is responsible for managing the project requirements of the customer. TPI
will regularly notify the MCW Account Executive of progress with the account,
customer satisfaction and Referral Fee.
IV. POLICIES AND PRACTICES
- --------------------------
A. APPLICABILITY
1. The Program applies to all products and services referred to or sold after
November 1 1997, by MCW which are performed by TPI.
Confidential information Page 2
<PAGE>
B. PROGRAM EXCEPTIONS
All exceptions, adjustments, additions or modifications to the Program require
the prior approval of MCW and TPI in writing. Either party reserves the right
to cancel the program at any time.
C. PROCEDURES
TPI will provide MCW with a list of current services and pricing.
TPI will:
1. Confirm client is new to TPI
2. Confirm dates available for the services with the client
3. Confirm order with MCW sales personnel
4. Log the date of the initial Referral
On receipt of confirmation, MCW personnel will forward the Purchase Order to MCW
head office for processing.
D. PAYMENT
TPI will generate monthly payment reports indicating the Client, services and
Referral Fee paid/payable.
E. CONFIDENTIALITY
Details of the Program and Referral Fee are to be held as confidential
information by MCW and TPI.
MCW BUSINESS SYSTEMS LTD. TRANSFORMATION PROCESSING INC.
/s/ Paul West /s/ Douglas Woolridge
- ----------------------------------- -----------------------------------
Paul West Douglas Woolridge
Managing Partner President & COO
November 5, 1997 November 5, 1997
- ----------------------------------- -----------------------------------
Date Date
Confidential information Page 3
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Exhibit 10.15
TEAMING AGREEMENT
TRANSFORMATION PROCESSING INC. (HEREIN "TPI")
AND SHL SYSTEMHOUSE INC. (HEREIN "SHL")
KEY BUSINESS TERMS
1. BACKGROUND/SCOPE
SCOPE: TPI and SHL (collectively, the "Parties") desire to jointly
participate to the extent described in this Key Business Terms Document
(the "Key Terms Document") relating to a contemplated definitive Teaming
Agreement (the "Agreement") in the preparation of proposals ("Proposals")
and presentations to qualified prospects and/or existing customers for the
purpose of providing a joint solution and subsequent services for their
Year/2000 business needs. In the majority of prospect or customer
engagements, it is anticipated that the relationship of the Parties is that
SHL will act as Sub-Contractor to provide some or all of the required Scan,
Repair and testing services (customer site), or emulated hot site
environment (i.e. Comdisco). Other professional services may be required.
KEY BUSINESS RELATIONSHIP: IBS Conversions Inc,., founded in 1982 and
headquartered in Chicago, Illinois, is a recognized leader in automated
conversion/migration software and consulting. IBS has translated millions
of lines of code for companies worldwide and this year, anticipates
revenues to realize $90 million USD.
Based on its many years of conversion tool development and conversion
project experience, IBS Year/2000 offering includes:
- Full project Analysis, Pilot Project and Repair, staffing and
management/methodology
- Conversion Factories for both mainframe and AS/400 environments
- Project Methodology
- Project Methodology training
- Qwik-Sizer Analysis
TPI has an agreement with IBS whereby TPI will, under IBS license, provide
in those capabilities and services in North America - specifically Canada.
TPI has certain proprietary rights with regard to further licensing of the
IBS offering in Canada.
- --------------------------------------------------------------------------------
TRANSFORMATION PROCESSING INC. DATE TEAMING AGREEMENT - TPI/SHL
1
<PAGE>
CONTRACT: The Parties will attempt to contract jointly with customers
wherever possible with SHL acting as Prime Contractor. The Parties will
enter into agreements with each other wherein each will provide services
and deliverables consistent with the commitments agreed upon in the
Proposal to such customers. Neither Party shall be obligated to make
commitments beyond the commitments made by that Party in the Proposal. If
required, the Parties will contract separately to provide the commitments
agreed upon in the Proposal to the customers. Any such arrangement would
be governed by the customer contract.
NO AGENCY RELATIONSHIP: The Parties are and will act solely as independent
contractors. Neither Party shall have the authority to bind the other
without first obtaining the prior written consent of the other.
2. RESPONSIBILITIES OF BOTH PARTIES
RESPONSES TO PROPOSAL/MARKETING MATERIALS: Joint preparation/presentation
of responses to proposals, preparation/distribution of marketing materials,
and attendance at trade shows and conferences, with each Party performing
the portion related to the work to be performed. Each Party will be
responsible for promptly communicating with qualified prospects and will
bear its own costs in performing these obligations. Each Party will be
responsible for determining that the prospects are serious prospects with
the need for both Party's products and services, and the means to pay for
them.
METHODOLOGIES: The Parties will share Year/2000 methodologies and work
together to ensure the appropriate linkages between the IBS/Solution
2000-TM- and the SHL Transform-TM- methodology. This is particularly
applicable to the "front end" portion of the methodologies in order that
subsequent scan and repair work can be appropriately allocated.
MARKETING PLAN: To the extent deemed necessary, both Parties will jointly
develop a marketing plan. SHL's responsibilities in the marketing plan
are to include target offices where they feel specific assistance provided
by TPI would be logical.
PREFERRED VENDOR: TPI will reference SHL in all proposals and
presentations as TPI's Preferred Firm for Year/2000 Project Management
and/or Systems Integration in the Territory. TPI is prepared to provide
first right of refusal for Year/2000 Project Management and/or Systems
Integration. SHL will reference TPI in all proposals and presentations as
SHL s Preferred Vendor of Year/2000 Conversion and Scanning Services in the
Territory. The "Territory" will consist of the United States, Canada and
Mexico. The Parties will use their respective good faith efforts to expand
the Territory to include additional countries of promising opportunity as
later identified. Consistent with the preferred status given to the other
Party, each Party will share all appropriate engagements with each other.
COMPETITORS: Neither Party shall provide information about the other
Party, or its services or products, to the other Party's competitors as
identified by each Party from time to time.
- --------------------------------------------------------------------------------
TRANSFORMATION PROCESSING INC. DATE TEAMING AGREEMENT - TPI/SHL
2
<PAGE>
PRESS RELEASES: On or before ten (10) days after this Key Terms Document
is signed, the Parties will issue a joint press release detailing their
intent to work together.
3. ADDITIONAL RESPONSIBILITIES OF TPI
PEOPLE: One person, Peter Ross, will be available to assist John Gardner
in performing TPI's obligations under this Key Terms Document and the
Agreement.
SERVICE DATES: TPI will provide immediate Scan and Repair service at its
Year/2000 Partner/IBS Conversion Factory.
CONVERSION FACTORY: TPI will install Conversion Factory Module One for
Year/2000 Scan and Repair in a space contiguous with its current
Mississauga locations.
- Scanning production will occur in the sixty (60) to ninety (90)
day time frame.
- Repair production in ninety (90) to one hundred and twenty (120)
days.
INITIAL CAPACITY: Conversion Factory Module One will have a repair
capacity of four (4) million lines of code per month.
REPAIRED CODE: TPI will deliver repaired code that is clean compiled and
passes testing compilation. The repaired code may be further compiled in
the customer's production environment at the unit test level and pass
production acceptance as defined in the customer contract.
RESERVE CAPACITY: TPI will make available to SHL, a reserve capacity of
75% of Conversion Factory Module One for a period of not less than
twenty-four (24) months.
TPI will provide SHL will first right refusal for capacity in subsequent
Factory Modules, not to exceed 60% or 2.4 million lines of code per month.
OPTIONAL - EARLY MAY MEETING: TPI will make a major presentation at this
meeting. TPI is responsible for paying its expenses in connection with
travel to, and making its presentation at, such meeting.
TPI is prepared to conduct a three (3) or four (4) day IBM Institute
Year/2000 Analysis Training Course for selected SHL or customer's personnel
(SHL expense).
4. ADDITIONAL RESPONSIBILITIES OF SHL
PEOPLE: One person, John Gardner, will be available to assist Peter Ross
in performing SHL's obligations under this Key Terms Document and the
Agreement.
- --------------------------------------------------------------------------------
TRANSFORMATION PROCESSING INC. DATE TEAMING AGREEMENT - TPI/SHL
3
<PAGE>
VOLUME GUARANTEE: SHL will guarantee to TPI repair volumes to be executed
in Factory Module One as follows:
1 Million Lines of Code August 1, 1997
2 Million Lines of Code September 1, 1997
3 Million Lines of Code October 1, 1997
A subsequent 3 million lines of code per month to September 1, 1999.
OPTIONAL - SHL'S EARLY MAY MEETING: SHL will invite associates from all
offices (with special encouragement to members of Target Offices) to
discuss sample collateral materials, TPI's role, how the Parties will work
together, etc. Meetings will be held in Toronto, Ontario on or about May
1st, 1997, and will be funded by SHL. TPI will be introduced as SHL's
Preferred Vendor of Year/2000 Conversion and Scanning Services in the
Territory at this meeting.
5. EXPENSES AND COSTS
Each Party is responsible for its own costs in connection with its
obligations under this Key Terms Document and the Agreement. Joint
obligations shall be identified and qualified by the Parties and a written
agreement reached prior to commitment therefore. Neither Party shall be
liable for costs incurred by the other, without such Party s written
consent.
The Parties will enter into agreements whereby SHL will be entitled to
receive consideration in the form of "wholesale" pricing and/or a
percentage of the then current end-user pricing paid to TPI. Consideration
is with respect to scanning, converting and repair work performed at TPI's
factory where SHL introduces the customers to TPI and:
(a) the customer contracts with SHL and TPI separately to perform
Year/2000 work; or
(b) SHL sub-contract the Year/2000 to TPI.
6. CONFIDENTIAL AND PROPRIETARY INFORMATION
STANDARD: Each Party may use trademarks, etc. of the other for purposes
related to the scope of this Key Terms Document and the Agreement upon the
prior written approval of the other Party, which approval shall not be
unreasonably withheld.
7. INDEMNIFICATION
Each Party to indemnify the other for claims due to infringement of
copyright, patent, trade secret, trademark, or other proprietary rights.
8. LIMITATION OF LIABILITY
- --------------------------------------------------------------------------------
TRANSFORMATION PROCESSING INC. DATE TEAMING AGREEMENT - TPI/SHL
4
<PAGE>
Except for indemnification, each Party is limited in liability to the other
for direct damages up to $250,000.00. Neither Party shall be liable to the
other for indirect damages, etc. The specific terms and conditions of the
contract will take precedence in all cases.
9. TERM/TERMINATION
TERM: The Agreement will have an initial term of two (2) years, with
automatic renewals for consecutive one (1) year periods.
TERMINATION: Either Party may terminate this Key Terms Document and the
Agreement for any reason (or for no reason) upon sixty (60) calendar days
prior written notice to the other. The Parties will be obligated to
continue any ongoing proposals and projects past this sixty (60) day
period.
10. KEY BUSINESS CONTACTS
DESIGNATED CONTACT FOR TPI: Peter W. Ross
TITLE: Vice President, Marketing
DESIGNATED CONTACT FOR SHL: John Gardner
TITLE: Director
11. MISCELLANEOUS
NO ASSIGNMENT, without the written consent of the other Party.
NOTICES: Transformation Processing Inc.
2121 Argentia Road, Suite 200
Mississauga, Ontario L5N 2X4
SHL Systemhouse Inc.
55 York Street, 7th Floor
Toronto, Ontario M5J 1R7
GOVERNING LAW / VENUE: Ontario / Toronto, Ontario CANADA
THE UNDERSIGNED AGREE THAT THE FOREGOING KEY BUSINESS TERMS ARE ACCEPTABLE
AND FORM A BASIS UPON WHICH THE PARTIES MAY PROCEED AND MAY DEVELOP THE
AGREEMENT.
5
<PAGE>
SHL Systemhouse Inc.
John Gardner
_______________________________________ TRANSFORMATION PROCESSING INC.
Full Legal Name of User (Please Print)
By: /s/ John Gardner By: /s/ Peter Ross
____________________________________ ______________________________
(Signature) (Signature)
John Gardner Peter Ross
________________________________________ _________________________________
Name of Signing Officer (Please Print) Name of Signing Officer (Please
Print)
Director Vice President--Sales & Marketing
______________________________________ ___________________________________
Title (Please Print) Title (Please Print)
- --------------------------------------------------------------------------------
TRANSFORMATION PROCESSING INC. DATE TEAMING AGREEMENT - TPI/SHL
Date April 21, 1997 Date April 21, 1997
-------------- --------------
6
<PAGE>
Exhibit 10.16
SOFTWARE LICENSE AGREEMENT
This Agreement is entered into on the Effective Date, as hereinafter
defined, by and between IntellAgent Control Corporation f/k/a Veritas
Technologies, Inc., a Texas corporation with offices in Dallas, Texas ("ICC"),
and the entity or individual identified in the Software License Exhibit,
attached hereto and incorporated herein for all purposes, as "Licensee" (the
"Licensee").
IN CONSIDERATION OF the mutual representations, covenants and
undertakings hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, ICC and Licensee,
intending to be legally bound, agree as follows:
DEFINITIONS
1. For Purposes of this Agreement, the following terms shall have the
following meanings unless the context clearly indicates otherwise:
a. Act!. "Act!" means the computer software entitled ACT!
owned and/or licensed by Symantec Corporation and designated by the version or
version number in the System Requirements. This does not include ACT! for DOS
(single user or network version), ACT! for Hewlett-Packard 95LX or any version
or version number of ACT! not designated in the system Requirements.
b. Additional User. "Additional User" means each individual
who uses the Licensed Materials in excess of the number of Authorized Users
specified in the Software License Exhibit.
c. Additional User Fee. "Additional User Fee" means the fee
payable to ICC by Licensee, as designated in the Software License Exhibit, for
use of the Licensed Materials by each Additional User. If no Additional User Fee
is designated, then the Additional User Fee shall be the amount published by ICC
as its standard Additional User Fee at the time the Additional User Fee accrues.
d. Authorized Users. "Authorized Users" means the number of
individuals who are authorized to use the Licensed Materials as specified in the
Software License Exhibit.
e. Effective Date. "Effective Date" means the date so
identified in the Software License Exhibit.
f. Intellectual Property Rights. "Intellectual Property Rights
mean any patent, trademark, copyright, trade secret or contract rights in and to
the Licensed Materials.
g. Licensed Database/Templates. "Licensed Database/Templates"
mean those parts of the ICC Software that ICC designates a licensee may modify
subject to the Paragraph entitled "Permitted Alterations." Licensed
Database/Templates include, but are not limited to, the ICC product known as
IntellAgent Control.-TM-
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<PAGE>
h. License Fee. "License Fee" means the nonrefundable fee
specified in the Software License Exhibit.
i. Licensed Materials. "Licensed Materials" mean the ICC
Software and Support Materials delivered to the Licensee under this Agreement.
j. Lotus Notes. "Lotus Notes" means the computer software
owned and/or licensed by Lotus Development Corporation and designated by the
version or version number set forth in the System Requirements. This does not
include any Lotus Notes version or version number not designated in the System
Requirements.
k. Modification. "Modification" means any modification,
change, enhancement or improvement to the Licensed Materials.
l. Software Defect. "Software Defect" means a failure of the
ICC Software to function substantially in accordance with the applicable Support
Materials.
m. Support Materials. "Support Materials" mean printed or
written materials relating to the ICC Software including, without limitation,
manuals, specifications, and instructions, and any copies of any of the
foregoing, in any medium, delivered to the Licensee under this Agreement.
n. System Requirements. "System Requirements" mean the system
requirements published from time to time by ICC for the applicable component
and/or version of the ICC Software including, but not limited to, the required
versions of Third Party Software.
o. Third Party Software. "Third Party Software" means Act! and
Lotus Notes as designated in the System Requirements.
p. ICC Confidential Information. "ICC Confidential
Information" means trade secrets, knowledge, data or other proprietary
information of ICC not generally known to the public. ICC Confidential
Information includes, without limitation, the Licensed Materials, inventions,
trade secrets, ideas, processes, formulae, flow charts, design specifications,
source and object code, data, programs, documentation, unpublished works of
authorship, know-how, improvements, discoveries, developments, designs and
techniques, including without limitation, all code, parameter files, execution
files and other files constituting a part of the Licensed Materials, along with
the design, layout and operation of the IntellAgent Control-TM- database. ICC
Confidential Information does not include (i) information already known or
independently developed by the Licensee; (ii) information in the public domain
through no wrongful act of the Licensee; (iii) information that subsequently
enters the public domain through no wrongful act of the Licensee; or (iv)
information received by the Licensee from a third party who was free to disclose
it.
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q. Licensee Confidential Information. "Licensee Confidential
Information" means proprietary information of Licensee, not generally known to
the public, that is specifically identified by Licensee in a written notice
delivered to ICC as Licensee Confidential Information; provided, however, that
Licensee Confidential Information does not include program code, parameter or
execution files for the Licensed Materials and Modifications, routines,
algorithms, software structure, sequence, or organization; information already
known or independently developed by ICC; information in the public domain
through no wrongful act of ICC; information that subsequently enters the public
domain through no wrongful act of ICC; and information received by ICC from a
third party who was free to disclose it.
r. ICC Software. "ICC Software" means the version of computer
software entitled IntellAgents-TM- and/or the Licensed Database/Templates, as
identified in the Software License Exhibit, along with each copy, translation,
compilation, update, modification or enhancement of all or any part of the ICC
Software, in any medium, delivered to Licensee or made by ICC under this
Agreement.
GENERAL PROVISIONS
2. License Fee. The License Fee is due and payable and Licensee agrees
to pay the Licensee Fee to ICC on or before the Effective Date.
3. Taxes and Duties. Except for taxes based on the net income of ICC
and ICC's franchise taxes, Licensee shall be responsible for all taxes on sums
payable to ICC under this Agreement, including without limitation sales and use
taxes. Licensee shall pay all customs duties, import fees, and similar levies,
as applicable, on shipments from ICC.
4. Exclusion of Third Party Software. Neither the License Fee nor any
other sums payable under this Agreement include the cost of the Third Party
Software.
5. Invoice; Payment and Late Charges. All fees payable under this
Agreement, other than the license Fee, shall be paid to ICC within ten (10) days
of Licensee's receipt of the invoice. Invoices shall be considered delinquent
ten (10) days after receipt. Any payments received by ICC more than thirty one
(31) days past due shall be subject to any costs of collection (including
reasonable legal fees and costs).
6. Non-Payment. If Licensee fails to pay fees payable to ICC under this
Agreement, ICC reserves the right to repossess the ICC Software without
prejudice, and assert appropriate liens until all amounts due are paid in full.
All past due amounts shall bear interest at the lesser of one and one-half
percent per month and the highest rate allowed by law.
7. Additional User Fee. Licensee shall pay to ICC the Additional User
Fee for each Additional User in excess of the number of Authorized Users. The
Additional User Fee for each
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Additional User shall be due and payable by Licensee and Licensee shall pay the
Additional User Fee before the first use of the ICC Software by each such
Additional User.
8. Term. This Agreement is effective upon the effective date and shall
remain in effect until terminated.
9. Licensee's Obligations. Licensee agrees to adhere to the terms and
conditions of this Agreement and all other agreements between ICC and Licensee.
10. Installation and Training Services. ICC shall provide its standard
installation and training services in accordance with the fees specified in the
Software License Exhibit.
11. Services Provided by Other Agreements. There are no software
maintenance or consulting services provided under this Agreement. Software
maintenance and consulting services are available only pursuant to separate,
written agreements between ICC and Licensee.
LICENSE
12. Grant of License. Subject to the terms and conditions of this
Agreement and for the duration of this Agreement, ICC hereby grants and Licensee
hereby accepts a non-exclusive and non-transferable license to use and possess
the Licensed Materials for the number of Authorized Users specified in the
Software License Exhibit.
13. Export Control. Licensee warrants and represents that it shall in
all ways comply with the export control laws and regulations of the United
States. If Licensee is furnishing the Licensed Materials to its facilities
outside of the United States, Licensee shall obtain all export licenses, fully
adhere to the applicable export control laws and regulations, and indemnify and
hold ICC harmless from and against all claims, liabilities, actions, damages and
expenses (including reasonable attorneys' fees incurred by ICC) arising out of
any failure to comply with such laws and regulations and any breach of this
Agreement by such facilities outside the United States. Further, Licensee
represents and warrants that any of its facilities outside of the United States
to which it provides the Licensed Materials are bound by the provisions of this
Agreement. If at any time the Licensed Materiels are to be located at any
location other than the address designated in the Software License Exhibit,
Licensee shall notify ICC in writing of the street address of such other
location prior to moving the Licensed Materials to such location.
14. Assignment or Transfer. Licensee may assign this Agreement and/or
transfer the Licensed Materials only with the prior, express, and written
consent of ICC, which consent shall not be unreasonably withheld. Any
encumbrance, other transfer, and/or attempt to encumber or transfer shall be
void and of no legal effect and shall constitute a material breach of this
Agreement by Licensee.
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<PAGE>
15. Duplication. Licensee shall not make any copies of the Licensed
Materials except that for each Authorized User and each Additional User.
Licensee may make one (1) copy of the ICC Software program and (l) one copy of
the user manual contained in the Support Materials. In addition, Licensee may
make (1) copy of the ICC Software for backup purposes. All such copies shall
include ICC's copyright and other proprietary notices and are subject to the
provisions of this Agreement.
16. Certain alterations Prohibited. Except as expressly provided in the
Paragraph entitled "Permitted Alterations," Licensee shall not alter, modify,
disassemble, decompile, reverse engineer or otherwise manipulate (or attempt to
alter, modify, disassemble, decompile, reverse engineer or otherwise manipulate)
the ICC Software. Licensee shall not translate, update, or make any
Modifications to the ICC Software without the prior, express, and written
consent of ICC, except as otherwise expressly provided in the Paragraph entitled
"Permitted Alterations."
17. Permitted Alterations. Licensee shall have the non-exclusive and
non-transferable right to make Modifications to the Licensed
Database/Templates, but not the IntellAgents-TM- program or any other
portion of the ICC Software or the Licensed Materials; and provided, however,
that the following provisions apply to all Modifications made by Licensee:
a. All such Modifications of the Licensed Database/Templates or any
portion thereof shall be at Licensee's, sole risk and expense, and in no event
shall ICC have any obligation to support or maintain any Modification which is
not distributed by ICC to its general client base and made a part of the
standard ICC Software.
b. ICC shall not be responsible in any regard and shall incur no
liability for any errors, failures or malfunctions of the Licensed
Database/Templates or any other portion of the ICC Software, and Licensee
assumes full responsibility for any and all errors, failures, malfunctions, non-
conformance or other effects arising from Modification(s) made by Licensee.
c. Licensee acknowledges that, by virtue of such Modification(s) made
by Licensee to the Licensed database/Templates, subsequent modifications,
solutions, corrections, improvements, or release of the ICC Software and related
documentation may be rendered unusable or incompatible.
d. The non-exclusive and non-transferable right granted to Licensee in
this Paragraph to make Modifications to the Licensed Database/Templates applies
solely to the Licensed Database/Templates, and shall not apply to the
IntellAgents-TM- program or any other portion of the ICC Software or the
Licensed Materials. The provisions of Subparagraphs a and b of this Paragraph
shall survive termination of this Agreement, but the rights granted to Licensee
in this Paragraph shall terminate upon termination of this Agreement.
18. Acknowledgment of Confidentiality. Licensee hereby acknowledges
that the ICC Confidential Information, code partial copies and derivative works
thereof contain proprietary information belonging exc1usively to ICC Licensee
acknowledges that such ICC Confidential
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Information gives ICC an advantage over competitors in the industry who do not
know or use ICC Confidential Information. Licensee acknowledges that ICC has
expended substantial amounts of time, effort, and money in creating, developing,
and protecting the ICC Confidential Information. Licensee acknowledges that any
publication or disclosure to third parties of ICC Confidential Information would
cause immediate and irreparable harm to ICC.
19. Nondisclosure of ICC Confidential Information. During the Term of
this Agreement and at all times thereafter, Licensee shall not (a)
misappropriate any ICC Confidential Information, or (b) without ICC's prior,
express, and written consent, disclose, provide, or in any way make any ICC
Confidential Information available in any form to any other party, except to
employees of Licensee and consultants who require such knowledge and use in the
ordinary course and scope of their engagement at Licensee and whose access is
necessary to enable Licensee to exercise its rights under this Agreement.
Licensee shall require all employees and consultants having access to any ICC
Confidential Information to agree to maintain the confidentiality of the ICC
Confidential Information. Licensee warrants to ICC that each employee and
consultant having access to the ICC Confidential Information understands, agrees
to be governed, and is bound by the terms and conditions of this Agreement or
one at least as restrictive. The provisions regarding confidentiality and
nondisclosure of the ICC Confidential Information shall survive termination of
this Agreement. Licensee shall take all reasonable steps necessary to maintain
the confidentiality of the ICC Confidential Information and shall use at least a
reasonable standard of care safeguarding it.
20. Injunctive Relief. Licensee acknowledges that violation of the
provisions of the Paragraph entitled "Nondisclosure of ICC Confidential
Information" would cause irreparable harm to ICC not adequately compensable by
monetary damages. Accordingly, in addition to monetary damages and other relief,
the parties agree that injunctive re1ief including, but, not limited to,
specific performance, shall be available to ICC to prevent any actual or
threatened violation of such provisions and is available without the requirement
of posting bond.
INTELLECTUAL PROPERTY
21. Ownership of Intellectual Property Rights. ICC owns all
Intellectual Property Rights in and title to all copies, in whole and in part,
of the Licensed Materials and all derivative works thereof. Licensee shall not
acquire any rights or interest in any of the Intellectual Property by reason of
any use and/or modification of the same in connection with this Agreement. ICC
retains all rights not expressly granted in this Agreement.
22. ICC Trademarks. Licensee agrees and acknowledges that
VERITAS-TM-, INTELLAGENTS-TM- and INTELLAGENT CONTROL-TM- are trademarks of
ICC. All goodwill derived from Licensee's use of ICC's trademarks in
connection with this Agreement shall inure to the benefit of ICC. Licensee
shall not alter, vary or combine ICC's trademarks in any manner. Licensee
shall neither alter nor remove from any Licensed Materials any proprietary,
copyright, trademark or trade secret notice or legend.
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23. Ownership of Modifications. ICC shall own all right, title and
interest, including all Intellectual Property Rights, in and to any
modifications of the Licensed Materials; the provisions in this Section shall
not be deemed to grant to Licensee a right or privilege to make Modifications
except as otherwise expressly permitted in this Agreement. If Licensee makes any
Modifications to the Licensed Materials, Licensee shall be deemed to have
assigned to ICC ownership of all program code and data for such Modifications,
unless ICC and Licensee expressly agree otherwise in a writing that specifically
identifies such Modifications made by Licensee. Licensee retains rights to
Licensee Confidential Information. Nothing in this Section shall limit ICC's
Intellectual Property Rights. So long as this Agreement is in effect, Licensee
shall have a non-exclusive, royalty-free license to use any Modifications made
by Licensee in accordance with the terms of this Agreement. Subject to the
limitations set forth in this Section, ICC's ownership includes, without
limitation, the right to produce, make, use, modify, prepare derivative works,
display publicly, perform publicly, sell, license or otherwise distribute or
dispose of all Modifications.
LIMITATIONS OF LIABILITY
EXCEPT AS EXPRESSLY SET FORTH ABOVE, ICC MAKES NO WARRANTY,
REPRESENTATION, PROMISE, OR GUARANTEE, EITHER EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE, REGARDING THE LICENSED MATERIALS, INCLUDING WITHOUT LIMITATION THEIR
QUALITY, PERFORMANCE, SUITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, AND ICC EXPRESSLY DISCLAIMS ALL WARRANTIES NOT EXPRESSLY STATED HEREIN.
LICENSEE ASSUMES THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE
LICENSED MATERIALS. SHOULD THE LICENSED MATERIALS PROVE DEFECTIVE, LICENSEE AND
NOT ICC ASSUMES THE ENTIRE COST OF NECESSARY SERVICING, REPAIR, OR CORRECTION.
LICENSEE'S SOLE REMEDIES AND THE ENTIRE LIABILITY OF ICC ARE SET FORTH
ABOVE. IN NO EVENT WILL ICC BE LIABLE TO LICENSEE OR ANY OTHER PERSON FOR ANY
DAMAGES, INCLUDING ANY INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES, EXPENSES,
LOST PROFITS, LOST SAVINGS OR OTHER DAMAGES ARISING OUT OF USE OR INABILITY TO
USE THE LICENSED MATERIALS OR IN ANY WAY RELATING TO THE LICENSED MATERIALS.
SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OF IMPLIED WARRANTIES OR
LIMITATION OF LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE
LIMITATION MAY NOT APPLY TO LICENSEE.
BECAUSE SOFTWARE IS INHERENTLY COMPLEX AND MAY NOT BE
COMPLETELY FREE OF ERRORS, LICENSEE IS ADVISED TO VERIFY AND MAKE
BACKUP COPIES OF ITS WORK.
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<PAGE>
IN NO EVENT SHALL ICC BE LIABLE, IN CONTRACT AND/OR IN TORT, FOR ANY
AMOUNT IN EXCESS OF THE MONIES PAID BY LICENSEE TO ICC PURSUANT TO THIS
AGREEMENT.
TERMINATION
30. Termination. Licensee may terminate this Agreement at any time by
written notice to ICC and returning the Licensed Materials to ICC together with
all copies thereof and extracts or modifications thereof. If Licensee breaches
this Agreement and after written notice of such breach, Licensee fails to cure
within five days, ICC may terminate this Agreement upon written notice to
Licensee. Termination of this Agreement terminates the license granted herein.
Upon termination for any reason whatsoever, Licensee shall immediately cease
using, directly or indirectly, all Licensed Materials and shall promptly return
the Licensed Materials to ICC at Licensee's expense.
31. Survival. The provisions of the following entitled Paragraphs shall
survive termination of this Agreement: "Acknowledgment of Confidentiality,"
"Nondisclosure of ICC Confidential Information," "Injunctive Relief," "Ownership
of Intellectual Property Rights," "ICC Trademarks," "Ownership of
Modifications," "No Warranties for Third Party Software," "Limitation of
LIABILITY," and "Governing Law."
32. No Refund of Fees. Upon termination of this Agreement, ICC shall
have no obligation to refund any fees paid to it for the Licensed Materia1s.
ADDITIONAL PROVISIONS
33. Compliance with System Requirements. Licensee shall not use the ICC
Software other than in conformance with the System Requirements.
34. Infringement. If any third party makes to Licensee a claim or
demand regarding infringement of any copyright or trademark or misappropriation
of any trade secret by reason of Licensee's having used the Licensed Materials
within the scope of the licenses granted herein, Licensee agrees to notify ICC
promptly in writing of the claim or demand.
35. Indemnification. Provided Licensee is not in default of this
Agreement, ICC shall defend and indemnify Licensee from and against all claims
and damages, if any, arising from any alleged infringement by the Licensed
Materials of a U.S. copyright or trademark or the misappropriation of any trade
secrets of any third party (an "Infringement Claim"); provided further: that
Licensee notifies ICC as provided in the Paragraph entitled "Infringement;" that
ICC is permitted to control fully the defense and settlement of such
Infringement Claim; and that Licensee fully cooperates with ICC in the defense
and settlement of such Infringement Claim. Alternatively, ICC may, in its sole
discretion and at ICC's expense, replace the allegedly infringing Licensed
Materials, modify them so that they do not infringe, and/or acquire the right
from the third party to use the allegedly infringing Licensed Materials. ICC
shall have no obligation pursuant to this Paragraph if the
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<PAGE>
Infringement Claim arose out of Licensee's use of Licensed Materials with
hardware and/or software, other than the third Party Software, not provided by
ICC.
36. Governing Law. This agreement shall be construed and enforced in
accordance with the laws of the State of Texas, excluding Texas' conflicts of
law, and both parties agree that the Federal and State Courts located in Dallas
County, Texas shall have jurisdiction over any matter arising in connection with
this Agreement and hereby submit to such jurisdiction. Any action against either
party must be commenced within two (2) years after such cause of action accrues.
If any action is brought to enforce this Agreement or any of its terms, the
prevailing party shall be entitled to legal costs, including reasonable
attorneys' fees and costs.
37. Modification, Waiver, Amendment, Etc. This Agreement may be amended
only by a written instrument executed by all parties hereto. The failure of any
party at any time or times to require performance of any provision of this
Agreement by any other party hereto shall in no manner affect the right of such
party at a later time to enforce same. To be effective a waiver must be signed
by the party sought to be charged with the waiver. If any covenant or other
provision of this Agreement is found by a court of competent jurisdiction to be
invalid, unlawful or incapable of being enforced, all other conditions and
provisions of this Agreement which can be given effect without the invalid,
unlawful or unenforceable provision shall, nevertheless, remain in full force
and effect
38. Integration. This Agreement and the Software License Exhibit
constitute the sole, full, and complete Agreement and understanding between
Licensee and ICC with respect to the matters set forth herein, and supersedes
and terminates any and all prior or existing proposals, agreements, or
understandings between Licensee and ICC with respect to such matters.
39. Notices. All notices, requests, demands, instructions and other
communications required or permitted to be given under this Agreement by a party
hereto shall be deemed duly given or sent hereunder only if in writing and
delivered personally, mailed first class, postage prepaid, certified mail,
return receipt requested, sent by Federal Express or similar overnight delivery
service, or sent by facsimile transmission or telex with acknowledgment or
confirmation required thereof, to the other hereto as follows:
If to Licensee to the individual named and the address set forth in the
Software License Exhibit
If to ICC to IntellAgent Control Corporation f/k/a Veritas
Technologies, Inc., 12750 Merit Drive, Suite 830, Dallas, Texas 75251-1241,
Attention: License Administrator
Any such communication shall be deemed to have been given or sent as of the date
of hand delivery five (5) days after the date of mailing by certified mail; the
business day after the date sent by Federal Express or other similar service; or
the date of acknowledgment of receipt of facsimile or telex transmission, as the
case may be.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
made it effective upon the Effective Date.
Agreed and accepted: Agreed and accepted:
INTELLAGENT CONTROL CORPORATION
(ICC): (Licensee):
By: /s/ By: /s/ Gary G. McCann
------------------------- ---------------------------
Title: Business Partner Manager Title: Vice President - Operations
------------------------- ---------------------------
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<PAGE>
SOFTWARE LICENSE EXHIBIT
Licensee:
Licensee's address:
Notices should be sent to the following person at the above address:
Attn:
Effective Date:
License Fee $____________
Licensed Materials Number of Version
Authorized Users
IntellAgents _________________ _____R4___________
Additional User Fee $_____________
Annual Maintenance fees: $____ per authorized user
$____ Total Annual Maintenance Fee
Unless otherwise expressly agreed to in writing, Licensee shall reimburse ICC
for all travel expenses.
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<PAGE>
Agree and accepted: Agreed and accepted:
INTELLAGENT CONTROL (ICC): PRODUCTIVITY POINT CORPORATION
INTERNATIONAL (PPI):
By :__________________________ By :__________________________
Title :_________________________ Title :_________________________
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<PAGE>
INTELLAGENT CONTROL CORPORATION
VALUE ADDED RESELLER AGREEMENT
Name and address of Value Added Reseller:
Transformation Processing, Inc.
2121 Argentia Road, Suite 200
Mississauga, Ontario L5N2X4
Attention: Lisa Denis
Effective Date: April 23, 1997
This Agreement sets forth the terms under which the Value Added Reseller
identified above may participate in IntellAgent Control Corporation's Value
Added Reseller Program( the "Program"), including the receipt of IntellAgent
Control Corporation products (the "Products") and services.
1. PRODUCTS AND SERVICES AVAILABLE UNDER THE PROGRAM.
(a) Products. Value Added Reseller shall have the right to acquire and use
IntellAgent Control Corporation products made available to Program participants
from time to time, in the quantity and for the prices or fees established by
IntellAgent Control Corporation for Program participants. Value Added Reseller
agrees to use any Product acquired under the Program solely for sales, marketing
and demonstration purposes, as well as general internal business purposes
related to the Products, and not for resale or distribution to third parties.
Value Added Reseller shall be solely responsible for its activities, products
and services relating to or provided with IntellAgent Control Corporation
Products. Value Added Reseller shall not make any representations or statements
regarding Intelligent Control Corporation Products other than those contained in
Intelligent Control Corporation's marketing literature and advertising copy.
Value Added Reseller's other rights and obligations relating to such Products
shall be governed by the IntellAgent Control Corporation Software License
Agreement accompanying the particular Product acquired. Value Added Reseller
shall provide to Intelligent Control Corporation, upon request information
related to Value Added Reseller's involvement in sales of the Products.
(b) Support. Value Added Reseller shall be entitled to receive the
technical support services made available to Program participants from time to
time, including electronic and telephone support, under the terms and conditions
established by IntellAgent Control Corporation.
(c) Marketing services. Value Added Reseller shall be entitled to receive
the marketing services IntellAgent Control Corporation elects to provide from
time to time for its Value Added Resellers.
(d) Program terms subject to change. IntellAgent Control Corporation may
change any of the terms for products or support offered to Program participants
without prior notice to value
<PAGE>
Added Reseller, provided, however, that Value Added Reseller shall be permitted
to terminate this Agreement and its participation in the Program without cause
upon any change by IntellAgent Control Corporation in these terms.
2. PRE-RELEASE PRODUCTS
(a) Use. IntellAgent Control Corporation may in its sole discretion extend
to Value Added Reseller the right to use the pre-release software and related
documentation that it makes available under the Value Added Reseller Marketing
Program from time to time (the "Pre-Release Software") solely for the purpose of
evaluating the Pre-Release Software, and subject to the following terms:
(b) Acceptance of terms. Value Added Reseller shall acknowledge its
acceptance of the terms of this Section 2, in the form stipulated by IntellAgent
Control Corporation, prior to receiving any Pre-Release Software under the
Program.
(c) Confidentiality; proprietary rights. Value Added Reseller agrees with
IntellAgent Control Corporation that the Pre-Release Software is IntellAgent
Control Corporation Confidential Information subject to the terms of Section 8
of this Agreement and constitutes a trade secret of IntellAgent Control
Corporation, and that, unless otherwise specifically agreed by IntellAgent
Control Corporation in writing, Value Added Reseller:
(i) shall not copy the Pre-Release Software or the related documentation
in excess of the number designated by IntellAgent Control Corporation
in computer readable or human readable form except for one back-up
copy; and
(ii) shall, at IntellAgent Control Corporation's request, promptly return
to IntellAgent Control Corporation or destroy all diskettes,
documentation or other materials furnished to Value Added Reseller by
IntellAgent Control Corporation under this Agreement.
(d) No Warranty. In view of the developmental nature of Pre-Release
Software, IntellAgent Control Corporation makes no warranty as to the
operational performance of Pre-Release Software. INTELLAGENT CONTROL CORPORATION
DISCLAIMS ALL WARRANTIES WITH REGARD TO PRE-RELEASE SOFTWARE AND THE RELATED
DOCUMENTATION INCLUDING WITHOUT LIMITATION WARRANTY OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE AND NO INFRINGEMENT.
3. PAYMENT TERMS. Unless otherwise stated by IntellAgent Control Corporation,
payments of applicable subscription, license and support fees for the Program
and Products are due upon submission of Value Added Reseller's order form for
the particular Product or service requested. Value Added Reseller agrees to pay
shipping and related insurance charges, as well as any tax, however
characterized, including customs duties and tariffs, arising out of this
Agreement
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<PAGE>
or the use of the Products, other than taxes assessed on IntellAgent Control
Corporation's net income.
4. PROPRIETARY RIGHTS. During the terms of this Agreement, Value Added Reseller
may represent itself as an authorized IntellAgent Control Corporation Value
Added Reseller of IntellAgent Control Corporation Products. Value Added Reseller
shall not represent that Value Added Reseller's products and services are
affiliated with or endorsed by IntellAgent Control Corporation.
Nothing done pursuant to this Agreement shall transfer to Value Added Reseller
title to any intellectual property rights (including, without limitation, any
trademark or copyright) in or to IntellAgent Control Corporation Products or any
other software application, or any associated documentation or training
materials, provided to Value Added Reseller by IntellAgent Control Corporation .
Value Added Reseller shall not manufacture, duplicate, translate, reverse
engineer or decompile IntellAgent Control Corporation Products or information
relating thereto.
5. TECHNICAL SUPPORT. From time to time and depending upon the particular
IntellAgent Control Corporation product involved, IntellAgent Control
Corporation may require that Value Added Reseller obtain a certain level of
technical expertise in order to resell or recommend IntellAgent Control
Corporation Products. IntellAgent Control Corporation or its designee shall
offer fee-based periodic training classes in order for Value Added Reseller
personnel to obtain and maintain such technical expertise.
6. LIMITED WARRANTY. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THE
APPLICABLE PRODUCT SOFTWARE AGREEMENT AND ELSEWHERE HEREIN, INTELLAGENT CONTROL
CORPORATION DISCLAIMS ALL WARRANTIES WITH REGARD TO PRODUCTS AND SERVICES
RECEIVED UNDER THIS AGREEMENT, INCLUDING ALL IMPLIED WARRANTIES 0F
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
7. LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE LIABLE FOR SPECIAL, INDIRECT,
INCIDENTAL, CONSEQUENTIAL, TORT OR COVER DAMAGES, INCLUDING, WITHOUT LIMITATION,
DAMAGES RESULTING FROM THE USE OR INABILITY TO USE THE PRODUCTS, DELAY OF
DELIVERY OR LOSS OF PROFITS, DATA, BUSINESS OR GOODWILL, WHETHER OR NOT SUCH
PARTY HAS BEEN ADVISED OR IS AWARE OF THE POSSIBILITY OF SUCH DAMAGES. THE LIMIT
OF MONETARY DAMAGES AGAINST INTELLAGENT CONTROL CORPORATION UNDER THIS AGREEMENT
SHALL IN NO EVENT EXCEED THE AMOUNTS PAID BY VALUE ADDED RESELLER TO INTELLAGENT
CONTROL CORPORATION UNDER THE VALUE ADDED RESELLER PROGRAM.
8. NONDISCLOSURE AND CONFIDENTIALITY AGREEMENT. IntellAgent Control Corporation
("IntellAgent Control Corporation ") possesses valuable information and
technical
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<PAGE>
experience of a secret and confidential nature relating to IntellAgents and
IntellAgent Control. This information ("IntellAgent Control Corporation
Confidential Information") is a commercial asset of considerable value to
IntellAgent Control Corporation and IntellAgent Control Corporation is willing
to disclose and permit disclosure of IntellAgent Control Corporation
Confidential Information to the undersigned individual and to the business
entities represented by him/her (collectively 'Value Added Reseller') for
evaluation purposes and with a view toward entering into a subsequent business
relationship only on the condition that the Value Added Reseller will not
disclose or make use of in any manner the IntellAgent Control Corporation
Confidential Information except under the conditions set forth below:
(a) IntellAgent Control Corporation Confidential Information shall mean
trade secrets, knowledge, data or other proprietary information of IntellAgent
Control Corporation not generally known to the public and identified as
confidential by IntellAgent Control Corporation. IntellAgent Control Corporation
Confidential Information includes inventions trade secrets, ideas, processes,
formulae, flow charts, design specifications, source and object code, data,
programs, documentation, unpublished works of authorship, know-how,
improvements, discoveries, developments, designs and techniques, including,
without limitation, all code, parameter files, executable files, and other files
constituting a part of IntellAgents(TM), along with the design, layout and
operation of the IntellAgent Control database. IntellAgent Corporation
Confidential Information does not include (i) Information already known or
independently developed by the Value Added Reseller; (ii) information in the
public domain through no wrongful act of the Value Added Reseller, or (iii)
information received by the Value Added Reseller from a third party who was free
to disclose it.
(b) Value Added Reseller shall not communicate IntellAgent Control
Corporation Confidential Information to any third party and shall take all
reasonable steps to prevent inadvertent disclosure of IntellAgent Control
Corporation Confidential Information to any third party.
(c) Value Added Reseller shall limit dissemination of IntellAgent Control
Corporation Confidential Information to persons involved in the evaluation of
IntellAgent Control Corporation Confidential Information. Value Added Reseller
represents and warrants that any person involved in the evaluation on Value
Added Resellers behalf is either under contract to Value Added Reseller not to
disclose any information received from Value Added Reseller, or will become
obligated to Value Added Reseller prior to receiving IntellAgent Control
Corporation Confidential Information.
(d) Value Added Reseller shall not, without IntellAgent Control
Corporation's prior consent to disclose to any third Party that IntellAgent
Control Corporation and Value Added Reseller are discussing a potential business
relationship or the nature of IntellAgent Control Corporation' interest in a
proposed business relationship with Value Added Reseller.
(e) The obligations of paragraphs 1-2 hereof shall terminate with respect
to IntellAgent Control Corporation Confidential Information only.
(i) When Value Added Reseller can document that:
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<PAGE>
A. IntellAgent Control Corporation Confidential Information was in
the public domain at the time of IntellAgent Control Corporation
Communication thereof to Value Added Reseller;
B. IntellAgent Control Corporation Confidential Information entered
the public domain through no fault of Value Added Reseller;
C. IntellAgent Control Corporation Confidential Information was in
Value Added Resellers possession free of any obligation of
confidence at the time of IntellAgent Control Corporation
Communication thereof to Value Added Reseller;
D. IntellAgent Control Corporation Confidential Information was
rightfully communicated to Value Added Reseller free of any
obligation of confidence;
E. IntellAgent Control Corporation Confidential Information was
developed by Value Added Reseller, employees or agents of Value
Added Reseller independently of and without reference to any
IntellAgent Control Corporation Confidential Information or other
information that IntellAgent Control Corporation has disclosed in
confidence to any third party; or
F. IntellAgent Control Corporation Confidential Information is
apparent by inspection of publications marketed without
restriction by IntellAgent Control Corporation, Value Added
Reseller or others in the ordinary course of business;
(ii) In any event, ninety-nine (99) years after IntellAgent Control
Corporation' communication thereof to Value Added Reseller, after
which time IntellAgent Control Corporation will rely on whatever
rights it may obtain under the patent and copyright laws for
protection of any information communicated to the undersigned.
(f) All IntellAgent Control Corporation Confidential Information shall
remain the property of IntellAgent Control Corporation and shall be returned to
IntellAgent Control Corporation promptly at its request together with all copies
thereof made by Value Added Reseller during the evaluation process and all work
papers generated by Value Added Reseller during the evaluation process.
(g) This Agreement shall govern all communications relating to IntellAgent
Control Corporation that are made after the date this Agreement was signed, and
shall continue until either party receives from the other written notice that
subsequent communications shall not be governed.
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<PAGE>
(h) Value Added Reseller acknowledges that violation of any of the
provisions of this document would cause irreparable harm to IntellAgent Control
Corporation . Therefore, in addition to monetary damages and other relief, the
parties agree that injunctive relief shall be available to IntellAgent Control
Corporation to prevent any actual or threatened violation of such provisions.
(i) This Agreement shall be construed in accordance with the laws of the
State of Texas, U.S.A. and venue for any action arising out of or under this
Agreement shall be in the courts of Dallas County, Texas.
(j) The undersigned represents that he is authorized to execute this
Agreement on behalf of Value Added Reseller.
(k) No Disclosure. During the term of this Agreement and for a period of
three (3) years thereafter, neither IntellAgent Control Corporation nor Value
Added Reseller shall disclose to any third party and Value Added Reseller may
not use except as permitted under this Agreement any information of the other
party identified as confidential or proprietary at the time of disclosure and,
if disclosed orally, confirmed in writing by the disclosing party as such
promptly after its disclosure ("Information"), without the prior written consent
of the other party and then only to the extent specified in such consent. The
parties shall limit access to the information of the other to those employees
and independent contractors who have entered into appropriate confidentiality
agreements and shall ensure compliance with the terms of such agreements.
Information may be copied and disseminated within the receiving party's own
organization only to the extent reasonably required for the purposes hereof.
(l) Exceptions. The restrictions on disclosure of Information described in
Paragraph 8(a) do not extend to any items of information which (i) is publicly
known at the time of its disclosure, (ii) is lawfully received by the receiving
party from a third party not bound in a confidential relationship to the
disclosing party, (iii) is published or otherwise made known to the public by
the disclosing party, or (iv) was generated or developed independently before
its receipt from the disclosing party. Either party may disclose information to
the extent required by law provided that the party so required must give the
other party prompt notice and make a reasonable effort to obtain a protective
order.
(m) Electronic connections. Value Added Reseller acknowledges that
IntellAgent Control Corporation maintains electronic connection and
communications with third parties similar to those maintained with Value Added
Reseller; however, Value Added Reseller acknowledges and agrees that only direct
electronic communications with IntellAgent Control Corporation are permitted
under this Agreement and any use of said electronic connections to communicate
with said third parties is expressly prohibited and constitutes a material
breach of this Agreement.
9. ASSIGNMENT. This Agreement is not assignable and the duties hereunder are not
delegable by Value Added Reseller. Except as set forth herein, nothing in this
Agreement shall be
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<PAGE>
construed as granting to Value Added Reseller the right to sell, distribute to
third parties, lease, license or otherwise transfer or dispose of the products
in whole or in part.
10. NOTICES. Any notice hereunder shall be deemed to be sufficiently given and
any delivery hereunder deemed made when delivered in person or sent by facsimile
(followed by written confirmation) or by registered or certified mail or courier
addressed to the Value Added Reseller at the address stated above and to
IntellAgent Control Corporation at 12750 Merit Drive, Suite 830, Dallas, TX
75251, or at such changed address as either party shall have specified by
written notice.
11. ENTIRE AGREEMENT; RELATIONSHIP OF PARTIES. This Agreement and the
IntellAgent Control Corporation Software Agreements and other documents, such as
acknowledgments, referred to herein, set forth the complete and exclusive
agreement and understanding between the parties as to the subject matter hereof
and are in lieu of and supercede all other communications, understandings and
agreements, whether written or oral, prior or contemporaneous. Any waiver,
amendment or modification of this Agreement will not be effective unless
contained in a writing signed by the party or parties to be bound, and any
variance from or addition to the terms of this Agreement contained in any Value
Added Reseller purchase order or other written notification will be of no
effect. The invalidity in whole or in part of any provision of this Agreement
shall not void or affect the validity of any other provision hereof. The parties
hereto are independent contractors and neither party shall have the right to
bind the other to any agreement with a third party nor to represent itself as an
agent, partner or joint venturer of the other or to incur any obligation or
liability on behalf of the other party. Each party shall be responsible for the
acts, negligence and omissions of its employees, agents, representatives and
subcontractors. If any provision of this Agreement is held to be contrary to law
or public policy or otherwise unenforceable, the remaining provisions shall
remain in full force and effect, and the invalid provision shall remain in force
as reformed.
12. GOVERNING LAW. This Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law rules.
13. EXPORT; COMPLIANCE WITH LAW. The export, distribution and disclosure of the
Products and any Pre-Release Software are subject to United States Export
Administration Regulations. The export of the North American Edition of
IntellAgents is controlled by the U.S. Department of State.
14. TERMS AND TERMINATION; SURVIVAL
(a) Term. This Agreement shall have a term of one year from the date given
below and shall automatically renew for successive one-year terms, subject to
earlier termination as set forth below.
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<PAGE>
(b) Termination
(i) Termination without cause: Either party may terminate this Agreement
without cause upon ninety (90) days prior written notice to the other
party.
(ii) Termination upon breach: Either party may terminate the Agreement
fourteen (14) days after written notice of material breach of this
Agreement if such breach is not cured within such period.
(c) Actions upon termination. Upon expiration or termination of this
Agreement, Value Added Reseller shall immediately return all copies of Products,
Pre-Release Software and documentation provided by IntellAgent Control
Corporation under this Agreement, destroy any additional copies made by Value
Added Reseller and certify in writing that such actions have been taken. Upon
expiration or termination of this Agreement each party shall return to the other
any information, including any copies thereof, together with a letter certifying
that all such information has been returned. Value Added Reseller shall not be
entitled to a refund of any amounts paid for Products or services received under
or in connection with this Agreement upon the expiration or termination of this
Agreement.
(d) Surviving Sections. The provisions of Section 2(c), 2(d), 6, 7 and 8 of
this Agreement shall survive any termination of this Agreement for any reason.
INTELLAGENT CONTROL CORPORATION VALUE ADDED RESELLER
By: /s/ H. Gertz By: /s/ Gary G. McCann
Name: H. Gertz Name: Gary G. McCann
Title: ___________________________ Title: Vice President - Operations
Date: ___________________________ Date: April 15, 1997
Return to:
IntellAgent Control Corporation
Authorization Programs
12750 Merit Drive, Suite 830
Dallas, TX 75251-1241
(214) 776-8500 FAX:(214) 776-8501
9800) 974-9900
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<PAGE>
RESELLER ADDENDUM TO
THE INTELLAGENT CONTROL CORPORATION
VALUE ADDED RESELLER AGREEMENT
IntellAgent Control Corporation Value Added Reseller Name and Address:
Authorization Programs
12750 Merit Drive Transformation Processing Inc.
Suite 800, LB74 2121 Argentia Road
Dallas, TX 75251-1241 Suite 200
Phone: (214)776-8500 Mississauga, Ont L5N2X4
Fax: (214) 776-8501 Telephone: (905) 812-7907
Fax: (905) 812-7920
Effective Date: April 23, 1997 Attention: Lisa Denis
Authorization: /s/ Gary G. McCann
- --------------------------------------------------------------------------------
This Reseller Addendum to the IntellAgent Control Corporation Value Added
Reseller Agreement (the Agreement") sets forth the terms and conditions under
which IntellAgent Control Corporation Authorize the Value Added Reseller
identified above (Value Added Reseller') to resell the IntellAgent Control
Corporation products identified on Attachment A (the "IntellAgent Control
Corporation Products"). This Addendum supplements the terms of the Agreement.
1. APPOINTMENT AND DISTRIBUTION RIGHTS. IntellAgent Control Corporation hereby
authorizes Value Added Reseller, on a non-exclusive and nontransferable basis,
to market and distribute the IntellAgent Control Corporation Products in the
United States to its customers (referred to herein as "End Users") subject to
the terms and conditions of this Addendum, the Agreement and the terms of the
Value Added Reseller Program, as they are made known to Value Added Reseller in
writing by IntellAgent Control Corporation from time to time. Such authorization
may be suspended by IntellAgent Control Corporation during any period in which
Value Added Reseller is past due on any amounts owing to IntellAgent Control
Corporation.
2. END USER SOFTWARE AGREEMENT. Value Added Reseller shall deliver to each End
User the IntellAgent Control Corporation Software license Agreement accompanying
the IntellAgent Control Corporation Products purchased by Value Added Reseller.
3. PURCHASE OF INTELLAGENT CONTROL CORPORATION PRODUCTS. Value Added Reseller
shall acquire IntellAgent Control Corporation Products only from IntellAgent
Control Corporation. The terms of purchase shall be determined between Value
Added Reseller and IntellAgent Control Corporation. IntellAgent Control
Corporation will endeavor to provide Value Added Reseller with thirty (30) days
prior written notice of changes to the Suggested Retail Price (SRP") of
IntellAgent Control Corporation Products. On or before the tenth of each month,
Value Added Reseller shall forward to IntellAgent Control Corporation at the
address above information reasonably requested by IntellAgent Control
Corporation regarding sales of IntellAgent Control
<PAGE>
Corporation Products made by Value Added Reseller timing the previous month.
IntellAgent Control Corporation shall maintain the confidentiality of such
information in accordance with the terms of the Agreement. IntellAgent Control
Corporation reserves the right to modify and/or discontinue IntellAgent Control
Corporation Products at any time. IntellAgent Control Corporation also reserves
the right to modify the SRP of IntellAgent Control Corporation Products at any
time.
4. MAINTENANCE. Depending upon the particular product configuration and
availability from IntellAgent Control Corporation, Value Added Reseller may
offer End Users the option of purchasing future upgrades of IntellAgent Control
Corporation Products on an annual basis ("maintenance") or purchasing upgrades
to IntellAgent Control Corporation Products as they become available from time
to time. Value Added Reseller purchase such offerings from IntellAgent Control
Corporation. When providing upgrades to any End User that has not purchased
Maintenance, Value Added Reseller shall collect satisfactory proof of such End
Users ownership of IntellAgent Control Corporation Products. Value Added
Reseller shall keep all such proofs of ownership on its premises for a period of
one (1) year from the date of sale and make such proofs of ownership available
to IntellAgent Control Corporation for inspection during normal business hours.
5. WARRANTIES. For a period of sixty (60) days following receipt of any
IntellAgent Control Corporation Products by Value Added Reseller, IntellAgent
Control Corporation warrants to Value Added Reseller that the media,
documentation and packaging shall not contain any physical defects in
workmanship or material. During the warranty period IntellAgent Control
Corporation shall at its option and expense, repair or replace any defective
IntellAgent Control Corporation Products product or refund to Value Added
Reseller any amounts paid therefore. The foregoing remedies constitute Value
Added Reseller's sole and exclusive remedies for breach of warranty. This
warranty is made to Value Added Reseller separate and apart from any warranty
IntellAgent Control Corporation makes to an End User in the IntellAgent Control
Corporation Software Agreement.
EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 5, INTELLAGENT CONTROL CORPORATION
MAKES NO WARRANTIES, GUARANTEES OR REPRESENTATIONS OF ANY KIND, WHETHER EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
6. INDEMNIFICATION. IntellAgent Control Corporation shall indemnify and hold
Value Added Reseller harmless from and against and defend any claim suit or
proceeding, and pay any settlement amounts or damages awarded by a court of
final jurisdiction arising out of claims by third parties that a IntellAgent
Control Corporation Product infringes any United States copyright or patent,
provided that Value Added Reseller promptly notifies IntellAgent Control
Corporation in writing of any such claim, suit or proceeding, permits
IntellAgent Control Corporation to control the defense or settlement thereof and
cooperates in the defense or settlement thereof. Value Added Reseller shall have
the right at its option to be represented by counsel at its own expense.
IntellAgent Control Corporation shall have the right to demand the return from
Value Added Reseller of any inventory of IntellAgent Control Corporation
Products which is the subject of a
-2-
<PAGE>
claim of infringement and to credit Value Added Reseller the net amount paid
therefore. Upon notice, Value Added Reseller shall discontinue distribution of
any IntellAgent Control Corporation Product which is subject of a claim of
infringement. IntellAgent Control Corporation shall have no obligation under
this section with respect to any claim of infringement of proprietary rights
based upon any modification of IntellAgent Control Corporation Products by Value
Added Reseller or the combination, operation or use of IntellAgent Control
Corporation Products with materials not supplied by IntellAgent Control
Corporation if such infringement would not have occurred without such
modification, combination, operation or use.
7. SURVIVAL. The provisions of Sections 5 and 6 shall survive the termination or
expiration of this Addendum.
IN WITNESS WHEREOF, the parties have caused this Addendum to be executed by
their duly authorized representatives as of the Effective Date.
INTELLAGENT CONTROL CORPORATION VALUE ADDED RESELLER
By: /s/ H. Gertz By: /s/ Gary G. McCann
Name: H. Gertz Name: Gary G. McCann
Title: Title: Vice President Operations
--------------------------
-3-
<PAGE>
Exhibit 10.17
PROFESSIONAL SERVICES
SUBCONTRACT AGREEMENT
This Professional Services Subcontract Agreement is entered into by and between
GE IT Solutions/Universal Data Consultants "UDC" and Transformation Processing
Inc. (TPI) "Vendor", with reference to the following facts:
1. Vendor represents that it has expertise in providing classroom software
instruction.
2. UDC desires to acquire, and Vendor desires to provide to UDC and/or to
UDC's customers, Vendor's services ("Services").
3. UDC and Vendor contemplate entering into a number of projects wherein
Vendor will provide such Services as UDC's subcontractor.
4. UDC and Vendor wish to establish the terms and conditions governing those
undertakings.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties agree as follows:
1. Term and Termination.
(a) This Agreement will commence as of the date first set forth above and
will continue in force thereafter unless terminated in accordance with
the provisions hereof. Notwithstanding the expiration or termination
of this Agreement, the provisions of this Agreement will continue in
full force and effect until each party has fulfilled its obligations
pursuant to any Statement of Work hereunder that is in effect at the
time of such expiration or termination.
(b) This Agreement may be terminated by either party at any time upon
thirty (30) days prior written notice to the other party. UDC may
terminate the Services of Vendor with respect to any particular
Statement of Work issued hereunder upon written notice. In the event
of such termination by UDC, Vendor shall be reimbursed in accordance
with the provisions of paragraph 5 for the proportional work which it
has performed satisfactorily prior to the date of termination.
(c) In the event that either party hereto fails in the performance of its
obligation hereunder or under any Statement of Work hereunder, or
breaches the terms or conditions hereof or of any Statement of Work
hereunder, the other party may, at its option, give written notice to
the party which has failed to perform or has breached this Agreement
or any such Statement of Work of its intention to terminate this
Agreement or such Statement of Work unless such breach or failure in
performance is cured within thirty (30) days of such notice. Failure
to cure
<PAGE>
such a breach shall make this Agreement or such Statement of Work
terminable, at the option of the aggrieved party, at the end of such
thirty (30) day period unless notification is withdrawn.
(d) Upon termination of this Agreement pursuant to any provision hereof,
or upon the written request of UDC, Vendor shall return to UDC within
seven (7) days all written or media-stored matter of any type relating
to the subject matter set forth in paragraph 8 below and any other
materials which contain confidential proprietary information of UDC or
its customers. Furthermore, at UDC's sole option, Vendor shall render
Services up and until the date of any such termination as required
hereunder.
2. Scope of Work
(a) Vendor agrees to provide its services from time to time, upon UDC's
request. Such Services will include classroom instruction and related
professional services. UDC may require such Services to be performed
at its customer's location. The Services to be rendered in any
particular project will be defined in a Statement of Work mutually
acceptable to both parties. Each Statement of Work will be signed by
both parties and will be subject to the terms and conditions of this
Agreement, which are herewith incorporated and made a part of each
Statement of Work hereunder.
(b) Vendor agrees to abide by the terms and conditions of a prime contract
between UDC and its end-user customer, provided UDC has disclosed said
terms and conditions to Vendor. In general, UDC will include any
unique or unusual terms as part of the Statement of Work.
3. Manner of Performances. Vendor represents and warrants that the Services
performed hereunder will be of professional quality and will conform to
generally-accepted industry practices. Vendor warrants and represents that
it has the requisite expertise, ability and legal right to render the
Services. Vendor will cooperate fully with UDC in accomplishing the purpose
of the Services and satisfying the needs of the end-user customer. Vendor
recognizes that UDC will rely on any representations made by Vender in
relation to the Services to be provided under this Agreement and may
incorporate such representations in its prime contracts with end-user
customers; as a result time is of the essence in Vendor's performance of
this contract.
4. Price and Payment.
(a) In full consideration for the Services provided for hereunder, UDC
agrees to pay Vender the amounts or at the rates specified in a
Statement of Work hereunder.
(b) In no event will UDC be liable to Vendor for any amounts, including
expenses, in excess of the maximum amount stated in the Statement of
Work.
<PAGE>
(c) Unless otherwise expressly agreed and provided in a Statement of Work
issued pursuant hereto, payment will be due net 15 after receipt of
invoice, which invoice shall not be issued until completion of the
Work provided for in each Statement of Work, unless otherwise
specified in the Statement of Work.
5. Non-Solicitation. The parties agree that during the term of this Agreement,
and for a period of twelve (12) months after termination of this Agreement,
neither party shall directly or indirectly solicit for employment, employ
or engage as a consultant any person employed then or within the preceding
one (1) year by the other party and who came in contact with the person
directly or indirectly in the performance of this Agreement. In the event
of any actual or threatened breach of any of the terms of this paragraph 6,
the party who is thereby aggrieved shall have the right to specific
performance and injunction in addition to any and all other rights and
remedies at law or in equity for damages and otherwise, and all such rights
and remedies shall be cumulative.
6. Conflicts of Interest; Authority. Vendor represents and warrants that
neither Vendor nor any officer, partner or principal of Vendor has any
interest or relationships with third parties, including competitors of UDC,
which in any way would present a conflict of interest with the Services or
which in any way would prevent it from carrying out the terms of this
Agreement. Vendor represents and warrants that it has the authority to
enter into this Agreement and to perform the Services hereunder and to
grant UDC the rights set forth herein.
7. Independent Contractor.
(a) Vendor will be an independent contractor and will not be treated as an
employee of UDC for any purpose, including, without limitation, for
the payment of federal, state and local employment and social security
taxes.
(b) UDC shall not be responsible for Vendor's acts while performing
Services hereunder, whether on UDC's premises, or elsewhere, and
Vendor will have no authority to speak for, represent, or obligate UDC
in any way without express written authority.
8. Ownership of Work Product.
(a) For purposes of this Agreement, the term "Work Product" shall mean all
materials and information in tangible form which are developed in
whole or in part pursuant to any Statement of Work under this
Agreement.
(b) All Work Product and any copies thereof, including training material,
reports, designs, programs, tapes, listings, and other programming
originated for and prepared by or for UDC, shall belong exclusively to
UDC. The Work Product will be deemed to be work made for hire under
the United States copyright laws for the sole and exclusive benefit of
UDC. Vendor assigns to UDC any right or
<PAGE>
interest it may have or acquire in the Work Product.
(c) Not withstanding the foregoing, any software application product and
associated documentation already owned by Vendor at the time of
execution of any Statement of Work hereunder including any
modifications, extensions or enhancements thereof made by Vendor
("Vendor Proprietary Product") outside of the scope of this Agreement
shall be set forth in the Statement of Work and shall belong
exclusively to Vendor.
(d) Vendor shall not, during the term of this Agreement or thereafter,
assert any rights with respect to any matters set forth in
subparagraphs (a) and (b), above. Vendor will assist UDC to and will
execute all documents reasonably necessary to perfect UDC's rights and
interest in Work Product.
9. Confidentiality.
(a) During the term of this Agreement, each party will consider as
"Confidential Information" any information it obtains in tangible form
from the other party that is designated as, or known to the receiving
party to be, confidential or proprietary.
(b) Each party agrees to receive and maintain all Confidential Information
in strictest confidence, using at least reasonable care, and except as
provided herein, shall not use Confidential Information for its own
benefit or disclose it to third parties without the written consent of
the other party.
(c) The obligations of the parties under this paragraph shall survive the
expiration or termination of this Agreement and shall be binding on
the parties, their successors and assigns.
(d) Neither party shall have any obligations under this Agreement with
respect to information which: (i) is already known to the receiving
party or is publicly available at the time of disclosure: (ii) is
disclosed to the receiving party by a third party who is not in breach
of an obligation of confidentiality; (iii) becomes publicly available
after disclosure through no act of the receiving party; or (iv) is
developed by the receiving party without breach of this Agreement.
10. Hold Harmless; Insurance.
(a) In consideration of this Agreement, Vendor hereby agrees to indemnify
and hold UDC harmless from any and all suits, claims, actions, damages
or losses whatsoever (including attorney's fees) arising from injury
to persons or damage to property which results from any act or
omission of Vendor in its performance hereunder or presence at a UDC
or customer of UDC facility.
(b) During the terms of this Agreement and any Statement of Work
hereunder,
<PAGE>
Vendor shall maintain its own (i) Worker's Compensation insurance, as
prescribed by the law of the state in which the Services are
performed, (ii) comprehensive automobile liability insurance, for
bodily injury and property damage, and (iii) comprehensive general
liability insurance.
11. Indemnification. Vendor warrants that the Work Product shall be delivered
to UDC and/or the customer of UDC free and clear of all liens and
encumbrances of any third party. Vendor hereby agrees to indemnify UDC
against and hold harmless of and from any and all claims, actions, damages,
losses, causes of action and liabilities asserted again UDC by third
parties and all costs and expenses (including but not limited to reasonable
attorney's fees) incurred by UDC in connection therewith, arising out of or
in connection with (i) any claim that the use of the Work Product infringes
any patent or copyright or otherwise violates the rights of any third
party, or (ii) Vendor's breach of any of the terms and provisions of this
Agreement, whether related to the Services to be provided by Vendor or any
rights granted to UDC hereunder. This Section shall survive any expiration
or termination of this Agreement.
12. Books and records. Consultant shall maintain accurate books and records of
the hours spent and expenses incurred to be invoiced to UDC hereunder, and
will attach such supporting documentation and receipt to Consultant's
invoices to UDC hereunder.
13. Severability; Headings. If any provision of this Agreement is determined to
be invalid or unenforceable, the remaining provisions of this Agreement
shall not be affected thereby and shall be binding upon the parties hereto,
and shall be enforceable, as though said invalid or unenforceable
provisions were not contained herein. Furthermore, the parties hereto agree
that in the event any provisions shall be determined to be invalid or
unenforceable, such provision shall be limited or curtailed only to the
extent necessary for it to be valid and enforceable. Section headings are
for the convenience of reference only and shall be construed as part of
this Agreement.
14. Notices. Except as otherwise provided in this Agreement, notice required to
be given pursuant to this Agreement shall be effective when received and
shall be sufficient if given in writing, hand delivered, sent by telegraph
or certified mail, postage prepaid, to the parties at the addresses set
forth below or such other address as the parties may designate in
accordance with this paragraph.
15. Entire Agreement. This Agreement is the entire agreement of the parties and
shall supersede all prior agreements and understanding between the parties
respecting the subject matter hereof. This Agreement may not be modified
except in writing signed by duly authorized officers of the parties.
16. Limitation of Liability. EXCEPT WITH RESPECT TO VENDOR'S OBLIGATIONS SET
FORTH IN PARAGRAPHS 10 AND 11 OF THIS AGREEMENT, IN NO EVENT SHALL EITHER
PARTY BE LIABLE, ONE TO THE OTHER, FOR ANY SPECIAL, INCIDENTAL, INDIRECT OR
CONSEQUENTIAL DAMAGES OR FOR THE LOSS
<PAGE>
OF PROFIT OR DATA, EVEN IF THE PARTY SHALL HAVE BEEN ADVISED OF THE
POSSIBILITY OF SUCH POTENTIAL LOSS OR DAMAGE.
17. Governing Law. This Agreement is deemed to be made under and shall be
construed according to the laws of the State of Georgia.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives:
GE IT Solutions/Universal Data Transformation Processing Inc.
Consultants
/s/ Martin Foest
By: /s/ TJ Glover ------------------------------
------------------------------- Martin Foest
TJ Glover, Groupware Practice Manager, Groupware Consulting
Date: 5/15/97 Date: 5/15/97
------------------------------ --------------------------
Transformation Processing Inc.
/s/ Gary McCann
-------------------------------
Gary McCann
VP, Operations and Secretary
Date: 5/15/97
--------------------------
<PAGE>
Addendum to the Value Added Reseller Agreement
This Addendum (the "Addendum") is made to the Standard Software License (the
"Agreement"), dated April 23,1997, to provide certain additional or revised
terms to the Agreement between IntellAgent Control Corporation ("ICC") and
Transformation Processing, Inc. ("TPI"). In the event of any conflict between
the terms of this Addendum and the terms or the Agreement, the terms of this
Addendum shall govern.
In consideration of Business Partner's commitment to staff it's
organization with two dedicated sales associates who's priority it is
to advocate the use of the IntellAgent Control System with clients in
Canada, ICC agrees to increase Business Partner's discount to 45%. This
discount shall be extended to Business Partner for a term of one year,
beginning on November 24, 1997. At the end of each term, this offer
will automatically renew unless notified in writing by ICC thirty (30)
days prior to the end of the term.
IN WITNESS WHEREOF, each of the parties has caused this Addendum to be executed
in duplicate originals by its duly authorized representatives.
IntellAgent Control Corporation TPI
(ICC): (Business Partner)
BY: /s/ Howard Getson BY: /s/Gary G. McCann
------------------------- -----------------------------
NAME: Howard Getson NAME: Gary G. McCann
------------------------ ---------------------------
(Print) (Print)
TITLE: President/CEO TITLE: Executive Vice President
----------------------- --------------------------
DATE: 12/15/97 DATE: /s/ November 26, 1997
------------------------ -----------------------
<PAGE>
MINUTES OF SETTLEMENT
AMONG:
RONALD A. CONTENT,
and RACONIX CORPORATION and
RACONIX EUROPE LIMITED
-and-
TRANSFORMATION PROCESSING, INC.,
TRANSFORMATION PROCESSING INC., CYPERPLAN INC.,
PAUL MIGHTON, GARY McCANN and VLADIMIR STEPANOFF
The parties to the action bearing Court File No. 97-CU-123080 (the
"Action") in the Ontario Court (General Division), being Ronald A. Content
("Content") and Raconix Corporation ("Raconix") (collectively, the
"Plaintiffs") and Transformation Processing, Inc. ("TPI US"), Transformation
Processing Inc., CyberPlan Inc., Paul Mighton, Gary McCann and Vladimir
Stepanoff (collectively, the "Defendants") and Raconix Europe Limited
("Raconix Europe") hereby agree to settle the Action and all other disputes
between them on the following terms and conditions:
1. Content will return to TPI US or as it directs, all shares in Samuel
Hamman Graphix Inc. and/or TPI US that he now holds (believed to be
500,000) and will duly endorse those shares as required and complete
any other documentation necessary to effect the transfer. Subject to
paragraph 2 below, Content and Raconix agree to release any claim to
any shares or shareholder's rights of Samuel Hamman Graphix Inc., TPI
US or its affiliates.
2. TPI US will issue 150,000 TPI US shares to Content after Content
returns the 500,000 shares referred to in paragraph 1 above. It is
agreed and understood that the 150,000 TPI US shares issued to Content
have the same trading restrictions as the 500,000 previously held
shares referred to in paragraph 1 above.
3. Following the return of the shares referred to in paragraph 1 above
and return of all items in paragraph 6 below and following execution
of the escrow agreement (the "Escrow Agreement") attached hereto as
Appendix "A", TPI US will provide 140,000 shares to Dingwell,
McLauchlin to be held in escrow pending the final payment of funds
referred to in paragraph 8 below. Upon payment of the final payment
of funds referred to in paragraph 8 such shares will be returned
<PAGE>
immediately to Fasken Campbell Godfrey and the Escrow Agreement will
be at an end. In the event that the Escrowed Shares are sold by the
Escrow Agent as set out in paragraph 1.04 of the Escrow Agreement and
should the net proceeds of all Escrowed Shares not be sufficient to
satisfy the payments outstanding under these Minutes of Settlement,
TPI US will remain liable for any outstanding amounts referred to in
paragraph 8 of the Settlement Agreement.
4. Content, Raconix and Raconix Europe will execute the release attached
hereto as Appendix "B".
5. The Defendants will execute a release in a form satisfactory to
counsel.
6. Content, Raconix and Raconix Europe will return to Fasken Campbell
Godfrey:
(a) all source code in the possession or control of Content, Raconix
or Raconix Europe, or their associates, employees, consultants
and affiliates, including Mr. David Adams, relating to
transformation software referred to in the "1991 Licence
Agreement" including the definition of "New Products" thereunder
or related in any way to the "1995 Software" (all as defined in
the Affidavit of Vladimir Stepanoff sworn May 15, 1997), and
return any other documents, data or other information no matter
how stored to the Defendants; and
(b) ensure that neither Content, Raconix or Raconix Europe or any
associates, employees, consultants and affiliates including, Mr.
David Adams, can develop or sell software as set out in the 1991
licence Agreement including "New Products" or the 1995 Software
or that could emulate therefrom.
7. The Plaintiffs and Defendants or their counsel on their behalf will
immediately execute a consent to a dismissal of the Action without
costs.
8. Upon satisfaction of the terms, and conditions set out in paragraphs
1, 2, 3, 4, 5, 6 and 7 above TPI US will pay to Content the sum of
$160,000 Cdn. as follows:
(a) TPI US will pay to Content, or as he directs, $20,000 Cdn.;
(b) TPI US will pay to Content, or as he directs, $140,000 Cdn. over
eighteen months by way of 18 post-dated cheques in the amount of
$7,777.78 each payable to Content or as he may direct. These
post-dated cheques will be delivered to Content following the
execution of the documents set out herein and will be dated from
the first day of the month following the satisfaction of the
terms and conditions set out in paragraphs 1, 2, 3, 4, 5, 6 and 7
above; and
2
<PAGE>
(c) TPI US will have option, at any time, to accelerate the payments
to Content under sub-paragraph (b) above.
9. It is further agreed that the return of the Samuel Hamman Graphix
Inc. and/or TPI US shares, the issuance of TPI US shares, the
retention of TPI US shares and the deposit of TPI US shares referred
to in paragraphs 1, 2, and 3 above will take place in accordance with
the requirements of the appropriate U.S. securities law.
10. The Plaintiffs and Defendants shall co-operate and take all reasonable
steps to implement and ensure the implementation of these Minutes of
Settlement. The Plaintiffs' will undertake to obtain an order
dismissing the Action immediately upon the execution of the consent to
the dismissal of the Action.
11. These Minutes of Settlement shall enure to the benefit of and be
binding upon the Plaintiffs and the Defendants and their respective
successors, administrators, representatives, executors and assigns.
12. It is agreed and understood that nothing in these Minutes of
Settlement shall be deemed to be an admission of liability on the part
of the Defendants.
13. These Minutes of Settlement may be executed in counterparts and may be
delivered by means of facsimile.
14. These Minutes of Settlement will be held in escrow until the Releases
referred to in paragraphs 4 and 5, the Escrow Agreement and the
consent to the dismissal of the Action have been executed.
3
<PAGE>
-4-
IN WITNESS WHEREOF the parties have hereto set their hands and seals
including the signatures of their duly authorized officers or representatives.
/s/ /s/ RONALD A. CONTENT
- --------------------------------- -------------------------------
Witness June 12, 1997 RONALD A. CONTENT
June 12, 1997 RACONIX CORPORATION
Per:
/s/ RONALD A. CONTENT
______________________c/s
June 12, 1997 RACONIX EUROPE LIMITED
Per:
/s/ RONALD A. CONTENT
_______________________ c/s
June 16, 1997 TRANSFORMATION PROCESSING, INC.
Per:
/s/ PAUL MIGHTON
________________________ c/s
June 16, 1997 CYBERPLAN INC.
/s/ VLADIMIR STEPANOFF
_______________________c/s
/s/ PAUL MIGHTON
- --------------------------------- -------------------------------
Witness PAUL MIGHTON
/s/ GARY MCCANN
- --------------------------------- -------------------------------
Witness GARY MCCANN
/s/ Caroline Brady /S/ VLADIMIR STEPANOFF
- --------------------------------- -------------------------------
Witness VLADIMIR STEPANOFF
<PAGE>
Appendix "B"
R E L E A S E
- - - - - - -
RONALD A. CONTENT ("Content"), on behalf of himself and his heirs,
executors, administrators and assigns, and RACONIX CORPORATION, RACONIX EUROPE
LIMITED and its present or former subsidiaries, affiliates and associated
companies, and all of their succcessors and assigns and officers, directors,
employees, servants and agents, and each of them (hereinafter the "Releasors"),
in consideration of the matters set out in a Settlement Agreement dated June 12,
1997, and other good and valuable consideration, the receipt and sufficiency of
which is hereby irrevocably acknowledged, do hereby jointly and severally
release, acquit, semise and forever discharge TRANSFORMATION PROCESSING, INC.,
TRANSFORMATION PROCESSING INC, and CYBERPLAN INC., and any and all of their
present or former subsidiaries, affiliates and associated companies, and all of
their successors and assigns and respective officers, directors, employees,
shareholders, servants and agents, and PAUL MIGHTON, GARY McCANN, and VLADIMIR
STEPANOFF (personally and operating as Cyberplan Enrg.) ("Stepanoff"), and their
respective heirs, executors, administrators and assigns, agents, servants and
employees, and each of them (collectively the "Releasees"), from any and all
actions, causes of action, suits, debts, dues, accounts, covenants, contracts,
demands, proceedings and claims for injuries, losses or damages of any kind
whatsoever (including any loss or damages not yet ascertained) which the
Releasors have had, now have, or may hereafter have against the Releases
("Claims"), including but not limited to the following:
(a) any Claims which were made or could have been made in the action
bearing Court File No. 97-CU-123080 in the Ontario Court (General
Division) (the "Action") between Ronald A. Content and Raconix
Corporation as Plaintiffs and Transformation Processing, Inc.,
Transformation Processing Inc., Cyberplan Inc., Paul Mighton, Gary
McCann and Vladimir Stepanoff as Defendants;
(b) any Claims in relation to transformation software (the "1991 Unix
Software") which was the subject of the Licensing Agreement dated May
24, 1991 between Raconix Corporation and Stepanoff (the "1991 Licence
Agreement") or related in any way to the "1995 Software" (as each is
defined in the Affidavit of Vladimir Stepanoff sworn May 15, 1997 and
served upon Ronald A. Content and Raconix Corporation or their counsel
in respect of a motion in the Action);
(c) any Claims to any other computer software or related endeavors or
things which the Releasees have developed, are now in the process of
developing, or will develop in the future;
(d) any Claims to any source code, documents, data or any other
information relating to the items described in (b) and (c) above;
(e) any Claims with respect to the 1991 Licence Agreement and the Licence
Amending Agreement dated April 10, 1992 between Raconix, Stepanoff,
and
<PAGE>
Content, and any other agreements or contracts between the Releasors
and the Releasees or any of them; and
(f) any Claims to shares or shareholder's rights in Samuel Hamman Graphix
Inc., Transformation Processing Inc., Transformation Processing Inc.,
or their affiliates subject to any rights pursuant to the shares
issued under paragraph 2 of the Minutes of Settlement between the
Plaintiffs and Defendants dated June 12, 1997.
AND FOR THE SAID CONSIDERATION the Releasors further covenant and agree to
save harmless and indemnity the Releasees from and against all claims, charges,
taxes, penalties or demands of any kind whatsoever which may be made relating to
the hiring of, the employment by or the termination of the employment of Content
by the Releasees, including but not limited to claims, charges, taxes, penalties
or demands which may be made by the Minister of National Revenue requiring the
Releasees to pay income tax, charges, taxes, or penalties under the INCOME TAX
ACT (CANADA) in respect of income tax payable in excess of income tax previously
withheld and in respect of any and all claims, charges, taxes or penalties and
demands which may be made on behalf of or related to the Canada Employment and
Immigration Commission and the Canada Pension Commission under the applicable
statutes and regulations with respect to any amounts which may be payable or may
in the future be found to be payable by the Releasees in respect of the
Releasors.
AND the Releasors hereby undertake and agree not to take any steps or
initiate any proceedings against any person, partnership, corporation or other
entity which might be entitled to claim contribution, indemnity or other relief
over against the Releasees, under the provisions of any statute or otherwise,
with respect to any of the matters which the Releasors release by this Release
or with respect to which the Releasors agree herein not to make any claim or
take any proceedings.
AND the Releasors hereby represent and warrant that the said Releasors have
not assigned to any person, partnership, corporation or other entity any of the
matters which the Releasors release by this Release or with respect to which the
Releasors agree herein not to make any claim or take any proceedings.
THIS RELEASE shall be governed by and construed in accordance with the laws
of the Province of Ontario.
THIS RELEASE shall be binding upon and shall enure to the benefit of the
respective heirs, executors, administrators, successors, assigns, and / or legal
representatives of the Releasors and of the Releasees.
IT IS HEREBY DECLARED that the terms of this Release are fully understood
and that the said Release is given voluntarily for the purpose of making a full
and final compromise, adjustment and settlement of all claims as aforesaid.
DATED at Oakville this 16th day of June, 1997
<PAGE>
June 16, 1997 /s/ Ronald A. Content
------------------------------
RONALD A. CONTENT
June 16, 1997 RACONIX CORPORATION
Per:
/s/ Ronald A. Content c/s
------------------------------
June 16, 1997 RACONIX EUROPE LIMITED
Per:
/s/ Ronald A. Content c/s
------------------------------
<PAGE>
Exhibit 10.19
Transformation Processing Inc. DEMAND NOTE
2121 Argentia Road, Suite 200
Mississauga, Ontario L5N 2X4
Tel: (905)812-7907
Fax: (905)812-7920
July 31, 1997
$ 21,996.15
ON DEMAND, I promise to pay to the order of Transformation Processing Inc.
the sum of Twenty-one thousand, nine hundred and ninety-six---------15/100
Dollars and to pay interest monthly at a rate of 4 per cent (4%) per annum, up
to and after maturity and until actual payment at the offices of
Transformation Processing Inc. here. At the date of this note such prime
rate per annum is 4.75 percent.
Value Received. VLADIMIR STEPANOFF
PRIME RATE: The variable interest rate per annum
posted by the Royal Bank of Canada from time to
time which is used to determine the interest rate
on loans in Canadian dollars made in Canada.
/s/ Vladimir Stepanoff
----------------------------
Signature
<PAGE>
Transformation Processing Inc. DEMAND NOTE
2121 Argentia Road, Suite 200
Mississauga, Ontario L5N 2X4
Tel: (905)812-7907
Fax: (905)812-7920
July 31, 1997
$52,172.45
ON DEMAND, I promise to pay to the order Transformation Processing Inc. the
sum of Fifty-two thousand, one hundred and seventy-two--45/100 Dollars
and to pay interest monthly at a rate of 4 per cent (4%) per annum, up to
and after maturity and until actual payment at the offices of
Transformation Processing Inc. At the date of this note the prime rate per
annum is 4.75 percent.
Value Received.
PRIME RATE: The variable interest rate per annum
posted by the Royal Bank of Canada from time to time
which is used to determine the interest rate in loans in
Canadian dollars made in Canada.
Gary G. McCann
---------------------
Signature
<PAGE>
Transformation Processing Inc. DEMAND NOTE
2121 Argentia Road, Suite 200
Mississauga, Ontario L5N 2X4
Tel: (905)812-7907
Fax: (905)812-7920
July 31, 1997
$ 84,764.46
ON DEMAND, I promise to pay to the order of Transformation Processing Inc.
the sum of Eighty-four thousand, seven hundred and sixty four-------46/100
Dollars and to pay interest monthly at a rate of 2 per cent per annum, up to
and after maturity and until actual payment at the offices of Transformation
Processing Inc. here. At the date of this note such prime rate per annum is
4.75 percent.
Value Received.
PRIME RATE: The variable interest rate per annum
posted by the Royal Bank of Canada from time to time
which is used to determine the interest rate on loans in
Canadian dollars made in Canada.
Paul G. Mighton
-------------------
Signature
<PAGE>
Exhibit 10.20
Verification Statement
This is not a Certificate issued under the PPSA. It is provided as a courtesy to
assist you.
*The expiry date calculated by the system may exceed the date on which the
registration ceases to be effective.
Notice of Discharge
<TABLE>
<S> <C> <C> <C> <C>
File Number: 825026139 Registration Number: 970317175115130771 Page: 1 Expiry Date ID
YY/MM/DD
1997/03/17 2013502314-6
</TABLE>
<TABLE>
<S> <C>
Reference: Discharge
Amend Indicator: C
Referenced Debtor: Transformation Processing Inc.
Registering Party: The Bank of Nova Scotia
6725 Airport Road
P.O. Box 20 Malton Stn
Mississauga, Ontario
L4V 1V2
</TABLE>
<PAGE>
Ministry of Consumer Commercial Relations
Ontario
Form2Cocr
PPSA-P
RSLA-R P
Financing Change Statement
Part 1
01 Page 1 of 1
21 Preference File Number: 825026139
Amendements Only D
Part 3
03/06 Business Debtor/Transferee/commercial:
Transformation Processing Inc.
04/07 Address: #200, 2121 Argentia Road, Mississauga, Ont. L5N 2X4
Part 6
16 Registering Agent/Secured Party/Lien Claimant:
17 Address: #3700 Royal Trust Tower, 77 King St. West, Toronto, ON
M5K 1E7
<PAGE>
SMALL BUSINESS LOAN REGISTRATION
NOTE: You must fill in all boxes or indicate N/A if not applicable
- --------------------------------------------------------------------------------
INFORMATION ON LENDER
- --------------------------------------------------------------------------------
1. Lender name, address and postal code:
The Bank of Nova Scotia
6725 Airport Road
Mississauga, Ontario, L4V 1V2 Canada
2. CPA Transit number:
60582-002
3. Lender loan number:
1037-02
- --------------------------------------------------------------------------------
INFORMATION ON BORROWER
- --------------------------------------------------------------------------------
4. Name, address and postal code of the entity directly obligated to repay the
loan:
Transformation Processing, Inc.
2121 Argentia Road, Suite 200
Mississauga, Ontario L5N 2X4 Canada
5. Operating name of business, if different from the name of the borrower:
6. GST registration number:
894766393 R T
or ___ Exempted
7. Industrial sector (Use one of the letters from A to R as per instructions):
M
8. Type of borrower:
Sole proprietor Partnership X Limited company
--- --- ---
1
<PAGE>
9. Type of project the loan applies to (fill in one box only):
Start-Up Expansion/Modernization Change of Ownership
Franchise Franchise Franchise
--- --- ---
X Other Other Other
---- --- ---
10. Estimated annual gross revenue
$3,000,000.00 (Cannot exceed $5,000,000.00)
11. Number of current Full-time Equivalent Employees on the payroll at time of
loan application: 15
12. Number of additional persons to be employed (Full-time Equivalent) as a
direct result of this loan: N/A
13. Number of years the entity has been in business: 9 months
14. Assets located on Indian reserve: Yes X No
--- ---
15. Aggregate amount of guarantees obtained for the loan to be registered:
Personal $25,000.00 Corporate $ .00 None
------------- ---
(Personal guarantees cannot exceed, in aggregate, 25% of line 29)
16. Rank of asset security obtained:
X Registered First Charge Pari Passu Other
--- --- ---
17. Aggregate principal outstanding of borrower's other SBLA loans, if any,
including loans made by other lenders. (This amount plus the loan to be
registered on line 29 cannot exceed $250,000.00):
N/A
- --------------------------------------------------------------------------------
INFORMATION ON LOAN
- --------------------------------------------------------------------------------
Note: Any number reported in line 22 must be detailed in line 19, 20
and/or 21. Any number reported in line 25 must be detailed in
line 23 and/or 24.
<TABLE>
<CAPTION>
Type of loan Amount of loan to be registered
------------ -------------------------------
<S> <C>
18. Equipment loans $100,000.00
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
19. Premises Alteration - Owner $ .
-------- --
20. Premises Alteration - Tenant $ .
-------- --
21. Building Construction (excluding cost of land) $ .
-------- --
22. Total Premises Loans
(add lines 19, 20 and 21) $ .
-------- --
23. Land Purchase [excluding cost of building(s)] $ .
-------- --
24. Building Purchase (excluding cost of land) $ .
-------- --
25. Total Land Loan
(add lines 23 and 24) $ .
-------- --
26. Sub-Total (add lines 18, 22 and 25) $ 100,000.00
-------- --
plus: 28. SBLA fee financed (if applicable) $ .
-------- --
29. Total amount of loan to be
registered (add lines 26 and 28) $ 100,000.00
-------- --
- --------------------------------------------------------------------------------------------
27. Registration fee (2% of line 26)
cheque attached *
Do not round to nearest dollar: $ 2,000.00
-------- --
30. Percentage of asset cost
financed by the SBLA loan 70% Cannot exceed 90%
---
- --------------------------------------------------------------------------------------------
</TABLE>
31. Term of loan (in months): 24
--------------
Cannot exceed 120 months.
32. Date of first loan disbursement: 1997 02 17
Yr Mth Day
33. Scheduled interest rate:
X Floating: PRIME RATE + 2.5 % = 7.25%
--- -----
cannot exceed 3% Total interest rate
OR
Fixed MORTGAGE RATE + % = %
--- ------- ------
Cannot exceed 3% Total interest rate
3
<PAGE>
- --------------------------------------------------------------------------------
BORROWER'S ACKNOWLEDGMENT
- --------------------------------------------------------------------------------
I, the borrower (or responsible officer of the company, certify the information
provided is complete and accurate.
Transformation Processing, Inc.
- -------------------------------
Name of borrower
/s/ John McGee
- -------------------------------
Signature of borrower
Date: 19
----------------------
Yr Mth Day
- --------------------------------------------------------------------------------
LENDER'S ACKNOWLEDGMENT
- --------------------------------------------------------------------------------
I, the undersigned, responsible officer of the lender certify that, to the best
of my knowledge, the information contained herein is complete and accurate, the
loan was approved in accordance with generally accepted lending/banking
practice, and complies with all the eligibility requirements of the Small
Business Loan Act and its applicable Regulations.
This Loan Registration Form is being submitted within a period of three
- --- months after the date of the first loan disbursement.
or
The period since the date of the first loan disbursement exceeds three
- --- months but does not exceed one year, and I certify that the non-compliance
was inadvertent and that the loan is not, and has never been, in default.
Request is being made to register the loan pursuant to section 23(2) of the
Regulations.
Name (print) Position Title
- -------------------------------- -----------------------------------
Signature Date Telephone No. Fax No.
19
- --------------------------------- ----------------- ----------------
Yr Mth Day
* MAKE LENDER'S CHEQUE PAYABLE TO "RECEIVER GENERAL FOR CANADA"
4
<PAGE>
SMALL BUSINESS LOAN REGISTRATION
NOTE: You must fill in all boxes or indicate N/A if not applicable
- --------------------------------------------------------------------------------
INFORMATION ON LENDER
- --------------------------------------------------------------------------------
1. Lender name, address and postal code:
The Bank of Nova Scotia
6725 Airport Road
Mississauga, Ontario, L4V 1V2 Canada
2. CPA Transit number:
-- -- -- -- -- - -- -- --
3. Lender loan number:
- --------------------------------------------------------------------------------
INFORMATION ON BORROWER
- --------------------------------------------------------------------------------
4. Name, address and postal code of the entity directly obligated to repay the
loan:
Transformation Processing, Inc.
2121 Argentia Road, Suite 200
Mississauga, Ontario L5N 2X4 Canada
5. Operating name of business, if different from the name of the borrower:
6. GST registration number:
__ __ __ __ __ __ __ __ __ R T
or ___ Exempted
7. Industrial sector (Use one of the letters from A to R as per instructions):
8. Type of borrower:
Sole proprietor Partnership X Limited company
--- --- ---
1
<PAGE>
9. Type of project the loan applies to (fill in one box only):
Start-Up Expansion/Modernization Change of Ownership
-------- ----------------------- -------------------
Franchise Franchise Franchise
--- --- ---
Other X Other Other
--- --- ---
10. Estimated annual gross revenue
$3,084,500.00 (Cannot exceed $5,000,000.00)
11. Number of current Full-time Equivalent Employees on the payroll at time of
loan application: 15
--
12. Number of additional persons to be employed (Full-time Equivalent) as a
direct result of this loan: 10
--
13. Number of years the entity has been in business: 1
--
14. Assets located on Indian reserve: Yes X No
--- ---
15. Aggregate amount of guarantees obtained for the loan to be registered:
Personal $17,944.00 Corporate $ .00 None
------------- ---
(Personal guarantees cannot exceed, in aggregate, 25% of line 29)
16. Rank of asset security obtained:
X Registered First Charge Pari Passu Other
--- --- ---
17. Aggregate principal outstanding of borrower's other SBLA loans, if any,
including loans made by other lenders. (This amount plus the loan to be
registered on line 29 cannot exceed $250,000.00):
$62,501.00
- --------------------------------------------------------------------------------
INFORMATION ON LOAN
- --------------------------------------------------------------------------------
Note: Any number reported in line 22 must be detailed in line 19, 20
and/or 21. Any number reported in line 25 must be detailed in
line 23 and/or 24.
<TABLE>
<CAPTION>
Type of loan Amount of loan to be registered
------------ -------------------------------
<S> <C>
18. Equipment loans $71,779.59
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
19. Premises Alteration - Owner $ .
-------- --
20. Premises Alteration - Tenant $ .
-------- --
21. Building Construction (excluding cost of land) $ .
-------- --
22. Total Premises Loans
(add lines 19, 20 and 21) $ .
-------- --
23. Land Purchase [excluding cost of building(s)] $ .
-------- --
24. Building Purchase (excluding cost of land) $ .
-------- --
25. Total Land Loan
(add lines 23 and 24) $ .
-------- --
26. Sub-Total (add lines 18, 22 and 25) $71,779.59
plus: 28. SBLA fee financed (if applicable)
$--------.--
29. Total amount of loan to be
registered (add lines 26 and 28) $ 71,779.59
-------- --
- ----------------------------------------------------------------------------------------------
27. Registration fee (2% of line 26)
cheque attached *
Do not round to nearest dollar: $1435.59
30. Percentage of asset cost
financed by the SBLA loan 90% Cannot exceed 90%
---
- ----------------------------------------------------------------------------------------------
</TABLE>
31. Term of loan (in months): 24
-----------
Cannot exceed 120 months.
32. Date of first loan disbursement: 19
--- --- ---
Yr Mth Day
33. Scheduled interest rate:
Floating: PRIME RATE + 2 1/2% = %
--- ------
cannot exceed 3% Total interest rate
OR
Fixed MORTGAGE RATE + % = %
------- -----
Cannot exceed 3% Total interest rate
3
<PAGE>
- --------------------------------------------------------------------------------
BORROWER'S ACKNOWLEDGMENT
- --------------------------------------------------------------------------------
I, the borrower (or responsible officer of the company, certify the information
provided is complete and accurate.
Transformation Processing, Inc.
- -----------------------------------
Name of borrower
/s/ John McGee
- -----------------------------------
Signature of borrower
Date: 19
--------------------------
Yr Mth Day
- --------------------------------------------------------------------------------
LENDER'S ACKNOWLEDGMENT
- --------------------------------------------------------------------------------
I, the undersigned, responsible officer of the lender certify that, to the best
of my knowledge, the information contained herein is complete and accurate, the
loan was approved in accordance with generally accepted lending/banking
practice, and complies with all the eligibility requirements of the Small
Business Loan Act and its applicable Regulations.
- --- This Loan Registration Form is being submitted within a period of three
months after the date of the first loan disbursement.
or
- --- The period since the date of the first loan disbursement exceeds three
months but does not exceed one year, and I certify that the non-compliance
was inadvertent and that the loan is not, and has never been, in default.
Request is being made to register the loan pursuant to section 23(2) of the
Regulations.
Name (print) Position Title
Diane M. Sweet Account Manager
- -------------- ---------------
Signature Date Telephone No. Fax No.
19 (905) 678-2155 (905) 678-2210
- ------------------------------------ -------------- --------------
Yr Mth Day
* MAKE LENDER'S CHEQUE PAYABLE TO "RECEIVER GENERAL FOR CANADA"
4
<PAGE>
SCOTIABUSINESS
Customer Agreement
In this form, "you" and "your" mean the customer and "we," "our," "us" and "the
Bank" mean Scotiabank, The Bank of Nova Scotia.
This Customer Agreement, together with the Customer Agreement Terms and
Conditions and any schedules attached, is the complete agreement between you and
the Bank for the loans described here.
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Customer Customer's full legal name (name of individual unless a registered
information partnership or corporation): Transformation Processing Inc.
Date (mm,dd,yy) Trading as Branch transit stamp
Type of business structure
(proprietorship, partnership,
corporation, other): Corporation
Main business address: 2121 Argentia Road, Suite 200
City or town Province Postal code
Mississauga Ontario L5N 2X4
Birth date (individual) Deposit account number
(mm,dd,yy) 800-12
Location of your business property (for mobile property, such as vehicles,
put their main base of operations)
Address
City or town Province Postal code
Attach a schedule if you have business property in more than one location.
- --------------------------------------------------------------------------------------------------------------
Residents of Complete this section if you are an individual or sole proprietor.
Quebec
</TABLE>
1
<PAGE>
<TABLE>
<S> <C> <C> <C>
Are you: married If married, which property regime are you
---- married under?
single Separation as to property
---- -----
Partnership of acquests
-----
Community as to property
-----
- --------------------------------------------------------------------------------------------------------------
Your Scotiabusiness The completed sections describe the loan or loans you
loans requested and we approved.
Scotiabusiness/Scotiafarm Limit Interest
Credit Line $ Prime plus %
Application fee Annual review fee
$ $
Your credit line must be paid on demand.
Scotia Professional Select either the Overdraft Facility or Scotiabusiness Overdraft
Plan Account Protection below.
Overdraft facility (ODF)
Limit Interest
$ Prime plus %
Monthly account fee Monthly monitoring fee
$ $
Your overdraft facility must be paid on demand.
Scotiabusiness Limit Interest Monthly availment fee
Overdraft Protection (SBOP) $ Prime plus % $
Your overdraft must be paid within 30 days.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Term Loan Is the loan guaranteed under the Small Business Loans Act
(SBLA) or the Farm Improvement and Marketing Cooperatives
Loans Act (FIMCLA)?
X Yes if Yes, you confirm that you make the
----- declarations in section 12 of the Customer
Agreement Terms and Conditions and that they
are true and correct.
No
-----
Amount of loan Term of loan
$71,779.59 (months) 24
Amortization Government guarantee
(months) 24 or application fee: $1,435.59
Purpose of loan:
Purchase equipment
Advance arrangement
one advance
Principal repayment arrangements for your Term Loan You will
make your first principal payment on (mm, dd, yy)
Check and complete one of the three options below.
X Floating rate, principal payments plus variable rate interest payments.
----
Interest rate Principal payment Principal payment frequency
Prime plus 2 1/2% $2,990.82 Monthly
Fixed rate, blended payments of interest and principal.
----
Interest Payment amount Final payment Payment frequency
rate % $ $
Fixed rate, principal plus variable interest payments.
----
Interest Principal Payment Final payment Principal Payment
rate % $ $ frequency
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Life insurance Do you want life insurance to cover these loans?
for your loans Yes Check and complete a Commercial Creditor Life Insurance
---- form.
X No Check and sign this waiver of life insurance to certify that
---- you have been given the opportunity to be insured under a
group policy of the Bank and have declined.
Your signature or signatures
- -------------------------------------------------------------------------------------------------------------------
Added repayment Do you want added repayment flexibility for your loan?
flexibility
Yes SBILPlus - A combination of options including deferred
---- payments, delayed start, prepayment privileges and interest
rate conversion as described in the Customer Agreement
Terms and Conditions.
No
----
Monthly fee
$
- -------------------------------------------------------------------------------------------------------------------
Other fees These fees do not apply for SBIA or FIMCLA loans.
Fee type Payment Payment frequency
$
Fee type Payment Payment frequency
$
Fee type Payment Payment frequency
$
- -------------------------------------------------------------------------------------------------------------------
Security Please read and initial the completed sections for the property you are granting to
the Bank as security for your obligations under this Customer Agreement and the
Customer Agreement Terms and Conditions. Your initials confirm that you are
hereby granting the mortgage, security interest, assignment and hypothec outlined
in section 15 of the Customer Agreement Terms and Conditions on the property
described beside your initials. If any of the property is located in Quebec, the
mortgage and security includes a hypothec for an amount equal to 150 percent of
the loan amount.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C> <C>
initials General security All present property and property
----- acquired in the future, including inventory, furniture,
fixtures, office equipment, industrial equipment, machinery,
plant, tools, vehicles, intangible personal property,
securities, documents of title, instruments, chattel paper,
money and accounts receivable.
initials Book debts All present, and acquired in the future,
----- accounts receivable, chattel paper, securities, documents of
title, instruments, money relating to accounts receivable and
records.
initials Inventory All present inventory and inventory acquired in the future.
-----
initials X Equipment or goods Equipment or goods include furniture,
----- fixtures, industrial equipment, office equipment,
manufacturing equipment, machinery, plant, tools and vehicles,
but not inventory. Attach a schedule if you need more room to
describe your equipment or goods.
Description Serial number Value
Refer to Schedule A attached $79,775.11
Description Serial number Value
$
Description Serial number Value
$
initials Leaseholds Leasehold improvements, as specifically described.
----- Description
Legal description of premises Value
$
initials Other security Other property, specified below, including:
----- - life insurance policies and intangibles such as trademarks, copyright,
patents, licenses and quotas
- cash equivalents such as deposits, negotiable instruments and money.
Value
$
initials Other agreements
----- You must provide the following other agreements to the Bank.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C> <C>
initials Third party security You must make sure that the following
----- security from other persons is provided to the Bank. Third
party guarantors and corporate guarantors must sign the Banks
standard guarantee form.
- -------------------------------------------------------------------------------------------------------------------
Term Loan You promise to pay the Bank the principal amount of your term loan
Promissory together with interest calculated at the rate specified on the loan
Note and costs according to the terms set out in this Scotiabusiness Customer
Agreement and the Customer Agreement Terms and Conditions.
Your signature or signatures Promissory Note effective date
/s/ John McGee (mm,dd,yy)
- -------------------------------------------------------------------------------------------------------------------
Personal By signing this Customer Agreement, the guarantor agrees that he or she is bound
Guarantees by this agreement and the Customer Agreement Terms and Conditions, and is
responsible for the repayment of the customer's obligations to the Bank, to the
amount noted below. The guarantor also acknowledges that he or she has
received and read the Customer Agreement Terms and Conditions, in particular,
section 16, which outlines the guarantor's obligations.
Guarantor name Guarantee
amount $
Guarantor signature Witness
Guarantor name Guarantee
amount $
Guarantor signature Witness
- -------------------------------------------------------------------------------------------------------------------
Amendments to a If this agreement amends a previous agreement, complete the following.
previous agreement
This Customer Agreement amends the previous Customer Agreement
dated (mm,dd,yy) but does not create a new loan.
- -------------------------------------------------------------------------------------------------------------------
Other Please initial if there is a Schedule of Conditions and Reporting Requirements
conditions -----
for your loan attached to this Customer Agreement. Your initial is your agreement
to be bound by the terms of this schedule.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Signatures By signing below, you agree that this Scotiabusiness Customer Agreement:
- is a binding agreement and incorporates the Customer Agreement Terms
and Conditions
- is governed by the laws of the province where your main business office is
located.
Your signature also confirms that:
- you will provide us with evidence of insurance for your property granted as
security with loss payable to the Bank
- you have received a copy of the Customer Agreement Terms and
Conditions and have read and understood it before signing this Customer
Agreement
- you and the Bank require that this agreement and all
related documents be drawn up and executed only in
English. Les parties conviennent et exigent
expressement que ce contrat et tous documents et avis
emis en vertu de celui-ci ou s'y rattachant soient
rediges en anglais.
- you are aware of the information disclosure authorized by the Customer
Agreement Terms and Conditions.
Customer - individual
Your signature Witness
Customer - Corporate or partnership
Business name
Transformation Processing Inc.
By (authorized signing officer or partner) Title
By (authorized signing officer or partner) Title
/s/ John McGee Chief Financial Officer
The Bank of Nova Scotia
Per (authorized signing officer)
</TABLE>
7
<PAGE>
SCOTIABUSINESS
Customer Agreement
In this form, "you" and "your" mean the customer and "we," "our," "us" and "the
Bank" mean Scotiabank, The Bank of Nova Scotia.
This Customer Agreement, together with the Customer Agreement Terms and
Conditions and any schedules attached, is the complete agreement between you and
the Bank for the loans described here.
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Customer Customer's full legal name (name of individual unless a registered
information partnership or corporation): Transformation Processing Inc.
Date (mm,dd,yy) Trading as Branch transit stamp
Type of business structure
(proprietorship, partnership,
corporation, other):
Main business address: 2121 Argentia Road, Suite 200
City or town Province Postal code
Mississauga Ontario L5N 2X4
Birth date (individual) Deposit account number
(mm,dd,yy)
Location of your business property (for mobile property, such as vehicles,
put their main base of operations) 2121 Argentia Road, Suite 200
Address
City or town Province Postal code
Mississauga Ontario L5N 2X4
Attach a schedule if you have business property in more than one location.
- --------------------------------------------------------------------------------------------------------------
Residents of Complete this section if you are an individual or sole proprietor.
Quebec
</TABLE>
1
<PAGE>
<TABLE>
<S> <C> <C> <C>
Are you: married If married, which property regime are you
---- married under?
single Separation as to property
---- -----
Partnership of acquests
-----
Community as to property
-----
- --------------------------------------------------------------------------------------------------------------
Your Scotiabusiness The completed sections describe the loan or loans you
loans requested and we approved.
Scotiabusiness/Scotiafarm Limit Interest
Credit Line $ Prime plus %
Application fee Annual review fee
$ $
Your credit line must be paid on demand.
Scotia Professional Select either the Overdraft Facility or Scotiabusiness Overdraft
Plan Account Protection below.
Overdraft facility (ODF)
Limit Interest
$ Prime plus %
Monthly account fee Monthly monitoring fee
$ $
Your overdraft facility must be paid on demand.
Scotiabusiness Limit Interest Monthly availment fee
Overdraft Protection (SBOP) $ Prime plus % $
Your overdraft must be paid within 30 days.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Term Loan Loan Is the loan guaranteed under the Small Business Loans Act
(SBLA) or the Farm Improvement and Marketing Cooperatives
Loans Act (FIMCLA)?
X Yes if Yes, you confirm that you make the
----- declarations in section 12 of the Customer
Agreement Terms and Conditions and that they
are true and correct.
No
-----
Amount of loan Term of loan
$100,000.00 (months) 24
Amortization Government guarantee
(months) or application fee: $2,000.00
Purpose of loan:
Finance Computer and Office Supplies
Advance arrangement
one advance
Principal repayment arrangements for your Term Loan You will
make your first principal payment on (mm, dd, yy)
02, 08, 97
Check and complete one of the three options below.
X Floating rate, principal payments plus variable rate interest payments.
----
Interest rate Principal payment Principal payment frequency
Prime plus 2.5% $4,166.66 Monthly
Fixed rate, blended payments of interest and principal.
----
Interest Payment amount Final payment Payment frequency
rate % $ $
Fixed rate, principal plus variable interest payments.
----
Interest Principal Payment Final payment Principal Payment
rate % $ $ frequency
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Life insurance Do you want life insurance to cover these loans?
for your loans Yes Check and complete a Commercial Creditor Life Insurance
---- form.
X No Check and sign this waiver of life insurance to certify that
---- you have been given the opportunity to be insured under a
group policy of the Bank and have declined.
Your signature or signatures
- -------------------------------------------------------------------------------------------------------------------
Added repayment Do you want added repayment flexibility for your loan?
flexibility
Yes SBILPlus - A combination of options including deferred
---- payments, delayed start, prepayment privileges and interest
rate conversion as described in the Customer Agreement
Terms and Conditions.
X No
----
Monthly fee
$
- -------------------------------------------------------------------------------------------------------------------
Other fees These fees do not apply for SBIA or FIMCLA loans.
Fee type Payment Payment frequency
$
Fee type Payment Payment frequency
$
Fee type Payment Payment frequency
$
- -------------------------------------------------------------------------------------------------------------------
Security Please read and initial the completed sections for the property you are granting to
the Bank as security for your obligations under this Customer Agreement and the
Customer Agreement Terms and Conditions. Your initials confirm that you are
hereby granting the mortgage, security interest, assignment and hypothec outlined
in section 15 of the Customer Agreement Terms and Conditions on the property
described beside your initials. If any of the property is located in Quebec, the
mortgage and security includes a hypothec for an amount equal to 150 percent of
the loan amount.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C> <C>
initials X General security All present property and property
----- acquired in the future, including inventory, furniture,
fixtures, office equipment, industrial equipment, machinery,
plant, tools, vehicles, intangible personal property,
securities, documents of title, instruments, chattel paper,
money and accounts receivable.
initials X Book debts All present, and acquired in the future,
----- accounts receivable, chattel paper, securities, documents of
title, instruments, money relating to accounts receivable and
records.
initials Inventory All present inventory and inventory acquired in the future.
-----
initials X Equipment or goods Equipment or goods include furniture,
----- fixtures, industrial equipment, office equipment,
manufacturing equipment, machinery, plant, tools and vehicles,
but not inventory. Attach a schedule if you need more room to
describe your equipment or goods.
Description Serial number Value
See Schedule A attached $139,799.00
Description Serial number Value
$
Description Serial number Value
$
initials Leaseholds Leasehold improvements, as specifically described.
----- Description
Legal description of premises Value
$
initials X Other security Other property, specified below, including:
----- - life insurance policies and intangibles such as trademarks, copyright,
patents, licenses and quotas
- cash equivalents such as deposits, negotiable instruments and money.
Guarantee of a Scotiabusiness improvement loan
signed by Paul Mighton, Gary McCann, John
McGee, Vladimir Stepanoff
Value
$25,000.00
initials Other agreements
----- You must provide the following other agreements to the Bank.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C> <C>
initials Third party security You must make sure that the following
----- security from other persons is provided to the Bank. Third
party guarantors and corporate guarantors must sign the Banks
standard guarantee form.
- -------------------------------------------------------------------------------------------------------------------
Term Loan You promise to pay the Bank the principal amount of your term loan
Promissory together with interest calculated at the rate specified on the loan
Note and costs according to the terms set out in this Scotiabusiness Customer
Agreement and the Customer Agreement Terms and Conditions.
Your signature or signatures Promissory Note effective date
/s/ John McGee (mm,dd,yy)
- -------------------------------------------------------------------------------------------------------------------
Personal By signing this Customer Agreement, the guarantor agrees that he or she is bound
Guarantees by this agreement and the Customer Agreement Terms and Conditions, and is
responsible for the repayment of the customer's obligations to the Bank, to the
amount noted below. The guarantor also acknowledges that he or she has
received and read the Customer Agreement Terms and Conditions, in particular,
section 16, which outlines the guarantor's obligations.
Guarantor name Guarantee
amount $
Guarantor signature Witness
Guarantor name Guarantee
amount $
Guarantor signature Witness
- -------------------------------------------------------------------------------------------------------------------
Amendments to a If this agreement amends a previous agreement, complete the following.
previous agreement
This Customer Agreement amends the previous Customer Agreement
dated (mm,dd,yy) but does not create a new loan.
- -------------------------------------------------------------------------------------------------------------------
Other X Please initial if there is a Schedule of Conditions and Reporting Requirements
conditions -----
for your loan attached to this Customer Agreement. Your initial is your agreement
to be bound by the terms of this schedule.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Signatures By signing below, you agree that this Scotiabusiness Customer Agreement:
- is a binding agreement and incorporates the Customer Agreement Terms
and Conditions
- is governed by the laws of the province where your main business office is
located.
Your signature also confirms that:
- you will provide us with evidence of insurance for your property granted as
security with loss payable to the Bank
- you have received a copy of the Customer Agreement Terms and
Conditions and have read and understood it before signing this Customer
Agreement
- you and the Bank require that this agreement and all
related documents be drawn up and executed only in
English. Les parties conviennent et exigent
expressement que ce contrat et tous documents et avis
emis en vertu de celui-ci ou s'y rattachant soient
rediges en anglais.
- you are aware of the information disclosure authorized by the Customer
Agreement Terms and Conditions.
Customer - individual
Your signature Witness
Customer - Corporate or partnership
Business name
Transformation Processing Inc.
By (authorized signing officer or partner) Title
/s/Douglas Wooldridge President
By (authorized signing officer or partner) Title
/s/ Gary G. McCann Vice President & Secretary
The Bank of Nova Scotia
Per (authorized signing officer)
/s/
</TABLE>
7
<PAGE>
Exhibit 10.21
GUARANTEE OF A SCOTIABUSINESS IMPROVEMENT LOAN
TO THE BANK OF NOVA SCOTIA
IN CONSIDERATION OF THE BANK OF NOVA SCOTIA (herein called the "Bank") agreeing
to deal with or to continue to deal with
TRANSFORMATION PROCESSING INC. (herein called the "Customer") the undersigned
and each of them, if more than one, hereby jointly and severally guarantees
payment to the Bank of all debts and liabilities, present or future, direct
or indirect, absolute or contingent, matured or not, at any time owing by the
Customer to the Bank or remaining unpaid by the Customer to the Bank arising
under the Scotiabusiness Improvement Loan established under the
Scotiabusiness Customer Agreement dated _____________ 19__ and made between
the Customer and the Bank, whether incurred by one Customer alone or with
another or others and whether as principal or surety, including all interest,
commissions, legal and other costs, charges and expenses (such debts and
liabilities being herein called the "guaranteed liabilities"), the liability
of the undersigned hereunder being limited to the sum of SEVENTEEN THOUSAND
NINE HUNDRED AND FORTY FOUR dollars with interest from the date of demand for
payment at the rate set out in paragraph 5 hereof.
AND THE UNDERSIGNED and each of them, if more than one, hereby jointly
and severally agrees with the Bank as follows:
1. In this Guarantee the word "Guarantor" shall mean the undersigned
and, if there is more than one guarantor, it shall mean each of them.
2. This guarantee shall be a continuing Guarantee of all the guaranteed
liabilities and shall apply to and secure any ultimate balance due or remaining
unpaid to the Bank; and this guarantee shall not be considered as wholly or
partially satisfied by the payment or liquidation at any time of any sum of
money for the time being due or remaining unpaid to the Bank.
3. The Bank shall not be bound to exhaust its recourse against the
Customer or others or any securities or other guarantees it may at any time hold
before being entitled to payment from the Guarantor, and the Guarantor renounces
all benefits of discussion and division.
4. The Guarantor's liability to make payment under this guarantee shall
arise forthwith after demand for payment has been made in writing on the
undersigned or any one of them, if more than one, and such demand shall be
deemed to have been effectually made when an envelope containing such demand
addressed to the undersigned or such one of them at the address of the
undersigned or such one of them last known to the Bank is posted, postage
prepaid, in the post office; and the Guarantor's liability shall bear interest
from the date of such demand at the rate set out in paragraph 5 hereof.
5. The rate of interest payable by the Guarantor from the date of a
demand for payment under this guarantee shall be the Bank's prime rate
applicable at the time of demand, PLUS 2% per annum.
6. Upon default in payment of any sum owing by the Customer to the Bank
at any time, the Bank may treat all guaranteed liabilities as due and payable
and may forthwith collect from the Guarantor the total amount hereby guaranteed
and may apply the sum so collected upon the guaranteed liabilities or may place
it to the credit of a special account. A written statement of a Manager or
Acting Manager of a branch of the bank at which an account of the Customer is
kept or of a General Manager of the Bank as to the amount remaining unpaid to
the Bank at any time by the Customer shall, if agreed to by the Customer, be
conclusive
<PAGE>
evidence and shall, in any event, be prima facie evidence against the Guarantor
as to the amount remaining unpaid to the Bank at such time by the Customer.
7. This guarantee shall be in addition to and not in substitution for
any other guarantees or other securities which the Bank may now or hereafter
hold in respect, of the guaranteed liabilities and the Bank shall be under no
obligation to marshal in favour of the Guarantor any other Guarantees or other
securities or any moneys or other assets which the Bank may be entitled to
receive or may have a claim upon; and no loss of or in respect of or
unenforceability of any other Guarantees or other securities which the Bank may
now or hereafter hold in respect of the guaranteed Liabilities, whether
occasioned by the fault of the Bank or otherwise, shall in any way limit or
lessen the Guarantor's liabilities. Nothing in this guarantee shall limit,
restrict or reduce in any way the Guarantor's liability to the Bank under any
other agreements, guarantees or documents whether heretofore or hereafter
executed by the Guarantor.
8. Without prejudice to or in any way limiting or lessening the
Guarantor's liability and without obtaining the consent of or giving notice to
the Guarantor, the Bank may discontinue, reduce, increase or otherwise vary the
credit of the Customer, may grant time, renewals, extensions, indulgences,
releases and discharges to and accept compositions from or otherwise deal with
the Customer and others, including the Guarantor and any other guarantor as the
Bank may see fit, and the Bank may take, abstain from taking or perfecting,
vary, exchange, renew, discharge, give up, realize on or otherwise deal with
securities and guarantees in such manner as the Bank may see fit, and the Bank
may apply all moneys received from the Customer or others or from securities or
guarantees upon such parts of the guaranteed liabilities as the Bank may see fit
and change any such application in whole or in part from time to time.
9. Until repayment in full of all the guaranteed liabilities, all
dividends, compositions, proceeds of securities, securities valued or payments
received by the Bank from the Customer or others or from estates in respect of
the guaranteed liabilities, shall be regarded for all purposes as payments in
gross without any right on the part of the Guarantor to claim the benefit
thereof in reduction of the liability under this guarantee, and the Guarantor
shall not claim any set-off or counterclaim against the Customer in respect of
any liability of the Customer to the Guarantor, claim or prove in the bankruptcy
or insolvency of the Customer in competition with the Bank or have any right to
be subrogated to the Bank.
10. This guarantee shall not be discharged or otherwise affected by the
death or loss of capacity of the Customer, by any change in the name of the
Customer, or in the membership of the Customer, if a partnership, or in the
objects, capital structure or constitution of the Customer, if a corporation, or
by the sale of the Customer's business or any part thereof or by the Customer
being amalgamated with a corporation, but shall, notwithstanding any such event,
continue to apply to all guaranteed liabilities whether theretofore or
thereafter incurred; and in the case of a change in the membership of a Customer
which is a partnership or in the case of the Customer being amalgamated with a
corporation, this guarantee shall apply to the liabilities of the resulting
partnership or corporation, and the term "Customer" shall include each such
resulting partnership and corporation.
11. All advances, renewals and credits made or granted by the Bank
purportedly to or for the Customer after the death, loss of capacity, bankruptcy
or insolvency of the Customer, but before the Bank has received notice thereof
shall be deemed to form part of the guaranteed liabilities; and all advances,
renewals and credits obtained from the Bank purportedly by or on behalf of the
Customer shall be deemed to form part of the guaranteed liabilities,
<PAGE>
notwithstanding any lack or limitation of power, incapacity or disability of the
Customer or of the directors, partners or agents thereof, or that the Customer
may not be a legal or suable entity, or any irregularity, defect or informality
in the obtaining of such advances, renewals or credits, whether or not the Bank
had knowledge thereof; and any such advance, renewal or credit which may not be
recoverable from the undersigned as guarantors shall be recoverable from the
undersigned and each of them, if more than one, jointly and severally as
principal debtor(s) in respect thereof and shall be paid to the Bank on demand
with interest at the rate set out in paragraph 5 hereof.
12. All debts and liabilities, present and future, of the Customer to
the Guarantor are hereby assigned to the Bank and postponed to the guaranteed
liabilities, and all moneys received by the Guarantor in respect thereof shall
be received in trust for the Bank and forthwith upon receipt shall be paid over
to the Bank, the whole without in any way lessening or limiting the liability of
the Guarantor under this guarantee; and this assignment and postponement is
independent of the guarantee and shall remain in full force and effect until
repayment in full to the Bank of all the guaranteed liabilities, notwithstanding
that the liability of the undersigned or any of them under this guarantee may
have been discharged or terminated.
13. The undersigned or any of them, if more than one, or his or their
executors or administrators, by giving thirty days' notice in writing to the
branch of the Bank at which the main account of the Customer is kept, may
terminate his or their further liability under this guarantee in respect of
liabilities of the Customer incurred or arising after the expiration of such
thirty days, but not in respect of any guaranteed liabilities insured or arising
before the expiration of such thirty days even though not then matured; provided
that notwithstanding receipt of any such notice the Bank may fulfil any
requirements of the Customer based on agreements express or implied made prior
to the expiration of such thirty days and any resulting liabilities shall be
covered by this guarantee; and provided further that in the event of the
termination of this guarantee as to one or more of the undersigned, if more than
one, it shall remain a continuing guarantee as to the other or others of the
undersigned.
14. This guarantee embodies all the agreements between the parties
hereto relative to the guarantee, assignment and postponement and none of the
parties shall be bound by any representation or promise made by any person
relative thereto which is not embodied herein; and it is specifically agreed
that the Bank shall not be bound by any representations or promises made by the
Customer to the Guarantor. Possession of this instrument by the Bank shall be
conclusive evidence against the Guarantor that the instrument was not delivered
in escrow or pursuant to any agreement that it should not be effective until any
condition precedent or subsequent has been complied with and this guarantee
shall be operative and binding notwithstanding the non-execution thereof by any
proposed signatory.
15. This guarantee shall be governed in all respects by the laws of the
Province or jurisdiction in which the Customer's main account with the Bank is
kept.
16. This guarantee shall not be discharged or affected by the death or
any disability of the undersigned or any of them, if more than one, and shall
enure to the benefit of and be binding upon the Bank, its successors and
assigns, and the Guarantor, his heirs, executors, administrators, successors and
assigns.
<PAGE>
AS WITNESS the hand and seal of the Guarantor at MISSISSAUGA, ONTARIO
this 27th day of November, 1997.
SIGNED SEALED AND DELIVERED
in the presence of SIGNATURE AND SEAL
/s/S. Chapman /s/Paul Mighton
- -------------------- ---------------------
Samantha Chapman PAUL MIGHTON
/s/S. Chapman /s/Gary McCann
- -------------------- ---------------------
Samantha Chapman GARY MCCANN
/s/S. Chapman /s/John McGee
- -------------------- ---------------------
Samantha Chapman JOHN McGEE
/s/S. Chapman /s/Vladimir Stepanoff
- -------------------- ---------------------
Samantha Chapman VLADIMIR STEPANOFF
JOINT AND SEVERAL
N.B. Signature of this Guarantee involves personal liability.
<PAGE>
Exhibit 10.21
GUARANTEE OF A SCOTIABUSINESS IMPROVEMENT LOAN
TO THE BANK OF NOVA SCOTIA
IN CONSIDERATION OF THE BANK OF NOVA SCOTIA (herein called the "Bank") agreeing
to deal with or to continue to deal with
TRANSFORMATION PROCESSING INC. (herein called the "Customer") the undersigned
and each of them, if more than one, hereby jointly and severally guarantees
payment to the Bank of all debts and liabilities, present or future, direct
or indirect, absolute or contingent, matured or not, at any time owing by the
Customer to the Bank or remaining unpaid by the Customer to the Bank arising
under the Scotiabusiness Improvement Loan established under the
Scotiabusiness Customer Agreement dated _____________ 19__ and made between
the Customer and the Bank, whether incurred by one Customer alone or with
another or others and whether as principal or surety, including all interest,
commissions, legal and other costs, charges and expenses (such debts and
liabilities being herein called the "guaranteed liabilities"), the liability
of the undersigned hereunder being limited to the sum of TWENTY-FIVE THOUSAND
CANADIAN dollars with interest from the date of demand for payment at the
rate set out in paragraph 5 hereof.
AND THE UNDERSIGNED and each of them, if more than one, hereby jointly
and severally agrees with the Bank as follows:
1. In this Guarantee the word "Guarantor" shall mean the undersigned
and, if there is more than one guarantor, it shall mean each of them.
2. This guarantee shall be a continuing Guarantee of all the guaranteed
liabilities and shall apply to and secure any ultimate balance due or remaining
unpaid to the Bank; and this guarantee shall not be considered as wholly or
partially satisfied by the payment or liquidation at any time of any sum of
money for the time being due or remaining unpaid to the Bank.
3. The Bank shall not be bound to exhaust its recourse against the
Customer or others or any securities or other guarantees it may at any time hold
before being entitled to payment from the Guarantor, and the Guarantor renounces
all benefits of discussion and division.
4. The Guarantor's liability to make payment under this guarantee shall
arise forthwith after demand for payment has been made in writing on the
undersigned or any one of them, if more than one, and such demand shall be
deemed to have been effectually made when an envelope containing such demand
addressed to the undersigned or such one of them at the address of the
undersigned or such one of them last known to the Bank is posted, postage
prepaid, in the post office; and the Guarantor's liability shall bear interest
from the date of such demand at the rate set out in paragraph 5 hereof.
5. The rate of interest payable by the Guarantor from the date of a
demand for payment under this guarantee shall be the Bank's prime rate
applicable at the time of demand, PLUS 2% per annum.
6. Upon default in payment of any sum owing by the Customer to the Bank
at any time, the Bank may treat all guaranteed liabilities as due and payable
and may forthwith collect from the Guarantor the total amount hereby guaranteed
and may apply the sum so collected upon the guaranteed liabilities or may place
it to the credit of a special account. A written statement of a Manager or
Acting Manager of a branch of the bank at which an account of the Customer is
kept or of a General Manager of the Bank as to the amount remaining unpaid to
the Bank at any time by the Customer shall, if agreed to by the Customer, be
conclusive
<PAGE>
evidence and shall, in any event, be prima facie evidence against the Guarantor
as to the amount remaining unpaid to the Bank at such time by the Customer.
7. This guarantee shall be in addition to and not in substitution for
any other guarantees or other securities which the Bank may now or hereafter
hold in respect, of the guaranteed liabilities and the Bank shall be under no
obligation to marshal in favour of the Guarantor any other Guarantees or other
securities or any moneys or other assets which the Bank may be entitled to
receive or may have a claim upon; and no loss of or in respect of or
unenforceability of any other Guarantees or other securities which the Bank may
now or hereafter hold in respect of the guaranteed Liabilities, whether
occasioned by the fault of the Bank or otherwise, shall in any way limit or
lessen the Guarantor's liabilities. Nothing in this guarantee shall limit,
restrict or reduce in any way the Guarantor's liability to the Bank under any
other agreements, guarantees or documents whether heretofore or hereafter
executed by the Guarantor.
8. Without prejudice to or in any way limiting or lessening the
Guarantor's liability and without obtaining the consent of or giving notice to
the Guarantor, the Bank may discontinue, reduce, increase or otherwise vary the
credit of the Customer, may grant time, renewals, extensions, indulgences,
releases and discharges to and accept compositions from or otherwise deal with
the Customer and others, including the Guarantor and any other guarantor as the
Bank may see fit, and the Bank may take, abstain from taking or perfecting,
vary, exchange, renew, discharge, give up, realize on or otherwise deal with
securities and guarantees in such manner as the Bank may see fit, and the Bank
may apply all moneys received from the Customer or others or from securities or
guarantees upon such parts of the guaranteed liabilities as the Bank may see fit
and change any such application in whole or in part from time to time.
9. Until repayment in full of all the guaranteed liabilities, all
dividends, compositions, proceeds of securities, securities valued or payments
received by the Bank from the Customer or others or from estates in respect of
the guaranteed liabilities, shall be regarded for all purposes as payments in
gross without any right on the part of the Guarantor to claim the benefit
thereof in reduction of the liability under this guarantee, and the Guarantor
shall not claim any set-off or counterclaim against the Customer in respect of
any liability of the Customer to the Guarantor, claim or prove in the bankruptcy
or insolvency of the Customer in competition with the Bank or have any right to
be subrogated to the Bank.
10. This guarantee shall not be discharged or otherwise affected by the
death or loss of capacity of the Customer, by any change in the name of the
Customer, or in the membership of the Customer, if a partnership, or in the
objects, capital structure or constitution of the Customer, if a corporation, or
by the sale of the Customer's business or any part thereof or by the Customer
being amalgamated with a corporation, but shall, notwithstanding any such event,
continue to apply to all guaranteed liabilities whether theretofore or
thereafter incurred; and in the case of a change in the membership of a Customer
which is a partnership or in the case of the Customer being amalgamated with a
corporation, this guarantee shall apply to the liabilities of the resulting
partnership or corporation, and the term "Customer" shall include each such
resulting partnership and corporation.
11. All advances, renewals and credits made or granted by the Bank
purportedly to or for the Customer after the death, loss of capacity, bankruptcy
or insolvency of the Customer, but before the Bank has received notice thereof
shall be deemed to form part of the guaranteed liabilities; and all advances,
renewals and credits obtained from the Bank purportedly by or on behalf of the
Customer shall be deemed to form part of the guaranteed liabilities,
<PAGE>
notwithstanding any lack or limitation of power, incapacity or disability of the
Customer or of the directors, partners or agents thereof, or that the Customer
may not be a legal or suable entity, or any irregularity, defect or informality
in the obtaining of such advances, renewals or credits, whether or not the Bank
had knowledge thereof; and any such advance, renewal or credit which may not be
recoverable from the undersigned as guarantors shall be recoverable from the
undersigned and each of them, if more than one, jointly and severally as
principal debtor(s) in respect thereof and shall be paid to the Bank on demand
with interest at the rate set out in paragraph 5 hereof.
12. All debts and liabilities, present and future, of the Customer to
the Guarantor are hereby assigned to the Bank and postponed to the guaranteed
liabilities, and all moneys received by the Guarantor in respect thereof shall
be received in trust for the Bank and forthwith upon receipt shall be paid over
to the Bank, the whole without in any way lessening or limiting the liability of
the Guarantor under this guarantee; and this assignment and postponement is
independent of the guarantee and shall remain in full force and effect until
repayment in full to the Bank of all the guaranteed liabilities, notwithstanding
that the liability of the undersigned or any of them under this guarantee may
have been discharged or terminated.
13. The undersigned or any of them, if more than one, or his or their
executors or administrators, by giving thirty days' notice in writing to the
branch of the Bank at which the main account of the Customer is kept, may
terminate his or their further liability under this guarantee in respect of
liabilities of the Customer incurred or arising after the expiration of such
thirty days, but not in respect of any guaranteed liabilities insured or arising
before the expiration of such thirty days even though not then matured; provided
that notwithstanding receipt of any such notice the Bank may fulfil any
requirements of the Customer based on agreements express or implied made prior
to the expiration of such thirty days and any resulting liabilities shall be
covered by this guarantee; and provided further that in the event of the
termination of this guarantee as to one or more of the undersigned, if more than
one, it shall remain a continuing guarantee as to the other or others of the
undersigned.
14. This guarantee embodies all the agreements between the parties
hereto relative to the guarantee, assignment and postponement and none of the
parties shall be bound by any representation or promise made by any person
relative thereto which is not embodied herein; and it is specifically agreed
that the Bank shall not be bound by any representations or promises made by the
Customer to the Guarantor. Possession of this instrument by the Bank shall be
conclusive evidence against the Guarantor that the instrument was not delivered
in escrow or pursuant to any agreement that it should not be effective until any
condition precedent or subsequent has been complied with and this guarantee
shall be operative and binding notwithstanding the non-execution thereof by any
proposed signatory.
15. This guarantee shall be governed in all respects by the laws of the
Province or jurisdiction in which the Customer's main account with the Bank is
kept.
16. This guarantee shall not be discharged or affected by the death or
any disability of the undersigned or any of them, if more than one, and shall
enure to the benefit of and be binding upon the Bank, its successors and
assigns, and the Guarantor, his heirs, executors, administrators, successors and
assigns.
<PAGE>
AS WITNESS the hand and seal of the Guarantor at MISSISSAUGA, ONTARIO
this 30th day of JANUARY, 1997.
SIGNED SEALED AND DELIVERED
in the presence of SIGNATURE AND SEAL
/s/Caroline Brodie /s/Paul Mighton
---------------------
PAUL MIGHTON
/s/Caroline Brodie /s/Gary McCann
---------------------
GARY MCCANN
/s/Caroline Brodie /s/John McGee
---------------------
JOHN McGEE
/s/Caroline Brodie /s/Vladimir Stepanoff
---------------------
VLADIMIR STEPANOFF
JOINT AND SEVERAL
N.B. Signature of this Guarantee involves personal liability.
<PAGE>
Exhibit 10.22
ATTACHMENT A
TO: Transformation Processing Inc. (TPI) thereafter called Business Partner
FROM: Allegiant Legacy Solutions, Inc. ("ALS")
RE: Procedures and Documents to order Program Products and Services
A. Program Products
Business Partner may order Program Product in the following
manner/purposes.
I. As a Business Partner for relicense to end user or client
o Use "Quotation and Agreement to License Program Product"
o Use Schedule A
o Use Schedule B
o Use Schedule C
2. Business Partner may use ALS documents with their name, logotype, etc.
in place of the ALS name. A complete set of the above is required to
install program product on client hardware/client site. Documents must
state ADAPT/2000 is a product of ALS.
3. Business Partner may charge license fees deemed appropriate. ALS
requires executed license agreement as above. Business Partner may
block out fees charged.
4. Business Partner will pay ALS for License fees for each client
agreement, which is 50% of monies per schedule C, attached and 100% of
LOC charge per Schedule C. If Business Partner takes first call for
maintenance and support, you will receive a 50% discount on
maintenance. If ALS takes first call, Business Partner will receive a
30% discount. Option must be specified with order and consistent with
all Business Partner clients.
5. Business Partner will forward executed agreement along with minimum of
25% of ALS List License Fee at time of order. 25% of List License Fee
is due upon installation (per Schedule B, Item I of Program Product
License). This percentage varies due to client percentage variance,
from that shown on Schedule B.
B. Program Product for Business Partner Factory use
1. Business Partner may establish as many factories as desired. Further;
you may utilize as many concurrent users as desired. You may utilize
UNIX, NT/Windows, DOS environments or any combination.
2. Business Partner will pay maintenance as specified in Schedule "C"
attached, calculated based on the list price of the actual factory
configuration installed. Each factory will be required to process 2M
lines of code per year for a 3 year commitment. Users may be increased
at will and reduced on the anniversary date.
3. Business Partner will pay on a quarterly basis the following monies
based on lines of code (LOC) processed on clients' behalf.
(i) 7c per LOC up to - 50MLOC
(ii) 6c per LOC up to - 100MLOC
1
<PAGE>
(iii) 5c per LOC up to - 150MLOC
(iv) 4c per LOC over - 150MLOC
Lines of code are defined as all lines of code maintained by the end
user, including comment and blank lines. Business Partner will report
by the last day of each month, in entirety each project carried out
with ADAPT/2000, the line counts for each, and the royalty due. ALS
will have the right and ability to dial in to Business Partner
factories for LOC auditing purposes. ALS will invoice appropriate
amount which will be due and payable upon receipt.
4. To order Program Product for factory use, Business Partner will execute the
following attached documents:
o Quotation and Agreement to License Program Product with zero
amount in price and extended price fields. All other fields are
to be completed.
o Schedule A
o Schedule B
o Schedule C
<TABLE>
<S> <C> <C> <C>
/s/Gary McCann October 22, 1997 /s/ ALS October 29, 1997
- ----------------------------------------------- ------------------------------------------
Agreed by Business Partner Date Agreed by ALS Date
</TABLE>
Attachment Governing
Quotation and Agreement to License Program Product
Schedule A
Schedule B
Schedule C
2
<PAGE>
Allegiant Legacy Solutions, Inc.
11025 Reed Hartman Highway QUOTATION NO.
Cincinnati, OH 45242 972110 - S
QUOTATION AND AGREEMENT TO LICENSE PROGRAM PRODUCT
Customer Name: Transformation Processing, Inc. (TPI)
Installation Address: 2121 Argentia Road, Suite 200
-----------------------------
City: Mississauga State: Ontario Zip Code: L5N 2X4
<TABLE>
<CAPTION>
ITEM DESCRIPTION QTY PRICE EXTENDED ANNUAL
PRICE MAINT.
---- ----------- --- ----- -------- ------
<S> <C> <C> <C> <C> <C>
1 ADAPT 2000 Complete System 1 64,500 64,500 12,900
JCL Analyzer, Independent Data Conv.
2 Factory Credit 1 64,500 -64,500 0
-------
TOTAL $0.00
------- -------
TOTAL MAINTENANCE $12,900
-------
-------
</TABLE>
DATE OF QUOTE: 10-21-97
SCHEDULES: A X B X C X D E
---- ---- ---- ---- ----
Processor Type: UNIX Class B
Customer: Transformation Processing, Inc. (TPI)
By: /s/ Gary McCann
Title: Executive Vice President Date October 22, 1997
------------------------ ----------------
QUOTE EXPIRES: 11-21-97
Installation Date
ALLEGIANT LEGACY SOLUTIONS, INC.
By: /s/ ALLEGIANT LEGACY SOLUTIONS, INC.
Title: Managing Director Date 10/29/97
----------------------- --------
3
<PAGE>
SCHEDULE B
OF THE
PROGRAM PRODUCT LICENSE
I. PAYMENT SCHEDULE:
50% of the amount of the attached Quotation # 972110-S, $6,450 (US Dollars) is
due with order. The balance, $ 6,450 (US Dollars), is due upon installation.
II. ANNUAL RENEWAL
LICENSEE may renew the PROGRAM PRODUCT License by paying one dollar annually.
Upon acceptance by Allegiant and LICENSEE'S renewal of the Warranty Enhancement
Program described in Schedule B, Section III, the License is renewed.
III. MAINTENANCE OF WARRANTY ENHANCEMENT PROGRAM
The maintenance, warranty and enhancement fee shall entitle LICENSEE the
continued use of and improvements, enhancements and modifications, and updates
to the PROGRAM PRODUCT if and as made available by Allegiant to its LICENSEES
generally and will be deemed to be part of the PROGRAM PRODUCT. LICENSEE will be
informed in writing when improvements, enhancements, modifications and updates
for the PROGRAM PRODUCT are available for installation. If LICENSEE fails to
install any such improvements, enhancements, modifications and updates within 45
days of receipt of code, the LICENSEE will be deemed as not utilizing the
current release of the PROGRAM PRODUCT, and Allegiant shall have no further
obligation to provide to LICENSEE improvements, enhancements, modifications or
updates to the affected PROGRAM PRODUCT. All improvements, enhancements,
modifications and updates shall be delivered to LICENSEE at Allegiant's option.
Such improvements, enhancements, modifications or updates shall be installed by
LICENSEE or Allegiant, as requested by LICENSEE.
IV. LICENSE AND OPERATIONAL SUPPORT FEES
A. It is understood that the Prepaid Licensee Fee for each PROGRAM PRODUCT
indicated on the Schedule and on the Quotation is a one-time License Fee for the
PROGRAM PRODUCT and is payable in full on the date such PROGRAM PRODUCT is
physically installed at LICENSEE'S facility. The Prepaid License Fee does not
entitle LICENSEE to any software support services or to any improvements,
enhancements, modifications and updates to the PROGRAM PRODUCT.
B. The maintenance, warranty and enhancement fee, as set forth in Allegiant's
applicable PROGRAM PRODUCT Price Listing, shall commence on the date the
applicable PROGRAM PRODUCT is installed on LICENSEE'S system and shall continue
until the AGREEMENT is terminated. The Annual Support Fee for each PROGRAM
PRODUCT indicated on the Schedule and on the Quotation shall remain unchanged
until the end of the initial term of the AGREEMENT.
Thereafter, Allegiant may increase the Fee for such PROGRAM PRODUCT from time to
time, upon a least 30 days prior written notice to LICENSEE.
C. LICENSEE will pay Allegiant for work performed at the following hourly rates
with four (4) hours minimum per day. These rates are effective for one year from
date of contract.
<TABLE>
<CAPTION>
OPERATIONS SUPPORT
<S> <C>
Senior Technician $187.50/ hour plus expenses
Consultant $150.00/hour plus expenses
Junior Technician $125.00/hour plus expenses
</TABLE>
Non standard hours available by quote.
V. PAYMENT TERMS
All invoices are due on a net 30 day basis. All monies, 30 days past due, incur
a 1 - 1/2% interest fee per month.
VI. EXPENSES
All Allegiant incurred expenses for LICENSEES are billed at actual cost.
VII. ESCROW SERVICES
Allegiant software utilizes certain proprietary subroutines and utilities for
PROGRAM PRODUCT development tools. The source code for these are not provided to
the LICENSEE along with source code for PROGRAM PRODUCT. Allegiant escrows this
source code with First National Bank of Southwestern Ohio and offers an
agreement to provide this source code upon Allegiant's cessation of business or
bankruptcy. The fee for this escrow service is currently $120 to be renewed each
November 1st by signing a new escrow agreement and paying the then current
escrow fee.
VIII. ALLEGIANT COMMUNICATION PROCEDURES
All communication should be directed through your assigned consulting account
manager (CAM). They will resolve or direct your request to the appropriate
person for resolution. If possible, the client designates one person as the
primary Allegiant contact and all communication comes through this person. Your
CAM is:
- --------------------
IX. CESSATION OF PROGRAM PRODUCT USE
LICENSEE will notify Allegiant on anniversary date of signing prior to
cancellation of the maintenance, warranty and enhancement and/or no longer
utilizing the PROGRAM PRODUCT.
4
<PAGE>
SCHEDULE A
TERMS AND CONDITIONS OF
CONSULTING AND TECHNICAL SERVICES
AGREEMENT, made this 21st day of October 1997 between Allegiant Legacy
Solutions, Inc., (hereinafter called ALS) and Transformation Processing, Inc.
(TPI) (hereinafter called CLIENT)
WHEREAS ALS represents that it has the right to grant the rights herein and in
consideration of the covenants contained herein, and other good and valuable
consideration the parties agree as follows:
1. FEE SCHEDULES: All services other than those specified herein are provided at
standard hourly rate schedules. All projects and services are billed on a time
and material basis. All reasonable expenses incurred on the CLIENTS behalf will
be billed at actual cost. All travel time will be billed at fifty (50) percent
of the standard hourly rate when the ALS employee(s) is traveling on the CLIENTS
behalf. Mileage is billed at the then current IRS rate.
The following rates will apply for one year from date of contract:
<TABLE>
<S> <C>
SENIOR CONSULTANT $187.50/hour
CONSULTANT $150/hour
SYSTEMS IMPLEMENTATION ENGINEER $125/hour
SYSTEMS ANALYST $150/hour
SENIOR PROGRAMMER $125/hour
PROGRAMMER $100/hour
</TABLE>
2. TERMS OF PAYMENT: All ALS invoices are considered due on a net 30 day basis.
3. PRICES AND TAXES: All amounts to be paid to ALS pursuant to this AGREEMENT
shall be paid in U.S. dollars. Any taxes, import fees or other governmental
duties of whatever nature shall be paid by the CLIENT in addition to the Fee
Schedules set forth herein.
4. HIRING OF ALS EMPLOYEES: It is contemplated that one or more employees of ALS
may be in contact with, or may assist CLIENT in areas of education, consulting
services and technical support. It is acknowledged that ALS employees are
valuable assets of ALS. While ALS will make an effort to provide such contacts
and/or assistance pursuant to the express terms hereof, ALS desires to retain
its employees in house. Accordingly, it is agreed that CLIENT or its related or
affiliated companies or organizations shall not offer employment to, nor hire
any ALS employee during the term of this license, or within one (1) year from
the termination date. Should CLIENT or any of its related affiliated companies
or organizations make an employment offer to an employee or actually hire an ALS
employee, then CLIENT shall pay to ALS, in liquidated damages, a sum equal to
twice employee's annual salary at ALS, calculated on such employee, annualized
income over the immediately preceding year, or portion thereof, during which the
employee was an employee of ALS.
5. UNAUTHORIZED ACTS: To the extent that it is aware, CLIENT agrees to notify
ALS immediately of the unauthorized possession, use or knowledge of any item
supplied under this CLIENT by any person or organization not authorized to have
such possession.
6. ASSIGNMENT: The rights of either party hereunder shall not be assigned,
licensed or transferred without written prior consent of both parties.
Permission will not be unreasonably withheld. 7. REMEDIES: In the event of any
violation of this AGREEMENT, both parties shall have the right to seek any
remedy at law or equity including the right to injunctive relief.
B. NON-WAIVER: No delay or failure on the part of either party in exercising any
right hereunder and no partial or single exercising thereof shall be deemed of
itself to constitute a waiver of such right or any other rights hereunder.
9. BINDING EFFECT: This AGREEMENT is binding upon the parties herein, their
respective employees, agents, representatives and persons associated with them.
10. COMPLETE AGREEMENT: This together with any forthcoming "COMPUTER PROGRAMMING
WORK AUTHORIZATION" and/or "ALLEGIANT SERVICES PROPOSAL" and/or "SERVICE
REQUEST" constitutes the sole, complete and exclusive statement of the AGREEMENT
between ALS and CLIENT for the subject matter hereof being ordered herein.
CLIENT acknowledges no other written or oral agreements in representations have
been made by ALS in connection herewith other than appear in this AGREEMENT,
including documents attached hereto by specific reference.
11. ALTERATION: This AGREEMENT may not be waived, altered or modified except by
written agreement of the parties.
12. REPRESENTATION OF AGENTS: No agent, employee or representative of ALS has
authority to bind ALS to any affirmation, representation or warranty and unless
such is specifically included within this AGREEMENT, it shall not be enforceable
by CLIENT.
13. GOVERNING LAW: This AGREEMENT shall be governed by the laws of the State of
Ohio.
14. TERMINATION AND DEFAULT: In the event of default, ALS may terminate this
AGREEMENT upon thirty (30) days written notice to the CLIENT. Upon such default
and upon written demand by ALS the CLIENT shall forthwith return all DOCUMENTS,
VIDEO TAPES, AUDIO TAPES and RECORDED ACTIVITIES in which an ALS employee
participated in its possession to ALS in its original form, shall further return
any and all copies that have been made whether authorized hereunder or not, and
shall not thereafter use any deviation thereof without written consent from ALS.
Default shall occur upon the occurrence of any of the following.
CLIENT'S failure to pay any amount within forty-five (45) days notice that such
sum is due:
The bankruptcy of the CLIENT; or
The filing by the CLIENT or a any petition under Bankruptcy laws.
WHEREFORE, the parties have executed this AGREEMENT the day and year first above
written.
CLIENT: TRANSFORMATION PROCESSING, INC. (TPI)
By: /s/ Gary McCann
Title: Executive Vice President Date October 22, 1997
ALLEGIANT LEGACY SOLUTIONS, INC.
By: /s/ALLEGIANT LEGACY SOLUTIONS, INC.
Title: Managing Director Date 10/29/97
5
<PAGE>
SCHEDULE A
TERMS AND CONDITIONS OF
PROGRAM PRODUCT LICENSE
AGREEMENT, made this 21st day of October, 1997 between Allegiant Legacy
Solutions, Inc., (hereinafter called Allegiant) and Transformation Processing,
Inc. (TPI) (hereinafter called LICENSEE)
WHEREAS Allegiant represents that it has the right to grant the rights and
Licenses herein and in consideration of the covenants contained herein, and
other good and valuable consideration the parties agree as follows:
1. LICENSE: In accordance with the terms of this agreement, Allegiant grants to
the LICENSEE and the LICENSEE accepts from Allegiant a non exclusive License to
use the PROGRAM PRODUCT which is detailed and describer in the Quotation and
Agreement to License Program Products attached hereto and made a part hereof. It
is acknowledged that the License granted herein only grants the LICENSEE the
right to use each PROGRAM PRODUCT being licensed herein, on a single identified
Central Processing Unit.
2. TERMS & LICENSEE FEE: The term is one year from installation date,
automatically renewable upon payment by LICENSEE and acceptance by Allegiant of
the annual renewal fee as set forth in Schedule B.
3. ADDITIONAL PROGRAM PRODUCT: The LICENSEE may from time to time order
additional PROGRAM PRODUCT or software from Allegiant or any optional
enhancements to the PROGRAM PRODUCT. These orders will be governed by the terms
and conditions of this AGREEMENT and shall be subject to acceptance by
Allegiant. Orders for additional software copies will incorporate the terms of
this agreement by reference.
4. PRICES AND TAXES: All amounts to be paid to Allegiant pursuant to this
AGREEMENT shall be paid in U.S. dollars. Any taxes, import fees or other
governmental duties of whatever nature shall be paid by the LICENSEE in addition
to the Price set forth herein.
5. DELIVERY AND DELAY: Allegiant shall not be responsible for failure to deliver
or for any delay in the installation of the System that is directly or
indirectly attributed to causes beyond Allegiant's control to include without
limit strikes (legal or illegal), labor stoppages or slow downs; lookouts;
fires, embargoes, war (declared or undeclared); riots; rebellions;
insurrections; acts of God; inability to obtain shipping space; transportation
of materials or components; machinery breakdowns; delays of carriers or
suppliers; governmental acts and regulation; presidential or executive orders;
and bankruptcies or insolvencies of suppliers. The Installation Date set forth
in the Quotation attached hereto is a desired and approximate date only.
Allegiant shall use every reasonable effort to effect timely delivery and
completed installation, although Allegiant reserves the right to change any
anticipated programming delivery date or the Installation Date, upon notice to
LICENSEE and without incurring any liability to LICENSEE by reason thereof
LICENSEE agrees that the programming to be furnished hereunder, since it shall
involve special features of LICENSEE'S business, may result in some periodic
delays by Allegiant in meeting the tentative time scheduling set forth herein
for the preparation of such programming in final form for use. In view of the
nature of any programming, LICENSEE acknowledges that any time scheduling cannot
be deemed the essence of this Order:
6. WARRANTY: LICENSEE agrees it has been advised that the nature of the
programming art is such that Allegiant cannot and does not assume liability for
errors or omissions in all programming furnished hereunder beyond the correction
of any error or omission. Allegiant makes no warranty with respect to the
programming ordered herein, except that such programming shall conform to
Published Specifications.
a) THESE WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED, IMPLIED OR
STATUTORY OR ARISING BY CUSTOM OR TRADE USAGE, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR ANY UNIQUE OR SPECIAL OR EXPRESS PURPOSE, AND OF
ALL OTHER OBLIGATIONS OR LIABILITIES INCLUDING, WITHOUT LIMITATION, LIABILITY
FOR DAMAGES (WHETHER GENERAL OR SPECIAL, DIRECT OR INDIRECT, CONSEQUENTIAL,
INCIDENTAL, EXEMPLARY), OR FOR ANY CLAIM FOR THE LOSS OF PROFITS OR BUSINESS OR
FOR DAMAGE TO GOODWILL.
b) LICENSEE shall have a license to use the PROGRAM PRODUCT being Licensed
hereunder free and clear of any liens and encumbrances.
c) If the PROGRAM PRODUCT fails to perform in accordance with and conform to
Published Specifications, Allegiant will, at its own expense, make all
reasonable efforts to promptly conform to such specifications. This warranty is
applicable if the PROGRAM PRODUCT is unmodified by the LICENSEE.
7. HARDWARE AND OPERATING SYSTEMS: Should LICENSEE change its hardware
configuration to a different manufacturers system which Allegiant does not
support, Allegiant shall have no obligation to modify the PROGRAM PRODUCT to
conform to such new equipment. If the hardware modification is to a system which
is not supported by the PROGRAM PRODUCT, Allegiant shall undertake at its option
to modify the PROGRAM PRODUCT to the new equipment. LICENSEE shall be
responsible for a prior agreed upon additional cost incurred for such
modification.
8. ACCEPTANCE AND NOTICE: Acceptance shall occur 30 days after installation of
PROGRAM PRODUCT- If any PROGRAM PRODUCT does not perform to the conditions set
forth in warranties, paragraph 6, LICENSEE will notify Allegiant in writing of
such failure. LICENSEE will document such failure in significant detail to allow
Allegiant to comprehend the nature of the failure. Any given notice by mail
shall be sent postage prepaid, by certified mail, return receipt requested.
LICENSEE will notify Allegiant on anniversary date of signing prior to
cancellation of the maintenance, warranty and enhancement and/or no longer
utilizing the PROGRAM PRODUCT.
9. PROPRIETARY RIGHTS: LICENSEE recognizes that Allegiant has a proprietary
interest in the PROGRAM PRODUCT and the PROGRAM PRODUCT contains trade secrets
of Allegiant. LICENSEE will maintain the PROGRAM PRODUCT and the trade secrets
of Allegiant in strict confidence and will exercise the same degree of care in
safeguarding the proprietary interest of Allegiant in the PROGRAM PRODUCT and
the Allegiant trade secrets as it does with its own proprietary information and
trade secrets of a similar nature. However, this obligation or any obligation of
LICENSEE contained in this AGREEMENT shall not apply to any Licensed PROGRAM
PRODUCT which is:
a) in the public domain or available to the public at any time, or
b) known to LICENSEE prior to disclosure thereof by Allegiant without any
instruction with respect to use or disclosure, or
c) available to LICENSEE from a third party who has the right to make such
disclosure, or
d) independently generated by an employee, agent or consultant or LICENSEE not
having actual access to such Licensed Programs, or
e) disclosed to others by Allegiant without obligations similar to those set
forth in this AGREEMENT.
In order to fall within one of these exceptions, the subject matter must be so
available, or disclosed, in its entirety from a single source.
Allegiant retains title to the PROGRAM PRODUCT furnished in any form and
training materials. LICENSEE shall keep each and every item to which Allegiant
retains title free and clear of all claims, liens and encumbrances except those
of Allegiant and any act of LICENSEE, voluntary or involuntary purporting to
create a claim, lien or encumbrance on such as item shall be void.
6
<PAGE>
All PROGRAM PRODUCT supplied by Allegiant hereunder are for the sole use of the
LICENSEE. LICENSEE agrees that while this License is in effect or while it has
custody or possession of any property of Allegiant, it will not directly or
indirectly lease, license, sell, offer or negotiate to lease, license or sell or
otherwise deal in the PROGRAM PRODUCT except as may be provided under this
AGREEMENT or for the sole and exclusive use of the LICENSEE. LICENSEE will not
copy or duplicate or permit anyone else to copy or duplicate any physical
magnetic or machine readable version of the PROGRAM PRODUCT, furnished by
Allegiant unless it shall be with the prior written approval of Allegiant.
Notwithstanding the foregoing, LICENSEE may copy or duplicate the physical or
magnetic version of the PROGRAM PRODUCT furnished by Allegiant for the sole and
exclusive use by the LICENSEE as specifically required for the purpose of Backup
and Catastrophic offsite storage. LICENSEE may copy or duplicate the Allegiant
supplied PROGRAM PRODUCT for the sole and exclusive use by the LICENSEE
specifically required in the support of day-to-day usage by the PROGRAM PRODUCT.
LICENSEE, upon request, will supply to Allegiant any persons having access to
PROGRAM PRODUCT source code who is not a full time LICENSEE employee during the
12 month period prior to such request.
10. HIRING OF ALLEGIANT EMPLOYEES: It is contemplated that one or more employees
of Allegiant may be in contact with, or may assist LICENSEE in areas related to
the PROGRAM PRODUCT including, but not limited to, enhancements, training,
application, adaptation, support and the like. It is acknowledged that Allegiant
employees are valuable assets of Allegiant. While Allegiant will make an effort
to provide such contacts and/or assistance pursuant to the express terms hereof,
Allegiant desires to retain its employees in house. Accordingly, it is agreed
that LICENSEE or its related affiliated companies or organizations shall not
offer employment to, nor hire any Allegiant employee during the term of this
license, or within one (1) year from the termination date. Should LICENSEE or
any of its related affiliated companies or organizations make an employment
offer to an employee or actually hire an Allegiant employee, then LICENSEE shall
pay to Allegiant, in liquidated damages, a sum equal to twice such employee's
annual salary at Allegiant, calculated on such employee's annualized income over
the immediately preceding year, or portion thereof, during which the employee
was an employee of Allegiant.
11. UNAUTHORIZED ACTS: To the extent it is aware, LICENSEE agrees to notify
Allegiant immediately of the unauthorized possession, use or knowledge of any
item supplied under this License by any person or organization not authorized to
have such possession.
12. INSPECTION: In order to assist Allegiant in the protection of its
proprietary rights, LICENSEE shall permit representatives of Allegiant to
inspect, at mutually agreeable times, the PROGRAM PRODUCT being supplied under
this License.
13. ASSIGNMENT: The rights of either party hereunder shall not be assigned,
licensed or transferred without written prior consent of both parties.
Permission will not be unreasonably withheld.
14. REMEDIES: In the event of any violation of this Agreement, both parties
shall have the right to seek any remedy at law or equity including the right to
injunctive relief.
15. NON-WAIVER: No delay or failure on the part of either party in exercising
any right hereunder and no partial or single exercising thereof shall be deemed
of itself to constitute a waiver of such right or any other rights hereunder.
16. BINDING EFFECT: This Agreement is binding upon the parties herein, their
respective employees, agents, representatives and person associated with them.
17. COMPLETE AGREEMENT: This together with the 'Quotation and AGREEMENT to
License PROGRAM PRODUCTS' and all noted schedules, constitutes the sole complete
and exclusive statement of the AGREEMENT between Allegiant and LICENSEE for the
subject matter hereof being ordered herein. LICENSEE acknowledges no other
written or oral agreements or representations have been made by Allegiant in
connection herewith other than appear in this AGREEMENT, including any documents
attached hereto by specific reference.
18. ALTERATION: This AGREEMENT may not be waived, altered or modified except by
written agreement of the parties.
19. REPRESENTATION OF AGENTS: No agent, employee or representative of Allegiant
has any authority to bind Allegiant to any affirmation, representation or
warranty and unless such is specifically included within this AGREEMENT, it
shall not be enforceable by LICENSEE.
20. COPYRIGHT: LICENSEE acknowledges that Allegiant is the owner of the entire
right, title and interest in all copyrights in and to the PROGRAM PRODUCT, all
source object codes related thereto, all training, information and use of
manuals, all documentation and writing of Allegiant, and all subsidiary and
derivative rights therein. LICENSEE agrees to respect such copyrights, and not
copy, publish, modify, amend, alter, enhance, license, grant, or otherwise
dispose of, or transfer same, except as expressly provided herein, without
Allegiant.
21. GOVERNING LAW: This AGREEMENT shall be governed by the laws of the State of
Ohio.
22. TERMINATION AND DEFAULT: In the event of default, Allegiant may terminate
this AGREEMENT upon thirty (30) days written notice to the LICENSEE. In such
event, all License Fees payable for the entire term of this AGREEMENT shall
without notice or demand by Allegiant immediately become due and payable as
liquidated damages. Upon such default and upon written demand by Allegiant the
LICENSEE shall forthwith return the PROGRAM PRODUCT in its possession to
Allegiant in its original form, shall further return any and all copies that
have been made, whether authorized hereunder or not and shall not thereafter use
any PROGRAM PRODUCT, modification, enhancement, alteration or derivation thereof
without written consent from Allegiant. Default shall occur upon the occurrences
of any of the following.
LICENSEE'S failure to pay amount within forty-five (45) days notice that such
sum is due;
The assignment (without prior Allegiant approval), transfer or subleasing of the
PROGRAM PRODUCT herein by the LICENSEE.
The bankruptcy of the LICENSEE; or
The filing by the LICENSEE any petition under Bankruptcy laws.
WHEREFORE, the parties have executed this AGREEMENT the day and year first above
written.
LICENSEE: TRANSFORMATION PROCESSING INC. (TPI)
By: /s/ Gary McCann
OFFICER
Executive Vice President October 22, 1997
- ------------------------------------------------
TITLE DATE
ALLEGIANT LEGACY SOLUTIONS, INC.
By: /s/ALLEGIANT LEGACY SOLUTIONS, INC.
OFFICER
Managing Director October 29, 1997
------------------------------------------------
TITLE DATE
7
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF TRANSFORMATION PROCESSING INC.
None.
-----
