U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
Powertech, Inc.
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(Name of Small Business Issuer in Its Charter)
Nevada 86-0914695
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
370-1122 Mainland Street, Vancouver, British Columbia, Canada V6B 5L1
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (604) 669-2255
----------------------------------------------------
Securities to be registered under Section 12(b) of the Act: None.
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $0.001
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(Title of class)
<PAGE>
PART I
Item 1. Description of Business
General
Powertech, Inc. ("Powertech") was incorporated under the laws of the State of
Nevada on May 4, 1998 to engage in the business of Internet software and
hardware development. The company neither owned nor leased any real or personal
property, and had no specific business plan other than to engage in a merger or
acquisition with an unidentified company. Following its purchase of all the
issued and outstanding shares of NETSentry Technology, Inc. ("NETSentry") on
February 12, 1999, described below, Powertech is a development stage that
intends to develop and exploit technologies that improve efficiency, reliability
and recoverability on Internet protocol ("IP") networks. Unless the context
otherwise indicates or requires, Powertech together with NETSentry, its
wholly-owned subsidiary, are referred to in this registration statement as the
"Company."
NETSentry
Pursuant to a Share Purchase Agreement dated for reference January 11, 1999, as
amended by agreement dated January 29, 1999, Powertech acquired from Randy
Voldeng and Dragos Ruiu all of the issued and outstanding shares of NETSentry
Technology, Inc. ("NETSentry") in consideration of $115,000, payable by the
issuance of 2,442,500 shares to each of them, or an aggregate of 4,885,000
shares, plus an additional aggregate of 1,000,000 shares from three persons then
serving as directors of Powertech, and Powertech's having unencumbered funds of
$1,012,500. The transaction closed on February 12, 1999. On that date, Mr.
Voldeng and Mr. Ruiu entered into Non-Competition Agreements with NETSentry as a
condition of closing.
NETSentry was incorporated under the Company Act of British Columbia on May 22,
1998 to develop and exploit technologies that improve the efficiency,
reliability and recoverability on IP networks. It was a development stage
company that had not earned any revenues and that required substantial financing
to develop the technologies into marketable products.
NETSentry's business will focus on the development and marketing of software
products to enhance the efficiency, reliability and recoverability of the IP
networks deployed by national backbone operators, regional backbone operators,
internet service providers and large corporations.
Marketing and Distribution of New Products
NETSentry and Hewlett Packard Network Test Division executed a Memorandum of
Understanding, dated May 15, 1998, with respect to a marketing and distribution
structure for NETSentry's ProbeNET distributed measurement software, providing
for a period of 24 months beginning with the product release date, which is
expected to occur at the end of the 4th quarter of 1999. The Memorandum of
Understanding which is subject to mutually agreed annual renewal terms, require
the Company to sell the ProbeNET software to HP at a discount from the net
selling price.
2
<PAGE>
ProbeNET is a software package - a distributed network problem-solving tool for
network professionals. IP routing and address resources are distributed
throughout IP Networks, as are their associated problems. ProbeNET is a network
wide "Logic Analyzer" used to identify, monitor and take action on interesting
events, conditions and traffic that happen at different times and places within
the network.
Competition
ProbeNET is a technology that enables the network professional to make a network
related measurement in a fast and efficient manner; it differentiates itself
from other measurement tools by combining data intelligently collected from
distributed measurement points into a single, meaningful reporting mechanism. It
also is a highly customizable tool that uses a deployed architecture to capture
and analyze anything, anywhere, anytime on the network.
There are vendors providing measurements for specific applications, such as IP
billing, network performance, service level agreements and policy management,
but the Company's management is not aware of any commercially available,
comprehensive test tools like ProbeNET.
In general, however, the development of Internet software and hardware is
intensely competitive. The Company competes with numerous other companies,
including several major manufacturers and distributors. Some of the Company's
competitors have greater financial and other resources than the Company.
Consequently, such entities may begin to develop, manufacture, market and
distribute Internet software and hardware that is substantially similar or
superior to the Company's products. There is no assurance that the Company will
be able to develop and sell products that have a competitive advantage in the
market.
Government Supervision and Regulation
The phenomenal growth of the Internet indicates a fundamental change in the way
people and organizations interact. Electronic connectivity, once solely the
realm of larger corporate business systems, is now impacting every business
segment in the worldwide economy and all consumers in the form of the Internet.
Voice, fax, e-commerce and video now converge on the Internet. However, although
the Government is closely monitoring the development of this new communications
infrastructure, especially to ensure there is fair competition, the Internet is
largely unregulated.
Research & Development
The Company estimates spending approximately $1 million on product development
during fiscal 2000, including $175,000 in expected support funding from
Technology BC, a British Columbia provincial government funding program for
joint development activities between the Company and Advanced Technology Group
of the British Columbia Institute of Technology.
3
<PAGE>
Employees
As of September 30, 1999, the Company employed 10 full-time employees, including
programmers, technicians and others. The Company considers relations with
employees to be good.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Forward-Looking Statements. The discussion and analysis below, and throughout
this Form 10-SB, contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected or suggested in the forward-looking statements. The following
discussion and analysis should be read in conjunction with the Financial
Statements and notes thereof that appear elsewhere in this report.
The independent auditors' report comments that the Company's having no
established source of revenue and its being dependent on its ability to raise
substantial amounts of equity funds raise substantial doubt about the Company's
ability to continue as a going concern. The technologies the Company intends to
develop will require significant cash. The ability of the Company to develop the
technologies into marketable products is dependent on management's ability to
obtain adequate additional financing, develop commercially saleable products and
achieve profitable operation. There can be no assurance that any of these
objectives will be realized.
Plan of Operation
The Company has not had revenues from operations since inception. With the
acquisition of NETSentry, Powertech's plan of operation contemplates obtaining
additional financing of about $1.5 million in the next 6 months necessary for
the continued development of its technologies in order to achieve profitable
operations. Attracting additional members to a team of highly skilled
experienced technical professionals, including programmers and marketing
engineers, also is contemplated.
With the additional financing and staff, the Company expects to continue
development of and to launch ProbeNET and other innovative products during the
next several years, currently including:
oProbeNET Version 2 - will include an architecture for consultants and customers
to develop customizable measurements and will include more advanced inter-probe
communication to provide more detailed network performance measurement;
estimated release in the third quarter of 2000.
oTestBOT - a hardware platform designed for use by system and network
administration professionals, with 5 prototypes estimated for release in the
third quarter of 2000; envisioned as a portable 270MIPS/32Mb/100 base T
handheld, battery operated management console and test tool about the size and
weight of a 35mm camera.
4
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oMineNET -- a custom access and report generation add-on for large customers
that will allow more powerful information mining from the databases of ProbeNET
There can be no assurance that any of the products under development will be
successfully developed or will be commercially successful.
Item 3. Description of Property.
The Company subleases office space of approximately 2300 square feet for its
executive offices and primary operating facility from an unrelated entity for
monthly rent of CDN $4606 on a lease expiring on May 15, 2001, with an option to
extend the lease for two years and to increase the space by 1000 square feet.
The Company also leases approximately 750 feet for its main test lab and network
infrastructure facility in an adjacent building for monthly rent of CDN $833 on
a lease expiring on June 15, 2001, with an option to extend the lease for two
years. The Company also maintains at no cost a test lab at the home of Mr. Ruiu
in Vancouver and a remote test site at an apartment of Mr. Ruiu in Edmonton,
Alberta. In the opinion of management, these properties are adequate and
suitable for the Company's use for the foreseeable future.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of September 30, 1999, the beneficial
ownership of shares of Company's common stock by any person known to be the
beneficial owner of more than 5%, each of the directors and executive officers,
and all directors and executive officers as a group. Except as otherwise
indicated, each of the persons named has sole voting and investment power with
respect to all shares beneficially owned. Beneficial ownership is calculated in
accordance with Rule 13d-3(d) of the Securities Exchange Act of 1934.
Amount and Nature
Name of Beneficial Owner of Beneficial Ownership Percent of Class
- ------------------------ ------------------------ -----------------
Randy Voldeng 2,942,500 shares 19.4%
370-1122 Mainland Street
Vancouver, BC V6B 5L1
Dragos Ruiu 2,942,500 shares 19.4%
370-1122 Mainland Street
Vancouver, BC V6B 5L1
Officers & Directors as a group
(2 persons) 5,885,000 shares 38.8%
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Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers of the Company are:
Name Age Principal Occupation
- ---- --- --------------------
Randy Voldeng 50 Director, President and
Chief Executive Officer of
Powertech and NETSentry
Dragos Ruiu 32 Director and Executive Vice
President of Powertech
and NETSentry
Each director is elected to hold office until the next annual meeting of
stockholders and until his successor is elected or appointed and qualified. Each
officer serves at the discretion of the Board of Directors. There is no family
relationship between or among any of the directors or executive officers.
Randy Voldeng is a director and the President and Chief Executive Officer of
Powertech and NETSentry. Prior to co-founding NETSentry, Mr. Voldeng was the
President of Hayes Voldeng Management, Inc. Prior to founding Hayes Voldeng
Management, Inc. in 1993, Mr. Voldeng was responsible for worldwide sales and
marketing for the IDACOM Telecom Division of Hewlett-Packard ("HP"). Previous to
that, he served as HP's Operations Manager. Before joining HP, Mr. Voldeng was
Vice-President and Chief Operating Officer of IDACOM Electronics Ltd. of
Edmonton, Alberta. While at IDACOM Electronics Ltd., he played a key role in the
company's management and eventual sale to HP.
Dragos Ruiu is a director and Executive Vice President of the Powertech and
NETSentry. Prior to co-founding NETSentry, Mr. Ruiu spent six years in product
management and strategic product planning at the Network System Test Division of
HP. During his last three years, he focused on the formation and launch of new
business units targeted at developing new test products for emerging network and
multimedia technologies. Mr. Ruiu was also the founder of the ATM Forum Testing
Working Group and has co-authored books on Frame Relay, ATM and Digital Video.
Prior to joining HP, Mr. Ruiu served as a product-marketing engineer for IDACOM
Electronics Ltd.
By virtue of their positions and beneficial ownership of shares, each of Messrs.
Voldeng and Ruiu may be deemed a "control person" and a "parent"of the Company,
within the definition of those terms in Rule 12b-2 of the Securities Exchange
Act of 1934.
By virtue of their activities in founding and organizing Powertech and
NETSentry, each of Messrs. Voldeng, Ruiu, Daniel Para, David Raftery, Daniel
Hodges and Ms. Kathy Para, who is married to Daniel Para, may be deemed a
"promoter" of those companies, within the definition of that term in Rule 12b-2
of the Securities Exchange Act of 1934.
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Item 6. Executive Compensation.
Neither the Chief Executive Officer nor any other executive officer of the
Company received compensation (total salary and bonus) in excess of $100,000 in
any fiscal year since inception. Mr. Voldeng, Chief Executive Officer, received
$12,000 from May 22, 1998, inception of NETSentry, through December 31, 1998,
and Dragos Ruiu, Chief Technical Officer, received $15,000 during that period.
In 1999, each of Messrs. Voldeng and Ruiu will receive a salary of $90,000 CDN.
Item 7. Certain Relationship and Related Transactions.
Pursuant to a Share Purchase Agreement dated for reference January 11, 1999, as
amended by agreement dated January 29, 1999, Powertech acquired all of the
issued and outstanding shares of NETSentry from Messrs. Voldeng and Ruiu in
consideration of $115,00 payable by the issuance of 2,442,500 shares to each of
them, or an aggregate of 4,885,000 shares, plus the transfer of an aggregate of
1,000,000 shares from promoters Kathy Para (300,000), Daniel Hodges (400,000)
and David Raftery (300,000).
Each of Ms. Para and Mr. Raftery had acquired 300,000 shares in August 1998 for
management services rendered. Mr. Hodges had acquired 400,000 shares in June
1998 for management services and organizational development services provided.
Daniel Para, another promoter who is married to Kathy Para, acquired 600,000
shares in December 1998 for $.03125 per share.
NETSentry has entered into an option agreement dated September 10, 1998 with a
company controlled by Mr. Ruiu to obtain the related rights and equipment for an
internet protocol tester known as TestBOT for $50,000 in cash and 500,000 common
shares of Powertech. Management expects to exercise the option after it
completes its next round of financing.
Item 8. Description of Securities.
The securities being registered are shares of common stock, par value $.001.
There are 100,000,000 shares of common stock authorized, with 15,194,800 issued
and outstanding as of September 30, 1999. Each of the common shares is entitled
to one vote on all matters submitted to a vote of the stockholders. There are no
cumulative voting rights or other special voting rights; nor are there any
preemptive rights, or any preference as to dividends or interest or upon
liquidation.
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<PAGE>
PART II
Item 1. Market Price of and Dividend on the Registrant's Common Equity
and Other Shareholder Matters.
The shares of common stock were quoted and traded on the OTC Bulletin Board for
two days, from January 11, 1999 until the trading suspension on January 13,
1999. Trading has not resumed. The following table sets forth the high and low
bid prices for such shares during the period of trading, as reported by the
National Association of Securities Dealers, Inc. See "Item 2. Legal
Proceedings."
Date High Low Volume
1-11-99 1-1/2 1-1/2 5,000
1-12-99 1-33/64 1-7/16 1,514,000
1-13-99 1-5/8 1-7/16 627,000
The quotations set forth above reflect inter-dealer prices, without retail
mark-up, markdown, or commission, and may not represent actual transactions
Holders. As of September 30,1999, there were approximately 42 holders of record
of the Company's shares.
Dividends. The Company has not declared any dividends since inception and does
not intend to declare or pay any cash dividends in the foreseeable future.
Rather, any net earnings shall be used for working capital and other corporate
purposes.
Item 2. Legal Proceedings.
There are no material legal proceedings pending to which the Company is a party
or to which any of its property is the subject.
On January 13, 1999, the Securities and Exchange Commission ("SEC") announced
the temporary suspension, pursuant to Section12 (k) of the Securities Exchange
Act of 1934, of over the counter trading of the securities of Powertech,
commencing at 9:30 a.m. on January 14, 1999 and terminating at 11:59 p.m. on
January 28, 1999, because of questions raised about the accuracy and adequacy of
publicly disseminated information concerning, among other things, contracts
entered into by the issuer.
The SEC also is conducting a private investigation pursuant to a formal order
entered on January 26, 1999, styled In the Matter of PTC Group, Inc. (NY-6515).
8
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Item 3. Changes in and Disagreements with Accountants.
Not applicable.
Item 4. Recent Sales of Unregistered Securities.
On June 18, 1998, 400,000 shares were issued to Daniel Hodges for management
services and organizational development services rendered. On August 14, 1998,
300,000 shares were issued to each of Kathy Para and David Raftery, then
directors, for management services rendered. There were no underwriters involved
in these issuances. These shares were not registered under the Securities Act of
1933 in reliance upon the exemption afforded by Section 4(2)
On September 10, 1998, 3,200,000 shares were issued at $.03125 per share, or an
aggregate consideration of $100,000, to 42 accredited investors outside the
United States, without registration, in reliance upon the exemptions provided by
Rule 504 of Regulation D and Rule 903 of Regulation S. There were no
underwriters involved.
On September 30, 1998, 3,550,000 shares were issued at $.01 per share for
consulting services to 12 persons outside the United States, without
registration, in reliance upon the exemptions provided by Rule 504 of Regulation
D and Rule 903 of Regulation S. There were no underwriters involved.
On December 7, 1998, 1,750,000 shares were issued at $.03125 per share, or an
aggregate consideration of $54,688, to 6 accredited investors outside the United
States, without registration, in reliance upon the exemptions provided by Rule
504 of Regulation D and Rule 903 of Regulation S. There were no underwriters
involved.
On February 12, 1999, Powertech acquired from Randy Voldeng and Dragos Ruiu,
citizens of Canada and residents of British Columbia, all of the issued and
outstanding shares of NETSentry in consideration of $115,000 payable by the
issuance of 2,442,500 shares to each of them, or an aggregate of 4,885,000
shares, without registration, in reliance upon the exemptions afforded by
Section 4(2) and Rule 903 of Regulation S. There were no underwriters involved.
Item 5. Indemnification of Directors and Officers.
Pursuant to Nevada Revised Statutes ("NRS") 78.7502 of the Nevada General
Corporation Law, a corporation may indemnify an officer, director, employee or
agent who was or is a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, except
a derivative action, by reason of the fact that he is or was an officer,
director, employee or agent of the corporation, against expenses, including
attorneys' 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 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, had no reasonable cause to believe his conduct
was unlawful.
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Pursuant to NRS 78.751, any discretionary indemnification under NRS 78.7502 may
be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances. The determination must be made by: (a) the
stockholders; (b) the board of directors by majority vote of directors who were
not parties to the action, suit or proceeding; or (c) by independent legal
counsel in a written opinion.
Article TWELVE of the Company's Articles of Incorporation provides that no
director or officer of the corporation shall be personally liable for damages
for breach of fiduciary duty as a director or officer involving any act or
omission except those involving intentional misconduct, fraud or a knowing
violation of law, or the payment of unlawful distributions to shareholders in
violation of NRS 78.300.
Index to Financial Statements
The following consolidated financial statements of the Company are filed as part
of this registration statement.
<TABLE>
<CAPTION>
Page #
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<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS OF THE REGISTRANT
Independent Auditors on the Consolidated Financial Statements
at June 30, 1999 and for the six months then ended 12
Consolidated Balance Sheets as at June 30, 1999 and December 31, 1998 13
Consolidated Statement of Operations for the cumulative period from
inception to June 30, 1999, and for the periods from inception to December 31, 1998
and January 1, 1999 to June 30, 1999 14
Consolidated Statement of Cash Flows for the cumulative period from
inception to June 30, 1999, and for the periods from inception to December 31, 1998
and from January 1, 1999 to June 30, 1999 15
Consolidated Statement of Stockholders' Equity from inception to
June 30, 1999 16
Notes to the Consolidated Financial Statements 17-21
Independent Auditor's Report on the Financial Statements as at
December 31, 1998, and for the period from inception toDecember 31, 1998 22
Balance Sheet as at December 31, 1998 23
Statement of Operations for the period from inception to
December 31, 1998 24
Statement of Stockholders' Equity for the period from inception
to December 31, 1998 25
Statement of Cash Flows for the period from inception to
December 31, 1998 26
</TABLE>
10
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<TABLE>
<S> <C>
Notes to 1998 Financial Statement 27-29
FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Independent Auditors'Report on the Financial Statements as at February 11, 1999
and December 31, 1998, and for the periods from January 1, 1999 to February 11,
1999, from inception to December 31, 1998, and for the cumulative period from
inception to February 11, 1999 30
Balance Sheets as at February 11, 1999 and December 31, 1998 31
Statement of Operations for the cumulative period from inception to February 11,
1999 and for the periods from January 1, 1999 to February 11, 1999 and from
inception to December 31, 1998 32
Statement of Cash Flows for the cumulative period from inception to February 11,
1999 and for the periods from January 1, 1999 to February 11, 1999 and from
inception to December 31, 1998 33
Statement of Stockholders' Equity from inception to February 11, 1999 34
Notes to the Financial Statements 35-38
PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Notice to Reader 39
Pro-Forma Consolidated Statement of Operations for the period from
inception to December 31, 1998 40
Pro-Forma Consolidated Statement of Operations for the six months
ended June 30, 1999 41
Note to the Pro-Forma Consolidated Statement of Operations 42
</TABLE>
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INDEPENDENT AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
To the Board of Directors
and Shareholders of Powertech, Inc.
We have audited the consolidated balance sheet of Powertech, Inc. as at June 30,
1999 and the consolidated statements of operations, cash flows and stockholders'
equity for the six months then ended. These consolidated financial statements
are the responsibility of the company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing standards
in Canada, which are in substantial agreement with those in the United States of
America. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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, these consolidated financial statements present fairly, in all
material respects, the financial position of Powertech, Inc. as at June 30, 1999
and the results of its operations and its cash flows for the six months then
ended in accordance with generally accepted accounting principles in the United
States of America.
The accompanying consolidated financial statements have been prepared assuming
the company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the company has no established source of
revenue and is dependent on its ability to raise substantial amounts of equity
funds. This raises substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
The financial statements as at December 31, 1998 and for the period from
inception to December 31, 1998 were audited by a firm of certified public
accountants who expressed an opinion without reservation on those statements in
their report dated October 5, 1999.
/s/ Davidson & Company
-----------------------
Vancouver, Canada Chartered Accountants
September 1, 1999
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Powertech, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current
Cash and term deposits $ 532,217 $ -
Prepaids 6,088 -
Receivables 20,623 -
Due from company controlled by a shareholder
(Note 3) 16,463 -
Stock subscription receivable - 55,688
--------------- ---------------
575,391 55,688
Capital assets (Note 4) 124,879 -
Technology (Notes 5 and 6) 94,231 -
--------------- ---------------
$ 794,501 $ 55,688
=============== ===================
- ---------------------------------------------------------------------------------------------------------
Liabilities
Current
Bank indebtedness $ - $ 1,841
Accounts payable and accruals (Note 7) 66,316 12,611
--------------- ---------------
66,316 14,452
--------------- ---------------
Stockholders' Equity
Capital stock (Note 8) 15,195 9,500
Authorized:
100,000,000 common shares of $0.001 par value
Issued:
15,194,800 (December 31, 1998 - 9,500,000)
common shares
Additional paid-in capital 1,159,881 181,688
Deficit (446,891) (149,952)
--------------- ---------------
728,185 41,236
--------------- ---------------
$ 794,501 $ 55,688
=============== ===============
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
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- --------------------------------------------------------------------------------
Powertech, Inc.
(A Development Stage Company)
Consolidated Statement of Operations
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the For the
Period from Six Months Period from
Inception to Ended Inception to
June 30, June 30, December 31,
1999 1999 1998
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
Interest $ 7,730 $ 7,730 $ -
--------------- --------------- ---------------
Expenses
Marketing and sales
Advertising 1,108 1,108 -
Salaries and benefits 44,148 44,148 -
Travel and entertainment 8,765 8,765 -
--------------- --------------- ---------------
54,021 54,021 -
--------------- --------------- ---------------
Product development
Salaries and benefits 79,492 79,492 -
Travel and entertainment 480 480 -
--------------- --------------- ---------------
79,972 79,972 -
--------------- --------------- ---------------
General and administration
Bank charges 203 203 -
Communication 14,223 11,473 2,750
Computer and office supplies 54,970 25,483 29,487
Consulting 110,250 - 110,250
Depreciation 5,793 5,793 -
Employee relocation 1,872 1,872 -
Foreign exchange loss 3,280 3,280 -
Professional fees 75,975 70,510 5,465
Rent 6,639 6,639 -
Salaries and benefits 42,240 42,240 -
Travel and entertainment 5,183 3,183 2,000
--------------- --------------- ---------------
320,628 170,676 149,952
--------------- --------------- ---------------
Total expenses 454,621 304,669 149,952
--------------- --------------- ---------------
Net loss $ (446,891) $ (296,939) $ (149,952)
--------------- --------------- ---------------
Weighted average number of shares
Outstanding 7,688,011 13,963,136 2,995,436
=============== =============== ===============
Loss per share - basic and diluted $ (0.06) $ (0.02) $ (0.05)
=============== =============== ===============
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
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Powertech, Inc.
(A Development Stage Company)
Consolidated Statement of Cash Flows
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the For the
Period from Six Months Period from
Inception to Ended Inception to
June 30, June 30, December 31,
1999 1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash derived from (applied to)
Operating
Net loss $ (446,891) $ (296,939) $ (149,952)
Depreciation 5,793 5,793 -
Shares issued for services rendered 35,500 - 35,500
Change in non-cash operating
working capital
Prepaids (6,088) (6,088) -
Receivables (2,314) (2,314) -
Accounts payable and accruals 28,425 15,814 12,611
--------------- --------------- ---------------
(385,575) (283,734) (101,841)
--------------- --------------- ---------------
Financing
Shares issued for cash 1,080,003 979,003 100,000
Share subscriptions received 54,688 55,688 -
Payment of promissory notes
payable by subsidiary company
(Note 3) (127,373) (127,373) -
--------------- --------------- ---------------
1,007,318 907,318 100,000
--------------- --------------- ---------------
Investing
Acquisition of capital assets (107,176) (107,176) -
Advances to company controlled
by a shareholder (16,463) (16,463) -
Cash assumed on acquisition of
subsidiary 34,113 34,113 -
--------------- --------------- ---------------
(89,526) (89,526) -
--------------- --------------- ---------------
Net increase (decrease) in cash 532,217 534,058 (1,841)
Cash and term deposits (bank indebtedness)
Beginning of period - (1,841) -
--------------- --------------- ---------------
End of period $ 532,217 $ 532,217 $ (1,841)
=============== ================ ===============
- --------------------------------------------------------------------------------------------------------
Non-cash items not included in cash flows:
Shares issued for subscription
receivable $ 55,688 $ - $ 55,688
Shares issued for services $ 1,000 $ - $ 1,000
Shares issued to acquire subsidiary $ 4,885 $ 4,885 $ -
- --------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
15
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- -------------------------------------------------------------------------------
Powertech, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
----------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
(expressed in U.S. dollars)
From the Date of Inception to June 30, 1999
- -------------------------------------------------------------------------------------------------------
Common Shares
---------------------------
Additional
Paid-in
Shares Amount Capital Deficit Total
<S> <C> <C> <C> <C> <C>
Common stock issued to
officers for services
rendered 1,000,000 $ 1,000 $ - $ - $ 1,000
Common stock issued by
offering at $.03125 per
share 4,950,000 4,950 149,738 - 154,688
Common stock issued by
offering at $.01 per
share 3,550,000 3,550 31,950 - 35,500
Net loss for the period
from inception to
December 31, 1998 - - - (149,952) (149,952)
------------- ---------- ------------- ------------ -----------
Balance,
December 31, 1998 9,500,000 9,500 181,688 (149,952) 41,236
Common shares issued
for cash net of share
issuance costs of
$33,247 809,800 810 978,193 - 979,003
Common shares issued on
acquisition of
NETSentry Technology
Inc. (Note 3) 4,885,000 4,885 - - 4,885
Net loss for the six months
ended June 30, 1999 - - - (296,939) (296,939)
------------- ---------- ------------- ------------ -----------
Balance, June 30, 1999 15,194,800 $ 15,195 $ 1,159,881 $ (446,891) $ 728,185
============= ========== ============= ============ ===========
- --------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
16
<PAGE>
- -------------------------------------------------------------------------------
Powertech, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
June 30, 1999
- -------------------------------------------------------------------------------
1. Operations and going concern
The company was incorporated under the laws of the State of Nevada on May 4,
1998 to engage in the business of internet software and hardware development.
On February 11, 1999, the company acquired all the issued and outstanding common
shares of NETSentry Technology Inc., a Vancouver, Canada based company in
business to develop and exploit technologies that improve the efficiency,
reliability and recoverability of internet protocol networks.
The company has commenced its planned principal operations through its newly
acquired subsidiary, however, it has not yet earned any revenue therefrom and
the technologies that it intends to develop will require cash significantly in
excess of its current resources. The ability of the company to develop these
technologies into marketable products is dependent on management's ability to
obtain adequate additional financing, develop commercially saleable products and
to achieve profitable operations. It will be necessary for the company to raise
such additional funds in the coming year for the continued development and
marketing of its technologies.
- --------------------------------------------------------------------------------
2. Summary of significant accounting policies
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ materially from those estimates.
Consolidation
These financial statements include the accounts of the company and its
wholly-owned subsidiary, NETSentry Technology Inc. All intercompany transactions
and balances have been eliminated.
Capital assets
Capital assets are recorded at cost less accumulated depreciation. Depreciation
is provided for at the following rates and methods:
Office equipment 20%, straight line method
Computer hardware 30%, straight line method
Computer software 50%, straight line method
Furniture and fixtures 20%, straight line method
Leasehold improvements straight line over the term of the lease
Depreciation is recorded at one-half the annual rate in the year of acquisition.
17
<PAGE>
- -------------------------------------------------------------------------------
Powertech, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
June 30, 1999
- -------------------------------------------------------------------------------
2. Summary of significant accounting policies (Continued)
Technology
The acquisition cost of the ProbeNET technology (Note 5) has been capitalized.
All costs incurred to develop this technology will be expensed as incurred. The
capitalized technology acquisition costs will be amortized over a period to be
determined by management once the company commences its marketing and
distribution of this product.
Should management determine that the product will not achieve commercial
viability, the capitalized acquisition costs will be written off to operations
when that determination is made.
Financial instruments
The company has financial instruments that include cash, receivables and
payables and amounts due from a company controlled by a shareholder. The
carrying value of these financial instruments approximates their fair value.
Foreign currency translation
The company considers the U.S. dollar its functional currency.
Monetary assets and liabilities resulting from foreign currency transactions are
translated into United States dollars using the year end conversion rates.
Revenues, expenses, receipts and payments are translated throughout the year at
exchange rates prevailing at the date of the transaction. Exchange gains and
losses are included in earnings for the period.
Statement of cash flows
For the purpose of the statement of cash flows, the company considers cash on
hand and balances with banks, net of overdrafts, and highly liquid temporary
money market instruments with original maturities of three months or less as
cash or cash equivalents.
Deferred income taxes
Deferred income taxes are provided for significant carryforwards and temporary
differences between the tax basis of an asset or liability and its reported
amount in the financial statements that will result in taxable or deductible
amounts in future periods. Deferred tax assets or liabilities are determined by
applying the presently enacted tax rates and laws.
A valuation allowance is required when it is more likely than not that some
portion or all of the deferred tax asset will not be realized.
18
<PAGE>
- -------------------------------------------------------------------------------
Powertech, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
June 30, 1999
- -------------------------------------------------------------------------------
3. Due from company controlled by a shareholder
Advances to this related party are due on demand, bear no interest and are
unsecured.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4. Capital assets Accumulated Net
Cost Depreciation Book Value
---- ------------ ----------
<S> <C> <C> <C>
Computer hardware and software $ 101,253 $ 5,044 $ 96,209
Office equipment 9,598 140 9,458
Leasehold improvements 13,341 441 12,900
Furniture and fixtures 6,480 168 6,312
------------ ----------------- ----------------
$ 130,672 $ 5,793 $ 124,879
============ ================= ================
</TABLE>
- --------------------------------------------------------------------------------
5. Acquisition
On February 12, 1999, the company acquired all the issued and outstanding shares
of NETSentry Technology Inc. for 4,885,000 of its own shares. This acquisition
was accounted for by the purchase method with the company being the acquirer.
The results of operations of NETSentry Technology Inc. have been included in
these consolidated financial statements from the date of acquisition.
Assets acquired
Cash $ 34,113
Receivables 18,309
Capital assets 23,496
Technology 94,231
----------------
170,149
Liabilities assumed
Payables and accruals 37,891
Advances from Powertech, Inc. to repay
promissory notes payable by NETSentry 127,373
----------------
Net assets acquired $ 4,885
=================
Purchase price consists of:
4,885,000 of the company's common shares $ 4,885
=================
19
<PAGE>
- -------------------------------------------------------------------------------
Powertech, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
June 30, 1999
- -------------------------------------------------------------------------------
6. Technology
By an agreement dated December 23, 1998, the company's newly-acquired subsidiary
purchased from one of its shareholders for nominal consideration, all world-wide
rights, title and interest in the internet technology known as ProbeNET.
The marketing of this technology is subject to a Memorandum of Understanding
("MOU") entered into by the company and an international computer products
distributor. If development of this technology is successful, the terms of the
MOU require the company to sell the ProbeNET software through the counterparty
at a 50% discount from its net selling price. The term of this MOU is 24 months
from the date that ProbeNET is initially released and the MOU is subject to
mutually agreed annual renewal terms.
The ProbeNET technology has been recorded in these financial statements at its
cost of acquisition. Management believes that the cost of acquiring the
technology is not in excess of its fair market value.
- --------------------------------------------------------------------------------
7. Accounts payable and accruals
Accounts payable $ 33,626
Accruals 32,690
----------------
$ 66,316
================
- --------------------------------------------------------------------------------
8. Capital stock
As a result of the acquisition of NETSentry, 5,885,000 of the issued and
outstanding shares are restricted securities as defined under the Securities Act
of 1933 and in the future may be sold only in compliance with Rule 144 of the
Act, pursuant to a registration statement filed under the Act, or other
applicable exemptions from registration thereunder.
- --------------------------------------------------------------------------------
9. Option agreement
The company's subsidiary has entered into an option agreement with a company
controlled by a director and shareholder of the company. This agreement enables
this subsidiary to obtain the related rights and equipment for an Internet
Protocol Tester known as TestBOT for consideration consisting of $50,000 in cash
and 500,000 of its common shares. This option expires on September 10, 2003.
20
<PAGE>
- -------------------------------------------------------------------------------
Powertech, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
June 30, 1999
- -------------------------------------------------------------------------------
10. Income taxes
At June 30, 1999, the company has net operating losses carried forward of
approximately $460,000 that may be offset against future taxable income from
2006 to 2011. No tax benefit has been reported in the financial statements, as
the company believes that is more likely than not that the carryforwards will
expire unused. Accordingly, the potential tax benefits of the loss carryforwards
are offset by a valuation allowance of the same amount.
- -------------------------------------------------------------------------------
11. Commitments
The company's subsidiary has obligations under premises lease agreements. The
leases provide for annual commitments as follows:
1999 $ 18,723
2000 37,447
2001 15,603
- --------------------------------------------------------------------------------
12. Uncertainty due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. Also, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than a date. The
effects of the Year 2000 Issue may be experienced before, on, or after January
1, 2000. If not addressed, the impact on operations and financial reporting may
range from minor errors to significant systems failure which could affect
business operations. It is not possible to be certain that all aspects of the
Year 2000 Issue affecting the company, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
- --------------------------------------------------------------------------------
13. Contingencies
On January 13, 1999, the Securities and Exchange Commission (SEC) announced the
temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act
of 1934, of over the counter trading of the securities of Powertech, as a result
of questions raised about the accuracy and adequacy of information publicly
disclosed by the company.
A private investigation involving Powertech is being conducted by the SEC
pursuant to a formal order of investigation entered by the Commission on January
26, 1999. To the company's knowledge, the investigation is continuing as of the
date of this audit report.
The outcome of the temporary suspension and the investigation and the potential
loss, if any, cannot be reasonably determined at this time, therefore no amount
has been included in the financial statements.
21
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors October 5, 1999
Powertech, Inc.
We have audited the accompanying balance sheet of Powertech, Inc. (A Development
Stage Company), as of December 31, 1998, and the related statements of
operations, stockholders' equity and cash flows for the partial period of May 4,
1998 (Corporate inception) through December 31, 1998. 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.
I 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 Powertech, Inc. (A Development
Stage Company) as of December 31, 1998 and the results of its operations and
cash flows for the partial period May 4, 1998, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 6 to the financial
statements, the Company has no established source of revenue. This raises
substantial doubt about its ability to continue as a going concern. Management's
plan in regard to these matters are also described in Note 6. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Peter Demian
- -------------------
Peter Demian, CPA
Demian & Company, P.C.
Certified Public Accountants
22
<PAGE>
POWERTECH, INC.
(A Development Stage Company)
Balance Sheet
<TABLE>
<CAPTION>
ASSET
----- December 31,
1998
------------
<S> <C>
CURRENT ASSET
Stock Subscription Receivable $ 55,688
------------------
TOTAL CURRENT ASSET 55,688
------------------
TOTAL ASSET $ 55,688
==================
- --------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Bank Overdraft $ 1,841
Accounts Payable 12,611
------------------
TOTAL CURRENT LIABILITIES 14,452
------------------
TOTAL LIABILITIES 14,452
------------------
STOCKHOLDERS' EQUITY
Common Stock, $0.001 par value,
100,000,000 authorized shares;
9,500,000 shares issued and outstanding 9,500
Additional Paid-in Capital 181,688
Deficit accumulated during the Development Stage (149,952)
------------------
TOTAL STOCKHOLDERS' EQUITY 41,236
------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 55,688
==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
POWERTECH, INC.
(A Development Stage Company)
Statement of Operations
<TABLE>
<CAPTION>
From Inception
On May 4,
1998
Through
December 31,
1998
--------------
<S> <C>
REVENUE (A DEVELOPMENT STAGE CO.) $ -0-
------------------
EXPENSES:
Consulting 110,250
Public Relations 2,750
Office Administration 27,204
Professional Fees 5,465
Travel & Lodging 2,000
Office Expenses 2,283
------------------
TOTAL EXPENSES: 149,952
------------------
NET LOSS (see note 2b) $ (149,952)
==================
Weighted Average Number of Shares 2,995,436
==================
LOSS PER SHARE $ (.05)
==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
POWERTECH, INC.
(A Development Stage Company)
Statement of Stockholders' Equity
From Inception on May 4, 1998 Through December 31, 1998
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-In Development
Shares Amount Capital Stage
------- ------ ---------- ------------
<S> <C> <C> <C>
Inception date of
May 4, 1998 (see note 3)
Common Stock Issued
June 18 & Aug 14, 1998
to Officers for Services
Rendered (see note 4) 1,000,000 $ 1,000
Common Stock Issued
by Offering at $.03125
per share from the
offering closed
September 10, 1998 3,200,000 3,200 $ 96,800
Common Stock Issued
by Offering at $.01
per share from the
offering closed
October 10, 1998 3,550,000 3,550 31,950
Common Stock Issued
by Offering at $.03125
per share from the
offering closed
December 21, 1998 1,750,000 1,750 52,938
Net Loss for Period
May 4, 1998 to
December 31, 1998 $ (149,952)
------------- ----------- ------------- ------------------
Balance as of
December 31, 1998 9,500,000 $ 9,500 $ 181,688 $ (149,952)
============= =========== ============= ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
POWERTECH, INC.
(A Development Stage Company)
Statement of Cash Flows
<TABLE>
<CAPTION>
From Inception
On May 4,
1998
Through
December 31,
1998
------------
<S> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Loss from operations (see note 2b) $ (149,952)
Adjustment to reconcile net cash to net loss from
operations due to current liabilities 12,611
Adjustment to reconcile net cash from operations
due to shares issued for services 35,500
------------------
Net cash used by operating activities (101,841)
CASH FLOWS FROM INVESTING ACTIVITIES -0-
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issued for cash 100,000
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD -0-
------------------
CASH (OVERDRAFT), END OF PERIOD $ (1,841)
==================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Paid For: Interest $ -0-
==================
Income Taxes $ -0-
==================
NON CASH FINANCING ACTIVITIES
Stock issued to Incorporators $ 1,000
==================
Shares issued for subscription receivable $ 55,688
==================
</TABLE>
The accompanying notes are an integral part of these financial statements
26
<PAGE>
POWERTECH, INC.
(A Development Stage Company)
Notes to Financial Statement
December 31, 1998
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
On May 4, 1998, Powertech, Inc. (the "Company") was incorporated
under the laws of the State of Nevada to engage in the business of
Internet software and hardware development.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting.
b. Provision for Taxes
At December 31, 1998, the Company has net operating loss carry
forwards of approximately $149,952 that may be offset against
future taxable income through 2011. No tax benefit has been
reported in the financial statements, because the Company believes
there is a 50% or greater chance the carry forwards will expire
unused. Accordingly, the potential tax benefits of the loss carry
forwards are offset by a valuation allowance of the same amount.
c. Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
d. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of financial statement and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
27
<PAGE>
NOTE 3 - STOCK TRANSACTIONS
On June 18, 1998 the Board of Directors authorized a stock
issuance totaling 400,000 common shares to Daniel L. Hodges for
management services and organizational development services
provided to the Company.
On August 14, 1998 the Board of Directors authorized a stock
issuance totaling 600,000 common shares to David Raftery and Kathy
Para (300,000 each) for management services rendered.
On August 14, 1998 the Board of Directors authorized a stock
issuance totaling 6,000,000 common shares of the Company at
$.03125 per share subject to Regulation D, Rule 504 Offering
Memorandum. The offering was closed September 10, 1998. An amount
of 3,200,000 common shares were issued and $100,000.00 was
received.
On September 30, 1998 the Board of Directors authorized a stock
issuance of 3,550,000 common shares of the Company at $.01 per
share subject to Regulation D, Rule 504 Offering Memorandum. The
offering was closed on October 10, 1998. An amount of 3,550,000
common shares were issued in exchange for services. These services
were booked at their fair market value of $35,500.
On December 7, 1998 the Board of Directors authorized a stock
issuance of 2,000,000 common shares of the Company at $.03125 per
share subject to Regulation D, Rule 504 Offering Memorandum. The
offering was closed on December 21, 1998. An amount of 1,750,000
common shares were issued and $54,688.00 is receivable. This
amount was received after December 31, 1998.
NOTE 4 - RELATED PARTY TRANSACTIONS
On June 18, 1998 and August 14, 1998 the officers and directors of
the Company were issued a total of 1,000,000 common shares of the
Company for services rendered to the Company.
The Company neither owns nor leases any real or personal property.
Office services have been provided without charge by an officer.
Such costs are immaterial to the financial statements and
accordingly are not reflected herein. The officers and directors
are involved in other business activities and most likely will
become involved in other business activities in the future. If a
specific business opportunity becomes available, such persons may
face a conflict of interest. A Company policy for handling such a
conflict has not yet been formulated.
28
<PAGE>
NOTE 5 - CONTINGENCIES
On January 13, 1999, the Securities and Exchange Commission (SEC)
announced the temporary suspension, pursuant to Section 12(k) of
the Securities Exchange Act of 1934, of over the counter trading
of the securities of Powertech, as a result of questions raised
about the accuracy and adequacy of information publicly disclosed
by the Company.
A private investigation involving Powertech is being conducted by
the SEC pursuant to a formal order of investigation entered by the
Commission on January 26, 1999. To the Company's knowledge, the
investigation is continuing as of the date of this audit report.
The outcome of the temporary suspension and the investigation and
the potential loss, if any, cannot be reasonably determined at
this time, therefore no amount has been included in the financial
statements.
NOTE 6 - GOING CONCERN
The Company has not commenced commercial operations and its
ability to continue as a going concern is dependent upon its
success in raising substantial amounts of equity for use in
developing its intended business and its administrative
activities, as revenues have not yet been established. While
management believes that the Company will be able to raise
sufficient funds through the sale of equity or debt securities,
there is no assurance that sufficient funds will be raised.
In January 1999 the Company commenced negotiations to acquire
NETSentry Technology, Inc. (a private Canadian company) for an
amount to be determined of treasury stock subject to due diligence
by both parties. NETSentry develops software technology for
network monitoring. If and when this transaction takes place it
could significantly affect the Company.
29
<PAGE>
INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS
To the Board of Directors and
Shareholders of NETSentry Technology Inc.
We have audited the balance sheets of NETSentry Technology Inc. as at February
11, 1999 and December 31, 1998 and the statements of operations, cash flows and
stockholders' equity for the periods from January 1, 1999 to February 11, 1999
and from inception to December 31, 1998. 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 audits.
We conducted our audits in accordance with generally accepted auditing standards
in Canada, which are in substantial agreement with those in the United States of
America. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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, these financial statements present fairly, in all material
respects, the financial position of NETSentry Technology Inc. as at February 11,
1999 and December 31, 1998 and the results of its operations and its cash flows
for the periods from January 1, 1999 to February 11, 1999 and from inception to
December 31, 1998 in accordance with generally accepted accounting principles in
the United States of America.
The accompanying financial statements have been prepared assuming the company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the company has no established source of revenue and is dependent on
its ability to raise substantial amounts of equity funds. This raises
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Davidson & Company
Vancouver, Canada -----------------------
September 1, 1999 Chartered Accountants
30
<PAGE>
- -------------------------------------------------------------------------------
NETSentry Technology Inc.
(A Development Stage Company)
(Incorporated under the Company Act of British Columbia)
Balance Sheet
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
February 11, December 31,
1999 1998
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current
Cash $ 34,113 $ 81,450
Receivables 18,309 20,633
--------------- ---------------
52,422 102,083
Capital assets (Note 3) 23,496 4,407
Technology (Note 4) 1 1
--------------- ---------------
$ 75,919 $ 106,491
=============== ===============
- --------------------------------------------------------------------------------------------------------
Liabilities
Current
Accounts payable and accrued liabilities $ 37,891 $ 5,209
Promissory notes payable (Note 5) - 123,522
Due to Powertech, Inc. (Note 6) 127,373 -
--------------- ---------------
165,264 128,731
--------------- ---------------
Shareholders' Deficiency
Capital stock (Note 7) 136 136
Authorized:
500,000 class "A" voting common shares without
par value
500,000 class "B" non-voting, redeemable, retractable preference
shares without par value
Issued:
200,000 class "A" shares
Deficit (89,481) (22,376)
--------------- ---------------
(89,345) (22,240)
--------------- ---------------
$ 75,919 $ 106,491
=============== ===============
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the financial statements.
31
<PAGE>
- -------------------------------------------------------------------------------
NETSentry Technology Inc.
(A Development Stage Company)
Statement of Operations
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the
For the Period from For the
Period from January 1, Period from
Inception to 1999 to Inception to
February 11, February 11, December 31,
1999 1999 1998
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
Interest $ 23 $ 23 $ -
--------------- --------------- ---------------
Expenses
Marketing and sales
Salaries and benefits 5,399 5,399 -
Travel and entertainment 1,578 1,578 -
--------------- --------------- ---------------
6,977 6,977 -
--------------- --------------- ---------------
Product development
Salaries and benefits 12,289 12,289 -
Travel and entertainment 3,533 2,670 863
--------------- --------------- ---------------
15,822 14,959 863
--------------- --------------- ---------------
General and administration
Computer and office supplies 3,843 1,314 2,529
Depreciation 343 343 -
Employee relocation 5,506 5,506 -
Foreign exchange (gain) 1,891 2,241 (350)
Management fees 8,907 - 8,907
Professional fees 34,493 27,086 7,407
Rent 1,137 1,137 -
Salaries and benefits 7,361 7,361 -
Travel and entertainment 3,224 204 3,020
--------------- --------------- ---------------
66,705 45,192 21,513
--------------- --------------- ---------------
Total expenses 89,504 67,128 22,376
--------------- --------------- ---------------
Net loss $ (89,481) $ (67,105) $ (22,376)
=============== =============== ===============
Weighted average number of shares
outstanding 200,000 200,000 200,000
=============== =============== ===============
Loss per share - basic and diluted $ (0.45) $ (0.34) $ (0.11)
=============== =============== ===============
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the financial statements.
32
<PAGE>
- -------------------------------------------------------------------------------
NETSentry Technology Inc.
(A Development Stage Company)
Statement of Cash Flows
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the
For the Period from For the
Period from January 1, Period from
Inception to 1999 to Inception to
February 11, February 11, December 31,
1999 1999 1998
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash derived from (applied to)
Operating
Net loss $ (89,481) $ (67,105) $ (22,376)
Depreciation 343 343 -
Change in non-cash operating
working capital
Receivables (18,309) 2,324 (20,633)
Accounts payable and accrued
liabilities 37,891 32,682 5,209
--------------- --------------- ---------------
(69,556) (31,756) (37,800)
--------------- --------------- ---------------
Financing
Issuance of promissory notes 123,522 - 123,522
Issuance of capital stock 136 - 136
Repayment of promissory notes (127,373) (127,373) -
Foreign exchange gain on financing
activities 3,851 3,851 -
Advances from Powertech, Inc. 127,373 127,373 -
--------------- --------------- ---------------
127,509 3,851 123,658
--------------- --------------- ---------------
Investing
Acquisition of capital assets (23,839) (19,432) (4,407)
Acquisition of technology right (1) - (1)
--------------- --------------- ---------------
(23,840) (19,432) (4,408)
--------------- --------------- ---------------
Net increase (decrease) in cash 34,113 (47,337) 81,450
Cash
Beginning of period - 81,450 -
--------------- --------------- ---------------
End of period $ 34,113 $ 34,113 $ 81,450
=============== =============== ===============
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the financial statements.
33
<PAGE>
- -------------------------------------------------------------------------------
NETSentry Technology Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
---------------------------------
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
From the Date of Inception to February 11, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Shares
----------------------------
Shares Amount Deficit Total
<S> <C> <C> <C> <C>
Common shares issued on
incorporation 200,000 $ 136 $ - $ 136
Net loss for the period from
inception to December 31, 1998 - - (22,376) (22,376)
------------- ----------- ------------ ------------
Balance,
December 31, 1998 200,000 136 (22,376) (22,240)
Net loss for the period January 1,
1999 to February 11, 1999 - - (67,105) (67,105)
------------- ----------- ------------ ------------
Balance, February 11, 1999 200,000 $ 136 $ (89,481) $ (89,345)
============= =========== ============ ============
- --------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the financial statements.
34
<PAGE>
- -------------------------------------------------------------------------------
NETSentry Technology Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
February 11, 1999
- -------------------------------------------------------------------------------
1. Nature of operations
The company was incorporated under the Company Act of British Columbia on May
22, 1998. The company's business is to develop and exploit technologies that
improve the efficiency, reliability and recoverability of internet protocol
networks.
The company has commenced its planned principal operations, however, it has not
yet earned any revenue therefrom and the technologies that it intends to develop
will require cash significantly in excess of its current resources. The ability
of the company to develop these technologies into marketable products is
dependent on management's ability to obtain adequate additional financing and to
achieve profitable operations. It will be necessary for the company to raise
such additional funds in the coming year for the continued development of its
technologies.
- -------------------------------------------------------------------------------
2. Summary of significant accounting policies
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ materially from those estimates.
Capital assets
Capital assets consist of computer hardware and are recorded at cost less
accumulated depreciation. Depreciation is provided for at the following rates
and methods:
Office equipment 20%, straight line method
Computer hardware 30%, straight line method
Computer software 50%, straight line method
Furniture and fixtures 20%, straight line method
Leasehold improvements straight line over the term of the lease
Depreciation is recorded at one-half the annual rate in the year of acquisition.
Financial instruments
The company has financial instruments that include cash, receivables and
payables, amounts due to Powertech, Inc. and promissory notes payable. The
carrying value of these financial instruments approximates their fair value.
35
<PAGE>
- -------------------------------------------------------------------------------
NETSentry Technology Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
February 11, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3. Capital assets February 11, December 31,
1999 1998
------------ ------------
Accumulated Net Net
Cost Depreciation Book Value Book Value
------------ ---------- ----------
<S> <C> <C> <C> <C>
Computer
hardware $ 20,536 $ 312 $ 20,224 $ 4,407
Office equipment 565 5 560 -
Furniture and
fixtures 2,632 22 2,610 -
Software 106 4 102 -
------------ ----------------- ----------------- -----------------
$ 23,839 $ 343 $ 23,496 $ 4,407
============ ================= ================= =================
- --------------------------------------------------------------------------------------------------------
</TABLE>
4. Technology
Pursuant to an agreement dated December 23, 1998, the company purchased from one
of its shareholders for nominal consideration, all world-wide rights, title and
interest in the internet technology known as ProbeNET.
The marketing of this technology is subject to a Memorandum of Understanding
("MOU") entered into by the company and an international computer products
distributor. If development of this technology is successful, the terms of the
MOU require the company to sell the ProbeNET software through the counterparty
at a 50% discount from its net selling price. The term of this MOU is 24 months
from the date that ProbeNET is initially released and the MOU is subject to
mutually agreed annual renewal terms.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
5. Promissory notes payable February 11, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Unsecured promissory note due February 1, 1999,
convertible at the option of the company at a price
of Cdn. $20.77 per class "A" common share $ - $ 65,110
Unsecured promissory note due February 1, 1999,
convertible at the option of the company at a price
of Cdn. $20.77 per class "A" common share - 58,412
----------------- ------------------
$ Nil $ 123,522
================= ==================
</TABLE>
These promissory notes were repaid on behalf of the company by Powertech, Inc.
on February 1, 1999.
36
<PAGE>
- -------------------------------------------------------------------------------
NETSentry Technology Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
February 11, 1999
- -------------------------------------------------------------------------------
6. Due to Powertech, Inc.
Amounts due to Powertech, Inc. are unsecured, bear no interest and are due on
demand. On February 11, 1999, Powertech, Inc. acquired all of the company's
outstanding common shares.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
7. Capital stock February 11, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Authorized:
500,000 class "A" voting common shares without
par value
500,000 class "B" non-voting, redeemable,
retractable preference shares
without par value
Issued:
200,000 class "A" shares $ 136 $ 136
================= ==================
- ---------------------------------------------------------------------------------------------------------
</TABLE>
8. Option agreement
The company has entered into an option agreement with a company controlled by
one of its shareholders. This agreement enables the company to obtain the
related rights and equipment for an Internet Protocol Tester known as TestBOT
for consideration consisting of $50,000 in cash and 48,884 of NETSentry's common
shares. This option expires on September 10, 2003.
Subsequent to year end, the consideration under this option was amended to
$50,000 cash and 500,000 Powertech, Inc. common shares.
- -------------------------------------------------------------------------------
9. Related party transaction
During the period from inception to December 31, 1998, $8,907 was paid to the
company's shareholders for management fees.
37
<PAGE>
- -------------------------------------------------------------------------------
NETSentry Technology Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
February 11, 1999
- -------------------------------------------------------------------------------
10. Commitments
The company has obligations under premises lease agreements. The leases provide
for annual commitments as follows:
1999 $ 18,723
2000 37,447
2001 15,603
- -------------------------------------------------------------------------------
11. Uncertainty due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. Also, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than a date. The
effects of the Year 2000 Issue may be experienced before, on, or after January
1, 2000. If not addressed, the impact on operations and financial reporting may
range from minor errors to significant systems failure which could affect
business operations. It is not possible to be certain that all aspects of the
Year 2000 Issue affecting the company, including those related to the effects of
customers, suppliers, or other third parties, will be fully resolved.
38
<PAGE>
Notice to Reader
We have reviewed, as to the compilation only, the accompanying unaudited
pro-forma consolidated statement of operations of Powertech, Inc. for the period
from inception, May 4, 1998, to December 31, 1998 and for the six month period
ended June 30, 1999. In our opinion, the unaudited pro-forma consolidated
statement of operations has been properly compiled to give effect to the
acquisition of NETSentry Technology Inc. as if it had occurred on May 4, 1998.
/s/ Davidson & Company
Vancouver, Canada ------------------------
September 1, 1999 Chartered Accountants
39
<PAGE>
- -------------------------------------------------------------------------------
Powertech, Inc.
(A Development Stage Company)
Pro-Forma Consolidated Statement of Operations
(expressed in U.S. dollars)
For the Period from Inception to December 31, 1998
(Unaudited - See Notice to Reader)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NETSentry Pro-Forma
Technology Inc. Powertech, Inc. Consolidated
--------------- --------------- -------------
<S> <C> <C> <C>
Expenses
Product development
Travel and entertainment $ 863 $ - $ 863
------------------ ------------------ ---------------
General and administration
Bank charges - - -
Communication 542 2,750 3,292
Computer and office supplies 1,987 29,487 31,474
Consulting 8,907 110,250 119,157
Foreign exchange (gain) (350) - (350)
Professional fees 7,407 5,465 12,872
Travel and entertainment 3,020 2,000 5,020
------------------ ------------------ ---------------
21,513 149,952 171,465
------------------ ------------------ ---------------
Total expenses 22,376 149,952 171,465
------------------ ------------------ ---------------
Net loss $ (22,376) $ (149,952) $ (171,465)
================== ================== ===============
Weighted average number of
shares outstanding 2,995,436
===============
Net loss per share $ (0.06)
===============
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying note to the pro-forma consolidated statement of operations.
40
<PAGE>
- -------------------------------------------------------------------------------
Powertech, Inc.
(A Development Stage Company)
Pro-Forma Consolidated Statement of Operations
(expressed in U.S. dollars)
For the Six Month Period Ended June 30, 1999
(Unaudited - See Notice to Reader)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NETSentry Pro-Forma
Technology Inc. Powertech, Inc. Consolidated
--------------- --------------- -------------
<S> <C> <C> <C>
Revenue
Interest $ 50 $ 7,703 $ 7,753
------------------ ------------------ ---------------
Expenses
Marketing and sales
Advertising 1,108 - 1,108
Salaries and benefits 49,551 - 49,551
Travel and entertainment 10,344 - 10,344
------------------ ------------------ ---------------
61,003 - 61,003
------------------ ------------------ ---------------
Product development
Salaries and benefits 91,787 - 91,787
Travel and entertainment 3,150 - 3,150
------------------ ------------------ ---------------
94,937 - 94,937
------------------ ------------------ ---------------
General and administration
Bank charges 129 74 203
Communication 11,473 - 11,473
Computer and office supplies 6,680 20,118 26,798
Depreciation 6,293 - 6,293
Employee relocation 7,378 - 7,378
Professional fees 36,175 71,445 107,620
Rent 7,776 - 7,776
Salaries and benefits 40,603 9,000 49,603
Travel and entertainment 2,142 1,245 3,387
------------------ ------------------ ---------------
118,649 101,882 220,531
------------------ ------------------ ---------------
Total expenses 274,589 101,882 376,471
------------------ ------------------ ---------------
Net loss $ (274,539) $ (94,179) $ (368,718)
================== ================== ===============
Weighted average number of
shares outstanding 7,688,011
===============
Net loss per share $ (0.05)
===============
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying note to the pro-forma consolidated statement of operations.
41
<PAGE>
- -------------------------------------------------------------------------------
Powertech, Inc.
(A Development Stage Company)
Note to the Pro-Forma Consolidated Statement of Operations
(expressed in U.S. dollars)
June 30, 1999
(Unaudited - See Notice to Reader)
- -------------------------------------------------------------------------------
1. Basis of presentation
This pro-forma consolidated statement of operations has been prepared to
demonstrate the results of operations of the company as if the acquisition of
NETSentry Technology Inc. had occurred on the date of inception of Powertech,
Inc., May 4, 1998. The pro-forma results of operations are not necessarily
indicative of future financial results.
42
<PAGE>
PART III
Item 1. Index to Exhibits.
<TABLE>
<CAPTION>
Sequential
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
(2)(a) Corporate Charter of Powertech, Inc. 48
(2)(b) Bylaws of Powertech, Inc. 56
(6)(a) Non-Competition Agreement dated
February 12, 1999 between Dragos Ruiu
and NETSentry Technology Inc. 79
(6)(b) Non-Competition Agreement dated
February 12, 1999 between Randy Voldeng
and NETSentry Technology Inc. 86
(6)(c) NETSentry Technology Inc. $100,000
(CDN) Promissory Note dated
December 3, 1998, to Dan Para 93
(6)(d) Agreement dated February 12, 1999 between Powertech,
Randy Voldeng, Dragos Ruiu and Dan Para 95
(6)(e) Assignment Agreement dated
December 23, 1998 between Dragos
Ruiu and Dragostech.com Inc. and
NETSentry Technology Inc. 98
(6)(f) Memorandum of Understanding dated
May 15, 1998 between NETSentry Technology Inc.
and Hewlett-Packard Network System
Test Division [confidential treatment of all] 101
(6)(g) Asset Purchase and Sale Agreement made August 1998
between Dragostech.com Inc. and NETSentry Techonology
Inc. 104
(8)(a) Share Purchase Agreement between Powertech, Inc.
and Randy Voldeng and Dragos Ruiu, dated for
reference January 11, 1999 111
(8)(b) Amending Agreement among Randy Voldeng and
Dragos Ruiu and Powertech, Inc., dated for reference
January 29, 1999 138
(8)(c) Mutual Waiver dated February 12, 1999 144
</TABLE>
43
<PAGE>
Item 2. Description of Exhibits.
Form 1-A
Exhibit No. Description
- ----------- -----------
(2) Charter and Bylaws. See Exhibit Nos. 2(a) and 2(b), above.
(6) Material Contracts. See Exhibit Nos. 6(a) - 6(f), above.
(8) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession. See Exhibit Nos. 8(a) - 8(c),
above.
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.
POWERTECH, INC.
Date October 12, 1999 By /s/Randy Voldeng
- --------------------- ------------------------
Randy Voldeng, President
44
<PAGE>
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
(2)(a) Corporate Charter of Powertech, Inc.
(2)(b) Bylaws of Powertech, Inc.
(6)(a) Non-Competition Agreement dated
February 12, 1999 between Drago Ruiu
and NETSentry Technology Inc.
(6)(b) Non-Competition Agreement dated
February 12, 1999 between Randy Voldeng
and NETSentry Technology Inc.
(6)(c) NETSentry Technology Inc. $100,000
(CDN) Promissory Note dated
December 3, 1998, to Dan Para
(6)(d) Agreement dated February 12, 1999
Randy Voldeng, Dragos Ruiu and Dan Para
(6)(e) Assignment Agreement dated
December 23, 1998 between Dragos
Ruiu and Dragostech.com Inc. and
NETSentry Technology Inc.
(6)(f) Memorandum of Understanding dated
May 15, 1998 between NETSentry Technology Inc.
and Hewlett-Packard Network System
Test Division
(6)(g) Asset Purchase Agreement and Sale Agreement
dated as of August 1998 between Dragostech.com, Inc
and NETSentry Technology, Inc. and Amendment dated
September 10, 1998
(8)(a) Share Purchase Agreement between Powertech, Inc.
and Randy Voldeng and Dragos Ruiu, dated for
reference January 11, 1999
(8)(b) Amending Agreement among Randy Voldeng and
Dragos Ruiu and Powertech, Inc., dated for reference
January 29, 1999
(8)(c) Mutual Waiver dated February 12, 1999
</TABLE>
<PAGE>
Description of Exhibits.
------------------------
Form 1-A
Exhibit No. Description
- ----------- -----------
(2) Charter and Bylaws. See Exhibit Nos. 2(a) and 2(b), above.
(6) Material Contracts. See Exhibit Nos. 6(a) - 6(f), above.
(8) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession. See Exhibit Nos. 8(a) - 8(c),
above.
Exhibit 2(a)
[Graphic Omitted]
ARTICLES OF INCORPORATION
---------------------------
OF
---
PowerTech, Inc.
---------------
FIRST. The name of the corporation is:
PowerTech, Inc.
SECOND. Its registered office in the State of Nevada is located at
2533 North Carson Street, Carson City, Nevada 89706 that this Corporation may
maintain an office, or offices, in such other place within or without the State
of Nevada as may be from time to time designated by the Board of Directors, or
by the By-Laws of said Corporation, and that this Corporation may conduct all
Corporation business of every kind and nature, including the holding of all
meetings of Directors and Stockholders, outside the State of Nevada as well as
within the State of Nevada
THIRD. The objects for which this Corporation is formed are: To
engage in any lawful activity, including, but not limited to the following:
(A) Shall have such rights, privileges and powers as may be conferred
upon corporations by any existing law.
B) May at any time exercise such rights, privileges and powers, when
not inconsistent with the purposes and objects for which this corporation is
organized.
1
<PAGE>
(C) Shall have power to have succession by its corporate name for the
period limited in its certificate or articles of incorporation, and when no
period is limited, perpetually, or until dissolved and its affairs wound up
according to law.
(D) Shall have power to sue and be sued in any court of law or equity.
(E) Shall have power to make contracts.
(F) Shall have power to hold, purchase and convey real and personal
estate and to mortgage or lease any such real and personal estate with its
franchises. The power to hold real and personal estate shall include the power
to take the same by devise or bequest in the State of Nevada, or in any other
state, territory or country.
(G) Shall have power to appoint such officers and agents as the affairs
of the corporation shall require, and to allow them suitable compensation.
(H) Shall have power to make By-Laws not inconsistent with the
constitution or laws of the United States, or of the State of Nevada, for the
management, regulation and government of its affairs and property, the transfer
of its stock, the transaction of its business, and the calling and holding of
meetings of its stockholders.
(I) Shall have power to wind up and dissolve itself, or be wound up or
dissolved.
(J) Shall have power to adopt and use a common seal or stamp, and alter
the same at pleasure. The use of a seal or stamp by the corporation on any
corporate documents is not necessary. The corporation may use a seal or stamp,
if it desires, but such use or nonuse shall not in any way affect the legality
of the document.
(K) Shall have power to borrow money and contract debts when necessary
for the transaction of its business, or for the exercise of its corporate
rights, privileges or franchises,
2
<PAGE>
or for any other lawful purpose of its incorporation; to issue bonds, promissory
notes, bills of exchange, debentures, and other obligations and evidences of
indebtedness, payable at a specific time or times, or payable upon the happening
of a specified event or events, whether secured by mortgage, pledge or
otherwise, or unsecured, for money borrowed, or in payment for property
purchased, or acquired, or for any other lawful object.
(L) Shall have power to guarantee, purchase, hold, sell, assign,
transfer, mortgage, pledge or otherwise dispose of the shares of the capital
stock of, or any bonds, securities or evidences of the indebtedness created by,
any other corporation or corporations of the State of Nevada, or any other state
or government, and, while owners of such stock, bonds, securities or evidences
of indebtedness, to exercise all the rights, powers and privileges of ownership,
including the right to vote, if any.
(M) Shall have power to purchase, hold, sell and transfer shares of its
own capital stock, and use therefor its capital, capital surplus, surplus, or
other property or fund.
(N) Shall have power to conduct business, have one or more offices, and
hold, purchase, mortgage and convey real and personal property in the State of
Nevada, and in any of the several states, territories, possessions and
dependencies of the United States, the District of Columbia, and any foreign
countries.
(O) Shall have power to do all and everything necessary and proper for
the accomplishment of the objects enumerated in its certificate or articles of
incorporation, or any amendment thereof, or necessary or incidental to the
protection and benefit of the corporation, and, in general, to carry on any
lawful business necessary or incidental to the attainment of the
3
<PAGE>
objections of the corporation, whether or not such business is similar in nature
to the objects set forth in the certificate or articles of incorporation, or any
amendment thereof.
(P) Shall have power to make donations for the public welfare or for
charitable, scientific or educational purposes.
(Q) Shall have power to enter into partnerships, general or limited, or
joint ventures, in connection with any lawful activities, as may be allowed by
law.
FOURTH. That the total number of common stock authorized that
may be issued by the Corporation is ONE HUNDRED MILLION (100,000,000) shares of
stock with a ONTE TENTH OF ONE CENT ($.001) par value and no other class of
stock shall be authorized. Said shares may be issued by the corporation from
time to time for such considerations as may be fixed by the Board of Directors.
FIFTH. The governing board of this corporation shall be known
as directors, and the number of directors may from time to time be increased or
decreased in such manner as shall be provided by the By-Laws of this
Corporation, providing that the number of directors shall not be reduced to
fewer than one (1).
The name and post office address of the first board of Directors
shall be one (1) in number and listed as follows:
NAME POST OFFICE ADDRESS
- ---- ---------------------
Brent Buscay 2533 North Carson Street
Carson City, Nevada 89706
SIXTH. The capital stock, after the amount of the subscription
price, or par
4
<PAGE>
value, has been paid in, shall not be subject to assessment to pay the debts of
the corporation.
SEVENTH. The name and post office address of the Incorporator signing
the Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
---- -------------------
Brent Buscay 2533 North Carson Street
Carson City, Nevada 89706
EIGHTH. The resident agent for this corporation shall be:
LAUGHLIN ASSOCIATES, INC.
The address of said agent, and, the registered or statutory address of this
corporation in the state of Nevada, shall be:
2533 North Carson Street
Carson City, Nevada 89706
NINTH. The corporation is to have perpetual existence.
TENTH. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
Subject to the By-Laws, if any, adopted by the Stockholders, to make,
alter or amend the By-Laws of the Corporation.
To fix the amount to be reserved as working capital over and above its
capital stock paid in; to authorize and cause to be executed, mortgages and
liens upon the real and personal property of this Corporation.
By resolution passed by a majority of the whole Board, to
designate one (1) or more
5
<PAGE>
Committees, each committee to consist of one or more of the Directors of the
Corporation, which, to the extent provided in the resolution, or in the By-laws
of the Corporation, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation. Such
committee, or committees, shall have such name, or names, as may be stated in
the By-laws of the Corporation, or as may be determined from time to time by
resolution adopted by the Board of Directors.
When and as authorized by the affirmative vote of the
Stockholders holding stock entitling them to exercise at least a majority of the
voting power given at a Stockholders meeting called for that purpose, or when
authorized by the written consent of the holders of at least a majority of the
voting stock issued and outstanding, the Board of Directors shall have power and
authority at any meeting to sell, lease or exchange all of the property and
assets of the Corporation, including its good will and its corporate franchises,
upon such terms and conditions as its board of Directors deems expedient and for
the best interests of the Corporation.
ELEVENTH. No shareholder shall be entitled as a matter of
right to subscribe for or receive additional shares of any class of stock of the
Corporation, whether now or hereafter authorized, or any bonds, debentures or
securities convertible into stock, but such additional shares of stock or other
securities convertible into stock may be issued or disposed of by the Board of
Directors to such persons and on such terms as in its discretion it shall deem
advisable.
TWELFTH . No director or officer of the Corporation shall be personally
liable to the Corporation or any of its stockholders for damages for breach of
fiduciary duty as a director or officer involving any act or omission of any
such director or officer; provided,
6
<PAGE>
however, that the foregoing provision shall not eliminate or limit the liability
of a director or officer (i) for acts of omissions which involve international
misconduct, fraud or a knowing violation of law, or (ii) the payment of
dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any
repeal or modification of this Article by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director or officer of the Corporation for acts or
omissions prior to such repeal or modification.
THIRTEENTH. This Corporation reserves the right to amend,
alter, change or repeal any provision contained in the Articles of
Incorporation, in the manner now or hereafter prescribed by statute, or by the
Articles of Incorporation, and all rights conferred upon Stockholders herein are
granted subject to this reservation.
7
<PAGE>
I, THE UNDERSIGNED, being the Incorporator hereinbefore named for the
purpose of forming a Corporation pursuant to the General Corporation Law of the
State of Nevada, do make and file these Articles of Incorporation, hereby
declaring and certifying that the facts herein stated are true, and accordingly
have hereunto set my hand this April 27, 1998.
/s/ Brent Buscay
-------------------
Brent Buscay
STATE OF NEVADA )
) SS:
CARSON CITY )
On this April 27, 1998 in Carson City, Nevada, before me, the undersigned, a
Notary Public in and for Carson City, State of Nevada, personally appeared:
Brent Buscay
Known to me to be the person whose name is subscribed to the foregoing document
and acknowledge before to me that he executed the same.
/s/ [Notary omitted]
---------------------
Notary Public
I, Laughlin Associates, hereby accept as Resident Agent for the previously
named Corporation.
April 27, 1998 /s/ Illegible
- ----------------- -----------------------
Date Vice President
8
Exhibit 2(b)
BYLAWS
OF
POWERTECH, INC.
(A NEVADA CORPORATION)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation
in the State of Nevada shall be in the City of Carson City, State of Nevada.
Section 2. Other Offices. The corporation shall also have and maintain
an office or principal place of business at such place as may be fixed by the
Board of Directors, and 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
CORPORATE SEAL
Section 3. Corporate Seal. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate
Seal-Nevada." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
Section 4. Place of Meetings. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Nevada, as may be designated from time to time by the Board of Directors, or, if
not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
Section 5. Annual Meeting.
(a.) The annual meeting of the stockholders of the corporation, for the
purpose of election of directors and for such other business as may lawfully
come before it, shall be held on such date and at such time as may be designated
from time to time by the Board of Directors.
(b.) At an annual meeting of the stockholders, only such business shall
be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting
<PAGE>
(or any supplement thereto) given by or at the direction of the Board of
Directors, (B) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (C) otherwise properly brought before
the meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not later than the close of
business on the sixtieth (60th) day nor earlier than the close of business on
the ninetieth (90th) day prior to the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that no annual meeting was
held in the previous year or the date of the annual meeting has been changed by
more than thirty (30) days from the date contemplated at the time of the
previous year's proxy statement, notice by the stockholder to be timely must be
so received not earlier than the close of business on the ninetieth (90th) day
prior to such annual meeting and not later than the close of business on the
later of the sixtieth (60th) day prior to such annual meeting or, in the event
public announcement of the date of such annual meeting is first made by the
corporation fewer than seventy (70) days prior to the date of such annual
meeting, the close of business on the tenth (10th) day following the day on
which public announcement of the date of such meeting is first made by the
corporation. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and address, as they appear on the corporation's books, of the stockholder
proposing such business, (iii) the class and number of shares of the corporation
which are beneficially owned by the stockholder, (iv) any material interest of
the stockholder in such business and (v) any other information that is required
to be provided by the stockholder pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as
a proponent to a stockholder proposal. Notwithstanding the foregoing, in order
to include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (b). The chairman of the annual meeting shall, if the
facts warrant, determine and declare at the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this paragraph (b), and, if he should so determine, he shall so declare at the
meeting that any such business not properly brought before the meeting shall not
be transacted.
(c.) Only persons who are confirmed in accordance with the procedures
set forth in this paragraph (c) shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the corporation
may be made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder of the corporation entitled to vote in the
election of directors at the meeting who complies with the notice procedures set
forth in this paragraph (c). Such nominations, other than those made by or at
the direction of the Board of Directors, shall be made pursuant to timely notice
in writing to the Secretary of the corporation in
<PAGE>
accordance with the provisions of paragraph (b) of this Section 5. Such
stockholder's notice shall set forth (i) as to each person, if any, whom the
stockholder proposes to nominate for election or re-election as a director: (A)
the name, age, business address and residence address of such person, (B) the
principal occupation or employment of such person, (c) the class and number of
shares of the corporation which are beneficially owned by such person, (D) a
description of all arrangements or understandings between the stockholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nominations are to be made by the stockholder, and (E) any
other information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the 1934 Act (including without
limitation such person's written consent to being named in the proxy statement,
if any, as a nominee and to serving as a director if elected); and (ii) as to
such stockholder giving notice, the information required to be provided pursuant
to paragraph (b) of this Section 5. At the request of the Board of Directors,
any person nominated by a stockholder for election as a director shall furnish
to the Secretary of the corporation that information required to be set forth in
the stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the corporation unless nominated
in accordance with the procedures set forth in this paragraph (c). The chairman
of the meeting shall, if the facts warrant, determine and declare at the meeting
that a nomination was not made in accordance with the procedures prescribed by
these Bylaws, and if he should so determine, he shall so declare at the meeting,
and the defective nomination shall be disregarded.
(d.) For purposes of this Section 5, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
Section 6. Special Meetings.
(a.) Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption), and shall be held at such place, on such date, and at
such time as the Board of Directors, shall determine.
(b.) If a special meeting is called by any person or persons other than
the Board of Directors, the request shall be in writing, specifying the general
nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the Chairman of the Board of Directors, the Chief Executive
Officer, or the Secretary of the corporation. No business may be transacted at
such special meeting otherwise than specified in such notice. The Board of
Directors shall determine the time and place of such special meeting, which
shall be held
<PAGE>
not less than thirty-five (35) nor more than one hundred twenty (120) days after
the date of the receipt of the request. Upon determination of the time and place
of the meeting, the officer receiving the request shall cause notice to be given
to the stockholders entitled to vote, in accordance with the provisions of
Section 7 of these Bylaws. If the notice is not given within sixty (60) days
after the receipt of the request, the person or persons requesting the meeting
may set the time and place of the meeting and give the notice. Nothing contained
in this paragraph (b) shall be construed as limiting, fixing, or affecting the
time when a meeting of stockholders called by action of the Board of Directors
may be held.
Section 7. Notice of Meetings. Except as otherwise provided by law or
the Articles of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
Section 8. Quorum. At all meetings of stockholders, except where
otherwise provided by statute or by the Articles of Incorporation, or by these
Bylaws, the presence, in person or by proxy duly authorized, of the holder or
holders of not less than one percent (1%) of the outstanding shares of stock
entitled to vote shall constitute a quorum for the transaction of business. In
the absence of a quorum, any meeting of stockholders may be adjourned, from time
to time, either by the chairman of the meeting or by vote of the holders of a
majority of the shares represented thereat, but no other business shall be
transacted at such meeting. The stockholders present at a duly called or
convened meeting, at which a quorum is present, may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. Except as otherwise provided by law,
the Articles of Incorporation or these Bylaws, all action taken by the holders
of a majority of the votes cast, excluding abstentions, at any meeting at which
a quorum is present shall be valid and binding upon the corporation; provided,
however, that directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Where a separate vote by a class or classes
or series is required, except where otherwise provided by the statute or by the
Articles of Incorporation or these Bylaws, a majority of the outstanding shares
of such class or classes or series, present in person or represented by proxy,
shall constitute a quorum entitled to take action with respect to that vote on
that matter and, except where otherwise provided by the statute or by the
Articles of Incorporation or these Bylaws, the affirmative vote of the majority
(plurality, in the case of the election of directors) of the votes cast,
including abstentions, by the holders of shares of such class or classes or
series shall be the act of such class or classes or series.
<PAGE>
Section 9. Adjournment and Notice of Adjourned Meetings. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes, excluding abstentions. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, the corporation may transact any business which might
have been transacted at the original meeting. If the adjournment is for more
than thirty (30) 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 10. Voting Rights. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote shall have the right to do so either in person or by an
agent or agents authorized by a proxy granted in accordance with Nevada law. An
agent so appointed need not be a stockholder. No proxy shall be voted after
three (3) years from its date of creation unless the proxy provides for a longer
period.
Section 11. Joint Owners of Stock. If shares or other securities having
voting power stand of record in the names of two (2) or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two (2) or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect: (a) if only
one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the securities in
question proportionally, or may apply to the Nevada Court of Chancery for relief
as provided in the General Corporation Law of Nevada, Section 217(b). If the
instrument filed with the Secretary shows that any such tenancy is held in
unequal interests, a majority or even-split for the purpose of subsection (c)
shall be a majority or even-split in interest.
Section 12. List of Stockholders. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order, showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time thereof
and may be inspected by any stockholder who is present.
<PAGE>
Section 13. Action Without Meeting. No action shall be taken by the
stockholders except at an annual or special meeting of stockholders called in
accordance with these Bylaws, or by the written consent of a majority of the
stockholders.
Section 14. Organization.
(a.) At every meeting of stockholders, the Chairman of the Board of
Directors, or, if a Chairman has not been appointed or is absent, the President,
or, if the President is absent, a chairman of the meeting chosen by a majority
in interest of the stockholders entitled to vote, present in person or by proxy,
shall act as chairman. The Secretary, or, in his absence, an Assistant Secretary
directed to do so by the President, shall act as secretary of the meeting.
(b.) The Board of Directors of the corporation shall be entitled to
make such rules or regulations for the conduct of meetings of stockholders as it
shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted proxies and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting on matters which are to be voted
on by ballot. Unless and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
Section 15. Number and Qualification. The authorized number of
directors of the corporation shall be not less than one (1) nor more than twelve
(12) as fixed from time to time by resolution of the Board of Directors;
provided that no decrease in the number of directors shall shorten the term of
any incumbent directors. Directors need not be stockholders unless so required
by the Articles of Incorporation. If for any cause, the directors shall not have
been elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws.
Section 16. Powers. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Articles of
Incorporation.
<PAGE>
Section 17. Election and Term of Office of Directors. Members of the
Board of Directors shall hold office for the terms specified in the Articles of
Incorporation, as it may be amended from time to time, and until their
successors have been elected as provided in the Articles of Incorporation.
Section 18. Vacancies. Unless otherwise provided in the Articles of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by stockholder vote, be filled
only by the affirmative vote of a majority of the directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified. A vacancy
in the Board of Directors shall be deemed to exist under this Bylaw in the case
of the death, removal or resignation of any director.
Section 19. Resignation. Any director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. When one
or more directors shall resign from the Board of Directors, effective at a
future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office for the unexpired
portion of the term of the director whose place shall be vacated and until his
successor shall have been duly elected and qualified.
Section 20. Removal. Subject to the Articles of Incorporation, any
director may be removed by:
(a.) the affirmative vote of the holders of a majority of the
outstanding shares of the Corporation then entitled to vote, with or without
cause; or
(b.) the affirmative and unanimous vote of a majority of the directors
of the Corporation, with the exception of the vote of the directors to be
removed, with or without cause.
Section 21. Meetings.
(a.) Annual Meetings. The annual meeting of the Board of Directors
shall be held immediately after the annual meeting of stockholders and at the
place where such
<PAGE>
meeting is held. No notice of an annual meeting of the Board of Directors shall
be necessary and such meeting shall be held for the purpose of electing officers
and transacting such other business as may lawfully come before it.
(b.) Regular Meetings. Except as hereinafter otherwise provided,
regular meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Articles of Incorporation, regular meetings of the
Board of Directors may also be held at any place within or without the state of
Nevada which has been designated by resolution of the Board of Directors or the
written consent of all directors.
(c.) Special Meetings. Unless otherwise restricted by the Articles of
Incorporation, special meetings of the Board of Directors may be held at any
time and place within or without the State of Nevada whenever called by the
Chairman of the Board, the President or any two of the directors.
(d.) Telephone Meetings. Any member of the Board of Directors, or of
any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
(e.) Notice of Meetings. Notice of the time and place of all special
meetings of the Board of Directors shall be orally or in writing, by telephone,
facsimile, telegraph or telex, during normal business hours, at least
twenty-four (24) hours before the date and time of the meeting, or sent in
writing to each director by first class mail, charges prepaid, at least three
(3) days before the date of the meeting. Notice of any meeting may be waived in
writing at any time before or after the meeting and will be waived by any
director by attendance thereat, except when the director attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
(f.) Waiver of Notice. The transaction of all business at any meeting
of the Board of Directors, or any committee thereof, however called or noticed,
or wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present and if, either before or after
the meeting, each of the directors not present shall sign a written waiver of
notice. All such waivers shall be filed with the corporate records or made a
part of the minutes of the meeting.
Section 22. Quorum and Voting.
(a.) Unless the Articles of Incorporation requires a greater number and
except with respect to indemnification questions arising under Section 43
hereof, for which a quorum shall be one-third of the exact number of directors
fixed from time to time in accordance with the Articles of Incorporation, a
quorum of the Board of Directors shall consist of a majority of the exact number
of directors fixed from time to time by the Board of Directors in accordance
with the Articles of Incorporation provided, however, at any
<PAGE>
meeting whether a quorum be present or otherwise, a majority of the directors
present may adjourn from time to time until the time fixed for the next regular
meeting of the Board of Directors, without notice other than by announcement at
the meeting.
(b.) At each meeting of the Board of Directors at which a quorum is
present, all questions and business shall be determined by the affirmative vote
of a majority of the directors present, unless a different vote be required by
law, the Articles of Incorporation or these Bylaws.
Section 23. Action Without Meeting. Unless otherwise restricted by the
Articles of Incorporation or these Bylaws, any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 24. Fees and Compensation. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.
Section 25. Committees.
(a.) Executive Committee. The Board of Directors may by resolution
passed by a majority of the whole Board of Directors appoint an Executive
Committee to consist of one (1) or more members of the Board of Directors. The
Executive Committee, to the extent permitted by law and provided in the
resolution of the Board of Directors shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation, including without limitation the power or authority
to declare a dividend, to authorize the issuance of stock and to adopt a
certificate of ownership and merger, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Articles of Incorporation (except that a committee may, to the extent authorized
in the resolution or resolutions providing for the issuance of shares of stock
adopted by the Board of Directors fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending
<PAGE>
to the stockholders a dissolution of the corporation or a revocation of a
dissolution, or amending the bylaws of the corporation.
(b.) Other Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board of Directors, from time to time appoint such
other committees as may be permitted by law. Such other committees appointed by
the Board of Directors shall consist of one (1) or more members of the Board of
Directors and shall have such powers and perform such duties as may be
prescribed by the resolution or resolutions creating such committees, but in no
event shall such committee have the powers denied to the Executive Committee in
these Bylaws.
(c.) Term. Each member of a committee of the Board of Directors shall
serve a term on the committee coexistent with such member's term on the Board of
Directors. The Board of Directors, subject to the provisions of subsections (a)
or (b) of this Bylaw may at any time increase or decrease the number of members
of a committee or terminate the existence of a committee. The membership of a
committee member shall terminate on the date of his death or voluntary
resignation from the committee or from the Board of Directors. The Board of
Directors may at any time for any reason remove any individual committee member
and the Board of Directors may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
(d.) Meetings. Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive Committee or any other committee appointed
pursuant to this Section 25 shall be held at such times and places as are
determined by the Board of Directors, or by any such committee, and when notice
thereof has been given to each member of such committee, no further notice of
such regular meetings need be given thereafter. Special meetings of any such
committee may be held at any place which has been determined from time to time
by such committee, and may be called by any director who is a member of such
committee, upon written notice to the members of such committee of the time and
place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of any
committee may be waived in writing at any time before or after the meeting and
will be waived by any director by attendance thereat, except when the director
attends such special meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. A majority of the authorized number of
members of any such committee shall constitute a quorum for the transaction of
business, and the act of a majority of those present at any meeting at which a
quorum is present shall be the act of such committee.
<PAGE>
Section 26. Organization. At every meeting of the directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.
ARTICLE V
OFFICERS
Section 27. Officers Designated. The officers of the corporation shall
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, one or more Vice
Presidents, the Secretary, the Chief Financial Officer, the Treasurer, the
Controller, all of whom shall be elected at the annual organizational meeting of
the Board of Direction. The Board of Directors may also appoint one or more
Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such
other officers and agents with such powers and duties as it shall deem
necessary. The Board of Directors may assign such additional titles to one or
more of the officers as it shall deem appropriate. Any one person may hold any
number of offices of the corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation of the officers
of the corporation shall be fixed by or in the manner designated by the Board of
Directors.
Section 28. Tenure and Duties of Officers.
(a.) General. All officers shall hold office at the pleasure of the
Board of Directors and until their successors shall have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors. If the office
of any officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors.
(b.) Duties of Chairman of the Board of Directors. The Chairman of the
Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. If there is no President, then the Chairman
of the Board of Directors shall also serve as the Chief Executive Officer of the
corporation and shall have the powers and duties prescribed in paragraph (c) of
this Section 28.
(c.) Duties of President. The President shall preside at all meetings
of the stockholders and at all meetings of the Board of Directors, unless the
Chairman of the Board of Directors has been appointed and is present. Unless
some other officer has been elected Chief Executive Officer of the corporation,
the President shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of
<PAGE>
the corporation. The President shall perform other duties commonly incident to
his office and shall also perform such other duties and have such other powers
as the Board of Directors shall designate from time to time.
(d.) Duties of Vice Presidents. The Vice Presidents may assume and
perform the duties of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice Presidents
shall perform other duties commonly incident to their office and shall also
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time.
(e.) Duties of Secretary. The Secretary shall attend all meetings of
the stockholders and of the Board of Directors and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary shall
give notice in conformity with these Bylaws of all meetings of the stockholders
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time.
(f.) Duties of Chief Financial Officer. The Chief Financial Officer
shall keep or cause to be kept the books of account of the corporation in a
thorough and proper manner and shall render statements of the financial affairs
of the corporation in such form and as often as required by the Board of
Directors or the President. The Chief Financial Officer, subject to the order of
the Board of Directors, shall have the custody of all funds and securities of
the corporation. The Chief Financial Officer shall perform other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time. The President may direct the Treasurer or any Assistant Treasurer,
or the Controller or any Assistant Controller to assume and perform the duties
of the Chief Financial Officer in the absence or disability of the Chief
Financial Officer, and each Treasurer and Assistant Treasurer and each
Controller and Assistant Controller shall perform other duties commonly incident
to his office and shall also perform such other duties and have such other
powers as the Board of Directors or the President shall designate from time to
time.
Section 29. Delegation of Authority. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officer
or agent, notwithstanding any provision hereof.
Section 30. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of
<PAGE>
any such resignation shall not be necessary to make it effective. Any
resignation shall be without prejudice to the rights, if any, of the corporation
under any contract with the resigning officer.
Section 31. Removal. Any officer may be removed from office at any
time, either with or without cause, by the affirmative vote of a majority of the
directors in office at the time, or by the unanimous written consent of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION
Section 32. Execution of Corporate Instrument. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Treasurer or any Assistant Secretary or Assistant Treasurer. All
other instruments and documents requiting the corporate signature, but not
requiring the corporate seal, may be executed as aforesaid or in such other
manner as may be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositaries on funds to
the credit of the corporation or in special accounts of the corporation shall be
signed by such person .or persons as the Board of Directors shall authorize so
to do.
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.
Section 33. Voting of Securities Owned by the Corporation. All stock
and other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in
<PAGE>
the absence of such authorization, by the Chairman of the Board of Directors,
the Chief Executive Officer, the President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
Section 34. Form and Execution of Certificates. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Articles of Incorporation and applicable law. Every holder of stock in the
corporation shall be entitled to have a certificate signed by or in the name of
the corporation by the Chairman of the Board of Directors, or the President or
any Vice President and by the Treasurer or Assistant Treasurer or the Secretary
or Assistant Secretary, certifying the number of shares owned by him in the
corporation. Any or all of the signatures on the certificate may be facsimiles.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent, or registrar before such certificate is issued, it
may be issued with the same effect as if he were such officer, transfer agent,
or registrar at the date of issue. Each certificate shall state upon the face or
back thereof, in full or in summary, all of the powers, designations,
preferences, and rights, and the limitations or restrictions of the shares
authorized to be issued or shall, except as otherwise required by law, set forth
on the face or back a statement that the corporation will furnish without charge
to each stockholder who so requests the powers, designations, preferences and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights. Within a reasonable time after the issuance or
transfer of uncertificated stock, the corporation shall send to the registered
owner thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to this section or otherwise required
by law or with respect to this section a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of certificates representing stock of the same class and series shall be
identical.
Section 35. Lost Certificates. A new certificate or certificates shall
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.
Section 36. Transfers.
<PAGE>
(a.) Transfers of record of shares of stock of the corporation shall be
made only upon its books by the holders thereof, in person or by attorney duly
authorized, and upon the surrender of a properly endorsed certificate or
certificates for a like number of shares.
(b.) The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Nevada.
Section 37. Fixing Record Dates.
(a.) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix, in advance, a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which record date
shall not be more than sixty (60) nor less than ten (10) days before the date of
such meeting. If no record date is fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b.) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty (60)
days prior to such action. If no record date is filed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
Section 38. Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of Nevada.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
<PAGE>
Section 39. Execution of Other Securities. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 34), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature, or where permissible facsimile signature, of a trustee under an
indenture pursuant to which such bond, debenture or other corporate security
shall be issued, the signatures of the persons signing and attesting the
corporate seal on such bond, debenture or other corporate security may be the
imprinted facsimile of the signatures of such persons. Interest coupons
appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the corporation or such other person as may be authorized
by the Board of Directors, or bear imprinted thereon the facsimile signature of
such person. In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall appear
thereon or on any such interest coupon, shall have ceased to be such officer
before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security
nevertheless may be adopted by the corporation and issued and delivered as
though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.
ARTICLE IX
DIVIDENDS
Section 40. Declaration of Dividends. Dividends upon the capital stock
of the corporation, subject to the provisions of the Articles of Incorporation,
if any, may be declared by the Board of Directors pursuant to law at any regular
or special meeting. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the Articles of Incorporation.
Section 41. Dividend Reserve. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
ARTICLE X
FISCAL YEAR
<PAGE>
Section 42. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
Section 43. Indemnification of Directors, Executive Officers, Other
Officers, Employees and Other Agents.
(a.) Directors Officers. The corporation shall indemnify its directors
and officers to the fullest extent not prohibited by the Nevada General
Corporation Law; provided, however, that the corporation may modify the extent
of such indemnification by individual contracts with its directors and officers;
and, provided, further, that the corporation shall not be required to indemnify
any director or officer in connection with any proceeding (or part thereof)
initiated by such person unless (i) such indemnification is expressly required
to be made by law, (ii) the proceeding was authorized by the Board of Directors
of the corporation, (iii) such indemnification is provided by the corporation,
in its sole discretion, pursuant to the powers vested in the corporation under
the Nevada General Corporation Law or (iv) such indemnification is required to
be made under subsection (d).
(b.) Employees and Other Agents. The corporation shall have power to
indemnify its employees and other agents as set forth in the Nevada General
Corporation Law.
(c.) Expense. The corporation shall advance to 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 proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or officer, of
the corporation, or is or was serving at the request of the corporation as a
director or executive officer of another corporation, partnership, joint
venture, trust or other enterprise, prior to the final disposition of the
proceeding, promptly following request therefor, all expenses incurred by any
director or officer in connection with such proceeding upon receipt of an
undertaking by or on behalf of such person to repay said mounts if it should be
determined ultimately that such person is not entitled to be indemnified under
this Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Bylaw, no advance shall be made by the corporation to an
officer of the corporation (except by reason of the fact that such officer is or
was a director of the corporation in which event this paragraph shall not apply)
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made (i) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding, or (ii) if such quorum is not obtainable,
or, even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision-making party at the time such determination is made demonstrate clearly
and
<PAGE>
convincingly that such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation.
(d.) Enforcement. Without the necessity of entering into an express
contract, all rights to indemnification and advances to directors and officers
under this Bylaw shall be deemed to be contractual rights and be effective to
the same extent and as if provided for in a contract between the corporation and
the director or officer. Any right to indemnification or advances granted by
this Bylaw to a director or officer shall be enforceable by or on behalf of the
person holding such right in any court of competent jurisdiction if (i) the
claim for indemnification or advances is denied, in whole or in part, or (ii) no
disposition of such claim is made within ninety (90) days of request therefor.
The claimant in such enforcement action, if successful in whole or in part,
shall be entitled to be paid also the expense of prosecuting his claim. In
connection with any claim for indemnification, the corporation shall be entitled
to raise as a defense to any such action that the claimant has not met the
standard of conduct that make it permissible under the Nevada General
Corporation Law for the corporation to indemnify the claimant for the amount
claimed. In connection with any claim by an officer of the corporation (except
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such officer is or was a director of
the corporation) for advances, the corporation shall be entitled to raise a
defense as to any such action clear and convincing evidence that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed in the best interests of the corporation, or with respect to any
criminal action or proceeding that such person acted without reasonable cause to
believe that his conduct was lawful. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the Nevada
General Corporation Law, nor an actual determination by the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that claimant has not
met the applicable standard of conduct. In any suit brought by a director or
officer to enforce a right to indemnification or to an advancement of expenses
hereunder, the burden of proving that the director or officer is not entitled to
be indemnified, or to such advancement of expenses, under this Article XI or
otherwise shall be on the corporation.
(e.) Non-Exclusivity of Rights. The rights conferred on any person by
this Bylaw shall not be exclusive of any other right which such person may have
or hereafter acquire under any statute, provision of the Articles of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the Nevada General Corporation Law.
<PAGE>
(f.) Survival of Rights. The rights conferred on any person by this
Bylaw shall continue as to a person who has ceased to be a director, officer,
employee or other agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
(g.) Insurance. To the fullest extent permitted by the Nevada General
Corporation Law, the corporation, upon approval by the Board of Directors, may
purchase insurance on behalf of any person required or permitted to be
indemnified pursuant to this Bylaw.
(h.) Amendments. Any repeal or modification of this Bylaw shall only be
prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.
(i.) Saving Clause. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and officer to the full
extent not prohibited by any applicable portion of this Bylaw that shall not
have been invalidated, or by any other applicable law.
(j.) Certain Definitions. For the purposes of this Bylaw, the following
definitions shall apply:
(i.) The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation,
prosecution, defense, settlement, arbitration and appeal of, and the
giving of testimony in, any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative.
(ii.) The term "expenses" shall be broadly construed and shall include,
without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses
of any nature or kind incurred in connection with any proceeding.
(iii.) The term the "corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger
which, if its separate existence had continued, would have had power
and authority to indemnify its directors, officers, and employees or
agents, so that any person who is or was a director, officer, employee
or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer,
employee or agent or another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the
provisions of this Bylaw with respect to the resulting or surviving
corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(iv.) References to a "director," "executive officer," "officer,"
"employee," or "agent" of the corporation shall include, without
limitation, situations where such
<PAGE>
person is serving at the request of the corporation as, respectively, a
director, executive officer, officer, employee, trustee or agent of
another corporation, partnership, joint venture, trust or other
enterprise.
(v.) References to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references to
"serving at the request of the corporation" shall include any service
as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of
the corporation" as referred to in this Bylaw.
ARTICLE XII
NOTICES
Section 44. Notices.
(a.) Notice to Stockholders. Whenever, under any provisions of these
Bylaws, notice is required to be given to any stockholder, it shall be given in
writing, timely and duly deposited in the United States mail, postage prepaid,
and addressed to his last known post office address as shown by the stock record
of the corporation or its transfer agent.
(b.) Notice to directors. Any notice required to be given to any
director may be given by the method stated in subsection (a), or by facsimile,
telex or telegram, except that such notice other than one which is delivered
personally shall be sent to such address as such director shall have filed in
writing with the Secretary, or, in the absence of such filing, to the last known
post office address of such director.
(c.) Affidavit of Mailing. An affidavit of mailing, executed by a duly
authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stockholder or stockholders, or
director or directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall in the absence of fraud, be prima
facie evidence of the facts therein contained.
(d.) Time Notices Deemed Given. All notices given by mail, as above
provided, shall be deemed to have been given as at the time of mailing, and all
notices given by facsimile, telex or telegram shall be deemed to have been given
as of the sending time recorded at time of transmission.
(e.) Methods of Notice. It shall not be necessary that the same method
of giving notice be employed in respect of all directors, but one permissible
method may be
<PAGE>
employed in respect of any one or more, and any other permissible method or
methods may be employed in respect of any other or others.
(f.) Failure to Receive Notice. The period or limitation of time within
which any stockholder may exercise any option or right, or enjoy any privilege
or benefit, or be required to act, or within which any director may exercise any
power or right, or enjoy any privilege, pursuant to any notice sent him ill the
manner above provided, shall not be affected or extended in any manner by the
failure of such stockholder or such director to receive such notice.
(g.) Notice to Person with Whom Communication Is Unlawful. Whenever
notice is required to be given, under any provision of law or of the Articles of
Incorporation or Bylaws of the corporation, to any person with whom
communication is unlawful, the giving of such notice to such person shall not be
require and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person. Any action or
meeting which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given. In the event that the action taken by the corporation is
such as to require the filing of a certificate under any provision of the Nevada
General Corporation Law, the certificate shall state, if such is the fact and if
notice is required, that notice was given to all persons entitled to receive
notice except such persons with whom communication is unlawful.
(h.) Notice to Person with Undeliverable Address. Whenever notice is
required to be given, under any provision of law or the Articles of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve-month period, have been mailed addressed to such
person at his address as shown on the records of the corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Nevada General Corporation Law, the certificate need not state
that notice was not given to persons to whom notice was not required to be given
pursuant to this paragraph.
ARTICLE XII
AMENDMENTS
Section 45. Amendments.
<PAGE>
The Board of Directors shall have the power to adopt, amend, or repeal
Bylaws as set forth in the Articles of Incorporation.
ARTICLE XIV
LOANS TO OFFICERS
Section 46. Loans to Officers. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance may
be with or without interest and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in these Bylaws shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
ARTICLE XV
RESTRICTIONS ON SHARE TRANSFER
Section 47. Restrictions on Share Transfer. The Company will be
governed by each of the following restrictions:
(a.) No shares may be transferred except with the prior approval of the
directors, who may in their absolute discretion refuse to register the transfer
of any shares, such approval to be evidenced by a resolution of the directors;
(b.) There shall not be any invitation to the public to subscribe for
any shares or debt obligations of the Company.
(c.) The number of shareholders of the Company exclusive of:
(i.) persons who are in the employment of the Company or of an affiliate of
the Company;
(ii.) persons who, having formerly been in the employment of the Company or
an affiliate of the Company, were, while in that employment,
shareholders of the Company and have continued to be shareholders of
the Company after termination of that employment,
is limited to not more than 50 persons, two or more persons who are joint
registered owners of one or more shares being counted as one shareholder.
<PAGE>
Declared as the Restated By-Laws of Powertech, Inc. as of the _____ day of
___________, 1998.
Signature of Director: ________________________
Name of Director: Daniel L. Hodges
+++++++++++++
Exhibit 6(a)
NON-COMPETITION AGREEMENT
THIS AGREEMENT made February 12th, 1999.
BETWEEN:
DRAGOS RUIU, businessman, of #1102 - 717 Jervis Street,
Vancouver, BC V6E 4L5
("Ruiu")
AND:
NETSENTRY TECHNOLOGY INC., a company incorporated under the
laws of British Columbia, having an office at #2500 - 1055
Dunsmuir Street, PO Box 49290, Vancouver, BC V7X 1S8
("NetSentry")
WHEREAS:
A. Ruiu has developed a internet monitoring technology for use in the
telecommunications industry.
B. NetSentry is a company owned wholly by Ruiu and Randy Voldeng ("Voldeng").
NetSentry will research, manufacture, develop and market Ruiu's internet
monitoring technology.
C. Pursuant to a share purchase agreement dated December 23, 1998 between Ruiu,
Voldeng and PowerTech, Inc. (the "Share Purchase Agreement"), PowerTech, Inc.
agreed to purchase from Ruiu and Voldeng 100% of NetSentry's issued and
outstanding shares on the terms and subject to the conditions set out in the
Share Purchase Agreement;
D. The Share Purchase Agreement provides that Ruiu and Voldeng will, as a
condition of closing the purchase and sale of the shares, enter into a
non-competition agreement with NetSentry.
THIS AGREEMENT WITNESSES THAT in consideration of the completion of the
transaction contemplated by the Share Purchase Agreement and the sum of TEN
DOLLARS now paid by NetSentry to Ruiu and other good and valuable consideration
(the receipt and sufficiency of which is hereby acknowledged by Ruiu), the
parties hereby agree as follows:
1. INTERPRETATION
1.1 Defined Terms
For the purposes of this Agreement, unless the context otherwise requires, the
following terms will have the respective meanings set out below and grammatical
variations of such terms will have the corresponding meanings:
<PAGE>
2
through one or more intermediaries is controlled by, or is
under common control with, Ruiu or any of his Associates;
(b) "Confidential Information" has the meaning given to it in
Section 2.5; and
(c) "Restricted Period" means the period equal to one year after
Ruiu ceases employment with NetSentry, PowerTech or one of its
affiliates.
Except as otherwise expressly provided herein, all capitalized terms made in
this Agreement without separate definition will have the definitions ascribed to
them in the Share Purchase Agreement, all of which definitions are incorporated
herein by reference.
1.2 Sections and Headings
The division of this Agreement into Sections and the insertion of headings are
for reference purposes only and will not affect the interpretation of this
Agreement. Unless otherwise indicated, any reference in this Agreement to a
Section refers to the specified Section of this Agreement.
1.3 Number, Gender and Persons
In this Agreement, words importing the singular number only will include the
plural and vice versa, words importing gender will include all genders and words
importing persons will include individuals, companies, corporations,
partnerships, associations, trusts, unincorporated organizations, governmental
bodies and other legal or business entities.
1.4 Entire Agreement
This Agreement together with the Share Purchase Agreement and all documents
delivered pursuant thereto constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral. There are
no conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as herein provided.
1.5 Time of Essence
Time will be of the essence of this Agreement.
1.6 Applicable Law
This Agreement will be construed, interpreted and enforced in accordance with,
and the respective rights and obligations of the parties will be governed by,
the laws of the Province of British Columbia and the federal laws of Canada
applicable in such province, and each party hereby irrevocably and
unconditionally submits to the non-exclusive jurisdiction of the courts of such
province and all courts competent to hear appeals therefrom.
<PAGE>
3
1.7 Severability
If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination will not impair or affect the validity, legality or enforceability
of the provisions hereof, and each provision is hereby declared to be separate,
severable and distinct.
1.8 Amendment and Waivers
No amendment or waiver of any provision of this Agreement will be binding on any
party unless consented to in writing by such party. No waiver of any provision
of this Agreement will constitute a waiver of any other provision, nor will any
waiver constitute a continuing waiver unless otherwise specified in such waiver.
2. NON-COMPETITION, NON-SOLICITATION, CONFIDENTIALITY
2.1 Non-Competition
During the Restricted Period, Ruiu will not directly or indirectly (through any
Affiliate, Associate or otherwise), individually or in partnership, or jointly
or in conjunction with any person as principal, agent, shareholder, creditor,
partner, director, officer, employee or in any other manner whatsoever, carry on
or be engaged in or be concerned with or interested in or advise, lend money to,
guarantee the debts or obligations of or permit his name or any part thereof to
be used or employed by any person engaged in or concerned with or interested in
any business which is the same as, similar to or competitive with the business
of NetSentry, or any part thereof, conducted anywhere in the world as of the
Closing Date. The foregoing restrictions will not prevent Ruiu or any company or
entity controlled by him from acquiring or holding, as a passive investment, up
to a total of 5% of the securities of any class or series of any public company
which is traded on a recognized stock exchange.
2.2 Non-Solicitation
During the Restricted Period, Ruiu will not directly or indirectly (through any
Affiliate, Associate or otherwise):
(a) solicit or induce any person, who is or was an employee of
NetSentry, during the Restricted Period or the 6 month period
prior to the Closing Date, to discontinue his or her
relationship with NetSentry, or to accept employment by, or
enter into a business relationship with, any other entity or
person;
(b) hire or offer to hire any person, who is or was an employee of
NetSentry, during the Restricted Period or the 6 month period
prior to the Closing Date;
(c) solicit, interfere with, induce or entice away any person or
entity that is or was a client, customer or agent of
NetSentry, during the Restricted Period or the 24 month period
prior to the Closing Date, to purchase, market or sell any
product or
<PAGE>
4
service which is directly or indirectly competitive with the
business of NetSentry; or
(d) in any manner persuade or attempt to persuade any such
customers referred to in (c) to discontinue a business
relationship with NetSentry, or to enter into a business
relationship with any other entity or person which would be
detrimental to or competitive with the business of NetSentry.
2.3 Prohibition on Use of Name
In addition to his obligations under this Agreement, Ruiu will not, during the
Restricted Period, or at any time thereafter, use, or authorize any other person
to use, directly or indirectly (through any Affiliate or Associate or
otherwise), any corporate, firm or business name, title, logo, trade-mark, or
trade name of NetSentry, or any other confusingly similar names, words or
phrases, or any variations or derivatives thereof, whether alone or in
conjunction with any other names or words, in connection with any business or
activity anywhere in the world in a manner which would be likely to create
confusion with any of the trade-marks, trade names, corporation, firm or
business names or titles or logos associated with NetSentry.
2.4 Acknowledgement of Worldwide Scope
Ruiu hereby acknowledges that the business of NetSentry is conducted worldwide;
that NetSentry's customers are located throughout the world; that, accordingly,
any geographical limitation on the scope of the foregoing covenants would be
materially detrimental to NetSentry; and that, by reason thereof, Ruiu
acknowledges that the scope of the foregoing covenants is reasonable and
necessary in order to protect the interests of NetSentry sought to be protected
hereby.
2.5 Confidential Information
Ruiu will not, during the Restricted Period, or at any time thereafter, directly
or indirectly (through any Affiliate or Associate or otherwise), use for his own
benefit or for the benefit of others, divulge, furnish or make accessible to
anyone other than NetSentry, or its directors and officers, any knowledge or
information which he has with respect to confidential or secret documents,
processes, algorithms, plans, projects, systems, devices or other proprietary
material relating to the business of NetSentry or its Affiliates, or any other
confidential or secret aspect of the business of NetSentry or its Affiliates,
including but not limited to all marketing plans, any lists or other information
with respect to suppliers and customers of NetSentry or its Affiliates
(collectively, the "Confidential Information") except:
(a) any Confidential Information which is generally available to
the public at the time of such disclosure or use, other than
by reason of a breach of this Agreement; or
(b) to the extent that Confidential Information is required to be
disclosed by law or by any governmental or regulatory
authority having jurisdiction.
<PAGE>
5
2.6 Return or Destruction of Confidential Documents
Upon the earlier of a request by NetSentry or the expiry of the Restricted
Period, Ruiu will forthwith return all Confidential Information to NetSentry, or
destroy all materials or documents containing any Confidential Information and
provide proof of such destruction to NetSentry.
3. REMEDIES
3.1 Acknowledgement of Necessity for Restrictions
Ruiu hereby acknowledges that, by reason of his unique knowledge of and
association with the Business, the covenants and agreements set out in this
Agreement are reasonable and valid having regard to the nature of the businesses
of NetSentry, the terms of the Share Purchase Agreement and this Agreement, and
the relationship of Ruiu to NetSentry and its customers, clients, suppliers,
employees and markets. Ruiu hereby waives all defences to the strict enforcement
of the covenants and agreements contained in Section 2 by NetSentry.
3.2 Injunctive Relief
Ruiu hereby acknowledges and agrees that a violation of any of the provisions of
Section 2 will result in immediate and irreparable harm to NetSentry. Ruiu
acknowledges and agrees that because the provisions of Section 2 relate to the
research, development, manufacture and marketing of highly specialized
technology, which is at the heart of NetSentry's business, breach of these
provisions cannot be compensated adequately by recovery of damages alone. Ruiu
agrees that in the event of any such violation or threatened violation,
NetSentry will, in addition to any other rights or remedies available at law, in
equity or otherwise, be entitled to temporary and permanent injunctive relief,
specific performance and other equitable remedies.
3.3 Extension of Limitation Period
Ruiu hereby acknowledges and agrees that a violation of the provisions of
Section 2 will result in irreparable harm to NetSentry whether or not NetSentry
pursues its remedies within six months of the violation or threatened violation.
3.4 Extension of Restricted Period
If Ruiu is in breach of the provisions of Section 2, the running of the
Restricted Period will be stayed for the duration of such breach and will
recommence upon the date he ceases to be in breach thereof, whether voluntarily,
by injunction or otherwise.
4. MISCELLANEOUS
4.1 Notices
(a) Any notice or other communication required or permitted to be
given hereunder will be in writing and will be delivered in
person, transmitted by telecopy or
<PAGE>
6
similar means of recorded electronic communication or sent by
registered mail, charges prepaid, addressed as follows:
If to Ruiu, to:
Name: Dragos Ruiu
Address: #1102 - 717 Jervis Street
Vancouver, BC V6E 4L5
Fax No.: (604) 801-5598
If to NetSentry, to:
Name: NetSentry Technology Inc.
Address: #2500 - 1055 Dunsmuir Street
Vancouver, BC V7X 1S8
Attention: President
Fax No.:
with an additional copy to:
Bull, Housser & Tupper
Barristers and Solicitors
3000 - 1055 West Georgia Street
Vancouver, British Columbia
V6E 3R3
Attention: Steve McKoen
Fax No. (604) 641-4949
(b) Any such notice or other communication will be deemed to have
been given and received on the day after it was delivered or
transmitted (or, if such day is not a Business Day, on the
following Business Day) or, if mailed, on the third Business
Day following the date of mailing; except that if at the time
of mailing or within three Business Days thereafter there is
or occurs a labour dispute or other event which might
reasonably be expected to disrupt the delivery of documents by
mail, any notice or other communication hereunder will be
delivered or transmitted by means of recorded electronic
communication as aforesaid.
(c) Any party may at any time change its address for service from
time to time by giving notice to the other parties in
accordance with Section 4.1.
<PAGE>
7
4.2 Successors and Assigns
This Agreement will enure to the benefit of NetSentry and its respective
successors and assigns and will be binding on Ruiu and his respective heirs and
legal personal representatives.
4.3 Assignment and Enforceability
This Agreement will be binding upon and enforceable by the parties and their
respective heirs, legal personal representatives, successors and permitted
assigns. No party may assign any of its rights or benefits under this Agreement,
or delegate any of its duties or obligations under this Agreement, to any person
without the prior written consent of the other parties hereto, except that
NetSentry may assign any of its rights hereunder at any time following the
Closing Date.
4.4 Counterparts
This Agreement may be executed in counterparts, each of which will constitute an
original and all of which taken together will constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the day first above written.
<TABLE>
<S> <C>
SIGNED, SEALED AND DELIVERED by DRAGOS RUIU in the )
presence of: )
)
)
/s/ STEVEN R. McKOEN ) /s/ DRAGOS RUIU (seal)
- ----------------------------------------------------- ) ------------------------------------------------
Name ) DRAGOS RUIU
STEVEN R. McKOEN )
- ----------------------------------------------------- )
Address )
BARRISTER & SOLICITOR )
- ----------------------------------------------------- )
)
BULL, HOUSSER & TUPPER )
- ----------------------------------------------------- )
)
3000, 1055 WEST GEORGIA STREET )
- ----------------------------------------------------- )
)
VANCOUVER, BC V6E 3R3 )
- ----------------------------------------------------- )
)
PHONE 687-6575 )
- ----------------------------------------------------- )
)
)
- ----------------------------------------------------- )
Occupation )
)
THE CORPORATE SEAL Of NETSENTRY TECHNOLOGY INC. was )
hereunto affixed in the presence of: )
)
)
)
/s/ DRAGOS RUIU ) c/s
- -----------------------------------------------------
Authorized Signatory )
</TABLE>
Exhibit 6(b)
NON-COMPETITION AGREEMENT
THIS AGREEMENT made February 12th, 1999.
BETWEEN:
RANDY VOLDENG, businessman, of 122 Howe Street, Victoria, BC
V8V 4K4;
("Voldeng")
AND:
NETSENTRY TECHNOLOGY INC., a company incorporated under the
laws of British Columbia, having an office at #2500 - 1055
Dunsmuir Street, PO Box 49290, Vancouver, BC V7X 1S8
("NetSentry")
WHEREAS:
A. Dragos Ruiu ("Ruiu") has developed a monitoring technology for use in the
telecommunications industry. Voldeng and Ruiu have agreed to mutually pursue the
research, manufacture development and marketing of the internet monitoring
technology.
B. NetSentry is a company owned wholly by Ruiu and Voldeng. NetSentry will
research, manufacture, develop and market the internet monitoring technology.
C. Pursuant to a share purchase agreement dated December 23, 1998 between Ruiu,
Voldeng and PowerTech, Inc (the "Share Purchase Agreement"), PowerTech, Inc.
agreed to purchase from Ruiu and Voldeng 100% of NetSentry's issued and
outstanding shares on the terms and subject to the conditions set out in the
Share Purchase Agreement;
D. The Share Purchase Agreement provides that Ruiu and Voldeng will, as a
condition of closing the purchase and sale of the shares, enter into a
non-competition agreement with NetSentry.
THIS AGREEMENT WITNESSES THAT in consideration of the completion of the
transaction contemplated by the Share Purchase Agreement and the sum of TEN
DOLLARS now paid by NetSentry to Voldeng and other good and valuable
consideration (the receipt and sufficiency of which is hereby acknowledged by
Voldeng), the parties hereby agree as follows:
1. INTERPRETATION
1.1 Defined Terms
For the purposes of this Agreement, unless the context otherwise requires, the
following terms will have the respective meanings set out below and grammatical
variations of such terms will have the corresponding meanings:
<PAGE>
2
(a) "Affiliate" has the meaning given to it in the Company Act
(British Columbia), except in the case of Voldeng means any
person or entity that directly, or indirectly through one or
more intermediaries is controlled by, or is under common
control with, Voldeng or any of his Associates;
(b) "Confidential Information" has the meaning given to it in
Section 2.5; and
(c) "Restricted Period" means the period equal to one year after
Voldeng ceases employment with NetSentry, PowerTech or one of
its affiliates.
Except as otherwise expressly provided herein, all capitalized terms made in
this Agreement without separate definition will have the definitions ascribed to
them in the Share Purchase Agreement, all of which definitions are incorporated
herein by reference.
1.2 Sections and Headings
The division of this Agreement into Sections and the insertion of headings are
for reference purposes only and will not affect the interpretation of this
Agreement. Unless otherwise indicated, any reference in this Agreement to a
Section refers to the specified Section of this Agreement.
1.3 Number, Gender and Persons
In this Agreement, words importing the singular number only will include the
plural and vice versa, words importing gender will include all genders and words
importing persons will include individuals, companies, corporations,
partnerships, associations, trusts, unincorporated organizations, governmental
bodies and other legal or business entities.
1.4 Entire Agreement
This Agreement together with the Share Purchase Agreement and all documents
delivered pursuant thereto constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral. There are
no conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as herein provided.
1.5 Time of Essence
Time will be of the essence of this Agreement.
1.6 Applicable Law
This Agreement will be construed, interpreted and enforced in accordance with,
and the respective rights and obligations of the parties will be governed by,
the laws of the Province of British Columbia and the federal laws of Canada
applicable in such province, and each party
<PAGE>
3
hereby irrevocably and unconditionally submits to the non-exclusive jurisdiction
of the courts of such province and all courts competent to hear appeals
therefrom.
1.7 Severability
If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination will not impair or affect the validity, legality or enforceability
of the provisions hereof, and each provision is hereby declared to be separate,
severable and distinct.
1.8 Amendment and Waivers
No amendment or waiver of any provision of this Agreement will be binding on any
party unless consented to in writing by such party. No waiver of any provision
of this Agreement will constitute a waiver of any other provision, nor will any
waiver constitute a continuing waiver unless otherwise specified in such waiver.
2. NON-COMPETITION, NON-SOLICITATION, CONFIDENTIALITY
2.1 Non-Competition
During the Restricted Period, Voldeng will not directly or indirectly (through
any Affiliate, Associate or otherwise), individually or in partnership, or
jointly or in conjunction with any person as principal, agent, shareholder,
creditor, partner, director, officer, employee or in any other manner
whatsoever, carry on or be engaged in or be concerned with or interested in or
advise, lend money to, guarantee the debts or obligations of or permit his name
or any part thereof to be used or employed by any person engaged in or concerned
with or interested in any business which is the same as, similar to or
competitive with the business of NetSentry, or any part thereof, conducted
anywhere in the world as of the Closing Date. The foregoing restrictions will
not prevent Voldeng or any company or entity controlled by him from acquiring or
holding, as a passive investment, up to a total of 5% of the securities of any
class or series of any public company which is traded on a recognized stock
exchange.
2.2 Non-Solicitation
During the Restricted Period, Voldeng will not directly or indirectly (through
any Affiliate, Associate or otherwise):
(a) solicit or induce any person, who is or was an employee of
NetSentry, during the Restricted Period or the 6 month period
prior to the Closing Date, to discontinue his or her
relationship with NetSentry, or to accept employment by, or
enter into a business relationship with, any other entity or
person;
(b) hire or offer to hire any person, who is or was an employee of
NetSentry, during the Restricted Period or the 6 month period
prior to the Closing Date;
<PAGE>
4
(c) solicit, interfere with, induce or entice away any person or
entity that is or was a client, customer or agent of
NetSentry, during the Restricted Period or the 24 month period
prior to the Closing Date, to purchase, market or sell any
product or service which is directly or indirectly competitive
with the business of NetSentry; or
(d) in any manner persuade or attempt to persuade any such
customers referred to in (c) to discontinue a business
relationship with NetSentry, or to enter into a business
relationship with any other entity or person which would be
detrimental to or competitive with the business of NetSentry.
2.3 Prohibition on Use of Name
In addition to his obligations under this Agreement, Voldeng will not, during
the Restricted Period, or at any time thereafter, use, or authorize any other
person to use, directly or indirectly (through any Affiliate or Associate or
otherwise), any corporate, firm or business name, title, logo, trade-mark, or
trade name of NetSentry, or any other confusingly similar names, words or
phrases, or any variations or derivatives thereof, whether alone or in
conjunction with any other names or words, in connection with any business or
activity anywhere in the world in a manner which would be likely to create
confusion with any of the trade-marks, trade names, corporation, firm or
business names or titles or logos associated with NetSentry.
2.4 Acknowledgement of Worldwide Scope
Voldeng hereby acknowledges that the business of NetSentry is conducted
worldwide; that NetSentry's customers are located throughout the world; that,
accordingly, any geographical limitation on the scope of the foregoing covenants
would be materially detrimental to NetSentry; and that, by reason thereof,
Voldeng acknowledges that the scope of the foregoing covenants is reasonable and
necessary in order to protect the interests of NetSentry sought to be protected
hereby.
2.5 Confidential Information
Voldeng will not, during the Restricted Period, or at any time thereafter,
directly or indirectly (through any Affiliate or Associate or otherwise), use
for his own benefit or for the benefit of others, divulge, furnish or make
accessible to anyone other than NetSentry, or its directors and officers, any
knowledge or information which he has with respect to confidential or secret
documents, processes, algorithms, plans, projects, systems, devices or other
proprietary material relating to the business of NetSentry or its Affiliates, or
any other confidential or secret aspect of the business of NetSentry or its
Affiliates, including but not limited to all marketing plans, any lists or other
information with respect to suppliers and customers of NetSentry or its
Affiliates (collectively, the "Confidential Information") except:
(a) any Confidential Information which is generally available to
the public at the time of such disclosure or use, other than
by reason of a breach of this Agreement; or
<PAGE>
5
(b) to the extent that Confidential Information is required to be
disclosed by law or by any governmental or regulatory
authority having jurisdiction.
2.6 Return or Destruction of Confidential Documents
Upon the earlier of a request by NetSentry or the expiry of the Restricted
Period, Voldeng will forthwith return all Confidential Information to NetSentry,
or destroy all materials or documents containing any Confidential Information
and provide proof of such destruction to NetSentry.
3. REMEDIES
3.1 Acknowledgement of Necessity for Restrictions
Voldeng hereby acknowledges that, by reason of his unique knowledge of and
association with the Business, the covenants and agreements set out in this
Agreement are reasonable and valid having regard to the nature of the businesses
of NetSentry, the terms of the Share Purchase Agreement and this Agreement, and
the relationship of Voldeng to NetSentry and its customers, clients, suppliers,
employees and markets. Voldeng hereby waives all defences to the strict
enforcement of the covenants and agreements contained in Section 2 by NetSentry.
3.2 Injunctive Relief
Voldeng hereby acknowledges and agrees that a violation of any of the provisions
of Section 2 will result in immediate and irreparable harm to NetSentry. Voldeng
acknowledges and agrees that because the provisions of Section 2 relate to the
research, development, manufacture and marketing of highly specialized
technology, which is at the heart of NetSentry's business, breach of these
provisions cannot be compensated adequately by recovery of damages alone.
Voldeng agrees that in the event of any such violation or threatened violation,
NetSentry will, in addition to any other rights or remedies available at law, in
equity or otherwise, be entitled to temporary and permanent injunctive relief,
specific performance and other equitable remedies.
3.3 Extension of Limitation Period
Voldeng hereby acknowledges and agrees that a violation of the provisions of
Section 2 will result in irreparable harm to NetSentry whether or not NetSentry
pursues its remedies within six months of the violation or threatened violation.
3.4 Extension of Restricted Period
If Voldeng is in breach of the provisions of Section 2, the running of the
Restricted Period will be stayed for the duration of such breach and will
recommence upon the date he ceases to be in breach thereof, whether voluntarily,
by injunction or otherwise.
<PAGE>
6
4. MISCELLANEOUS
4.1 Notices
(a) Any notice or other communication required or permitted to be
given hereunder will be in writing and will be delivered in
person, transmitted by telecopy or similar means of recorded
electronic communication or sent by registered mail, charges
prepaid, addressed as follows:
If to Voldeng, to:
Name: Randy Voldeng
Address: 122 Howe Street
Vancouver, BC V8V 4K4
Fax No.: (250) 920-9738
If to NetSentry, to:
Name: NetSentry Technology Inc.
Address: #2500 - 1055 Dunsmuir Street
Vancouver, BC V7X 1S8
Attention: President
Fax No.:
with an additional copy to:
Bull, Housser & Tupper
Barristers and Solicitors
3000 - 1055 West Georgia Street
Vancouver, British Columbia
V6E 3R3
Attention: Steve McKoen
Fax No. (604) 641-4949
(b) Any such notice or other communication will be deemed to have
been given and received on the day after it was delivered or
transmitted (or, if such day is not a Business Day, on the
following Business Day) or, if mailed, on the third Business
Day following the date of mailing; except that if at the time
of mailing or within three Business Days thereafter there is
or occurs a labour dispute or other event which might
reasonably be expected to disrupt the delivery of documents by
mail, any notice or other communication hereunder will be
delivered or transmitted by means of recorded electronic
communication as aforesaid.
<PAGE>
7
(c) Any party may at any time change its address for service from
time to time by giving notice to the other parties in
accordance with Section 4.1.
4.2 Successors and Assigns
This Agreement will enure to the benefit of NetSentry and its respective
successors and assigns and will be binding on Voldeng and his respective heirs
and legal personal representatives.
4.3 Assignment and Enforceability
This Agreement will be binding upon and enforceable by the parties and their
respective heirs, legal personal representatives, successors and permitted
assigns. No party may assign any of its rights or benefits under this Agreement,
or delegate any of its duties or obligations under this Agreement, to any person
without the prior written consent of the other parties hereto, except that
NetSentry may assign any of its rights hereunder at any time following the
Closing Date.
4.4 Counterparts
This Agreement may be executed in counterparts, each of which will constitute an
original and all of which taken together will constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the day first above written.
<TABLE>
<S> <C>
SIGNED, SEALED AND DELIVERED by RANDY VOLDENG in )
the presence of: )
)
)
/s/ STEVEN R. McKOEN ) /s/ RANDY VOLDENG (seal)
- ----------------------------------------------------- ) ------------------------------------------------
Name ) RANDY VOLDENG
STEVEN R. McKOEN )
- ----------------------------------------------------- )
Address )
BARRISTER & SOLICITOR )
- ----------------------------------------------------- )
)
BULL, HOUSSER & TUPPER )
- ----------------------------------------------------- )
)
3000, 1055 WEST GEORGIA STREET )
- ----------------------------------------------------- )
)
VANCOUVER, BC V6E 3R3 )
- ----------------------------------------------------- )
)
PHONE 687-6575 )
- ----------------------------------------------------- )
)
)
- ----------------------------------------------------- )
Occupation )
)
THE CORPORATE SEAL Of NETSENTRY TECHNOLOGY INC. was )
hereunto affixed in the presence of: )
)
)
)
/s/ RANDY VOLDENG ) c/s
- ----------------------------------------------------- )
Authorized Signatory )
</TABLE>
Exhibit 6(c)
December 3, 1998 $100,000.00 (CDN)
NETSENTRY TECHNOLOGY INC.
PROMISSORY NOTE
For value received (the receipt and sufficiency of which is hereby
acknowledged), NETSentry Technology Inc. (the "Company") hereby promises to pay
to Dan Para (the "Note Holder") on February 1, 1999 (the "Due Date") on
presentation and surrender of this Note the principal sum of One Hundred
Thousand Canadian Dollars ($100,000.00 (CDN)).
All or any part of the principal amount of this Note is convertible, at the
option of the Company upon surrender of this Note to the Company, into fully
paid and non-assessable common shares (the "Common Shares") in the capital of
the Company at a conversion price of $20.77 (CDN) (the "Conversion Price") per
Common Share. As soon as practicable thereafter, the Company will deliver to the
Note Holder a certificate or certificates for such Common Shares.
If and whenever prior to the Due Date, the Company:
(i) subdivides the outstanding Common Shares into a greater number
of Common Shares,
(ii) consolidates the outstanding Common Shares into a lesser
number of Common Shares, or
(iii) issues Common Shares, or securities convertible or
exchangeable for Common Shares, to the holders of all or
substantially all of the outstanding Common Shares by way of a
stock dividend,
the Conversion Price will, on the effective date of such subdivision or
consolidation or stock dividend, as the case may be, be adjusted to the amount
which is in the same proportion to the Conversion Price in effect immediately
prior to such subdivision, consolidation or stock dividend as the number of
outstanding Common Shares before giving effect to such subdivision,
consolidation or stock dividend bears to the number of outstanding Common Shares
after giving effect to such subdivision, consolidation or stock dividend. Such
adjustments will be made successively whenever any event referred to herein will
occur.
<PAGE>
2
Notwithstanding the foregoing, the Company will not be required to issue
fractional Common Shares upon the conversion of this Note. If any fractional
interest in a Common Share would be delivered upon the conversion of this Note,
the Company will, in lieu of delivering a certificate for such fractional
interest, satisfy such fractional interest by paying in Canadian dollars to the
Note Holder an amount equal to the same fraction of the Conversion Price.
The Company may prepay any part of this Note at any time and from time to time
without bonus or penalty provided.
DATED at Vancouver, British Columbia, this 3rd day of December, 1998.
NETSENTRY TECHNOLOGY INC.
Per: /s/ Randy Voldeng
----------------------
Randy Voldeng
President and CEO
Exhibit 6(d)
AGREEMENT
THIS AGREEMENT made the 12th day of February, 1999.
BETWEEN
POWERTECH, INC., a Nevada corporation with an office at 5505
N. Indian Trail, Tucson, Arizona, U.S.A. 85750
("Powertech")
AND:
RANDY VOLDENG, businessman, of 122 Howe Street, Victoria,
British Columbia, Canada V8V 4K4
("Voldeng")
AND:
DRAGOS RUIU, businessman, of 10966 84th Avenue, Edmonton,
Alberta, Canada, T6G 0V4
("Ruiu")
AND:
DAN PARA, businessman, of #105 - 3065 Primrose Land,
Coquitlam, British Columbia
("Para")
WHEREAS:
A. Powertech, Voldeng and Ruiu have entered into a Share Purchase Agreement
dated as of January 11, 1999 as amended by an Amending Agreement dated as of
January 29, 1999 (the "Share Purchase Agreement").
B. Pursuant to the Share Purchase Agreement, Voldeng and Ruiu will be selling
all of their shares in NETSentry Technology Inc. ("NETSentry") to Powertech.
C. Under the terms of the Share Purchase Agreement, Powertech is required to
have not less than $1,012,500 in its account.
D. As of the Closing Date (as defined in the Share Purchase Agreement),
Powertech has only $895,000 in its account.
E. Para has loaned to NETSentry the sum of CAD $200,000 (the "Loan").
<PAGE>
2
F. The parties have reached certain agreements with respect to the shortfall in
the amount of funds Powertech has in its account.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT for good and valuable consideration
(the receipt and sufficiency of which is acknowledged by each party) the parties
have agreed as follows:
1. Powertech will raise an additional $117,500 (the "Funds") and have the
Funds in its account on or before February 26, 1999. The Funds will be
free and clear of all Liens (as defined in the Share Purchase
Agreement).
2. If Powertech is unable to raise the Funds on or before February 26,
1999, Para will immediately forgive the Loan and neither NETSentry nor
Powertech will have any further obligations or liabilities to Para with
respect to the Loan.
3. If Powertech raises the sum of $117,500 on or before February 26, 1999,
Powertech will issue to Para 108,000 common shares of its capital and
thereafter Para will forgive the Loan and neither NETSentry nor
Powertech will have any further obligations or liabilities to Para with
respect to the Loan.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the date
and year first above written.
POWERTECH, INC.
Per: /s/ [ILLEGIBLE]
--------------------
Authorized Signatory
<TABLE>
<S> <C>
SIGNED, SEALED AND DELIVERED by RANDY VOLDENG in )
the presence of: )
)
)
/s/ STEVEN R. McKOEN ) /s/ RANDY VOLDENG (seal)
- ----------------------------------------------------- ) ------------------------------------------------
Name ) RANDY VOLDENG
STEVEN R. McKOEN )
- ----------------------------------------------------- )
Address )
BARRISTER & SOLICITOR )
- ----------------------------------------------------- )
)
BULL, HOUSSER & TUPPER )
- ----------------------------------------------------- )
)
3000, 1055 WEST GEORGIA STREET )
- ----------------------------------------------------- )
)
VANCOUVER, BC V6E 3R3 )
- ----------------------------------------------------- )
)
PHONE 687-6575 )
- ----------------------------------------------------- )
)
)
- ----------------------------------------------------- )
Occupation )
)
</TABLE>
<PAGE>
3
<TABLE>
<S> <C>
SIGNED, SEALED AND DELIVERED by DRAGOS RUIU in the )
presence of: )
)
)
/s/ STEVEN R. McKOEN ) /s/ DRAGOS RUIU (seal)
- ----------------------------------------------------- ) ------------------------------------------------
Name ) DRAGOS RUIU
STEVEN R. McKOEN )
- ----------------------------------------------------- )
Address )
BARRISTER & SOLICITOR )
- ----------------------------------------------------- )
)
BULL, HOUSSER & TUPPER )
- ----------------------------------------------------- )
)
3000, 1055 WEST GEORGIA STREET )
- ----------------------------------------------------- )
)
VANCOUVER, BC V6E 3R3 )
- ----------------------------------------------------- )
)
PHONE 687-6575 )
- ----------------------------------------------------- )
)
)
- ----------------------------------------------------- )
Occupation )
)
SIGNED, SEALED AND DELIVERED by DAN PARA in the )
presence of: )
)
)
/s/ STEVEN R. McKOEN ) /s/ DAN PARA (seal)
- ----------------------------------------------------- ------------------------------------------------
Name ) DAN PARA
STEVEN R. McKOEN )
- ----------------------------------------------------- )
Address )
BARRISTER & SOLICITOR )
- ----------------------------------------------------- )
)
BULL, HOUSSER & TUPPER )
- ----------------------------------------------------- )
)
3000, 1055 WEST GEORGIA STREET )
- ----------------------------------------------------- )
)
VANCOUVER, BC V6E 3R3 )
- ----------------------------------------------------- )
)
PHONE 687-6575 )
- ----------------------------------------------------- )
)
)
- ----------------------------------------------------- )
Occupation )
)
</TABLE>
Exhibit 6(e)
ASSIGNMENT AGREEMENT
Assignment of Intellectual Property and Waiver of Moral Rights
THIS AGREEMENT MADE this 23 day of December, 1998.
BETWEEN:
DRAGOS RUIU, businessman, of 1102 - 717 Jervis Street,
Vancouver, British Columbia, Canada V6E 4L5
and
DRAGOSTECH.COM INC., a corporation incorporated pursuant to
the laws of the Province of Alberta with an office at 10966
84th Avenue, Edmonton, Alberta, Canada T6G 0V4
(hereinafter collectively referred to as "the Assignors")
AND:
NETSENTRY TECHNOLOGY INC., a corporation incorporated pursuant
to the laws of the Province of British Columbia with a
registered and records office at 2500 - Four Bentall Centre,
1055 Dunsmuir Street, Vancouver, B.C. V7X 1S8
(hereinafter referred to as "the Assignee")
WHEREAS the Assignors are the owners of all of the
intellectual property in the ProbeNet network monitoring technology developed
solely by Dragos Ruiu (the "Technology");
AND WHEREAS the Assignee is desirous of acquiring all right,
title and interest in and to the Technology, including title to and possession
of the Technology, and is desirous of acquiring a waiver of all moral rights of
Dragos Ruiu in and to the Work in favour of ASSIGNEE and its successors, assigns
and nominees;
NOW THEREFORE KNOW ALL PERSONS BY THESE PRESENTS that for the
sum of One Dollar ($1.00) now paid by the Assignee to the Assignors and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Assignment
The Assignors do hereby:
1.1 sell, assign and transfer to the Assignee all world-wide
right, title and interest in and to the Technology, including
all right, title, and interest of the Assignors in and to any
and all copyrights, moral rights, patents, inventions,
trade-marks, trade names, know-how, trade secrets or
confidential information, industrial designs, integrated
circuit topographies, plant breeder's rights and all other
industrial or intellectual property, whether registered or
unregistered, including all improvements, modifications or
enhancements thereto (collectively, "Intellectual Property"),
owned by, licensed to, or used by the Assignors in connection
with the Technology, including, without limiting the
generality of the foregoing, all Intellectual Property in, to
and associated with the works attached as Schedule "A", said
right, title and interest to be held and enjoyed by the
Assignee, its successors, assigns and nominees as fully and
entirely as the same could have been held and enjoyed by the
Assignors if this formal assignment had not been made, for so
long as and to the full extent permitted by law; and
1.2 covenant and represent that the Assignors have the full right
to convey the entire interest herein assigned, that the
Assignors have not executed, and will not execute any
conflicting document, and that the Technology is original to
the Assignors or their
<PAGE>
-2-
employees, as applicable, and is not copied in whole or in
part from any other material.
2. Waiver
Dragos Ruiu does hereby:
2.1 waive in favour of Assignee, its successors, assigns and
nominees, all his moral rights in relation to the Technology
in Canada and throughout the world, including, without
limiting the generality of the foregoing, waive all such
rights under the Canadian Copyright Act;
IN WITNESS WHEREOF the Assignors have executed this Agreement as of the
day and year first above written.
<TABLE>
<S> <C>
SIGNED, SEALED AND DELIVERED by Dragos Ruiu in the )
presence of: )
)
/s/ STEVEN R. McKOEN ) /s/ DRAGOS RUIU (seal)
- ----------------------------------------------------- ) ------------------------------------------------
Name ) DRAGOS RUIU
STEVEN R. McKOEN )
- ----------------------------------------------------- )
Address )
BARRISTER & SOLICITOR )
- ----------------------------------------------------- )
)
BULL, HOUSSER & TUPPER )
- ----------------------------------------------------- )
)
3000, 1055 WEST GEORGIA STREET )
- ----------------------------------------------------- )
)
VANCOUVER, BC V6E 3R3 )
- ----------------------------------------------------- )
)
PHONE 687-6575 )
- ----------------------------------------------------- )
)
)
- ----------------------------------------------------- )
Occupation )
)
</TABLE>
DRAGOSTECH.COM INC.
per: Dragos Ruiu
------------------------
Dragos Ruiu
President
- --------------------------------------------------------------------------------
Accepted at Vancouver, British Columbia NETSENTRY TECHNOLOGY INC.
this 23rd day of December, 1998 by the
Assignee:
per: /s/ Dragos Ruiu
----------------------------
Dragos Ruiu
Vice President
- --------------------------------------------------------------------------------
<PAGE>
-3-
SCHEDULE "A"
[GRAPHIC of CD-ROM OMITTED]
Exhibit 6(f)
MEMORANDUM OF UNDERSTANDING
This Agreement made this ______ day of May, 1998
Between:
- --------
NETSentry Technology Inc. of Vancouver, British Columbia, Canada (hereinafter
referred to as "NTI")
And:
- ----
Hewlett Packard Network System Test Division of Colorado Springs, Colorado, USA
(hereinafter referred to as "NSTD")
Whereas:
NSTD is interested in marketing and distributing NTI's ProbeNET software product
to specific customers on an exclusive basis; and
NTI plans on delivering ProbeNET, as specified in Section 8 of NTI's business
plan, by the second quarter of calendar year 1999; and
NTI is interested in developing other distribution channels for customers not
targeted by NSTD; and
Both parties are interested in a long term relationship whereby NTI becomes an
integral part of NSTD's business strategy; and
Both parties are committed to ensuring ProbeNET (for its designed purpose and
functionality) becomes the preferred product of Internet Service Providers for
testing their Internet Protocol networks; and
Both parties are committed to ensuring ProbeNET customers receive a high level
of service and support.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT, IN CONSIDERATION OF THE MUTUAL
PROMISES HEREINAFTER SET FORTH, THE PARTIES AGREE AS FOLLOWS:
o Based on NSTD's forecasted marketing, selling and distribution cost
structure, NTI will provide NSTD with a **% discount off the Net Selling
Price of ProbeNET. The Net Selling Price is the price paid to Hewlett
Packard by end user customers. When more precise estimates of NSTD's cost
structure are available, the exact discount will be finalized.
o NTI will be responsible for the software development and ongoing software
maintenance of ProbeNET. NTI agrees to ensure ProbeNET is Year 2000
compliant in accordance with the guidelines provided by NSTD.
o ProbeNET will be identified as both an HP and NTI product.
o NTI is committed to providing a high level of customer satisfaction and
will endeavor to deliver a high quality product. NTI plans to resolve minor
bug fixes with semi-annual software updates. Major bug fixes, should they
occur, will be remedied in the shortest time possible after discovery.
o Both parties agree to cooperate to ensure ProbeNET's user interface, where
practical and appropriate, is compatible with other NSTD products.
o NTI will endeavor to differentiate ProbeNET from network monitoring
products developed by HP's NMX division by focusing on "active
intervention" capabilities.
** - Confidential Treatment Requested
Page 1 of 3
<PAGE>
o If NTI develops resource constraints, rather than delay the introduction of
ProbeNET, functionality may be reduced in accordance with customer and NSTD
priorities.
o NTI agrees to allow NSTD to have a representative on NTI's Product Strategy
Committee and NSTD agrees to allow NTI to have a representative participate
in the HP/NSTD Service Providers Business Team Strategy and Planning
Sessions.
o In the event, HP/NSTD becomes an equity investor in NTI, NTI agrees to
allow NSTD have 1 representative on NTI's Board of Directors.
o NTI will be responsible for training NSTD marketing, sales and support
personnel and for assisting NSTD in training the Hewlett Packard sales
organization.
o NSTD and the Hewlett Packard sales organization will be responsible for
marketing and selling ProbeNET to customers noted on the attached Schedule
"A". Marketing includes advertising, and promotion at marketing events
(trade shows, customer seminars, industry symposiums etc.). NTI will be
responsible for marketing and selling ProbeNET to small ISPs (as per the
definition noted in NETSentry's business plan) unless NSTD develops an
acceptable strategy for selling to the small ISP market segment.
o NSTD and the Hewlett Packard sales organization will have primary
responsibility for providing installation assistance and training for end
user customers.
o Product customization for end user customers will be handled on a
case-by-case basis, however, where appropriate, NSTD and the HP sales
organization will provide this capability.
o NSTD and the Hewlett Packard sales organization will be responsible for
establishing the end user price with the objective of maximizing revenue.
Potentially, the end user price could vary on a country-by-country basis.
o NTI will be responsible for assisting NSTD, when required, at marketing
events.
o NTI will be responsible for providing NSTD with demo software.
o NSTD will be responsible for developing marketing materials (brochures,
promotional material) for ProbeNET. NTI will be responsible for assisting
NSTD by providing technical specifications and other necessary
documentation in electronic format.
The term of this agreement will cover a period of 24 months, beginning with
ProbeNET's product release date. Thereafter it can be renewed annually providing
both parties are in agreement. During the term of this agreement NSTD agrees not
to develop or market any products that compete directly with ProbeNET; if NSTD
violates this agreement, NTI has the right to terminate the agreement with 30
days notice. Otherwise, should either party be dissatisfied with the performance
of the other party during the term of this agreement, they are required to
notify the other party in writing. Should the other party fail to remedy the
noted deficiencies within a reasonable period of time, the dissatisfied party
may terminate the agreement with 6 months notice.
This Agreement shall be construed in accordance with and governed by the laws of
the Province of British Columbia.
Page 2 of 3
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date
first above mentioned.
NETSentry Technology Inc. Hewlett Packard Network System Test Division
Per:_________________________ Per:_________________________
Title:________________________ Title:_________________________
Per:_________________________ Per:_________________________
Title:________________________ Title:_________________________
Date:________________________ Date:________________________
SCHEDULE "A"
NSTD will have exclusive worldwide marketing and distribution rights for the
following customers:
o Large and mid-size ISPs ( as per the definition used in NETSentry's
business plan); and
o Telephone companies; and
o Private network operators (intranets);
o Network Equipment Manufacturers.
Page 3 of 3
Exhibit 6(g)
[DRAFT]
ASSET PURCHASE AND SALE AGREEMENT made as of the ______ day of August, 1998.
BETWEEN:
DRAGOSTECH.COM INC., a corporation duly incorporated under
the laws of the Province of Alberta (hereinafter called the
"Vendor")
OF THE FIRST PART
- and -
NETSENTRY TECHNOLOGY INC., a corporation incorporated under
the laws of the Province of British Columbia (hereinafter
called the "Purchaser")
OF THE SECOND PART
A. WHEREAS the Vendor is a consulting and design engineering firm;
B. WHEREAS the Purchaser is a product development and marketing company
involved in developing and marketing products that improve the efficiency,
reliability and recoverability of Internet Protocol networks;
C. WHEREAS the Vendor owns the assets referred to in Schedule "A" (the
"Assets");
D. WHEREAS the Vendor is desirous of selling and the Purchaser is desirous of
having an option to purchase the Assets subject to the terms and conditions
hereinafter set forth;
E. WHEREAS the Vendor and Purchaser agree, wherever reasonably possible, to
cooperate to allow the sale to be completed in a manner than will minimize
the income taxes consequences for both parties and their shareholders.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the
covenants, agreements, warranties and payments herein contained and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by each of the parties hereto, the parties hereto do hereby agree
as follows:
<PAGE>
- --------------------------------------------------------------------------------
2.
- --------------------------------------------------------------------------------
ARTICLE 1.
INTERPRETATION
--------------
1.1 In this Agreement, unless the context otherwise requires, the following
terms shall have the following respective meanings:
1.1.1 "Agreement" means this agreement and any amendments or any
extension or renewals hereof;
1.1.2 "Assets" means the property described in Schedule "A" hereto;
1.1.3 "Shares" means 48,884 Class "B" common non-voting shares in
the share capital of the Purchaser;
1.1.4 "Closing Date" means 30 days after the Purchaser exercises
their option to purchase;
1.2 Headings of the Articles or Sections hereof are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.3 Words importing the singular number only shall include the plural and
vice versa, and words importing the masculine gender shall include the
feminine and neuter gender, and words importing person shall include
provincial or federal companies, corporations, partnerships,
syndicates, trusts and any number or aggregate of persons all as the
context may require.
ARTICLE 2.
ASSET TRANSFER
--------------
2.1 Subject to the terms and conditions of this Agreement, the Vendor
hereby agrees give the Purchaser an option to purchase the Assets
anytime within 5 years from the date of this agreement. Upon execution
of this option by the Purchasor, the Vendor agrees to sell, transfer
and assign to the Purchaser the Assets to have and to hold the same,
together with all benefit and advantage to be derived therefrom,
absolutely.
2.2 The purchase price ("Purchase Price") for the Assets shall be payable
by the Purchaser as follows:
<PAGE>
- --------------------------------------------------------------------------------
3.
- --------------------------------------------------------------------------------
2.2.1 by the issuance by the Purchaser to the Vendor of the Shares
on the Closing Date; and
2.2.2 by the payment of fifty thousand Canadian dollars
(CDN$50,000.00), without interest, within five (5) days of the
Closing Date.
2.3 The Purchaser agrees not to dilute the share structure of NETSentry
without first receiving approval from the Vendor in writing.
2.4 The parties acknowledge that notwithstanding any other provision in
this Agreement, the Purchase Price of the Assets set out in this
Agreement is exclusive of the goods and services tax as provided for in
the Excise Tax Act (Canada). The parties work together to prepare and
execute the election prescribed under section 167 of the Excise Tax Act
(Canada) and the Purchaser shall file such election in the manner and
within the time prescribed in such legislation such that no goods and
services tax will be payable by the parties in respect of the sale of
the Assets described herein.
ARTICLE 3.
REPRESENTATIONS, WARRANTIES AND INDEMNITIES
-------------------------------------------
3.1 The Vendor represents and warrants to the Purchaser that on the Closing
Date it is entitled at law and in equity to sell, assign and transfer
clear title to the Assets pursuant to this Agreement. The Vendor makes
no other representations or warranties with respect to the assets.
ARTICLE 4.
FURTHER ASSURANCES
------------------
4.1 The Vendor and the Purchaser, and each of them will from time to time,
on, and after the Closing Date, at the request and cost of the other,
execute and deliver all such other and additional assignments,
instruments, notices, releases, transfers and other documents and shall
do all such other acts and things as may be reasonably necessary to
more fully assure the conveying of the Assets to the Purchaser and
otherwise to assure the carrying out of the intent and purpose of this
Agreement.
<PAGE>
- --------------------------------------------------------------------------------
4.
- --------------------------------------------------------------------------------
ARTICLE 5.
GOVERNING LAW
-------------
5.1 This Agreement shall be subject to and be interpreted, construed and
enforced in accordance with the laws of the Province of British
Columbia.o Each party hereto accepts the jurisdiction of the Courts of
the Province of British Columbia o.
ARTICLE 6.
SEVERABILITY
------------
6.1 Any term, condition or provision in this Agreement which is, or shall
be deemed to be void, prohibited, or unenforceable by a Court of
competent jurisdiction, shall be severable herefrom and be ineffective
to the extent of such avoidance, prohibition or unenforceability
without in any way invalidating the remaining terms, conditions and
provisions hereof.
ARTICLE 7.
ASSIGNMENT
----------
7.1 The Purchaser or the Vendor shall not assign any or all of its rights,
interest and title in this Agreement without the prior written consent
of the other party, which consent shall not be unreasonably withheld.
ARTICLE 8.
ENTIRE AGREEMENT
----------------
8.1 This Agreement constitutes the entire agreement between the parties
hereto and supersedes all previous verbal or written agreements,
options, assurances and undertakings by the parties hereto relating to
the sale and purchase herein contemplated, and there are no
representations, warranties, collateral agreements or conditions
affecting the Assets other than as expressed herein in writing.
8.2 No amendment or variation of the terms, conditions, warranties,
covenants, agreements or undertakings set forth herein shall be of any
force and effect unless the same shall be reduced to writing duly
executed by both parties hereto.
<PAGE>
- --------------------------------------------------------------------------------
5.
- --------------------------------------------------------------------------------
ARTICLE 9.
EXECUTORS AND ASSIGNS
---------------------
9.1 This Agreement shall enure to the benefit of and be binding upon the
parties hereto, together with their respective successors and permitted
assigns.
ARTICLE 10.
NOTICES
-----------
10.1 Any notice or other communication required or permitted hereunder shall
be deemed to be sufficiently given if personally delivered to the
Vendor or the Purchaser, if mailed by prepaid registered mail and
addressed as follows, or if telecopied to a party at the facsimile
number set out below, or such other address or facsimile number as that
party may provide in writing to the other party in lieu thereof:
If to the Purchaser:
Netsentry Technology Inc.
122 Howe Street
Victoria, British Columbia
Attention: Randy Voldeng
President
Fax: 604-920-9738
If to the Vendor:
Dragostech.com Inc.
10966 84th Avenue
Edmonton, AB
Attention: Dragos Ruiu
President
Any such notice shall be deemed to have been received by a party hereto if
personally delivered, then upon delivery, if mailed, then two (2) days after the
date of mailing, or if telecopied, the date the facsimile transmission is
received.
<PAGE>
- --------------------------------------------------------------------------------
6.
- --------------------------------------------------------------------------------
ARTICLE 11.
TIME
-----
11.1 Time shall in every respect be of the essence in this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day and year first above written.
Netsentry Technology Inc.
Per:________________________________
Dragostech.com Inc.
Per:________________________________
<PAGE>
SCHEDULE "A"
------------
ASSETS
1. Exclusive License for the Industrial Design of a Battery/AC 10/100
BaseT Internet Protocol Tester, hereinafter referred to as "TestBOT".
2. Exclusive License to Use the Technology in the Patents Arising from the
Industrial Design for TestBOT
3. Exclusive License for the Measurement Methodology Patents Utilized in
TestBOT
4. Exclusive Rights to the Industrial Design of TestBOT
5. Exclusive Rights to re-license the designs and technologies noted in
this Schedule
6. Six (6) Design Patent Quality Renditions of Innovative Industrial
Designs and Exteriors for TestBOT
7. Technology and Other Physical Assets, including but not limited to,
Patent Applications, Design Specifications, Hardware Prototypes,
Software Source and Object Codes, Computer Equipment, Development
Tools, and Software Licenses related to or used in the Development of
the TestBOT Prototype
8. Goodwill related to TestBOT
9. Spare parts and inventory related to TestBOT
<PAGE>
ADDENDUM/AMENDMENT TO ASSET PURCHASE AND SALE AGREEMENT
This Addendum/Amendment shall be attached to and become part of the ASSET
PURCHASE AND SALE AGREEMENT, dated September 10, 1998.
BETWEEN:
DRAGOSTECH.COM INC., a corporation duly incorporated under the laws of
the Province of Alberta (hereinafter called the "Vendor")
- and -
NETSENTRY TECHNOLOGY INC., a corporation incorporated under the laws of
the Province of British Columbia (hereinafter called the "Purchaser")
The Vendor and Purchaser hereby agree to amend Article 1.1.3 of the ASSET
PURCHASE AND SALE AGREEMENT dated September 10, 1998 to read:
"Shares" means 500,000 common shares in the share capital of Powertech, Inc.
ALL OTHER TERMS AND CONDITIONS TO REMAIN IN FULL FORCE AND EFFECT.
Netsentry Technology Inc.
Per: _____________________________
Date: ____________________________
Dragostech.com Inc.
Per: _____________________________
Date: ____________________________
Exhibit 8(a)
SHARE PURCHASE AGREEMENT
Dated for Reference January 11, 1999
Between
POWERTECH, INC.
as Purchaser
and
RANDY VOLDENG AND DRAGOS RUIU
as Vendors
BULL, HOUSSER & TUPPER
------------
BARRISTERS & SOLICITORS
<PAGE>
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made the 11th day of January, 1999.
BETWEEN
RANDY VOLDENG, businessman, of 122 Howe Street, Victoria,
British Columbia, Canada V8V 4K4,
and
DRAGOS RUIU, businessman, of 10966 84th Avenue, Edmonton,
Alberta, Canada, T6G 0V4
(collectively the "Vendors" and individually by their full
names)
AND:
POWERTECH, INC., a Nevada corporation with an office at 5505
N. Indian Trail, Tucson, Arizona, U.S.A. 85750
(the "Purchaser")
WHEREAS:
A. The Vendors are the registered holders and beneficial owners of all the
issued and outstanding shares of NetSentry Technology Inc. (the "Company") as
follows:
In the name of Class A Common Shares
Randy Voldeng 100,000
Dragos Ruiu 100,000
B. The Vendors wish to sell, and the Purchaser wishes to purchase, the Vendors'
Shares.
IN CONSIDERATION of the covenants and agreements in this Agreement, the parties
agree as follows:
1. INTERPRETATION
1.1 Definitions
In this Agreement:
(a) "Agreement" means this agreement including any recitals and Schedules to
this agreement, as amended, supplemented or restated from time to time;
<PAGE>
2
(b) "Ancillary Agreements" means all agreements, certificates and other
instruments delivered or given pursuant to this Agreement;
(c) "Applicable Laws" in respect of any Person, property, transaction or
event, means all present and future laws, statutes, regulations,
treaties, judgments and decrees applicable to that Person, property,
transaction or event and, whether or not having the force of law, all
applicable official directives, rules, consents, approvals,
authorizations, guidelines, orders and policies of any Governmental
Authority having or purporting to have authority over that Person,
property transaction or event;
(d) "Associates" as describing the relationship between two Persons, means
that they are "related persons" as defined in the Tax Act;
(e) "Business" means the business of software design, development and
marketing as now carried on by the Company;
(f) "Business Day" means a day other than a Saturday, Sunday or statutory
holiday in British Columbia. The Business Day will end at 4:30 p.m. PST
on that day;
(g) "Closing" has the meaning given to it in Section 2.1;
(h) "Closing Date" has the meaning given to it in Section 7.1;
(i) "Company" means NetSentry Technology Inc., a corporation incorporated
under the laws of the Province of British Columbia with a registered and
records office at 2500 - Four Bentall Centre, 1055 Dunsmuir Street,
Vancouver, B.C. V7X 1S8;
(j) "GAAP" means generally accepted accounting principles in effect in
Canada including the accounting recommendations published in the
Handbook of the Canadian Institute of Chartered Accountants or generally
accepted accounting principles in effect in the United States of America
as indicated;
(k) "Governmental Authority" means any domestic or foreign government,
including any federal, provincial, state, territorial or municipal
government, and any government agency, tribunal, commission or other
authority exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, government;
(l) "Intellectual Property" means, collectively, all right, title, and
interest of the Company in and to all copyrights, moral rights, patents,
trade-marks, trade names, business names, know-how, trade secrets or
confidential information, industrial designs, integrated circuit
topographies, plant breeder's rights and other industrial or
intellectual property, whether registered or unregistered, including all
improvements, modifications or enhancements thereto, owned by,
<PAGE>
3
licensed to, or used by, the Company in connection with the Business all
as more particularly described in Schedule 1.1(l);
(m) "Interim Period" means the period between the date of this Agreement and
the Closing Date;
(n) "Lien" means any mortgage, lien, charge, hypothec or encumbrance,
whether fixed or floating, on, or any security interest in, any
property, whether real, personal or mixed, tangible or intangible, any
pledge or hypothecation of any property, any deposit arrangement,
priority, conditional sale agreement, other title retention agreement or
equipment trust, capital lease or other security arrangements of any
kind (and including, in the case of shares or other securities,
shareholders agreements, voting trust agreements and similar
arrangements);
(o) "Person" means any natural person, sole proprietorship, partnership,
corporation, trust, joint venture, any Governmental Authority or any
incorporated or unincorporated entity or association of any nature;
(p) "Pubco Shares" has the meaning given to it in Section 2.2;
(q) "Tax" or "Taxes" includes all present and future taxes, surtaxes,
duties, levies, imposts, rates, fees, assessments, withholdings, dues
and other charges of any nature imposed by any Governmental Authority
(including income, capital (including large corporations), withholding,
consumption, sales, use, transfer, goods and services or other
value-added, excise, customs, anti-dumping, stumpage, countervail, net
worth, stamp, registration, franchise, payroll, employment, health,
education, business, school, property, local improvement, development,
education development and occupation taxes, surtaxes, duties, levies,
imposts, rates, fees, assessments, withholdings, dues and charges)
together with all fines, interest, penalties on or in respect of, or in
lieu of or for non-collection of, those taxes, surtaxes, duties, levies,
imposts, rates, fees, assessments, withholdings, dues and other charges;
(r) "Time of Closing" means 10:00 a.m. on the Closing Date;
(s) "Vendors' Shares" means all (and not less than all) of the issued and
outstanding shares of the Company as more particularly described in
Recital A; and
(t) "written" includes printed, typewritten, faxed or otherwise capable of
being visibly reproduced at the point of reception and "in writing" has
a corresponding meaning.
1.2 Section References
Unless otherwise specified, references in this Agreement to "Sections" and
"Schedules" are to Sections of, and Schedules to, this Agreement.
<PAGE>
4
1.3 Statutory References
Unless otherwise specified, each reference to a statute is deemed to be a
reference to that statute, and to the regulations made under that statute, as
amended or re-enacted from time to time.
1.4 Number and Gender
Unless otherwise specified, words importing the singular include the plural and
vice versa and words importing gender include all genders.
1.5 Time of Day
Unless otherwise specified, references to time of day or date mean the local
time or date in Vancouver, British Columbia.
1.6 Use of the Word "Including"
The word "including" when following any general term or statement will not be
construed as limiting the general term or statement to the specific matter
immediately following the word "including" or to similar matters, and the
general term or statement will be construed as referring to all matters that
reasonably could fall within the broadest possible scope of the general term or
statement.
1.7 Currency
All references to amounts of money mean lawful currency of the United States of
America.
1.8 Severability
Each provision of this Agreement is several. If any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any jurisdiction, the
illegality, invalidity or unenforceability of that provision will not affect:
(a) the legality, validity or enforceability of the remaining provisions of
this Agreement; or
(b) the legality, validity or enforceability of that provision in any other
jurisdiction;
except that if:
(c) on the reasonable construction of this Agreement as a whole, the
applicability of the other provision presumes the validity and
enforceability of the particular provision, the other provision will be
deemed also to be invalid or unenforceable; and
(d) as a result of the determination by a court of competent jurisdiction
that any part of this Agreement is unenforceable or invalid and, as a
result of this Section 1.8, the basic intentions of the parties in this
Agreement are entirely frustrated, the parties
<PAGE>
5
will use all reasonable efforts to amend, supplement or otherwise vary
this Agreement to confirm their mutual intention in entering into this
Agreement.
1.9 Time of Essence
Time is of the essence of this Agreement.
2. PURCHASE AND SALE
2.1 Purchase and Sale Covenant
On the basis of the warranties, representations and covenants of the Purchaser
and Vendors in this Agreement and subject to the fulfilment of any condition
that has not been waived by the party entitled to the benefit thereof, the
Purchaser will purchase from the Vendors and the Vendors will sell the Vendors'
Shares to the Purchaser at the closing herein provided for (the "Closing") on
the terms and conditions herein set forth.
2.2 Purchase Price
Subject to the terms and conditions of this Agreement, the price for the
Vendors' Shares is $95,000 payable by the issuance to the Vendors 4,885,000
voting common shares in the capital of the Purchaser (the "Pubco Shares"), and
the Purchaser will issue to the Vendors the Pubco Shares in the following
amounts on the Closing Date:
Vendor Number of Shares
------ ----------------
Randy Voldeng 2,442,500
Dragos Ruiu 2,442,500
3. VENDORS' REPRESENTATIONS AND WARRANTIES
3.1 Corporate and Share Representations
The Vendors represent and warrant that:
(a) Incorporation. The Company is a corporation duly incorporated, organized
and existing under the Company Act (British Columbia), is not a
reporting company, and is a valid and subsisting company in good
standing with respect to filing of annual reports with the Registrar of
Companies of British Columbia;
(b) Authorized Capital. The authorized capital of the Company is 1,000,000
shares divided into 500,000 Class A common shares without par value and
500,000 Class B preference shares without par value of which there are
issued and outstanding as fully paid and non-assessable 200,000 Class A
common shares and zero Class B preference shares;
(c) Ownership. The facts and information contained in the recitals to this
Agreement are true in every respect;
(d) Valid Issuance. The Vendors' Shares are validly issued and outstanding
as fully paid and non-assessable in the capital of the Company and have
been issued in compliance with all applicable laws;
<PAGE>
6
(e) Liens. The Vendors' Shares are free and clear of all Liens other than
those restrictions on transfer contained in the articles of the Company;
(f) Authority. The Vendors have good and sufficient right and authority to
enter into this Agreement on the terms and conditions herein set forth
and to implement this Agreement and, in particular, to transfer to the
Purchaser the legal title and beneficial ownership of the Vendors'
Shares free and clear of all Liens other than those restrictions on
transfer contained in the articles of the Company;
(g) No Options, etc. Except pursuant to an Asset Purchase and Sale Agreement
made as of the 10th day of September, 1998 between Dragostech.com Inc.
and the Company and two promissory notes each in the amount of $100,000
issued by the Company to Mr. Dan Para, no Person, other than the
Purchaser, has any right, present or future, contingent or absolute
(whether by law, pre-emptive or contract), to purchase the Vendors'
Shares or to require the Company to issue any share in its capital and
no triggering event has occurred under the Family Relations Act (British
Columbia) which gives a Person any right to the Vendors' Shares of that
Vendor;
(h) Other Investments. The Company does not own, and is not a party to any
agreement to acquire, directly or indirectly, any shares in the capital
of, any partnership interest in or any other equity interests in, any
Person, and the Company has no agreement to acquire, lease, or
amalgamate with any other business operations;
(i) Directors and Officers. The directors and officers of the Company
together with their position are as follows:
(1) Director, President and Chief Executive Officer: Randy Voldeng
(2) Director, Executive Vice President and Secretary: Dragos Ruiu
3.2 Financial and Tax Representations
The Vendors represent and warrant that:
(a) Liabilities. There are no liabilities or material adverse changes in the
affairs, contingent or otherwise, known or unknown, of the Company which
are not
<PAGE>
7
disclosed or reflected herein and except those incurred in the ordinary
course of its business; and
(b) Tax Status. Under the provisions of the Income Tax Acts of Canada and
British Columbia, the Company has been since incorporation and is now a
Canadian-controlled private corporation.
3.3 Asset Representations
The Vendor represents and warrants that:
(a) Business. The Business is the only material business operation carried
on by the Company at present;
(b) Title. The Company has good and marketable title to and possession of
all assets used by the Company in carrying out its Business free and
clear of all Liens;
(c) Equipment. The equipment and machinery used by the Company in its
Business constitutes all of the equipment and machinery used by the
Company in its Business, were purchased new, since their purchase have
been maintained in a manner recommended by their manufacturers and
installers and are in normal operating condition and in a state of
reasonable maintenance and repair; and
(d) Intellectual Property. The Company owns, licenses or uses the
Intellectual Property and neither the Company nor the Vendors are aware
of any infringement of the Intellectual Property of the Company and are
not aware of any infringement by the Company of any intellectual
property of any other Person.
3.4 Contractual Representations
The Vendors represent and warrant that:
(a) Contracts. The Company does not have any contracts, agreements, pension
plans, profit sharing plans, bonus plans, undertakings or arrangements
either oral, written or implied with any Person including employees,
agents, lessees, licensees, suppliers, officers or directors which are
material to the Company or which cannot be terminated on less than one
month's notice or which require any payments by the Company on
termination and the Company has complied with the terms and conditions
of all agreements to which it is a party and is not aware of any
defaults by the Company or the other party to any such agreement;
(b) Litigation. There are no actions, suits, judgments, investigations or
proceedings outstanding or pending or, to the best knowledge of the
Vendors, threatened against or affecting the Company at law or at
equity;
(c) Compliance with Laws. The Company is not in breach of Applicable Laws to
which it is subject or which apply to it;
<PAGE>
8
(d) Indebtedness by Vendors. Neither the Vendors nor any officer, director,
employee or shareholder of the Company are now indebted or under
obligation to the Company on any account whatsoever;
(e) Indebtedness to Vendors. The Company is not indebted or under any
obligation to the Vendors or their Associates on any account whatsoever;
and
(f) Canadian Resident. The Vendors are residents of Canada for all purposes
of the Income Tax Act of Canada.
3.5 Employee Representations
The Vendors represent and warrant that the Company has 2 employees and that as
of the date hereof, the Company has made offers of employment to 5 additional
persons.
3.6 General Vendor Representations
The Vendors represent and warrant that:
(a) No Conflict. The making of this Agreement and the completion of the
transactions contemplated hereby and the performance of and compliance
with the terms hereof does not conflict with or result in the breach of,
or the acceleration of, any terms, provisions or conditions of or
constitute a default under the memorandum or articles of the Company or
any indenture, mortgage, deed of trust, agreement, lease, franchise,
certificate, or other instrument to which the Company or the Vendors are
a party or are bound;
(b) Full Disclosure. None of the Vendors' representations, warranties or
statements contained in this Agreement contain any untrue statement of
fact or omit to state any fact necessary in order to make any such
representations, warranties or statements not misleading and all
information relating to the Company which is known or would, on
reasonable enquiry, be known to the Vendors and which may be material to
a purchase for value of the Vendors' Shares has been disclosed in
writing to the Purchaser and any such information arising on or before
the Closing Date will forthwith be disclosed in writing to the
Purchaser;
(c) Enforceability. This Agreement has been duly executed and delivered by
each of the Vendors and is a legal, valid and binding obligation of each
Vendor, enforceable against the Vendors by the Purchaser in accordance
with its terms.
3.7 Certificates
All certificates of each Vendor delivered to the Purchaser and its
representatives pursuant to this Agreement, and the information contained in
each, will be deemed to be part of the representations and warranties of the
Vendors contained in this Section 3.
<PAGE>
9
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES
4.1 Purchaser's Representations and Warranties
The Purchaser represents and warrants that:
(a) Incorporation. The Purchaser is a corporation duly incorporated,
organized and existing under the laws of the state of Nevada and is a
valid and subsisting company in good standing in all respects under the
laws of the State of Nevada;
(b) Authorized Capital. The authorized capital of the Purchaser is
100,000,000 common shares with a par value of $.001 per share and as of
the date hereof, there are or will be at the Closing Date validly issued
and outstanding as fully paid and non-assessable 9,500,000 common
shares;
(c) Authority. The Purchaser has good and sufficient right and authority to
enter into this Agreement on the terms and conditions herein set forth
and to implement and perform its obligations under this Agreement and,
in particular, to issue to and provide the Vendors with the legal title
and beneficial ownership of the Pubco Shares free and clear of all Liens
other than those restrictions on transfer set forth under Rule 144 of
the Rules and Regulations of the Securities and Exchange Commission of
the United States;
(d) Other Investments. The Purchaser does not own, and is not a party to any
agreement to acquire, directly or indirectly, any shares in the capital
of, any partnership interest in or any other equity interests in, any
Person, and the Purchaser has no agreement to acquire, lease, or
amalgamate with any other business operations;
(e) Registration Status. The shares of the Purchaser have been registered
with the National Association of Securities Dealers (the "NASD") and
have been approved by the NASD for listing and quotation on the NASD
Over the Counter Bulletin Board;
(f) Directors and Officers. The directors and officers of the Purchaser
together with their position are as follows:
(1) Director and President: David Raferty
(2) Director, Secretary and Treasurer: Kathy Para
4.2 Financial Representations
The Purchaser represents and warrants that:
<PAGE>
10
(a) Liabilities. There are no liabilities or material adverse changes in the
affairs, contingent or otherwise, known or unknown, of the Purchaser
which are not disclosed or reflected herein and except those incurred in
the ordinary course of its business; and
(b) Assets. The Purchaser does not own or lease any assets or properties.
4.3 Contractual Representations
The Purchaser represents and warrants that:
(a) Contracts. The Purchaser does not have any contracts, agreements,
pension plans, profit sharing plans, bonus plans, undertakings or
arrangements either oral, written or implied with any Person including
employees, agents, lessees, licensees, suppliers, officers or directors
which are material to the Purchaser or which cannot be terminated on
less than one month's notice or which require any payment by the
Purchaser on termination and the Purchaser has complied with the terms
and conditions of all agreements to which it is a party and is not aware
of any defaults by the Purchaser or the other party to any such
agreement
(b) Litigation. There are no actions, suits, judgments, investigations or
proceedings outstanding or pending or, to the best knowledge of the
Purchaser, threatened against or affecting the Purchaser at law or at
equity;
(c) Compliance with Laws. The Purchaser is not in breach of Applicable Laws
to which it is subject or which apply to it;
(d) Indebtedness by Directors and Officers. No officer, director, employee
or shareholder of the Purchaser is now indebted or under obligation to
the Purchaser on any account whatsoever; and
(e) Indebtedness to Directors and Officers. The Purchaser is not indebted or
under any obligation to any officer, director, employee or shareholder
of the Purchaser on any account whatsoever except for CDN $2,000.00 to
David Raferty.
4.4 Employee Representations
The Purchaser represents and warrants that the Purchaser has no employees.
4.5 General Vendor Representations
The Purchaser represents and warrants that:
(a) No Conflict. The making of this Agreement and the completion of the
transactions contemplated hereby and the performance of and compliance
with the terms hereof does not conflict with or result in the breach of,
or the acceleration of, any terms, provisions or conditions of or
constitute a default under the
<PAGE>
11
constating documents of the Purchaser or any indenture, mortgage, deed
of trust, agreement, lease, franchise, certificate, or other instrument
to which the Purchaser is a party or is bound;
(b) Full Disclosure. None of the Purchaser's representations, warranties or
statements contained in this Agreement contain any untrue statement of
fact or omit to state any fact necessary in order to make any such
representations, warranties or statements not misleading and all
information relating to the Purchaser which is known or would, on
reasonable enquiry, be known to the Purchaser and which may be material
to a purchase for value of the Pubco Shares has been disclosed in
writing to the Vendors and any such information arising on or before the
Closing Date will forthwith be disclosed in writing to the Vendors;
(c) Enforceability. This Agreement has been duly executed and delivered by
the Purchaser and is a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser by the Vendors in
accordance with its terms.
4.6 Certificates
All certificates of the Purchaser delivered to the Vendors and their
representatives pursuant to this Agreement, and the information contained in
each, will be deemed to be part of the representations and warranties of the
Purchaser contained in this Section 4.
5. COVENANTS
5.1 Vendors' Covenants
During the Interim Period, the Vendors will cause the Company to carry on its
business in the ordinary and normal course in a prudent, businesslike, and
efficient manner and substantially in accordance with the procedures and
practices in effect on the date hereof and the Vendors will cause the Company
to:
(a) use its best efforts to preserve and maintain the goodwill of its
Business;
(b) do all necessary repairs and maintenance to its assets and take
reasonable care to protect and safeguard those assets; and
(c) cause to be carried out prior to January 20, 1999 an audit of the books
of the Company all in accordance with GAAP.
5.2 Purchaser's Covenants
During the Interim Period, the Purchaser will carry on its business in the
ordinary and normal course in a prudent, businesslike, and efficient manner and
substantially in accordance with the procedures and practices in effect on the
date hereof. Without limiting the generality of the foregoing, during the
Interim Period the Purchaser will not, without the prior consent in writing of
the Purchaser:
<PAGE>
12
(a) enter into any contract or assume or incur any liability relating to or
in any way affecting its business;
(b) waive or surrender any material right in connection with its business;
(c) make any capital expenditures or commitment therefor in connection with
its business;
(d) issue shares in its capital or options or rights to purchase shares in
its capital such that the total number of issued and outstanding shares
in the capital of the Purchaser will exceed 15,194,800 shares on a fully
diluted basis including the Pubco Shares;
(e) pay or declare any dividends, make any distributions, or redeem or
repurchase any of the Purchaser's shares; or
(f) alter the constating documents of the Purchaser
and the Purchaser will:
(g) use its best efforts to preserve and maintain the goodwill of its
business; and
(h) use its best efforts to raise and have in its account, prior to the
Closing Date, funds in an amount not less than $850,000 which funds will
be free and clear of any Liens; and
(i) cause to be carried out prior to January 20, 1999 an audit of its books
all in accordance with U.S. GAAP.
5.3 Access for Due Diligence
During the Interim Period, the Purchasers will, and the Vendors will cause the
Company to, at all reasonable times prior to the Closing Date to permit
representatives of all parties full access to the books and records of the
Purchaser and the Company including all contracts and agreements, minute books
and share registers and to give the parties and their representatives such
copies and information with respect thereto as may be reasonably required and to
permit the parties to make such audit of the books of account of the Company and
the Purchaser as any individual party may see fit. The Purchaser will, and the
Vendors will cause the Company to, cause its senior officers to discuss and
answer fully any and all questions relating to the business and affairs of the
Company or the Purchaser. The provisions of this Section 5.3 are without
prejudice to the warranties and representations of the Vendors and the Purchaser
set forth in Sections 3 and 4 of this Agreement and the conditions set forth in
Section 6 of this Agreement.
<PAGE>
13
5.4 Non-Competition and Employment
On the Closing Date, each Vendor will enter into a non-competition agreement and
an employment agreement in a form to be mutually consented to by each of the
parties, such consent not to be unreasonably withheld.
5.5 Notice of Untrue Representation or Warranty
The Vendors will promptly notify the Purchaser, and the Purchaser will promptly
notify the Vendors, if any representation made by it in this Agreement or any
Ancillary Agreement become untrue or incorrect during the Interim Period and
such notice will set out particulars of the untrue or incorrect representation
and details of any actions being taken to rectify that state of affairs.
5.6 Transfer of the Purchased Shares
The Vendors will take all necessary corporate steps and corporate proceedings to
permit good and marketable title to the Vendors' Shares to be duly and validly
transferred and assigned to the Purchaser at the Closing, free of all Liens. The
Purchaser will take all necessary corporate steps and corporate proceedings to
permit good and marketable title to the Pubco Shares to be duly and validly
transferred and assigned to the Vendors at the Closing, free of all Liens other
than those restrictions on transfer set forth under Rule 144 of the Rules and
Regulations of the Securities and Exchange Commission of the United States.
5.7 Confidentiality
If for any reason the transaction herein provided for is not consummated, the
Purchaser will not and will not permit its Associates to:
(a) directly or indirectly, use for their own purposes any information,
trade secrets or confidential data relating to the Company or the
Business (including the customers of the Business, its operations or the
methods of conducting the Business) discovered or acquired by the
Purchaser or its authorized representatives as a result of the Vendors
making available to the Purchaser or its authorized representatives any
of the information and materials in connection with the transaction
contemplated under this Agreement;
(b) disclose, divulge or communicate, orally, in writing or otherwise, any
such information, trade secrets or confidential data to any other
Person;
and upon request by the Vendors, the Purchaser will forthwith return to the
Company or destroy all materials or documents containing any such information,
trade secrets or confidential data.
5.8 Vendor's Acknowledgement Respecting Pubco Shares
Each of the Vendors hereby acknowledge and agree that the Pubco Shares to be
issued to them pursuant to the terms of this Agreement will be issued pursuant
to Rule 144 of the Rules and
<PAGE>
14
Regulations of the Securities and Exchange Commission of the United States and
that the certificates representing such Pubco Shares will bear the following
legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1993, as amended
("Act"). Such shares have been acquired for investment and may
not be publicly offered or sold in absence of: (1) effective
registration statement for such shares under the Act; (2)
opinions of counsel to the Company prior to any proposed
transfer to the effect that registration is not required under
the Act; or (3) a letter presented to the Company, prior to
any proposed transfer, from the staff of the Securities and
Exchange Commission, to the effect that it will not take any
enforcement action if the proposed transfer is made without
registration under the Act."
5.9 Business Matters
On or immediately after the Closing Date, the Purchaser will take such
reasonable actions as may be required to cause the resignation of one director
of its board of directors and appoint the Vendors in replacement thereof. To the
extent that Applicable Laws permit, the Vendors may appoint two additional
directors to the board of the Purchaser immediately after Closing.
6. CONDITIONS OF CLOSING
6.1 Purchaser's Conditions of Closing
The Purchaser's obligation to carry out the terms of this Agreement and to
complete the purchase referred to in Section 2.1 hereof is subject to the
conditions, each waivable unilaterally by the Purchaser at its election, that:
(a) the Purchaser will have completed its due diligence of the Company the
result of which is satisfactory to the Purchaser acting reasonably;
(b) the representations and warranties of the Vendors contained in this
Agreement or in any certificate or other document delivered to the
Purchaser pursuant hereto will be true and correct in all material
respects on or as of the Closing Date with the same force and effect as
if such representations and warranties had been made on and as of the
Closing Date;
(c) all the obligations of the Vendors under this Agreement and the
Ancillary Agreements to be performed at or before the Closing will have
been so performed;
(d) at the Closing Date, there will have been no material adverse change in
the affairs, assets, liabilities, financial condition or business
(financial or otherwise) of the Company since the date hereof;
<PAGE>
15
(e) no action or proceeding by law or in equity will be pending or
threatened by any Person to enjoin or prohibit:
(1) the purchase and sale of the Vendors' Shares contemplated hereby or
the right of the Purchaser to own the Vendors' Shares; or
(2) the right of the Company to conduct its operations and carry on its
business in the normal course as its business and its operations
have been carried on in the past; and
(f) the results of the audit of the Company will be satisfactory to the
Purchaser acting reasonably.
6.2 Vendors' Conditions of Closing
The obligation of the Vendors to carry out the terms of this Agreement and to
complete the sale referred to in Section 2.1 hereof is subject to the
conditions, each waivable unilaterally by the Vendors at their election, that:
(a) the Vendors will have completed their due diligence of the Purchaser the
result of which is satisfactory to each Vendor acting reasonably;
(b) as at the Closing Date no more than 15,194,800 shares, including the
Pubco Shares, in the capital of the Purchaser will be issued and
outstanding on a fully diluted basis;
(c) at the Closing Date, the Purchaser will have in its account funds in an
amount not less than $850,000 which funds will be free and clear at any
Liens;
(d) the representations and warranties of the Purchaser contained in this
Agreement or in any certificate or other document delivered to the
Vendors pursuant hereto will be true and correct in all material
respects on or as of the Closing Date with the same force and effect as
if such representations and warranties had been made on and as of the
Closing Date; and
(e) all the obligations of the Purchaser under this Agreement and the
Ancillary Agreements to be performed at or before the Closing will have
been so performed;
(f) at the Closing Date, there will have been no material adverse change in
the affairs, assets, liabilities, financial condition or business
(financial or otherwise) of the Purchaser since the date hereof;
(g) no action or proceeding by law or in equity will be pending or
threatened by any Person to enjoin or prohibit:
<PAGE>
16
(1) the issuance of the Pubco Shares contemplated hereby or the right
of the Vendors to own the Pubco Shares; or
(2) the right of the Purchaser to conduct its operations and carry on
its business in the normal course as its business and its
operations have been carried on in the past; and
(h) the results of the audit of the Purchaser will be satisfactory.
7. CLOSING
7.1 Closing Date
The closing date is, and the Closing of the purchase and sale contemplated by
this Agreement will take place at 10:00 a.m. on January 22, 1999 ("Closing
Date") at the offices of Messrs. Bull, Housser & Tupper, 3000 - 1055 West
Georgia Street, Vancouver, British Columbia, or such earlier or later date or
other place as the parties hereto may agree in writing.
7.2 Closing Documents
At the Closing, the Vendors will tender and cause and procure to be tendered
such documents, agreements or certificates as the Purchaser may reasonably
require pursuant to and which are consistent with the terms of this Agreement
and the Purchaser will tender and cause and procure to be tendered such
documents, agreements or certificates as each Vendor may reasonably require
pursuant to and which are consistent with the terms of this Agreement.
7.3 Closing
The Closing will be effected by:
(a) the delivery to the Vendors of the items tendered by the Purchaser; and
(b) the delivery to the Purchaser of the items tendered by the Vendors.
7.4 Waiver
The conditions set forth in Section 6.1 of this Agreement are for the exclusive
benefit of the Purchaser and may be waived by the Purchaser in writing in whole
or in part at or prior to the Closing and the conditions set forth in Section
6.2 of this Agreement are for the exclusive benefit of the Vendors and may be
waived by the Vendors in writing in whole or in part at or prior to the Closing.
<PAGE>
17
8. INDEMNIFICATION
8.1 Vendors' Indemnification
The Vendors will indemnify and save harmless the Purchaser from and against any
and all losses, claims, damages (including interest, penalties, fines and
monetary sanctions) liabilities and costs ("Damages") incurred or suffered by
the Purchaser by reason of, resulting from, in connection with, or arising in
any manner whatsoever out of the breach of any warranty or covenant or the
inaccuracy of any representation of the Vendors contained or referred to in this
Agreement or in any Ancillary Agreement.
8.2 Purchaser's Indemnification
The Purchaser will indemnify and save harmless each of the Vendors from and
against any and all Damages incurred or suffered by the Vendors by reason of,
resulting from, in connection with, or arising in any manner whatsoever out of
the breach of any warranty or covenant or the inaccuracy of any representation
of the Purchaser contained or referred to in this Agreement or in any Ancillary
Agreement.
8.3 Costs
For the purposes of this Section 8, "costs" includes lawyers' (on a solicitor
and his own client basis), accountants' fees and expenses, court costs, costs of
investigation and all other out-of-pocket expenses.
9. GENERAL
9.1 Termination Without Notice
This Agreement will terminate without any requirement for notice or action by
any of the parties if the Closing has not taken place by January 31, 1999.
9.2 Survival of Representations
The representations, warranties, covenants and agreements of the parties
contained in this Agreement will survive the closing of the transactions
contemplated herein and remain in full force and effect notwithstanding any
waiver by the Purchaser, the Company or either or both of the Vendors unless
such waiver was made after notice in writing by the notifying party to all other
parties to this Agreement setting forth the breach.
9.3 Public Announcements and Post Closing Confidentiality
The parties will consult with each other before issuing any press release or
making any other public announcement with respect to this Agreement or the
transactions contemplated herein and neither the Vendors nor the Purchaser will
issue any press release or make any public announcement without the prior
consent of the other except to the extent required by law.
<PAGE>
18
9.4 Assignment
No party will assign this Agreement, or any part of this Agreement, without the
consent of the other party, which consent may be unreasonably withheld or
delayed. Any purported assignment without the required consent is not binding or
enforceable against any party.
9.5 Enurement
This Agreement enures to the benefit of and binds the parties and their
respective successors, heirs, executors, administrators, personal and legal
representatives and permitted assigns.
9.6 Notices
Each notice to a party required by this Agreement must be given in writing. A
notice may be given by delivery to an individual or by fax, and will be validly
given if delivered on a Business Day to an individual at the following address,
or, if transmitted on a Business Day by fax addressed to the following party:
(a) if to either or both of the Vendors:
Name: Randy Voldeng
Address: 122 Howe Street
Victoria, British Columbia
Canada V8V 4K4
Fax No.: (250) 920-9738
with a copy to:
Name: Dragos Ruiu
Address: 10966 84th Avenue
Edmonton, Alberta
Canada T6G 0V4
Fax No.: (403) 432-0344
<PAGE>
19
with a copy to:
Name: Bull, Housser & Tupper
Address: 3000 - 1055 West Georgia Street
Vancouver, British Columbia
Canada V6E 3R3
Attention: Steven R. McKoen
Fax No.: (604) 641-4949
(b) if to the Purchaser:
Name: Powertech, Inc.
Address: c/o 311 - 470 Granville Street
Vancouver, British Columbia
Canada V6C 1V5
Attention: David Raftery
Fax No.: (604) 488-0393
or to any other address, fax number or individual that the party designates. Any
notice:
(c) if validly delivered, will be deemed to have been given when delivered;
(d) if validly transmitted by fax before 3:00 p.m. (local time at the place
of receipt) on a Business Day, will be deemed to have been given on that
Business Day, and
(e) if validly transmitted by fax after 3:00 p.m. (local time at the place
of receipt) on a Business Day, will be deemed to have been given on the
Business Day after the date of the transmission.
9.7 Waivers
No waiver of any provision of this Agreement is binding unless it is in writing
and signed by all the parties to this Agreement except that any provision which
does not give rights or benefits to particular parties may be waived in writing,
signed only by those parties who have rights under, or hold the benefit of, the
provision being waived if those parties promptly send a copy of the executed
waiver to all other parties. No failure to exercise, and no delay in exercising,
any right or remedy under this Agreement will be deemed to be a waiver of that
right or remedy. No waiver of any breach of any provision of this Agreement will
be deemed to be a waiver of any subsequent breach of that provision or of any
similar provision.
9.8 Further Assurances
Before and after the Closing Date, each party will execute and deliver promptly
at the other party's expense and request all further documents and take all
further action reasonably necessary or
<PAGE>
20
appropriate to give effect to the provisions and intent of this Agreement and to
complete the transactions contemplated by this Agreement.
9.9 Counterparts
This Agreement and all documents contemplated by or delivered under or in
connection with this Agreement may be executed and delivered in any number of
counterparts with the same effect as if all parties had all signed and delivered
the same document and all counterparts will be construed together to be an
original and will constitute one and the same agreement.
9.10 Delivery by Fax
Any party may deliver an executed copy of this Agreement by fax but that party
will immediately dispatch by delivery in person to the other parties an
originally executed copy of this Agreement.
9.11 Amendments
Except as permitted for certain waivers in Section 9.6, no amendment,
supplement, restatement or termination of any provision of this Agreement is
binding unless it is in writing and signed by each Person that is a party to
this Agreement at the time of the amendment, supplement, restatement or
termination.
9.12 Submission to Jurisdiction
Each of the parties irrevocably submits to the jurisdiction of the courts of
British Columbia in any action, suit or proceeding and each party to this
Agreement waives, and will not assert by way of motion, as a defence, or
otherwise, in any action, suit or proceeding, any claim that:
(a) that party is not subject to the jurisdiction of the courts of British
Columbia;
(b) the action, suit or proceeding is brought in an inconvenient forum;
(c) the venue of the action, suit or proceeding is improper; or
(d) any subject matter of the action, suit or proceeding may not be
enforced in or by the courts of British Columbia.
In any suit or action brought to obtain a judgment for the recognition or
enforcement of any final judgment rendered in an action, suit or proceeding, no
party to this Agreement will seek any review with respect to the merits of any
action, suit or proceeding, whether or not that party appears in or defends the
action, suit or proceeding.
9.13 Costs
The Purchaser will reimburse the Vendors and the Company all reasonable costs
incurred by them in connection with this Agreement including legal, accounting
and other professional fees.
<PAGE>
21
9.13 Entire Agreement
This Agreement and all documents contemplated by or delivered under or in
connection with this Agreement, constitute the entire agreement between the
parties with respect to the subject matter of this Agreement and supersede all
prior agreements, negotiations, discussions, undertakings, representations,
warranties and understandings, whether written or oral, express or implied,
statutory or otherwise.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the date
and year first above written.
POWERTECH, INC.
Per: /s/ illegible
----------------------
Authorized Signatory
<TABLE>
<S> <C>
SIGNED, SEALED AND DELIVERED by RANDY VOLDENG in )
the presence of: )
)
)
/s/ STEVEN R. McKOEN ) /s/ RANDY VOLDENG (seal)
- ----------------------------------------------------- ------------------------------------------------
Name ) RANDY VOLDENG
STEVEN R. McKOEN )
- ----------------------------------------------------- )
Address )
BARRISTER & SOLICITOR )
- ----------------------------------------------------- )
)
BULL, HOUSSER & TUPPER )
- ----------------------------------------------------- )
)
3000, 1055 WEST GEORGIA STREET )
- ----------------------------------------------------- )
)
VANCOUVER, BC V6E 3R3 )
- ----------------------------------------------------- )
)
PHONE 687-6575 )
- ----------------------------------------------------- )
)
)
- ----------------------------------------------------- )
Occupation )
)
</TABLE>
<PAGE>
22
<TABLE>
<S> <C>
SIGNED, SEALED AND DELIVERED by DRAGOS RUIU in )
the presence of: )
)
)
/s/ STEVEN R. McKOEN ) /s/ DRAGOS RUIU (seal)
- ----------------------------------------------------- ------------------------------------------------
Name ) DRAGOS RUIU
STEVEN R. McKOEN )
- ----------------------------------------------------- )
Address )
BARRISTER & SOLICITOR )
- ----------------------------------------------------- )
)
BULL, HOUSSER & TUPPER )
- ----------------------------------------------------- )
)
3000, 1055 WEST GEORGIA STREET )
- ----------------------------------------------------- )
)
VANCOUVER, BC V6E 3R3 )
- ----------------------------------------------------- )
)
PHONE 687-6575 )
- ----------------------------------------------------- )
)
)
- ----------------------------------------------------- )
Occupation )
)
</TABLE>
<PAGE>
LIST OF SCHEDULES
Schedule Description
-------- -----------
1.1(l) Intellectual Property
<PAGE>
SCHEDULE 1.1(L)
Intellectual Property
A. All Intellectual Property in the ProbeNet network monitoring technology as
assigned to the Company by Dragos Ruiu and Dragostech.com Inc. on December 23,
1998 and further developed by the Company.
Exhibit 8(b)
AMENDING AGREEMENT
Dated for Reference January 29, 1999
Among
RANDY VOLDENG and DRAGOS RUIU
and
POWERTECH, INC.
<PAGE>
AMENDING AGREEMENT
THIS AGREEMENT made as of January 29, 1999
AMONG:
RANDY VOLDENG, businessman, of 122 Howe Street, Victoria, British
Columbia, Canada, V8V 4K4
and
DRAGOS RUIU, businessman, of 10966 84th Avenue, Edmonton, Alberta,
Canada, T6G 0V4
(collectively, the "Vendors" and individually by their full names)
AND:
POWERTECH, INC., a Nevada corporation with an office at 5505 N Indian
Trail, Tucson, Arizona, U.S.A. 85750
(the "Purchaser")
WHEREAS:
A. The Vendors and the Purchaser are parties to a Share Purchase Agreement dated
as of the 11th day of January, 1999 (the "Share Purchase Agreement").
B. The Vendors and the Purchaser wish to amend certain provisions of the Share
Purchase Agreement and have reached an agreement in respect of certain matters
in connection with the Share Purchase Agreement and the matters contemplated
thereby.
IN CONSIDERATION of the covenants and agreements contained in this Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 Definitions
Capitalized terms used herein and not otherwise defined herein have the meanings
provided therefor in the Share
Purchase Agreement.
<PAGE>
2
1.2 Full Force and Effect
Wherever the Share Purchase Agreement is referred to in the Share Purchase
Agreement or in any other agreements, documents and instruments, such reference
will be to the Share Purchase Agreement as amended hereby. Except as expressly
amended hereby, the terms and conditions of the Share Purchase Agreement will
continue in full force and effect.
2. AMENDMENTS
2.1 Section 2.2 of the Share Purchase Agreement
Section 2.2 of the Share Purchase Agreement is hereby amended by deleting
Section 2.2 in its entirety and inserting the following in substitution thereof:
"2.2 Purchase Price
Subject to the terms and conditions of this Agreement, the price for
the Vendor's Shares is $115,000 payable by:
(a) the issuance by the Purchaser to the Vendors of 4,885,000 voting
common shares in the capital of the Purchaser (the "Pubco Shares"),
and the Purchaser will issue to the Vendors such shares in the
following amounts on the Closing Date:
Vendor Number of Shares
------ ----------------
Randy Voldeng 2,442,500
Dragos Ruiu 2,442,500
(b) the transfer by the management of the Purchaser to each Vendor on
the Closing Date of an additional 500,000 common shares in the
capital of the Company
(the shares to be issued to the Vendors pursuant to Sections 2.2(a)
and (b) are collectively referred to as the "Pubco Shares")."
2.2 Section 3.1(g) of the Share Purchase Agreement
Section 3.1(g) of the Share Purchase Agreement is hereby amended by inserting
"(the "Para Note")" in the first sentence, the third line, after the word
"notes" in that Section.
2.3 Section 5.2(h) of the Share Purchase Agreement
Section 5.2(h) of the Share Purchase Agreement is hereby amended by deleting the
reference to "$850,000" and replacing it with "$1,012,500" and by deleting the
word "and" at the end of the Section.
<PAGE>
3
2.4 Section 5.2(i) of the Share Purchase Agreement
Section 5.2(i) of the Share Purchase Agreement is hereby amended by deleting the
"." at the end of the sentence and replacing it with "; and".
2.5 New Subsection 5.2(j) of the Share Purchase Agreement
The Share Purchase Agreement is hereby amended by the insertion of a new
Subsection 5.2(j), as follows:
"(j) take all necessary actions to cause the transfer of the shares to the
Vendors referred to in Section 2.2(b)".
2.6 New Section 5.10 of the Share Purchase Agreement
The Share Purchase Agreement is hereby amended by the insertion of a new Section
5.10, as follows:
"5.10 Discharge of the Para Note
The Purchaser hereby represents to the Vendors that it has reached an
agreement with Mr. Dan Para with respect to the repayment and discharge of
the Para Note by issuing to Mr. Dan Para 108,000 common shares in the
capital of the Purchaser. Forthwith after the Closing, the Purchaser will
issue to Mr. Dan Para 108,000 common shares in the capital of the Purchaser
and obtain from Mr. Dan Para a full release of NetSentry and the Purchaser
with respect to all liabilities under the Para Note."
2.7 Section 6.2(c) of the Share Purchase Agreement
Section 6.2(c) of the Share Purchase Agreement is hereby amended by deleting the
reference to "$850,000" and replacing it with "$1,012,500".
2.8 Section 7.1 of the Share Purchase Agreement
Section 7.1 of the Share Purchase Agreement is hereby amended by deleting the
reference to "January 22, 1999" and replacing it with "February 5, 1999".
2.9 Section 9.1 of the Share Purchase Agreement
Section 9.1 of the Share Purchase Agreement is hereby amended by deleting the
reference to "January 31, 1999" and replacing it with "February 12, 1999".
<PAGE>
4
3. MISCELLANEOUS
3.1 Counterpart
This Agreement may be executed in any number of counterparts with the same
effect as if all parties to this Agreement had signed the same document and all
counterparts will be construed together and constitute one and the same
instrument.
3.2 Enurement
All the terms and provisions of this Agreement will be binding upon and enure to
the benefit of the parties and their respective successors and assigns.
3.3 Time
Time will be of the essence hereof.
3.4 Entire Agreement
This Agreement sets forth the entire agreement and understanding of the parties
in respect of the matters contemplated hereby and supersedes all prior
agreements and understandings, oral or written, among the parties or their
respective representatives with respect to the matters herein.
IN WITNESS WHEREOF, the parties have duly executed these presents as of the date
and year first above written.
<TABLE>
<S> <C>
SIGNED, SEALED AND DELIVERED by RANDY VOLDENG in the )
presence of: )
)
)
/s/ STEVEN R. McKOEN ) /s/ RANDY VOLDENG (seal)
- ----------------------------------------------------- ) ------------------------------------------------
Name ) RANDY VOLDENG
STEVEN R. McKOEN )
- ----------------------------------------------------- )
Address )
BARRISTER & SOLICITOR )
- ----------------------------------------------------- )
)
BULL, HOUSSER & TUPPER )
- ----------------------------------------------------- )
)
3000, 1055 WEST GEORGIA STREET )
- ----------------------------------------------------- )
)
VANCOUVER, BC V6E 3R3 )
- ----------------------------------------------------- )
)
PHONE 687-6575 )
- ----------------------------------------------------- )
)
)
- ----------------------------------------------------- )
Occupation )
)
</TABLE>
<PAGE>
5
<TABLE>
<S> <C>
SIGNED, SEALED AND DELIVERED by DRAGOS RUIU in the )
presence of: )
)
)
/s/ STEVEN R. McKOEN ) /s/ DRAGOS RUIU (seal)
- ----------------------------------------------------- ) ------------------------------------------------
Name ) DRAGOS RUIU
STEVEN R. McKOEN )
- ----------------------------------------------------- )
Address )
BARRISTER & SOLICITOR )
- ----------------------------------------------------- )
)
BULL, HOUSSER & TUPPER )
- ----------------------------------------------------- )
)
3000, 1055 WEST GEORGIA STREET )
- ----------------------------------------------------- )
)
VANCOUVER, BC V6E 3R3 )
- ----------------------------------------------------- )
)
PHONE 687-6575 )
- ----------------------------------------------------- )
)
)
- ----------------------------------------------------- )
Occupation )
</TABLE>
POWERTECH, INC.
Per: /s/ illegible
------------------------
Authorized Signatory
Exhibit 8(c)
MUTUAL WAIVER
Pursuant to that Share Purchase Agreement dated as of the 11th day of January,
1999, as amended by the Amending Agreement dated as of the 29th day of February,
1999 (collectively, the "Share Purchase Agreement") among Powertech Inc, Randy
Voldeng and Dragos Ruiu, each of the undersigned hereby:
1. Acknowledge and waive the requirement under Section 7.1 of the Share Purchase
Agreement that the Closing takes place on February 5, 1999 and agrees that the
Closing will take place as of the date hereof.
2. Acknowledge and waive the requirement under Sections 6.2(a) of the Share
Purchase Agreement that the Purchaser have not less than $1,012,500 in its
account. Notwithstanding this waiver, Powertech Inc. will have the said funds in
its account on or before February 26, 1999.
3. Acknowledge and waive the requirement under Section 6.2(d) of the Share
Purchase Agreement specifically and only with respect to:
(a) the shares of the Purchaser are not currently listed and quoted on
the NASD Over the Counter Bulletin Board which is in breach of Section 4.1(e) of
the Share Purchase Agreement; and
(b) there is an investigation of the Purchaser by the US Securities and
Exchange Commission which is in breach of Section 4.3(b) of the Share Purchase
Agreement.
4. Acknowledge and waive the requirement under Section 6.2(e) of the
Share Purchase Agreement specifically and only with respect to that the
Purchaser has not raised and does not have in its account funds in an amount not
less than $1,012,500 which is in breach of Section 5.2(h) of the Share Purchase
Agreement. Notwithstanding this waiver, Powertech Inc. will raise and have the
said funds in its account on or before February 26, 1999.
5. Acknowledge and waive the requirement under Section 6.2(f) of the Share
Purchase Agreement specifically and only with respect to the shares of the
Purchaser not currently being listed and quoted on the NASD Over the Counter
Bulletin Board.
6. Acknowledge and waive the requirement under Section 6.2(g) of the Share
Purchase Agreement specifically and only with respect to the investigation of
the Purchaser by the US Securities and Exchange Commission.
7. Acknowledge and waive the requirement under Section 5.4 of the Share Purchase
Agreement that the Vendors enter into employment agreements.
<PAGE>
8. All capitalized terms not defines in this Waiver will have the meaning given
to such terms in the Share Purchase Agreement.
DATED as of the 12th day of February, 1999.
POWERTECH, INC.
Per: illegible
---------------------------
Authorized Signatory
SIGNED, SEALED AND DELIVERED )
by RANDY VOLDENG in the presence of: )
)
)
[illegible] ) /s/ Randy Voldeng
- ---------------------------------- ) -------------------------(seal)
Name ) RANDY VOLDENG
[graphic ommitted] )
- ---------------------------------- )
Address )
)
)
- ---------------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED )
by DRAGOS RUIU in the presence of: )
)
illegible ) /s/ Dragos Ruiu
- ---------------------------------- ) -------------------------(seal)
Name ) DRAGOS RUIU
)
[graphic ommitted] )
- ---------------------------------- )
Address )
)
)
- ---------------------------------- )
Occupation )
