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SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
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FORM 10-SB
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
PACIFIC CART SERVICES LTD.
(Exact name of registrant as specific in its charter)
Nevada 88-0410480
(State of Incorporation) (I.R.S. Employer
Identification No.)
2501 Lansdowne Avenue
Saskatoon, Saskatchewan, Canada S7J 1H3
(Address of executive offices, including postal code)
Registrant's telephone number: (306) 343-5799
Copies to: Conrad C. Lysiak, Esq.
601 West First Avenue
Suite 503
Spokane, Washington 99201
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
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(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
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(Title of Class)
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ITEM 1. DESCRIPTION OF BUSINESS.
THE BUSINESS
PACIFIC CART SERVICES LTD.. (the "Company"), was incorporated
under the laws of the State of Nevada on August 27, 1998. The Company
markets a mobile vending cart and certain other equipment relating to
hot dog vending under the brand name Mr. Tube Steak. The mobile
vending cart are available in several styles including a counter top
model and an easy tow trailer cart.
Mr. Tube Steak Canada, Inc.
In January 1999, the Company signed a five year exclusive
distribution agreement ("Exclusive Distribution Agreement") with Mr.
Tube Steak Canada, Inc. ("MTS") to market its mobile vending cart in
the states of Washington and California. The Exclusive Distribution
Agreement may be expanded into a broader relationship between the
companies which may include certain manufacturing rights. Presently,
the Mobile Vending Carts are marketed in Canada through MTS.
Mobile Vending Carts and Products
The Countercart Vending Cart is a counter model designed to be a
self contained hot dog service center. The Countercart includes an
umbrella, a menu board, condiment service stand and a cart shaped hot
dog and bun server, as well as, other necessities of food service
including knives, tongs, operations manual.
The Easy Tow Trailer Cart is a trailer model designed to be towed
to the location of use. The Easy Tow Cart is waterproofed and has a
sink, fresh water tank, pump, hot and cold running water, and a ice
box, as well as an umbrella, propane tanks, condiment service stand,
barbeque and hot plate, thermos cooler.
The Mobile Vending Carts are designed to be completely self-
sufficient. The Countercart will be marketed to convenience stores,
sports complexes, and other counter available locations. The Easy Tow
Cart will be marketed to individual entrepreneurs and businesses
interested in hot dog sales.
The Company may also distribute a full range of Mr. Tube Steak
products including meats, buns and condiments. The Company will
purchase these products from MTS. MTS purchases these products from
Fletcher Fine Foods ("Fletcher"). Fletcher manufactures and packages
meats, buns and condiments for MTS under the Mr. Tube Steak brand.
Fletcher has offices in Vancouver, Seattle and Los Angeles. The
Company will provide these products to the purchasers of its Mobile
Vending Carts and other retail venues.
<PAGE> 3
Distribution
The Company's operations will consists of selling Mobile Vending
Carts, meats and related products to retailers. The Company does not
manufacture any of the products. The Mobile Vending Carts, hot dogs
and related products are manufactured by Fletcher. Management believes
that if MTS is unable to provide Mobile Vending Carts or products to
the Company, the Company may be unable to replace its supply of Mobile
Vending Carts, meats and related products. MTS manufactures the Mobile
Vending Carts and operates primarily as an assembly plant. Outside
manufacturers in the area produce most of the components that make up
the carts.
Marketing.
The Exclusive Distribution Agreement gives the Company the right
to sell to individuals and businesses within the states of California
and Washington. The Exclusive Distribution Agreement will begin by
establishing a central commissary or distribution center. Central
commissary or distribution centers will be added on an as needed basis.
These commissaries distribute the MTS's products and all other supplies
necessary for the operation of the carts. Individuals and businesses
are required to utilize only the MTS's approved products and supplies
on the carts.
Trademarks and Patents
MTS owns certain rights, names, recipes and trademarks, which the
Company shall have the right to use for the duration of the Exclusive
Distribution Agreement. The Company will acknowledge all MTS
trademarks and copyrights on promotional materials and product
literature.
Competition
The Company in involved in highly competitive business. There are
several other entities which manufacture and distribute vending carts,
many of which are much larger companies possessing substantially
greater financial resources and facilities than the Company.
Company's Office
The Company's headquarters are located 2501 Lansdowne Avenue,
Saskatoon, Saskatchewan, Canada S7J 1H3 and the telephone number is
(306) 343-5799. The Company uses 100 square feet of space at the home
of Robert Kinloch, the Company's Secretary. There is no monthly.
Employees
The Company is a development stage company and currently has no
employees other than its Officers and Directors. The Company intends
to hire additional employees as needed.
<PAGE> 4
Risk Factors
1. Start-up Company with No History of Earnings. The Company has
no current operating history and is subject to all risks inherent in a
developing business enterprise. The likelihood of success of the
Company must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered in
connection with a new business in general and those specific to the
food service industry and the competitive and regulatory environment in
which the Company will operate.
2. Development and Market Acceptance of Products. The Company's
success and growth will depend upon the Company's ability to market its
existing products. The Company's success will depend in part upon the
market's acceptance of, and the Company's ability to deliver and
support its products. See "Business - Products."
3. Dependence on Suppliers; No Manufacturing Facilities or
Personnel. The Company is dependent upon an outside supplier for all
of its Mobile Vending Carts, hot dogs and hot dog related supplies.
While the Company has not encountered difficulty in obtaining Mobile
Vending Carts, hot dogs or hot dog related supplies during the
development phase, there can be no assurance its current sources will
be able to meet all of the Company's future demands on a timely basis.
The unavailability of Mobile Vending Carts, hot dogs or hot dog related
supplies will result in the Company ceasing operations.
4. Liquidity; Need for Additional Financing. The Company
believes that it has the cash it needs for at least the next twelve
months based upon its internally prepared budget. The Company's cash
requirements, however, are not easily predictable and there is a
possibility that its budget estimates will prove to be inaccurate. If
the Company is unable to generate a positive cash flow before its cash
is depleted, it will be required to curtail operations substantially,
seek additional capital. There is no assurance that the Company will
be able to obtain additional capital if required, or if capital is
available, to obtain it on terms favorable to the Company. The Company
may suffer from a lack of liquidity in the future which could impair
its short-term marketing and sales efforts and adversely affect its
results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
5. Competition. Most of the Company's competitors have
substantially greater financial, technical and marketing resources than
the Company. In addition, the Company's products compete indirectly
with numerous other products. As the market for the Company's products
expand, the Company expects that additional competition will emerge and
that existing competitors may commit more resources to those markets.
See "Business - Competition."
<PAGE> 5
6. Local Governmental Regulation. The Mobile Vending Carts to be
sold by the Company's will be subject to state and local licensing
regulations applicable to food service establishments (health and
sanitation codes, occupational safety codes and the like) and zoning
restrictions. Although the Company's Mobile Vending Carts comply with
all local restrictions and requirements in Canada, there can be no
assurance that the same Mobile Vending Carts at any specific site will
be able to comply with all such local regulations or that compliance,
where possible, will not involve additional expenditures.
7. Reliance Upon Directors and Officers. The Company is wholly
dependent, at the present, upon the personal efforts and abilities of
its Officer and Directors, James Oste, President and member of the
Board of Directors; David Glass, Treasurer and member of the Board of
Directors; and, Rob Kinloch, Secretary and member of the Board of
Directors, who exercise control over the day to day affairs of the
Company. See "Business" and "Management."
8. Issuance of Additional Shares. 89,967,000 shares of Common
Stock or 89.96% of the 100,000,000 authorized shares of Common Stock of
the Company are unissued. The Board of Directors has the power to
issue such shares, subject to shareholder approval, in some instances.
Although the Company presently has no commitments, contracts or
intentions to issue any additional shares to other persons, other than
in the exercise of options and warrants, the Company may in the future
attempt to issue shares to acquire products, equipment or properties,
or for other corporate purposes. Any additional issuance by the
Company, from its authorized but unissued shares, would have the effect
of diluting the interest of existing shareholders. See "Description of
Securities."
9. Indemnification of Officers and Directors for Securities
Liabilities. The Company's Articles of Incorporation provide that the
Company will indemnify any Director, Officer, agent and/or employee as
to those liabilities and on those terms and conditions as are specified
in The Company Act of the State of Nevada. Further, the Company may
purchase and maintain insurance on behalf of any such persons whether
or not the corporation would have the power to indemnify such person
against the liability insured against. The foregoing could result in
substantial expenditures by the Company and prevent any recovery from
such Officers, Directors, agents and employees for losses incurred by
the Company as a result of their actions. Further, the Company has
been advised that in the opinion of the Securities and Exchange
Commission, indemnification is against public policy as expressed in
the Securities Act of 1933, as amended, and is, therefore,
unenforceable.
10. Cumulative Voting, Preemptive Rights and Control. There are
no preemptive rights in connection with the Company's Common Stock.
Shareholders may be further diluted in their percentage ownership of
the Company in the event additional shares are issued by the Company in
the future. Cumulative voting in the election of Directors is not
provided for. Accordingly, the holders of a majority of the shares of
Common Stock, present in person or by proxy, will be able to elect all
of the Company's Board of Directors. See "Description of Securities."
<PAGE> 6
11. No Dividends Anticipated. At the present time the Company
does not anticipate paying dividends, cash or otherwise, on its Common
Stock in the foreseeable future. Future dividends will depend on
earnings, if any, of the Company, its financial requirements and other
factors. See "Dividend Policy."
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Selected Financial Data
The selected financial data presented below has been derived from
the financial statements of the Company. The following table
summarizes certain financial information and should be read in
conjunction with "Plan of Operation" and the Financial Statements and
related notes included elsewhere in this Registration Statement. The
information shown below may not be indicative of the Company's future
results of operations.
Selected Financial Data
Period from Inception
on August 27, 1998 to
December 31, 1998
Cash $ 105,553
Total assets $ 105,553
Net loss for period $ 31,783
Loss per share
Primary $ 0.006
Diluted $ 0.006
Results of Operations - (August 27, 1998) through December 31, 1998.
The Company is considered to be in the development stage as
defined in Statement of Financial Accounting Standards No. 7. There
have been no operations since incorporation.
Liquidity and Capital Resources.
The Company issued 10,033,000 shares of its Common Stock to
officers, directors and others. The Company has no operating history
and no material assets. The Company has $105,553 in cash as of
December 31, 1998.
ITEM 3. DESCRIPTION OF PROPERTIES.
The Company does not own any real or personal property. The
Company's only asset is cash.
<PAGE> 7
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth the Common Stock ownership of each
person known by the Company to be the beneficial owner of five percent
or more of the Company's Common Stock, each director individually and
all officers and directors of the Company as a group. Each person has
sole voting and investment power with respect to the shares of Common
Stock shown, unless otherwise noted, and all ownership is of record and
beneficial.
Name and Number of
address of owner Shares Position
James F. Oste 5,000,000 President, Chief Executive
350 Margaret Ave. Officer and a member of
Winnipeg, Manitoba the Board of Directors
Canada R2V 1T8
David G. Glass 250,000 Treasurer, Chief
201 Ambassador Row Financial Officer and a
Winnipeg, Manitoba member of the Board of
Canada R2U 3L9 Directors
Robert J. Kinloch 2,000,000 Vice President, Chief
2501 Lansdowne Ave. Operations Officer and a
Saskatoon, Saskatchewan member of the Board of
Canada S7J 1H3 Directors
All officers and 7,250,000
directors as a
group (3 persons)
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The officers and directors of the Company are as follows:
Name Age Position
James Oste 48 President, Chief Executive Officer
and a member of the Board of
Directors
David Glass 52 Treasurer, Chief Financial Officer
and a member of the Board of
Directors
Robert Kinloch 42 Vice President, Chief Operating
Officer and a member of the Board
of Directors
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Each director serves for a term of three years and one-third of
the directors are elected at the annual meeting of shareholders. The
Company's officers are appointed by the Board of Directors and hold
office at the discretion of the Board.
James Oste - President, Chief Executive Officer and Board Member.
Since inception, Mr. Oste has been a founder, the President and a
member of the Board of Directors of the Company. Since September 1997,
Mr. Oste has been the President, Chief Executive Officer and member of
the Board of Directors of Mr. Tube Steak Canada, Inc. From May 1985 to
March 1999, Mr. Oste was a founder, the President and a Director of
Karenco Foods Ltd. Karenco is a franchiser of a soup and sandwich style
deli, under the trade name of Deli Stop. From October 1995 to March
1999, Mr. Oste was a Director of Mr. Tube Steak Canada Ltd., a Alberta
corporation. From April 1992 to December 1998, Mr. Oste was a Director
of Montana Marketing Group, Inc. Montana Marketing is a wholly owned
subsidiary of Mr. Tube Steak Canada, Inc. From December 1993 to March
1999, Mr. Oste was a Director of Mr. T.S. Holdings Inc., a Nevada
corporation, a wholly owned subsidiary of Mr. Tube Steak of Canada.
From August 1990 to November 1998, Mr. Oste was a Director of D.S.
Holdings Ltd. From September 1996 to June 1998, Mr. Oste was a Director
of Montana Motor Lines Ltd. Mr. Oste attended Red River Community
College and graduate from Dun & Bradstreet in 1975 with a degree in
Commercial Credit Analysis.
David Glass - Treasurer, Chief Financial Officer and Board Member.
Since inception, Mr. Glass has been a founder, the Treasurer,
Chief Financial Officer and a member of the Board of Directors. Since
February 1985, Mr. Glass has been a partner with the accounting firm of
Shell & Glass in Winnipeg, Manitoba, Canada. From May 1977 to March
1999, Mr. Glass worked as an independent management consultant. Mr.
Glass graduated from the Accountancy of Manitoba in 1971 with a
certificate in accounting and is a licensed accountant in Winnipeg,
Manitoba, Canada.
Robert Kinloch - Vice President, Chief Operating Officer and Board
Member.
Since inception, Mr. Kinloch has been a founder, the Vice
President Chief Operating Officer and a member of the Board of
Directors. From April 1998 to February 1999, Mr. Kinloch has been the
head of investor relations for Mr. Tube Steak Canada, Inc. From June
1993 to June 1996, Mr. Kinloch was a commercial charter pilot for Loyal
Air. Loyal Air is located in Belleville, Ontario. From June 1987 to
September 1990, Mr. Kinloch was a registered commodity futures trader
with the Ontario Securities Commission. From June 1987 to September
1990, Mr. Kinloch was an independent floor trader on the Toronto
Futures Exchange, Toronto Stock Exchange. From December 1988 to
December 1997, Mr. Kinloch was a co-founder and Vice President of
Lakebreeze Properties Ltd. Lakebreeze is a property development
company. Mr. Kinloch graduated from the University of Saskatchewan in
1992 with a degree in Philosophy.
<PAGE> 9
ITEM 6. EXECUTIVE COMPENSATION.
Summary Compensation.
The following table sets forth the compensation paid by the
Company since inception August 27, 1998 for each officer and director
of the Company. This information includes the dollar value of base
salaries, bonus awards and number of stock options granted, and certain
other compensation, if any.
Summary Compensation Table.
Annual Compensation
-------------------
Principal
Name Position Year Salary ($)
- - ------------- --------- ---- ----------
James Oste President 1998 $ 0
David Glass Treasurer 1998 $ 0
Robert Kinloch Secretary 1998 $ 0
James Oste President 1999 $ 24,000 [1]
David Glass Treasurer 1999 $ 0
Robert Kinloch Secretary 1999 $ 22,000 [1]
[1] Projected.
There are no stock option, retirement, pension, or profit sharing
plans for the benefit of the Company's officers and directors.
Option/SAR Grants.
No individual grants of stock options, whether or not in tandem
with stock appreciation rights ("SARs"), and freestanding SARs have
been made since the Company's inception to any officer or director.
Long-Term Incentive Plan Awards.
The Company does not have any long-term incentive plans that
provide compensation intended to serve as incentive for performance.
Compensation of Directors.
Directors do not receive any compensation for serving as members
of the Board of Directors. The Board has not implemented a plan to
award options to any Directors. There are no contractual arrangements
with any member of the Board of Directors.
The Company has not paid any paid salaries to its officers for
since the Company's inception and does not plan to do so until such
time as the Company beings operating profitably.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In October 1998, the Company issued 5,000,000 shares of common
stock to James F. Oste, the Company's President in consideration of the
$50,000.
<PAGE> 10
On August 27, 1998, Mr. Oste lent the Company $20,000 as evidenced
by a promissory note dated August 27, 1998.
In February 1999, the Company issued 250,000 shares of common
stock to David G. Glass, the Company's Treasurer in consideration of
the $10,000.
In October 1998, the Company issued 2,000,000 shares of common
stock to Robert J. Kinloch, the Company's Secretary in consideration of
services rendered by Mr. Kinloch as a finder in locating investors for
the Company's securities.
On January 10, 1999, the Company entered into an agreement with
Mister Tube Steak Canada Inc. ("MTS") wherein the Company was appointed
MTS's exclusive distributor in California and Washington. See "ITEM 1,
BUSINESS." Mr. Oste is President and a Director of MTS and Mr. Kinloch
is head of investor relations for MTS.
ITEM 8. LEGAL PROCEEDINGS.
The Company is not a party to any pending or threatened litigation
and to its knowledge, no action, suit or proceedings has been
threatened against its officers and its directors.
ITEM 9. MARKET PRICE FOR COMMON EQUITY AND OTHER SHAREHOLDER MATTERS.
No market exists for the Company's securities and there is no
assurance that a regular trading market will develop, or if developed,
that it will be sustained. A shareholder in all likelihood, therefore,
will be unable to resell the securities referred to herein should he or
she desire to do so. Furthermore, it is unlikely that a lending
institution will accept the Company's securities as pledged collateral
for loans unless a regular trading market develops.
There are no plans, proposals, arrangements or understandings with
any person with regard to the development of a trading market in any of
the Company's securities. Public Securities, Inc, however, has filed
a Form 211 with the National Association of Securities Dealers, Inc.
(the "NASD") requesting that the Company's common stock be listed on
the Bulletin Board operated by the NASD. On January 4, 1999, the NASD
amended its rules regarding listing of securities for trading on the
Bulletin Board. Effective on January 4, 1999, securities of
corporations will not be listed for trading on the Bulletin Board
unless the corporation files reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934. Accordingly, the Company's common
stock will not be listed for trading on the Bulletin Board until such
time as this registration statement is declared effective by the
Securities and Exchange Commission (the "Commission") and the Company
has satisfied all comments made by the Commission.
As of February 26, 1999, the Company has 47 holders of record of
its Common Stock.
<PAGE> 11
The Company has not paid any dividends since it is inception and
does not anticipate paying any dividends on its Common Stock in the
foreseeable future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has 10,033,000 shares of Common Stock issued and
outstanding as of February 26, 1999. Of the 10,033,000 shares of the
Company's Common Stock outstanding, 2,783,000 shares are freely
tradeable and 7,250,000 shares can only be resold in compliance with
Reg. 144 adopted under the Securities Act of 1933 (the "Act").
In general, under Rule 144 as currently in effect, a person (or
persons whose Shares are aggregated) who has beneficially owned Shares
privately acquired directly or indirectly from the Company or from an
affiliate, for at least one year, or who is an affiliate, is entitled
to sell within any three month period a number of such Shares that does
not exceed the greater of 1% of the then outstanding shares of the
Company's Common Stock or the average weekly trading volume in the
Company's Common Stock during the four calendar weeks, immediately
preceding such sale. Sales under Rule 144 are also subject to certain
manner of sale provisions, notice requirements and the availability of
current public information about the Company. A person (or persons
whose Shares are aggregated) who is not deemed to have been an
affiliate at any time during the 90 day preceding a sale, and who has
beneficially owned Restricted Shares for at least two years, is
entitled to sell all such Shares under Rule 144 without regard to the
volume limitations, current public information requirements, manner of
sale provisions or notice requirements.
In October 1998, the Company issued 5,000,000 "restricted" shares
of common stock to James F. Oste, the Company's President in
consideration of the $50,000. The foregoing shares were issued
pursuant to Section 4(2) of the Act.
In February 1999, the Company issued 250,000 "restricted" shares
of common stock to David G. Glass, the Company's Treasurer in
consideration of the $10,000. The foregoing shares were issued pursuant
to Section 4(2) of the Act.
In October 1998, the Company issued 2,000,000 shares of common
stock to Robert J. Kinloch, the Company's Secretary in consideration of
services rendered by Mr. Kinloch as a finder in locating investors for
the Company's securities. The foregoing shares were issued pursuant to
Section 4(2) of the Act.
Between December 1998 and February 1999, the Company sold
1,283,000 shares of Common Stock to 43 individuals in consideration of
$64,150 in cash pursuant to Reg. 504 of the Act.
In February 1999, the Company sold 1,500,000 shares of Common
Stock to 3 individuals in consideration of $60,000 in cash, pursuant to
Reg. 504 of the Act.
<PAGE> 12
ITEM 11. DESCRIPTION OF SECURITIES.
Common Stock
The authorized Common Stock of the Company consists of 100,000,000
shares, $0.001 par value per share. All shares have equal voting
rights and are not assessable. Voting rights are not cumulative and,
therefore, the holders of more than 50% of the Common Stock could, if
they chose to do so, elect all of the directors of the Company.
Upon liquidation, dissolution or winding up of the Company, the
assets of the Company, after the payment of liabilities, will be
distributed pro rata to the holders of the Common Stock. The holders
of the Common Stock do not have preemptive rights to subscribe for any
securities of the Company and have no right to require the Company to
redeem or purchase their shares. The shares of Common Stock presently
outstanding are fully paid and non-assessable.
Dividends
Holders of the Common Stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefore. No dividend has
been paid on the Common Stock since inception, and none is contemplated
in the foreseeable future.
Transfer Agent
The Company's transfer agent is TranSecurities International,
Inc., 2510 North Pines Road, Suite 202, Spokane, Washington 99216 and
its telephone number is (509) 927-1255.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The laws of the state of Nevada and certain provisions of the
Company's Articles of Incorporation under certain circumstances provide
for indemnification of the Company's Officers, Directors and
controlling persons against liabilities which they may incur in such
capacities. A summary of the circumstances in which such
indemnification is provided for is contained herein, but this
description is qualified in its entirety by reference to the Company's
Articles of Incorporation and to the statutory provisions.
In general, any Officer, Director, employee or agent may be
indemnified against expenses, fines, settlements or judgments arising
in connection with a legal proceeding to which such person is a party,
if that person's actions were in good faith, were believed to be in the
Company's best interest, and were not unlawful. Unless such person is
successful upon the merits in such an action, indemnification may be
awarded only after a determination by independent decision of the Board
of Directors, by legal counsel, or by a vote of the shareholders, that
the applicable standard of conduct was met by the person to be
indemnified.
<PAGE> 13
The circumstances under which indemnification is granted in
connection with an action brought on behalf of the Company is generally
the same as those set forth above; however, with respect to such
actions, indemnification is granted only with respect to expenses
actually incurred in connection with the defense or settlement of the
action. In such actions, the person to be indemnified must have acted
in good faith and in a manner believed to have been in the Company's
best interest, and have not been adjudged liable for negligence or
misconduct.
ITEM 13. FINANCIAL STATEMENTS.
Financial Statements begin on following page.
<PAGE> 14
MOEN AND COMPANY
CHARTERED ACCOUNTANTS
PO Box 10129
1400 IBM Tower Telephone:(604)662-8899
701 West Georgia Street Fax: (604)662-8809
Vancouver, BC V7Y 1C6 E-mail: [email protected]
INDEPENDENT AUDITORS' REPORT
To the Directors of
Pacific Cart Services Ltd. (A Nevada Corporation)
(A Development Stage Company)
We have audited the accompanying Balance Sheet of Pacific Cart Services
Ltd (A Development Stage Company) as at December 31, 1998, and the
related Statement of Income, Retained Earnings (Deficit), Cash Flows
and Shareholders' Equity for the period from date of incorporation on
August 27, 1998 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Pacific
Cart Services Ltd. (A Development Stage Company) as of December 31,
1998 and the results of its operations and Cash Flows for the period
from August 27, 1998 to December 31, 1998 in conformity with generally
accepted accounting principles.
Vancouver, British Columbia, Canada /s/ Moen and Company
February 4, 1999 Chartered Accountants
F-1
<PAGE> 15
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Balance Sheet
December 31, 1998
(In U.S. Dollars)
ASSETS
<TABLE>
<S> <C> <C>
Current Assets
Cash $ 105,553
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued $ 750
Note payable to shareholder, James
Oste, unsecured, non-interest
bearing and not subject to demand
before June 1, 1999 20,000
Due to related parties (note 4(d)) 2,436
---------
23,186
---------
Shareholders' Equity
Capital Stock
Authorized: 100,000,000 common
shares at $0.001 par value
Issued and fully paid
8,283,000 common share at par value 8,283
Additional paid-in capital 125,867
Deduct: finders' fee (note 4(a)) 20,000 105,867
-------- ---------
114,150
Deficit, accumulated during the
development stage (31,783)
---------
82,367
---------
$ 105,553
=========
</TABLE>
Approved on Behalf of the Board
/s/ James Oste, Director
/s/ David Glass, Director
/s/ Robert J. Kinloch, Director
See Accompanying Notes and Independent Auditors' Report.
F-2
<PAGE> 16
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Statement of Income
For the Period From August 27, 1998 to December 31, 1998
(In U.S. Dollars)
<TABLE>
<S> <C>
Administration Expenses
Accounting fee $ 2,050
Bank charges 60
Legal expenses 20,152
Office expenses 673
Transfer agent fees 1,000
Travel expenses 7,848
----------
Total administration expenses 31,783
----------
Net Loss for the Period $ 31,783
==========
Net Loss Per Common Share
Basic $ 0.006
Diluted $ 0.006
Average Number of Common Shares Outstanding
Basic 5,092,851
Diluted 5,092,851
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Statement of Retained Earnings (Deficit)
For the Period From August 27, 1998 to December 31, 1998
(In U.S. Dollars)
Balance, beginning of period $ --
Net Loss for the Period (31,783)
----------
Retained Earnings (Deficit),
December 15, 1998 $ (31,783)
==========
</TABLE>
See Accompanying Notes and Independent Auditors' Report
F-3
<PAGE> 17
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Statement of Cash Flows
For the Period From August 27, 1998 to December 31, 1998
(In U.S. Dollars)
<TABLE>
<S> <C>
Cash Provided by (Used for)
Operating Activities
Loss for the period $ (31,783)
Changes in non-cash working capital items
Accounts payable 750
----------
(31,033)
----------
Investing Activities --
----------
Financing Activities
Capital stock subscribed 114,150
Note payable to shareholder 20,000
Due to related parties 2,436
----------
136,586
----------
Increase in Cash During the Period 105,553
Cash, Beginning of the Period --
----------
Cash, End of the Period $ 105,553
==========
</TABLE>
See Accompanying Notes and Independent Auditors' Report
F-4
<PAGE> 18
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Statement of Shareholders' Equity
From Date of Incorporation on August 27, 1998 to December 31, 1998
(in U.S. Dollars)
<TABLE>
<CAPTION>
Price Number of Additional
Per Common par Paid-in
Share Shares Value Capital
<S> <C> <C> <C> <C>
Oct. 5, 98 Shares subscribed by
Director for cash $0.01 5,000,000 5,000 45,000
Oct. 5, 98 Shares subscribed by
Director for finders'
fee $0.01 2,000,000 2,000 18,000
Dec. 7, 98 Share subscribed by
private placement
for cash $0.05 1,283,000 $ 1,283 $ 62,867
Net loss for the period
--------- ------- --------
8,283,000 8,283 125,867
Deduct:
Finders Fee paid (20,000)
--------- ------- --------
Balance, December 31, 1988 8,283,000 $ 8,283 $105,867
========= ====== ========
See Accompanying Notes and Independent Auditors' Report
F-5a
<PAGE> 19
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Statement of Shareholders' Equity
From Date of Incorporation on August 27, 1998 to December 31, 1998
(in U.S. Dollars)
Total Retained Total
Capital Earnings Shareholders'
Stock (Deficit) Equity
<S> <C> <C> <C>
Oct. 5, 98 Shares subscribed by
Director for cash 50,000 50,000
Oct. 5, 98 Shares subscribed by
Director for finders'
fee 20,000 20,000
Dec. 7, 98 Share subscribed by
private placement
for cash $ 64,150 $ 64,150
Net loss for the period (31,783) $ (31,783)
--------- --------- ----------
134,150 (31,783) 102,367
Deduct:
Finders Fee paid (20,000) (20,000)
--------- --------- ----------
Balance, December 31, 1988 $ 114,150 $ (31,783) $ 82,367
========= ========= ==========
</TABLE>
See Accompanying Notes and Independent Auditors' Report
F-5b
<PAGE> 20
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Notes to Financial Statements
(In U.S. Dollars)
Note 1. BUSINESS OPERATIONS
3. The Company was incorporated on August 27, 1998 under the
Company Act of the State of Nevada, U.S.A. to pursue
opportunities in the business of franchising fast food
distributor systems.
4. The Company is considered to be a development stage
enterprise as its principal operations have not yet commenced
and have not yet produced revenue. The deficit to December
31, 1998 has been accumulated in the development stage.
5. The first fiscal year end of the Company is December 31,
1998.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Administration Costs
Administration costs are written off to operations during the
period.
b) Translation of Foreign Currency
The accounts of the Company are translated into U.S. dollars
on the following basis:
-current assets and liabilities at the rate of exchange in
effect at the balance sheet date
-administration expenses at the average rate in effect during
the period
-non-current assets and liabilities at rates prevailing when
the transaction occurred
c) Basis of Presentation
These financial statements are prepared in accordance with
United States Generally Accepted Accounting Principles
(GAAP).
d) Net Loss Per Share
Net loss per common share is computed by dividing net loss by
the weighted average number of shares outstanding (including
shares subscribed but unissued) during the period.
See Accompanying Notes and Independent Auditors' Report
F-6
<PAGE> 21
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Notes to Financial Statements
(In U.S. Dollars)
Note 3. CAPITAL STOCK
1,273,000 common shares subscribed had been issued by the transfer
agent to December 31, 1998. 7,000,000 common shares were
subsequently issued on February 2, 1999 (note 6 (b)), leaving a
balance of 10,000 common shares unissued. The transfer agent has
been authorized by the Company to issue these shares.
Note 4. RELATED PARTY TRANSACTIONS:
1. Finders' fees for director - $20,000
By Directors Resolution dated October 5, 1998, the Company
authorized the issuance of 2,000,000 shares to Robert
Kinloch at a price of $0.01 per share for fair value of
$20,000 representing finders' fees for services rendered to
the Company for finding investors to invest in initial seed
capital. Robert Kinloch is Secretary and Director of the
Company. These finders' fees related to the issuance of
stock are offset against additional paid-in capital.
2. Share subscription by director - $50,000
By Director Resolution dated October 5, 1998, authorized
the share subscription for 5,000,000 shares at a price of
$0.01 per share for James Oste, Chairman, President and
Director of the company.
c) Management fees
No management fees have been incurred by the Company to
December 31, 1998.
d) Expenses paid by directors
Expenses incurred by directors on behalf of the Company
comprised of office expenses of $588 and travel and related
costs of $7,848, for total costs of $8,436, $6,000 of which
has been paid to December 31, 1998, with a balance unpaid
of $2,436 due to the following directors and officers,
which is included in current liabilities as of December 31,
1998:
James Oste, Chairman, President, Director $ 486
Robert Kinloch, Secretary, Director 1,950
--------
Balance unpaid at December 31, 1998 $ 2,436
========
See Accompanying Notes and Independent Auditors' Report
F-7
<PAGE> 22 PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Notes to Financial Statements
(In U.S. Dollars)
Note 5 INCOME TAXES
The Company has a loss for income tax purposes that may be carried
forward to be applied against future taxable income. The benefit
of a potential reduction in future income taxes has not been
recorded as an asset at December 31, 1998 as it is reduced by a
valuation allowance.
Note 6 SUBSEQUENT EVENTS
a) Agreement with Mister Tube Steak Canada Inc.
i) By agreement dated January 10, 1999 and signed on
January 26, 1999, between Mister Tube Steak Canada
Inc. ("MTS") and Pacific Cart Services Ltd. ("PCS"),
MTS appointed PCS as its exclusive distributor for its
products in the United States and any other countries
coming under the terms of the agreement during the
initial period.
ii) The effective date of the agreement is February
1, 1999 for an initial period of five years for
the United States, and with respect to all other
countries five years from February 1, 1999 or
such date as may be agreed to by the parties with
respect to any additional country.
iii) Products purchased by PCS from MTS represented by
equipment and food and dry goods are payable on a
sixty day basis.
iv) MTS will provide product liability insurance in the
amount of $2,000,000 CDN.
v) The term of the agreement is for five years unless
terminated earlier on consent of both parties. The
agreement shall automatically renew for successive
two-year periods, commencing on the fifth anniversary,
unless PCS provides 180 days prior written notice to
MTS of its intent not to renew. MTS shall have the
right to cancel this agreement on the fifth
anniversary and second anniversary of any subsequent
renewal upon not less than 180 days prior written
notice to PCS.
v) The agreement provides for reimbursement to PCS for
value of business and goodwill created by PCS if the
agreement is terminated by MTS for other than a
default or breach by PCS.
vi) If MTS intends to sell all or any part of its business
PCS shall have a first right of refusal.
See Accompanying Notes and Independent Auditors' Report
F-8
<PAGE> 23
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Notes to Financial Statements
(In U.S. Dollars)
vii) The agreement is not assignable as security or otherwise
by either party without the prior consent of the other.
b) Share Capital
i) 7,000,000 common shares subscribed to December 31, 1998
were subsequently issued on February 2, 1999.
ii) On February 3, 1999, the Company received $60,000 as the
proceeds of the subscription for and issuance of
1,500,000 common shares at a price of $0.04 per share.
iii) 250,000 common shares were issued at a price of $0.04
per share for a total of $10,000 to David Glass for
financial services. David Glass is a director and
officer of the Company.
See Accompanying Notes and Independent Auditor's Report.
F-9
<PAGE> 24
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures from the inception of the Company through the date of this
Registration Statement.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit No. Description
3.1 Articles of Incorporation.
3.2 Bylaws.
4.1 * Specimen Stock Certificate.
10.1 Agreement with Mr. Tube Steak of Canada, Inc.
27 Financial Data Schedule
* Filed via Form SE.
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, this Form 10-SB Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
Signatures Title Date
/s/ James F. Oste
James F. Oste Chairman of the Board 03/08/99
of Directors and
President
/s/ David G. Glass
David G. Glass Member of the Board 03/08/99
of Directors and Treasurer
/s/ Robert J. Kinloch
Robert J. Kinloch Member of the Board 03/08/99
of Directors and Secretary
<PAGE> 26
EXHIBIT 3.1
ARTICLES OF INCORPORATION
(PURSUANT TO NRS 78)
STATE OF NEVADA
Secretary of State
(For filing office use)
1. NAME OF CORPORATION: PACIFIC CART SERVICES LTD.
2. REGISTERED AGENT:
Name of registered agent: Michael J. Morrison, Esq.
Street Address: 1025 Ridgeview Drive
Suite 400
Reno, Nevada 89509
3. SHARES:
Number of shares with par value 100,000,000 par value:
$.001 Number of shares without par value 0
4. GOVERNING BOARD: shall be styled by Directors
The FIRST BOARD OF DIRECTORS shall consist of four members
and the names and addresses are as follows:
James F. Oste
636 Dufferin Avenue
Winnipeg, Manitoba R2W 2Z2 Canada
Steven J. Duff
20243 40th Avenue
Langley, British Columbia V3A 2W8 Canada
Robert Kinloch
2501 Lansdowne Avenue
Saskatoon, Saskatchewan S7J 1H3 Canada
The affairs of the Corporation shall be managed by or under
the authority of the Board of Directors consisting of no less
than one director. The number of directors may be increased
or decreased from time to time in accordance with the Bylaws
of the Corporation. The election of the directors shall be
protected from personal liability to the fullest extent
permitted by applicable law.
<PAGE> 27
5. PURPOSE: (Not applicable)
6. The initial primary business address is as follows until such
time as the Company establishes another principal place of
business.
1275 K Street, N.W.
Suite 1101
Washington, D.C. 20005
7. SIGNNATURE OF INCORPORATORS:
W. Kwame Anthony
1275 K Street, N.W.
Suite 1101
Washington, D.C. 20005
________________________________
Signature
District of Columbia
This instrument was acknowledge before me on ______________________,
19___, by ______________________________ (Name of Person)
As incorporator of Pacific Cart Services Ltd.
_________________________________
Notary Public Signature
(affix notary stamp or seal)
<PAGE> 28
EXHIBIT 3.2
PACIFIC CART SERVICES LTD.
BYLAWS
Article 1. Offices
The principal office of the corporation in the state of Nevada
shall be located in the city of Reno, Nevada. The corporation
may have such other offices, either within or without the state of
Nevada, as the board of directors may designate or as the business
of the corporation may require from time to time.
The registered office of the corporation, required by the
State of Nevada to be maintained in the state of Nevada may be, but
need not be, identical with the principal office in the state of
Nevada, and the address of the registered office may be changed
from time to time by the board of directors.
Article II. Shareholders
Section 1. Annual Meeting. The annual meeting of the
shareholders shall be held at such time on such day within such
month as shall be fixed by the board of directors, for the purpose
of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday in the state of Nevada,
such meeting shall be held on the next succeeding business day. If
the election of directors shall not be held on the day designated
herein for any annual meeting of the shareholders, or at any
adjournment of such, the board of directors shall cause the elect-
ion to be held at a special meeting of the shareholders as soon
hereafter as conveniently may be.
Section 2. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise
prescribed statute, may be called only by the president or by the
board of directors.
Section 3. Place of Meeting. The board of directors may
designate any place, either within or without the state of Nevada,
as the place of meeting for any annual meeting or for any special
meeting called by the board of directors. A waiver of notice
signed by all shareholders entitled to vote at a meeting may
designate any place, either within or without the state of Nevada,
as the place for the holding of such meeting. If no designation is
made, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the corporation in the
state of Nevada.
<PAGE> 29
Section 4. Notice of Meeting. Written notice stating the
place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called,
shall, unless otherwise prescribed by statute, be delivered not
less than 10 nor more than 50 days before the date of the meeting,
either personally or by mail, by or at the direction of the presid-
ent, or the secretary, or the officer or other persons calling the
meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail, addressed to the
shareholder at his address as it appears on the stock transfer
books of the corporation, with postage prepaid.
Section 5. Closing of Transfer Books or Fixing of Record
Date. For the purposes of determining shareholders entitled to
notice of or to vote at any meeting of shareholders or any
adjournment of such, or shareholders entitled to receive payment of
any dividend, or in order to make a determination of shareholders
for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be
closed for a stated period but not to exceed, in any case, 50 days.
If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least 10
days immediately preceding such meeting. In lieu of closing the
stock transfer books, the board of directors may fix in advance a
date as the record date for any such determination of shareholders,
such date in any case to be not more than 50 days and, in case of
a meeting of shareholders, not less than ten days prior to the date
on which the particular action, requiring such determination of
shareholders, is to be taken. If the stock transfer books are not
closed and no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the board of directors declaring
such dividend is adopted, as the case may be, shall be the record
date for such determination of shareholders. When a determination
of shareholders entitled to vote at any meeting of shareholders has
been made as provided in this section, such determination shall
apply to any adjournment of such.
Section 6. Voting Record. The officer or agent having
charge of the stock transfer books for shares of the corporation
shall make a complete record of the shareholders entitled to vote
each meeting of shareholders or any adjournment of such, arranged
in alphabetical order, with the address of and the number of shares
held by each. Such record shall be produced and kept open at the
<PAGE> 30
time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting
for the purposes of such.
Section 7. Quorum. A majority of the outstanding shares
of the corporation entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of shareholders. If
less than a majority of the outstanding shares are represented at
a meeting, a majority of the shares so represented may adjourn the
meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or repre-
sented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders
present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
Section 8. Proxies. At all meetings of shareholders, a
shareholder may vote in person or by proxy executed in writing by
the shareholder or by his or her duly authorized attorney-in-fact.
Such proxy shall be filed with the secretary of the corporation
before or at the time of the meeting. No proxy shall be valid
after 11 months from the date of its execution, unless otherwise
provided in the proxy.
Section 9. Voting of Shares. Subject to the provisions of
section 12 of this Article II, each outstanding share entitled to
vote shall be entitled to one vote upon each matter submitted to a
vote at a meeting of shareholders.
Section 10. Voting of Shares by Certain Holders. Shares
standing in the name of another corporation may be voted by such
officer, agent or proxy as the bylaws of such corporation may
prescribe, or, in the absence of such provision, as the board of
directors of such other corporation may determine.
Shares held by an administrator, executor, guardian or conservator
may be voted by him or her, either in person or by proxy, without
a transfer of such shares into his or her name. Shares standing in
the name of a trustee may be voted by him or her, either in person
or by proxy, but no trustee shall be entitled to vote shares held
by him or her without a transfer of such shares into his or her
name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may
be voted by such receiver without the transfer into his or her name
if authority so to do be contained in an appropriate order of the
court by which such receiver was appointed.
<PAGE> 31
A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the
name of the pledgee, and after that the pledgee shall be entitled
to vote the shares so transferred.
Neither treasury shares of its own stock held by the corpora-
tion, nor shares held by another corporation if a majority of the
shares entitled to vote for the election of directors of such other
corporation are held by the corporation, shall be voted at any
meeting or counted in determining the total number of outstanding
shares at any given time for purposes of any meeting.
Section 11. Informal Action by Shareholders. Any action
required or permitted to be taken at a meeting of the shareholders
may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter
thereof.
Section 12. Cumulative Voting Prohibited. At each election
for directors every shareholder entitled to vote at such election
shall have the right to vote, in person or by proxy, the number of
shares owned by him or her for as many persons as there are
directors to be elected and for whose election he or she has a
right to vote, but every such shareholder is prohibited from
cumulating his or her votes by giving one candidate as many votes
as the number of such directors multiplied by the number of his or
her shares shall equal, or by distributing such votes on the same
principle among any number of such candidates.
Article III. Board of Directors
Section 1. General Powers. The business and affairs of
the corporation shall be managed by its board of directors.
Section 2. Number, Tenure and Qualifications. The number
of directors of the corporation shall be three. The number of
directors may be increased at any time by affirmative vote of a
majority of directors at a regular meeting or a special meeting
called for that purpose. Each director shall hold office until the
annual meeting of shareholders at which his or her term expires and
until his or her successor shall have been elected and qualified.
Directors need not be residents of the state of Nevada or share-
holders of the corporation.
<PAGE> 32
The directors shall be classified with respect to the time for
which they shall severally hold office by division them into three
classes, each consisting of one-third of the whole number of the
board of directors, and all directors of the corporation shall hold
office until their successors are elected and qualified. At the
meeting held for the election of the first board, the directors of
the first class shall be elected for a term of one year; the
directors of the second class for a term of two years; and the
directors of the third class for a term of three years; and at each
annual election the successors to the class of directors whose
terms shall expire that year shall be elected to hold office for
the term of three years, so that the term of office of one class of
directors shall expire in each year.
Section 3. Regular Meetings. A regular meeting of the
board of directors shall be held without other notice than this
bylaw immediately after, and at the same place as, the annual
meeting of shareholders. The board of directors may provide, by
resolution, the time and place, either within or without the state
of Nevada, for the holding of additional regular meetings without
other notice than such resolution.
Section 4. Special Meetings. Special meetings of the
board of directors may be called by or at the request of the
president or any two directors. The person or persons authorized
to call special meetings of the board of directors may fix any
place, either within or without the state of Nevada, as the place
for holding any special meeting of the board of directors called by
them.
Section 5. Notice. Notice of any special meeting shall be
given at least 2 days previous to such by written notice delivered
personally or mailed to each director at his or her business
address, or by telegram. If mailed, such notice shall be deemed to
be delivered when deposited in the United States mail, so
addressed, with postage prepaid. If notice be given by telegram,
such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Any director may waive notice
of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to
the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the board of
directors need be specified in the notice or waiver of notice of
such meeting.
<PAGE> 33
Section 6. Quorum. A majority of the number of directors
fixed by section 2 of this Article III shall constitute a quorum
for the transaction of business at any meeting of the board of
directors, but if less than such majority is present at a meeting,
a majority of the directors present may adjourn the meeting from
time to time without further notice.
Section 7. Manner of Acting. The act of the majority of
the directors present at a meeting at which a quorum is present
shall be the act of the board of directors.
Section 8. Action Without a Meeting. Any action required
or permitted to be taken by the board of directors at a meeting may
be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the directors.
Section 9. Vacancies. Any vacancy occurring in the board
of directors may be filled by the affirmative vote of a majority of
the remaining directors though less than a quorum of the board of
directors. A director elected to fill a vacancy shall be elected
for the unexpired term of his predecessor in office. Any
directorship to be filled by reason of an increase in the number of
directors may be filled by election by the board of directors for
a term of office continuing only until the next election of the
class for which such directors have been chosen and until their
successors are elected and qualify.
Section 10. Compensation. By resolution of the board of
directors, each director may be paid his or her expenses, if any,
of attendance at each meeting of the board of directors, and may be
paid a stated salary as director or a fixed sum for attendance at
each meeting of the board of directors or both. No such payment
shall preclude any director from serving the corporation in any
other capacity and receiving compensation for it.
Section 11. Presumption of Assent. A director of the
corporation who is present at a meeting of the board of directors
at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless his or her dissent
shall be entered in the minutes of the meeting or unless he or she
shall file his or her written dissent to such action with the
person acting as the secretary of the meeting before the
adjournment of such or shall forward such dissent by registered
mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply
to a director who voted in favor of such action.
<PAGE> 34
Article IV. Officers
Section 1. Number. The officers of the corporation
shall be a president, one or more vice-presidents (the number to
be determined by the board of directors), a secretary, and a
treasurer, each of whom shall be elected by the board of
directors. Such other officers and assistant officers as may be
deemed necessary may be elected or appointed by the board of
directors. Any 2 or more offices may be held by the same person,
except the offices of president and secretary.
Section 2. Election and Term of Office. The officers of
the corporation to be elected by the board of directors shall be
elected annually by the board of directors at the first meeting
of the board of directors held after each annual meeting of the
shareholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon after that as
conveniently may be. Each officer shall hold office until his or
her successor shall have been duly elected and shall have
qualified or until his or her death or until he or she shall
resign or shall have been removed in the manner hereafter
provided.
Section 3. Removal. Any officer or agent may be removed
by the board of directors whenever in its judgment the best
interests of the corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any,
of the person so removed. Election or appointment of an officer or
agent shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification or otherwise, may be
filled by the board of directors for the unexpired portion of the
term.
Section 5. President. The president shall be the
principal executive officer of the corporation and, subject to the
control of the board of directors, shall in general supervise and
control all of the business and affairs of the corporation. The
president shall, when present, preside at all meetings of the
shareholders and of the board of directors. The president may
sign, with the secretary or any other proper officer of the
corporation authorized by the board of directors, certificates for
shares of the corporation and deeds, mortgages, bonds, contracts,
or other instruments which the board of directors has authorized to
be executed, except in cases where the signing and execution of
such shall be expressly delegated by the board of directors or by
these bylaws to some other officer or agent of the corporation, or
shall be required by law to be otherwise signed or executed; and in
general shall perform all duties incident to the office of
president and such other duties as may be prescribed by the board
of directors from time to time.
<PAGE> 35
Section 6. The Vice-Presidents. In the absence of the
president or in the event of his or her death, inability or refusal
to act, the vice-president (or in the event there be more than one
vice-president, the vice-presidents in the order designated at the
time of their election, or in the absence of any designation, then
in the order of their election) shall perform the duties of the
president, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the president. Any
vice-president may sign, with the secretary or an assistant
secretary,
certificates for shares of the corporation; and shall perform such
other duties as from time to time may be assigned to him or her by
the president or by the board of directors.
Section 7. The Secretary. The secretary shall:
(a) keep the minutes of the proceedings of the shareholders
and of the board of directors in one or more books
provided for that purpose;
(b) see that all notices are duly given in accordance with
the provisions of these bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of
the corporation and see that the seal of the corporation
is affixed to all documents the execution of which on
behalf of the corporation under its seal is duly
authorized;
(d) keep a register of the address of each shareholder which
shall be furnished to the secretary by such shareholder;
(e) sign with the president, or a vice-president,
certificates for shares of the corporation, the issuance
of which shall have been authorized by resolution of the
board of directors;
(f) have general charge of the stock transfer books of the
corporation; and
(g) in general perform all duties incident to the office of
secretary and such other duties as from time to time may
be assigned to him or her by the president or by the
board of directors.
Section 8. The Treasurer. The treasurer shall:
(a) have charge and custody of and be responsible for all
funds and securities of the corporation;
<PAGE> 36
(b) receive and give receipts for moneys due and payable to
the corporation from any source whatsoever, and deposit
all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be
selected in accordance with the provisions of Article V
of these bylaws; and
(c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to
time may be assigned to him or her by the president or by
the board of directors.
If required by the board of directors, the treasurer shall
give a bond for the faithful discharge of his or her duties in such
sum and with such surety or sureties as the board of directors
shall determine.
Section 9. Assistant Secretaries and Assistant Treasurers.
The assistant secretaries, when authorized by the board of direc-
tors, may sign with the president or a vice-president certificates
for shares of the corporation the issuance of which shall have been
authorized by a resolution of the board of directors. The
assistant treasurers shall respectively, if required by the board
of directors, give bonds for the faithful discharge of their duties
in such sums and with such sureties as the board of directors shall
determine. The assistant secretaries and assistant treasurers, in
general, shall perform such duties as shall be assigned to them by
the secretary or the treasurer, respectively, or by the president
or the board of directors.
Section 10. Salaries. The salaries of the officers shall be
fixed from time to time by the board of directors and no officer
shall be prevented from receiving such salary by reason of the fact
that he or she is also a director of the corporation.
Article V. Contracts, Loans, Checks and Deposits
Section 1. Contracts. The board of directors may
authorize any officer or officers, agent or agents, to enter into
any contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and such authority may be general
or confined to specific instances.
Section 2. Loans. No loans shall be contracted on
behalf of the corporation and no evidence of indebtedness shall be
issued in its name unless authorized by a resolution of the board
of directors. Such authority may be general or confined to
specific instances.
<PAGE> 37
Section 3. Checks, Drafts, etc. All checks, drafts or
other orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation and
in such manner as shall from time to time be determined by
resolution of the board of directors.
Section 4. Deposits. All funds of the corporation not
otherwise employed shall be deposited from time to time to the
credit of the corporation in such banks, trust companies or other
depositories as the board of directors may select.
Article VI. Certificates for Shares and Their Transfer
Section 1. Certificates for Shares. Certificates
representing shares of the corporation shall be in such form as
shall be determined by the board of directors. Such certificates
shall be signed by the president or a vice-president and by the
secretary or an assistant secretary and sealed with the corporate
seal or a facsimile of such. The signatures of such officers upon
a certificate may be facsimiles if the certificate is manually
signed on behalf of a transfer agent or a registrar, other than the
corporation itself or one of its employees. Each certificate for
shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation.
All certificates surrendered to the corporation for transfer shall
be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been
surrendered and cancelled, except that in case of a lost, destroyed
or mutilated certificate a new one may be issued upon such terms
and indemnity to the corporation as the board of directors may
prescribe.
Section 2. Transfer of Shares. Transfer of shares of the
corporation shall be made only on the stock transfer books of the
corporation by the holder of record or by his or her legal
representative, who shall furnish proper evidence of authority to
transfer, or by his or her attorney authorized by power of attorney
duly executed and filed with the secretary of the corporation, and
on surrender for cancellation of the certificate for such shares.
The person in whose name shares stand on the books of the
corporation shall be deemed by the corporation to be the owner for
all purposes.
<PAGE> 38
Article VII. Fiscal Year
The fiscal year of the corporation shall begin on the 1st
day of July and end on the 30th day of June in each year.
Article VIII. Dividends
The board of directors may, from time to time, declare and
the corporation may pay dividends on its outstanding shares in
the manner and upon the terms and conditions provided by law and
its articles of incorporation.
Article IX. Corporate Seal
The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed the name of the
corporation and the state of incorporation and the words "Corporate
Seal."
Article X. Waiver of Notice
Whenever any notice is required to be given to any share-
holder or director of the corporation under the provisions of
these bylaws or under the provisions of the articles of
incorporation or under the provisions of the laws of the State of
Nevada, a waiver in writing signed by the person or persons
entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
Article XI. Amendments
These bylaws may be altered, amended or repealed and new
bylaws may be adopted by the board of directors at any regular
meeting of directors or special meeting called for that purpose.
Article XII. Emergency Bylaws
The emergency bylaws provided in this Article XII shall be
operative during any emergency in the conduct of the business of
the corporation resulting from an attack on the United States or
any nuclear or atomic disaster, notwithstanding any different
provision in the preceding articles of the bylaws or in the
articles of incorporation of the corporation or in the laws of the
Sate of Nevada. To the extent not inconsistent with the provisions
of this article, the bylaws provided in the preceding articles
shall remain in effect during such emergency and upon its
termination the emergency bylaws shall cease to be operative.
<PAGE> 39
During any such emergency:
(a) A meeting of the board of directors may be called by any
officer or director of the corporation. Notice of the
time and place of the meeting shall be given by the
person calling the meeting to such of the directors as it
may be feasible to reach by any available means of
communication. Such notice shall be given at such time
in advance of the meeting as circumstances permit in the
judgment of the person calling the meeting.
(b) At any such meeting of the board of directors, a quorum
shall consist of a majority of the directors.
(c) The board of directors, either before or during any such
emergency, may provide, and from time to time modify,
lines of succession in the event that during such an
emergency any or all officers or agents of the
corporation shall for any reason be rendered incapable of
discharging their duties.
(d) The board of directors, either before or during any such
emergency, may, effective in the emergency, change the
head office or designate several alternative head offices
or, regional offices, or authorize the officers so to do.
No officer, director or employee acting in accordance with
these emergency bylaws shall be liable except for willful
misconduct.
These emergency bylaws shall be subject to repeal or change by
further action of the board of directors, but no such repeal or
change shall modify the provisions of the next preceding paragraph
with regard to action taken prior to the time of such repeal or
change. Any amendment of these emergency bylaws may make any
further or different provision that may be practical and necessary
for the circumstances of the emergency.
<PAGE> 40
EXHIBIT 10.1
EXCLUSIVE DISTRIBUTION AGREEMENT
This agreement made as of the 10th day of January, 1999 between Mr.
Tube Steak Canada Inc., a corporation incorporated under the laws of
Canada (hereinafter referred to as "MTS") and Pacific Cart Services
Ltd. a corporation incorporated under the laws of the State of Nevada
and having offices at 561 Keystone Avenue, Reno, Nevada (hereinafter
referred to as "PCS") collectively known as the "parties."
WHEREAS MTS has designed and manufactured a mobile vending cart and
certain other equipment relating to hotdog vending. And whereas MTS
owns certain rights, names, recipes and trademarks.
WHEREAS PCS has expressed its intend to distribute the Products in
the California and Washington State.
NOW THEREFORE in consideration of the mutual premises and covenants
set forth herein, the parties agree as follows:
1. DEFINITIONS AND APPENDICES
1.1 DEFINITIONS
1.1.1 "Affiliate" shall mean, with respect to a party,
an entity which, directly or indirectly, majority
owns, or is majority owned by, or is under common
majority ownership with, that party;
1.1.2 "Distribution" shall mean advertising, promoting,
warehousing, providing samples of and selling
Products;
1.1.3 "Effective Date" means February 1, 1999;
1.1.4 "Initial Period" means with respect to the United
States 2004 the period five (5) years from the
Effective Date of this Agreement and with respect
to all other countries five (5) years from the
effective date of this Agreement or such date as
may be agreed to by the parties with respect to
any additional country;
1.1.5 "Net Sales" shall mean gross sales of Products
invoiced by PCS to its customers (a) retroactive
price reductions, (b) trade, quantity discounts,
and (c) any taxes or other governmental charges
levied or measured or both by sale and indicated
in the billing price. Net Sales shall include
all sales of Products by PCS in the ordinary
course of business but shall exclude sale for the
purpose of evaluation, demonstration or
promotion;
1.1.6 "Non-Exclusive Basis" shall mean a situation in
which PCS is not the sole distributor of these or
any future Products which MTS may choose to
market;
1.1.7 "Price" is defined in Section 4.1;
1.1.8 "Products" are the Mobile Vending cart and other
products listed in Appendix "A," and any other
product created and manufactured by MTS during
the period of this Agreement which PCS may elect
to distribute and sell;
<PAGE> 41
1.1.9 "Recalls" shall mean any withdrawal of Products,
market withdrawal or product corrective action
caused by any problems or defects associated with
the Products to be delivered to PCS or to PCS's
customers hereunder, including but not limited to
actions required by governmental or regulatory
authorities having jurisdiction in the relevant
countries;
1.1.10 "Significant Customer Complaint of Adverse Event"
is defined in Section 5.9;
1.1.11 "Territory" shall mean the United States and any
other countries subsequently coming under the
terms of this Agreement during the initial
period;
1.1.12 "List Price" is defined in Appendix A.
1.2 The following appendices are attached to and form part of
this Agreement.
(a) Appendix A: List Price
1.3 All references in this Agreement to activities, rights,
obligations, agreements or covenants by PCS are defined to
refer to PCS carrying on business in that country.
2. DISTRIBUTION OF PRODUCTS
2.1 Subject to the terms and conditions of this Agreement, MTS
hereby appoints PCS as its exclusive Distributor for the
Products in the Territory, and PCS agrees to undertake
appropriate activities related to the distribution of the
Products.
2.2 It is hereby acknowledged that this Exclusive Distribution
Agreement is Phase 1 of what may become a broader
relationship between the parties. The parties may later
consider a Phase 2, which may entail a distribution
agreement with PCS having certain manufacturing rights. At
such time as the parties agree to proceed with Phase 2, if
the manufacturing of the Products meets all applicable
regulatory requirements, PCS at its sole discretion may
elect to take over manufacturing of some or all of such of
the Products as are distributed by PCS. At the time, PCS
will take appropriate steps to satisfy all regulatory
requirements commensurate with the rights granted to PCS
under such new agreement.
2.3 It is hereby acknowledged that in the event that the
parties enter into Phase 2, PCS may wish to become the
Manufacturer and continue as the exclusive distributor of
the Products. Reasonable royalty rates will be negotiated
by the parties in good faith as part of any Phase 2
agreement. If PCS elects to manufacture the products, MTS
shall provide all documentation including, but not limited
to, manufacturing procedures, packaging specifications,
quality control procedures, and recipes.
3. ORDERS AND SHIPMENTS
3.1 PCS shall provide MTS on or before the 20th day of each
calendar month a twelve (12) month rolling forecast
indicating non binding delivery requirements. PCS will
place purchase orders with MTS and MTS will ship Products
within sixty (60) days of receipt of the purchase orders by
MTS.
<PAGE> 42
3.2 MTS shall ship the Products ordered to the PCS designated
warehouse, FOB the MTS-designated factory, subject to PCS
Purchase Orders. PCS will specify to MTS the carrier to
deliver the products. MTS shall agree to deliver the
Products to PCS within a period of sixty (60) days from
issuance of the purchase order by PCS. From time to time
it may be necessary to MTS to supply Product within the
sixty (60) day lead time at PCS' request, and MTS will make
every reasonable attempt to meet the delivery.
3.3 MTS it to supply PCS with Products in lots and packaging
pre-existing in Canada where applicable. Shipper size to
be finalized and agreed to prior to the first shipment of
products.
3.4 MTS is to supply PCS with Exporters' Certificates of Origin
under the Canada/U.S. F.T.A. and/or the N.A.F.T.A., as
applicable, where PCS is supplying Products for sale,
sample or otherwise, outside of the country of manufacture.
PCS will co-operate in responding to any information
requests form any Customs authority relating to the
validity of the information contained on the
certificate(s).
4. CONSIDERATION, PRICES OF PRODUCTS AND DISCOUNTS.
4.1 For all Products manufactured by MTS and ordered by PCS and
delivered to PCS by MTS, MTS shall deliver invoices to PCS
during each calendar month based on each individual
delivery of Product, PCS shall pay MTS based on invoices
calculated pursuant to Appendix A, based on the prices set
forth therein. The total Product price ("Price") paid to
MTS by PCS will consist of the following:
4.1.1 MTS's list price for products (Appendix A) to be
paid in Canadian Dollars on a sixty (60) days net
basis form the date of receipt of invoice and
Products by PCS. MTS' current direct factory
manufacturing costs for Products shall remain
fixed for a period of one (1) year for the date
of this Agreement, with the exclusion of: (a)
fluctuation in the Canadian currency in relation
to the U.S. dollar, subject to Section 4.2, (b)
industry shortages, or (c) changes in government
regulations which would require changes to the
manufacturing site at the request of PCS and
agreed to by MTS. Direct manufacturing costs
will be adjusted hereafter once every twelve (12)
months to reflect MTS' actual cost changes.
These adjustments must be agreed to by both
parties sixty (60) days before they become
effective.
4.1.2 MTS' list price, to be paid in Canadian Dollars
on a sixty (60) day net basis from the date of
receipt of invoice and Product by MTS. MTS'
current list price will remain fixed for a period
of one (1) year from the date of this agreement,
with the exclusion of:
(a) fluctuation in the Canadian currency with
respect to the U.S. dollar.
(b) changes in Government regulations which
would require changes to the manufacturing
process or Product status.
<PAGE> 43
4.2 No penalty for late payment will apply until sixty (60)
days after receipt of invoices by PCS. Balances which are
unpaid after sixty (60) days are to bear interest at the
rate equal to the prime rate quoted by the Royal Bank of
Canada in effect at the date the balance became overdue
plus two percent (2.00%) per annum charged on a monthly
basis.
4.3 The parties agree that the costs subject to subsection
4.1.1 hereof shall be made in Canadian dollars at the
current rate of exchange for the U.S. dollar. At the time
of execution of this Agreement said rate is .65 Canadian/
1.00 U.S. If the exchange rate should vary by more than
=/- 5.00% during the term of this Agreement, the parties
will share any gain or loss in equal shares of one-half of
such gain or loss greater than +/- 5.00%
5. PCS RIGHTS AND RESPONSIBILITIES
5.1 PCS shall have sole control over the responsibility for
advertising, marketing, pricing and distributing the
Products which it will sell, including all expenses arising
therefrom.
5.2 In connection with the promotion and sale of Products, PCS
shall have the right to use such trademarks, and is
obligated to use such trademarks, service marks or trade
names as are owned and used by MTS in connection with the
Products. Notwithstanding the foregoing, PCS shall be free
to market the Products under such names and logos which
shall be free to market the Products under such names and
logos which PCS deems appropriate ("MTS Trademarks"). PCS
will acknowledge all MTS trademarks and copyrights on
promotional materials and product literature and MTS hereby
grants PCS a non-exclusive paid up license to such
trademarks, service marks and trade names in accordance
with the requirements and intent of this Agreement. In the
event that this Agreement expires or is terminated for any
reason, such license will also terminate and all rights in
such trademarks, service marks or trade names which re
owned and used by MTS will revert to MTS. Products which
are in commercial distribution prior to the expiration or
termination of this Agreement will continue to be subject
to the license issued to PCS. In no event will PCS acquire
any rights to the MTS Trademarks without the specific
written permission of MTS.
5.3 PCS will use its reasonable best efforts to continuously
and diligently develop demand for the Products and to
solicit purchases therefor. At all times hereunder, PCS
shall maintain adequate working capital, facilities and
personnel to accomplish this purpose.
5.4 PCS shall have the right to distribute, under this
Agreement, any improvements to the Products.
5.5 In the event of a notice of a Significant Customer
Complaint of Adverse Event and of PCS having knowledge of
such Event, PCS agrees to notify MTS within two (2) working
days. A Significant Customer Complaint of Adverse Event
includes but is not limited to:
5.5.1 Medical complaints: side effects.
5.5.2 Technical complaints: quality defects, stability
problems, erroneous product identification, mix-
ups, errors in manufacturing or packaging,
mislabeling, etc.
<PAGE> 44
5.5.3 Reports and other information as specified in the
prevailing regulations.
5.5.4 Dangerous Adverse Product Information: product
hazards which re associated with a considerable
risk to life or health or damage thereto or a
suspicion thereof.
5.5.5 Significant Adverse Product Information: Product
hazards without a considerable risk to health,
but which may considerably impair the efficacy or
utility of the product with possible consequent
injury.
5.5.6 Other Adverse Product Information: Deviation from
product standards, which do not significantly
impact on the utility, safety or efficacy of the
product.
5.6 PCS has the right, but no the obligation, to confirm that
the Products manufactured by or for MTS meet all MTS
performance claims, implied and explicit warranties and
conditions of merchantability or fitness for a particular
purpose.
5.7 All Products delivered to PCS under this Agreement will
have a remaining shelf life of not less than forty-five
(45) days where applicable as of the date such Products are
received by PCS.
6. MTS RIGHTS AND RESPONSIBILITIES
6.1 MTS shall indemnify, defend and hold harmless PCS and its
officers, directors, employees and representative against,
and in respect of, any and all claims, losses, expenses,
costs, including reasonable attorneys' fees, obligations,
liabilities and damages of every kind arising out or
attributed to any defect or failure of any Products
manufactured by or for MTS, and any Recall of Product
except those arising out of the negligence or fault of PCS.
6.2 Provided that MTS is responsible for manufacturing and/or
supplying the Products to PCS, MTS shall provide PCS with a
certificate of insurance evidencing product liability
insurance in the amount of Two Million Canadian Dollars
(CAN$2,000,000) that has been obtained and maintained by
MTS for the Products from Insurers acceptable to PCS, MTS
shall maintain such insurance for the Initial Term of this
Agreement and subsequent renewals. MTS agrees that it
shall provide PCS with at least sixty (60) days prior
written notice of any transfer of such policy to another
insurer which shall also be acceptable to PCS or change of
limits or terms of such policy. The certificate and policy
shall contain an endorsement that such insurance may not be
cancelled or modified except upon sixty (60) days written
notice to PCS. No additional amount will be charged to PCS
for this insurance coverage.
6.3 MTS represents and warrants that it is the sole and
exclusive owner of all rights, titles and interest in and
to the trademarks, service marks and trade names associated
with the Products, and registrations thereof in the
Territory; and the goodwill attached thereto. MTS further
represents and warrants that to the best of its knowledge,
no other person, firm, corporation or association has any
right to sue said trademarks, service marks and trade names
in commerce in the Territory and the Products do no
infringe any patent, industrial design or other
<PAGE> 45
intellectual property rights of any person in Canada or the
United States or will not infringe, such rights in any
other jurisdiction in which PCS may sell Products pursuant
to this Agreement. MTS shall indemnify, defend and hold
harmless PCS pursuant to section 6.4 with respect to any
such claims, challenges or actions based on allegations of
infringement of intellectual property rights.
6.4 MTS is responsible to meet and maintain all Regulatory and
Quality Assurance requirements necessary to market MTS
products in the United States and if PCS so elects, any
other countries. PCS shall be responsible for compliance
with regulatory requirements associated with its role as a
distributor of MTS' products throughout the Territory. PCS
will made a reasonable effect to notify MTS if it becomes
aware of any changes in regulatory requirements which
affect MTS' obligations as a manufacturer, however, MTS is
responsible for ensuring compliance with all Regulatory and
Quality Assurance requirements which are applicable to it
as a manufacturer and PCS assumes no responsibility for
such compliance. Any failure by PCS to keep MTS updated as
to such requirements shall not constitute a breach or
default of the Agreement by PCS.
6.5 MTS shall comply with Canadian and United States Government
regulations and be solely responsible for meeting all
Products manufacturing standards and quality control
specifications.
6.6 MTS must notify PCS immediately in the event of any
unforeseen manufacturing or packaging changes.
6.7 In the event of a notice of a significant Customer
complaint of an Adverse Event as described in Section 5.5,
MTS will notify PCS by telephone or facsimile within
twenty-four (24) hours and provide PCS with written
confirmation of the particulars of such complaint within
ten (10) working days.
6.8 MTS warrants that the Products are owned by MTS and will be
free of any liens or encumbrances to the title to the
Products at the time that title tot he Products passes from
MTS to PCS or from MTS to the applicable MTS/PCS customer,
as the case may be.
6.9 MTS agrees that it will co-operate with and consult
thoroughly with PCS regarding any and all Product Recalls.
7. TERM AND TERMINATION
7.1 The term of this Agreement shall commence on the Effective
Date and continue in full force and effect for five (5)
years unless earlier terminated on consent of both parties.
This Agreement shall automatically renew for successive two
(2) year periods commencing on the fifth anniversary of the
Effective Date unless PCS provides not less than one
hundred and eighty (180) days prior written notice to MTS
of its intent not to renew. MTS shall have the right to
cancel this Agreement on the fifth anniversary of the
Effective Date and second anniversary of any subsequent
renewals upon not less than one hundred and eighty (180)
days prior written notice to PCS of such intent.
<PAGE> 46
7.2 The non-defaulting party may terminate this Agreement:
7.2.1 by written notice to the other party if that
party is in material breach of any of the terms
and conditions of this Agreement and does not
cure such breach or breaches within ninety (90)
days after receiving written notice of such
breach from the other party, or
7.2.2 without notice or opportunity to rectify if the
other party ceases to carry on business, makes a
general assignment for the benefit of its
creditors or files a proposal or arrangement
under the bankruptcy and Insolvency Act Canada,
or similar legislation in the United States or
other relevant jurisdiction or a petition is
filed against that party under such legislation
or if that party shall be declared or adjudicated
bankrupt or if a liquidator, trustee in
bankruptcy, custodian, receiver-manager or any
other officer with similar power shall be
appointed of or for either party or its business
or assets (unless such petition or appointment of
an officer is rescinded within thirty (30) days
after being filed or appointed) or if either
party shall commit an act of bankruptcy or shall
propose a compromise or arrangement or institute
proceedings to be adjudged bankrupt or insolvent
or consents to the institution for such
appointment or proceedings or admits in writing
its inability to pay debts generally as they
become due.
7.3 In addition to the termination of rights set out in Section
7.2, MTS may terminate this Agreement by thirty (30) days
written notice to PCS if PCS is in default on payments
outlined in Article 4 of this Agreement. PCS shall not be
in default for the purposes of this Section 7.4 until
payments due under this Agreement are overdue for one
hundred and twenty (120) days.
7.4 If MTS terminates this Agreement after the Initial Period
or any subsequent term for whatever reason other than a
default or a breach by PCS then MTS shall reimburse PCS for
the fair and reasonable value of the business based upon
the goodwill crated by PCS, such value to be negotiated at
the time of termination.
7.4.1 If the total annual gross sales of the Products
by PCS in the Territory during the twelve months
preceding the termination by MTS is less than one
million dollars ($1,000,000) then the negotiated
value will be not less than fifty percent (50.0%)
but not more than one hundred percent (100%) of
PCS annual gross sales of the Products in the
Territory.
7.4.2 If the total annual gross sales of the Products
by PCS in the Territory during the twelve months
precedent the termination by MTS is more than one
million dollars ($1,000,000) then the negotiated
value will be not less than one hundred percent
(100%) but not more than two hundred percent
(200%) of PCS annual gross sales of the Products
in the Territory.
<PAGE> 47
7.5 Neither PCS, nor MTS, shall be deemed to be in default of
the Agreement if such default is due to force majeure.
Changes in the general economic or business conditions in
the Territory shall not constitute force majeure.
7.6 In the event of any termination of this Agreement,
including its expiry pursuant to section 7.1:
(a) each party shall pay to the other all amounts then due
and accrued due pursuant to this Agreement; and
(b) sections 5.10, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9,
7.10, 8.1 and 9.4 shall survive.
8. CONFIDENTIALITY AND PUBLICATION
Each party agrees to keep secret during the term of this
Agreement and for a period of five (5) years thereafter any and
all written information received from the other on a
confidential basis (such written information to be marked as
Confidential), including such information received before or
after the effective date of this Agreement.
9. GENERAL PROVISIONS
9.1 The failure of either party to enforce at any time the
provisions of this Agreement will not be construed to be a
waiver of such provisions or the right of such party to
thereafter enforce each and every such provision.
9.2 Any notice, report or other communication under this
Agreement shall be deemed to have been duly given on the
date of delivery if delivered to the party to whom or to
which notice is to be given, or on the seventh (7th) day
after mailing if mailed by first-class mail, registered or
certified, postage prepaid, on the next business day, if
sent by fax, after being transmitted by fax confirmed at
the time of transmission, if properly addressed to the
party to receive the notice at the following address or at
any other address given to the other party in the manner
provided by this section 9.2
If to PCS:
Pacific Cart Services Ltd.
Box 492
561 Keystone Avenue
Reno, Nevada
USA
Phone: (702) 334-6476
FAX: (306) 343-0888
If to MTS:
Mister Tube Steak Canada Inc.
636 Dufferin Avenue
Winnipeg, Manitoba
Canada
R2W 2Z2
Phone: (204) 582-2613
FAX: (204) 582-2636
9.3 This Agreement shall be construed and interpreted according
to the laws of the province of Manitoba. Bother parties
hereby expressly agree that, by entering into this
Agreement neither party intends to violate any public
policy, statutory or common law, and if any prat of this
Agreement is in violation of any laws, such sections of
<PAGE> 48
this Agreement will be inoperative and divisible here from
and the remainder of this Agreement will remain binding
upon the parties hereto. Headings and captions are used in
the Agreement for convenience and reference only and shall
not affect the interpretation of construction of this
Agreement.
9.4 No party is the agent or representative of any other party
and no party has any authority to enter into contracts,
agreements or commitments on behalf of any other party, or
in any way to bind any other party.
9.5 If MTS intends to sell or any part of the business of MTS
then PCS shall have the first right of refusal to purchase
all or any such part of the business of MTS at fair market
value subject to commercially reasonable terms of sale to
be prepared by MTS. PCS will have sixty (60) days to
respond to a proposal from MTS. If PCS does not respond
during this period of if PCS declines to purchase the
business of MTS or a part of such business pursuant to this
right of first refusal, MTS may offer to sell all or any
part of the business of MTS to a third party subject to the
identical terms and conditions offered to, and declined by,
PCS. If MTS' negations with a third party results in a
lower sales price or more favorable terms and conditions,
than those offered to PCS for all or any part of the
business of MTS, MTS will offer the lower price and more
favorable terms and conditions to PCS before entering into
an agreement with a third party. PCS will have forty (40)
days within which to respond to this second proposal from
MTS. If PCS does not respond during this period or if PCS
declines to purchase all or any part of the business of
MTS, then MTS may proceed with negotiations with a third
party for the sale or all or any part of the MTS business.
9.6 This Agreement is not assignable as security or otherwise
by either party without the prior consent of the other,
such consent not to be unreasonably withheld.
Notwithstanding the above, PCS and MTS may assign its
rights or obligations hereunder to a subsidiary or
affiliate or to a purchaser of its business relating to the
Products without prior written consent of the other.
9.7 It is agreed that any act or payment required by this
Agreement if not done on a business day, the act or payment
may be done on the next following business day.
9.8 This Agreement sets forth the entire Agreement and
undertaking between the parties as to the subject matter
hereof and supersedes all prior discussions and
negotiations.
9.9 As to the meaning, legal nature, and binding effect of this
Agreement, the undersigned MTS has sought and received
advice and explanation from its attorney, who has confirmed
this as signified by the attestation attached hereto as
Exhibit 1.
9.10 The parties require that this contract be drawn up in
English. Les parties exigent que ce contract soit redige
en anglais.
<PAGE> 50
IN WITNESS WHEREOF the parties hereto have executed this Agreement by
the signature of their duly authorized representatives.
PACIFIC CART SERVICES LTD.
BY: /s/ illegible
Title: Secretary
Date: January 26, 1996
MISTER TUBE STEAK CANADA INC.
BY: /s/ James F. Oste
Title: President
Date: January 26, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Financial Condition at December 31, 1998 (Audited) and the
Statement of Income for the period from inception on August 27, 1998 (Audited)
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 105,553
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 105,553
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 105,553
<CURRENT-LIABILITIES> 23,186
<BONDS> 0
0
0
<COMMON> 114,150
<OTHER-SE> (31,783)
<TOTAL-LIABILITY-AND-EQUITY> 105,553
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (31,783)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (31,783)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (31,783)
<EPS-PRIMARY> 0.006
<EPS-DILUTED> 0.006
</TABLE>
