<PAGE>
As filed with the Securities and Exchange Commission on February 17, 2000
Registration No. 333-83539
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT No. 2
To
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
THINWEB TECHNOLOGIES CORPORATION
(Name of small business issuer in its charter)
---------------
<TABLE>
<CAPTION>
Delaware 52-2102438 7372
<S> <C> <C>
(State or other jurisdiction
of (I.R.S. Employer (Primary Standard Industrial
incorporation or
organization) Identification Number) Classification Code Number)
</TABLE>
---------------
JAMES CAPPADOCIA
President and Chief Executive Officer
thinWEB Technologies Corporation
Suite 101, Phase 3
6 Antares Drive
Ottawa, Ontario K2E 8A9
(613) 225-8446
(Address and telephone number of principal executive offices and
principal place of business, and name, address and telephone number of agent
for service)
Copies to:
IRWIN M. LATNER, ESQ.
Sadis & Goldberg LLC
463 Seventh Ave, Suite 1601
New York, New York 10018
(212) 947-3793
---------------
Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Each Class of to Be Offering Price Aggregate Registration
Securities to be Registered Registered Per Unit Offering Price Fee(2)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock Held by Selling Security
Holders................................ 6,262,500 $0.02(1) $125,250 $331
- -----------------------------------------------------------------------------------------------
Total................................. $125,250 $331
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) There is no current market for the securities and the price at which the
shares held by the selling security holders will be sold is unknown.
Pursuant to Rule 457(f)(2), the registration fee is based upon the
estimated book value per share of common stock of $0.02 as of September
30, 1999.
(2) Previously paid by electronic transfer.
---------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)
Dated , 2000
THINWEB TECHNOLOGIES CORPORATION
6,262,500 Shares of Common Stock
to be Sold by Certain Selling Security Holders
-----------
This prospectus relates to the offer and sale of 6,262,500 shares of common
stock by certain selling security holders. We intend to apply to have our
common stock quoted on the OTC Bulletin Board market maintained by Nasdaq under
the symbol TNWB. No public market currently exists for the shares of common
stock.
We will not receive any proceeds from the sale of shares by the selling
security holders.
Investing in the common stock offered by this prospectus involves a high
degree of risk. See "Risk Factors" beginning on page 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
Prospectus dated , 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.......................................................... 3
Risk Factors................................................................ 4
The Company................................................................. 7
Forward-looking Statements.................................................. 8
Use of Proceeds............................................................. 8
Dividend Policy............................................................. 8
Business.................................................................... 10
Plan of Operation........................................................... 27
Management.................................................................. 32
Security Ownership of Certain Beneficial Owners and Management.............. 38
Selling Security Holders.................................................... 40
Certain Relationships and Related Transactions.............................. 45
Description of Securities................................................... 48
Plan of Distribution........................................................ 54
Legal Matters............................................................... 56
Experts..................................................................... 56
How to Get More Information................................................. 56
Index to Financial Statements...............................................
</TABLE>
2
<PAGE>
PROSPECTUS SUMMARY
ThinWEB Technologies Corporation
We are a recently created company formed to develop internet e-business
software applications targeted to organizations that require rapid access to
data and immediate interaction with customers and employees over the internet.
We have developed a core technology and two software applications, ThinAccess
and Webcrumbs. We are also in the process of developing a wireless product
suite based on our core technology to support wireless data access over the
internet and cellular networks.
Our executive offices are located at Suite 101, Phase 3, 6 Antares Drive,
Ottawa, Ontario K2E 8A9, and our telephone number is (613) 225-8446. Our web
site is located at www.thinweb.com. Information contained in our web site is
not part of this prospectus.
Trading Market
There is currently no trading market for our securities, including our
common stock. We intend to apply for admission to quotation of our common stock
on the OTC Bulletin Board maintained by Nasdaq.
Offering
This prospectus relates to the offering of 6,262,500 shares of thinWEB
common stock by certain selling security holders. We will not receive any
proceeds from these sales.
Selected Financial Data
The following table sets forth the selected consolidated financial data for
thinWEB Technologies Corporation for the period from April 22, 1998 to December
31, 1998 and the nine months ended September 30, 1999:
<TABLE>
<CAPTION>
Nine Months Ended
Period Ended September 30,
December 31, 1998 1999
----------------- -----------------
(unaudited)
<S> <C> <C> <C>
Income statement data:
Revenues.............................. 1,156 2,756
Research and development expense...... 43,888 3,124,685
Loss for the period................... (100,296) (7,168,794)
<CAPTION>
September 30,
December 31, 1998 1999
----------------- -----------------
(unaudited)
<S> <C> <C> <C>
Balance sheet data:
Current Assets........................ 103,258 176,139
Total Current liabilities........... 200,906 905,147
</TABLE>
3
<PAGE>
RISK FACTORS
An investment in our common stock involves a high degree of risk. In
addition to the other information contained in this prospectus, you should
carefully consider the following risk factors and other information in this
prospectus before investing in our common stock.
We will not be able to purchase existing software from third parties and will
be required to reduce our marketing and other expenditures if we are not able
to raise sufficient capital.
A major part of our business plan is to use anticipated revenues from
operations, proceeds from anticipated equity offerings, proceeds from
licensing of technology and borrowings under loan facilities to fund marketing
and advertising related expenditures and acquisitions of existing third party
software. If we do not obtain sufficient funding from such sources, we will
not be able to fund acquisitions of existing software from third parties and
we will be required to reduce or eliminate expenditures on marketing, sales
and advertising, and research and development. In addition, if we are unable
to raise any additional capital or only nominal capital from such sources, the
planned development of thinWEB and the completion, introduction and marketing
of our two software products would be severely curtailed.
Because we have a limited operating history, we may not be able to
successfully manage our business or achieve profitability.
We have only been operating since April 1998 and to date have received only
insignificant revenues from start-up operations. Our management team faces the
challenge of successfully implementing company-wide administrative and
operating systems and marketing our newly developed software products. We may
not be able to successfully manage our business to achieve or maintain
profitability. The profitability of our operations will depend upon many
factors, some of which are beyond our control, including market acceptance of
our concepts, market awareness, reliability of our software products,
dependability and accuracy of technical support, availability of competing
software, initial user acceptance, and general market conditions. We also do
not have insurance to cover losses and liabilities resulting from unforeseen
events such as copyright infringement, product liability, and employment
related liability.
Our success depends on our ability to retain Bryan MacLean, Cory Reid and
other key personnel.
We believe that the expertise of Bryan MacLean, a vice president and a
director, and Cory Reid, a vice president, the initial developers of our two
current software applications, is critical to our success in the software
business, and the loss of their services would have a detrimental impact on
our business. The competition for information technology expertise, including
internet, computer and software programmers and developers, is intense and we
may have difficulty replacing these two individuals, if lost for any reason.
Our success will also
4
<PAGE>
depend on our ability to hire and retain other qualified management, including
competent marketing, technical and sales personnel. We do not have life
insurance on the lives of any of our executive officers.
Sales by selling security holders now and in the future may cause the market
price of our common stock to drop significantly, even if our business is doing
well.
We currently have a total of 17,381,344 shares of common stock outstanding.
Pursuant to this prospectus, 6,262,500 shares held by the selling security
holders may be resold in the public market immediately, subject to certain
voluntary trading restrictions agreed to by certain of the selling security
holders. Most of our remaining 11,118,844 outstanding shares may become
available for resale in the public market in limited amounts beginning April
22, 2000, or upon expiration of the applicable one year holding period,
pursuant to applicable provisions of the federal securities laws.
The large number of shares available for sale immediately by the selling
security holders could significantly reduce the market price of our common
stock, if a market should develop. Also, the availability of low priced shares
offered by selling security holders could hinder our ability to sell our
shares in the future. The selling security holders may offer and sell their
shares at prices and at times they determine, in accordance with applicable
federal and state securities laws. The timing of such sales and the price at
which such shares are sold could have an adverse effect upon the public market
for our common stock, should one develop. In addition, after April 22, 2000,
as restrictions on resale end, the market price could drop significantly if
the holders of these restricted shares sell them or are perceived by the
market as intending to sell them.
If our software suffers delays in release, it would impair our projected
operations and business plan.
Any delay in the release of any of our software products, or any recall or
unforeseen impairment to the use of the software once released, could drain
resources that we expect to receive from potential sales. This would have a
detrimental impact on our projected operations and business plan.
Because our software products are designed for use in the Java programming
language, any decrease in the use of Java as a computer platform would hurt
our potential sales.
Our software products are based on the Java computer programming language
(or computer platform), which is currently a widely used computer platform. If
wide-spread acceptance of Java does not continue or if a competitor to Java
develops a better and more widely used platform not compatible with our
software, the sales and marketability of our software products, as well as our
overall profitability, would be significantly diminished.
5
<PAGE>
The lack of continued development of the e-commerce market would hamper sales
of our products.
Use of the internet and world wide web for commercial purposes is expanding
and, as increased commerce takes place on the internet, unforeseen overloads,
lack of sufficient hardware, telephone availability or other problems may
develop. In addition, consumer use of the internet for purchases, banking, and
other commercial uses may decline for any number of reasons such as security
problems, overload difficulties, shopping trends, or slow internet access. Our
marketing strategy is based on internet sales and a reduction in the general
use of the internet for e-commerce would likely reduce sales of our products.
Competition in the software industry is intense and the availability of
competing software may hurt our potential sales and market share.
The competition in the software industry is intense. Competitors may offer
similar or identical or better software to that being developed or to be
developed by us, and these competitors may offer their software prior to our
software becoming available. In addition, a competitor may offer similar or
identical software at a cheaper price or as free software. Given the intense
competition in the software market, we believe it is important for us to us to
have the first software available in an application or for our software to be
offered for the cheapest price. Any failure in this regard may hurt our
potential sales and market share.
In addition, there are numerous well-established competitors, including
national, regional and local software developers possessing substantially
greater financial, marketing, personnel and other resources than thinWEB. We
may not be able to market or sell our products if faced with direct product
competition from these larger software developers.
6
<PAGE>
THE COMPANY
ThinWeb Software Incorporated was founded in April 1998 by two of thinWEB's
present officers, Bryan MacLean, also a director, and Cory Reid, to focus on
e-commerce business applications. Messrs. MacLean and Reid were part of the
initial software development team at Sanga International, Inc., a company
providing web-based software business solutions using Java technology. Messrs.
MacLean and Reid determined that a market opportunity existed to develop web-
based software applications targeted to software developers and internet
providers based on the use of Sun Microsystems' Java software programming
language. Messrs. MacLean and Reid began development of ThinAccess and
WebCrumbs and its core technology in March 1998, and thereafter established
ThinWeb Software Incorporated through which they continued development of the
technology and products. In November 1999, through a wireless initiative with
Innovium Capital Corp., thinWEB commenced development of a wireless product,
ThinSuite.
Warwick Acquisition Corporation was created on June 2, 1998 to provide a
method for a foreign or domestic private company to become a reporting company
whose securities would be qualified for trading in the United States secondary
market. Warwick was a shell company with no operations, revenues, material
assets or liabilities. On February 19, 1999, Warwick filed a Form 10-SB
registration statement under the Securities Exchange Act of 1934 making it a
reporting company.
On May 27, 1999, Warwick finalized and executed a share exchange agreement
with an effective date of April 22, 1999, among Warwick, Warwick's newly-
created wholly-owned subsidiary Thinweb.com Inc., ThinWeb Software
Incorporated, and the shareholders of ThinWeb Software Incorporated. As part
of the transaction, Warwick changed its name to thinWEB.com Corporation.
ThinWEB.com Corporation later changed its name to our present name, thinWEB
Technologies Corporation. Under the terms of the exchange agreement,
Thinweb.com Inc. purchased all the outstanding shares of ThinWeb Software
Incorporated in consideration for:
(1) the issuance of 16,916,344 Class A exchangeable non-voting
participating common shares of Thinweb.com Inc. common stock to the
shareholders of ThinWeb Software Incorporated;
(2) the issuance by thinWEB Technologies Corporation, the parent
company, to StockTrans, Inc., Ardmore, Pennsylvania, as trustee for the
ThinWeb Software Incorporated shareholders, 16,916,344 shares of its common
stock to be held in trust under the terms of an exchange and voting
agreement dated April 22, 1999; and
(3) the issuance by thinWEB Technologies Corporation, the parent
company,of 1,500,000 shares of convertible preferred stock to E-Capital
Management Inc., a Canadian corporation, at a price of $.0001 per share. E-
Capital subsequently assigned these shares to its affiliate, 583317 British
Columbia, Ltd., a British Columbia corporation. J. Gregory Wilson, one of
our directors, is the president and sole shareholder of 583317 British
Columbia, Ltd. and the president of E-Capital who we have engaged to assist
us in raising capital.
Prior to April 22, 1999, Warwick did not have any operations and had
5,000,000 common shares issued and outstanding. At the same time as the share
exchange, Warwick redeemed
7
<PAGE>
and retired 4,850,000 of its 5,000,000 outstanding shares of common stock. As
consideration for services provided in connection with the acquisition of
Warwick, TPG Capital Corporation, the sole shareholder of Warwick prior to the
share exchange,
(1) retained 150,000 shares of the common stock of Warwick, now thinWEB
Technologies Corporation; and
(2) received a warrant to purchase 50,000 shares of common stock of
thinWEB Technologies Corporation at an exercise price of $1.00 per share
which expires April 22, 2004.
For accounting purposes, the acquisition has been treated as an issuance of
150,000 shares and 50,000 warrants by ThinWeb Software Incorporated to the
shareholder of Warwick in consideration for services related to the corporate
reorganization. These shares and warrants issued as consideration for
acquisition related services have been attributed a value of $90,000 based on
the value of the services received.
James M. Cassidy, the sole officer and director of Warwick, resigned from
such positions pursuant to the share exchange. Mr. Cassidy is the controlling
shareholder of TPG Capital Corporation and is a principal of Cassidy &
Associates, the law firm which prepared initial versions of this registration
statement. In consideration of services provided or caused to be provided to
us by TPG Capital, including among other services, the preparation and filing
of initial versions of this registration statement, we also agreed to pay TPG
Capital $150,000, $125,000 of which has been paid.
At the time of the share exchange transaction, 24 shareholders received
Class A shares in our subsidiary, Thinweb.com Inc. Following the windup and
distribution of assets by a corporate shareholder, 3024704 Nova Scotia
Limited, certain share transfers, and conversions to common stock of the
parent company, there are currently 31 Class A shareholders. Each beneficial
shareholder of the Class A shares has, through the trustee, voting rights in
thinWEB Technologies Corporation, the parent company, equal to the number of
Class A shares held for his benefit by the trustee. Upon proper notice, the
Class A shares may be converted into or exchanged for an equal number of
shares of the parent company held by the trustee. By having the Class A shares
exchangeable at some time in the future for issued shares of the parent
company held by the trustee, the ThinWeb Software Incorporated shareholders
were able to defer, until the exchange of their Class A shares for thinWEB
Technologies Corporation shares, certain Canadian taxes otherwise payable upon
the disposition of their ThinWeb Software Incorporated shares while
maintaining voting rights in the parent company. In this prospectus, certain
of the selling security holders are Class A shareholders who are registering a
portion of the parent company common stock obtainable by such persons upon
conversion of an equal number of their Class A shares.
ThinWEB Technologies Corporation presently has two wholly-owned
subsidiaries, Thinweb.com Inc., a Nova Scotia corporation, and ThinWeb
Software Incorporated, a Nova Scotia corporation. Thinweb.com Inc. was created
to effect the exchange of stock with ThinWeb Software Incorporated
shareholders and has no operations. As a result of the share exchange
transaction, effective April 22, 1999, ThinWeb Software Incorporated became a
wholly-owned subsidiary of Thinweb.com Inc. and, indirectly, a wholly-owned
subsidiary of thinWEB Technologies Corporation, the parent company.
8
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. We intend to identify
forward-looking statements in this prospectus using words such as "believes,"
"intends," "expects," "may," "will," "should," "plan," "projected,"
"contemplates," "anticipates," or similar statements. These statements are
based on our beliefs as well as assumptions we made using information
currently available to us. Because these statements reflect our current views
concerning future events, these statements involve risks, uncertainties and
assumptions. Actual future results may differ significantly from the results
discussed in the forward-looking statements. Some, but not all, of the factors
that may cause these differences include those discussed in the Risk Factors
section beginning on page 4 of this prospectus. You should not place undue
reliance on these forward-looking statements, which apply only as of the date
of this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from sales of the shares offered by the
selling security holders.
We have suffered losses from start-up activities, have insignificant
operations and revenues and need to obtain sufficient financing to complete
our research and development projects, to market our products once available
and to develop profitable operations. We believe that the net proceeds from an
anticipated overseas equity offering, together with potential revenues from
operations (including our investment in our joint venture company, NoTime
Wireless Corp.), funds from earlier subscriptions, and borrowings available
from E- Capital Management Inc., Lines Overseas Management Limited and
shareholders, will be sufficient to fund our operations for the next 12
months.
If funding from the foregoing sources is insufficient to fund our proposed
operations, we may be required to delay, scale back or eliminate parts of our
development plan or obtain funds from additional sources of capital, including
possibly, an additional offering of equity securities, an offering of debt
securities or borrowing through a bank or other entity. We have not
established a limit as to the amount of debt we may incur nor have we adopted
a ratio of our equity to a debt allowance. We cannot guarantee that financing
will available to us from any source, or that financing will be available on
terms acceptable to us, or that any future offering of securities will be
successful. We have no additional agreements or understandings with respect to
any future financing or loan agreements.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock since inception and
we do not anticipate paying any cash dividends on our common stock in the
foreseeable future. We intend to reinvest earnings, if any, in the development
and expansion of our business. Our board of directors will determine, in its
sole discretion, whether to declare any dividends on our common stock in the
future, based on our earnings, capital requirements, financial position,
general economic conditions, and other pertinent factors.
9
<PAGE>
BUSINESS
In this section, all references to "thinWEB", "we", "our" or "us" include
the parent company, thinWEB Technologies Corporation, and its wholly-owned
subsidiaries, Thinweb.com Inc. and ThinWeb Software Incorporated, unless the
context otherwise requires. We are a start-up company with insignificant
operations or revenues to date. Our ability to continue is dependent upon us
obtaining the necessary financing to complete our research and development
projects and upon future profitable operations.
We were incorporated in Delaware on June 2, 1998 under the name Warwick
Acquisition Corporation. Warwick was a shell reporting corporation with no
operations and one shareholder and director. Warwick filed a registration
statement on Form 10-SB with the Securities and Exchange Commission on
February 19, 1999. Pursuant to a share exchange agreement effective April 22,
1999, Warwick acquired all the outstanding stock of ThinWeb Software
Incorporated and changed its name to thinWEB.com Corporation, which later
changed its name to our present name, thinWEB Technologies Corporation.
Pursuant to the share exchange transaction, the management and shareholders of
ThinWeb Software Incorporated became the management and shareholders of the
new company.
Overview
ThinWEB is a company that develops e-business software applications for
organizations that require rapid access to data and immediate interaction with
customers or employees over the internet. We anticipate that all our software
applications will utilize Java, the language released in 1995 by Sun
Microsystems that provides a universal platform that can run on any computer
and on most operating systems without alteration. Our use of Java will enable
us to develop applications for mobile and wireless devices and other emerging
technologies that require platform independence, swift deployment,
flexibility, fast operation and low-cost.
We expect our customer base to consist of stand alone software development
companies, internet service providers, application service providers and
software development teams within large organizations.
We have developed a core technology that will support current and future e-
commerce applications developed by us. Our core technology will provide the
framework for all future software developed by us and will eliminate the need
and cost for developing a particular framework for each application. Our first
two applications are targeted for the e-commerce web applications market.
On August 9, 1999, we introduced into the market our first product,
ThinAccess. To introduce ThinAccess, we issued a press release supplemented by
an informational mail-out to industry publications and research analysts, sent
an e-mail announcement to all users of the beta version (i.e. earlier testing
version) of ThinAccess, and hosted a tour for product reviewers, writers and
industry analysts. Several articles describing ThinAccess appeared in some
industry publications and management anticipates that after testing of the
product, additional reviews will be published in industry trade publications.
10
<PAGE>
On October 6, 1999, at the internet World '99 trade show in New York, we
announced the release of a version of ThinAccess for the Java 2 Platform. At
this time we also announced release of the beta version of our second software
product, WebCrumbs 1.0, for free downloading from the our web site.
Technology and Products
Core Technology. Through our subsidiary, ThinWeb Software Incorporated, we
have developed our core technology to be used for our e-commerce software
applications. The core technology uses Java software compliance and enterprise
Application Programming Interfaces (or APIs) from Sun Microsystems, Inc. to
retrieve data and business logic wherever located and integrate it into new
applications for use on the web. An API is a source code which programmers use
to develop software. The core technology approach treats applications as a
tapestry of inter-linked collaborating and intelligent modular objects called
components. Each component is responsible for encapsulation of its internal
data as well as displaying the designed behavior. Any component connected into
the core requiring a particular action of another component can send
instructions via that component's interpretation mechanism, the API. Our core
technology eliminates the need to build a new framework for each new
application that we develop.
We anticipate that our core technology will facilitate more rapid product
research and development of applications due to the following benefits:
. Decreasing duplication of effort. A problem encountered in a development
project can be solved once and abstracted for use by others in the
project with the same or similar problem.
. Decreased lines of code. Component specialization reduces needed lines of
code since specific functions are encapsulated in one place and can be
referenced by other developers.
. Developer specialization. A developer can specialize in one or a few
components with regard to performance, functions, and other areas and not
use time attempting tasks with which he is not familiar.
. Increase bug detection and fixing. Common operations and algorithms are
encapsulated into components shared by all the developers; when a bug
occurs with one of these operations or algorithms, it can be quickly
isolated to one component and fixed at one time for developers utilizing
the operation or algorithm.
. Easier adaptation. As applications evolve, components can be easily
added, updated or replaced with minimal effect at the application level.
The core technology is not intended to directly be a marketable product;
the core technology was specifically developed to provide a competitive
technical advantage in the development of our web applications and is designed
for transmission control protocol/internet protocol (or TCP/IP) networks using
web clients such as web browsers, middle tier services such as web servers,
application servers and database middle-wares with support for industry
11
<PAGE>
standard protocols. The transmission control protocol/internet protocol is a
set of protocols developed for the internet in the 1970's to get data from one
network device to another.
We have developed two marketable software applications utilizing the core
technology: ThinAccess and WebCrumbs. ThinAccess and WebCrumbs have been
tested and listed by Sun Microsystems on its web site as being approved Java
cross platform applications (referred to in the industry as "100% Pure Java").
ThinAccess was introduced into the market in August 1999, and WebCrumbs was
released on February 1, 2000. We have additional products in the design and
development phases, including a wireless data access product, ThinSuite.
ThinSuite was announced via a press release dated January 23, 2000, and is
projected to be completed in June 2000.
ThinAccess Overview. Databases are widely used in computing and are crucial
to many e-commerce applications including:
. payroll and employee records departments,
. travel and reservation systems,
. financial services systems,
. accounting departments, and
. many other areas in both government and private industry organizations.
ThinAccess is designed to offer remote access to any database running in
any web browser over the internet with exceptional speed and an ultra-thin
download. An ultra-thin download refers to software downloaded over the
internet to a web browser which has under 100 kilobytes of memory. Timely
access to databases is crucial and ThinAccess is designed to provide such
database access in seconds. ThinAccess is a packaged software application that
can be downloaded from a web site. A customer is able to download this
application in the form of an installation program. ThinAccess is designed to
work on any platform, including cellular phones and personal data assistants.
Java Database Connectivity (or JDBC) is a standard defined by Sun
Microsystems to allow database access from Java applets and applications. An
applet refers to a program written in the Java language which is downloaded
over the internet and runs in a web browser. ThinAccess is intended to provide
high performance, powerful features and scalable JDBC database access to
network databases. This improves user responsiveness for web database
applications and gives web developers a single interface to access all
databases enabling web applications to manipulate all databases uniformly.
ThinAccess is specifically aimed at providing thin client Java database
access for Java applets, servlets and applications. A servlet is a Java code
that runs as part of a web server which when requested executes the code on
the server and returns any information to the web browser. ThinAccess is
designed to improve the performance at both the client and server level
through the following key features:
. Decreases database application development cost;
. Can use any browser, any database, or any platform;
12
<PAGE>
. Reuses database connections across multiple clients;
. Provides remote management over the web;
. Connects to multiple databases with one driver download (a driver is a
software code designed to enable a particular device or program by
translating an independent format request into instructions the device
can understand);
. Increases web page response time by avoiding large driver downloads;
. Saves redundant database processing by enabling multiple clients to
browse same query results;
. Ease of use and installation saves costs of installation of specialized
software;
. No software installations required of clients; and
. Ships with a structured query language (or SQL) compliant pure Java
database (SQL is an industry standard language for creating, updating
and querying relational databases).
ThinAccess' utilities include an Interactive SQL, a Query Tool, and a
Schema Viewer. A Query Tool is a software program whose sole purpose is to
query or retrieve information from a database and display it for the user. A
Schema Viewer is a a software program whose sole purpose is to view how data
is stored in a database and display the physical structure for the user.
ThinAccess Technical Data. ThinAccess first requires the ThinAccess Server
to be started. Once this product is initialized customers are able to
configure the ThinAccess Server using the graphical administrator contained in
ThinAccess. Configuration issues for customers include
(1) importing database middlewares (middleware is software that
mediates between a program and a network, managing the interaction
between disparate applications across various computing platforms),
(2) specifying properties such as user name and password to connect to
the database, and
(3) pre-configuring database objects.
ThinAccess is shipped to customers pre-configured with an SQL compliant
Java database called InstantDB. With a configured ThinAccess Server running,
web clients are able to access their databases in Java applets, servlets or
applications using JDBC drivers or ultra-thin Thinlets.
Thinlets provide an ultra-thin download and high performance mechanism to
directly access a pre-configured component existing on the ThinAccess Server.
They drastically reduce the time to perform database operations because many
critical path issues can be performed before the user clicks on the button.
For example, it is possible to instantly access a pre-
13
<PAGE>
configured connection to save on the time it takes to create a connection,
access a pre-configured database query result or access a pre-configured query
to execute if required.
Three JDBC drivers are included with ThinAccess that support the JDBC
standard for Java database connectivity. The choice of driver depends on the
requirements of the project. Factors determining the appropriate driver
include the web browser support required, firewalls requiring HTTP tunneling,
and JDK version proxying. HTTP tunneling refers to communication between web
servers and web browsers through an agreed port using hypertext transfer
protocol (or HTTP) thereby allowing web servers to remain secure while still
allowing the exchange of information. JDK version proxying refers to the
ability to determine and react within software depending on which version of
the JDK software is currently running. ThinAccess can be used to connect to
any database accessible via a JDBC driver and supports access to any open
database connectivity (or ODBC) database as well. Open database connectivity
refers to an industry standard application programming interface allowing
developers to access different database systems.
JDBC drivers involve low level protocols that connect to databases.
Downloading these drivers to web browsers introduces many potential obstacles
including breaking browser security models, Java sandbox issues, huge class
downloads from loading drivers, client software installation issues such as
dynamic link libraries (or DLLs), insecure transmission of database user id's
and passwords, complicated JDBC uniform resource locators (or URL's) and many
more. ThinAccess provides all the functionality of these JDBC drivers without
the downloading obstacles. The following technical terms used in this
paragraph are defined as follows:
Java sandbox a security model used in the Java programming language
which restricts certain actions when running Java
applets and applications.
dynamic link library
a code which is linked when programs are executed
instead of when they are compiled.
uniform resource
an address that identifies a document or resource on
the world
locator
wide web.
ThinAccess provides remote access to these drivers, without the need to
download the driver. This immediately saves a class download that could take
minutes for network users to complete. When a JDBC request is made by the
client, ThinAccess proxies this request over to the middle tier server where
it is executed, then the results returned.
Technical Benefits of ThinAccess include:
. One location for all JDBC drivers. In environments where multiple
databases and database drivers exist, ThinAccess can simplify this
environment by organizing database connectivity in one place.
14
<PAGE>
. Simplicity for web developers. ThinAccess gives web developers a simple
JDBC URL to access databases by simple names. Using the ThinWeb JDBC URL
means the web developer does not have to know underlying database
specifics including the need to know SQL.
. Seamless access when database changes occur. When databases are upgraded,
new JDBC driver versions are released, ports change, database user
identifications and passwords change, and the physical location of the
database changes. This means the user must change all its database
applications to reflect these changes. With ThinAccess this is avoided
since the web developer deals simply with the user defined name. The
database could change but the ThinAccess application does not have to be
changed.
. One driver download for multiple databases. If an applet requires
connectivity to multiple databases, a user could be faced with multiple
downloads. With ThinAccess, one JDBC driver download is sufficient.
. Pre-configuration for premium performance and scalability. It is possible
to pre-configure database connections, statements and result sets so they
can be instantly accessed and processed by many clients simultaneously.
. Work in any version of any Java enabled web browser. Web browsers only
support one version of Java and if there is a download of an applet with
the wrong driver version, the application will not work. ThinAccess
contains a JDBC driver that works in any browser and avoids having to
keep a separate driver for every version of a web browser.
. Use of the more efficient Type 2 drivers. Web enabled databases using
type 2 drivers are regarded as the best performing and most reliable
since they use native database libraries. Most often the type 2 driver is
much more stable and preferred but it cannot be deployed over networks
without customer software installations. ThinAccess uses the type 2
driver.
. Avoids transmitting database user identifications and passwords over the
network. Many JDBC drivers send user identifications and passwords from
the application over the internet and often are unprotected. ThinAccess
avoids transmitting any user identification or password information.
. Flexibility of use. ThinAccess can plug into any web server, any browser,
or any database on any platform supporting the Java specifications.
WebCrumbs Overview. WebCrumbs is designed to be a web site management and
smart agent analysis tool. A smart agent analysis tool is a term used to
describe software which both analyzes web site usage and gives web site
administrators the ability to smartly determine which page web visitors see.
WebCrumbs is a shrink-wrapped (or downloadable) packaged application which can
be graphically installed and easily used to run in correlation with the
corporate web server. WebCrumbs is intended to gather and analyze information
about a visitor to a particular web site and to generate a personalized look
to the web site in response to the information learned about that visitor.
WebCrumbs runs on any operating system
15
<PAGE>
supporting Java, any web server supporting Java servlets, and communicates
with any database supporting JDBC or ODBC.
WebCrumbs Technical Data. As a web site analysis and reporting tool,
WebCrumbs is intended to offer a non-intrusive installation and integrated
real- time reporting, and the ability to use any in-house database customer
reporting tool. Real time, high performance database communication, via JDBC
or ODBC, allows WebCrumbs to provide web-based industry standard analysis
reports, in both hypertext markup language (or HTML) and 3D graphs quickly and
accurately to any web browser. Hypertext markup language refers to a standard
set of tags or characters which are used to format documents on the world wide
web. This database communication also allows WebCrumbs to serve up dynamic
database pages and complicated real time web pages.
Management believes that WebCrumbs is different from other web site
analysis tools because it uses Dynamic Navigation Technology, a technology
developed by thinWEB that automatically generates customized web pages based
on pre-defined business rules and tracks web site activity in real time.
WebCrumbs' smart agent technology learns about a visitor's preferences by
monitoring the visitor's web site usage patterns (such as pages visited and
length of stay) and utilizes such information in real time by instantly
presenting on the web site information and advertising most suitable.
We anticipate that WebCrumbs will be a commerce tool on many web sites.
These sites will display different pages to visitors based on the visitor's
past and current behavior. web sites will present users with personalized
content or purchase recommendations based on individual interests and
preferences. Since this data is updated continuously in real-time, new
suggestions for additional purchases are available instantly.
WebCrumbs' personalization of the web site takes two basic forms:
collaborative filtering and profiling. Both are attempts to collect specific
information that will aid in generating additional traffic, click-throughs and
revenue on web sites.
Collaborative filtering is voluntary. It accepts information provided by
the user and predicts what information will be of interest to him or her. It
can also compare a user profile with those of other users to create common-
interest groups and make recommendations based on other customer preferences.
Profiling is not voluntary. A visitor's actions are observed and tracked.
Subsequent user clicks identify patterns of behavior and interests, which
result in the presentation of specific information to web sites visited.
We anticipate that all future versions of WebCrumbs will be based on the
core features WebCrumbs provides. The versions will include both an internet
service provider (or ISP) and Enterprise edition. ISPs have the unique problem
of having to handle multiple domain name web sites so all tools must be able
to handle their environment. The Enterprise edition will be a more scalable,
multi-server version.
16
<PAGE>
The WebCrumbs Community edition should enable multiple sites, or community
of sites, to collaboratively share certain information obtained by WebCrumbs
about visitors as they move from one site to another in the community.
ThinSuite Overview. Through NoTime Wireless Corp., our joint venture with
Innovium Capital Corp., we are developing ThinSuite as a platform to enable
organizations to provide wireless business applications over WAP (Wireless
Application Protocol) to an assortment of WAP enabled devices. The initial
release of ThinSuite is scheduled to include several prebuilt business
applications, including server based email, scheduling, and contact
management. We are designing this software as a platform for organizations to
readily deploy custom business applications to their workforce. The client
types supported in the initial release will be WAP and WML (Wireless Markup
Language) compliant.
ThinSuite Technical Data. As a platform for wireless business deployment,
ThinSuite is intended to offer businesses the ability to readily deploy
prebuilt as well as custom built business applications to their workforce.
This suite will address two important problems at the enterprise wireless
access level -- limited resources, or resource constrained devices, and the
larger internal problem of supporting two separate data systems, one for the
wired and another for wireless environments. Much of the anticipated growth in
wireless data access in the short term will be enabled by the availability of
WAP. WAP is a protocol standard for wireless integration with the internet
sponsored by the Symbian group which all major cellular phone manufacturers
have joined. The WAP phones are expected to be first introduced to the market
later this year. These phones will use WAP browsers to provide cross-platform
wireless access to internet and corporate infrastructures via the internet.
WAP browsers display WML, the wireless equivalent of HTML. Although these
phones will be limited to serving up only static web pages and no computing is
done on the device, WAP is a new standard designed to extend internet services
to mobile telephony. We believe it will provide an outstanding near-term
market opportunity for software developers.
The device resource constraints include small screens and keypads, limited
memory, narrow bandwidth (a baud rate of 14.4k or less) and continuing airtime
charges. As a consequence of these limitations, wireless devices will not be
able to run the same applications currently used in the wired environment. New
applications will be required such as those proposed by NoTime Wireless Corp.,
our joint venture with Innovium, which have very small footprints on the
device, operate with very small downloads, and are displayable in small
graphical areas.
Enterprises will be faced with the costly problem of developing concurrent
back end infrastructures for supporting wireless client access to enterprise
data. Through ThinSuite, our software platform and application suite will
enable companies to plug-in to existing databases and legacy applications and
provide that information to the WAP enabled wireless device.
The initial suite of applications will consist of scheduling, e-
mail/messaging and contact management. The scheduling application will include
features for setting up meetings and making appointments, automatic
notification of upcoming meetings and schedule changes,
17
<PAGE>
weekly/monthly calendar overviews and calendar publishing. The scheduling
application will eventually communicate with all major scheduling software in
the industry.
The e-mail/messaging application includes cross-platform access from any
WAP device to server based email systems without requiring any software
package on the cell phone. This is the type of email which has become popular
in the enterprise and on the wired internet. Initially only text messages will
be used thereby not bogging down the device waiting for attachments or images.
The contact management application will handles addresses, phone numbers
and contact history for all personal and professional contacts.
The server-based ThinSuite platform will be responsible for managing all
ThinSuite applications including the security of information transferred, user
authentication and scalability.
Joint Venture with Innovium Capital Corp.
Through our subsidiary,ThinWeb Software Incorporated, we have entered into
a joint venture with Innovium Capital Corp. of Toronto, Canada. The joint
venture vehicle is a Canadian private corporation named NoTime Wireless Corp.,
which was incorporated under Canadian law on October 21, 1999. NoTime Wireless
will develop ThinAccess for application to the wireless database access
market, which includes the development of the ThinSuite product for database
access for wireless devices. As part of the joint venture agreements, ThinWeb
Software has provided NoTime Wireless with a perpetual license to use and
market ThinAccess. As consideration for this license, NoTime issued ThinWeb
Software 1,250,000 shares of capital stock representing a 50% interest in the
company and a promissory note in the amount of $1,250,000 CDN ($812,500 US),
and agreed to pay ThinWeb Software a continuing royalty, payable quarterly,
equal to 5% of NoTime's net revenues.
In consideration for 1,250,000 shares of capital stock representing a 50%
interest in NoTime, Innovium paid $1,250,000 CDN ($812,500 US). These proceeds
were used by NoTime to repay the promissory note in the same amount to ThinWeb
Sofware. In addition, ThinWeb Software purchased 500,000 units of Innovium for
CDN$250,000 ($162,500 US). Each unit consists of one share of freely
transferable common stock and one common stock purchase warrant exercisable
for a period of two years at an exercise price per share of CDN$.50 (US$.325).
As part of the transaction, for nominal consideration, thinWEB Technologies
Corporation issued to Innovium 100,000 non-transferable common stock purchase
warrants with a two year exercise term and an exercise price per share equal
to the lower of $5.00 and the lowest price at which thinWEB Technologies
Corporation issues equity or securities convertible into equity during this
period pursuant to a financing.
As a result of all of the joint venture agreements, ThinWeb Software
received net proceeds of $1,000,000 CDN ($650,000 US), ThinWeb Software and
Innovium each hold a 50% equity interest in NoTime and all operational costs
of NoTime are to be funded equally. ThinWeb Software serves as the managing
partner of NoTime and receives a fee for these
18
<PAGE>
services equal to 2.5% of NoTime's operating costs. In addition, ThinWeb
Software has agreed to provide certain consulting services to NoTime for
additional compensation. James Anthony, our chairman of the board, is a former
director of Innovium.
Future Products and Research and Development. We intend to develop
additional e-commerce focused internet applications based on our existing core
technology, in response to perceived market demands. The development of newer
versions of the two products currently developed and the development of new
e-commerce products will require a material investment of resources and market
research. During the first nine months of 1999, research and development
expenses were $3,124,685.
Trademarks
We do not have any patents. On December 4, 1998, we applied for trademark
registration in Canada for "WebCrumbs" and "ThinWeb" and on April 16, 1999, for
"ThinAccess". On June 4, 1999, we applied for trademark protection in the
United States for "WebCrumbs", "ThinWeb" and "ThinAccess". We cannot guarantee
that other companies do not already use these names as their company or product
name and we may not be able to prevent use of these marks by prior users. Even
if such trademark protection is granted, we may not be able to prevent
competitors from using the same or similar marks, concepts or appearances and
we may not have the financial resources necessary to protect our marks against
infringing use.
Licenses
Sun Microsystems, Inc. We have entered into a licensing agreement with Sun
Microsystems, Inc. for use of the 100% Pure Java Logo. The agreement with Sun
Microsystems grants us a non-exclusive, non-transferable, personal, royalty-
free license to use the 100% Pure Java logo and the "For Java" tagline
(1) on the products, splash screens and product packaging, and
(2) in the marketing, advertising, distribution and sale of the
products, provided that ownership of the logo and tagline are attributed to
Sun Microsystems.
The license only extends to those products which have successfully passed
Sun Microsystem's certification tests. Both ThinAccess and WebCrumbs have
passed the certification tests. ThinSuite has not undergone certification
testing.
Cloudscape, Inc. We have entered into a license agreement with Cloudscape,
Inc. of Oakland, California, by which Cloudscape granted us a non-exclusive,
non-transferable license to use its JBMS embedded client and workgroup server
deployment software to
(1) develop a limited use version of the software and
(2) distribute or otherwise deploy to end users the limited use version
of the software.
One year of maintenance and support of the software is included in the
license, including updates, upgrades, new versions, and new products within the
embedded software product
19
<PAGE>
family. The license agreement currently expires on March 31, 2000; however,
the agreement automatically renews year to year unless canceled by us in
writing not less than 90 days prior to the March 31 anniversary date.
Cloudscape may terminate the agreement upon 30 days written notice in the
event that we are in breach of the agreement. We have agreed to pay Cloudscape
a royalty of 3% of the selling price of those products we sell which include
Cloudscape's products and are sold as customer development copies and thus
have a restricted limited use license. On those products sold as customer
deployment copies, and thus have an unrestricted license, Cloudscape will be
paid a royalty of 10% of the selling price. The agreement also entitles
Cloudscape to receive a minimum license fee of $5,000 per year in the event
that the royalty fees fail to total more than $5,000. Additionally, Cloudscape
charges us for technical support on a per call basis with the minimum 10 pack
of support calls at $1,000 to be charged against the initial prepayment.
Informix Software, Inc. We have also entered into a license agreement with
Informix Software, Inc. of Menlo Park, California whereby Informix has granted
us a non-exclusive, non-transferable license to internally use its products
provided under the Informix Solutions Alliance Program. This license is solely
for our development and support purposes and the agreement appoints us as an
Independent Software Vendor under the Informix Solutions Alliance Program.
Pricing for licensing of any products used is pursuant to the pricing
established in the Informix Solutions Alliance Program from time to time. The
agreement is for a 1 year term but automatically renews unless either party
provides written notice of its intention not to renew at least 30 days prior
to expiration.
Oracle Corporation. We have entered into a cooperative marketing agreement
with Oracle Corporation of Redwood City, California. The agreement is designed
to promote each company's products and, in particular, to demonstrate to
customers and potential customers the benefits of using ThinAccess in
conjunction with Oracle's Jdeveloper product. Under the agreement each company
provides the other with a nontransferable, nonexclusive and royalty free
license to use the other's software product for marketing and demonstrations,
internal training and product compatibility testing. Moreover, each company
agrees to cooperate in joint marketing efforts, including mutual links to the
other's web site. The agreement is for a 1 year term but automatically renews
unless either party provides written notice of its intention not to renew at
least 30 days prior to expiration. Either party may terminate the agreement at
any time upon 30 days written notice.
Marketing-General Strategy
We intend to target software manufacturers (database and application),
software developers and internet service providers. We expect to market our
products directly to businesses. We also anticipate marketing our technology
to developers directly through internet sales on our web site in the form of a
developers' tool kit. We anticipate that our thinner and faster internet
solution will have a significant appeal to many software suppliers. Many of
the current database software companies have an application too thick to be
easily internet ready.
20
<PAGE>
We anticipate generating sales inquiries through an on-line marketing
campaign designed to lead Java software developers to our web site. Using
discussion forums, chat groups, and web site advertising banners to be placed
on strategic web sites, customers will be able to link directly to our web
site and learn more about and download our products.
We plan to support our on-line advertising with attendance at industry
trade shows and selected magazine advertisements.
We began to establish a marketing staff during the second quarter of 1999
with the employment of three industry-experienced personnel. We now have six
sales and marketing employees and intend to expand our marketing staff by
hiring additional employees. In addition to our executive offices in Ottawa,
Ontario, Canada, we lease space in Halifax, Canada to accommodate our
increased research and development, administrative personnel and wireless
operations, including NoTime Wireless Corp.
Marketing and Sales Strategy-ThinAccess
The target markets for ThinAccess are database software development
companies that need to web-enable their products and developers seeking to
enable client server applications either for internal use or re-marketing. We
believe that a major shift is taking place in the way information and
applications are accessed and that such shift will provide users access to
powerful computer applications and information through inexpensive and easy to
use information access devices, i.e. thin clients.
ThinAccess sales efforts will be initially focused on the major database
companies, sales force automation and customer relations vendors. We expect to
try to establish long-term agreements with original equipment manufacturing
companies (or OEMs) whereby ThinAccess would be bundled or embedded within
that vendor's software and shipped as a web enhancement. We intend to assist
these vendors to enable their products to remotely access the internet,
intranet and extranet with the eventual target of entering into a binding
royalty or one-time fee structure with these vendors. We anticipate that
pricing for ThinAccess will start at $11,000 per CPU (Central Processing Unit)
with OEM pricing based upon type of sales stream, i.e., either bundled with a
version of the database or sold embedded with all versions with subsequent
annual maintenance fees.
We are targeting the wireless business data application market with our
ThinSuite product. We will attempt to establish relationships with vendors who
require a faster and smaller footprint to allow effective deployment of their
application such as palm-held organizers, certain Windows applications,
cellular phones and pagers. Despite our efforts, however, we may not be able
to meet these expectations or establish agreements or relationships with the
OEM or wireless markets.
Marketing and Sales Strategy-WebCrumbs
Our target markets for WebCrumbs are internet service providers (ISPs),
Application Service Providers (ASPs), web marketers, call center application
vendors and web houses. We will attempt to market WebCrumbs to ISPs by
focusing on the use of WebCrumbs to increase
21
<PAGE>
the value of advertising on web sites. By using WebCrumbs, we believe that an
ISP will be able to charge a premium for advertising. We anticipate that we
will charge a "click charge" to the ISP; that is, each time the ISP uses
WebCrumbs, we will receive a fee. We will also try to obtain a "powered by
thinWEB" logo on the ISP's web site.
We anticipate marketing WebCrumbs to call center vendors to improve their
customer experience by having the ability to adjust to the caller's needs
while online. We anticipate that the fee for embedding WebCrumbs into the
software applications will be based on a royalty fee structure.
Web houses design and deploy web sites for other companies, including the
design, functionality enhancements and, often, the hosting. We expect to first
introduce the software developers tool kit (discussed below) to web houses to
assist them in improving web site features and then building WebCrumbs onto
that. We hope to eventually charge a license fee to such web houses for use of
WebCrumbs with subsequent annual maintenance fees. Despite our efforts,
however, we may not be able to meet these expectations or establish any such
agreements or relationships.
Software Developers Tool Kit
We believe that the key to the success of any software company is its
linking the input of customers and prospects with the input from the software
developer community. We will make available a software developers tool kit
that will enable developers to develop applications using thinWEB products. We
anticipate selling the software developers tool kit directly, through our web
site, to assist in-house information technology departments and developers to
work with our technology. Both ThinAccess and WebCrumbs will be available to
be downloaded directly from our web site for a 30-day no risk trial. After the
trial period, the software developers tool kit for ThinAccess and WebCrumbs
will be available for purchase at $995 and will include a 5-user license. The
software developers tool kit will be only for development use and once an
application is to be deployed to more than five users, we anticipate entering
into a license agreement.
Marketing-Specific Alliances
We have joined several alliances with certain major computer companies and
computer groups which we anticipate will assist in the promotion and sales of
our products.
Sun Developer Connection. We are a member of the Sun Developer Connection
Alliance, a free alliance open to 100% Pure Java certified companies. As a
member of the Sun Developer Connection Alliance, we anticipate the promotion
of our name and products on the Sun web site, a web site description of our
software and a link to our web site from the Javasoft web site, distribution
of evaluation copies of our products bundled on Sun Solutions' widely
distributed CD's, inclusion in the Sun Solutions Catalogue which is
distributed to all Sun Microsystem hardware customers, and possible Sun trade
show participation (such as Sun's Java One and Java Business Expo trade
shows).
22
<PAGE>
Microsoft Independent Software Vendors Program. We are a member of the
Microsoft Independent Software Vendors Program which is designed for
independent software vendors which produce shrink-wrapped or downloadable
software that supports or runs on Microsoft products, technologies and
platforms. Benefits include opportunities to promote our name and products
within and outside of Microsoft to potential customers and developers, regular
receipt of current information on the latest technology, product news and
product strategy from Microsoft, discounts and special pricing.
Novell. ThinAccess is listed on the Novell web site as an approved product
for use with Novell's operating system.
Informix Solutions Alliance Program. We are a member of the Informix
Solutions Alliance Program which is designed for independent software vendors
which support or use Informix products. Benefits include marketing tools in
accordance with the marketing opportunities under the Informix Solutions
Alliance Program from time to time.
Oracle Corporation. We have entered into a cooperative marketing agreement
with Oracle Corporation of Redwood City, California. The agreement is designed
to promote each companies' products and, in particular, to demonstrate to
customers, and potential customers, the benefits of using ThinAccess in
conjunction with Oracle's developer product. The companies have agreed to
cooperate in joint marketing efforts, including mutual links to the other's
web site.
Internet Screenphone Reference Forum. We are a member of the Internet
Screenphone Reference Forum (ISRF), which was established in 1997 to help
foster the global development of new Java technology-based services to be
offered through screenphone terminals and includes many device manufacturers,
software vendors, network operators and service providers. The ISRF's working
document is intended to establish an open specification intended to
standardize screenphone access to the internet, giving consumers an easy-to-
use, low cost alternative for getting online and accessing an array of
services that operate with any compliant internet screenphone. Software
designers who will be developing end-user solutions are invited to provide
their feedback.
Marketing-Alliance Strategy
We will attempt to form alliances with major database manufacturers,
operating system manufacturers, internet service providers and other software
manufacturers to establish technical, marketing and original equipment
manufacturer (or OEM) alliances.
We anticipate that technical alliances will enhance our current and future
products where there is a clear business advantage to incorporate the vendor's
product versus building elements of our products. A typical technical alliance
would involve our use of a vendor's technology to enhance our products.
We anticipate that marketing alliances will increase our market presence
through cross selling to other vendors' customers, reducing the costs of
marketing by combining efforts and shortening the sales cycle. We will attempt
to form marketing alliances with firms that have
23
<PAGE>
complimentary products. A typical marketing alliance for ThinAccess would be
for a database vendor to recommend ThinAccess as a preferred remote access
tool to its customers on its web site and in its literature. These alliances
should enable us to gain broader coverage in media, trade shows, joint sales
calls and promotions.
We will attempt to establish OEM alliances which would bundle our software
applications with the vendor's products. There are different levels of OEM
alliances depending on the manufacturer, product maturity and market
potential. The most common methods that we anticipate being used for our
software applications are bundled and embedded. A bundling OEM alliance would
have the technology shipped or sold with selective models or products. An
embedded OEM Alliance would have the technology sold every time the vendor's
product is sold.
Technical Support
We anticipate that we will develop a dedicated web site to support and
attract software developers. Our research and development team will provide
the support for such developers. We will also host online chat sessions to
allow developers to network and discuss issues and ideas. We anticipate
providing second level support for the OEM alliances, i.e. the manufacturer
will be responsible for supporting its customers directly and we will provide
support for product issues and bug fixes to the manufacturer. We intend to
establish a secure section of our web site to list any known deficiencies in
the products and known "work arounds". This is intended to ensure that the OEM
manufacturers do not spend time debugging known issues.
The Market
Our first two products are intended to target the internet e-business
access and intelligence software applications markets. Our future prospects
are tied directly to the future growth and continued global acceptance of the
internet. The internet has grown in less than a decade from a limited research
tool to a global network consisting of millions of computers and users.
Management believes that the internet is becoming the computing structure of
choice for global business. Companies are introducing new web-based
applications in mainstream operations such as sales force automation, call
center integration, one-to-one marketing, remote training, and customer
support.
Both of our products are "100% Pure Java" certified software solutions, the
Sun Microsystems standard of excellence in Java programming. We have developed
our applications in Java based on our belief that it is fast becoming the
standard for internet programming. We expect to benefit from investments being
made in Java technology by enterprises worldwide. We believe that application
development budgets for Java endeavors will almost double in the next 24
months, and will continue to grow exponentially as Java microprocessors
flourish in internet devices such as TV set-top boxes, smart phones, personal
digital assistants, hand-held devices, pagers, and laser printers.
24
<PAGE>
The primary target market for ThinAccess is companies utilizing internet
web applications with any database, any web browser and requiring "thin
client" database connectivity. We perceive a major initiative by e-commerce
companies to web-enable their business activity and to provide it as another
medium for their customers. Database access is crucial to web-enabling
business activity as it is the predominant mechanism to store and access
information. We also perceive wireless devices and sales force automation as a
major target market for ThinAccess. We agree with projections that predict the
global thin client market will expand dramatically, potentially aggregating
over $1 billion annually. Such predictions have been recently published in
various articles including:
(1) An article in Computer World dated April 28, 1999 by Stacy Collett
which stated, "The thin-client market should reach 2.2 million units
shipped by 2001, with revenue exceeding $1 billion, according to a new
report by Zona Research Inc. in Redwood City, California."
(2) An article in Computer World dated May 10, 1999 by Stacy Collett
stated, "More hardware options and lower prices will join Microsoft's
blessing to propel thin-client sales to 2.2 million units by 2001, with
revenue of $1 billion, according to separate reports by IDC (International
Data Corporation) and Zona."
(3) An article in Inter@ctive Week on line dated June 14, 1999 by
Charles Babcock stated, "Mobile databases are found on client devices, such
as laptops and handheld computers. A "boom in thin clients" is anticipated
between now and 2001, with 2.25 million internet-accessing devices totaling
$1 billion in value expected to be sold, according to Zona Research."
The primary target market for WebCrumbs is the web site management and
analysis market with a secondary target including internet service providers,
call center integrations and remote training. WebCrumbs targets companies that
desire to upgrade their web sites with the ability to learn about and respond
to web site visitors by instantly personalizing that company's web site for
that visitor. This personalization provides companies with the increased
ability of turning web visitors into clients. We believe that this will assist
companies to increase customer response and sales. We anticipate that as a
result of the growth of online applications (e.g., e-commerce, extranets,
automated customer service) and related businesses, web traffic analyzers will
become an even more strategic element with larger budgets for web traffic
analysis tools and services. We believe that companies that now analyze or
will develop analysis capabilities of web site traffic patterns or web site
personalization, need powerful data analysis solutions such as WebCrumbs that
will integrate effortlessly with other applications and platforms.
We believe that companies can increase their web site investment return by
better understanding the profiles and preferences of site visitors.
Investor Relations
We have engaged Brokerwise Communications Inc. to handle our investor
relations. Pursuant to our agreement with Brokerwise, Brokerwise is
responsible for our general investor
25
<PAGE>
relations, including without limitation, developing and maintaining relations
with investment dealers, fund managers, shareholders, preparing news releases,
etc. As compensation for its services, Brokerwise will be paid $10,000 CDN
($6,500 USD) per month, plus reimbursement for authorized expenses up to
$4,500 CDN ($2,925 USD) per month. Our agreement with Brokerwise terminates as
of July 31, 2000.
Competition
We face competition from different companies for different aspects of our
technology and for our different software applications.
ThinAccess connects to any database over the web with swift high
performance downloads of web database applications. We consider the
competitors to ThinAccess to be those products that can provide thin client
(under 100K download) distributed access in Java. Software Synergy's JDBC
Connect provides a thin access database application product, but it is a
Windows specific product supporting ODBC databases. IDS Software's IDS Server
is another competitor and is also a Windows/Linux product with support for
ODBC and Oracle databases.
We anticipate that WebCrumbs will face competition from companies in the e-
commerce field including Web Trends, Active Concepts, Net.Genesis, Andromedia
and Accrue. These companies primarily supply static web analyzer software
providing detailed reports on web site activity without the Dynamic Navigation
Technology used by WebCrumbs which allows a web page viewed by one visitor to
be different than the same web page viewed by another.
The software industry is highly competitive with frequent entries into all
markets and fields by new start-up companies and by established companies with
new products. Many of these competitors may have more experience and access to
resources, including financial and technological resources, than thinWEB.
Employees
We currently have 20 full-time employees and two part-time employees. We
are not a party to any collective bargaining agreements or labor union
contracts, nor have we been subjected to any strikes or employment disruptions
in our history.
Property
Our principal executive offices are located at Suite 101, Phase 3, 6
Antares Drive, Ottawa, Canada. We lease such offices at an annual rent of CDN
$36,000 ($23,400 US) and our telephone number there is (613) 225-8446. We also
lease research and development offices at Suite 1510, 1505 Barrington Street,
Halifax, Canada at an annual rent of CDN $41,615 ($27,050 US) and our
telephone number there is (902) 425-2802. Our web site is located at
http://www.thinweb.com.
We believe that our leased properties are in good condition, are well
maintained and are adequate for our current and immediately foreseeable
operating needs. We do not have any policies regarding investments in real
estate, securities or other forms of property.
26
<PAGE>
PLAN OF OPERATION
Overview
We are a development stage company which develops internet software
products. We have developed a core technology and two software applications,
ThinAccess, designed for organizations that require rapid access to data over
the internet, and WebCrumbs, designed for organizations that require immediate
interaction with customers and employees. We are also in the research and
development stage for a third product called Thinsuite which targets companies
wanting to provide wireless access to business applications. Our use of Java
enables us to develop applications for mobile and wireless devices and similar
and other technologies as they emerge that require platform independence,
swift deployment, flexibility, fast operation and low-cost.
Sales of ThinAccess 1.0 commenced in August, 1999. A version of ThinAccess
for the Java 2 Platform was announced on October 6, 1999 at the Fall internet
World '99 Show in New York City. WebCrumbs was released on February 1, 2000.
Results and Plan of Operations
To date we have had insignificant sales and revenue. Since inception we
have focused on organizational activities and research and development of the
software applications.
Our ability to continue operations is dependent upon our receiving funds
through revenues from the sale of our products and alternate sources of
financing. We may be required to raise additional capital by the sale of
equity securities, through an offering of debt securities, or from borrowing
from a financial institution. We do not have a policy on the amount of
borrowing or debt we can incur.
We believe that the internet as a source of e-business will continue to
experience rapid technological and user growth and that Java-based technology
will continue to increasingly become the user standard. Our first two
applications have been certified by KeyLabs on behalf of Sun Microsystems as
"100% Pure Java" which is considered the industry seal of approval and assures
customers that these products are of the highest quality, interpretable Java
solutions. We anticipate that all our future applications will be certified as
"100% Pure Java".
We have developed a sales and marketing strategy to introduce these
products into the market. As part of our marketing strategy, we anticipate
entering into license arrangements and alliance relationships with major
database manufacturers, operating system manufacturers, internet services
providers and others to establish technical, marketing and original equipment
manufacturer alliances. We have a license agreement with Sun Microsystems,
Inc. to utilize the Pure Java logo and For Java tagline in its packaging and
advertising. We have a license agreement with Cloudscape, Inc. to use
Cloudscape's JBMS embedded client and workgroup server deployment software to
develop a limited use version of the software and to distribute it to end
users. We have a license agreement with Informix Software, Inc. to use
Informix's products internally for development and support purposes, further
to the Informix Solutions Alliance Program.
27
<PAGE>
Significant Expenses
During the period ending September 30, 1998, we were a newly incorporated
entity that was not carrying on any operations and ThinWeb Software
Incorporated, which is now our wholly owned subsidiary, consisted of 4
software developers who were writing computer software programs in a small
office. During the nine month period ended September 30, 1999, we incurred
significant expenses on activities for which there are no comparables in 1998.
These expenses included increased research and development costs, attendance
at industry trade shows, marketing and sales expenses, financing costs,
renting larger premises in Halifax, Nova Scotia and a new office in Ottawa,
Ontario, as well as significant professional fees associated with obtaining
bridge financing and the going public process. We have grown from 4 employees
to 20 full-time employees and 2 part-time employees in the past year. Research
and development costs are expected to increase in future periods as are
selling, general and administration costs. Professional fees and other costs
attributed to financing and going public are expected to be significantly
lower in future periods.
It should be noted that the totals shown in our Consolidated Interim
Statement of Operations and Deficit to September 30, 1999, for research and
development, selling, general and administration, and interest are higher than
the amounts actually disbursed. Shares issued for employee compensation and
financing costs and shares and warrants issued for services during the nine
month period ending September 30, 1999, were valued and the difference between
estimated fair market value and the consideration received by us was allocated
to the above noted categories and to deferred charges and deferred
compensation on the balance sheet for accounting purposes. The total amount
expensed during the nine month period ended September 30, 1999 was $6,043,482.
Liquidity and Capital Resources
We have incurred start-up costs, including administrative costs and
research and development costs. To date we have received funds from sales of
our securities and from loans. We have used the proceeds from the sale of the
securities of ThinWeb Software Incorporated (prior to becoming a subsidiary)
primarily for payment of operating costs to date.
Since inception, ThinWeb Software Incorporated has received an aggregate of
$602,500 from the sale of its securities. ThinWeb Software took out a loan
from Business Development Bank of Canada for an aggregate amount of $18,900
which has been repaid in full from such subscription proceeds.
We have entered into a loan agreement with E-Capital Management, Inc. which
is acting on behalf of Amery Associates Inc., Arrendadora Solarsa S.A.,
Butternut Capital Limited, Cannon Equity Limited, Corporate Solutions Limited,
Greensted Equities Limited, International Shareholdings Corp., Seismic
Investments Limited and Strathglen Capital Limited, all of whom are selling
security holders herein and all of whom are clients of Lines Overseas
Management Limited.
The loan agreement set up a two part credit facility for up to an aggregate
available borrowing of CDN $1,335,000 ($867,750 US). One part of the credit
facility provides for
28
<PAGE>
borrowing up to CDN $375,000 ($243,750 US), without interest, to be repaid
from the proceeds of our first significant financing event. We borrowed CDN
$375,000 ($243,750 US) from this facility but repaid the entire amount.
The second part of the credit facility provides for borrowing up to CDN
$960,000 ($624,000 US) at 12% interest per annum to be repaid from the
proceeds of our first significant financing event. At the option of E-Capital,
all or any portion of the outstanding amount of the interest-bearing credit
facility may be converted into securities of thinWEB at the time of and on the
same terms and conditions as such securities are issued pursuant to a
significant financing event. We borrowed CDN $510,000 ($331,500 US) from this
facility but repaid the entire amount.
E-Capital will be issued, for no additional consideration, common stock
purchase warrants equal to the amount drawn down under the interest-bearing
facility divided by the price of our shares of common stock issued pursuant to
a significant financing event. Such warrants will be exercisable at a per
share price equal to the price at which our common stock is issued pursuant to
such significant financing event for an exercise period of one year from the
date of closing of such transaction.
We have entered into a Private Placement Agreement with Lines Overseas
Management Limited, a registered broker-dealer based in Hamilton, Bermuda,
pursuant to which Lines has agreed to act as our placement agent, on a best
efforts basis, in connection with an offshore private placement of common
stock and warrants with certain non-US institutions and high net worth
individuals pursuant to Regulation S of the Securities Act. We anticipate that
this offering will commence shortly after this registration statement becomes
effective. The offering will consist of a minimum of 1,000,000 units at a
price of $5.00 per unit, with each unit consisting of one share of common
stock and one warrant to purchase an additional share for a two year period at
$7.00. If successful, the minimum proceeds to us from this offering will be
$5,000,000. Lines will receive a commission of five percent of the total
proceeds of the offering with the option to receive the commission in units
instead of cash. We have agreed to use our best efforts to file a registration
statement with the SEC with respect to the common shares placed in this
offering within 60 days of completion of the offering. Upon the effectiveness
of such registration statement, such shares will be freely tradeable.
Lines has also agreed to provide us with an interim credit facility of up
to $2,000,000 through its affiliate, Gateway Research Management Group Ltd.
The credit facility will bear interest at the rate of 12% per annum. To date,
we have borrowed $1,500,000 under the facility. This loan may be repaid out of
the proceeds of the offshore offering. At the option of Lines, the outstanding
balance of this loan can be applied towards the purchase of units in the
offshore offering. This loan is to be secured by a lien on all of our assets.
Pursuant to our joint venture with Innovium Capital Corp., we have received
net proceeds of CDN $1,000,000 ($650,000 US) as consideration for licensing
the development and exploitation of ThinAccess for the wireless database
access market.
29
<PAGE>
ThinWeb Software Incorporated had a net loss of $7,269,090 from operating
activities for the period April 22, 1998 to September 30, 1999.
ThinWeb Software has approximately $160,000 in losses for income tax
purposes available to reduce future taxable income. Our ability to utilize
such losses to reduce our income taxes expires in 2005.
Our cash flow from financing activities for the period April 22, 1998 to
September 30, 1999 was primarily from the proceeds of common stock
subscriptions and advances under the E-Capital credit facility.
We have no commitments for capital expenditures in the near future. We
anticipate that we will primarily focus on marketing ThinAccess and WebCrumbs
and refining these applications. We anticipate developing additional software
applications for use in e-business over the internet.
The financial statements appearing elsewhere in this prospectus have been
prepared assuming that we will continue as a going concern. Our ability to
continue our operations is dependent upon our receipt of revenues through
sales of our software applications or through raising capital through equity
financing or borrowings, or a combination of the foregoing. If substantial
additional funding is not acquired, alternative sources developed, or revenues
from sales not received, we will be required to curtail our operations. In
such case there is substantial doubt about our ability to continue as a going
concern
We believe that the proceeds from the proposed offshore offering,
borrowings from Lines and E-Capital, anticipated revenues from operations, the
CDN $1,000,000 ($650,000 US) in net proceeds received from our joint venture
with Innovium Capital Corp. and funds from earlier stock subscriptions, will
be sufficient to pay our currently anticipated expenses, including salaries,
rent and payments to professionals, and to continue our research,
developmental and marketing operations for the next 12 months. If additional
funds are required, we may borrow up to CDN $1,335,000 ($867,750 US) under the
E-Capital credit facility and an additional $500,000 US under the Lines credit
facility.
Year 2000 Issues
We devised a plan and completed a review and assessment of our hardware and
software in 1999 to satisfy ourselves that our hardware and software are
substantially year 2000 compliant and will continue functioning and be able to
process data on a date from and after January 1, 2000. The costs of our year
2000 compliance program have not been material, and we do not expect any
additional costs related to year 2000 review and assessment to be material.
We are highly dependent upon internet service suppliers and
telecommunications suppliers. However, we have not made any inquiries about
the year 2000 compliance of our clients' systems.
30
<PAGE>
We have not experienced any effects of year 2000 computer system or
software issues to date. However due to the uncertainties that exist in the
software industry concerning the potential effects associated with the failure
of computer systems and software to be year 2000 compliant, we cannot be
certain that our systems or the systems of our clients and critical vendors
will in the future be year 2000 compliant, nor can we be certain that we have
identified in our assessment all of the potential risks to our business that
could result from matters related to the year 2000. We have identified the
following risks of which you should be aware:
. The failure of our services to be fully year 2000 compliant could result
in claims by or liability to our clients.
. The purchasing patterns of our clients and potential clients may be
materially adversely affected by year 2000 issues because they may be
required to expend significant resources on year 2000 compliance matters,
rather than investing in new online products and services such as those
we offer.
. Disruptions caused by year 2000 problems could affect internet usage
generally, which could result in a decline in the use of our services.
If any of these risks materialize, there could be a serious disruption of
our operations, and our business, operating results and financial condition
would be materially adversely affected.
31
<PAGE>
MANAGEMENT
Officers and Directors
The officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
James S. Anthony............ 52 Chairman of the Board
James Cappadocia............ 40 President, Chief Executive Officer and Director
C. James Enman.............. 46 Vice President and Secretary
Bryan C. MacLean............ 31 Vice President, Director
Cory Reid................... 29 Vice President
George R. Fraser............ 61 Chief Financial Officer, Director
J. Gregory Wilson........... 36 Director
</TABLE>
All of our directors hold office until the next annual meeting of
shareholders or until their successors are elected and qualified. At present,
our bylaws provide for not less than one nor more than nine directors.
Currently, we have five directors. Our bylaws permit the board of directors to
fill any vacancy and such director may serve until the next annual meeting of
shareholders or until his successor is elected and qualified. Officers serve
at the discretion of the board of directors.
Our directors do not receive any salary or fee for acting as directors.
However, directors are entitled to participate in the employee and directors
stock option plan and may be issued options. We pay all expenses incurred by
the directors relating to attending board of director meetings.
The principal occupation and business experience for each of our officers
and directors for at least the last five years are as follows:
James S. Anthony has served as our chairman of the board since March
1999. Since June 1974, Mr. Anthony has been the president of J. S. Anthony
& Co. Ltd., Toronto, Canada, which provides consulting services to
corporations, including thinWEB, including strategic planning, finance and
corporate organization. Mr. Anthony is the founder of The Foundation for
the Study of Objective Art, a charitable foundation which operates an art
gallery in Toronto and funds art education programs for the public.
Mr. Anthony also serves on the board of directors of Seabridge Resources
Limited, Toronto, Canada, a precious metals company listed on the Canadian
Venture Exchange. Mr. Anthony formerly served on the board of directors of
Innovium Capital Corp., Toronto, Canada, a technology investment company
listed on the Montreal Exchange and with whom thinWEB has entered into a
joint venture; Denbridge Capital Corporation, Toronto, Canada, a digital
radar imaging company listed on the Toronto Stock Exchange; Borneo Gold
Corporation, Toronto, Canada, a gold exploration company listed on the
Venture Exchange; and Independence Resources Ltd., Toronto, Canada, a gold
exploration company listed on the Venture Exchange. From 1986 to 1993, Mr.
Anthony served as a director and strategist for Softkey Software, Inc., a
public company traded on the Toronto Stock Exchange, which subsequently
through mergers became The Learning Company and was acquired in 1999 by
Mattel. Mr. Anthony received his Bachelor of Arts
32
<PAGE>
degree from the University of Manitoba in 1968 and attended Carleton
University from 1968 to 1970.
James Cappadocia was appointed our president and chief executive officer
and a director on February 3, 2000. From 1997 to 2000, through a consulting
company which he founded to provide executive level services to various
companies, Mr. Cappadocia functioned as president (1998--2000) of PC Outlet
Inc., a Toronto, Ontario distributor of end of life new and used Compaq
products for which it is Compaq Canada's primary channel partner, and as
executive vice president sales and marketing (1997--1998) of Sidus Canada
Inc., a Toronto, Ontario systems integrator and computer manufacturer. In
1997, Mr. Cappadocia was general manager, strategic accounts for Cantel
AT&T of Toronto, Ontario, the second largest wireless communications
company in Canada. From 1995 to 1997, he held the position of director,
sales operations for Shaw MobileComm in Toronto, Ontario, the third largest
wireless communications company in Canada. Mr. Cappadocia was director,
sales and operations (commercial) for Savin Canada Inc., Canada's exclusive
Ricoh distributor of digital and multifunctional copiers and facsimile
products from 1992 to 1995. He previously held executive management
positions from 1990 to 1992 with NEC Canada Inc. a computer manufacturer,
and from 1983 to 1990 with SHL Inc., a technology systems integrator. Mr.
Cappadocia received his Bachelor of Business Administration degree from
Lakehead University in 1982.
C. James Enman, Esq. has served as our vice president and secretary
since March 1999. He also serves as secretary of NoTime Wireless Corp., our
wireless joint venture with Innovium Capital Corp. From 1990 until 1999,
Mr. Enman was a member of the law partnership of Goldberg Thompson,
Halifax, Nova Scotia, where he practiced in the areas of corporate and
commercial law, including securities, financing and intellectual property.
Mr. Enman received his Bachelor of Arts degree from Acadia University in
1977 and his LL.B. degree from Dalhousie University in 1980. Mr. Enman is a
member of the Nova Scotia Barristers Society, Canadian Tax Foundation, and
is a Canadian Trademark Agent. Mr. Enman serves as general counsel to the
Company.
Bryan C. MacLean has served as our vice president and a director since
our inception in April 1998. Mr. MacLean is the co-founder of ThinWeb
Software Incorporated and co-developer of our Java software e-commerce
applications. From 1996 to 1998, Mr. MacLean was a software engineer for
Sanga International Research, Boston, Massachusetts specializing in Java
software solutions. From 1994 to 1996, Mr. MacLean was a software engineer
for Northern Telecom, Ottawa, Canada specializing in asynchronous transfer
software switch development. During 1996, Mr. MacLean was employed by Bell
Canada, Ottawa, Canada as a software engineer where he served as one of the
lead developers of that company's project to process telephone bills over
the Web using electronic data interchange. Mr. MacLean obtained his
Bachelor Commerce degree from St. Francis Xavier University in 1990 and his
Bachelor of Computer Science degree from DalTech University of Nova Scotia
in 1994.
Cory Reid has served as our vice president since our inception in April
1998. He also serves as the president and a director of NoTime Wireless
Corp., our wireless joint venture with Innovium Capital Corp. Mr. Reid is
the co-founder of ThinWeb Software
33
<PAGE>
Incorporated and co-developer of our Java software e-commerce applications.
From 1996 to 1998, Mr. Reid was a senior designer for Java internet
software at Sanga International Research, Boston, Massachusetts and
Halifax, Nova Scotia. From 1995 to 1996, Mr. Reid was a senior software
designer at AT&T, Herndon, Virginia specializing in telecommunications. Mr.
Reid received his Bachelor of Computer Science degree from DalTech
University of Nova Scotia in 1993.
George R. Fraser, C.A. has served as our chief financial officer and a
director since August 16, 1999. Since 1997, Mr. Fraser has served as vice
president of Fraser Financial Consultants, an Oakville, Ontario based
private company providing specialized financial services to public
corporations on mergers and acquisitions and international treasury
financing. From 1995 to 1997, Mr. Fraser was president of TRC Sports
Medical Products Inc., a private company located in Toronto, Ontario
engaged in the distribution of strength and cardiovascular equipment
(StairMaster, Quinton and Cybex) and related health products across Canada.
From 1988 to 1993, he was chief financial officer and corporate secretary
of Crowntek Business Centres Inc. in Toronto, which was the largest
privately owned Canadian distributor of IBM and Compaq computer equipment
and related software with annual sales exceeding CDN $350 million
($227 million US) and 600 employees. Prior to that, from 1984 to 1987 Mr.
Fraser was treasurer of Bow Valley Resource Services Ltd. in Calgary,
Alberta a major public company engaged in land and offshore drilling, heavy
truck manufacturing and waste management operations. From 1974 to 1984 he
was employed in several positions, the last of which was as assistant
treasurer, at Cominco Inc., the Vancouver, British Columbia based
multinational producer of zinc, lead, copper, precious metals and
chemicals. Mr. Fraser began his professional career with Price Waterhouse,
where he obtained his Chartered Accountant designation in Manitoba in 1962
and was employed as a Manager of Taxation Services when he left in 1974.
J. Gregory Wilson has served as a director since November 1999. Mr.
Wilson is the president of E-Capital Investment Inc. which he founded in
1998. E-Capital is a venture capital firm that provides funding, incubator
services and strategic consulting for emerging-growth companies. From 1994
until 1998, Mr. Wilson worked as an investment advisor in Ottawa, Canada
with two of Canada's largest brokerage firms, ScotiaMcLeod and Midland
Walwyn (now Merrill Lynch Canada), where his client base consisted of high
net worth individuals, financial institutions, and corporations. From 1992
until 1994, Mr. Wilson was a business development consultant for Programmed
Communications, a Canadian corporate communications company, specializing
in IPO's and annual shareholder meetings. From 1988 to 1992, Mr. Wilson
obtained the Ottawa franchise rights to Nutri/Systems, a weight loss
company, and built up 11 locations and annual revenues in excess of $13
million before selling the business in 1992. Mr. Wilson received his degree
in economics and finance from Queens University in Kingston, Ontario in
1985. Mr. Wilson has completed the Canadian Investment Management (CIM)
Program administered by the Canadian Securities Institute and has been
awarded the Fellowship of the Canadian Securities Institute (FCSI)
designation.
34
<PAGE>
Executive Compensation
The following table sets forth the total compensation that we have paid or
accrued on behalf of our chief executive officer and president during 1998 and
1999, our only two completed fiscal years to date. None of our officers
received a salary and bonus in excess of $100,000 for services rendered during
such fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------
Awards Payouts
---------------- ------------
Annual Compensation
-------------------------------- Restricted
Name and Principal Stock All Other
Position(s) Year Salary($) Bonus($) Other($) Awards(# shares) Compensation
------------------ ---- --------- -------- -------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
James Anthony........... 1999 0 0 0 250,000 0
Chairman of the Board 1998 0 0 0 0 0
Gary Hannah............. 1999 $92,750 0 0 1,181,344 0
Former President and 1998 0 0 0 0 0
Chief Executive Officer
Bryan MacLean........... 1999 $55,250 0 0 3,090,000 0
Former President 1998 $51,986 0 0 0 0
</TABLE>
- --------
In the preceding table:
(1) Gary Hannah resigned as our president, chief executive officer and a
director, effective February 3, 2000. At such time, James Cappadocia
became our new president, chief executive officer and a director. In 1999,
Mr. Hannah was issued 1,181,344 shares of common stock for nominal
consideration in connection with his initial employment by thinWEB. These
shares have no dollar value assigned to them since there is no public
trading market for our common stock, provided, however, that for
accounting purposes, these shares have been assigned a value of $594,690.
The figure in the table represents Mr. Hannah's aggregate restricted stock
holdings at the end of 1999. These shares may be redeemed pursuant to
certain repurchase rights held by us or we may redeem all or a portion of
such shares as part of the severance package we are presently negotiating
with Mr. Hannah.
(2) James Anthony is the founder, director and president of The Foundation
for the Study of Objective Art, a charitable trust, and may be deemed to
be the beneficial owner of the 250,000 shares owned by it, 200,000 of
which are registered for sale in this prospectus. All of Mr. Anthony's
shares were issued in 1999 in connection with the corporate
reorganization transactions that led to thinWEB's creation. These shares
have no dollar value assigned to them since there is no public trading
market for our common stock. The figure in the table represents Mr.
Anthony's aggregate restricted stock holdings at the end of 1999.
(3) Bryan MacLean is the trustee and beneficiary of the B. MacLean Family
Trust and is deemed to be the beneficial owner of the 3,090,000 shares
owned by it, 200,000 of which are registered for sale in this prospectus.
All of Mr. MacLean's shares were issued in 1999 in connection with the
corporate reorganization transactions that led to thinWEB's creation.
These shares have no dollar value assigned to them since there is no
public trading market for our common stock. The figure in the table
represents Mr. MacLean's aggregate restricted stock holdings at the end of
1999.
35
<PAGE>
Stock Option Plan
We have adopted a stock option plan for key employees, officers and
directors. The plan allows for the issuance of options at the discretion of
the board of directors to such employees, officers and directors and in such
amounts as the directors choose. The total amount of the options issued, if
converted, may not exceed 17% of our total issued and outstanding shares.
Options issued under the plan expire five years after the date of issuance.
No stock options were granted or exercised during 1999 to or by any of our
named executive officers.
Employment Agreements
We have entered into an employment agreement with James Cappadocia to serve
as president and chief executive officer at an annual salary of $200,000 CDN
($130,000 US) and an automobile allowance of CDN $750 per month ($500 US).
Pursuant to the agreement, we issued Mr. Cappodocia 315,000 shares of common
stock for nominal consideration upon his employment with us and have agreed to
issue him an additional 635,000 shares in equal quarterly amounts of 79,375
shares over a two year period. The agreement provides a right to participate
in the employee stock option plan, contains comprehensive confidentiality and
non-competition provisions and provides one year's notice of termination.
We have entered into an employment agreement with Bryan MacLean to serve as
vice president of technology at an annual salary of $120,000 CDN($78,000 US).
The agreement provides a right to participate in the employee stock option
plan, contains comprehensive confidentiality and non-competition provisions
and provides one year's notice of termination.
We have entered into an employment agreement with Cory Reid to serve as
vice president of product development at an annual salary of $120,000
CDN($78,000 US). The agreement provides a right to participate in the employee
stock option plan, contains comprehensive confidentiality and non-competition
provisions and provides one year's notice of termination.
We have entered into an employment agreement with James Enman to serve as
vice president of corporate affairs and general counsel at an annual salary of
$100,000 CDN ($65,000 US). The agreement provides a right to participate in
the employee stock option plan, contains comprehensive confidentiality and
non-competition provisions and provides one year's notice of termination.
Limitation of Liability and Indemnification of Officers, Directors, Employees
and Agents
Overview. Under our charter and Delaware law, our directors are not liable
for monetary damages for breach of fiduciary duties except in special
situations as described below. In addition, under our charter and Delaware
law, we are required to indemnify our directors and officers against all
losses to the fullest extent permitted by Delaware law under a variety of
situations as described below. Finally, under our charter and Delaware law, we
are entitled to obtain insurance on behalf of our directors, officers agents
and employees to protect them
36
<PAGE>
against liabilities they may occur in their official capacities even in
situations where we may not have the power to indemnify these individuals, and
we intend to obtain such insurance, as described below.
Limitations on Liability of Directors. Under Delaware law, a corporation
may adopt a charter provision eliminating or limiting the personal liability
of its directors to the corporation or its stockholders for breach of
fiduciary duties except for:
.any breach of the director's duty of loyalty to the corporation or its
stockholders;
. any acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. any payment of a dividend or approval of a stock purchase that is illegal
under Section 174 of the Delaware General Corporation Law; or
. any transaction from which the director derived an improper personal
benefit.
We have adopted a charter provision eliminating the personal liability of
our directors to the fullest extent permitted under Delaware law except under
the four provisions noted above.
Indemnification of Officers and Directors. Under Delaware law, a
corporation may indemnify its present and former directors, officers, agents
and employees for any claim in connection with a variety of court or
administrative proceedings against such persons in their official capacities
if such person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful.
We have adopted a charter provision that requires us to indemnify all of
our present and former directors, officers, agents and employees to the
fullest extent permitted by Delaware law. In connection with our
indemnification obligations to such persons, we may make advances to cover a
person's expenses provided that we receive an undertaking from such person to
repay the advances unless the person is ultimately determined to be entitled
to indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
thinWEB pursuant to the foregoing provisions, or otherwise, we have been
advised that in the opinion of the Securities and Exchange Commission
indemnification for such liabilities is against public policy as expressed in
the Securities Act and is therefore unenforceable.
Insurance. We are in the process of applying for director and officer
liability insurance and intend to obtain such insurance in the near future.
37
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the date of this
prospectus regarding the beneficial ownership of our common stock by
(1) each of our executive officers and directors, individually and as a
group; and
(2) each person who beneficially owns in excess of five percent of our
common stock after giving effect to the exercise of warrants or options
held by the named security holder.
The information given in this table
(1) is based on 17,381,344 shares of our common stock outstanding as of
the date of this prospectus,
(2) assumes that there has been no conversion of convertible preferred
stock or convertible loans or exercise of warrants by other security
holders, and
(3) includes rights to acquire common stock through exercise of
exchangeable Class A shares of our subsidiary, Thinweb.com Inc.
<TABLE>
<CAPTION>
Amount of Percent of
Common Stock Common Stock
Beneficially Beneficially
Owned or Right Owned or Right
Name to Direct Vote to Direct Vote
---- -------------- --------------
<S> <C> <C>
James S. Anthony,............................... 250,000 1.4%
Chairman of the Board
158 Amelia Street
Toronto, Canada M4X 1E7
James Cappadocia,............................... 315,000 1.8%
President, Chief Executive Officer, Director
33 Theobald's Circle
Richmond Hill, Ontario, Canada L4C 9C7
C. James Enman,................................. 3,090,000 17.8%
Vice President, Secretary
1883 Seldon Street
Halifax, Nova Scotia, Canada B3H 3X3
Bryan MacLean,.................................. 3,090,000 17.8%
Vice President, Director
5444 Victoria Road, #8
Halifax, Nova Scotia, Canada B3H 1M5
Cory Reid,...................................... 3,090,000 17.8%
Vice President
1360 Lower Water Street, Suite 207
Halifax, Nova Scotia, Canada B3S 3N2
Gary Hannah..................................... 1,181,344 6.8%
1250 Squire Drive
Manotick, Ontario, Canada K4M 1B8
All directors and executive officers as
a group (first 5 persons)....................... 9,835,000 56.6%
</TABLE>
38
<PAGE>
- --------
In the preceding table:
(1) James Anthony is the founder, director and president of The Foundation for
the Study of Objective Art, a charitable trust, and may be deemed to be
the beneficial owner of the 250,000 shares owned by it, 200,000 of which
are registered for sale in this prospectus.
(2) Of the 315,000 shares beneficially owned by James Cappadocia, 200,000 are
registered for sale in this prospectus.
(3) James Enman is the trustee and beneficiary of the Enman Family Investment
Trust and is deemed to be the beneficial owner of the 3,090,000 shares
owned by it, 200,000 of which are registered for sale in this prospectus.
(4) Bryan MacLean is the trustee and beneficiary of the B. MacLean Family
Trust and is deemed to be the beneficial owner of the 3,090,000 shares
owned by it, 200,000 of which are registered for sale in this prospectus.
(5) Cory Reid is the trustee and beneficiary of the C. Reid Family Trust and
is deemed to be the beneficial owner of the 3,090,000 shares held by it,
200,000 of which are registered for sale in this prospectus.
(6) With respect to the shares owned by Gary Hannah, our former president and
chief executive officer, these shares may be redeemed pursuant to certain
repurchase rights held by us or we may redeem all or a portion of such
shares as part of the severance package we are presently negotiating with
Mr. Hannah. Any such redemption will affect the total number of
outstanding shares for purposes of the percentages calculated in the
table.
Because our executive officers and directors, together with entities
affiliated with them, beneficially own approximately 56.6% of the outstanding
common stock, they are able to exercise a controlling influence over the
election of directors and other matters requiring stockholder approval,
including change of control transactions. The effect of such management
control could be to delay or prevent any change of management control of
thinWEB.
Ownership of Preferred Stock
We issued 1,500,000 shares of non-voting convertible preferred stock to E-
Capital Management, Inc. at a price of $.0001 per share. E-Capital has since
assigned the shares to 583317 British Columbia Ltd. J. Gregory Wilson, one of
our directors, may be deemed to be the beneficial owner of these shares which
represent 100% of our issued and outstanding preferred stock. These shares are
convertible into common shares and are redeemable by us upon the happening of
certain events.
39
<PAGE>
SELLING SECURITY HOLDERS
In this prospectus, we are registering for offer and sale 6,262,500 shares
of common stock held by 41 security holders. These selling security holders
will offer their shares for sale on a continuous basis pursuant to Rule 415
under the 1933 Act. All of the selling security holder shares registered in
this prospectus will become tradeable on the effective date of this
prospectus. Thirty one selling security holders, representing approximately
1,447,500 shares registered in this prospectus, are registering parent company
common shares which are issuable to such holders upon exercise of their right
to convert Class A shares of our subsidiary, Thinweb.com Inc. The remaining 10
selling security holders, representing approximately 4,815,000 shares
registered in this prospectus, are direct shareholders of the parent company.
We intend to apply to have our common stock quoted on the OTC Bulletin
Board market maintained by Nasdaq under the symbol TNWB. Despite our efforts,
however, we may not have our shares accepted for quotation on the OTC Bulletin
Board.
The following table sets forth certain ownership and registration
information regarding the shares held by each person who is a selling security
holder.
In this table, the * denotes less than 1% share ownership. Also, the
information given in this table
(1) is based on 17,381,344 shares of our common stock as of the date of
this prospectus,
(2) assumes sale of all the shares offered by the selling security
holders,
(3) assumes that there has been no conversion of convertible preferred
stock or convertible loans or exercise of warrants, and
(4) includes rights to acquire common stock through exercise of
exchangeable Class A shares of our subsidiary, Thinweb.com Inc.
<TABLE>
<CAPTION>
Number of Amount and
Shares Percent of
Common Registered Stock Owned
Name and Address of Beneficial Owner Stock Owned for Sale After Offering
------------------------------------ ----------- ---------- --------------
<S> <C> <C> <C>
James Cappadocia...................... 315,000 200,000 115,000(*)
33 Theobald's Circle
Richmond Hill, Ontario, Canada L4C
9C7
C. James Enman........................ 3,090,000 200,000 2,890,000(16.6%)
1883 Seldon Street
Halifax, Nova Scotia, Canada B3H 3X3
Bryan MacLean......................... 3,090,000 200,000 2,890,000(16.6%)
5444 Victoria Road, #8
Halifax, Nova Scotia, Canada B3H 1M5
Cory Reid............................. 3,090,000 200,000 2,890,000(16.6%)
1360 Lower Water Street, Suite 207
Halifax, Nova Scotia, Canada B3S 3N2
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Number of Amount and
Shares Percent of
Common Registered Stock Owned
Name and Address of Beneficial Owner Stock Owned for Sale After Offering
------------------------------------ ----------- ---------- --------------
<S> <C> <C> <C>
T. MacLean Family Trust............... 300,000 100,000 200,000(1.2%)
1338 Molli Street
Halifax, Nova Scotia Canada B3J 1T9
J. Smyth Family Trust................. 300,000 100,000 200,000(1.2%)
1991 Brunswick Street, Apartment 620
Halifax, Nova Scotia Canada B3J 3N2
Amery Associates Inc.................. 473,000 473,000 0
Apartada Postal 1802-1002
Passeo de los Estudiantes
San Jose, Costa Rica
Anjula Ltd............................ 5,000 2,500 2,500(*)
Bahamas Financial Centre
Shirley & Charlotte Street
3rd Floor, PO Box CB13135
Nassau, Bahamas
Arrendadora Solarsa S.A............... 500,000 500,000 0
600 mts. Sur oeste de la Antigua
Fabrica
Paco, San Rafael
San Jose, Costa Rica
Stephanie Bigelow..................... 80,000 40,000 40,000(*)
10 Crichton Park Road
Dartmouth, Nova Scotia Canada
Patrick Birmingham.................... 10,000 5,000 5,000(*)
322 Millwood Drive
Sackville, Nova Scotia Canada
Butternut Capital Limited............. 613,000 613,000 0
Apartada Postal 7-3330-1000
San Jose, Costa Rica
Cannon Equity Limited................. 498,000 448,000 50,000(*)
Avenida 7, Calle 3 Bix
Edifico Teresa 3 Piso
San Jose, Costa Rica
Dale Chaisson Auto Sales, Inc......... 20,000 10,000 10,000(*)
218 Micmac Boulevard
Dartmouth, Nova Scotia Canada
Corporate Solutions Limited........... 602,000 602,000 0
Apartada Postal 1555-1000
San Jose, Costa Rica
Everest Private Trust................. 14,000 7,000 7,000(*)
PO Box HM2706
4th Floor, Jardine House
33 Reid Street
Hamilton HM 12 Bermuda
The Foundation for the Study of
Objective Art........................ 250,000 200,000 50,000(*)
80 Gerard Street East
Toronto, Ontario Canada M5B 1G6
Greensted Equities Limited............ 471,000 471,000 0
Apartada Postal 7-3330-1000
San Jose, Costa Rica
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Number of Amount and
Shares Percent of
Common Registered Stock Owned
Name and Address of Beneficial Owner Stock Owned for Sale After Offering
------------------------------------ ----------- ---------- --------------
<S> <C> <C> <C>
International Shareholdings Corp........ 387,000 387,000 0
Apartada Postal 1802-1002
Paseo de los Estudiantes
San Jose, Costa Rica
Althea Lacas............................ 5,000 2,500 2,500(*)
1005 Beaufort Avenue
Halifax, Nova Scotia Canada
Andrew Lacas............................ 5,000 2,500 2,500(*)
1005 Beaufort Avenue
Halifax, Nova Scotia Canada
Betty Lacas............................. 12,000 6,000 6,000(*)
1005 Beaufort Avenue
Halifax, Nova Scotia Canada
Peter Lacas............................. 14,000 7,000 7,000(*)
1005 Beaufort Avenue
Halifax, Nova Scotia Canada
Paul Landry, Sr......................... 100,000 50,000 50,000(*)
32 Greenwood Drive
Antigonish, Nova Scotia Canada B2G 2H8
Paul Landry, Jr......................... 10,000 10,000 0
32 Greenwood Drive
Antigonish, Nova Scotia Canada B2G 2H8
Darlene Letun........................... 100,000 50,000 50,000(*)
107 Douglas Park View SE
Calgary, Alberta Canada
Scott MacKinnon......................... 70,000 35,000 35,000(*)
69 Chameau Crescent
Dartmouth, Nova Scotia Canada
Michael MacDonald & Natasha Pavlinovic.. 80,000 40,000 40,000(*)
14 Stratford Way
Halifax, Nova Scotia Canada
William Mahody.......................... 50,000 25,000 25,000(*)
Suite 205--99 Portland Street
PO Box 1126
Dartmouth, Nova Scotia Canada
Diane Marsh............................. 50,000 25,000 25,000(*)
7365 Bradner Road
Mt. Leyman, British Columbia Canada
Curtis Mayert........................... 50,000 25,000 25,000(*)
1422 Joliet Avenue, SW
Calgary, Alberta Canada
Brian McAvoy............................ 20,000 10,000 10,000(*)
Trysail Circle
Tampa, Florida 33607
Christine Musgrave...................... 10,000 5,000 5,000(*)
6 Stonepoint Avenue
Napean, Ontario Canada
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
Number of Amount and
Shares Percent of
Common Registered Stock Owned
Name and Address of Beneficial Owner Stock Owned for Sale After Offering
------------------------------------ ----------- ---------- --------------
<S> <C> <C> <C>
Sean O'Regan........................... 50,000 25,000 25,000(*)
11 Gladstone Avenue
Dartmouth, Nova Scotia Canada
Gary Rubenstein........................ 50,000 25,000 25,000(*)
3 Sandhurst Close
Halifax, Nova Scotia Canada
Richard Shirley........................ 30,000 15,000 15,000(*)
41 Bayside Drive
Bayside, Nova Scotia Canada
Seismic Investments Ltd................ 577,000 577,000 0
Apartada Postal 1555-1000
San Jose, Costa Rica
Strathglen Capital Limited............. 479,000 479,000 0
Apartada Postal 1802-1002
Passeo de los Estudiantes
San Jose, Costa Rica
Louis Toth............................. 60,000 30,000 30,000(*)
32 Craigburn Drive
Dartmount, Nova Scotia Canada
Gary West.............................. 20,000 10,000 10,000(*)
38 Chadwick Street
Dartmouth, Nova Scotia Canada
Donald Wile............................ 100,000 50,000 50,000(*)
82 Empire Street
Bridgewater, Nova Scotia Canada
</TABLE>
- --------
In the preceding table:
(1) James Cappadocia, a selling security holder, is our president, chief
executive officer and a director;
(2) James Enman, a selling security holder, is our vice president and
secretary;
(3) Bryan MacLean, a selling security holder, is our vice president and a
director;
(4) Cory Reid, a selling security holder, is our vice president;
(5) The T. MacLean Family Trust is controlled by an employee of thinWEB and the
shares of common stock held by it are deemed to be beneficially owned by
such employee;
(6) The J. Smyth Family Trust is controlled by an employee of thinWEB and the
shares of common stock held by it are deemed to be beneficially owned by
such employee; and
(7) James Anthony is the founder, director and President of The Foundation for
the Study of Objective Art and may be deemed the beneficial owner of the
shares held by it.
(8) Kevin Gunther is the ultimate beneficial owner of 100,000 of the 498,000
shares held by Cannon Equity Limited, and 50,000 of Mr. Gunther's shares
are being registered in this prospectus. In Exhibit 10.4 to the
registration statement of which this prospectus is a part, we have
identified, to the best of our knowledge, the other ultimate beneficial
owners of the entities listed above.
43
<PAGE>
In the event the selling security holders receive payment from sales of
their shares, we will not receive any of the proceeds from such sales. We are
bearing all expenses in connection with the registration of the selling
security holder shares offered by this prospectus.
The shares owned by the selling security holders are being registered
pursuant to Rule 415 of the Securities and Exchange Commission pertaining to
continuous offerings and sales of securities. In regard to the selling
security holder shares offered under Rule 415, we have made certain
undertakings in Part II of the registration statement of which this prospectus
is a part pursuant to which, in general, we have committed to keep this
prospectus current during any period in which offers or sales are made
pursuant to Rule 415.
44
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Agreements with E-Capital Management Inc.
We have retained E-Capital Management Inc. to assist us in raising capital.
J. Gregory Wilson, one of our directors, is the president of E-Capital
Management which is owned by The Greg Wilson Family Trust, the beneficiaries
of which are Mr. Wilson's spouse and children. Mr. Wilson is also the
president and sole shareholder of 583317 British Columbia Ltd. Neither E-
Capital nor 583317 British Columbia Ltd. are registered broker-dealers.
We have issued 1,500,000 shares of convertible preferred stock to E-Capital
at the price of $.0001 per share, as compensation for E-Capital's assistance
in locating and providing both interim and equity financing. E-Capital has
since assigned the shares to 583317 British Columbia Ltd. The holder of these
shares is entitled to convert such shares into shares of our common stock on a
one-for-one basis at any time before June 30, 2000, provided that the holder
(or its affiliate) has been instrumental in arranging an equity financing
which has resulted in our receipt of net proceeds of at least $5,000,000.
After June 30, 2000, we may redeem any remaining outstanding convertible
preferred stock at a redemption price of $.0001 per share. To date, E-Capital
has assisted us in the sale of certain of our securities to 3024701 Nova
Scotia Limited, Everest (Private) Trust Company and Donald Wile for a total
investment of $502,500.
We have entered into a loan agreement with E-Capital which is acting on
behalf of Amery Associates Inc., Arrendadora Solarsa S.A., Butternut Capital
Limited, Cannon Equity Limited, Corporate Solutions Limited, Greensted
Equities Limited, International Shareholdings Corp., Seismic Investments
Limited and Strathglen Capital Limited, all of whom are selling security
holders herein and all of whom are clients of Lines Overseas Management
Limited.
The loan agreement set up a two part credit facility for borrowing up to
CDN $1,335,000 ($867,750US). One part of the credit facility provided us with
an interest free loan of CDN $375,000 ($243,750), which was to be repaid from
the proceeds of our first significant financing event. This loan has been
repaid in its entirety.
The second part of the E-Capital credit facility allows us to borrow up to
CDN $960,000 ($624,000 US) on an as needed basis at an interest rate of 12%
per annum. Interest on this facility is calculated and payable monthly at the
rate of 1% per month on the outstanding balance. We have the option of
repaying the accrued interest monthly or adding the accrued interest to the
outstanding balance. The outstanding balance of this facility shall become due
and payable upon completion of a significant financing event. However, at the
time that any securities are issued pursuant to a significant financing event,
E-Capital has the option to convert all or any portion of the outstanding
balance of this credit facility into securities of thinWEB on the same terms
and conditions as the securities which are issued pursuant to the significant
financing event. We borrowed CDN $510,000 ($331,500 US) under this facility
but repaid the entire amount.
E-Capital will be issued, for no additional consideration, common stock
purchase warrants equal to the largest amount drawn down under the interest-
bearing facility divided by the price
45
<PAGE>
of our common stock issued pursuant to a significant financing event. Such
warrants will be exercisable at a per share price equal to the price at which
our common stock is issued pursuant to such significant financing event for an
exercise period of one year from the date of closing of such transaction.
E-Capital has also been involved in identifying applicable government
financing and financial assistance programs for which we may be eligible. We
have agreed to reimburse all of E-Capital's approved expenses.
On August 31, 1999, E-Capital, further to a corporate reorganization,
assigned its contract with us to an affiliated company, E-Capital Investment
Inc. E-Capital Management Inc. and E-Capital Investment Inc. are both owned by
The Greg Wilson Family Trust.
Agreements with Lines Overseas Management Limited
We have entered into a Private Placement Agreement with Lines Overseas
Management Limited, a registered broker-dealer based in Hamilton, Bermuda,
pursuant to which Lines has agreed to act as our placement agent, on a best
efforts basis, in connection with an offshore private placement of common
stock and warrants with certain non-US institutions and high net worth
individuals pursuant to Regulation S of the Securities Act. We anticipate that
this offering will commence shortly after this registration statement becomes
effective. The offering will consist of a minimum of 1,000,000 units at a
price of $5.00 per unit, with each unit consisting of one share of common
stock and one warrant to purchase an additional share for a two year period at
$7.00. If successful, the minimum proceeds to us from this offering will be
$5,000,000. Lines will receive a commission of five percent of the total
proceeds of the offering with the option to receive the commission in units
instead of cash. We have agreed to use our best efforts to file a registration
statement with the SEC with respect to the common shares placed in this
offering within 60 days of completion of the offering. Upon the effectiveness
of such registration statement, such shares will be freely tradeable.
Lines has also agreed to provide us with an interim credit facility of up
to $2,000,000 through its affiliate, Gateway Research Management Group Ltd.
The credit facility will bear interest at the rate of 12% per annum. To date,
we have borrowed $1,500,000 under the facility. This loan may be repaid out of
the proceeds of the offshore offering. At the option of Lines, the outstanding
balance of this loan can be applied towards the purchase of units in the
offshore offering. This loan is to be secured by a lien on all of our assets.
Joint Venture with Innovium Capital Corp.
We are a party to a joint venture with Innovium Capital Corp. pursuant to
which each of us owns a 50% interest in NoTime Wireless Corp, a Canadian
corporation established in October 1999. The joint venture was organized for
the purpose of more fully developing our ThinAccess software program and
making it more merchantable to the wireless database access market. Pursuant
to the joint venture agreements, we have received net proceeds of CDN
$1,000,000 ($650,000 US) as consideration for licensing the development and
46
<PAGE>
exploitation of ThinAccess for the wireless database access market. James
Anthony, our chairman of the board, is a former director of Innovium.
As part of the joint venture transaction, ThinWeb Software purchased
500,000 units of Innovium for CDN$250,000 ($162,500 US). Each unit consists of
one share of freely transferable common stock and one common stock purchase
warrant exercisable for a period of two years at an exercise price per share
of CDN$.50 (US$.325). In addition, thinWEB Technologies Corporation issued to
Innovium 100,000 non-transferable common stock purchase warrants with a two
year exercise term and an exercise price per share equal to the lower of $5.00
and the lowest price at which thinWEB Technologies Corporation issues equity
or securities convertible into equity during this period pursuant to a
financing.
Consulting Agreement with J.S. Anthony & Associates Limited
We have retained, J.S. Anthony & Co. Ltd., a consulting firm owned by James
Anthony, to serve as consultants and, more specifically, to provide advice to
us on financing, business strategy and other corporate matters. In
consideration for these services, J.S. Anthony receives a monthly fee of
CDN$5,000 ($3,250 US) and reimbursement of reasonable expenses.
Transactions with TPG Capital Corporation and James Cassidy
We havegranted TPG Capital Corporation, a selling shareholder, a five year
warrant to purchase 50,000 shares of our common stock at an exercise price of
$1.00 per share. James M. Cassidy is the controlling shareholder of TPG
Capital and principal of Cassidy & Associates, the law firm which prepared
initial versions of this registration statement. James Cassidy was the sole
officer and director of our predecessor company, Warwick Acquisition
Corporation, prior to the share exchange transaction with the thinWEB
companies and
their shareholders. In consideration of services provided or caused to be
provided to us by TPG Capital, including among other services, the preparation
and filing of initial versions of this registration statement, we also agreed
to pay TPG Capital $150,000, of which $125,000 has been paid.
Voluntary Trading Restrictions Agreements with Selling Security Holders
TPG Capital has entered into a Voluntary Trading Restrictions Agreement
with us pursuant to which TPG Capital has agreed not to sell more than 25,000
shares in any 30 day period. Certain other selling security holders owning a
total of 1,002,500 shares have also entered into a Voluntary Trading
Restrictions Agreement with us pursuant to which each shareholder has agreed
not to sell more than 10 percent of the shareholder's shares in any 30 day
period.
Severance Arrangement with Gary Hannah
Gary Hannah, our former president and chief executive officer, resigned
from such positions effective February 3, 2000. We are presently negotiating a
severance package with Mr. Hannah which may involve the redemption of all or a
portion of his thinWEB shares.
47
<PAGE>
DESCRIPTION OF SECURITIES
We have authorized capital of 100,000,000 shares of common stock, $.0001
par value, and 20,000,000 shares of preferred stock, $.0001 par value. As of
the date of this prospectus, we have 17,381,344 shares of common stock issued
and outstanding and 1,500,000 shares of convertible preferred stock
outstanding.
Pursuant to a share exchange agreement, effective as of April 22, 1999, our
subsidiary, Thinweb.com Inc., purchased all the outstanding shares of common
stock of ThinWeb Software Incorporated (16,916,344 shares) in consideration
for:
(1) the issuance of 16,916,344 Class A exchangeable non-voting
participating common shares of common stock of Thinweb.com Inc.;
(2) the issuance to StockTrans, Inc., a Pennsylvania corporation, as
trustee for the ThinWeb Software Incorporated shareholders, 16,916,344
shares of our common stock to be held in trust under the terms of an
exchange and voting agreement dated April 22, 1999; and
(3) the issuance of 1,500,000 shares of our convertible preferred stock
to 583317 B.C. Ltd., a British Columbia corporation, at $.0001 per share.
As a result of the transaction, thinWeb Software Incorporated became a
subsidiary of Thinweb.com Inc., and, indirectly, a subsidiary of thinWEB
Technologies Corporation, the parent company.
Each beneficial shareholder of the Class A shares has, through the trustee,
voting rights in thinWEB equal to the number of Class A shares held for his
benefit by the trustee. The Class A shares may be converted into or exchanged
for an equal number of the common shares of thinWEB held by the trustee.
Thirty one of the 41 selling security holders in this prospectus are
registering parent company common shares which are issuable to such holders
upon exercise of their right to convert Class A shares of our subsidiary,
Thinweb.com Inc.
Class A Shares
General. Our subsidiary, Thinweb.com Inc., has an authorized 20,000,000
Class A exchangeable non-voting shares of which 16,916,344 have been issued to
the ThinWeb Software Incorporated shareholders. The Class A shares are not
entitled to receive notice of or to attend any meeting of the shareholders of
Thinweb.com Inc. nor to vote on any matters that come before its shareholders.
The Class A shares have voting rights in thinWEB equal to one vote for each
Class A share held on all matters that properly come before the shareholders
of thinWEB at a meeting of shareholders or in connection with any action taken
by shareholder consent. The holders of the Class A shares are entitled to
receive notice of and attend any meeting of shareholders of thinWEB and to
vote at any such meetings.
The Class A shares may be converted into or exchanged for an equal number
of shares of the thinWEB which shares are held by the trustee for such
conversion or exchange.
48
<PAGE>
The trust agreement with StockTrans, Inc. sets forth the rights and
restrictions pertaining to the Class A shares and the shares of common stock
of thinWEB held by StockTrans, Inc., as trustee. Upon conversion, the shares
held by the trustee will be released to the converting holder and an equal
number of Class A shares will be delivered to thinWEB. The holders of the
Class A shares have the right to vote their interests in thinWEB directly or
through the trustee as holder of thinWEB shares.
Our shares, while held by the trustee, will not be entitled to participate
in dividends declared by us; however, we have agreed that should we declare a
dividend on our common stock we will ensure that our subsidiary, Thinweb.com
Inc., has the means to pay a like dividend on its Class A shares.
Summary of Class A Share Agreements. We have issued to and placed with the
trustee 16,916,344 shares of our common stock for use in exchange of the Class
A shares pursuant to an exchange and voting agreement. The Class A shares
contain certain rights and provisions as set forth in the trust agreement and
discussed below. These rights and provisions are a summary only and should be
read in conjunction with the descriptions provided in the documents which were
filed as exhibits with the Form 8-K filed by us under our former name, Warwick
Acquisition Corporation, on May 28, 1999 and are incorporated by reference in
this prospectus.
(1) Exchange Rights on the Liquidation of the Purchaser. Holders of the
Class A shares have the right, upon the occurrence and during the
continuance of any proceeding in bankruptcy, insolvency, dissolution or
winding up commenced by Thinweb.com Inc. or against it, to require us to
purchase from each or any holder of the Class A shares all or any part of
the Class A shares held at an amount equal to (a) the current market price
of our common stock on the last business day prior to the day of purchase
plus (b) an additional amount equal to the full amount of all dividends
declared on such Class A shares and all dividends declared on our common
stock which have not been declared on the Class A shares.
(2) Automatic Exchange on the Liquidation of thinWEB. In order that
holders of the Class A shares will be able to participate on a pro rata
basis with the holders of our common stock in the event of a voluntary or
involuntary dissolution, liquidation or winding-up of thinWEB, all of the
then outstanding Class A shares shall be automatically exchanged for shares
of our common stock in the absence of an affirmative written election from
a holder of Class A shares not to participate in the automatic exchange.
(3) Retraction by Holder. A holder of Class A shares is entitled at any
time to require Thinweb.com Inc. to redeem any or all of the Class A shares
held by it in an amount equal to (a) the current market price of our common
stock on the last business day prior to the retraction date which may be
satisfied in full by Thinweb.com Inc. causing to be delivered to such
holder one share of our common stock for each Class A share held by the
retracting holder plus (b) an additional amount equal to the full amount of
all dividends declared on such Class A shares and all dividends declared on
our common stock which have not been declared on the Class A shares.
49
<PAGE>
(4) Automatic Redemption by the Purchaser. On the 25th anniversary of
the closing date of the stock exchange transactions, unless otherwise
extended or accelerated, Thinweb.com Inc. shall redeem all the then
outstanding Class A shares for an amount per share equal to (a) the current
market price of our common stock on the last business day prior to the
redemption date which may be satisfied in full by Thinweb.com Inc. causing
to be delivered to such holder one share of our common stock for each Class
A share held by the retracting holder plus (b) an additional amount equal
to the full amount of all dividends declared on such Class A shares and all
dividends declared on our common stock which have not been declared on the
Class A shares.
(5) Purchase for Cancellation. Thinweb.com Inc. may at any time and from
time to time offer to purchase for cancellation all or any of the
outstanding Class A shares at any price by tender to all of the holders of
the Class A shares then outstanding at any price per share determined by it
plus an amount equal to all declared and unpaid dividends thereon. If in
response to such tender offer, more Class A shares are tendered than
Thinweb.com Inc. is willing to purchase, then Thinweb.com Inc. shall
purchase as nearly as possible pro rata according to the number of shares
tendered by each holder.
(6) Reciprocal Changes. If we issue or distribute warrants, options or
other rights to purchase our securities to the holders of our outstanding
common stock, or if we issue shares or securities of any other class than
the common stock exchangeable for the Class A shares, or evidences of
indebtedness or assets, then Thinweb.com Inc. shall issue to the holders of
the Class A shares the economic equivalent on a per share basis of such
rights, options, securities, shares, evidences of indebtedness or other
assets.
(7) Reclassifications. If we subdivide, redivide or change the
outstanding number of our common stock into a greater number or reduce,
combine or consolidate the outstanding number of our common stock into a
lesser number or reclassify or otherwise change our common stock or effect
an amalgamation, merger, reorganization or other transaction affecting our
common stock, then Thinweb.com Inc. will make the same or an economically
equivalent change simultaneously to, or in the rights of the holders of,
the Class A shares.
Common Stock
We are registering an aggregate of 6,262,500 shares of common stock for
sale by 41 selling security holders at a price to be determined in the future.
Holders of the common stock do not have preemptive rights to purchase
additional shares of common stock or other subscription rights. The common
stock carries no conversion rights and is not subject to redemption or to any
sinking fund provisions. All shares of common stock are entitled to share
equally in dividends from legally available sources when, as and if declared
by the board of directors and, upon our liquidation or dissolution, whether
voluntary or involuntary, to share equally in our assets available for
distribution to stockholders. All outstanding shares are validly authorized
and issued, fully paid and non- assessable, and all shares to be offered and
sold by this prospectus will be validly authorized and issued, fully paid and
non-assessable.
50
<PAGE>
Our board of directors is authorized to issue additional shares of common
stock, not to exceed the amount authorized by our certificate of
incorporation, and to issue options for the purchase of such shares, on such
terms and conditions and for such consideration as the board may deem
appropriate without further stockholder action.
Noncumulative Voting
Each holder of common stock is entitled to one vote per share on all
matters on which such stockholders are entitled to vote. Shares of common
stock do not have cumulative voting rights. The holders of more than 50
percent of the shares voting for the election of directors can elect all the
directors if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any person to the board of
directors.
Warrants
We have granted a warrant to purchase up to 50,000 registered shares of our
common stock at a strike price of $1.00 per share, exercisable for a period of
five years from April 22, 1999, to TPG Capital Corporation, an affiliated
company of Cassidy & Associates, the law firm which prepared initial versions
of this prospectus.
As part of our joint venture with Innovium Capital Corp., we issued to
Innovium 100,000 non-transferable common stock purchase warrants with a two
year exercise term and an exercise price per share equal to the lower of $5.00
and the lowest price at which we issue equity or securities convertible into
equity during the period pursuant to a financing.
Preferred Stock
Our board of directors is authorized to approve the issuance from time to
time of up to 20,000,000 shares of preferred stock in one or more series and
can also establish the number of shares to be included in each such series and
the respective rights, powers and restrictions of the shares of each such
series without any further vote or action by the shareholders. Any shares of
preferred stock so issued may have priority over our common stock with respect
to dividend or liquidation rights. Any issuance of preferred stock may have
the effect of delaying, deferring or preventing a change in control of thinWEB
without further action by the shareholders, and may adversely affect the
voting and other rights of the holders of common stock.
Our board of directors has designated 1,500,000 preferred shares as Series
1 preferred stock. All of the Series 1 preferred stock has been issued and is
outstanding. The holder of the preferred shares is entitled to convert such
shares into shares of our common stock on a one-for-one basis at any time
before June 30, 2000, provided that the holder (or its affiliate) has been
instrumental in arranging an equity financing which has resulted in our
receipt of net proceeds of at least $5,000,000. These convertible preferred
shares are not entitled
to dividends and are non-voting. In the event of our liquidation or
dissolution, the preferred stockholders are entitled to receive the par value
of their preferred share before any property or assets are distributed to the
holders of common stock. After payment in full to the holders
51
<PAGE>
of the preferred shares, any surplus assets shall be divided among our other
stockholders. At any time after June 30, 2000, we may redeem any of the
outstanding Series 1 preferred shares at their par value.
At present, we haveno plans to issue any additional preferred stock or
adopt any additional series, preferences or other classification of preferred
stock.
Admission to Quotation on OTC Bulletin Board Maintained by Nasdaq
Prior to the date of this prospectus, no public trading market existed for
our common stock. A public trading market for our common stock may not develop
or if developed, may not be sustained. If we meet the qualifications, we
intend to apply for quotation of our common stock on the OTC Bulletin Board
maintained by Nasdaq. Until we meet such qualifications, our securities may be
quoted in the daily quotation sheets of the National Quotation Bureau, Inc.,
commonly known as the pink sheets. If our common stock is not quoted on the
OTC Bulletin Board, a holder may have difficulty selling, or obtaining
accurate quotations as to the market value of, such stock.
In order to have its securities quoted on the OTC Bulletin Board, a company
must:
(1) be a company that reports its current financial information to the
Securities and Exchange Commission, banking regulators or insurance
regulators; and
(2) have at least one market maker who completes and files a Form 211
with the National Association of Securities Dealers, Inc.
The OTC Bulletin Board is a dealer-driven quotation service. Unlike the
Nasdaq Stock Market, companies cannot apply to be quoted on the OTC Bulletin
Board, only market makers can initiate quotes, and quoted companies do not
have to meet any quantitative financial requirement. Any equity security of a
reporting company not listed on Nasdaq or on a national securities exchange is
eligible.
Penny Stock Regulation
Penny stocks generally are equity securities with a price of less than
$5.00 per share other than securities registered on certain national
securities exchanges or listed on the Nasdaq Stock Market, provided that
current price and volume information with respect to transactions in such
securities are provided by the exchange or system. The penny stock rules
impose additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited
investors (generally those with assets in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 together with their spouse). For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule prescribed by the SEC relating to the penny stock market.
The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered
52
<PAGE>
representative and current quotations for the securities. Finally, monthly
statements must be sent disclosing recent price information on the limited
market in penny stocks. Because of these penny stock rules, broker-dealers may
be restricted in their ability to sell our common stock. The foregoing
required penny stock restrictions will not apply to our common stock if such
stock reaches and maintains a market price of $5.00 or greater.
Transfer Agent and Registrar and Trustee
StockTrans, Inc., Ardmore, Pennsylvania, serves as our transfer agent and
as trustee for the Class A shares.
Reports to Shareholders
We will furnish to holders of our common stock annual reports containing
audited financial statements examined and reported upon, and with an opinion
expressed by, an independent accountant. We may issue other unaudited interim
reports to our shareholders as we deem appropriate.
53
<PAGE>
PLAN OF DISTRIBUTION
Sale of the Selling Security Holder Shares
We will not receive any proceeds from the sale of shares by the selling
security holders. The selling security holders may sell their shares directly
to purchasers from time to time or they may offer their securities for sale
through underwriters, dealers or agents, who may receive compensation in the
form of underwriting discounts, concessions or commissions from the selling
security holders and/or the purchasers of the securities for whom they may act
as agents. Any underwriters, dealers or agents who participate in the
distribution of the securities may be deemed to be "underwriters" under the
Securities Act and any discounts, commissions or concessions received by any
such underwriters, dealers or agents may be deemed to be underwriting
discounts and commissions under the Securities Act.
At the time a particular offer is made by or on the behalf of the selling
security holders, a prospectus, including any necessary supplement thereto,
will be distributed which will set forth the number of shares of common stock
and other securities being offered and the terms of the offering, including
the names of any underwriters, dealers or agents, the purchase price paid by
any underwriter for the shares purchased from the selling security holders,
any discounts, commissions and other items constituting compensation from the
selling security holders, any discounts, commissions or concessions allowed,
reallowed or paid to dealers, and the proposed selling price to the public.
Pursuant to Regulation M of the of the Securities and Exchange Commission,
any person engaged in a distribution of securities, including on behalf of a
selling security holder, may not simultaneously bid for, purchase or attempt
to induce any person to bid for or purchase securities of the same class for a
period of five business days prior to the commencement of such distribution
and continuing until the selling security holder (or other person engaged in
the distribution) is no longer a participant in the distribution. In addition
and without limiting the foregoing, the selling security holders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations under such Act in connection with transactions in the securities
during the effectivenessof the registration statement of which this prospectus
is a part.
If, at some time in the future, we meet the listing requirements of the
Nasdaq SmallCap Market, we may apply to have our shares listed on such market.
If we qualify and are accepted for listing, then certain underwriters may
engage in passive market making transactions in our common stock in accordance
with Rule 103 of Regulation M.
The shares sold by the selling security holders may be sold from time to
time in one or more transactions:
(1) at an offering price that is fixed or that may vary from transaction
to transaction depending upon the time of sale or
(2) at prices otherwise negotiated at the time of sale.
54
<PAGE>
Such prices will be determined by the selling security holders or by agreement
between the selling security holders and any underwriters.
In order to comply with the applicable securities laws, if any, of certain
states, the shares of the selling security holders will be offered or sold in
such states through registered or licensed brokers or dealers in those states.
In addition, in certain states, the securities may not be offered or sold
unless they have been registered or qualified for sale in such states or an
exemption from such registration or qualification requirement is available and
with which we have complied.
We will pay all of the expenses incident to the registration of the shares
for sale by the selling security holders (including registration pursuant to
the securities laws of certain states) other than commissions, expenses,
reimbursements and discounts of underwriters, dealers or agents, if any.
Voluntary Trading Restrictions Agreements with Selling Security Holders
TPG Capital Corporation has entered into a Voluntary Trading Restrictions
Agreement with us pursuant to which TPG Capital has agreed not to sell more
than 25,000 shares in any 30 day period. In addition, the following selling
security holders owning a total of 1,105,000 shares, have also entered into a
Voluntary Trading Restrictions Agreement with us pursuant to which each
shareholder has agreed not to sell more than 10 percent of the original number
of the shareholder's shares in any 30 day period:
<TABLE>
<S> <C>
. Anjula Ltd. . William Mahody
. Stephanie Bigelow . Diane Marsh
. Patrick Birmingham . Curtis Mayert
. Dale Chaisson Auto Sales Inc. . Brian McAvoy
. Everest Private Trust . Christine Musgrave
. Cannon Equity Limited . Sean O'Regan
. Althea Lacas . Gary Rubenstein
. Andrew Lacas . Richard Shirley
. Betty Lacas . Louis Toth
. Peter Lacas . Gary West
. Paul Landry Sr. . Donald Wile
. Darlene Letun . Scott MacKinnon
. Michael MacDonald and Natasha
Pavlinovic
</TABLE>
Cannon Equity Limited is subject to the Voluntary Trading Restrictions
Agreement only with respect to the 100,000 shares it holds for Kevin Gunther,
the beneficial owner of such shares.
55
<PAGE>
LEGAL MATTERS
Legal Proceedings
We are not a party to any litigation and management has no knowledge of any
threatened or pending litigation against us.
Legal Opinion
Sadis & Goldberg LLC, New York, New York, has given its opinion as
attorneys-at-law that the shares of common stock offered by the selling
security holders will be fully paid, validly issued and non-assessable. Sadis
& Goldberg has passed on the validity of the common stock offered by the
selling security holders but purchasers of such common stock should not rely
on Sadis & Goldberg with respect to any other matters.
EXPERTS
The audited financial statements for the period from April 22, 1998 to
December 31, 1998 included in this prospectus have been so included in
reliance on the report of PricewaterhouseCoopers LLP, Halifax, Canada,
independent accountants, given on the authority of such firm as experts in
auditing and accounting.
HOW TO GET MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2 under the Securities Act with respect to this offering.
This prospectus does not contain all the information contained in that
registration statement and the exhibits and schedules thereto, as permitted by
the rules and regulations of the Commission. For further information about
thinWEB and the securities offered hereby, reference is made to the
registration statement including the accompanying exhibits and schedules,
which may be inspected without charge at the public reference facilities of
the Commission's Washington, D.C. office, 450 Fifth Street, N.W., Washington,
D.C. 20549. Each statement contained in this prospectus with respect to a
contract or other document filed as an exhibit to the registration statement
is qualified by reference to the exhibit for its complete terms and
conditions.
We will provide without charge to each person who receives a copy of this
prospectus, upon written or oral request, a copy of any of the information
incorporated herein by reference, not including exhibits. Such requests should
be made in writing to James Cappadocia, President, thinWEB Technologies
Corporation, Suite 101, Phase 3, 6 Antares Drive, Ottawa, Ontario K2E 8A9
Canada, or by telephone at (613) 225-8446.
We are subject to the informational requirements of the Securities Exchange
Act of 1934 and file reports and other information with the Commission,
including annual reports on Form 10-KSB and quarterly reports on Form 10-QSB.
Reports, proxy statements and other information filed by us, including our
registration statement, can be inspected and copied on the Commission's home
page on the world wide web at http://www.sec.gov or at the public
56
<PAGE>
reference facilities of the Commission, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as the following Regional Offices: 7
World Trade Center, Suite 1300, New York, N.Y. 10048; and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies can be
obtained from the Commission by mail at prescribed rates. Requests should be
directed to the Commission's Public Reference Section, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 or by telephone at (800) SEC-0330.
We intend to send our stockholders annual reports containing audited
financial statements and such other reports as we may determine or as may be
required by law.
57
<PAGE>
INDEX TO FINANCIAL STATEMENTS
The audited financial statements for the period from April 22, 1998 to
December 31, 1998 are included herein on pages F-1 to F-13.
The unaudited consolidated balance sheet of thinWEB Technologies
Corporation as of September 30, 1999 and the unaudited consolidated interim
statement of operations and deficit for the periods from April 22, 1998 to
September 30, 1998 and 1999 and for the three-month and nine-month periods
ended September 30, 1999 and the unaudited consolidated interim statement of
cash flow for the periods from April 22, 1998 to September 30, 1998 and 1999
and the nine-month period ended September 30, 1999 are included herein on
pages F-14 to F-28.
<PAGE>
THINWEB SOFTWARE INCORPORATED
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1998
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
ThinWeb Software Incorporated
We have audited the balance sheet of ThinWeb Software Incorporated as of
December 31, 1998 and the statements of operations and deficit and cash flows
for the period from April 22, 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 in Canada. Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as of December 31, 1998 and
the results of its operations and its cash flows for the period then ended in
accordance with generally accepted accounting principles in Canada.
PricewaterhouseCoopers LLP
_______________________________
Chartered Accountants
Halifax, Canada
May 20, 1999
F-2
<PAGE>
Comments by Auditors for U.S. Readers on Canada--U.S. Reporting Difference
In the United States, reporting standards for auditors require the addition
of an explanatory paragraph (following the opinion paragraph) when the
financial statements are affected by conditions and events that cast
substantial doubt on the company's ability to continue as a going concern,
such as those described in note 1 to the financial statements. Our report to
the board of directors of ThinWeb Software Incorporated dated May 20, 1999 is
expressed in accordance with Canadian reporting standards which do not permit
a reference to such events and conditions in the auditors' report when these
are adequately disclosed in the financial statements.
/s/ PricewaterhouseCoopers LLP
_____________________________________
Chartered Accountants
Halifax, Canada
May 20, 1999
F-3
<PAGE>
THINWEB SOFTWARE INCORPORATED
(A Development Stage Company)
BALANCE SHEET
As of December 31, 1998 (expressed in U.S. dollars)
<TABLE>
<S> <C>
ASSETS
------
Current assets
Cash.................................................................. $ 31,566
Investment tax credits receivable (note 3)............................ 65,908
Other................................................................. 5,784
--------
103,258
Capital assets (notes 3 and 4)........................................ 10,895
Trademarks............................................................ 555
--------
114,708
========
LIABILITIES
-----------
Current liabilities
Accounts payable and accrued liabilities.............................. 21,470
Accrued salaries...................................................... 89,657
Current portion of long-term debt (note 6)............................ 2,957
Loan payable.......................................................... 65,338
Amounts due to shareholders........................................... 21,484
--------
200,906
Long-term debt (note 6)............................................... 13,754
--------
214,660
--------
Shareholders' Deficiency
Capital stock (note 7)................................................ 1
Foreign currency translation adjustments.............................. 343
Deficit accumulated during the development stage...................... (100,296)
--------
(99,952)
--------
114,708
========
</TABLE>
Approved by the Board of Directors
- --------------------------- Director
-------- -----------------------------
Director
F-4
<PAGE>
THINWEB SOFTWARE INCORPORATED
(A Development Stage Company)
STATEMENT OF OPERATIONS AND DEFICIT
For the period from April 22, 1998 to December 31, 1998 (expressed in U.S.
dollars)
<TABLE>
<S> <C>
Revenue............................................................ $ 1,156
---------
Expenses
Research and development (note 3).................................. 43,888
Selling, general and administration................................ 55,896
Amortization....................................................... 1,668
---------
101,452
---------
Loss for the period and deficit accumulated during the development
stage--End of period.............................................. (100,296)
=========
Loss per share..................................................... 28.30
=========
Weighted average number of shares outstanding during the period.... 3,544
=========
</TABLE>
F-5
<PAGE>
THINWEB SOFTWARE INCORPORATED
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the period from April 22, 1998 to December 31, 1998
(expressed in U.S. dollars)
<TABLE>
<S> <C>
Cash provided by (used in)
Operating activities
Loss for the period............................................... $ (100,296)
Amortization...................................................... 1,668
Net change in non-cash working capital balances related to
operations
Increase in investment tax credits receivable................... (66,918)
Increase in other current assets................................ (5,873)
Increase in accounts payable and accrued liabilities............ 21,799
Increase in accrued salaries.................................... 91,031
----------
(58,589)
----------
Financing activities
Proceeds from long-term debt...................................... 16,966
Proceeds from loan payable........................................ 66,339
Issue of common shares............................................ 1
Proceeds from shareholder loans................................... 20,627
----------
103,933
----------
Investing activities
Acquisition of capital assets..................................... (12,731)
Acquisition of trademarks......................................... (564)
----------
(13,295)
----------
Effect of exchange rate changes in cash........................... (483)
----------
Increase in cash during the period and cash--End of period........ 31,566
==========
</TABLE>
F-6
<PAGE>
THINWEB SOFTWARE INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 (expressed in U.S. dollars)
1 Nature of operations and basis of presentation
The company incorporated on April 22, 1998 and is primarily a software
research and development company that has not yet commenced commercial
operations. All of the company's operations are in Canada. These statements
are prepared on a going-concern basis. There is substantial doubt as to
whether or not the company will be able to continue as a going concern. The
ability of the company to continue as a going-concern is dependent upon it
obtaining the necessary financing to commercialize and market its products and
upon future profitable operations. Like other companies at this stage of
development, the company is subject to numerous risks, including the
uncertainty of its chosen market, its ability to develop its markets and other
risks. The company plans to raise funds through a private placement; however,
there are no commitments for the private placement and there can be no
assurance that the company will be successful in raising the required capital
to finance operations.
2 Accounting policies
a) Financial statement presentation
These financial statements have been prepared in accordance with Canadian
generally accepted accounting principles. The significant differences between
these principles and those that would be applied under U.S. generally accepted
accounting principles are disclosed in note 10.
b) Foreign currency translation
The company's currency of measurement is Canadian dollars; however, the
reporting currency is U.S. dollars. The assets and liabilities of the company
are translated into U.S. dollars at year-end exchange rates, and income and
expense items are translated at rates approximating the average rates of
exchange for the year. Gains and losses from the translation are excluded from
the statement of operations and deficit and are accumulated in the cumulative
foreign currency translation adjustment account.
c) Capital assets and amortization
Amortization of the following capital assets is calculated using the
declining balance method at annual rates which will amortize their cost over
their estimated useful lives. These rates are:
<TABLE>
<S> <C>
Computer hardware....................... 30%
Computer software....................... 100%
Office furniture and equipment.......... 20%
</TABLE>
F-7
<PAGE>
THINWEB SOFTWARE INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998 (expressed in U.S. dollars)
d) Income taxes
The company uses the liability method of accounting for income taxes. Under
this method, current income taxes are recognized for the estimated income
taxes payable for the current year. Future income tax assets and liabilities
are recognized for temporary differences between the tax and accounting bases
of assets and liabilities as well as for the benefit of losses available to be
carried forward to future years for tax purposes. Future income tax assets are
evaluated and if realization is not considered "more likely than not", a
valuation allowance is provided.
Investment tax credits relating to scientific research and experimental
development expenditures are recorded in the accounts in the fiscal period the
qualifying expenditures are incurred provided there is reasonable assurance
that the tax credit will be realized. Investment tax credits in connection
with research and development activities are accounted for using the cost
reduction method which recognizes the credits as a reduction of the cost of
the related assets or expenditures.
e) Revenue recognition
The company recognizes revenue at the time of delivery of its licensed
software products to customers, provided collectibility of proceeds from the
sale of licensed software is reasonably assured. Currently, all sales are made
from the company's web site. An electronic order form is filled out on-line by
the customer; payment for the order is then received when the customer
provides a credit card number; the product is then downloaded by the customer.
The product is not returnable; therefore, no provision is required for sales
returns.
f) Research and development
Research costs are expensed in the period incurred. Where, in the opinion
of management, the deferral criteria established by the Canadian Institute of
Chartered Accountants are satisfied in all material respects, development
expenditures are capitalized and amortized over the estimated earning life of
the related products. To date, no development costs have been deferred.
g) Loss per common share
Loss per common share is calculated using the weighted number of common
shares issued and outstanding during each period. Fully diluted loss per
share are not presented as the exercise of warrants and options would be
antidilutive.
h) Use of estimates
The presentation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported
F-8
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998 (expressed in U.S. dollars)
amount of assets and liabilities and disclosure of contingent liabilities at
the date of the financial statements and the reported amounts of revenues and
expenditures during the reported period. Actual results could differ from
those reported.
i) Financial instruments
The fair value of the company's cash, investment tax credits receivable,
other current assets, accounts payable and accrued liabilities, accrued
salaries, long-term debt, loan payable and amounts due to shareholders
approximate their carrying values.
3 Investment tax credits receivable
For small, closely held Canadian corporations, a credit of approximately
40% of eligible scientific research and experimental development expenditures
is available, refundable in cash if no taxes are owed. For all other Canadian
corporations, the credit is reduced to approximately 20% on a non-refundable
basis, available only against taxes otherwise payable. Eligible scientific
research and experimental development expenditures include direct current and
capital costs and an allowance for overhead in the amount of 65% of specified
salaries and wages.
During 1998, investment tax credits in the amount of $63,862 have been
applied to reduce research and development expenditures and $3,056 have been
credited to the cost of capital assets.
4 Capital assets
<TABLE>
<CAPTION>
1998
----------------------------
Accumulated
Cost amortization Net
------- ------------ -------
<S> <C> <C> <C>
Computer hardware................................. $ 9,618 $ 913 $ 8,705
Computer software................................. 1,567 595 972
Office furniture and equipment.................... 1,353 135 1,218
------- ------ -------
12,538 1,643 10,895
======= ====== =======
</TABLE>
5 Income Taxes
The company has approximately $160,000 in losses for income tax purposes,
with an expiry date of 2005, which are available to reduce future taxable
income. This potential benefit is offset by $53,000 in temporary differences
between income for accounting purposes and income for tax purposes. The net
potential future tax benefit, calculated at the statutory rate of
approximately 45%, amounts to $48,000. This future income tax asset has been
reduced to $nil through the application of a valuation allowance based on the
likelihood of realization.
F-9
<PAGE>
THINWEB SOFTWARE INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998 (expressed in U.S. dollars)
6 Long-term debt
<TABLE>
<CAPTION>
1998
--------
<S> <C>
Business Development Bank of Canada, authorized amount $18,900,
bearing interest at 8.7% per annum, repayable in one principal
payment of $108 and 72 principal payments of $261, secured by
personal guarantees of certain shareholders in the amount of
$4,100............................................................. $ 16,711
Less: Current portion............................................... 2,957
--------
13,754
========
</TABLE>
The loan was repaid in full subsequent to December 31, 1998.
7 Capital Stock
Authorized
10,000,000 common shares, without nominal or par value
<TABLE>
<CAPTION>
Number
of Ascribed
Shares Value
------- --------
<S> <C> <C>
Issued
Issued in 1998 pursuant to share subscription agreements..... 900,000 $ 32,669
Subscriptions receivable..................................... -- (32,668)
------- --------
Balance--December 31, 1998................................... 900,000 1
======= ========
</TABLE>
Subscriptions receivable are presented as a reduction from capital stock
unless paid subsequent to the period end.
On March 31, 1999, the company increased its authorized capital to
100,000,000 common shares by the creation of 90,000,000 common shares without
nominal or par value.
8 Uncertainty due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information
using year 2000 dates is processed. In addition, similar problems may arise in
some systems which use certain dates in 1999 to represent something other than
a date. The effects of the Year 2000 Issue may be experienced before, on, or
after January 1, 2000, and, if not addressed, the impact on operations and
financial reporting may range from minor errors to significant systems failure
which could affect the company's ability to conduct normal business
operations. It is not possible to be certain that all aspects of the Year 2000
Issue affecting the company, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
F-10
<PAGE>
THINWEB SOFTWARE INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998 (expressed in U.S. dollars)
9 Subsequent events
a) Repayment of loan payable
Subsequent to December 31, 1998, the company repaid in full, the loan
payable of $65,338 which was outstanding at December 31, 1998. The company
also paid a premium in the amount of $16,565 to the lender. The premium was
agreed with the lender in April 1999 and one-half of this premium has been
accrued in the financial statements as financing costs as of December 31,
1998, the remaining one-half will be accrued subsequent to December 31, 1998.
As part of the loan repayment, the company also issued, for no cash
consideration, 100,000 shares to the lender and 10,000 shares to the
individual who arranged the initial loan. Both individuals deal at arm's
length with the company.
b) Share issuances
Subsequent to December 31, 1998, the company issued shares as follows:
<TABLE>
<CAPTION>
Number of Ascribed
shares value
---------- ---------
<S> <C> <C>
For cash............................................. 8,878,677 $ 157,000
Pursuant to share subscription agreements............ 7,027,667 462,097
Related to the repayment of loan payable............. 110,000 --
---------- ---------
16,016,344 619,097
========== =========
</TABLE>
The company appointed a new chief executive officer subsequent to December
31, 1998. As part of the terms of the employment agreement, the chief
executive officer was issued 1,181,344 common shares (included above) from
treasury for nominal consideration of $8, with 28.58% of the shares vesting
immediately, 35.71% vesting in one year and the balance of 35.71% vesting in
two years.
c) Corporate Re-organization
On April 22, 1999, the company entered into a combination agreement with
Warwick Acquisition Corporation ("Warwick"). This agreement was adopted by the
Board of Directors of Warwick and approved by the shareholders of Warwick on
May 20, 1999. Thinweb.com Inc. ("Thinweb.com"), formerly 3028184 Nova Scotia
Limited, a wholly-owned subsidiary of Warwick, will acquire all of the issued
and outstanding shares of the company through the issuance of 16,916,344 Class
"A" exchangeable, non-voting, participating common shares without par value
("Exchangeable Shares") of Thinweb.com. The Exchangeable Shares entitle the
holder to voting rights in Warwick as if the shareholder held an equivalent
number of common shares in Warwick. The Exchangeable Shares are
F-11
<PAGE>
THINWEB SOFTWARE INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998 (expressed in U.S. dollars)
exchangeable for shares in Warwick on a share- for-share basis without any
further consideration.
Pursuant to this agreement, 4,850,000 of the issued and outstanding shares
of Warwick were redeemed and retired resulting in 150,000 common shares of
Warwick being issued and outstanding. On closing of this transaction, Warwick
issued 16,916,344 common shares to be held in trust pending receipt of the
Exchangeable Shares. Warwick also issued 1,500,000 preferred shares on closing
of this agreement for deemed consideration of $0.0001 per share. The holders
of the preferred shares of Warwick are entitled to convert them into common
shares of Warwick on a share-for-share basis any time prior to November 1,
1999, provided the holders were instrumental in arranging financing for the
company of not less that $5,000,000. In addition, Warwick will grant a five
year transferable warrant entitling the holder to acquire up to 50,000 common
shares of Warwick for consideration of $1 per share.
If all Exchangeable Shares and preferred shares are converted into shares
of Warwick, the former shareholders of ThinWeb Software Incorporated will own
approximately 91% of the issued shares of Warwick.
10 Differences between Canadian and U.S. Generally Accepted Accounting
Principles
The financial statements of the company have been prepared in accordance
with generally accepted accounting principles in Canada ("Canadian GAAP")
which are different in certain respects from those applicable in the United
States ("U.S. GAAP"), as described below.
a) Comprehensive income
Under Statement of Financial Accounting Standards No. 130 (SFAS 130),
"Comprehensive income", the company is required to show the change in net
assets, excluding shareholder investments and distributions. The following
summarizes the company's comprehensive loss:
<TABLE>
<CAPTION>
1998
---------
<S> <C>
Loss for the period............................................ $(100,296)
Change in foreign currency translation adjustment.............. 343
---------
Comprehensive loss............................................. (99,953)
=========
</TABLE>
b) Recent pronouncements
In 1998, SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities" was issued and is effective for fiscal years commencing after June
15, 1999. The company
F-12
<PAGE>
THINWEB SOFTWARE INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998 (expressed in U.S. dollars)
will comply with the requirements of SFAS 133 in fiscal year 2000 and does not
expect the adoption of SFAS 133 will be material to the company's results of
operations.
In 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs of
Start-up Activities". SOP 98-5 is effective in fiscal years beginning after
December 15, 1998 with earlier adoption permitted. SOP 98-5 requires costs of
start-up activities and organization costs to be expenses as incurred. The
company has complied with the requirements of SOP 98-5.
F-13
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
September 30, 1999 (expressed in U.S. dollars)
F-14
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
As of September 30, 1999 (expressed in U.S. dollars)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash (note 3)....................................... $ 42,479 $ 31,566
Investment tax credits receivable (note 4).......... 68,620 65,908
Other current assets (note 5)....................... 65,040 5,784
----------- ---------
176,139 103,258
Capital assets (notes 4 and 6)...................... 68,502 10,895
Deferred charges (note 7)........................... 1,051,323 --
Trademarks.......................................... 1,210 555
----------- ---------
1,297,174 114,708
=========== =========
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities............ 97,214 21,470
Accrued salaries.................................... 16,406 89,657
Current portion of long-term debt................... -- 2,957
Loans payable (note 8).............................. 451,391 65,338
Amounts due to shareholders......................... -- 21,484
Other current liability (note 9).................... 340,136 --
----------- ---------
905,147 200,906
Long-term debt...................................... -- 13,754
----------- ---------
905,147 214,660
----------- ---------
Commitments (note 10)
Shareholders' Equity
Capital stock (note 11)............................. 1,857 1
Additional paid in capital.......................... 7,933,252 --
Share subscriptions receivable...................... (32,896) --
Deferred compensation............................... (321,784) --
Warrants............................................ 15,000 --
Foreign currency translation adjustments............ 65,688 343
Deficit accumulated during the development stage.... (7,269,090) (100,296)
----------- ---------
392,027 (99,952)
----------- ---------
1,297,174 114,708
=========== =========
</TABLE>
F-15
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
CONSOLIDATED INTERIM STATEMENT OF OPERATIONS AND DEFICIT (Unaudited)
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Cumulative Three months Period from
April 22, ended Nine months April 22,
1998 to September 30, ended 1998 to
September 30, --------------------- September 30, September 30,
1999 1999 1998 1999 1998
------------- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenue................. $ 3,912 $ 1,336 $ -- $ 2,756 $ --
Expenses
Research and development
(note 4)............... 3,168,573 55,456 16,793 3,124,685 29,031
Selling, general and
administration......... 3,024,638 492,200 12,142 2,977,764 17,272
Interest................ 1,067,706 925,814 -- 1,058,684 --
Amortization............ 12,085 3,156 218 10,417 320
----------- ----------- -------- ----------- --------
7,273,002 1,476,626 29,153 7,171,550 46,623
----------- ----------- -------- ----------- --------
Loss for the period..... (7,269,090) (1,475,290) (29,153) (7,168,794) (46,623)
Deficit accumulated
during the development
stage--Beginning of
period................. -- (5,793,800) (17,470) (100,296) --
----------- ----------- -------- ----------- --------
Deficit accumulated
during the development
stage--End of period... (7,269,090) (7,269,090) (46,623) (7,269,090) (46,623)
=========== =========== ======== =========== ========
Basic and fully diluted
loss per
common share........... -- (0.09) (29,153) (0.63) (46,623)
=========== =========== ======== =========== ========
Weighted average number
of shares outstanding
during the period ..... -- 17,066,344 1 11,428,344 1
=========== =========== ======== =========== ========
</TABLE>
F-16
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS (Unaudited)
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Cumulative Period from
April Nine months April
22, 1998 to ended 22, 1998 to
September 30, September 30, September 30,
1999 1999 1998
------------- ------------- -------------
<S> <C> <C> <C>
Cash provided by (used in)
Operating activities
Loss for the period................. $(7,269,090) $(7,168,794) $(46,623)
Items not affecting cash
Amortization...................... 12,085 10,417 320
Shares issued for employee
compensation..................... 4,783,608 4,783,603 --
Shares issued for financing
costs............................ 1,044,185 1,044,185 --
Shares and warrants issued for
services......................... 215,689 215,689 --
Net change in non-cash working
capital balances related
to operations
Increase in investment tax credits
receivable....................... (66,918) -- (40,050)
Increase in other current assets.. (64,097) (58,224) (5,090)
Increase in accounts payable and
accrued liabilities.............. 95,653 73,854 3,383
Increase (decrease) in accrued
salaries......................... 15,125 (75,906) 60,247
----------- ----------- --------
(1,233,760) (1,175,176) (27,813)
----------- ----------- --------
Financing activities
Proceeds of long-term debt.......... 16,966 -- 19,897
Repayments of long-term debt........ (17,164) (17,164) --
Proceeds of loans payable........... 511,659 445,319 67,221
Repayments of loans payable......... (67,112) (67,112) --
Issue of common shares.............. 576,353 576,352 1
Proceeds from (repayment of)
shareholder loans.................. (240) (20,868) 22,094
Increase in other current
liabilities........................ 335,561 335,561 --
----------- ----------- --------
1,356,023 1,252,088 109,213
----------- ----------- --------
Investing activities
Acquisition of capital assets....... (79,537) (66,806) (3,883)
Acquisition of trademarks........... (1,187) (623) --
----------- ----------- --------
(80,724) (67,429) (3,883)
----------- ----------- --------
Effect of exchange rate changes in
cash............................... 940 1,430 (1,944)
----------- ----------- --------
Increase in cash during the period.. 42,479 10,913 75,573
Cash--Beginning of period........... -- 31,566 --
----------- ----------- --------
Cash--End of period................. 42,479 42,479 75,573
=========== =========== ========
</TABLE>
F-17
<PAGE>
THINWEB.COM CORPORATION
CONSOLIDATED INTERIM STATEMENT OF CHANGES OF SHAREHOLDERS' EQUITY (Unaudited)
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Deficit
accumulated
Common shares Preferred shares Additional Less Less Warrants during the
------------------ ----------------- paid in subscriptions deferred --------------- Development
Number Amount Number Amount capital receivable compensation Number Amount Stage
----------- ------ ---------- ------ ---------- ------------- ------------ ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shares issued
for
subscriptions... $ 900,000 $ 90 $ -- $ -- $ 32,579 $ (32,668) $ -- $ -- $ -- $ --
Change in
foreign currency
translation
account......... -- -- -- -- -- -- -- -- -- --
Loss for the
period.......... -- -- -- -- -- -- -- -- -- (100,296)
----------- ------ ---------- ----- ---------- --------- --------- ------- ------- -----------
Balance--
December 31,
1998............ 900,000 90 -- -- 32,579 (32,668) -- -- -- (100,296)
Shares issued
for cash........ 1,505,000 151 -- -- 535,683 -- -- -- -- --
Shares issued
for
compensation.... 10,401,344 1,040 -- -- 5,213,205 (51) (321,784) -- -- --
Shares issued
for financing
costs........... 4,110,000 411 -- -- 2,076,800 (27) -- -- -- --
Shares issued
for a corporate
reorganization.. 150,000 15 -- -- 74,985 -- -- -- -- --
Warrants issued
for services.... -- -- -- -- -- -- -- 50,000 15,000 --
Convertible
shares issued
for a financing
arrangement..... -- -- 1,500,000 150 -- (150) -- -- -- --
Change in
foreign currency
translation
account......... -- -- -- -- -- -- -- -- -- --
Loss for the
period.......... -- -- -- -- -- -- -- -- -- (7,168,794)
----------- ------ ---------- ----- ---------- --------- --------- ------- ------- -----------
Balance--
September 30,
1999............ 17,066,344 1,707 1,500,000 150 7,933,252 (32,896) (321,784) 50,000 15,000 (7,269,090)
=========== ====== ========== ===== ========== ========= ========= ======= ======= ===========
<CAPTION>
Foreign
currency Total
translation shareholders' Comprehensive
adjustments Equity loss
----------- ------------- -------------
<S> <C> <C> <C>
Shares issued
for
subscriptions... $ -- $ 1 $ --
Change in
foreign currency
translation
account......... 343 343 343
Loss for the
period.......... -- (100,296) (100,296)
----------- ------------- -------------
Balance--
December 31,
1998............ 343 (99,952) (99,953)
Shares issued
for cash........ -- 535,834 --
Shares issued
for
compensation.... -- 4,892,410 --
Shares issued
for financing
costs........... -- 2,077,184 --
Shares issued
for a corporate
reorganization.. -- 75,000 --
Warrants issued
for services.... -- 15,000 --
Convertible
shares issued
for a financing
arrangement..... -- -- --
Change in
foreign currency
translation
account......... 65,345 65,345 65,345
Loss for the
period.......... -- (7,168,794) (7,168,794)
----------- ------------- -------------
Balance--
September 30,
1999............ 65,688 392,027 (7,103,449)
=========== ============= =============
</TABLE>
F-18
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
September 30, 1999 (expressed in U.S. dollars)
1 Nature of operations and basis of presentation
Effective April 22, 1999, Thinweb.com Inc. (formerly 3028184 Nova Scotia
Limited), a wholly owned subsidiary of thinWEB.com Corporation (formerly
Warwick Acquisition Corporation), acquired all the outstanding common shares
of ThinWeb Software Incorporated in exchange for 16,916,344 Class "A"
exchangeable, non-voting, participating common shares of Thinweb.com Inc. Each
of these exchangeable shares are exchangeable into common shares of
thinWEB.com Corporation for no additional consideration on or before April 21,
2024. Under the provisions of various agreements between thinWEB.com
Corporation and Thinweb.com Inc., the holders of the exchangeable shares are
entitled to voting, dividend and liquidation rights as if the holder held the
equivalent number of common shares in thinWEB.com Corporation. thinWEB.com
Corporation has issued 16,916,344 common shares held in trust to be issued to
the holders of the exchangeable shares upon the exchange.
Prior to April 22, 1999, Warwick Acquisition Corporation did not have any
operations and had 5,000,000 common shares issued and outstanding. As part of
the transaction, Warwick Acquisition Corporation redeemed and retired
4,850,000 common shares and issued 50,000 warrants for no additional
consideration. The warrants which expire in five years entitle the holder to
acquire up to 50,000 common shares of thinWEB.com Incorporated for $1 per
share. For accounting purposes, the acquisition has been treated as an
issuance of 150,000 shares and 50,000 warrants by ThinWeb Software
Incorporated for the services related to the corporate reorganization. These
shares and warrants have been attributed a value of $90,000 based on the value
of services received. The historical financial statements prior to April 22,
1999 are those of ThinWeb Software Incorporated. ThinWeb Software Incorporated
was incorporated on April 22, 1998. Pro forma financial information giving
effect to the acquisition has not been provided as the transaction is not a
business combination.
The company is primarily a software research and development company that
has not yet commenced commercial operations. All of the company's operations
are in Canada. These statements are prepared on a going-concern basis. There
is substantial doubt as to whether or not the company will be able to continue
as a going concern. The ability of the company to continue as a going- concern
is dependent upon it obtaining the necessary financing to commercialize and
market its products and upon future profitable operations. Like other
companies at this stage of development, the company is subject to numerous
risks, including the uncertainty of its chosen market, its ability to develop
its markets and other risks. The company plans to raise funds through a public
offering of its securities; however, there are no commitments for the public
offering and the public offering has not yet been approved by the Securities
and Exchange Commission. There can be no assurance that the company will be
successful in raising the required capital to finance operations.
F-19
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)--(Continued)
September 30, 1999 (expressed in U.S. dollars)
2 Accounting policies
a) Financial statement presentation
These consolidated financial statements have been prepared in accordance
with U.S. generally accepted accounting principles and include the accounts of
thinWEB.com Corporation and its wholly owned subsidiaries.
In the opinion of management, the accompanying financial statements include
all adjustments (consisting of normal recurring items) considered necessary
for a fair presentation of the results of operations for the interim periods
covered and of the financial condition of the company at the date of interim
balance sheet. The results for the interim periods are not necessarily
indicative of the results for the entire year.
b) Foreign currency translation
The company's functional currency is Canadian dollars; however, the
reporting currency is U.S. dollars. The assets and liabilities of the company
are translated into U.S. dollars at period-end exchange rates, and income and
expense items are translated at rates approximating the average rates of
exchange for the period. Gains and losses from the translation are excluded
from the statement of operations and deficit and are accumulated in the
cumulative foreign currency translation adjustment account.
c) Capital assets and amortization
Amortization of the following capital assets is calculated using the
declining balance method at annual rates which will amortize their cost over
their estimated useful lives. These rates are:
<TABLE>
<S> <C>
Computer hardware.................................................... 30%
Computer software.................................................... 100%
Office furniture and equipment....................................... 20%
</TABLE>
d) Deferred charges
Deferred charges represent prepaid costs of financing and are being charged
to expense over the estimated term of the financing arrangement.
e) Income taxes
The company uses the liability method of accounting for income taxes. Under
this method, current income taxes are recognized for the estimated income
taxes payable for the current year. Future income tax assets and liabilities
are recognized for temporary differences
F-20
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)--(Continued)
September 30, 1999 (expressed in U.S. dollars)
between the tax and accounting bases of assets and liabilities as well as for
the benefit of losses available to be carried forward to future years for tax
purposes. Future income tax assets are evaluated and if realization is not
considered "more likely than not", a valuation allowance is provided.
Investment tax credits relating to scientific research and experimental
development expenditures are recorded in the accounts in the fiscal period the
qualifying expenditures are incurred provided realization of the tax credit is
considered "more likely than not". Investment tax credits in connection with
research and development activities are accounted for using the cost reduction
method which recognizes the credits as a reduction of the cost of the related
assets or expenditures.
f) Revenue recognition
The company recognizes revenue at the time of delivery of its licensed
software products to customers, provided collectibility of proceeds from the
sale of licensed software is reasonably assured. Currently, all sales are made
from the company's web site. An electronic order form is filled out on-line by
the customer; payment for the order is then received when the customer
provides a credit card number; the product is then downloaded by the customer.
The product is not returnable; therefore, no provision is required for sales
returns. The customer is charged for future updates to the version purchased
and there is minimal support offered subsequent to the purchase.
g) Research and development
Research and development costs are charged to expense when incurred,
unless, in the opinion of management, the technological feasibility of the
product has been established in accordance with Statement of Financial
Accounting Standards (SFAS) 86, in which case the costs are capitalized.
Capitalization of computer software costs ceases when the product is available
for general release. As of September 30, 1999, no computer software costs have
been capitalized.
h) Loss per common share
Basic loss per common share is calculated using the weighted number of
common shares issued and outstanding during each period. The exercise of
warrants and the conversion of convertible preferred shares would be
antidilutive. Accordingly, fully diluted loss per common share is the same as
basic loss per common share.
i) Use of estimates
The presentation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported
F-21
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)--(Continued)
September 30, 1999 (expressed in U.S. dollars)
amount of assets and liabilities and disclosure of contingent liabilities at
the date of the financial statements and the reported amounts of revenues and
expenditures during the reported period. Actual results could differ from
those reported.
j) Financial instruments
The fair value of the company's cash, subscriptions receivable, investment
tax credits receivable, other current assets, accounts payable and accrued
liabilities, accrued salaries, long-term debt, loans payable, amounts due to
shareholders and other current liability approximate their carrying values.
k) Recent pronouncements
In 1998, Statement of Financial Accounting Standards No. 133 (SFAS 133),
"Accounting for Derivative Instruments and Hedging Activities" was issued and
is effective for fiscal years commencing after June 15, 2000. The company will
comply with the requirements of SFAS 133 in fiscal year 2000 and does not
expect the adoption of SFAS 133 will be material to the company's results of
operations.
In 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-up
Activities". SOP 98-5 is effective in fiscal years beginning after December
15, 1998 with earlier adoption permitted. SOP 98-5 requires costs of start-up
activities and organization costs to be expensed as incurred. The company has
complied with the requirements of SOP 98-5.
3 Restrictions on cash
Included in cash is $3,736 held in a trust account by the company's
solicitors, which requires the approval of two shareholders in order to be
released. The cash is to be used to fund certain expenditures within the next
year.
4 Investment tax credits receivable
For small, closely held Canadian corporations, a credit of approximately
40% of eligible scientific research and experimental development expenditures
is available, refundable in cash if no taxes are owed. For all other Canadian
corporations, the credit is reduced to approximately 20% on a non-refundable
basis, available only against taxes otherwise payable. Eligible scientific
research and experimental development expenditures include direct current and
capital costs and an allowance for overhead in the amount of 65% of specified
salaries and wages.
F-22
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)--(Continued)
September 30, 1999 (expressed in U.S. dollars)
During the year ended December 31, 1998, investment tax credits in the
amount of $63,862 have been applied to reduce research and development
expenditures and $3,056 have been credited to the cost of capital assets.
During the period ended September 30, 1998, investment tax credits in the
amount of $40,050 have been applied to reduce research and development
expenditures.
5 Other current assets
Other current assets is comprised of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
Refundable commodity taxes..................... $40,161 $5,430
Prepaid expenses............................... 21,477 354
Other.......................................... 3,402 --
------- ------
65,040 5,784
======= ======
</TABLE>
6 Capital assets
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---------------------------- ------------
Accumulated
Cost Amortization Net Net
------- ------------ ------- ------------
<S> <C> <C> <C> <C>
Computer hardware............. $37,159 $ 6,044 $31,115 $ 8,705
Computer software............. 6,544 3,221 3,323 972
Office furniture and
equipment.................... 37,069 3,005 34,064 1,218
------- ------- ------- -------
80,772 12,270 68,502 10,895
======= ======= ======= =======
</TABLE>
7 Deferred charges
During the period, the company issued 4,000,000 common shares at nominal
values for the commitment to provide debt financing of up to $907,000 until
such time as the company has raised funds pursuant to a major private
placement, public offering or other significant financing event (the
"Significant Financing Event"), if any (see note 8). These shares have been
recorded at the price established through an arm's length transaction which
occurred within 14 days of the date the shares were issued. The excess of the
recorded value of the shares over the nominal issue price is recorded as
financing costs. The portion of the financing costs related to future periods
has been recorded as deferred charges and is being charged to expense over the
estimated term of the financing arrangement estimated to be from June 4, 1999
to February 28, 2000.
F-23
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)--(Continued)
September 30, 1999 (expressed in U.S. dollars)
8 Loans payable
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
Demand loan, bearing interest at prime, plus 2.5%... $ 51,020 $ --
Loan payable, authorized amount $255,000, without
interest or fixed terms of repayment ("Credit
Facility A"), $100,660 of Credit Facility A is
available and unused............................... 154,340 --
Loan payable, authorized amount $652,000, bearing
interest at the rate of 12%, without fixed terms of
repayment ("Credit Facility B"), $405,969 of Credit
Facility B is available and unused................. 246,031 --
Loan repaid during the period ended September 30,
1999............................................... -- 65,338
-------- -------
451,391 65,338
======== =======
</TABLE>
The lenders may, at their sole option, elect to convert all, or any portion
of the outstanding amount, including interest, of Credit Facility B, into
securities of the company on the same terms and conditions as such securities
are issued pursuant to a Significant Financing Event, if any.
Credit Facility A and B become due and payable immediately upon completion
of a Significant Financing Event, subject to the option noted above.
The lenders of Credit Facility B shall have issued to them, for no
additional consideration, share purchase warrants of the company equal in
number to the amount of the facility which has been drawn down, divided by the
price of the company's shares issued pursuant to a Significant Financing
Event. These warrants will be exercisable on the basis of one warrant for one
common share, at a strike price equal to the price at which the company shares
are issued pursuant to a Significant Financing Event, for a period of one year
from the closing of such event. As these warrants will be issued upon a
Significant Financing Event, if any, they will be valued at that time and
recorded as a cost of financing.
In conjunction with the commitment to provide financing, the company issued
4,000,000 shares to the lender of Credit Facility A and B. For accounting
purposes, the issuance of these shares have been treated as financing costs
and have been attributed a value of $2,021,821.
9 Other current liability
On September 10, 1999, the company, through one of its wholly owned
subsidiaries, entered into a Memorandum of Agreement with Agritek Bio
Ingredients Corporation ("Agritek") to establish a new corporation with an
equal and undivided interest for the company and Agritek. The $340,136
included in other current liability as of September 30,
F-24
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)--(Continued)
September 30, 1999 (expressed in U.S. dollars)
1999 represents the CDN $500,000 received upon the signing of the Memorandum
of Agreement. On December 15, 1999, this amount was repaid to Agritek.
NoTime Wireless Corp. ("NoTime") was incorporated on October 21, 1999 and
was inactive until December 15, 1999. On December 15, 1999, the company
transferred to NoTime an exclusive perpetual license for thinAccess for the
wireless database access market in return for 1,250,000 Class A common shares
of NoTime and a promissory note in the amount of CDN $1,250,000. On December
16, 1999, Innovium Capital Corp. ("Innovium"), formerly Agritek, acquired
1,250,000 Class B common shares of NoTime, representing a
50% interest in NoTime, for cash consideration of CDN $1,250,000. Also on that
date, NoTime repaid the CDN $1,250,000 promissory note to the company.
On December 16, 1999, the company, through one of its wholly owned
subsidiaries purchased 500,000 units of the capital stock of Innovium (each
unit consisting of one freely tradable common share and one share purchase
warrant exercisable for two years from the date of the subscription agreement
at an exercise price of CDN $0.50 each) for CDN $250,000. Assuming the share
purchase warrants are exercised, the company would own approximately 4% of the
issued and outstanding common shares of Innovium.
On December 16, 1999, the company issued to Innovium Capital U.S. Corp.
100,000 non-transferrable share purchase warrants, which expire on December
15, 2001, exercisable for shares of the company on a one-for-one basis at an
exercise price equal to the lower of $5.00 or the lowest price at which the
company issues equity or convertible securities during this period.
NoTime shall pay the company a royalty of 5% of net revenues realized, paid
quarterly in arrears. These royalties are accrued, but payments will only
commence once NoTime has reimbursed to the parties all advances made to
NoTime.
As long as the company owns at least 40% of the issued and outstanding
shares of NoTime, the company shall manage the day-to-day activities of
NoTime, in return for a fee of 2.5% of NoTime's operating costs. Each party
shall provide advances to fund operating expenses of NoTime. If a party is
unable or unwilling to continue funding operating expenses, that party's
interest in NoTime shall be subject to dilution by the other party or a third
party, which is prepared to fund operating expenses.
10 Commitments
The minimum annual payments under long-term agreements for premises are as
follows:
<TABLE>
<S> <C>
Year ending September 30, 2000........$28,271..........
Year ending September 30, 2001.........18,847.........
</TABLE>
F-25
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)--(Continued)
September 30, 1999 (expressed in U.S. dollars)
11 Capital stock
Authorized
100,000,000 common shares, of the par value of $0.0001 each
20,000,000 preferred shares, of the par value of $0.0001 each
Shares subscribed for have been recorded at the value received for the
shares which is considered to be fair value. Shares issued for compensation,
financing costs, and a corporate reorganization were issued at nominal values.
These issues have been recorded at the price established through cash sales of
shares to arm's length parties which occurred within 14 days of these issues.
The excess of the recorded value of the shares over the nominal issue price is
recorded as compensation, financing and professional fees expense over the
estimated term of the related service. The unearned portion of the
compensation related to the share issues has been recorded as a reduction of
shareholders' equity. The portion of the financing costs related to future
periods has been recorded as deferred charges.
The preferred shares issued at September 30, 1999 are convertible into
common shares of the company on a share-for-share basis at any time prior to
June 30, 2000, provided the holders were instrumental in arranging financing
for the company of not less than $5,000,000. Starting June 30, 2000, the
company may redeem any of the outstanding preferred shares at a redemption
price of $0.0001 per share. As the preferred shares are convertible only if
the holders are instrumental in arranging financing of not less than
$5,000,000 the beneficial conversion feature will be valued at that time and
recorded as a cost of financing.
Subscriptions receivable are presented as a reduction from capital stock
unless paid subsequent to the period end.
F-26
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)--(Continued)
September 30, 1999 (expressed in U.S. dollars)
Issued
<TABLE>
<CAPTION>
Assigned
Number of value/price
shares per share Total Value Comments
---------- ----------- ----------- -----------------------------------------------------
<S> <C> <C> <C> <C>
Common shares
April 22, 1998.......... 1 $1.00000 $ 1 Share subscriptions
December 31, 1998....... 449,999 0.03630 16,334 Share subscriptions
December 31, 1998....... 450,000 0.03630 16,334 Share subscriptions
-- (32,668) Unpaid share subscriptions
Balance--
December 31, 1998....... 900,000 1
March 31, 1999.......... 2,216,667 0.50000 1,108,334 Shares issued for compensation
March 31, 1999.......... 2,216,667 0.50000 1,108,334 Shares issued for compensation
March 31, 1999.......... 2,666,666 0.50000 1,333,333 Shares issued for compensation
March 31, 1999.......... 195,000 0.50000 97,500 Shares issued for compensation
March 31, 1999.......... 175,000 0.50000 87,500 Shares issued for compensation
March 31, 1999.......... 891,000 0.50000 445,500 Share subscriptions
March 31, 1999.......... 100,000 0.50000 50,000 Share subscriptions
March 31, 1999.......... 14,000 0.50000 7,000 Share subscriptions
April 5, 1999........... 500,000 0.16678 83,389 Shares issued for financing costs
April 5, 1999........... 100,000 0.50340 50,340 Shares issued for financing costs
April 5, 1999........... 10,000 0.50340 5,034 Shares issued for financing costs
April 7, 1999........... 1,181,344 0.50340 594,690 Shares issued for compensation
April 14, 1999.......... 613,000 0.50546 309,847 Shares issued for financing costs
April 14, 1999.......... 387,000 0.50546 195,613 Shares issued for financing costs
April 14, 1999.......... 577,000 0.50546 291,650 Shares issued for financing costs
April 14, 1999.......... 473,000 0.50546 239,082 Shares issued for financing costs
April 14, 1999.......... 398,000 0.50546 201,173 Shares issued for financing costs
April 14, 1999.......... 602,000 0.50546 304,286 Shares issued for financing costs
April 14, 1999.......... 479,000 0.50546 242,115 Shares issued for financing costs
April 14, 1999.......... 471,000 0.50546 238,071 Shares issued for financing costs
April 14, 1999.......... 423,333 0.50546 213,978 Shares issued for compensation
April 14, 1999.......... 423,333 0.50546 213,978 Shares issued for compensation
April 14, 1999.......... 423,334 0.50546 213,978 Shares issued for compensation
April 14, 1999.......... 105,000 0.50546 53,073 Shares issued for compensation
April 14, 1999.......... 125,000 0.50546 63,182 Shares issued for compensation
April 14, 1999.......... 250,000 0.50546 126,365 Shares issued for compensation
May 27, 1999............ 150,000 0.50000 75,000 Shares issued for a corporate reorganization
(78) Change in unpaid share scriptions
(321,784) Deferred compensation
(50,055) Share issue costs
---------- ----------
Balance--
September 30, 1999...... 17,066,344 7,580,429
========== ==========
Preferred shares
Balance--
December 31, 1998....... -- --
May 27, 1999 ........... 1,500,000 0.00010 150 Convertible shares issued for a financing arrangement
(150) Unpaid share subscriptions
---------- ----------
Balance--
September 30, 1999...... 1,500,000 --
========== ==========
</TABLE>
F-27
<PAGE>
THINWEB.COM CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)--(Continued)
September 30, 1999 (expressed in U.S. dollars)
12 Subsequent events
On December 15, 1999, the company repaid the $340,136 included in other
current liability as of September 30, 1999 and transferred to NoTime Wireless
Corp. ("NoTime") an exclusive perpetual license for thinAccess for the
wireless database access market in return for shares of NoTime and a
promissory note (see note 9 for further details).
On December 16, 1999, the company, through one of its wholly owned
subsidiaries, purchased 500,000 units of the capital stock of Innovium Capital
Corp. and issued to Innovium Capital U.S. Corp. 100,000 non-transferrable
share purchase warrants exercisable for shares of the company (see note 9 for
further details).
Effective February 1, 2000, the company changed its name to thinWEB
Technologies Corporation.
F-28
<PAGE>
THINWEB TECHNOLOGIES CORPORATION
6,262,500 Shares of Common Stock to be Sold by Certain Selling Security
Holders
----------------
PROSPECTUS
----------------
, 2000
We have not authorized any dealer, salesperson or other person to provide
any information or make any representations about thinWEB except the
information or representations contained in this prospectus. You should not
rely on any additional information or representations if made.
This prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy any securities:
. except the common stock offered by this prospectus;
. in any jurisdiction in which the offer or solicitation is not authorized;
. in any jurisdiction where the dealer or other salesperson is not
qualified to make the offer or solicitation;
. to any person to whom it is unlawful to make the offer or solicitation;
or
. to any person who is not a United States resident or who is outside the
jurisdiction of the United States.
The delivery of this prospectus or any accompanying sale does not imply
that:
. there have been no changes in the affairs of thinWEB after the date of
this prospectus; or
. the information contained in this prospectus is correct after the date of
this prospectus.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 24. Indemnification of Directors and Officers
ThinWeb is incorporated in Delaware. Under Section 145 of the General
Corporation Law of the State of Delaware, a Delaware corporation has the
power, under specified circumstances, to indemnify its directors, officers,
employees and agents in connection with actions, suits or proceedings brought
against them by a third party or in the right of the corporation, by reason of
the fact that they were or are such directors, officers, employees or agents,
against expenses incurred in any action, suit or proceeding. The certificate
of incorporation and the by-laws of thinWEB provide for indemnification of
directors and officers to the fullest extent permitted by the General
Corporation Law of the State of Delaware.
The General Corporation Law of the State of Delaware provides that a
certificate of incorporation may contain a provision eliminating the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such
provision shall not eliminate or limit the liability of a director
(1) for any breach of the director's duty of loyalty to the corporation
or its stockholders,
(2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
(3) under Section 174 (relating to liability for unauthorized
acquisitions or redemptions of, or dividends on, capital stock) of the
General Corporation Law of the State of Delaware, or
(4) for any transaction from which the director derived an improper
personal benefit.
ThinWEB's certificate of incorporation contains such a provision.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or persons
controlling thinWEB pursuant to the foregoing provisions, it is the opinion of
the Securities and Exchange Commission that such indemnification is against
public policy as expressed in the Act and is therefore unenforceable.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth our expenses in connection with this
registration statement. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission.
<TABLE>
<S> <C>
Filing Fee--Securities and Exchange Commission.................. $ 8,000
Fees and Expenses of Accountants and legal counsel.............. 100,000
Blue Sky Fees and Expenses...................................... 4,000
Printing and Engraving Expenses................................. 5,000
Miscellaneous Expenses.......................................... 1,000
--------
Total........................................................... $118,000
========
</TABLE>
II-1
<PAGE>
Item 26. Recent Sales of Unregistered Securities
Founding of Warwick
In connection with the founding of Warwick Acquisition Corporation, the
predecessor to thinWEB Technologies Corporation, Warwick issued 5,000,000
shares of common stock to two persons for nominal consideration. The issuance
of these shares did not involve a public offering and was exempt from the
registration requirements of the Securities Act pursuant to the exemption from
registration provided by Section 4(2) thereof. Of these 5,000,000 shares,
4,850,000 were redeemed in connection with the share exchange transaction in
April 1999 pursuant to which the shareholders of ThinWeb Software Incorporated
acquired control of Warwick.
Original Investments in ThinWEB Software Incorporated
Prior to the share exchange transaction, ThinWEB Software Incorporated
issued shares of common stock to the following individuals or entities for the
cash consideration listed below. Some of these holders of the shares listed
below may have subsequently transferred or disposed of their shares and the
list does not purport to be a current listing of our shareholders.
<TABLE>
<CAPTION>
Number of
Number of Post-Exchange
Pre-Exchange Shares or Right
Date Shareholder Shares to Direct Vote Consideration
---- ----------- ------------ --------------- -------------
<C> <S> <C> <C> <C>
Pierce Mill Associates,
6/9/98 Inc....................... 4,250,000 redeemed $ 425
TPG Capital Corporation... 750,000 150,000 75
Butternut Capital
Limited................... 613,000 613,000 4*
International
Shareholdings Corp........ 387,000 387,000 3*
Seismic Investments Ltd... 577,000 577,000 4*
Amery Associates Inc...... 473,000 473,000 3*
Cannon Equity Limited..... 398,000 398,000 3*
Corporate Solutions
Limited................... 602,000 602,000 4*
Strathglen Capital
Limited................... 479,000 479,000 3*
Greensted Equities
Limited................... 471,000 471,000 3*
Arrendadora Solarsa S.A... 500,000 500,000 83,389*
Transatlantic Co., S.A.... 250,000 250,000 2*
Cheetah Systems Ltd....... 500,000 500,000 3*
Shaftesbury Global
Limited................... 500,000 500,000 3*
Midland Shareholdings
Limited................... 500,000 500,000 3*
B. MacLean Family Trust... 2,666,667 2,666,667 16,349*
C. Reid Family Trust...... 2,666,667 2,666,667 16,349*
Enman Family Investment
Trust..................... 2,666,666 2,666,666 33,130*
J. Smyth Family Trust..... 175,000 175,000 1*
T. MacLean Family Trust... 195,000 195,000 1*
3024704 Nova Scotia
Limited................... 891,000 891,000 445,500*
Donald Wile............... 100,000 100,000 50,000*
Everest (Private) Trust
Company................... 14,000 14,000 7,000*
Gary Hannah............... 1,181,344 1,181,344 8*
Paul Landry Sr............ 100,000 100,000 0*
Paul Landry Jr............ 10,000 10,000 0*
</TABLE>
II-2
<PAGE>
- --------
In the preceding table,
(1) the * denotes the amount paid for the shareholder's original investment in
shares of ThinWeb Software Incorporated;
(2) 3024704 Nova Scotia Limited was subsequently dissolved and its shares of
ThinWeb Software Incorporated were distributed pro rata to shareholders;
and
(3) None of the original sales of ThinWEB Software Incorporated shares
involved a public offering and all were exempt from the registration
requirements of the Securities Act pursuant to the exemption from
registration provided by Section 4(2) thereof or Regulation S thereunder.
Share Exchange Transaction
The ThinWEB Software Incorporated shares reflected in the preceding table
were subsequently exchanged by the holders in the share exchange transaction
for 16,916,344 Class A shares of our subsidiary, Thinweb.com Inc., and
accompanying voting rights in the parent company, thinWEB Technologies
Corporation. This exchange of ThinWEB Software Incorporated shares by the
holders for Class A shares of Thinweb.com Inc. was effected for Canadian tax
purposes, did not involve a public offering and was exempt from the
registration requirements of the Securities Act pursuant to the exemption from
registration provided by Section 4(2) thereof.
In connection with such share exchange transaction, the parent company,
thinWEB Technologies Corporation, issued 16,916,344 shares of common stock to
a trustee as part of the consideration for the purchase of the outstanding
stock of ThinWEB Software Incorporated by a newly created subsidiary,
Thinweb.com Inc. The issuance of these shares by thinWEB Technologies
Corporation to the trustee did not involve a public offering and was exempt
from the registration requirements of the Securities Act pursuant to the
exemption from registration provided by Section 4(2) thereof. As a result of
the share exchange, ThinWeb Software Incorporated became a subsidiary of
Thinweb.com Inc. and, indirectly, a subsidiary of thinWEB Technologies
Corporation, the parent company.
Also in connection with the share exchange transaction, in consideration
for certain services related to the corporate reorganization, we issued a
warrant to purchase up to 50,000 shares of our common stock at a strike price
of $1.00 per share, exercisable for a period of five years from April 22,
1999, to TPG Capital Corporation, an affiliated company of Cassidy &
Associates, the law firm which prepared initial versions of this registration
statement. The issuance of this warrant to TPG Capital did not involve a
public offering and was exempt from the registration requirements of the
Securities Act pursuant to the exemption from registration provided by Section
4(2) thereof.
Preferred Stock Issuance
We have issued 1,500,000 shares of convertible preferred stock to E-Capital
Management Inc. at the price of $.0001 per share, as compensation for E-
Capital's assistance in locating and providing both interim and equity
financing. E-Capital has since assigned the shares to
II-3
<PAGE>
583317 British Columbia Ltd. J. Gregory Wilson is the president of E-Capital
which is owned by The Greg Wilson Family Trust, the beneficiaries of which are
the spouse and children of J. Gregory Wilson. Mr. Wilson is also the president
and sole shareholder of 583317 British Columbia Ltd. The issuance of the
convertible preferred shares to E-Capital and the subsequent transfer of these
shares by E-Capital to 583317 British Columbia Ltd. did not involve a public
offering and was exempt from the registration requirements of the Securities
Act pursuant to the exemption from registration provided by Section 4(2)
thereof.
Neither E-Capital Management Inc. nor 583317 British Columbia Ltd. is a US
corporation and their selling activities neither took place in the United
States nor involved US persons. Accordingly, such entities would not be
required to register as broker-dealers in the United States.
Joint Venture with Innovium Capital Corp.
As part of our joint venture with Innovium Capital Corp., we issued to
Innovium 100,000 non-transferable common stock purchase warrants with a two
year exercise term and an exercise price per share equal to the lower of $5.00
and the lowest price at which we issue equity or securities convertible into
equity during this period pursuant to a financing. In consideration for
entering into the joint venture transaction, we received net proceeds of
$1,000,000 CDN ($650,000 US) and a 50% interest in the joint venture company.
The issuance of this warrant to Innovium did not involve a public offering and
was exempt from the registration requirements of the Securities Act pursuant
to the exemption from registration provided by Section 4(2) thereof.
Employment Agreement with James Cappadocia
Pursuant to our employment agreement with James Cappadocia, our recently
appointed president and chief executive officer, we issued 315,000 shares of
common stock to him for nominal consideration upon his employment with us and
agreed to issue him an additional 635,000 shares in equal quarterly amounts of
79,375 shares over a two year period. Such issuance to Mr. Cappadocia did not
involve a public offering and was exempt from the registration requirements of
the Securities Act pursuant to the exemption from registration provided in
Section 4.2 thereof.
II-4
<PAGE>
Item 27. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<C> <S>
3.1* Certificate of Incorporation, filed with the registration statement
of Warwick Acquisition Corporation on Form 10-SB (file no. 0-25419)
filed with the Commission on February 19, 1999 and incorporated
herein by reference
3.2* By-Laws of the Company, filed with the registration statement of
Warwick Acquisition Corporation on Form 10-SB (file no. 0-25419)
filed with the Commission on February 19, 1999 and incorporated
herein by reference
3.3 Amendments to Certificate of Incorporation
3.4* Certificate of Designation for Series 1 Preferred Shares
4.1* Share Exchange and Share Purchase Agreement among Warwick
Acquisition Corporation, Thinweb.com Inc.,ThinWeb Software
Incorporated, and all of the shareholders of ThinWeb Software
Incorporated, filed with the Form 8-K of Warwick Acquisition
Corporation (file no. 0-25419) filed with the Commission on May 28,
1999, and incorporated herein by reference.
4.2* Exchange and Voting Agreement among Warwick Acquisition
Corporation, ThinWeb Software Incorporated, the Trustee, and all of
the shareholders of ThinWeb Software Incorporated, and all of the
shareholders of ThinWeb Software Incorporated, filed with the Form
8-K of Warwick Acquisition Corporation (file no. 0-25419) filed
with the Commission on May 28, 1999, and incorporated herein by
reference
5.1 Opinion of Sadis & Goldberg LLC
10.1* License Agreement with Sun Microsystems
10.3* License Agreement with Cloudscape, Inc.
10.4* List of Beneficial Owners of Selling Security Holders
10.5* Agreement with E-Capital Management
10.6 Employment Agreement with Mr. Cappadocia
10.7* Agreement with Brokerwise Communication, Inc.
10.8 Joint Venture Agreements with Innovium Capital Corp.
10.9* License Agreement with Informix Software, Inc.
10.10* Loan Agreement with E-Capital Management, Inc.
10.11 Private Placement Agreement with Lines Overseas Management Limited
10.12* Stock Option Plan
10.13 Employment Agreement with Mr. MacLean
10.14 Employment Agreement with Mr. Reid
10.15 Employment Agreement with Mr. Enman
10.16 Voluntary Trading Restrictions Agreements
23.1 Consent of Accountants
23.2 Consent of Sadis & Goldberg LLC (included in Exhibit 5.1)
27 Financial Data Schedule
</TABLE>
- --------
* Previously filed
II-5
<PAGE>
(b) The following financial statement schedules are included in this
registration statement.
None.
Item 28. Undertakings.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(1) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(2) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(3) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) The undersigned registrant hereby undertakes that for the purpose
of determining any liability under the Securities Act of 1933, each post-
effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
thinWEB Technologies Corporation certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form SB-2 and
authorized this registration statement to be signed on its behalf by the
undersigned in Ottawa, Ontario, Canada on February 16, 2000.
Thinweb Technologies Corporation
By:
/s/ James Cappadocia
______________________________
James Cappadocia,
President, Chief Executive
Officer and Director
By:
/s/ George R. Fraser
______________________________
George R. Fraser,
Chief Financial Officer,
Principal Accounting Officer
and Director
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James S. Anthony Director February 16, 2000
______________________________________
James S. Anthony
/s/ Bryan C. MacLean Director February 16, 2000
______________________________________
Bryan C. MacLean
</TABLE>
II-7
<PAGE>
EXHIBIT 3.3
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
thinWEB.com Corporation, a corporation organized and existing under and by the
virtue of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That a meeting of the Board of Directors of thinWEB.com Corporation
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended
by changing Article One thereof, so that, as amended, said Article shall now
read as follows:
The name of the Corporation is thinWEB Technologies Corporation.
SECOND: That thereafter, the amendment was approved by written consent of the
required number of stockholders, in accordance with Section 228 of the General
Corporation Law of the State of Delaware.
THIRD: That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, said thinWEB.com Corporation, has caused this certificate
to be signed by C. James Enman, an authorized officer, this 28/th/ Day of
January, 2000.
/s/ C. James Enman
-----------------------------
C. James Enman
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
TO
WARWICK ACQUISITION CORPORATION
CERTIFICATE OF INCORPORATION
Warwick Acquisition Corporation (the "Corporation"), a corporation
organized and existing under the Delaware General Corporation Law, hereby
certifies as follows:
FIRST: As of May 27, 1999, the Corporation had 150,000 shares of common
stock issued and outstanding.
SECOND: by unanimous consent of the Board of Directors on May 27, 1999 and
by unanimous written consent without a meeting of the shareholder(s) dated May
27, 1999, an amendment to the Certificate of Incorporation of the Corporation,
as written below, was adopted in accordance with Section 242 of the Delaware
General Corporation Law to a change of the name of the Corporation.
THIRD: Article One to the Certificate of Incorporation shall be amended to
reflect the name change and shall be amended to read as follows:
"Name
----
The name of the Corporation is "thinWEB.com Corporation"
IN WITNESS WHEREOF, I have hereunto set my hand this 27/th/ day of May,
1999.
/s/ James M. Cassidy
----------------------------------
James M. Cassidy
President
<PAGE>
Exhibit 5.1
<TABLE>
<CAPTION>
<S> <C> <C>
Sadis & Goldberg LLC
Jack M. Sadis Attorneys at Law Telephone
Jeffrey C. Goldberg 463 Seventh Avenue, 16th floor 212-947-3793
Ron Geffner* New York, NY 10018 Telecopier
Douglas R. Hirsch* 212-947-3796
Irwin Latner* Email
Steve Etkind [email protected]
- -----------------------
Danielle Epstein
Dennis Hirsch**
- -----------------------
Greg Shrock
(of Counsel)
* Also a member of NJ Bar
** Also a member of CA Bar
</TABLE>
February 16, 2000
thinWEB Technologies Corporation
Suite 101, Phase 3
6 Antares Drive
Ottawa, Ontario K2E 8A9
Attn: Mr. James Cappadocia,
Chief Executive Officer
Re: thinWEB Technologies Corporation - Registration Statement on Form SB-2
Dear Mr. Cappadocia:
We have acted as counsel to thinWEB Technologies Corporation, a Delaware
corporation (the "Company"), in connection with the Registration Statement on
Form SB-2 filed with the Securities and Exchange Commission on the date hereof
(the "Registration Statement"). The Registration Statement covers 6,262,500
shares of Common Stock ("Common Stock") to be offered for sale by certain
selling security holders named therein (the "Selling Security Holders").
In rendering this opinion, we have examined (i) the Articles of
Incorporation, as amended, and Bylaws of the Company; (ii) the resolutions of
the Board of Directors evidencing the corporate proceedings taken by the Company
to authorize the issuance of the Common Stock covered by the Registration
Statement; (iii) the Registration Statement (including all exhibits thereto);
(iv) the Share Exchange and Share Purchase Agreement dated April 22, 1999 among
the Company, Thinweb.com Inc. (the "Purchaser"), ThinWeb Software Incorporated
("ThinWeb Software") and the shareholders of ThinWeb Software (the "Holders");
(v) the Exchange and Voting Agreement dated April 22, 1999 among the Company,
the Purchaser and the Holders; (vi) the Support Agreement dated April 22, 1999
among the Company and the Purchaser; and (vii)
<PAGE>
such other documents as we have deemed appropriate or necessary as a basis for
the opinion hereinafter expressed. The agreements referred to in clauses (iv),
(v) and (vi) above are hereinafter referred to as the "Share Exchange
Agreements", the material provisions of which are described in the Registration
Statement.
In rendering the opinion expressed below, we have assumed the authenticity
of all documents and records examined, the conformity with the original
documents of all documents submitted to us as copies and the genuineness of all
signatures.
Based upon and subject to the foregoing, and such legal considerations as
we deem relevant, we are of the opinion that, when issued pursuant to the Share
Exchange Agreements to the extent applicable to the Common Stock of a Selling
Security Holder, and sold as contemplated by the Registration Statement, and
subject to effectiveness of the Registration Statement and compliance with
applicable state securities laws, the Common Stock will have been legally
issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to references made to this firm under the heading
"Legal Matters" in the Prospectus contained in the Registration Statement and
all amendments thereto.
Sincerely,
By: /s/ Sadis & Goldberg LLC
------------------------
SADIS & GOLDBERG LLC
2
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 3rd day of February, 2000.
BETWEEN:
JAMES CAPPADOCIA (hereinafter referred to as the Employee)
OF THE FIRST PART
-and-
THINWEB SOFTWARE INCORPORATED, a company incorporated under the laws
of the Province of Nova Scotia (hereinafter referred to as the
Company)
OF THE SECOND PART
-and-
thinWEB TECHNOLOGIES CORPORATION, a company incorporated under the
laws of the State of Delaware
OF THE THIRD PART
WHEREAS:
(a) The Company is presently engaged in the business of computer software
concentrating on the development of Internet and electronic commerce
applications;
(b) The Company and the Employee have agreed to enter into this Employment
Agreement upon the terms and conditions hereafter set out.
NOW THEREFOR IN CONSIDERATION OF the foregoing and the mutual covenants and
agreements set forth below, and for other good and valuable consideration, the
parties covenant and agree as follows:
ARTICLE 1 - EMPLOYMENT
1.1 Term of Agreement
The term of this Agreement shall commence effective on the date of this
Agreement and shall continue for an indefinite period or until and if terminated
by the Company or the Employee as contemplated herein; provided, however, that
the provisions hereof shall survive the termination of this Agreement with
respect to the rights and entitlements of the parties hereto which have accrued
prior to, or as a consequence of, such termination.
1.2 Survival of Covenants
Notwithstanding Section 1.1, the provisions of Articles 5, 6 and 7 of this
Agreement shall survive the termination of this Agreement and shall continue in
effect in accordance with the terms thereof.
1.3 Employment and Duties
Subject to the terms of this Agreement, the Employee shall perform the duties as
set forth on Schedule A hereto and shall serve the Company and any affiliates of
the Company in such capacity or capacities and shall perform such further duties
and exercise such powers as may be determined from time to time by the Board of
Directors of the Company; provided however such duties shall be reasonably
consistent with the scope and stature of the duties and responsibilities with
which the Employee is empowered. The Employee shall:
<PAGE>
(a) devote his/her full time and attention to the business and affairs of
the Company;
(b) perform those duties assigned to them faithfully and diligently and to
the best of his/her ability;
(c) use his/her best efforts to promote the interests and goodwill of the
Company and its affiliates; and
(d) comply with the Company's policies as they are established from time
to time.
1.4 Reporting Procedures
The Employee shall be based in Toronto or Ottawa, as the employee sees fit
having regard to his responsibilities, and will report to or at the direction of
the Board of Directors of the Company. The Employee shall report fully on the
management, operations and business affairs of the Company advising to the best
of his ability and in accordance with reasonable standards on matters that may
arise from time to time during the terms of this Agreement. Within 30 days of
the date hereof at a meeting with the Board of Directors the Employee's clear
mandate, responsibilities and reporting relationship will be mutually agreed
upon as between the Employee and the Company.
ARTICLE 2 - COMPENSATION AND BENEFITS
2.1 Remuneration and Benefits
(i) The Employee remuneration shall be a base salary of CDN. $200,000 per year
(Base Salary), which shall not be reduced, and the benefits contemplated
herein. Subject to no reduction, the Base Salary shall be reviewed
annually, or more frequently if the Board of Directors of the Company so
determines in its absolute discretion. Notwithstanding anything contained
herein, the Company shall be under no obligation to increase the Base
Salary at the time of any such review. All payments of Base Salary shall
be made twice monthly, and all payments made by the Company on account of
Base Salary and other remuneration (if any) shall be subject to all
required deductions for income tax and other statutory withholdings.
(ii) The Employee shall receive 950,000 common shares of thinWEB Technologies
Corporation. 315,000 of such shares will vest immediately and the
remainder will vest in eight equal quarterly instalments, commencing three
months from this date. Of the shares vesting immediately, the Employee
will be permitted to sell a sufficient number of shares to realize net pre-
tax proceeds of $1,600,000 CDN, following thinWEB Technologies Corporation
shares becoming publicly traded, up to a maximum of 200,000 shares sold,
this being the number which will be registered for sale in the SEC
registration statement. The remaining vested shares shall be subject to
the trading restrictions imposed by the SEC on shares held by insiders.
2.2 Benefits
The Employee shall also be entitled to such benefits as are set out in Schedule
B hereto. In addition, the Employee shall be entitled to participate in such
other benefits as are provided by the Company generally to other employees of
the Company. The Employee acknowledges and agrees that the Company has the
right to unilaterally revise the terms of any insurance of health benefits
package.
2.3 Bonus and Profit Sharing
Bonuses, if any, to be paid to the Employee and the criteria for determining the
same shall be as determined by Board of Directors of the Company. Participation
in any profit-sharing plan approved by the Board of Directors at a level not
less than that of any other senior officer or employee.
<PAGE>
2.4 Employee Stock Option Plan
The Employee shall be entitled to participate in any employee stock option plan
(ESOP) established by the Company's parent thinWEB Technologies Corporation from
time to time for the general benefit of employees of the Company at a level that
is commensurate with his/her position, provided that the Employee is and remains
eligible for such participation in accordance with the terms and conditions of
the ESOP. The Employee shall be entitled to an option on 300,000 common shares
of thinWEB Technologies Corporation, to be issued at such time as the shares
become publicly traded, at a strike price equal to the opening price on the
first day of trading, or such other strike price adopted by thinWEB Technologies
Corporation that the Employee may agree to. Future options to be at a level not
less than that of any other senior officer or employee of the Company, thinWEB
Technologies Corporation or ThinWeb.com Inc.
2.5 Vacation
The Employee shall be entitled to four (4) weeks paid vacation per calendar year
at his discretion having regard to his responsibilities.
2.6 Business Expenses
The Company shall pay or reimburse the Employee for all reasonable and approved
out-of-pocket expenses, which approval shall not be unreasonable, actually and
properly incurred from time to time in connection with carrying out his/her
duties hereunder in accordance with the Company's general policies as they may
be established or amended from time to time. The Employee shall furnish to the
Company an expense statement and invoices or receipts (or such other supporting
information as the Company may require) for expenses for which the Employee
seeks reimbursement or payment. Additionally the Employee shall be entitled to
a monthly car allowance of up to $750 per month.
ARTICLE 3 - TERMINATION
3.1 Termination
Notwithstanding anything contained in this Agreement, the Company may not
terminate the employment of the Employee without payment as set out in
subsection 3.4 herein.
3.2 Termination for Disability/Death
The Company may terminate the employment of the Employee immediately upon notice
to the Employee if the employee becomes permanently disabled, with payment as
set out in subsection 3.4; provided however, if such termination would
jeopardize the Employee's right to receive long-term disability payments, which
he would otherwise receive from the Company's insurers, the Company shall (if so
directed by the Employee or his lawful attorney) terminate the employment of the
Employee immediately upon cessation of the Employee's entitlement thereto.
"Permanently disabled" means if in any year during the employment period,
because of ill health, physical or mental disability, or for other causes beyond
the control of the Employee, the Employee has been continuously unable or
unwilling or has failed to perform his/her duties for one hundred and eighty
(180) consecutive days, or if, during any year of the employment period, the
Employee has been unable or unwilling or has failed to perform his duties for a
total of one hundred eighty (180) days, consecutive or not. The term any year
of the employment period means any period of twelve (12) consecutive months
during the employment period. This Agreement shall, subject to the provisions
of Section 1.1, terminate without notice upon the death of the Employee.
3.3 Termination by Employee
The Employee may terminate his employment with the Company by providing no less
than sixty (60) days notice in writing prior to the effective date of the
termination of his/her employment. Such notice may be reduced to a shorter term
at the option of the Company. Upon giving such notice, the Employee shall
forthwith execute and deliver to the Company his written resignation from any
and all offices of the Company and its affiliates, without claim for
compensation for loss of office.
<PAGE>
3.4 Payments Due on Termination
Upon termination of the Employee's employment:
(a) as a result of termination by the Employer as set forth in Section
3.1, the Employee shall be entitled to receive, in such manner as he
may direct, within thirty (30) days of the date of termination, an
amount equal to one year's worth of targeted income (which shall
include Base Salary, car allowance, bonuses, profit sharing, and
benefits);
(b) as a result of the permanent disability or death of the Employee as
set forth in Section 3.2, the Employee or his/her estate, as
applicable, shall be entitled to receive, within thirty (30) days of
the date of such termination, an amount equal to the then applicable
Base Salary which would have been earned by the Employee during the
succeeding ninety (90) day period following the date of termination of
employment;
(c) shares and options vested to the Employee at the time of the
Employee's termination or resignation belong to the Employee but any
unvested shares and options will be forfeited; and
(d) Employee's profit participation under the terms of a profit-sharing
plan will be paid out pro-rata as per the terms of such agreement.
3.5 Deductions
All payments made by the Company as a result of the Employee's termination shall
be subject to all required deductions for income tax and other statutory
withholdings.
3.6 Payments in Full Settlement
The Employee acknowledges and agrees that the payments pursuant to this Article
shall be in full satisfaction of all claims, losses, costs, damages or expenses
in connection with the termination of his/her employment, including termination
pay and severance pay pursuant to the applicable Labour Standards legislation as
amended form time to time. Except as otherwise provided in this Article, the
Employee shall not be entitled to any further termination payments, damages or
compensation whatsoever in connection with the employment of the Employee and
the termination thereof. The Employee agrees to deliver to the Company,
concurent with any such payment, a full and final release from all actions or
claims in connection with the termination of his/her employment or any losses,
costs, damages or expenses resulting therefrom in favour of the Company, its
affiliates, subsidiaries, directors, and officers, in form satisfactory to
the Company. The Employee shall simultaneously receive a reciprocal release
from the Company, its affiliates, subsidiaries, directors, and officers in turn,
which however shall not waive confidentiality and non-competition provisions
contained herein.
3.7 Return of Materials
On termination of the Employee's employment for any reason, the Employee shall
deliver promptly to the Company all property of the Company and its affiliates
in the possession of the Employee or directly or indirectly under his control.
The Employee agrees not to make reproductions or copies of any such property of
the Company and its affiliates for his personal or business use or that of any
other party.
ARTICLE 4 - ACKNOWLEDGEMENTS BY THE EMPLOYEE
4.1 Acknowledgements by Employee
The Employee acknowledges that:
(a) the Company is presently engaged in the development of computer
software and the sale of products and services based upon such
software, primarily aimed at Internet and electronic commerce
applications;
<PAGE>
(b) his services to the Company are special and unique and that he has
significant responsibilities in connection with the Company, its
business and affairs;
(c) his work for the Company gives his/her access to trade secrets of and
confidential information concerning the Company and its affiliates
(Confidential Information) which Confidential Information includes,
without limitation: trade secrets; know-how; marketing plans; cost
figures; client lists; names and addresses of suppliers and business
contacts; software and operating systems; and information relating to
employees and other persons in a contractual relationship with the
Company (but shall not include any such information which is generally
available to the public through no fault of the Employee);
(d) the business of the Company is national and international in scope;
(e) a primary purpose of this Agreement is to evidence the agreements
between the Employee and the Company contained in Articles 5, 6 and 7
hereof; and
(f) the agreements contained in Articles 5,6 and 7 hereof are reasonable
and essential to protect the business and goodwill of the Company and
its business.
4.2 Remedies Available to Company
The Employee acknowledges that a breach by the Employee of the covenants
contained in Articles 5, 6 and 7 would result in immediate and irreparable
damages to the Company that could not adequately be compensated for by monetary
award. Accordingly, it is expressly agreed by the Employee that, in addition to
all other remedies available to it, the Company and its affiliates shall be
entitled to the immediate remedy of an interim, interlocutory and permanent
injunction as well as an accounting of all profits arising out of any breach by
the Employee.
ARTICLE 5 - NON-COMPETITION
5.1 Non-Competition
The Employee shall not, while employed by the Company or:
(a) for the two (2) year period following the termination of his
employment if the Employee initiated the termination; or
(b) for the twelve (12) month period following the termination of this
employment if the Company initiated the termination, whether with or
without Cause,
directly or indirectly, either individually or in partnership or in conjunction
in any way with any person or persons, whether as principal, agent, employee,
consultant, advisor, shareholder, director, guarantor, creditor or in any other
manner whatsoever:
(c) solicit, interfere with or endeavour to entice away from the Company
or its affiliates, accept any business from or the patronage of or
render any service to, sell to or contract or attempt to contract with
any person, firm or corporation who was a client, customer or supplier
of the Company, its affiliates or associates or a prospective client
or customer of the Company, its affiliates or associates with whom the
Company, its affiliates or associates have had any dealing, to the
extent that such business, patronage, service, or contract is
competitive with the business of the Company;
(d) offer employment to or endeavour to entice away from the Company or
its affiliates, any person employed by the Company or its affiliates
at the date of the termination of his employment, or who was so
employed at any time during the previous twelve (12) month period or
interfere in any way with the employment relationship between any such
employee and the Company or its affiliates; or
<PAGE>
(e) engage in, carry on or otherwise be concerned with or have any
interest in, or advise, lend money to, guarantee the debts or
obligations of, permit his/her name, or any part thereof, to be used
or employed by any person, firm, association, syndicate or corporation
engaged in or concerned with or having any interest in a business
which competes with the Company's business (Competitive Business).
5.2 Covenants are Reasonable
The Employee has and will have specific knowledge of the affairs of the Company
and its business, including Confidential Information. Therefore, the Employee
hereby acknowledges and agrees that all covenants, provisions and restrictions
contained in this Article are reasonable, necessary and valid in the
circumstances of this Agreement (including the time and geographic limitations)
and all defences to the strict enforcement thereof by the Company or its
affiliates are hereby waived.
5.3 Revision to Restrictions
If the provisions of this Article 5 are ever adjudicated to exceed the
limitations on time or geographic scope permitted by applicable law, then such
provisions shall be deemed reformed to the maximum time or geographic scope
permitted by applicable law.
5.4 Portfolio Exception
Notwithstanding the foregoing, nothing in this Agreement shall prevent the
Employee from acquiring and holding, directly or indirectly (and including the
holdings of any other person not acting at arm's length with the Employee (as
defined in the Income Tax Act (Canada)) not more than five percent (5%) of the
outstanding share of any corporation engaged in a Competitive Business if such
shares are listed on a stock exchange, provided that the Employee is not a
member of the board of directors or an officer or employee of, or consultant to,
or otherwise involved with, directly or indirectly, such corporation.
ARTICLE 6 - CONFIDENTIALITY
6.1 Confidentiality
The Employee acknowledges and agrees that the Confidential Information as
defined in Article 4 is the exclusive property of the Company and its affiliates
and that such property is being held by the Employee in trust for the Company.
Except as may be required in the course of carrying out his/her duties
hereunder, the Employee covenants and agrees that the Employee will not disclose
(directly or indirectly) any of the Confidential Information to any person,
other than to the directors, officers or employees of the Company, nor will the
Employee disclose, for any purpose other than for the purpose of the Company,
the private affairs of the Company or any other information which the Employee
may acquire during his/her employment with respect to the business and affairs
of the Company.
6.2 Permitted Disclosure
Notwithstanding Section 6.1, the Employee shall be entitled to disclose such
Confidential Information if required pursuant to a subpoena or order issued by a
court, arbitrator or governmental body, agency or official, provided that the
Employee shall first have:
(a) promptly notified the Company of the request to make such disclosure;
(b) consulted with the Company on the advisability of taking steps to
resist such requirements; and
(c) if the disclosure is required or deemed advisable, co-operate with the
Company in an attempt to obtain an order or other assurance that such
information will be accorded confidential treatment.
<PAGE>
6.2 Remedies of Company
Nothing in this Article 6 shall be construed as limiting or impair in any way
any of the rights of the Company whether at law, in equity or otherwise against
the Employee with respect to the disclosure, use or exploitation in any manner
whatsoever to any person or for any purpose, as the case may be, of any of the
Confidential Information.
6.3 Obligations Survive in Perpetuity
The obligations of the Employee under this Article 6 shall continue during the
course of his/her employment with the Company and, unless otherwise authorized
in writing by the Company, shall survive the termination of this Agreement,
regardless of which party initiated the termination.
ARTICLE 7 - INTELLECTUAL PROPERTY
7.1 Inventions
The Company shall be the sole owner of all of the products and proceeds of the
Employee's services as an Employee of the Company, whether before or after the
date of this Agreement, including, but not limited to, all materials, ideas,
concepts, formats, suggestions, developments, writings, arrangements, packages,
programs, trade secrets, discoveries, research materials, data bases and other
intellectual property that the Employee may acquire, obtain, develop or create
in connection with and during the term of the Employee's employment by the
Company, whether before or after the date of this Agreement, including any and
all inventions and improvements relating or in any way appertaining to or
connected with the business of the Company free and clear of any claims by the
Employee (or anyone claiming under the Employee) of any kind or character
whatsoever. The Employee shall, during his employment, at the request of the
Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title and
interest in or to any such properties, including all such applications,
assignments and other instruments with which the Company shall deem necessary in
order to apply for and obtain patents in Canada or foreign countries for such
inventions or improvements and in order to assign and convey to the Company the
sole and exclusive right, title and interest in the inventions or improvements,
all expenses in connection therewith to be borne by the Company.
7.2 Career Opportunities
Any business opportunities related to the business of the Company and its
affiliates which become known to the Employee during his/her employment with the
Company must be fully disclosed and made available to the Company by the
Employee. The Employee agrees not to take or attempt to take any action if the
result will be to divert from the Company any opportunity which is within the
scope of the Company's business or that of its affiliates.
7.3 Disclosure
During the employment period, the Employee shall promptly disclose to the board
of directors of the Company full information, concerning any material interest,
direct or indirect, of the Employee (as owner, shareholder, partner, lender or
other investor, director, officer, employee, consultant or otherwise) or any
member of his family in any business that is reasonably known to the Employee,
to purchase or otherwise obtain a material amount of services or products from,
or to sell or otherwise provide services or products to, the Company and its
affiliates or to any of their suppliers or customers.
<PAGE>
ARTICLE 8 - NOTICES
8.1 Notices
Any notice, direction or other communication to be given under this Agreement or
any ancillary agreement shall be in writing and given by delivering it or
sending it by telecopy or other similar form of recorded communication
addressed:
If to the Employee at:
33 Theobald's Circle
Richmond Hill, Ontario
L4C 9C7
Telephone: (905) 737-7011
If to the Company at:
6 Antares Drive, Phase 3, Suite 101
Nepean, Ontario
K2E 8A9
Telephone: (613) 225-8446
Fax: (613) 225-0721
8.2 Timing
Any communication shall be deemed to have been validly and effectively given (i)
if personally delivered, and the date of such delivery if such date is a
business day and such delivery was made prior to 4:00 p.m. (Ontario time) and
otherwise on the next business day: or (ii) if transmitted by telecopy or
similar means of recorded communication on the business day following the date
of transmission. Any party may change its address for service from time to
timely notice given in accordance with the foregoing and any subsequent notice
shall be sent to such party at its changed address.
ARTICLE 9 - GENERAL
9.1 Amendment and Waiver
This Agreement may not be amended, supplemented or waived except in writing
signed by the party against which such amendment or waiver is to be enforced.
The waiver by any party of a breach of any provision of this Agreement shall not
operate to, or be construed as a waiver of, any other breach of that provision
nor as a waiver of any breach of another provision.
9.2 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the Province of Ontario and the laws of Canada applicable therein.
9.3 Severability
If any provision of this Agreement shall be held by any court of competent
jurisdiction to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remaining provisions, or part thereof, of this Agreement and such
remaining provisions, or part thereof, shall remain enforceable and binding.
9.4 No Restriction on Conduct of Business
Nothing in this Agreement shall restrict the Company in the conduct of its
business and affairs and, without limiting the generality of the foregoing, the
Company shall be free to sell any or all of its assets, to merge, amalgamate
<PAGE>
or combine its business with the business of any other person or to discontinue
the business, and no such event shall constitute a breach of the Company's
obligations hereunder.
9.5 Successors
This Agreement shall be binding on and ensure to the benefit of the successors
and assigns of the Company and the heirs and executors of the Employee.
9.6 Entire Agreement
This Agreement constitutes the entire agreement and understanding between the
parties with respect to the employment arrangement addressed herein and
supersedes all prior agreements and understandings, written or oral, between the
parties relating to such subject matter.
9.7 Legal Advice
The Employee hereby represents and warrants to the Company and acknowledges and
agrees that he had the opportunity to seek and was encouraged by the Company to
seek independent legal advice prior to the execution and delivery of this
Agreement and that, in the event that he did not avail himself of that
opportunity prior to signing this Agreement, he did so voluntarily without any
undue pressure and agrees that his failure to obtain independent legal advice
shall not be used by him as a defence to the enforcement of his obligations
under this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.
SIGNED, SEALED and DELIVERED )
)
) ___________________________________
in the presence of: ) JAMES CAPPADOCIA
)
) THINWEB SOFTWARE INCORPORATED
)
) per:________________________________
)
)
) per:________________________________
)
)
)
) THINWEB TECHNOLOGIES CORPORATION
)
) per:_______________________________
)
)
) per:_______________________________
<PAGE>
SCHEDULE "A"
EMPLOYEE DUTIES
Employee is engaged as President and CEO and shall perform all duties normally
associated with such a position and any duties reasonably ancillary thereto.
Employee shall meet with the Board of Directors within 30 days and a clear
mandate, responsibilities and reporting relationship will be set out and agreed
to.
<PAGE>
SCHEDULE "B"
EMPLOYEE BENEFITS
Company group health and insurance benefits plan (currently through Sun Life).
Employee stock option plan.
<PAGE>
Exhibit 10.8
MEMORANDUM OF AGREEMENT MADE AND ENTERED INTO AS OF THE 16TH DAY OF DECEMBER,
1999.
AMONG: INNOVIUM CAPITAL CORP., a body politic and corporate, duly
incorporated according to law, having its principal place of
business in the City of Toronto, Province of Ontario, herein
represented by Jamie Macintosh, its President,
(hereinafter referred to as "Innovium");
PARTY OF THE FIRST PART
-----------------------
AND: THINWEB SOFTWARE INCORPORATED, a body politic and corporate,
duly incorporated according to law, having its principal
place of business in the City of Halifax, Province of Nova
Scotia, herein represented by Gary Hannah, its President,
(hereinafter referred to as "Thinweb");
PARTY OF THE SECOND PART
------------------------
AND: NOTIME WIRELESS CORP., a body politic and corporate, duly
incorporated according to law, having its principal place of
business in the City of Halifax, Province of Nova Scotia,
herein represented by Cory Reid,
(hereinafter referred to as the "Corporation");
PARTY OF THE THIRD PART
-----------------------
AND: LAPOINTE ROSENSTEIN, Attorneys, of the City of Montreal,
Province of Quebec,
(hereinafter referred to as the "Escrow Agent");
INTERVENANT
-----------
<PAGE>
-2-
1. PREAMBLE
1.1 WHEREAS the Corporation was incorporated pursuant to the Canada Business
Corporations Act (the "CBCA") by Certificate and Articles of Incorporation
dated October 21, 1999.
1.2 WHEREAS Innovium and Thinweb are the registered and beneficial owners of
and control all of the issued and outstanding shares in the capital stock
of the Corporation.
1.3 WHEREAS the Shareholders are desirous of regulating their respective
rights, duties and obligations in and to the Corporation and towards one
another.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
2. DEFINITIONS
2.1 In this Agreement:
2.1.1 "Act" means the Income Tax Act (Canada);
2.1.2 "Adjusted Technology Value" means, in the case of the Common
Shares, the aggregate of (i) the Original Technology Value; (ii)
all funds advanced to the Corporation subsequent to the date of
execution of this Agreement and up to the day immediately
preceding the date of the determination (the "Determination
Period"); and (iii) the aggregate subscription price for all
Shares issued by the Corporation during the Determination Period,
less (i) all repayments by the Corporation of funds (excluding
interest) advanced to the Corporation during the Determination
Period and (ii) all dividends declared and paid and other
distributions made by the Corporation to any of the Shareholders
during the Determination Period. In case of disagreement as to the
Adjusted Technology Value of the Common Shares, same shall be
determined by the Auditors using generally accepted accounting
principles consistently applied, whose determination shall be
final and binding upon the parties without right of appeal;
2.1.3 "Auditors" means such firm of chartered accountants as may be
agreed upon from time to time at a meeting of the Shareholders to
act as auditors or accountants for the Corporation;
2.1.4 "Board" means the Board of Directors of the Corporation;
2.1.5 "Business" has the meaning ascribed to it in subsection 5.1
hereof;
2.1.6 "CBCA" has the meaning ascribed to it in subsection 1.1 hereof;
2.1.7 "Closing" has the meaning ascribed to it in subsection 13.2
hereof;
2.1.8 "Common Share(s)" means the participating and voting shares in the
capital stock of the Corporation (being on the date of execution
hereof the Class "A" shares and the Class "B" shares) or any Share
or other security issued in
<PAGE>
-3-
replacement of such participating and voting shares upon any
reorganization or exchange of the capital stock of the
Corporation;
2.1.9 "Confidential Information" has the meaning ascribed to it in
paragraph 15.2 hereof;
2.1.10 "Creditor" has the meaning ascribed to it in subsection 11.1
hereof;
2.1.11 "Default Amount" has the meaning ascribed to it in subsection 11.1
hereof;
2.1.12 "Defaulting Party" has the meaning ascribed to it in subsection
11.1 hereof;
2.1.13 "Deposit" has the meaning ascribed to it in subparagraph 13.1.2.1
hereof;
2.1.14 "Exercising Shareholder" has the meaning ascribed to it in
subsection 11.3 hereof;
2.1.15 "Funds" has the meaning ascribed to it in subsection 11.1 hereof;
2.1.16 "Interest in the Corporation" means all the Shares owned by a
Shareholder plus the aggregate amount of such Shareholder's Loan
Claims;
2.1.17 "License Agreement" means the License Agreement entered into
between Thinweb and the Corporation as of December 15, 1999;
2.1.18 "Loan Claims" means in relation to a Shareholder, all indebtedness
owing by the Corporation to that Shareholder or to any person
Related to that Shareholder plus all accrued and unpaid interest
thereon;
2.1.19 "Majority Shareholder" has the meaning ascribed to it in
subsection 12.2 hereof;
2.1.20 "Management Fee" has the meaning ascribed to it in subsection 6.3
hereof;
2.1.21 "Minimum Percentage" has the meaning ascribed to it in subsection
11.2 hereof;
2.1.22 "Minority Offer" has the meaning ascribed to it in subsection 14.2
hereof;
2.1.23 "Minority Offeror" has the meaning ascribed to it in subsection
14.2 hereof;
2.1.24 "Minority Shareholder" has the meaning ascribed to it in
subsection 12.2 hereof;
2.1.25 "New Purchase Price" has the meaning ascribed to it in subsection
13.5 hereof;
2.1.26 "New Purchaser" has the meaning ascribed to it in subsection 13.5
hereof;
2.1.27 "New Vendor" has the meaning ascribed to it in subsection 13.5
hereof;
<PAGE>
-4-
2.1.28 "Non-Exercising Shareholder" has the meaning ascribed to it in
subsection 11.3 hereof;
2.1.29 "Offer" has the meaning ascribed to it in subsection 13.1 hereof;
2.1.30 "Offeree" has the meaning ascribed to it in subsection 13.1
hereof;
2.1.31 "Offeror" has the meaning ascribed to it in subsection 13.1
hereof;
2.1.32 "Operating Costs" means all non-capital costs and expenses
(excluding non-cash items) of the Corporation related to the
Business as are set out in the Quarterly Budget;
2.1.33 "Original Technology Value" means the sum of two million five
hundred thousand dollars ($2,500,000);
2.1.34 "Preferred Share(s)" means the non-participating shares in the
capital stock of the Corporation or any Share or other security
issued in replacement of such Preferred Share upon any
reorganization or exchange of the capital stock of the
Corporation;
2.1.35 "Price" has the meaning ascribed to it in subparagraph 13.1.2.1
hereof;
2.1.36 "Prime Rate" means the annual interest rate quoted publicly by the
Corporation's regular bankers as the reference rate of interest
for commercial demand loans made in Canadian dollars and commonly
known as such bank's prime rate, as adjusted from time to time on
the basis of the Prime Rate in effect on the first (1st) day of
each month;
2.1.37 "Proportion" means a fraction, the numerator of which shall be the
number of Common Shares owned by the particular Shareholder to
whom reference is made and the denominator of which shall be the
total of the Common Shares owned by all Shareholders;
2.1.38 "Quarterly Budget" has the meaning ascribed to it in subsection
6.1 hereof;
2.1.39 "Related" means related as that term is used in the Act;
2.1.40 "Services Agreement" means the Services Agreement entered into
between Thinweb and the Corporation as of December 15, 1999;
2.1.41 "Share(s)" means share(s) in the capital stock of the
Corporation;
2.1.42 "Shareholder" means any of the Shareholders;
2.1.43 "Shareholders" means initially Innovium and Thinweb, and the
definition shall be deemed to be modified from time to time to (i)
delete persons who cease to hold Shares in accordance with the
terms of this Agreement and (ii) add all persons who, from time to
time, become holders of Shares in accordance with the terms of
this Agreement and who undertake in writing to be bound by the
provisions of this Agreement;
<PAGE>
-5-
2.1.44 "TP Offer" has the meaning ascribed to it in subsection 14.1
hereof;
2.1.45 "TP Offeror" has the meaning ascribed to it in subsection 14.1
hereof.
3. SHAREHOLDERS AND SHAREHOLDINGS
3.1 The Shareholders acknowledge that the Shares in the capital stock of the
Corporation are held in the following numbers and classes:
<TABLE>
<CAPTION>
Shareholder Common Shares Percentage
----------- ------------- ----------
<S> <C> <C>
Innovium 1,250,000 Class "B" shares 50%
Thinweb 1,250,000 Class "A" shares 50%
</TABLE>
4. COMMISSIONS, FEES, ETC.
4.1 No fee, rebate, commission or gain of whatsoever nature shall be earned by
any of the Shareholders as a result of that Shareholder obtaining
financing for or on behalf of the Corporation.
5. BUSINESS OF THE CORPORATION
5.1 The Corporation shall carry on the business of research and development in
connection with the intellectual property licensed to it by Thinweb
pursuant to the License Agreement and the commercialization of such
intellectual property (the "Business").
6. OPERATIONS OF THE CORPORATION
6.1 The officers of the Corporation shall at least thirty (30) days prior to
the commencement of each quarter of the fiscal year of the Corporation
submit a quarterly budget to the Board for approval (the "Quarterly
Budget"). The officers shall carry on the Business in accordance with the
Quarterly Budget and the directives set forth by the Board from time to
time. Any amendments to the Quarterly Budget shall be submitted by the
officers of the Corporation to the Board for approval.
6.2 The Shareholders hereby agree that it is not the intention of the
Corporation to build up cash reserves once the research and development
phase of the Business is completed and the Corporation starts to
commercialize its products or services. The Shareholders hereby agree that
it will be the Auditors responsibility to determine a mechanism and
formula for distributing on a regular basis cash flow which is surplus to
the needs of the Corporation. The determination of the Auditors shall be
final and binding on the parties without right of appeal.
6.3 As long as Thinweb owns at least forty percent (40%) of the issued and
outstanding voting Shares, Thinweb shall, subject to the provisions of
this Agreement, through the officers of the Corporation nominated by it
manage the day-to-day activities of the Corporation. Once Thinweb ceases
to own at least forty percent (40%) of the issued and outstanding voting
Shares, then the other Shareholder shall determine whether or
<PAGE>
-6-
not Thinweb shall continue to manage the day-to-day activities of the
Corporation. Thinweb shall charge the Corporation a fee (the "Management
Fee") for managing its day-to-day activities equal to two and one-half
percent (2.5%) of the Operating Costs during the month in which Thinweb
manages the day-to-day activities of the Corporation. Thinweb shall invoice
the Corporation for the Management Fee at the end of each month in arrears.
The Corporation shall pay such Management Fee within thirty (30) days of
its receipt of the invoice.
7. BOOKS OF ACCOUNT
7.1 Proper and correct books of account and such other books as may be
necessary for the Business shall be kept, in which shall be entered all
such transactions as are usually entered and written in books of account
kept by persons engaged in businesses of a similar nature, and each of the
Shareholders or a chartered accountant appointed by any of them shall have
free access at all times to inspect, examine and make extracts and copies
of same.
8. DIRECTORS
8.1 The Shareholders agree to vote their Shares each and every year at meetings
of Shareholders so as to cause two (2) nominees of Innovium and two (2)
nominees of Thinweb to be elected to the Board. The initial nominees of
Innovium are Neil Raymond and Jamie Macintosh and the initial nominees of
Thinweb are Cory Reid and Gary Hannah. Notwithstanding the foregoing, at
such time as either Shareholder ceases to own at least forty percent (40%)
of the issued and outstanding voting Shares, then the other Shareholder
shall be entitled to appoint a third (3rd) nominee to the Board and the
Shareholders agree to vote their Shares to give effect to the foregoing.
8.2 Any Shareholder entitled under subsection 8.1 to nominate a director(s)
may, acting reasonably, replace any director nominated by it at any time
and from time to time. Any such Shareholder who wishes to replace a
director may have such director replaced at any duly constituted meeting of
the Shareholders or shall forward a written resolution to that effect,
signed by that Shareholder, as the case may be, to the other Shareholders
not less than five (5) days before a meeting of the Board at which such
replacement director is expected to attend. Upon receipt of such written
resolution, the other Shareholders shall execute the resolution and
promptly return it to the Shareholder initiating same, who, upon receipt
thereof, shall forward the signed resolution to the Corporation for filing
in the corporate minute book. The Shareholders agree to vote their Shares
to give effect to the provisions of this subsection 8.2.
9. BY-LAWS
9.1 The Shareholders undertake to take whatever steps that may be necessary to
adopt the following by-law as a by-law of the Corporation and they
furthermore undertake that they will not vote their Shares or exercise any
voting rights as directors or otherwise make any decision or take any
action in any manner or capacity whatsoever, for the purpose of amending or
repealing the said by-law, unless they do so unanimously.
<PAGE>
-7-
"Notwithstanding any by-law, resolution, decision or act previously
adopted, the following provisions override, supersede and amend all by-
laws of the Corporation inconsistent herewith:
A. As long as both shareholders of the Corporation each own at least
forty percent (40%) of the issued and outstanding voting shares of the
capital stock of the Corporation then:
(i) a quorum of a meeting of the shareholders of the Corporation
shall be the shareholders of the Corporation holding or
representing at least ninety percent (90%) of the issued and
outstanding voting shares of the capital stock of the
Corporation;
(ii) the board of directors shall consist of four (4) directors and
a quorum of a meeting of directors shall be three (3)
directors. In addition, no resolution, decision or act of the
board of directors will be valid unless a nominee director of
each of the shareholders of the Corporation forms part of the
majority in respect of such resolution, decision or act;
(iii) at no time and at no meeting whatsoever shall the Chairman of a
meeting or President of the Corporation have any additional
vote or any vote whatsoever in addition to his ordinary vote as
shareholder or as director, and that, more particularly,
neither the Chairman of a meeting nor the President shall have
a casting vote in case of a tie;
B. At such time as either shareholder of the Corporation ceases to own at
least forty percent (40%) of the issued and outstanding voting shares
of the capital stock of the Corporation then:
(i) a quorum of a meeting of shareholders of the Corporation shall
be the shareholders of the Corporation holding or representing
sixty percent (60%) of the issued and outstanding voting shares
of the capital stock of the Corporation;
(ii) the board of directors shall consist of five (5) directors and
a quorum of a meeting of directors shall be three (3)
directors;
(iii) at no time and at no meeting whatsoever shall the Chairman of a
meeting or President of the Corporation have any additional
vote or any vote whatsoever in addition to his ordinary vote as
shareholder or as director, and that, more particularly,
neither the Chairman of a meeting nor the President shall have
a casting vote in case of a tie;
(iv) without limiting the generality of the foregoing and provided
that neither shareholder of the Corporation owns less than ten
percent (10%) of the voting shares in the capital stock of the
Corporation, there shall be no by-law, resolution, decision or
act of the shareholders, directors or officers of the Corporation
having any of the following objects or purposes unless favourably
voted upon at a meeting of directors, and ratified and confirmed
by the holders of seventy-five percent (75%) of the voting shares
in the capital stock of the Corporation;
<PAGE>
-8-
(a) any change in the number of directors of the Corporation,
except as provided in the Shareholders Agreement dated as of
December 16, 1999 among the Corporation, Innovium Capital
Corp. and Thinweb Software Incorporated (the "Shareholders
Agreement");
(b) any filing of Articles of Amendment or Articles of
Amalgamation by the Corporation;
(c) any change in or alteration of the share capital of the
Corporation;
(d) any change in the remuneration paid to the shareholders,
directors or officers of the Corporation or to any person
Related (as that term is used in the Income Tax Act
(Canada)) to any of the shareholders, directors or officers
of the Corporation;
(e) any payment of bonuses or other benefits to shareholders,
directors or officers of the Corporation or to any person
Related to any of the shareholders, directors or officers of
the Corporation;
(f) any granting or repayment of any loan to any shareholder,
director or officer of the Corporation or to any person
Related to any of them, except as provided in the
Shareholders Agreement;
(g) any guarantee of any obligations of any shareholder,
director or officer of the Corporation or any person Related
to any of them;
(h) any making of an assignment under the Bankruptcy and
Insolvency Act or a proposal thereunder, or the exercise of
any recourse to any other measure designed for the
protection of insolvent debtors pursuant to any other
legislation in connection with insolvency;
(i) any judicial or voluntary winding-up or dissolution of the
Corporation or the liquidation of its business or assets;
(j) any sale of all or a substantial portion of the assets of
the Corporation or the granting of an option for same;
(k) any redemption or purchase by the Corporation of its share
capital;
(l) any amendment, repeal or abrogation of any by-law of the
Corporation;
(m) any adoption for or on behalf of the Corporation of any
contract or agreement or any entering into of any
transaction by the Corporation not in the ordinary course of
the Corporation's business."
9.2 Notwithstanding any provision of this Agreement to the contrary, the
parties hereto hereby acknowledge and confirm that Thinweb shall not be
entitled to vote as a
<PAGE>
-9-
Shareholder or cause its nominees to vote as directors of the Corporation
on any matter regarding the License Agreement or the Services Agreement and
any decision, act or resolution to be taken by the Board or the
Shareholders in respect of the License Agreement or the Services Agreement
shall be made or taken by the representatives of Innovium or Innovium
alone, as the case may be, and any such decision, act or resolution shall
be binding upon the Corporation and Thinweb.
10. AUDITORS OF THE CORPORATION
10.1 The auditors or accountants of the Corporation shall be the Auditors.
11. ADDITIONAL FUNDS
11.1 All operating expenses of the Corporation shall be funded by advances to
be made by the Shareholders as per the Quarterly Budget. Each time an
advance of funds (the "Funds") is required in accordance with the Quarterly
Budget, the Shareholders hereby agree to advance to the Corporation their
respective Proportion of the Funds. In the event that either of the
Shareholders fails to advance its Proportion of the Funds, when required
(the "Defaulting Party"), the other Shareholder (the "Creditor") may
advance to the Corporation the Defaulting Party's Proportion of the Funds
(the "Default Amount") for and on behalf of the Defaulting Party. Until
repayment of such amount, the Creditor shall be subrogated in all the
Defaulting Party's rights against the Corporation in connection with such
advances.
11.2 Should the Defaulting Party repay to the Creditor the Default Amount such
Default Amount shall be repaid with interest calculated from the date of
its advance at the rate of two percent (2%) above the Prime Rate. If the
Default Amount is not repaid to the Creditor by the Defaulting Party within
thirty (30) days from the date of its advance, then the Creditor shall
dilute the Interest in the Corporation of the Defaulting Party, in which
event the Creditor shall be entitled to convert all of the Default Amount,
including all interest accrued thereon, into Common Shares of the
Corporation by subscribing for additional Common Shares at a price equal to
the Adjusted Technology Value per share. Notwithstanding the foregoing,
such conversion shall not reduce the Defaulting Party's Proportion
expressed as a percent to less than ten percent (10%) (the "Minimum
Percentage"). If such conversion would result in the Defaulting Party's
Proportion being reduced to less than the Minimum Percentage, then
notwithstanding the obligation of the Creditor to convert all of the
Default Amount into Common Shares as aforesaid, the portion of the Default
Amount that would result in the Defaulting Party's Proportion being reduced
to less than the Minimum Percentage shall not be converted into Common
Shares, but rather shall be converted into a loan owing to the Creditor by
the Corporation, which loan shall be repaid to the Creditor in and by way
of twelve (12) equal, consecutive, monthly instalments payable on the first
(1st) day of each month, bearing interest at the rate of two percent (2%)
above the Prime Rate, which interest shall be payable at the same time as
the instalments of capital and which loan may, at the option of the
Creditor be secured by the personal property of the Corporation. The first
(1st) instalment shall be paid on the first (1st) day of the month next
following the month in which the portion of the Default Amount was
converted into a loan. The conversion by the Creditor of the Default
Amount shall relieve the Defaulting Party of its default in respect
thereof.
<PAGE>
-10-
11.3 Subject to subsection 11.2 hereof, each time that the Corporation wishes
to issue Common Shares from treasury, then the Corporation will give to
each Shareholder the right, exercisable within thirty (30) days from
receipt of notice thereof from the Corporation, to subscribe for such
number of additional Common Shares (on the same terms and conditions as are
applicable to the Common Shares to be issued from treasury) so that each
Shareholder's Proportion immediately after the said issue of Common Shares
from treasury shall continue to be equal to its Proportion immediately
before the said issue of Common Shares from treasury. In the event that
one (1) Shareholder exercises its right under this subsection 11.3 (the
"Exercising Shareholder") and the other Shareholder fails to exercise its
right to subscribe for such additional Common Shares within such thirty
(30) day period (the "Non-Exercising Shareholder"), then the Non-Exercising
Shareholder's right to subscribe for such additional Common Shares shall
thereupon become ipso facto null and void and the Corporation shall give
the Exercising Shareholder an additional seven (7) days in which to
subscribe for all or part of the additional Common Shares initially offered
to the Non-Exercising Shareholder. If not all of such additional Common
Shares are subscribed for pursuant to this subsection 11.3, the Corporation
shall be free for a period of ninety (90) days to sell such remaining
additional Common Shares to any person on terms not more favourable than
those provided to the Shareholders, provided, however, that it is a
condition precedent to such sale that such person have agreed to become a
party to and be bound by the terms and conditions of this Agreement.
12. ALIENATION OF SHARES
12.1 Provided that both Shareholders each own at least forty percent (40%) of
the issued and outstanding voting Shares, unless otherwise provided for in
accordance with the terms hereof, neither Shareholder shall sell, transfer,
assign, hypothecate, charge or otherwise encumber, alienate or dispose of
in any manner whatsoever the whole or any part of its Interest in the
Corporation without first obtaining the written consent of the other
Shareholder.
12.2 At such time as either Shareholder ceases to own at least forty percent
(40%) of the issued and outstanding voting Shares (the "Minority
Shareholder") and at all times thereafter, unless otherwise provided for in
accordance with the terms hereof, the Minority Shareholder shall not sell,
transfer, assign, hypothecate, charge or otherwise encumber, alienate or
dispose of in any manner whatsoever the whole or any part of its Interest
in the Corporation without first obtaining the written consent of the other
Shareholder (the "Majority Shareholder"). In the event that the Majority
Shareholder sells, transfers or assigns all or any of its Interest in the
Corporation and subsequent to such sale, transfer or assignment, the
Minority Shareholder continues to be a Shareholder, if permitted, the
Majority Shareholder agrees to ensure that any purchaser, transferee or
assignee be bound by the provisions of this Agreement.
13. BUY/SELL
13.1 Notwithstanding subsection 12.1, commencing on the first anniversary date
of this Agreement, each of the Shareholders (hereinafter referred to as the
"Offeror") shall have the right, provided that both Shareholders each own
at least forty percent (40%) of the issued and outstanding Shares, to
present to the other Shareholder (hereinafter
<PAGE>
-11-
referred to as the "Offeree") a bona fide offer to purchase all (but not
less than all) of the Offeree's Interest in the Corporation at a price per
Common Share, per Preferred Share and per dollar of Loan Claims which the
Offeror shall set forth in a written offer (the "Offer") to the Offeree.
Such Offer shall be considered as the granting of an option by the Offeror
to the Offeree exercisable as follows:
13.1.1 within thirty (30) days of the making of the Offer, the Offeree
shall be obliged to exercise one of the following two (2) options:
13.1.1.1 accept the Offer and sell its Interest in the
Corporation to the Offeror, at the price per Common
Share, per Preferred Share and per dollar of Loan Claims
as are contained in the Offer and the Offeror must
accordingly purchase the Offeree's Interest in the
Corporation as aforesaid; or
13.1.1.2 reject the Offer and effect the purchase of the
Offeror's Interest in the Corporation, at the same price
per Common Share, per Preferred Share and per dollar of
Loan Claims as are contained in the Offer, and the
Offeror must accordingly sell to the Offeree the
Offeror's Interest in the Corporation. In such case, the
provisions of paragraph 13.1.2 shall apply mutatis
mutandis and the Escrow Agent shall forthwith return to
the Offeror its Deposit;
failing which it shall be deemed to have exercised the option set
out in subparagraph 13.1.1.1;
13.1.2 for the purposes of this section, the Offer shall be deemed bona
fide only if:
13.1.2.1 it is accompanied by a statement signed by the Escrow
Agent confirming that it has received from the Offeror a
certified cheque payable to its order, in trust, in an
amount (the "Deposit") representing twenty-five percent
(25%) of the aggregate of (i) the consideration for the
Common Shares set out in the Offer, (ii) the
consideration for the Preferred Shares set out in the
Offer and (iii) the consideration for the Loan Claims
set out in the Offer (collectively, the "Price");
13.1.2.2 it contains an undertaking to secure the immediate
release of the Offeree and all persons Related to it
from all guarantees given by each of them on behalf of
the Corporation;
13.1.2.3 it contains an undertaking to purchase all Preferred
Shares owned by the Offeree;
13.1.2.4 it contains an undertaking to purchase all of the Loan
Claims of the Offeree;
13.1.2.5 it contains an undertaking to pay the balance of the
Price in full, in cash or by certified cheque, at the
Closing; and
<PAGE>
-12-
13.1.2.6 it is an offer for the entire Interest in the
Corporation of the Offeree and not for part thereof.
13.2 The closing of the transaction of purchase and sale contemplated herein
(the "Closing") shall take place at the offices of the attorneys for the
Corporation, at 10:00 a.m., sixty (60) days after the delivery of the Offer
to the Offeree or such other time and place as agreed to by the Offeror and
the Offeree.
13.3 At the Closing:
13.3.1 the purchasing Shareholder shall furnish to the selling Shareholder
written evidence to the effect that the selling Shareholder and all
persons Related to it have been released from all guarantees
furnished by each of them on behalf of the Corporation;
13.3.2 the selling Shareholder and each person Related to it shall repay
to the Corporation all loans and other amounts owing by them to the
Corporation, regardless of the terms of repayment thereof, together
with all interest due thereon, if any, and to this end, shall
deliver to the Corporation a certified cheque in an amount
representing full repayment of the indebtedness. The selling
Shareholder and each person Related to it shall repay to the
purchasing Shareholder all loans and other amounts owing by them to
such purchasing Shareholder, arising out of their association with
the Corporation, regardless of the terms of payment thereof,
together with all interest accrued thereon, if any, and to this end
shall deliver to such purchasing Shareholder a certified cheque in
an amount representing full repayment of such indebtedness. In
addition, the purchasing Shareholder shall repay to the selling
Shareholder and each person Related to it all loans and other
amounts owing by it to such selling Shareholder and persons Related
to it, arising out of their association with the Corporation,
regardless of the terms of payment thereof, together with all
interest accrued thereon, if any, and to this end shall deliver to
such selling Shareholder and persons Related to it a certified
cheque in an amount representing full repayment of such
indebtedness;
13.3.3 the Escrow Agent shall deliver to the purchasing Shareholder
certificates representing all of the Shares owned by the selling
Shareholder (properly endorsed for transfer) together with evidence
of the selling Shareholder's Loan Claims;
13.3.4 the selling Shareholder shall cause its nominee or any person
Related to it to resign as a director, employee and/or officer of
the Corporation;
13.3.5 the selling Shareholder and all persons Related to it who had any
involvement with the Corporation, on the one hand, and the
Corporation and the purchasing Shareholder, on the other hand,
shall grant to each other reciprocal releases from any and all
claims, past, present or future, which any of them have against the
others for matters arising out of their association with the
Corporation prior to the Closing, save for any matters arising
pursuant to the transaction of purchase and sale contemplated
herein, the License Agreement and the Services Agreement;
<PAGE>
-13-
13.3.6 if the Offeror is the purchasing Shareholder, the purchasing
Shareholder shall tender to the Escrow Agent a certified cheque in
an amount equal to the Price less the Deposit, and the Escrow Agent
shall remit the Price to the selling Shareholder; and
13.3.7 if the selling Shareholder if the Offeror, the purchasing
Shareholder shall tender to the Escrow Agent a certified cheque in
an amount equal to the Price less its Deposit, the Escrow Agent
shall return to the selling Shareholder its Deposit and the Escrow
Agent shall remit the Price to the selling Shareholder.
13.4 The parties hereto agree to sign all documents and perform all acts
required to give effect to the sale and purchase of the selling
Shareholder's Interest in the Corporation.
13.5 If, at the time of Closing, the purchasing Shareholder neglects or refuses
to complete the transaction of purchase and sale herein contemplated and
neglects or refuses to deliver those documents or perform those acts which
it is obliged to deliver pursuant to subsection 13.3 above, the selling
Shareholder shall have the right, at its option, without prejudice to any
other rights which it may have under the circumstances, to give to the
purchasing Shareholder within thirty (30) days from the date on which the
Closing should have occurred, a notice to the effect that the selling
Shareholder (hereinafter referred to in this subsection as the "New
Purchaser") intends to purchase from the purchasing Shareholder
(hereinafter referred to in this subsection as the "New Vendor") all of the
Interest in the Corporation owned by the New Vendor at a price equal to
fifty percent (50%) of the Price which would otherwise have been payable
for the New Vendor's Interest in the Corporation (hereinafter referred to
in this subsection as the "New Purchase Price"). The closing of the
resulting transaction of purchase and sale shall take place at the offices
of the Corporation's attorneys, at 10:00 a.m. on the sixtieth (60th)
business day following the date on which the Closing referred to in
subsection 13.2 was to take place. At such time, the New Vendor shall sell
all of its Interest in the Corporation to the New Purchaser which shall
purchase same, the whole in accordance with subsections 13.3 and 13.4,
which shall apply mutatis mutandis. In the event that the New Vendor
neglects or refuses to complete said transaction, the New Purchaser may
sign or perform in its place and stead and on its behalf any and all
documents required to complete the transaction, each Shareholder hereby
naming the other as its mandatory for such purposes. In such event, the New
Purchaser shall remit the New Purchase Price or the New Purchase Price less
it Deposit, if any, to the Escrow Agent, in trust, for the benefit of the
New Vendor and such remittance shall constitute full payment of the New
Purchase Price and same shall be delivered by the Escrow Agent to the New
Vendor at the closing referred to in this subsection 13.5. The Escrow Agent
shall return to the New Vendor its Deposit, if any, at said closing.
14. FORCED SALE AND RIGHT OF FIRST REFUSAL
14.1 At such time as either Shareholder ceases to own at least forty percent
(40%) of the issued and outstanding voting Shares and at all times
thereafter, in the event that the Majority Shareholder receives an
irrevocable bona fide offer (the "TP Offer") from a third (3rd) party,
other than a Related person (the "TP Offeror"), which TP Offer the Majority
Shareholder is prepared to accept, to purchase all but not less than all of
its
<PAGE>
-14-
Interest in the Corporation, the following provisions shall apply and
the Majority Shareholder shall forthwith following receipt of the TP Offer
advise the Minority Shareholder in writing of same, as well as of the terms
and conditions of the TP Offer:
14.1.1 the TP Offer must include an irrevocable offer to the Minority
Shareholder by the TP Offeror to purchase all (but not less than
all) of the Minority Shareholder's Interest in the Corporation on no
less favourable terms and conditions and price per Common Share, per
Preferred Share and per dollar of Loan Claims as those offered to
the Majority Shareholder; and
14.1.2 the Minority Shareholder shall be entitled to accept the TP Offer
with respect to all (but not less than all) of its Interest in the
Corporation in accordance with the terms of the TP Offer and
accordingly sell its Interest in the Corporation to the TP Offeror,
or the Majority Shareholder shall be entitled to oblige the Minority
Shareholder to sell all (but not less than all) of its Interest in
the Corporation to the TP Offeror in accordance with the terms of
the TP Offer, in which case the Minority Shareholder shall be deemed
to have accepted the TP Offer with respect to its Interest in the
Corporation and shall be bound to complete the transaction referred
to in the TP Offer with the TP Offeror on the terms and conditions
contemplated therein. In the event that neither the Minority
Shareholder nor the Majority Shareholder exercises its rights
pursuant to this paragraph 14.1.2, the Minority Shareholder shall
continue to be a Shareholder.
14.2 Notwithstanding subsection 12.2 hereof, in the event that the Minority
Shareholder receives an irrevocable bona fide offer (hereinafter referred
to as the "Minority Offer") from a third (3rd) party other than a Related
person (hereinafter referred to as the "Minority Offeror") to purchase all
(but not less than all) of its Interest in the Corporation for cash which
the Minority Shareholder is prepared to accept, the Minority Shareholder
shall be required, prior to being entitled to complete or proceed with the
sale to the Minority Offeror of all of its Interest in the Corporation, to
offer same to the Majority Shareholder on the following terms and
conditions:
14.2.1 within five (5) days of receipt of the Minority Offer, the Minority
Shareholder shall deliver to the Majority Shareholder a copy of the
Minority Offer with a written notice offering to sell its Interest
in the Corporation to the Majority Shareholder, the whole at the
same price per Common Share and on the same terms and conditions as
set forth in the Minority Offer, save as to delay for acceptance;
14.2.2 the Majority Shareholder shall then have thirty (30) days from
receipt of said Minority Offer and notice in which to notify the
Minority Shareholder of its intention to either:
14.2.2.1 purchase all of the Minority Shareholder's Interest in
the Corporation for the same price per Common Share and
on the same terms and conditions as are contained in the
Minority Offer, save as to delay for acceptance; or
14.2.2.2 not to purchase all of the Minority Shareholder's
Interest in the Corporation;
<PAGE>
-15-
14.2.3 should the Majority Shareholder fail to notify the Minority
Shareholder of its intention within the delays set forth in
paragraph 14.2.2 hereof, it shall be deemed to have elected not to
wish to purchase the Minority Shareholder's Interest in the
Corporation;
14.2.4 in the event that the Majority Shareholder notifies the Minority
Shareholder of its intention not to purchase the Minority
Shareholder's Interest in the Corporation, the Minority Shareholder
shall be free to proceed with the sale of its Interest in the
Corporation to the Minority Offeror in accordance with the Minority
Offer;
14.2.5 in the event that the Majority Shareholder notifies the Minority
Shareholder of its intention to purchase pursuant to subparagraph
14.2.2.1 hereof, the Minority Shareholder shall be obliged to sell
its Interest in the Corporation to the Majority Shareholder
accordingly.
14.3 For the purposes of subsection 14.2 hereof, the Minority Offer shall be
valid only if:
14.3.1 it provides for a twenty-five percent (25%) deposit by the Minority
Offeror at the time the Minority Offer is made;
14.3.2 it provides for a closing within one hundred and twenty (120) days
of the acceptance of the Minority Offer by the Minority Shareholder;
14.3.3 it provides for the purchase of all of the Minority Shareholder's
Interest in the Corporation; and
14.3.4 it contains an undertaking by the Minority Offeror to be bound by
the terms and conditions of this Agreement as a Minority Shareholder
in the event that the Minority Offeror becomes a Shareholder
pursuant to the terms hereof.
15. CONFIDENTIALITY
15.1 Each of the Shareholders undertakes that it shall not, while associated
with the Corporation as a shareholder and at all times following the
termination of said association, directly or indirectly, and whether on its
behalf or on behalf of others, disclose to any party any of the
Confidential Information (as hereinafter defined).
15.2 Each of the Shareholders hereby recognizes, acknowledges and agrees that
in its association with the Corporation it is and will be privy to certain
confidential information of the Corporation, including names of clients,
their addresses and requirements, trade secrets, inventions, data,
programming, systems, technical information, designs, ideas, data formats
and files, plans, specifications, formulas, drawings, sketches, prototypes,
tools, samples, reports and notes, operating instructions and similar
information, whether of a technical, engineering, operating design or
economic nature (collectively referred to as the "Confidential
Information"), which are valuable, special and unique assets of the
Corporation, and which information constitutes proprietary rights which the
Corporation is entitled to protect.
<PAGE>
-16-
16. CONCERNING THE ESCROW AGENT
16.1 Concurrently with the execution of this Agreement, the Shareholders shall
deposit with the Escrow Agent the share certificates representing all of
the Shares owned by them duly endorsed in blank for transfer as well as all
evidence of their Loan Claims duly assigned or endorsed in blank for
transfer. The Escrow Agent is hereby authorized to hold and deal with same
in accordance with the terms and conditions of this Agreement. As other
Shares are issued to the Shareholders or additional Loan Claims accrue to
them, the certificates representing said Shares and all evidence of Loan
Claims shall be forthwith assigned or endorsed in blank for transfer and
deposited with the Escrow Agent and shall be held and dealt with in
accordance with the terms and conditions of this Agreement. Notwithstanding
the deposit of the Shares and the evidence of Loan Claims with the Escrow
Agent, at all times prior to the closing of transactions referred to
herein, each Shareholder shall vote its Shares and be entitled to all
dividends declared and paid thereon as well as to all other benefits that
may accrue from said Shares from time to time and to all interest payable
on the Loan Claims.
16.2 The Escrow Agent may, at any time, resign or be discharged from any further
duties and responsibilities hereunder without liability of any kind other
than for its intentional or gross fault, upon giving fifteen (15) days
notice in writing to each of the Shareholders.
16.3 In the event of the resignation of the Escrow Agent herein named, the
Shareholders shall agree within fifteen (15) days on the appointment of its
successor. Such successor, immediately upon its appointment, shall be
vested with the same powers, rights, duties and responsibilities as if it
had been originally named as Escrow Agent herein, without any further
formality, and the Escrow Agent originally named and ceasing to act shall,
upon payment of any amounts due to it hereunder, execute and deliver all
such assignments and other instruments as may be necessary for the purpose
of assuring to the new escrow agent full seizin in the premises and shall
deliver the certificates representing the Shares and any evidences of Loan
Claims that it may hold to the new escrow agent.
16.4 It is acknowledged by the parties that the Escrow Agent shall not incur any
liabilities or responsibilities by reason of any matter or thing done or
omitted to be done under or in relation to this Agreement, except for
intentional or gross fault on its part. The Escrow Agent shall be entitled
to reasonable remuneration for its services hereunder.
16.5 The Escrow Agent shall have no duties or responsibilities except those
expressly set forth herein. It may consult with counsel and shall be fully
protected with respect to any action taken or omitted to be taken by it in
good faith. In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder, or shall receive instructions from any of the
parties with respect to the evidence of Loan Claims, the Shares and/or any
other documents or sums of money held by it in escrow pursuant to the
provisions hereof which in the Escrow Agent's opinion are in conflict with
the provisions hereof, it shall be entitled to refrain from taking any
action other than to keep such evidence of Loan Claims, Shares and/or other
documents or sums of money safely until it shall have been directed
otherwise in writing by the Corporation
<PAGE>
-17-
and the Shareholders or by a decision of the arbitrators in the manner set
forth in subsection 19.1.
16.6 The parties hereby agree to indemnify and hold harmless the Escrow Agent
from and against any and all claims relating to anything done or omitted by
the Escrow Agent in the course of the carrying out of the terms and
conditions of this Agreement.
16.7 The Escrow Agent shall not be bound to enter into or maintain any
litigation, until it shall have been indemnified against all expenses and
liabilities which might be reasonably incurred thereby.
17. NOTICES
17.1 All notices, requests, demands and other communications hereunder shall be
made in writing and shall be given by prepaid registered mail, receipt
return requested, or delivered by hand, to the other parties at the
following addresses:
if to Innovium: Innovium Capital Corp.
130 Adelaide Street West
Suite 2320
Toronto, Ontario
M5H 3P5
Attention: President
---------------------
if to Thinweb: Thinweb Software Incorporated
1505 Maritime Centre
Suite 1510, Maritime Centre
Halifax, Nova Scotia
B3J 3K5
Attention: President
---------------------
if to the Corporation: NoTime Wireless Corp.
1505 Maritime Centre
Suite 1510, Maritime Centre
Halifax, Nova Scotia
B3J 3K5
Attention: President
---------------------
if to the Escrow Agent: Lapointe Rosenstein
1250 Rene-Levesque Boulevard West
Suite 1400
Montreal, Quebec
H3B 5E9
Attention: Mtre. Brahm Gelfand
-------------------------------
<PAGE>
-18-
or at such other address as the parties may have previously indicated to
the other parties in writing in conformity with the foregoing. Any such
notice, request, demand or other communication shall be deemed to have
been received on the date of delivery if sent by registered mail or
delivered by hand.
18. INSCRIPTIONS ON SHARE CERTIFICATES
18.1 The share certificates which have been issued and allotted in respect of
the Shares as well as all evidence of Loan Claims shall be suitably
inscribed to indicate that they are subject to this Agreement.
19. ARBITRATION
19.1 Except as otherwise provided for in paragraph 2.1.2 or subsection 6.2, all
disputes arising in connection with this Agreement shall be finally settled
by arbitration under the Arbitration Act (Ontario) by one (1) arbitrator
appointed by both Shareholders. If the Shareholders cannot appoint one (1)
arbitrator to settle the dispute within fourteen (14) days of either
Shareholder notifying the other Shareholder of a dispute, each Shareholder
shall appoint one (1) arbitrator within fifteen (15) days thereafter, and
the two (2) arbitrators so appointed shall appoint a third (3rd) arbitrator
within ten (10) days thereafter, failing which either arbitrator shall be
entitled to apply to the Supreme Court of Ontario to have the third (3rd)
arbitrator appointed. If either Shareholder fails to appoint its
arbitrator within such fifteen (15) day period, then the arbitrator
appointed by the other Shareholder shall be the sole arbitrator. The
arbitration proceedings shall be conducted in English and the venue of the
arbitration shall be Toronto, Ontario. The decision of the arbitrators
shall be final and binding upon the parties to the exclusion of courts of
law.
20. MISCELLANEOUS PROVISIONS
20.1 The Shareholders undertake to cast their votes in favour of all
resolutions and by-laws and the parties undertake and agree to do all
things that may be necessary to give full force and effect to this
Agreement.
20.2 This Agreement may not be modified or amended except by instrument in
writing signed by each of the Shareholders. If any covenant, obligation or
agreement hereunder or the application of any part of this Agreement to any
person, party or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement or the application of such
covenants, agreements or obligations other than those as to which it is
held invalid or unenforceable shall not be affected thereby and each
covenant, obligation and agreement contained herein shall be separately
valid and enforceable to the full extent permitted by law.
20.3 The delays provided for herein are mandatory and may not be extended
without the consent of the Shareholders.
20.4 This Agreement shall be binding upon and enure to the benefit and advantage
of the parties hereto and their respective heirs, legatees, successors,
executors and assigns.
20.5 This Agreement shall be governed by and interpreted and enforced in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
<PAGE>
-19-
20.6 The preamble shall be deemed to form an integral part of this Agreement.
20.7 No waiver by any of the parties of the conditions, or of the breach of any
term, covenant or undertaking contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be
or construed as a further or continuing waiver of any such condition or
breach or as a waiver of any other condition or of the breach of any other
term, covenant or undertaking contained in this Agreement.
20.8 All words and personal pronouns relating thereto shall be read and
construed as the number and gender of the party or parties referred to in
each case require and the verb shall be construed as agreeing with the
required word and/or pronoun.
20.9 This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matters herein contained and supersedes and
replaces any negotiations, discussions or agreements previously held or
entered into by them with respect to the subject matters herein contained.
The parties hereby renounce to and waive the benefits of all prior
negotiations and discussions concerning the subject matter hereof which
are not embodied herein.
20.10 The provisions of this Agreement supersede with respect to the
Shareholders and the Escrow Agent, the provisions of the Articles, by-laws
and resolutions of the Corporation which are inconsistent with the
provisions hereof.
IN WITNESS WHEREOF, the parties have signed at the place and on the date first
hereinabove mentioned.
INNOVIUM CAPITAL CORP.
Per:______________________________________
THINWEB SOFTWARE INCORPORATED
Per:______________________________________
NOTIME WIRELESS CORP.
Per:______________________________________
LAPOINTE ROSENSTEIN
(in its capacity as Escrow Agent only)
Per:______________________________________
<PAGE>
LICENSE AGREEMENT
BETWEEN: THINWEB SOFTWARE INCORPORATED, a corporation
duly incorporated under the laws of the
Province of Nova Scotia,
(the "Licensor")
PARTY OF THE FIRST PART
-----------------------
AND: NOTIME WIRELESS CORP., a corporation duly
incorporated under the laws of Canada,
(the "Licensee")
PARTY OF THE SECOND PART
------------------------
1. PREAMBLE
1.1 WHEREAS Licensor has developed and owns software known as "thinAccess",
an ultra thin client database access middleware extender, and the source code
relating thereto, as well as considerable know-how and expertise relating
thereto;
1.2 WHEREAS Licensee wishes to obtain from Licensor and Licensor wishes to
grant to Licensee, an exclusive perpetual license to use said software and
source code and all know-how and expertise relating thereto in order to further
develop same for use in the wireless database access market, subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS:
2. DEFINITIONS
2.1 Whenever used in this Agreement:
2.1.1 "Licensed Documentation" means all documentation of any nature
whatsoever (including user manuals, technical manuals, etc.) prepared by
or on behalf of Licensor relating to the Licensed Software, the Licensed
Source Code, the Licensed Know-How or the Subject Matter of this
Agreement, whether in electronic or hard copy formats, and all future
improvements, enhancements, developments, additions or other
modifications thereto made by or on behalf of Licensor (but excluding
any improvements, enhancements, developments, additions or other
modifications thereto made by Licensor on behalf of Licensee pursuant to
the Service Agreement or otherwise made by on behalf of Licensee);
2.1.2 "Licensed Know-How" means all present and future technical knowledge,
unpatented inventions, trade secrets, secret processes, methods and
procedures, as well as current and accumulated experience acquired by
Licensor as a result of research,
<PAGE>
-2-
practical experience or otherwise, in the development of any of the
Licensed Material or which relates to the Subject Matter of this
Agreement;
2.1.3 "Licensed Material" means, collectively, the Licensed Software, the
Licensed Source Code, the Licensed Documentation and the Licensed Know-
How;
2.1.4 "Licensed Software" means the software currently known as "thinAccess",
an ultra-thin client database access middleware extender, more fully
described in Schedule "A" annexed hereto, together with all accompanying
documentation, as well as all Updates, Upgrades and all future
improvements, enhancements, developments, additions or other
modifications thereto made by or on behalf of Licensor (but excluding
any improvements, enhancements, developments, additions or other
modifications thereto made by Licensor on behalf of Licensee pursuant to
the Service Agreement or otherwise made by or on behalf of Licensee);
2.1.5 "Licensed Source Code" means one (1) complete, machine readable copy of
the source code text of the Licensed Software on storage media and
capable of being transformed into a hard copy source listing and which
shall, when complied, produce the most recent version of the Licensed
Software delivered by Licensor to Licensee, all of which shall be
sufficient to enable a data processing professional having ordinary
skills and experience in computer application programming to understand,
maintain and modify the Licensed Software;
2.1.6 "Licensed Trade Marks" means the trade mark "thinAccess" and such other
trade marks, service marks, logos and symbols used by Licensor in
connection with the Licensed Software from time to time;
2.1.7 "Licensee Confidential Information" has the meaning ascribed thereto in
Section 10.1 hereof;
2.1.8 "Licensor Confidential Information" has the meaning ascribed thereto in
Section 9.1 hereof;
2.1.9 "Licensee Indemnified Parties" has the meaning ascribed thereto in
Section 8.1 hereof;
2.1.10 "Licensor Indemnified Parties" has the meaning ascribed thereto in
Section 8.2 hereof;
2.1.11 "Losses" has the meaning ascribed thereto in Section 8.1 hereof;
2.1.12 "Person" includes an individual, body corporate, legal person,
partnership, joint venture, trust, association, unincorporated
organization, any governmental authority or body or any other entity
recognized by law;
2.1.13 "Net Revenues" means the entire amount of all sales, receivables and
other income of Licensee arising out of the licensing, maintenance and
support of the Licensed Software, collected by Licensee and whether by
cash, cheque, credit or otherwise, but excluding all returns, refunds
and any sales, value-added and equivalent taxes which are collected by
Licensee for and on behalf of any governmental body;
<PAGE>
-3-
2.1.14 "New Technologies" has the meaning ascribed thereto in Section 5.1
hereof;
2.1.15 "Other Markets" means any market other than the Target Market;
2.1.16 "Royalty" has the meaning ascribed thereto in Section 6.1 hereof;
2.1.17 "Service Agreement" means that certain service agreement entered into
between Licensor and Licensee concurrently herewith, pursuant to which
Licensor agrees to make available certain of its employees to Licensee
for the development of New Technologies;
2.1.18 "Shareholders Agreement" means that certain shareholders agreement to be
entered into among Licensor, Innovium Capital Corp. and Licensee on the
date on which Innovium Capital Corp. becomes a shareholder of Licensee;
2.1.19 "Subject Matter of this Agreement" means ultra-thin client software,
with ultra-thin "proxy" Java Database Connectivity compliance, which
permit remote access and manipulation of databases, and the processing
of structured query language statements, by mobile and wireless devices
over the Internet;
2.1.20 "Target Market" means the wireless database access market;
2.1.21 "Update" means software changes to correct any errors or bugs therein,
but that do not materially alter the functionality of such software or
add new functions thereto; and
2.1.22 "Upgrade" means changes to any software that materially alters the
functionality of such software or adds new functions thereto including
any enhancements.
3. GRANT OF LICENSE
3.1 Licensor hereby grants to Licensee the exclusive, perpetual, world-wide
license to:
3.1.1 use, support, execute, perform, reproduce, modify, add to, enhance,
improve, display and copy the Licensed Source Code for the purposes of:
(i) developing, improving, adding to, enhancing and otherwise modifying
the Licensed Software and/or developing New Technologies; (ii)
supporting and maintaining Licensed Software and any New Technologies
developed by or on behalf of Licensee;
3.1.2 use, support, execute, perform, reproduce, modify, enhance, improve,
develop, display and copy the Licensed Software for the purposes
contemplated by this Agreement;
3.1.3 market, license, sublicense and otherwise directly and indirectly
distribute, maintain and support the Licensed Software and the Licensed
Documentation;
3.1.4 use the Licensed Trade Marks in association with the marketing, license,
sublicensing, distribution, maintenance and support of the Licensed
Software and Licensed Documentation;
3.1.5 sublicense the rights granted to it under Sections 3.1.2, 3.1.3 and
3.1.4 hereof.
<PAGE>
-4-
3.2 Licensor shall not, directly or indirectly, perform any of the
activities set out in Section 3.1 anywhere in the world. However, nothing herein
contained shall prevent Licensor from using any of the Licensed Material or the
Licensed Trademarks for applications relating to the Other Markets.
3.3 Licensor shall refer to Licensee all inquiries concerning any of the
Licensed Material or the Licensed Trademarks received from anywhere in the world
which relate, directly or indirectly, to the Target Market. Licensee shall refer
to Licensor all inquiries concerning any of the Licensed Material and the
Licensed Trademarks received from anywhere in the world which relate exclusively
to the Other Markets.
4. INFORMATION AND ASSISTANCE
4.1 Immediately following the execution of this Agreement, Licensor shall:
4.1.1 deliver the Licensed Software, the Licensed Documentation and the
Licensed Source Code to Licensee;
4.1.2 disclose the Licensed Know-How to Licensee and make available to
Licensee all information and data in its possession or under its control
relating to any of the Licensed Material;
4.1.3 make available Mr. Cory Reid or such other person as reasonably
acceptable to Licensee in order to assist Licensee in its research and
development relating to the Subject Matter of this Agreement.
5. DEVELOPMENTS AND IMPROVEMENTS
5.1 Licensor acknowledges that Licensee will continue to develop, add to,
enhance, improve or otherwise modify the Licensed Material for the Target Market
and agrees that Licensee shall be the sole and absolute owner of: (i) all
enhancements, additions, improvements, developments, additions or other
modifications to any of the Licensed Material (including, without limitation,
derivative software); and (ii) all new software, inventions, technologies, know-
how, trade-secrets, processes and other developments, whether or not relating to
the Subject Matter of this Agreement (collectively, the "New Technologies").
Licensor shall cooperate fully and assist Licensee in obtaining, at Licensee's
expense, all patents, copyrights, industrial designs, trade marks and other
intellectual property registrations with respect to the New Technologies.
5.2 In the event that Licensor develops any enhancements, improvements,
additions, modifications or other improvements relating to: (i) any of the
Licensed Material (including, without limitation, any Update or Upgrade)
relating to the Subject Matter of this Agreement or intended for the Target
Market, or (ii) the Subject Matter of this Agreement, or intended for the Target
Market, then Licensor shall immediately furnish Licensee with complete details
thereof in order that Licensee may determine whether it would be interested in
using any or further developing any of same for the Target Market. All patents,
copyrights, technical data and know-how resulting therefrom shall be deemed
licensed to Licensee hereunder exclusively for applications in the Target
Market, without any additional compensation therefor.
5.3 In the event that Licensor gives Licensee written notice of its intent
to:
<PAGE>
-5-
5.3.1 license, otherwise commercialize or sell to any third Person any of the
New Technologies exclusively for applications for Other Markets,
Licensee shall appoint Licensor as its agent for the purpose of
licensing, otherwise commercializing or selling the New Technologies, on
Licensee's behalf, to third Persons exclusively for applications in such
Other Markets, upon such terms and conditions as may be mutually agreed
upon between Licensor and Licensee (including, without limitation, the
payment by Licensee of a reasonable commission to Licensor in the event
that Licensee enters into a transaction relating to any of the New
Technologies for Other Markets with any third Person introduced to it by
Licensor during the term hereof). Licensor acknowledges that it will
have no right, title or interest in or to the New Technologies by reason
thereof, and that all contracts and agreements to be entered into with
any third Person relating to the licensing, other commercialization or
sale of the New Technologies shall be entered into solely by Licensee
and that all revenues (including, without limitation, royalties) and/or
proceeds of sale arising therefrom shall belong exclusively to Licensee;
and
5.3.2 itself use or otherwise embed any of the New Technologies into thinWeb
products of Licensor not relating to the Subject Matter of this
Agreement, exclusively for applications in Other Markets, Licensee and
Licensor shall negotiate in good faith the terms and conditions of a
non-exclusive license agreement relating thereto which shall provide,
inter alia, for the payment by Licensor to Licensee of a fair and
----- ----
reasonable royalty for such use of the New Technologies.
6. CONSIDERATION
6.1 As initial consideration for the entering into of this Agreement by
Licensor and for the rights and license granted herein, Licensee hereby issues
to Licensor one million two hundred and fifty thousand (1,250,000) fully paid
and non-assessable Class A" shares of its capital stock and a demand promissory
note in the aggregate principal amount of $1,250,000. As further consideration
for the entering into of this Agreement by Licensor and for the rights and
license granted herein, Licensee undertakes to pay the Licensor, at such place
as Licensor may from time to time designate in writing, a continuing and non-
refundable royalty fee (the "Royalty") equal to five percent (5%) of the Net
Revenue of Licensee, payable quarterly in accordance with Section 6.2 hereof.
6.2 Within thirty (30) days following the end of each calendar quarter
during the term of this Agreement, Licensee shall furnish Licensor with a
certified statement for such calendar quarter disclosing the Net Revenue of
Licensee for such calendar quarter and containing the gross amount of all sales,
receivables and other income arising out of the licensing, maintenance and
support of the Licensed Software, as well as all deductions applicable to such
gross amount of sales, receivables and other income for such calendar quarter as
contemplated in the definition of Net Revenue. Concurrently with the delivery of
such a statement, Licensee shall pay to Licensor the Royalty payable for such
calendar quarter.
6.3 Notwithstanding any other provision of this Agreement, the obligation of
Licensee to pay Royalty to Licensor under this Agreement shall only commence as
and from such time as Licensee shall have reimbursed to its shareholders the
entire amount of all advances made to Licensee by such shareholders pursuant to
the Shareholders Agreement.
6.4 Licensee shall be entitled to withhold from all payments due to Licensor
hereunder any amount which is legally required to be withheld and paid to the
appropriate fiscal authority
<PAGE>
-6-
having jurisdiction in each country in which Net Revenue is generated. Whenever
any such amount is withheld, Licensee shall immediately deliver to Licensor the
statement disclosing the amount withheld the date of payment thereof and the
Royalty with respect to which such amount was paid. Licensee shall, at its
expense, make all necessary and appropriate applications to any governmental
authorities of any country in which Net Revenue is generated as may be required
for the transmittal in payment of monies due to Licensor pursuant to the terms
of this Agreement.
6.5 Whenever any payment of Royalty is not made when due, the amount of such
payment shall bear interest from its due date at an annual rate of interest
equal to two percent (2%) above the rate of interest advertised from time to
time by Licensee's bankers as the reference rate for the purpose of determining
the rate of interest charged to its customers for commercial demand loans in
Canadian currency.
6.6 Licensee shall keep accurate and complete books and records relating to
its operations in order that the Royalty payable hereunder may be accurately
determined in the statements finished by Licensee hereunder verified. Such books
and records shall be made available to Licensor throughout the term of this
Agreement for a period of two (2) years thereafter for inspection and/or audit
by any duly authorized representatives of the Licensor. Whenever any such
inspection and/or audit discloses an understatement in excess of five percent
(5%), of the Royalty payable by Licensee hereunder, all reasonable expenses in
connection with such inspection and/or audit shall be paid by Licensee to
Licensor on demand. In addition, Licensee shall immediately pay to Licensor all
amounts due and unpaid hereunder in the event of any understatement, together
with interest thereon at the rate set forth in Section 6.5 hereof. Within ninety
(90) days at the end of each calendar year, Licensee shall submit to Licensor a
detailed statement prepared by an independent chartered accountant addressing
the New Revenue of Licensee for such calendar year.
7. REPRESENTATIONS AND WARRANTIES
7.1 Licensor hereby represents and warrants to Licensee as follows and
acknowledges that Licensee is relying upon such representations and warranties
in connection with the transactions contemplated hereby and that Licensee would
not have entered into this Agreement without same:
7.1.1 Licensor is a corporation duly incorporated, organized and validly
existing in good standing under the laws of its jurisdiction of
incorporation;
7.1.2 Licensor has all necessary power, authority and capacity to enter into
this Agreement and consummate the transactions contemplated hereby.
Neither the execution and delivery of this Agreement nor the performance
of the transactions contemplated hereby will, with or without the giving
of notice and/or the passage of time, or both, (i) conflict with, or
constitute a default under, any applicable law in respect of Licensor,
or require any action, consent, approval or authorization of, or any
declaration, filing or registration with or notification to, any Person
or any action, consent, approval or authorization under applicable law,
(ii) result in the loss of any right under, conflict with or constitute
a default under, or accelerate the date of performance of, any covenant,
obligation or agreement to which Licensor may be a party or by which
Licensor or any of its assets, rights or properties may be bound or
(iii) conflict with or constitute a default under any of the constating
documents or by-laws of Licensor. This Agreement constitutes a valid and
binding obligation of Licensor enforceable against it in
<PAGE>
-7-
accordance with its terms, subject to applicable bankruptcy, insolvency
and other similar laws relating to or affecting the enforcement of
creditors' rights generally, and principles of equity;
7.1.3 any encryption technology forming part of the Licensed Material complies
and shall continue to comply with all applicable export laws in Canada
and the United States;
7.1.4 Licensor has obtained a waiver of moral rights relating to all of the
Licensed Material from the following Persons who have participated or
will in the future, through the Service Agreement, participate in the
development of the Licensed Material or the New Technologies: (i) any
Person who was, is or becomes an employee of Licensor; and (ii) any
Person which was, is or becomes retained by contract to provide any
services to Licensee in connection with the Licensed Material or the New
Technologies;
7.1.5 none of the Licensed Material or the Licensed Trademarks infringes any
patent, copyright, trademark, service mark or similar property rights or
any privacy, personality or moral rights, nor was developed on the basis
of misappropriated trade secrets of third Persons. No other Person has
any right, title or interest in or to any of the Licensed Material or
the Licensed Trademarks which would in any way curtail, impair, diminish
or derogate from any of the rights and licenses granted to Licensee
hereunder;
7.1.6 it has not granted any right or license to any Person to use any of the
Licensed Material or the Licensed Trademarks and there is no outstanding
right or license granted by Licensor which would in any way conflict
with the rights and licenses hereby granted to Licensee;
7.1.7 there are no lawsuits, pending or threatened, relating to any of the
Licensed Material or the Licensed Trademarks, and to the best of
Licensor's knowledge there are no claims or demands of whatsoever nature
with respect to or in any manner affecting same;
7.1.8 the Licensed Software (including, without limitation, the Licensed
Source Code) has the ability to accurately process date data (including,
but not limited to, calculating, comparing, and sequencing) from, into
and between the twentieth and twenty-first centuries, including leap
year calculations, when used in accordance with the Licensed
Documentation. Without limiting the generality of the foregoing, the
Licensed Software (including, without limitation, the Licensed Source
Code) is designed to be used prior to, during and after the calendar
year 2000 AD, and will operate during each such time period without
error relating to date data (specifically including any error relating
to, or the product of, date data which represents or references
different centuries or more than one (1) century) and, without limiting
the generality of the foregoing, the Licensed Software (including,
without limitation, the Licensed Source Code):
7.1.8.1 will not abnormally end or provide invalid or incorrect
results as a result of date data, specifically including date data which
represents or references different centuries or more than one (1)
century,
7.1.8.2 has been designed to ensure year 2000 compatibility, including
date data century recognition, calculations which accommodate same
century and multi-century formulas and date values, and date data
interface values that reflect the century, and
<PAGE>
-8-
7.1.8.3 includes "year 2000 capabilities", which means that the
Licensed Software: (a) will manage and manipulate data involving dates,
including single century formulas and multi-century formulas, and will
not cause an abnormally ending scenario within an application or
generate incorrect values or invalid results involving such dates; and
(b) provides that all date-related user interface functionalities and
data fields include the indication of century; and (c) provides that all
date-related data interface functionalities include the indication of
century;
7.1.9 Licensor has made or caused to be made reasonable inquiry with respect
to each covenant, agreement, obligation, representation and warranty
contained in this Agreement, and none of the aforesaid covenants,
agreements, obligations, representations or warranties contains any
untrue statement of a material fact or omits to state a material fact
necessary to make such representation or warranty not misleading, and
7.1.10 to the best of Licensor's knowledge, there is no fact, condition or
circumstance which (i) materially adversely or in the future could (so
far as Licensor can now reasonably foresee) materially adversely affect
the Licensed Material or the ability of Licensee to continue the
development of the Licensed Material or to develop New Technologies or
(ii) might reasonably be expected to deter a Person from consummating
the transactions contemplated in this Agreement.
7.2 Licensee hereby represents and warrants to Licensor as follows and
acknowledges that Licensor is relying upon such representations and warranties
in connection with the transactions contemplated hereby and that Licensor would
not have entered into this Agreement without same:
7.2.1 Licensee is a corporation duly incorporated, organized and validly
existing in good standing under the laws of its jurisdiction of
incorporation; and
7.2.2 Licensee has all necessary power, authority and capacity to enter into
this Agreement and consummate the transactions contemplated hereby.
Neither the execution and delivery of this Agreement nor the performance
of the transactions contemplated hereby will, with or without the giving
of notice and/or the passage of time, or both, (i) conflict with, or
constitute a default under, any applicable law in respect of Licensee,
or require any action, consent, approval or authorization of, or any
declaration, filing or registration with or notification to, any Person
or any action, consent, approval or authorization under applicable law
or (iii) conflict with or constitute a default under any of the
constating documents or by-laws of Licensee. This Agreement constitutes
a valid and binding obligation of Licensee enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency
and other similar laws relating to or affecting the enforcement of
creditors' rights generally, and principles of equity.
7.3 No investigations made by or on behalf of either party at any time shall
waive, diminish the scope of or otherwise affect any representation or warranty
made by the other party under this Agreement.
7.4 All representations and warranties made by each party hereto shall
survive the date of execution of this Agreement indefinitely.
<PAGE>
-9-
8. INDEMNIFICATION
8.1 Licensee agrees to indemnify, defend and hold Licensor and its
successors, officers, directors, employees, agents and consultants
(collectively, the "Licensee Indemnified Parties") harmless from and against any
and all claims, demands, liabilities, damages, losses (including diminution in
value), costs and expenses (including the cost of settlement, reasonable legal
and accounting fees and any other expenses for investigating or defending any
action, suit or other proceeding, actual or threatened) (collectively, the
"Losses") arising out of or in connection with: (i) any claim which, if true,
would be a breach of the representations and warranties set forth in Section 7.2
hereof; (ii) any claim by any Person to the effect that the use of copyrights,
trademarks or other proprietary rights (other than those relating to or forming
part of the Licensed Material or the Licensed Trademark) used by Licensee in
connection with the marketing, distribution, licensing, maintenance or support
of the Licensed Material or the New Technologies, violates or infringes any
proprietary rights of such Person; (iii) the failure by Licensee to perform any
of its obligations hereunder; (iv) any act or omission of Licensee or its
employees, directors, officers, shareholders, agents or affiliates; or (v) any
action, suit or other proceeding, or other compromise, settlement or judgment,
relating to any of the foregoing matters with respect to which any of the
Licensee Indemnified Parties is entitled to indemnification hereunder; provided
--------
in each case that such Licensee Indemnified Party gives prompt notice thereof to
Licensee, allows Licensee to defend, compromise or settle same and gives
Licensee all available information, reasonable assistance and authority to
enable Licensee to do so.
8.2 Licensor agrees to indemnify, defend and hold Licensee and its
successors, officers, directors, employees, agents and consultants
(collectively, the "Licensor Indemnified Parties") harmless from and against any
and all Losses arising out of or in connection with: (i) any claim which, if
true, would be a breach of the representations and warranties set forth in
Section 7.1 hereof; (ii) any claim by any Person to the effect that the use of
any of the Licensed Material or the Licensed Trademark violates or infringes any
proprietary rights of such Person; (iii) the failure by Licensor to perform any
of its obligations hereunder; (iv) any act or omission of Licensor or its
employees, directors, officers, shareholders, agents or affiliates; or (v) any
action, suit or other proceeding, or other compromise, settlement or judgment,
relating to any of the foregoing matters with respect to which any of the
Licensor Indemnified Parties is entitled to indemnification hereunder; provided
--------
in each case that such Licensor Indemnified Party gives prompt notice thereof to
Licensor, allows Licensor to defend, compromise or settle same and gives
Licensor all available information, reasonable assistance and authority to
enable Licensor to do so.
8.3 If any action, suit or other proceeding is brought against any of the
Licensee Indemnified Parties or any of the Licensor Indemnified Parties (in this
Section, a "Claimant") in respect of which indemnification may be sought from
Licensee or Licensor, respectively, pursuant to the provisions of this Section
(in this Section, an "Indemnifying Party"), the Claimant shall promptly notify
the Indemnifying Party in writing, specifying the nature of the action, suit or
other proceeding and the total monetary amount and/or other relief sought
thereby. The Claimant shall cooperate with the Indemnifying Party, at the
Indemnifying Party's expense, in all reasonable respects in connection with the
defense of such action, suit or other proceeding. The Indemnifying Party may,
upon written notice thereof to the Claiming Party, undertake to conduct all
proceedings or negotiations in connection therewith, assume the defense thereof
and, if it so undertakes, it shall also take all such other required steps or
proceedings to settle or defend any such action, suit or other proceeding,
including the retaining of counsel reasonably satisfactory to the Claiming Party
and the payment of all expenses
<PAGE>
-10-
relating thereto. However, Claimant shall have the right, at its own expense, to
retain separate counsel and participate in the defense thereof.
9. CONFIDENTIALITY OBLIGATIONS OF LICENSEE
9.1 Licensee acknowledges that Licensor shall disclose to Licensee
information, data, programming, systems, technical information, designs, ideas,
data formats and files, plans, specifications, formulas, drawings, sketches,
prototypes, tools, samples, reports and notes, operating instructions and
similar information, whether of a technical, engineering, operating design or
economic nature, forming part of or relating to the Licensed Material or
relating to the Subject Matter of this Agreement, all of which are confidential
and proprietary to Licensor (collectively, the "Licensor Confidential
Information"). Licensee hereby acknowledges that:
9.1.1 it had no part in the creation or development of and has no right, title
or interest of whatsoever nature in or to the Licensor Confidential
Information, except as set forth in this Agreement;
9.1.2 the Licensor Confidential Information has been disclosed to it solely
and exclusively for the purposes contemplated herein; and
9.1.3 Licensor shall be materially prejudiced by reason of any breach by
Licensee of the provisions of this Section 9, and agrees that Licensor
shall be entitled to injunctive relief to restrain any such breach or
anticipated breach hereof and to specifically enforce the provisions
hereof. Licensee further acknowledges that the foregoing rights and
recourses of Licensor are in addition to the rights and recourses
available to Licensor.
9.2 Licensee hereby covenants and agrees that it shall treat the Licensor
Confidential Information as strictly confidential and shall make use of same
solely and exclusively for the purposes permitted hereunder. Without in any way
limiting the generality of the foregoing, Licensee hereby undertakes that it
shall not use, provide, furnish, disclose or permit the use, provision,
furnishing or disclosure of any part of the Licensor Confidential Information
except as permitted hereunder. Licensee hereby further covenants and agrees
that:
9.2.1 the Licensor Confidential Information shall be disclosed to only those
employees of Licensee who require access to same for the purposes
permitted hereunder and who have a "need to know" same in furtherance of
such purposes. In connection therewith, Licensee shall apprise all such
persons of the obligations contained herein prior to the disclosure to
them of any part of the Licensor Confidential Information;
9.2.2 it shall do all such things as are necessary to preserve the secrecy and
confidentiality of the Licensor Confidential Information.
9.3 The undertakings of Licensee contained in this Section 9 shall not apply
to such part of the Licensor Confidential Information which Licensee can
demonstrate:
9.3.1 formed part of the public domain at the time of disclosure of same by
Licensor to Licensee, or becomes part of the public domain thereafter
through no fault of Licensee;
<PAGE>
-11-
9.3.2 was in its possession prior to its disclosure by Licensor and was not
obtained, directly or indirectly, from Licensor; or
9.3.3 it had received after the time of disclosure of same hereunder from a
third Person as a matter of right and having no direct or indirect
obligation to Licensor with respect to same.
10. CONFIDENTIALITY OBLIGATIONS OF LICENSOR
10.1 Licensor acknowledges that Licensee shall disclose to Licensor
information, data, programming, systems, technical information, designs, ideas,
data formats and files, plans, specifications, formulas, drawings, sketches,
prototypes, tools, samples, reports and notes, operating instructions and
similar information, whether of a technical, engineering, operating design or
economic nature, forming part of or relating to: (i) New Technologies, (ii)
developments, enhancements, improvements, additions, modifications or other
improvements to the Licensed Material or (iii) the Subject Matter of this
Agreement, all of which are proprietary to Licensee (collectively, the "Licensee
Confidential Information"). Licensor hereby acknowledges that:
10.1.1 it had no part in the creation or development of the Licensee
Confidential Information, except pursuant to the terms of the Service
Agreement, and has no right, title or interest of whatsoever nature in
or to the Licensee Confidential Information, except as set forth in this
Agreement;
10.1.2 the Licensee Confidential Information has been disclosed to it solely
and exclusively for the purposes contemplated herein; and
10.1.3 Licensee shall be materially prejudiced by reason of any breach by
Licensor of the provisions of this Section 10, and agrees that Licensee
shall be entitled to injunctive relief to restrain any such breach or
anticipated breach hereof and to specifically enforce the provisions
hereof. Licensor further acknowledges that the foregoing rights and
recourses of Licensee are in addition to the rights and recourses
available to Licensee.
10.2 Licensor hereby covenants and agrees that it shall treat the Licensee
Confidential Information as strictly confidential and shall make use of same
solely and exclusively for the purposes permitted hereunder. Without in any way
limiting the generality of the foregoing, Licensor hereby undertakes that it
shall not use, provide, furnish, disclose or permit the use, provision,
furnishing or disclosure of any part of the Licensee Confidential Information
except as permitted hereunder. Licensor hereby further covenants and agrees
that:
10.2.1 the Licensee Confidential Information shall be disclosed to only those
employees of Licensor who require access to same for the purposes
permitted hereunder and who have a "need to know" same in furtherance of
such purposes. In connection therewith, Licensor shall apprise all such
persons of the obligations contained herein prior to the disclosure to
them of any part of the Licensee Confidential Information;
10.2.2 it shall do all such things as are necessary to preserve the secrecy and
confidentiality of the Licensee Confidential Information.
<PAGE>
-12-
10.3 The undertakings of Licensor contained in this Section 10 shall not
apply to such part of the Licensee Confidential Information which Licensor can
demonstrate:
10.3.1 formed part of the public domain at the time of disclosure of same by
Licensee to Licensor, or becomes part of the public domain thereafter
through no fault of Licensor;
10.3.2 was in its possession prior to its disclosure by Licensee and was not
obtained, directly or indirectly, from Licensee; or
10.3.3 it had received after the time of disclosure of same hereunder from a
third Person as a matter of right and having no direct or indirect
obligation to Licensee with respect to same.
11. ADDITIONAL COVENANTS
11.1 Licensor shall, at its expense, diligently take all actions and do all
such things as may be necessary to maintain in full force and effect any
trademark, copyright, patent or other intellectual property rights of any nature
whatsoever in or to each of the Licensed Material, the Licensed Trademarks and
the Licensor Confidential Information, and its exclusive (subject to the terms
hereof) right, title and interest therein, and shall protect all of the Licensor
Confidential Information from disclosure or unauthorized use by its employees,
agents, affiliates, contractors, investors or licensees. Without limiting the
generality of the foregoing, Licensor shall:
11.1.1 affix appropriate trademark and copyright notices on all Licensed
Materials;
11.1.2 disclose the Licensor Confidential Information only on a "need-to-know"
basis and after having obtained binding confidentiality agreements from
its recipient containing restrictions against disclosure and use at
least as onerous as those contained in Section 10 hereof;
11.1.3 diligently take all necessary steps in any proceeding or other action
before the relevant governmental office or agency to prosecute and
defend each application for registration of any intellectual property
right it may have filed or may hereafter file in respect of any of the
Licensed Material and the Licensed Trademark, and shall maintain each
registration it has obtained or may hereafter obtain in respect of any
of the Licensed Material and the Licensed Trademark, including by
payment of all fees and disbursements relating thereto, filing of
renewals, affidavits or other materials, if any, which may be necessary
or useful is support of such application or registration, and shall not
abandon or discontinue any steps or actions for the maintenance and
renewal of any such application or registration; and
11.1.4 not do, cause or permit to be done any act or thing which might impair
or tend to impair in any manner whatsoever its exclusive (subject to the
terms hereof) right, title or interest in or to the Licensed Material,
the Licensed Trademarks or the Licensor Confidential Information. In
addition, Licensor shall not, directly or indirectly, encumber, pledge,
hypothecate, mortgage, charge or sell any of its right, title or
interest in or to the Licensed Material, the Licensed Trademarks or the
Licensor Confidential Information without Licensee's prior written
consent.
11.2 Licensee shall, at its expense, diligently take all actions and do all
such things as may be necessary to maintain in full force and effect any
trademark, copyright, patent or other
<PAGE>
-13-
intellectual property rights of any nature whatsoever in or to each of the New
Technologies and the Licensee Confidential Information, and its exclusive
(subject to the terms hereof) right, title and interest therein, and shall
protect all of the Licensee Confidential Information from disclosure or
unauthorized use by its employees, agents, affiliates, contractors, investors or
licensees. Without limiting the generality of the foregoing, Licensee shall:
11.2.1 affix appropriate trademark and copyright notices on all of the New
Technologies and all material relating thereto;
11.2.2 disclose the Licensee Confidential Information only on a "need-to-know"
basis and after having obtained binding confidentiality agreements from
its recipient containing restrictions against disclosure and use at
least as onerous as those contained in Section 9 hereof;
11.2.3 diligently take all necessary steps in any proceeding or other action
before the relevant governmental office or agency to prosecute and
defend each application for registration of any intellectual property
right it may have filed or may hereafter file in respect of any of the
New Technologies, and shall maintain each registration it has obtained
or may hereafter obtain file in respect of any of the New Technologies,
including by payment of all fees and disbursements relating thereto,
filing of renewals, affidavits or other materials, if any, which may be
necessary or useful is support of such application or registration, and
shall not abandon or discontinue any steps or actions for the
maintenance and renewal of any such application or registration; and
11.2.4 not do, cause or permit to be done any act or thing which might impair
or tend to impair in any manner whatsoever its exclusive (subject to the
terms hereof) rights, title or interest in or to the New Technologies or
the Licensee Confidential Information.
12. LICENSED MATERIAL, LICENSED TRADEMARK AND INFRINGEMENT THEREOF
12.1 Licensee shall use the Licensed Trademark strictly in accordance with
the terms hereof and in a manner that shall protect and preserve all rights of
Licensor therein. Licensee shall not take any action which might invalidate the
Licensed Trademark or impair any rights of Licensor or create any rights adverse
to those of Licensor therein. Licensee shall use the Licensed Trademark only as
depicted in its respective registrations or applications for registration. At
Licensor's request Licensee shall execute and deliver such documents,
applications and other writings and do such things as may be requested by
Licensor in order to confirm Licensor's ownership of the Licensed Trademark,
maintain the validity of same and obtain, maintain or renew any registration
thereof.
12.2 All advertising and promotional materials bearing the Licensed
Trademark, as well as all invoices, price sheets, documents, labels, packaging
materials and containers bearing the Licensed Trademark shall include a notice
to the effect that the Licensed Trademark belongs exclusively to Licensor and/or
that Licensee is the licensed or authorized user thereof.
12.3 All advertising and promotional material relating to any of the Licensed
Material including, without limitation, all catalogues, packaging, labelling,
circulars and other material bearing the Licensed Trademark shall be subject to
Licensor's prior written approval, which approval shall not be unreasonably
withheld or delayed. Whenever Licensor shall not have disapproved advertising or
promotional materials submitted by Licensee within fifteen (15) days
<PAGE>
-14-
following receipt thereof, Licensor shall be deemed to have approved same.
Licensee shall not use any advertising or promotional material which has been
disapproved by Licensor.
12.4 Whenever either party learns of any infringement or threatened
infringement of any of the Licensed Material or the Licensed Trademark or any
actual or intended common law passing-off by any other Person, such party shall
forthwith give notice thereof to the other party and provide the other party
with all information it acquires with respect thereto. The parties shall consult
with one another with respect to each infringement or violation of any of the
Licensed Material or the Licensed Trademark. Whenever the parties conclude that
proceedings should be taken with respect to any such infringement or violation,
they shall promptly and diligently prosecute same and each party shall assume
one-half (1/2) of the costs and expenses related thereto and be entitled to one-
half (1/2) of all recoveries and awards therefrom. Whenever Licensee advises
Licensor that it does not intend to participate in any such proceedings,
Licensor shall be free to prosecute same and shall pay all costs and expenses
related thereto and be entitled to all recoveries and awards therefrom. Whenever
Licensor advises Licensee that it shall not participate in any such proceedings,
Licensee may prosecute same and shall pay all costs and expenses related thereto
and be entitled to all recoveries and awards therefrom. The parties shall at all
times fully cooperate in the prosecution of all such proceedings and agree to
execute and deliver such documents and do such things including, without
limitation, being made a party to such proceedings, at the expense of the party
having instituted such proceedings, as may be deemed necessary or advisable by
counsel of such party.
13. TERM AND TERMINATION
13.1 Subject only to the provisions of this Section13, this Agreement shall
be for a perpetual term commencing upon the date of execution hereof by both
parties.
13.2 The occurrence of any one (1) or more of the following events shall
entitle Licensor to immediately terminate this Agreement, without notice or
further notice to Licensee, as the case may be:
13.2.1 should Licensee make an assignment for the benefit of its creditors,
file a petition in bankruptcy, be adjudicated insolvent or bankrupt,
file a petition or apply to any tribunal for any receiver, trustee,
liquidator or sequestrator of any substantial portion of its property,
commence any proceeding under any law or statute of any jurisdiction
respecting insolvency, bankruptcy, reorganization, arrangement or
readjustment of debt, dissolution, winding-up, composition or
liquidation, or otherwise take advantage of any bankruptcy or insolvency
legislation whether now or hereafter in effect, or if any receiver,
trustee, liquidator or sequestrator of any substantial portion of its
property is appointed;
13.2.2 should Licensee cease to actively promote and carry on its business and
fail to remedy such default within fourteen (14) days following receipt
of written notice thereof; or
13.2.3 should Licensee breach any provision hereof and fail to remedy same
within sixty (60) days following receipt of written notice containing
reasonably sufficient particulars thereof.
13.3 In the event that any one (1) or more of the following events occurs:
<PAGE>
-15-
13.3.1 should Licensor make an assignment for the benefit of its creditors,
file a petition in bankruptcy, be adjudicated insolvent or bankrupt,
file a petition or apply to any tribunal for any receiver, trustee,
liquidator or sequestrator of any substantial portion of its property,
commence any proceeding under any law or statute of any jurisdiction
respecting insolvency, bankruptcy, reorganization, arrangement or
readjustment of debt, dissolution, winding-up, composition or
liquidation, or otherwise take advantage of any bankruptcy or insolvency
legislation whether now or hereafter in effect, or if any receiver,
trustee, liquidator or sequestrator of any substantial portion of its
property is appointed;
13.3.2 should Licensor cease to actively promote and carry on its business and
fail to remedy such default within fourteen (14) days following receipt
of written notice thereof; or
13.3.3 should Licensor breach any provision hereof and fail to remedy same
within sixty (60) days following receipt of written notice containing
reasonably sufficient particulars thereof;
then, without notice or further notice to Licensor the obligation of
Licensee to pay Royalties shall cease immediately and all rights of
Licensor hereunder shall cease immediately, but Licensor shall remain
bound by all of its obligations hereunder.
13.4 No person acting for the benefit of the creditors of Licensee or any
receiver, trustee, liquidator, sequestrator, trustee in bankruptcy, sheriff,
officer of a court or Person in possession of Licensee's assets or business
shall have any right to continue the performance of this Agreement in any
circumstances whatsoever.
13.5 All rights, remedies and recourses set forth herein for the benefit of
either party shall be in addition and without prejudice to all other rights,
remedies and recourses available to such party.
14. EFFECT OF TERMINATION
14.1 Upon the termination of this Agreement by Licensor for any reason
whatsoever:
14.1.1 all rights and licenses of Licensee hereunder shall cease immediately;
14.1.2 Licensee shall forthwith deliver to Licensor all forms, documents and
materials relating to the Licensed Material without retaining any copy
thereof, as well as all promotional and advertising materials,
instruction sheets, documents and other items bearing the Licensed
Trademark; and
14.1.3 all amounts owing by Licensee to Licensor shall immediately become due
and payable.
14.2 Termination of this Agreement for any reason whatsoever shall not
release either party from any of its obligations which remain unfulfilled at
such time or release either party from those obligations which survive such
termination including, without limitation, the obligations set forth in Sections
8, 9, 10, 14 and 15 hereof.
<PAGE>
-16-
15. MISCELLANEOUS PROVISIONS
15.1 The preamble hereto shall form an integral part hereof.
15.2 This is an agreement between separate entities and neither is the agent
or servant of or possesses the power to obligate the other. This Agreement shall
not be construed so as to constitute Licensor and Licensee partners or joint
venturers or so as to create any other form of legal association which imposes
liability upon either party for the acts or omissions of the other party.
15.3 Failure by either party to take action against the other shall not
affect its right to require full performance of this Agreement at any time
thereafter. The waiver by either party of the breach of any provision of this
Agreement by the other shall not operate or be construed as a waiver of any
subsequent breach by such party.
15.4 Should any term, covenant or condition of this Agreement or the
application thereof to any person or circumstance be invalid or unenforceable,
the remainder of this Agreement, or the application of such term, covenant or
condition to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each term, covenant
and condition of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
15.5 Any notice required or permitted to be given hereunder by either party
shall be given by sending such notice, properly addressed to the other party's
last known address, by prepaid registered air mail or telecopier. All notices
shall be deemed received five (5) days after the date of mailing if sent by
prepaid registered air mail (except in the event of disruption of postal
services), or at the time of transmission if sent by telecopier.
15.6 This Agreement sets forth the entire agreement and understanding between
the parties with respect to the subject matter hereof and supersedes all prior
discussions and negotiations. Neither party shall be bound by any conditions,
definitions, representations or warranties with respect to the subject matter
hereof other than those contained herein or hereafter set forth in a writing
duly executed by the parties.
15.7 Neither party shall be entitled to assign any of its rights, title and
interest in this Agreement and Licensor shall not be entitled to subcontract the
performance of any of its obligations hereunder.
15.8 The parties agree to perform such acts and execute and deliver such
documents as may be necessary or desirable from time to time in order to give
full effect to the provisions hereof.
15.9 All disputes arising in connection with this Agreement shall be finally
settled by arbitration under the Arbitration Act (Ontario) by one (1) arbitrator
appointed by both parties. If the parties cannot appoint one (1) arbitrator to
settle the dispute within fourteen (14) days of either party notifying the other
party of a dispute, each party shall appoint one (1) arbitrator within fifteen
(15) days thereafter, and the two (2) arbitrators so appointed shall appoint a
third (3rd) arbitrator within ten (10) days thereafter, failing which either
arbitrator shall be entitled to apply to the Supreme Court of Ontario to have
the third (3rd) arbitrator appointed. If either party fails to appoint its
arbitrator within such fifteen (15) day period, then the arbitrator appointed by
the other party shall be the sole arbitrator. The arbitration proceedings shall
be conducted in
<PAGE>
-17-
English and the venue of the arbitration shall be Toronto, Ontario. The decision
of the arbitrators shall be final and binding upon the parties to the exclusion
of courts of law.
15.10 This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Province of Ontario (without regard to its
conflict of law rules) and the laws of Canada applicable therein.
IN WITNESS WHEREOF, THE PARTIES HAVE SIGNED THIS AGREEMENT AS OF THE 15TH DAY OF
DECEMBER, 1999.
THINWEB SOFTWARE INCORPORATED NOTIME WIRELESS CORP.
Per:________________________________ Per:________________________________
<PAGE>
SCHEDULE "A"
LICENSED SOFTWARE
<PAGE>
SERVICES AGREEMENT
BETWEEN: THINWEB SOFTWARE INCORPORATED, a
corporation duly incorporated under the
laws of the Province of Nova Scotia,
("Thinweb");
AND: NOTIME WIRELESS CORP., a corporation duly
incorporated under the laws of Canada,
(the "Company").
WHEREAS Thinweb has developed and owns software known as "thinAccess", an ultra
thin client database access middleware extender, and the source code relating
thereto, as well as considerable know-how and expertise relating thereto;
WHEREAS the Company has concurrently with the execution of this Agreement
entered into a license agreement with Thinweb (the "License Agreement") whereby
Thinweb has granted to the Company an exclusive perpetual license to use said
software and source code and all know-how and expertise relating thereto in
order to further develop same for use in the wireless database access market;
WHEREAS the Company has approached Thinweb to provide certain services to the
Company in connection with the development of the Licensed Software (as defined
in the License Agreement) and the New Technologies (as defined in the License
Agreement) and Thinweb is prepared to provide such services to the Company upon
the terms and conditions set forth herein; and
WHEREAS in order to provide such services, Thinweb shall cause certain of its
employees to be seconded to the Company upon the terms and conditions set forth
herein.
NOW, THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS:
1. SERVICES
1.1 Subject to the terms hereof, the Company hereby retains Thinweb and Thinweb
hereby agrees to provide the Company with the following services (the
"Services"):
1.1.1 Thinweb hereby agrees to cause Cory Reid ("Reid") personally to
provide, on behalf of Thinweb, consulting services to the Company
(the "Reid Consulting Services") at the offices of the Company or at
such other locations as may be determined by the Company during the
term commencing on the date of execution of this Agreement and
terminating on the earlier of (i) the third (3rd) anniversary of the
date of execution of this Agreement; and (ii) the termination or
expiration of this Agreement. The Reid Consulting Services shall
include, without limitation, the following: (i) to be
<PAGE>
-2-
responsible for the day-to-day operations of the Company and ensure
that the Company is being operated within the guidelines set forth
by the board of directors of the Company (the "Board") from time to
time; (ii) to perform and discharge all duties which may be
reasonably considered to be incidental to his position as President
of the Company or as may be required of him by the Board from time
to time; (iii) to prepare quarterly reports on the operations of the
Company and present or provide same to the Board within fifteen (15)
days of the end of each fiscal quarter of the fiscal year of the
Company; and (iv) to prepare a quarterly budget for the Company and
present or provide same to the Board at least thirty (30) days prior
to the commencement of each quarter of the fiscal year of the
Company. Thinweb shall cause Reid to devote such of his time,
efforts and attention as may be necessary or desirable to perform
the Reid Consulting Services in a conscientious, cost effective,
professional, efficient and timely manner, and to the best of his
ability, the whole subject to the instruction and direction of the
Board. Notwithstanding the foregoing, the Company shall be entitled
on thirty (30) days' prior written notice to Thinweb to terminate
the Reid Consulting Services. In the event that Reid ceases to be
employed by Thinweb or any of its affiliates (as defined in the
Canada Business Corporations Act) (the "Affiliates"), then Thinweb
agrees to make available to the Company during the term of this
Agreement the consulting services of another of its senior
executives, it being understood that the Company may not require the
consulting services of the individual designated by Thinweb to
replace Reid.
1.1.2 Thinweb hereby also agrees to cause such of its employees (the
"Thinweb Employees") as may be designated and requested by the
Company from time to time to provide, on behalf of Thinweb,
consulting services to the Company (the "Employee Consulting
Services") during the term of this Agreement. The number of Thinweb
Employees required by the Company to provide the Employee Consulting
Services and the duration of the Employee Consulting Services
required in respect of each Thinweb Employee shall be designated by
the Company from time to time, it being understood that the Company
may not require any Employee Consulting Services. The Company shall
be entitled on thirty (30) days' prior written notice to Thinweb to
terminate the Employee Consulting Services provided by any Thinweb
Employee.
2. TERM
2.1 This Agreement shall enter into effect on the date of execution hereof by
both parties hereto and shall remain in effect until such time as Thinweb
and/or its Affiliates cease to be a shareholder(s) of the Company (the
"Expiration Date"), unless otherwise terminated pursuant to the terms of
this Agreement. This Agreement shall not be extended thereafter without the
express written agreement signed by both parties hereto.
3. CONSIDERATION
3.1 In consideration of the Services to be provided by Thinweb, the Company
hereby agrees to pay to Thinweb, the following service fees:
<PAGE>
-3-
3.1.1 with respect to the Reid Consulting Services, an amount equal to
eleven thousand five hundred dollars ($11,500) per month [plus
applicable goods and services and provincial sales taxes]. In the
event that the Reid Consulting Services are terminated prior to the
expiration of any month, then the monthly service fee owing shall be
pro rated over the number of days of the month during which the Reid
Consulting Services were provided;
3.1.2 with respect to the Employee Consulting Services, an amount equal to
the hourly rate paid by Thinweb to such Thinweb Employee providing
the Employee Consulting Services increased by fifteen percent (15%),
[plus applicable goods and services and provincial sales taxes],
multiplied by the number of hours during which such Thinweb Employee
provided such Employee Consulting Services.
3.2 Thinweb shall invoice the Company on a monthly basis for the Services and
shall include therewith a detailed summary of the service fees in respect
of the Reid Consulting Services and the Employee Consulting Services. The
Company shall pay each invoice within fifteen (15) days of its receipt
thereof.
3.3 Thinweb hereby agrees that it shall be responsible for and shall make all
payments and contributions required under applicable law on behalf of Reid
and the Thinweb Employees, including without limitation, deductions at
source for employees' income taxes, sales taxes and goods and services
taxes, employees' contributions such as unemployment insurance
contributions, premiums paid for workmen's compensation or minimum wages to
the workers compensation board or the Labour Standards Board, union dues,
insurance premiums for employee benefits, excise taxes and severance
payments. Thinweb hereby agrees to save and hold the Company harmless from
and indemnify the Company against all claims made by Reid and/or any
Thinweb Employees against the Company alleging that he is or was an
employee of the Company.
4. CONFIDENTIALITY AND ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS
4.1 Thinweb hereby acknowledges that in connection with the performance of the
Services, the Company shall disclose to Thinweb information, data,
programming, systems, technical information, designs, ideas, data formats
and files, plans, specifications, formulas, drawings, sketches, prototypes,
tools, samples, reports and notes, operating instructions and similar
information, whether of a technical, engineering, operating design or
economic nature, forming part of or relating to (i) New Technologies (as
defined in the License Agreement); (ii) developments, enhancements,
improvements, additions, modifications or other improvements to the
Licensed Material (as defined in the License Agreement); or (iii) the
Subject Matter of the License Agreement (as defined in the License
Agreement), all of which are proprietary to the Company (collectively, the
"Company Confidential Information"). Thinweb hereby acknowledges that:
4.1.1 it had no part in the creation or development of the Company
Confidential Information and has no right, title or interest of
whatsoever nature in or to the Company Confidential Information,
except as set forth in the License Agreement;
<PAGE>
-4-
4.1.2 the Company Confidential Information has been disclosed to it solely
and exclusively for the purposes contemplated herein; and
4.1.3 the Company shall be materially prejudiced by reason of any breach
by Thinweb of the provisions of this Section 4, and agrees that the
Company shall be entitled to injunctive relief to restrain any such
breach or anticipated breach hereof and to specifically enforce the
provisions hereof. Thinweb further acknowledges that the foregoing
rights and recourses of the Company are in addition to the rights
and recourses available to the Company.
4.2 Thinweb hereby covenants and agrees that it shall treat the Company
Confidential Information as strictly confidential and shall make use of
same solely and exclusively for the purposes permitted hereunder. Without
in any way limiting the generality of the foregoing, Thinweb hereby
undertakes that it shall not use, provide, furnish, disclose or permit the
use, provision, furnishing or disclosure of any part of the Company
Confidential Information except as permitted hereunder. Thinweb hereby
further covenants and agrees that:
4.2.1 the Company Confidential Information shall be disclosed to only Reid
and the Thinweb Employees who provide the Reid Consulting Services
and the Employee Consulting Services, respectively. In connection
therewith, Thinweb shall apprise all such persons of the obligations
contained herein prior to the disclosure to them of any part of the
Company Confidential Information and cause all such persons to enter
into confidentiality agreements with the Company containing
confidentiality and assignment of intellectual property rights
provisions at least as onerous as those contained in this Section 4;
4.2.2 it shall do all such things as are necessary to preserve the secrecy
and confidentiality of the Company Confidential Information.
4.3 The undertakings of Thinweb contained in this Section 4 shall not apply to
such part of the Company Confidential Information which Thinweb can
demonstrate:
4.3.1 formed part of the public domain at the time of disclosure of same
by the Company to Thinweb, or becomes part of the public domain
thereafter through no fault of Thinweb;
4.3.2 was in its possession prior to its disclosure by the Company and was
not obtained, directly or indirectly, from the Company; or
4.3.3 it had received after the time of disclosure of same hereunder from
a third person as a matter of right and having no direct or indirect
obligation to the Company with respect to same.
4.4 Thinweb hereby further agrees that all inventions, ideas, suggestions,
discoveries, improvements, enhancements, additions, developments and other
modifications, whether patentable or copyrightable or not, as well as the
patents and copyrights and applications therefor (collectively, the
"Inventions"), made, conceived, developed or acquired by it or under which
Thinweb acquires the right to grant licences or become licensed, alone or
jointly with others, which results from any Services for the Company
<PAGE>
-5-
pursuant to this Agreement shall be the sole and absolute property of the
Company. Thinweb hereby assigns to the Company all of its right, title and
interest in, to and under all such Inventions, licences and rights to grant
licences. Thinweb hereby agrees (i) to execute and deliver all documents
which the Company shall deem necessary or appropriate to assign, transfer
and convey to the Company, all of its right, title and interest in and to
such Inventions, licences and rights to grant licences, and to enable the
Company to apply or join with the Company in applying for patents,
trademarks, copyrights, letters patent and other means for the protection
of proprietary information in Canada, the United States of America or any
other country on any of the Inventions as to which the Company wishes to
file applications; and (ii) to do all things (including the giving of
evidence in suits and other proceedings) which the Company shall deem
necessary or appropriate to obtain, maintain and assert patents, copyrights
and trademarks for any and all such Inventions and to assert the Company's
rights in any Inventions not patented, copyrighted or trademarked and in
such licences and rights to grant licences. Thinweb hereby agrees that all
writings, records and documents made by Thinweb or coming into possession
of Thinweb while providing the Services to the Company concerning any
Inventions or otherwise concerning the business or affairs of the Company,
shall be the property of the Company and upon termination of this Agreement
or upon the request of the Company at any time will be forthwith delivered
by Thinweb to the Company.
5. INDEMNIFICATION
5.1 Thinweb hereby agrees to save and hold the Company harmless from and
indemnify the Company against all demands, claims, obligations, liabilities
or expenses relating to the services provided by Thinweb, Reid and/or the
Thinweb Employees to the Company hereunder, unless same results from any
act or omission of the Company.
6. TERMINATION
6.1 The Company shall be entitled to terminate this Agreement for any reason
whatsoever at any time prior to the Expiration Date upon thirty (30) days'
prior written notice to Thinweb. In the event of the termination of this
Agreement by the Company prior to the Expiration Date, the Company shall
pay to Thinweb the service fees contemplated in Section 3 pro rated to the
Expiration Date.
6.2 Termination of this Agreement for any reason whatsoever or expiration of
its term shall not release the parties from those provisions hereof which
by nature survive such termination or expiration including, without
limitation, Sections 4 and 5 hereof and the indemnification provision set
forth in subsection 3.3 hereof.
7. GENERAL PROVISIONS
7.1 It is expressly agreed that Thinweb is acting as an independent contractor
in performing the Services and this Agreement is an agreement between
separate entities and neither is the agent or servant of or possesses the
power to obligate the other party and no employer-employee relationship is
hereby created.
7.2 Thinweb shall not assign any of its right, title and interest in this
Agreement or subcontract the performance of any of its rights or
obligations hereunder, without the prior written consent of the Company.
Subject to the foregoing, this Agreement shall
<PAGE>
-6-
enure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns.
7.3 Any notice required or permitted to be given hereunder by either party
shall be given by sending such notice, properly addressed to the other
party's last known address, by prepaid registered air mail or telecopier.
All notices shall be deemed received five (5) days after the date of
mailing if sent by prepaid registered air mail (except in the event of
disruption of postal services), or at the time of transmission if sent by
telecopier.
7.4 The preamble hereto forms an integral part hereof. This Agreement contains
the entire understanding of the parties hereto concerning the subject
matter hereof and supersedes all prior and contemporaneous agreements
between the parties. This Agreement may only be amended by an instrument in
writing signed by both parties.
7.5 All disputes arising in connection with this Agreement shall be finally
settled by arbitration under the Arbitration Act (Ontario) by one (1)
arbitrator appointed by both parties. If the parties cannot appoint one (1)
arbitrator to settle the dispute within fourteen (14) days of either party
notifying the other party of a dispute, each party shall appoint one (1)
arbitrator within fifteen (15) days thereafter, and the two (2) arbitrators
so appointed shall appoint a third (3rd) arbitrator within ten (10) days
thereafter, failing which either arbitrator shall be entitled to apply to
the Supreme Court of Ontario to have the third (3rd) arbitrator appointed.
If either party fails to appoint its arbitrator within such fifteen (15)
day period, then the arbitrator appointed by the other party shall be the
sole arbitrator. The arbitration proceedings shall be conducted in English
and the venue of the arbitration shall be Toronto, Ontario. The decision of
the arbitrators shall be final and binding upon the parties to the
exclusion of courts of law.
7.6 This Agreement shall governed by and construed in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the 15th day
of December, 1999
THINWEB SOFTWARE INCORPORATED
Per:_________________________________________
NOTIME WIRELESS CORP.
Per:_________________________________________
<PAGE>
-7-
ACKNOWLEDGEMENT
---------------
FOR ONE DOLLAR ($1.00) AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT
AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED BY THE UNDERSIGNED, the
undersigned hereby acknowledges having read this Agreement and agrees to provide
the Reid Consulting Services on behalf of Thinweb Software Incorporated pursuant
to this Agreement as long as he is employed by Thinweb Software Incorporated or
any of its Affiliates (as defined in the Canada Business Corporations Act) and
to be bound by all the other terms and conditions of this Agreement applicable
to him.
Dated as of December 15, 1999
___________________________________
CORY REID
<PAGE>
EXHIBIT 10.11
PRIVATE PLACEMENT AGREEMENT
BETWEEN:
LINES OVERSEAS MANAGEMENT LIMITED
73 Front Street
P.O. Box HM 2908
Hamilton, Bermuda
("Lines")
OF THE ONE PART
-and-
thinWEB TECHNOLOGIES CORPORATION
Suite 101, Phase 3
6 Antares Drive
Ottawa, Ontario
K2E 8A9
("ThinWEB")
OF THE OTHER PART
WHEREAS Lines is a registered broker-dealer with offices in Bermuda, Cayman
Islands and Guernsey.
AND WHEREAS ThinWEB and Lines have discussed an arrangement for Lines to make an
off-shore placement of securities of ThinWEB with certain institutions and high
net worth individuals ("the Private Placement");
AND WHEREAS Lines has agreed to raise for ThinWEB, on a best efforts basis, a
net amount of a minimum of $5 million USD.
IN CONSIDERATION of the mutual covenants hereinafter set out each party agrees
with the other as follows:
1. The Private Placement shall consist of equity in the form of a minimum of
1,000,000 units of ThinWEB securities. Each unit shall cost $5 USD and consist
of one share of common stock and one warrant to purchase an additional share for
a two-year period at $7 USD (the "unit"). ThinWEB agrees to use its best efforts
to file a Registration Statement with the SEC within 60 days of private
placement completion to register the private placement shares as free trading.
2. ThinWEB shall pay to Lines a commission equal to 5% of the total proceeds
of the private placement. At the option of Lines the commission may be taken in
units instead of cash.
3. Sale of the Private Placement units shall not commence until ThinWEB's SB-2
filing with the SEC has been declared effective and the sale of units may only
be made in those jurisdictions where Lines is a registered broker-dealer. Sale
of the units shall be subject to compliance with the US Securities Act of 1933,
as amended, and Regulation S thereunder and any applicable securities laws in
the jurisdictions where the units are sold.
4. Lines has agreed, in order to assist the financing of thinWeb's operations
until such time as the private placement is made, to advance by way of loan,
through its affiliate Gateway Research Management Group Ltd., up to $2 million
USD to thinWEB as required at the option of thinWEB. This amount may be repaid
to Lines out of the proceeds of the private placement. At the option of Lines
the $2 million (or such
<PAGE>
lesser amount as shall have been advanced by Lines) can be applied towards the
private placement to take-down units. Lines shall also be entitled to a first
charge security on all of thinWEB's assets and to be paid interest on the credit
facility at 12% per annum.
5. Sale of the Private Placement units shall be open for a period of 2 weeks
following the effectiveness of ThinWEB's SB-2 or such other time period as the
parties otherwise agree. All documentation in connection with the Private
Placement and the units shall be subject to the approval of thinWEB.
6. This Agreement shall replace and supersede the Selling Agent Agreement
between the parties dated November 16, 1999. This Agreement shall replace and
supersede the Loan Agreement dated November 16, 1999 between thinWEB and Gateway
Research Management Group Ltd.
7. This Agreement shall be governed by the laws of the State of New York. This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof, and may not be modified or amended except pursuant to
a writing signed by all parties. This Agreement is intended only for the benefit
of the parties hereto and shall not create any third party beneficiary rights.
IN WITNESS WHEREOF the parties have executed this Agreement this day of
January, 2000.
LINES OVERSEAS MANAGEMENT LIMITED
per:_________________________________
thinWEB TECHNOLOGIES CORPORATION
per:_________________________________
<PAGE>
EXHIBIT 10.13
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the day of August, 1999.
BETWEEN:
BRYAN MACLEAN (hereinafter referred to as the Employee)
OF THE FIRST PART
-and-
THINWEB SOFTWARE INCORPORATED, a company incorporated under the laws of the
Province of Nova Scotia (hereinafter referred to as the Company)
OF THE SECOND PART
WHEREAS:
(a) The Company is presently engaged in the business of computer software
concentrating on the development of Internet and electronic commerce
applications;
(b) The Company and the Employee have agreed to enter into this Employment
Agreement upon the terms and conditions hereafter set out.
NOW THEREFOR IN CONSIDERATION OF the foregoing and the mutual covenants and
agreements set forth below, and for other good and valuable consideration, the
parties covenant and agree as follows:
ARTICLE 1 - EMPLOYMENT
1.1 Term of Agreement
The term of this Agreement shall commence effective on the date of this
Agreement and shall continue for an indefinite period or until and if terminated
by the Company or the Employee as contemplated herein; provided, however, that
the provisions hereof shall survive the termination of this Agreement with
respect to the rights and entitlements of the parties hereto which have accrued
prior to, or as a consequence of, such termination.
1.2 Survival of Covenants
Notwithstanding Section 1.1, the provisions of Articles 5, 6 and 7 of this
Agreement shall survive the termination of this Agreement and shall continue in
effect in accordance with the terms thereof.
1.3 Employment and Duties
Subject to the terms of this Agreement, the Employee shall perform the duties as
set forth on Schedule A hereto and shall serve the Company and any affiliates of
the Company in such capacity or capacities and shall perform such further duties
and exercise such powers as may be determined from time to time by the President
of the Company; provided however such duties shall be reasonably consistent with
the scope and stature of the duties and responsibilities with which the Employee
is empowered. The Employee shall:
(a) devote his/her full time and attention to the business and affairs of
the Company;
(b) perform those duties assigned to them faithfully and diligently and to
the best of his/her ability;
<PAGE>
(c) use his/her best efforts to promote the interests and goodwill of the
Company and its affiliates; and
(d) comply with the Company's policies as they are established from time
to time.
1.4 Reporting Procedures
The Employee shall be based in Halifax and will report to or at the direction of
the President of the Company. The Employee shall report fully on the
management, operations and business affairs of the Company advising to the best
of his ability and in accordance with reasonable standards on matters that may
arise from time to time during the terms of this Agreement.
ARTICLE 2 - COMPENSATION AND BENEFITS
2.1 Remuneration and Benefits
The Employee remuneration shall be a base salary of CDN. $120,000 per year (Base
Salary) and the benefits contemplated herein. The Base Salary shall be reviewed
annually, or more frequently if the Board of Directors of the Company so
determine in its absolute discretion. Notwithstanding anything contained
herein, the Company shall be under no obligation to increase the Base Salary at
the time of any such review. All payments of Base Salary shall be made twice
monthly, and all payments made by the Company on account of Base Salary and
other remuneration (if any) shall be subject to all required deductions for
income tax and other statutory withholdings.
2.2 Benefits
The Employee shall also be entitled to such benefits as are set out in Schedule
B hereto. In addition, the Employee shall be entitled to participate in such
other benefits as are provided by the Company generally to other employees of
the Company. The Employee acknowledges and agrees that the Company has the
right to unilaterally revise the terms of any insurance of health benefits
package.
2.3 Bonus
Bonuses, if any, to be paid to the Employee and the criteria for determining the
same shall be as determined by Board of Directors of the Company.
2.4 Employee Stock Option Plan
The Employee shall be entitled to participate in any employee stock option plan
(ESOP) established by the Company from time to time for the general benefit of
employees of the Company at a level that is commensurate with his/her position,
provided that the Employee is and remains eligible for such participation in
accordance with the terms and conditions of the ESOP. We have agreed that you
will be entitled to an initial option on 350,000 common shares of the Company,
or its parent thinWEB.com Corporation, to be issued at such time as the
Company's shares become publicly traded, at a strike price equal to the opening
price on the first day of trading.
2.5 Vacation
The Employee shall be entitled to four (4) weeks paid vacation per calendar year
in accordance with the vacation policies and practices of the Company.
2.6 Business Expenses
The Company shall pay or reimburse the Employee for all reasonable and approved
out-of-pocket expenses actually and properly incurred from time to time in
connection with carrying out his/her duties hereunder in accordance with the
Company's general policies as they may be established or amended form time to
time. The Employee shall furnish to the Company an expense statement and
invoices or receipts (or such other supporting information as the Company may
require) for expenses for which the Employee seeks reimbursement or payment.
<PAGE>
ARTICLE 3 - TERMINATION
3.1 Termination for Cause
Notwithstanding anything contained in this Agreement, the Company may terminate
the employment of the Employee for cause without notice, or any payment in lieu
of notice, for Cause, which for the purposes of this Agreement shall be
restricted to the following;
(a) any cause which would entitle the Company at law to terminate the
services of the Employee without either notice or pay in lieu of
notice, including, without limitation, serious misconduct, habitual
neglect of duty, incompetence, conduct incompatible with his/her
duties, conduct prejudicial to the Company's business or disobedience
to the Company's directions in a matter of substance. The Employee
shall first receive written notice from the Company advising of the
acts or omissions that constitute the cause of termination of his/her
employment with the Company in accordance with this subsection 3.1(a)
and the employee shall have a reasonable opportunity to correct the
act or omission so complained of, unless they are of such serious
nature or so detrimental to the interests of the Company that the
Board of Directors of the Company has determined that any opportunity
to correct such acts or omissions would not serve the best interests
of the Company; or
(b) any material breach of this Agreement.
3.2 Termination for Disability/Death
Subject as I hereinafter provided, the Company may terminate the employment of
the Employee immediately upon notice to the Employee if the employee becomes
permanently disabled; provided however, if such termination would jeopardise the
Employee's right to receive long-term disability payment, which she would
otherwise receive from the Company's insurers, the Company may terminate the
employment of the Employee immediately upon cessation of the Employee's
entitlement thereto. The Employee shall be deemed to have become permanently
disabled if in any year during the employment period, because of ill health,
physical or mental disability, or for other causes beyond the control of the
Employee, the Employee has been continuously unable or unwilling or has failed
to perform his/her duties for one hundred and eighty (180) consecutive days, or
if, during any year of the employment period, the Employee has been unable or
unwilling or has failed to perform his/her duties for a total of one hundred
eighty (180) days, consecutive or not. The term any year of the employment
period means any period of twelve (12) consecutive months during the employment
period. This Agreement shall, subject to the provisions of Section 1.1,
terminate without notice upon the death of the Employee.
3.3 Termination Without Cause
The Company may terminate the employment of the Employee for any other reason
not set out in Sections 3.1 and 3.2, on twelve (12) months prior written notice.
3.4 Company's Remedies Not Affected
The Company's right of termination shall be in addition to and shall not affect
its other rights and remedies under this Agreement or at law, and such other
rights and remedies hereunder or at law shall survive termination of this
Agreement and the Employee's employment with the Company.
3.5 Termination by Employee
The Employee may terminate his/her employment with the Company by providing no
less than sixty (60) days notice in writing prior to the effective date of the
termination of his/her employment. Such notice may be reduced to a shorter term
at the option of the Company. Upon giving such notice, the Employee shall
forthwith execute and deliver to the Company his/her written resignation from
any and all offices of the Company and its affiliates, without claim for
compensation for loss of office.
<PAGE>
3.6 Payments Due on Termination
Upon termination of the Employee's employment:
(a) for Cause as defined in Section 3.1, the Employee shall not be
entitled to any payment other than compensation earned by the Employee
from Base Salary, benefits and entitlement to expense reimbursement
with respect to the period ending on the date of termination of
employment;
(b) as a result of the permanent disability or death of the Employee as
set forth in Section 3.2, the Employee or his/her estate, as
applicable, shall be entitled to receive, within thirty (30) days of
the date of such termination, an amount equal to the then applicable
Base Salary which would have been earned by the Employee during the
succeeding ninety (90) day period following the date of termination of
employment; and
(c) for any reason other than those set forth in Section 3.1, 3.2 or 3.5,
the Employee shall be entitled to be paid an amount equal to the
Employee's Base Salary for six months and, to the extent reasonably
available from the Company's insurers, shall be entitled to continue
to participate in the Company's benefit programs to which she was then
entitled in each case for the period in respect of which the Employee
was entitled to notice of termination of employment, or such portion
thereof in respect of which prior notice was not given.
3.7 Timing of Payments
Any payment referred to in subsection 3.6(a) or (c) will be made in instalments,
each instalment to be equivalent to the Employee's then current periodic salary
and other benefit payments and payable at the same time intervals.
3.8 Deductions
All payments made by the Company as a result of the Employee's termination shall
be subject to all required deductions for income tax and other statutory
withholdings.
3.9 Payments in Full Settlement
The Employee acknowledges and agrees that the payments pursuant to this Article
shall be in full satisfaction of all claims, losses, costs, damages or expenses
in connection with the termination of his/her employment, including termination
pay and severance pay pursuant to the applicable Labour Standards legislation
Code (Nova Scotia) as amended form time to time. Except as otherwise provided
in this Article, the Employee shall not be entitled to any further termination
payments, damages or compensation whatsoever in connection with the employment
of the Employee and the termination thereof. As a condition precedent to any
payment pursuant to this Article, the Employee agrees to deliver to the Company,
prior to any such payment , a full and final release form all actions or claims
in connection with the termination of his/her employment or any losses, costs,
damages or expenses resulting therefrom in favour of the Company, its
affiliates, subsidiaries, directors, officers, employees and agents, in form
satisfactory to the Company.
3.10 Return of Materials
On termination of the Employee's employment for any reason, the Employee shall
deliver promptly to the Company all property of the Company and its affiliates
in the possession of the Employee or directly or indirectly under his/her
control. The Employee agrees not to make reproductions or copies of any such
property of the Company and its affiliates for his/her personal or business use
or that of any other party.
ARTICLE 4 - ACKNOWLEDGEMENTS BY THE EMPLOYEE
4.1 Acknowledgements by Employee
The Employee acknowledges that:
<PAGE>
(a) the Company is presently engaged in the development of computer
software and the sale of products and services based upon such
software, primarily aimed at Internet and electronic commerce
applications;
(b) his/her services to the Company are special and unique and that she
has significant responsibilities in connection with the Company, its
business and affairs;
(c) his/her work for the Company gives his/her access to trade secrets of
and confidential information concerning the Company and its affiliates
(Confidential Information) which Confidential Information includes,
without limitation: trade secrets; know-how; marketing plans; cost
figures; client lists; names and addresses of suppliers and business
contacts; software and operating systems; and information relating to
employees and other persons in a contractual relationship with the
Company;
(d) the business of the Company is national and international in scope;
(e) a primary purpose of this Agreement is to evidence the agreements
between the Employee and the Company contained in Articles 5, 6 and 7
hereof; and
(f) the agreements contained in Articles 5, 6 and 7 hereof are reasonable
and essential to protect the business and goodwill of the Company and
its business.
4.2 Remedies Available to Company
The Employee acknowledges that a breach by the Employee of the covenants
contained in Articles 5, 6 and 7 would result in immediate and irreparable
damages to the Company that could not adequately be compensated for by monetary
award. Accordingly, it is expressly agreed by the Employee that, in addition to
all other remedies available to it, the Company and its affiliates shall be
entitled to the immediate remedy of an interim, interlocutory and permanent
injunction as well as an accounting of all profits arising out of any breach by
the Employee.
ARTICLE 5 - NON-COMPETITION
5.1 Non-Competition
The Employee shall not, while employed by the Company or:
(a) for the two (2) year period following the termination of his/her
employment if the Employee initiated the termination; or
(b) for the twelve (12) month period following the termination of this
employment if the Company initiated the termination, whether with or
without Cause,
directly or indirectly, either individually or in partnership or in conjunction
in any way with any person or persons, whether as principal, agent, employee,
consultant, advisor, shareholder, director, guarantor, creditor or in any other
manner whatsoever:
(c) solicit, interfere with or endeavour to entice away from the Company
or its affiliates, accept any business from or the patronage of or
render any service to, sell to or contract or attempt to contract with
any person, firm or corporation who was a client, customer or supplier
of the Company, its affiliates or associates or a prospective client,
customer or supplier of the Company, its affiliates or associates with
whom the Company, its affiliates or associates have had any dealing,
to the extent that such business, patronage, service, or contract is
competitive with the business of the Company;
(d) offer employment to or endeavour to entice away from the Company or
its affiliates, any person employed by the Company or its affiliates
at the date of the termination of his/her employment, or
<PAGE>
who was so employed at any time during the previous twelve (12) month
period or interfere in any way with the employment relationship
between any such employee and the Company or its affiliates; or
(e) engage in, carry on or otherwise be concerned with or have any
interest in, or advise, lend money to, guarantee the debts or
obligations of, permit his/her name, or any part thereof, to be used
or employed by any person, firm, association, syndicate or corporation
engaged in or concerned with or having any interest in a business
which is the same as or substantially the same as or competes with the
Company's business (Competitive Business).
5.2 Covenants are Reasonable
The Employee has and will have specific knowledge of the affairs of the Company
and its business, including Confidential Information. Therefore, the Employee
hereby acknowledges and agrees that all covenants, provisions and restrictions
contained in this Article are reasonable, necessary and valid in the
circumstances of this Agreement (including the time and geographic limitations)
and all defences to the strict enforcement thereof by the Company or its
affiliates are hereby waived. The Employee acknowledges and agrees that any
breach by the Employee of the covenants, provisions and restrictions contained
in this Article during the term of his/her employment shall constitute Cause for
termination.
5.3 Revision to Restrictions
If the provisions of this Article 5 are ever adjudicated to exceed the
limitations on time or geographic scope permitted by applicable law, then such
provisions shall be deemed reformed to the maximum time or geographic scope
permitted by applicable law.
5.4 Portfolio Exception
Notwithstanding the foregoing, nothing in this Agreement shall prevent the
Employee from acquiring and holding, directly or indirectly (and including the
holdings of any other person not acting at arm's length with the Employee (as
defined in the Income Tax Act (Canada)) not more than five percent (5%) of the
outstanding share of any corporation engaged in a Competitive Business if such
shares are listed on a stock exchange, provided that the Employee is not a
member of the board of directors or an officer or employee of, or consultant to,
or otherwise involved with, directly or indirectly, such corporation.
ARTICLE 6 - CONFIDENTIALITY
6.1 Confidentiality
The Employee acknowledges and agrees that the Confidential Information as
defined in Article 4 is the exclusive property of the Company and its affiliates
and that such property is being held by the Employee in trust for the Company.
Except as may be required in the course of carrying out his/her duties
hereunder, the Employee covenants and agrees that the Employee will not disclose
(directly or indirectly) any of the Confidential Information to any person,
other than to the directors, officers or employees of the Company, nor will the
Employee disclose, for any purpose other than for the purpose of the Company,
the private affairs of the Company or any other information which the Employee
may acquire during his/her employment with respect to the business and affairs
of the Company.
6.2 Permitted Disclosure
Notwithstanding Section 6.1, the Employee shall be entitled to disclose such
Confidential Information if required pursuant to a subpoena or order issued by a
court, arbitrator or governmental body, agency or official, provided that the
Employee shall first have:
(a) promptly notified the Company of the request to make such disclosure;
<PAGE>
(b) consulted with the Company on the advisability of taking steps to
resist such requirements; and
(c) if the disclosure is required or deemed advisable, co-operate with the
Company in an attempt to obtain an order or other assurance that such
information will be accorded confidential treatment.
6.2 Remedies of Company
Nothing in this Article 6 shall be construed as limiting or impair in any way
any of the rights of the Company whether at law, in equity or otherwise against
the Employee with respect to the disclosure, use or exploitation in any manner
whatsoever to any person or for any purpose, as the case may be, of any of the
Confidential Information.
6.3 Obligations Survive in Perpetuity
The obligations of the Employee under this Article 6 shall continue during the
course of his/her employment with the Company and, unless otherwise authorized
in writing by the Company, shall survive the termination of this Agreement,
regardless of which party initiated the termination and whether with or without
Cause.
ARTICLE 7 - INTELLECTUAL PROPERTY
7.1 Inventions
The Company shall be the sole owner of all of the products and proceeds of the
Employee's services as an Employee of the Company, whether before or after the
date of this Agreement, including, but not limited to, all materials, ideas,
concepts, formats, suggestions, developments, writings, arrangements, packages,
programs, trade secrets, discoveries, research materials, data bases and other
intellectual property that the Employee may acquire, obtain, develop or create
in connection with and during the term of the Employee's employment by the
Company, whether before or after the date of this Agreement, including any and
all inventions and improvements relating or in any way appertaining to or
connected with the business of the Company free and clear of any claims by the
Employee (or anyone claiming under the Employee) of any kind or character
whatsoever. The Employee shall, at the request of the Company, execute such
assignments, certificates or other instruments as the Company may from time to
time deem necessary or desirable to evidence, establish, maintain, perfect,
protect, enforce or defend its right, title and interest in or to any such
properties, including all such applications, assignments and other instruments
with which the Company shall deem necessary in order to apply for and obtain
patents in Canada or foreign countries for such inventions or improvements and
in order to assign and convey to the Company the sole and exclusive right, title
and interest in the inventions or improvements, all expenses in connection
therewith to be borne by the Company. The Employee's obligation to execute such
documents shall continue beyond the termination of the period of his/her
employment with respect to any and all such properties, inventions or
improvements.
7.2 Career Opportunities
Any business opportunities related to the business of the Company and its
affiliates which become known to the Employee during his/her employment with the
Company must be fully disclosed and made available to the Company by the
Employee. The Employee agrees not to take or attempt to take any action if the
result will be to divert from the Company any opportunity which is within the
scope of the Company's business or that of its affiliates.
7.3 Disclosure
During the employment period, the Employee shall promptly disclose to the board
of directors of the Company full information, concerning any material interest,
direct or indirect, of the Employee (as owner, shareholder, partner, lender or
other investor, director, officer, employee, consultant or otherwise) or any
member of his/her family in any business that is reasonably known to the
Employee, to purchase or otherwise obtain a material amount of services or
products from, or to sell or otherwise provide services or products to the
Company and its affiliates or to any of their suppliers or customers.
<PAGE>
ARTICLE 8 - NOTICES
8.1 Notices
Any notice, direction or other communication to be given under this Agreement or
any ancillary agreement shall be in writing and given by delivering it or
sending it by telecopy or other similar form of recorded communication
addressed:
If to the Employee at:
5444 Victoria Road, #8
Halifax, Nova Scotia
B3H 1M5
Telephone: 425-3302
If to the Company at:
6 Antares Drive, Phase 3, Suite 101
Nepean, Ontario
K2E 8A9
Telephone: (613) 225-8446
Fax: (613) 225-0721
8.2 Timing
Any communication shall be deemed to have been validly and effectively given (i)
if personally delivered, and the date of such delivery if such date is a
business day and such delivery was made prior to 4:00 p.m. (Halifax time) and
otherwise on the next business day: or (ii) if transmitted by telecopy or
similar means of recorded communication on the business day following the date
of transmission. Any party may change its address for service from time to
timely notice given in accordance with the foregoing and any subsequent notice
shall be sent to such party at its changed address.
ARTICLE 9 - GENERAL
9.1 Amendment and Waiver
This Agreement may not be amended, supplemented or waived except in writing
signed by the party against which such amendment or waiver is to be enforced.
The waiver by any party of a breach of any provision of this Agreement shall not
operate to, or be construed as a waiver of, any other breach of that provision
nor as a waiver of any breach of another provision.
9.2 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the Province of Ontario and the laws of Canada applicable therein.
9.3 Severability
If any provision of this Agreement shall be held by any court of competent
jurisdiction to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remaining provisions, or part thereof, of this Agreement and such
remaining provisions, or part thereof, shall remain enforceable and binding.
<PAGE>
9.4 No Restriction on Conduct of Business
Nothing in this Agreement shall restrict the Company in the conduct of its
business and affairs and, without limiting the generality of the foregoing, the
Company shall be free to sell any or all of its assets, to merge, amalgamate or
combine its business with the business of any other person or to discontinue the
business, and no such event shall constitute a breach of the Company's
obligations hereunder.
9.5 Successors
This Agreement shall be binding on and ensure to the benefit of the successors
and assigns of the Company and the heirs and executors of the Employee.
9.6 Entire Agreement
This Agreement constitutes the entire agreement and understanding between the
parties with respect to the employment arrangement addressed herein and
supersedes all prior agreements and understandings, written or oral, between the
parties relating to such subject matter.
9.7 Legal Advice
The Employee hereby represents and warrants to the Company and acknowledges and
agrees that he had the opportunity to seek and was encouraged by the Company to
seek independent legal advice prior to the execution and delivery of this
Agreement and that, in the event that he did not avail himself of that
opportunity prior to signing this Agreement, he did so voluntarily without any
undue pressure and agrees that his/her failure to obtain independent legal
advice shall not be used by him as a defence to the enforcement of his/her
obligations under this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.
SIGNED, SEALED and DELIVERED )
)
) ___________________________________
in the presence of: ) BRYAN MACLEAN
)
) THINWEB SOFTWARE INCORPORATED
)
) per:________________________________
)
)
) per:________________________________
<PAGE>
SCHEDULE "A"
EMPLOYEE DUTIES
Employee is engaged as Vice-President of Technology and shall perform all
duties normally associated with such a position and any duties reasonably
ancillary thereto.
<PAGE>
SCHEDULE "B"
EMPLOYEE BENEFITS
Company group health and insurance benefits plan (currently through Sun
Life).
Employee stock option plan.
<PAGE>
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the day of August, 1999.
BETWEEN:
CORY REID (hereinafter referred to as the Employee)
OF THE FIRST PART
-and-
THINWEB SOFTWARE INCORPORATED, a company incorporated under the laws
of the Province of Nova Scotia (hereinafter referred to as the
Company)
OF THE SECOND PART
WHEREAS:
(a) The Company is presently engaged in the business of computer software
concentrating on the development of Internet and electronic commerce
applications;
(b) The Company and the Employee have agreed to enter into this Employment
Agreement upon the terms and conditions hereafter set out.
NOW THEREFOR IN CONSIDERATION OF the foregoing and the mutual covenants and
agreements set forth below, and for other good and valuable consideration, the
parties covenant and agree as follows:
ARTICLE 1 - EMPLOYMENT
1.1 Term of Agreement
The term of this Agreement shall commence effective on the date of this
Agreement and shall continue for an indefinite period or until and if terminated
by the Company or the Employee as contemplated herein; provided, however, that
the provisions hereof shall survive the termination of this Agreement with
respect to the rights and entitlements of the parties hereto which have accrued
prior to, or as a consequence of, such termination.
1.2 Survival of Covenants
Notwithstanding Section 1.1, the provisions of Articles 5, 6 and 7 of this
Agreement shall survive the termination of this Agreement and shall continue in
effect in accordance with the terms thereof.
1.3 Employment and Duties
Subject to the terms of this Agreement, the Employee shall perform the duties as
set forth on Schedule A hereto and shall serve the Company and any affiliates of
the Company in such capacity or capacities and shall perform such further duties
and exercise such powers as may be determined from time to time by the President
of the Company; provided however such duties shall be reasonably consistent with
the scope and stature of the duties and responsibilities with which the Employee
is empowered. The Employee shall:
(a) devote his/her full time and attention to the business and affairs of
the Company;
(b) perform those duties assigned to them faithfully and diligently and to
the best of his/her ability;
<PAGE>
(c) use his/her best efforts to promote the interests and goodwill of the
Company and its affiliates; and
(d) comply with the Company's policies as they are established from time
to time.
1.4 Reporting Procedures
The Employee shall be based in Halifax and will report to or at the direction of
the President of the Company. The Employee shall report fully on the
management, operations and business affairs of the Company advising to the best
of his ability and in accordance with reasonable standards on matters that may
arise from time to time during the terms of this Agreement.
ARTICLE 2 - COMPENSATION AND BENEFITS
2.1 Remuneration and Benefits
The Employee remuneration shall be a base salary of CDN. $120,000 per year (Base
Salary) and the benefits contemplated herein. The Base Salary shall be reviewed
annually, or more frequently if the Board of Directors of the Company so
determine in its absolute discretion. Notwithstanding anything contained
herein, the Company shall be under no obligation to increase the Base Salary at
the time of any such review. All payments of Base Salary shall be made twice
monthly, and all payments made by the Company on account of Base Salary and
other remuneration (if any) shall be subject to all required deductions for
income tax and other statutory withholdings.
2.2 Benefits
The Employee shall also be entitled to such benefits as are set out in Schedule
B hereto. In addition, the Employee shall be entitled to participate in such
other benefits as are provided by the Company generally to other employees of
the Company. The Employee acknowledges and agrees that the Company has the
right to unilaterally revise the terms of any insurance of health benefits
package.
2.3 Bonus
Bonuses, if any, to be paid to the Employee and the criteria for determining the
same shall be as determined by Board of Directors of the Company.
2.4 Employee Stock Option Plan
The Employee shall be entitled to participate in any employee stock option plan
(ESOP) established by the Company from time to time for the general benefit of
employees of the Company at a level that is commensurate with his/her position,
provided that the Employee is and remains eligible for such participation in
accordance with the terms and conditions of the ESOP. We have agreed that you
will be entitled to an initial option on 350,000 common shares of the Company,
or its parent thinWEB.com Corporation, to be issued at such time as the
Company's shares become publicly traded, at a strike price equal to the opening
price on the first day of trading.
2.5 Vacation
The Employee shall be entitled to four (4) weeks paid vacation per calendar year
in accordance with the vacation policies and practices of the Company.
2.6 Business Expenses
The Company shall pay or reimburse the Employee for all reasonable and approved
out-of-pocket expenses actually and properly incurred from time to time in
connection with carrying out his/her duties hereunder in accordance with the
Company's general policies as they may be established or amended form time to
time. The Employee shall furnish to the Company an expense statement and
invoices or receipts (or such other supporting information as the Company may
require) for expenses for which the Employee seeks reimbursement or payment.
<PAGE>
ARTICLE 3 - TERMINATION
3.1 Termination for Cause
Notwithstanding anything contained in this Agreement, the Company may terminate
the employment of the Employee for cause without notice, or any payment in lieu
of notice, for Cause, which for the purposes of this Agreement shall be
restricted to the following;
(a) any cause which would entitle the Company at law to terminate the
services of the Employee without either notice or pay in lieu of
notice, including, without limitation, serious misconduct, habitual
neglect of duty, incompetence, conduct incompatible with his/her
duties, conduct prejudicial to the Company's business or disobedience
to the Company's directions in a matter of substance. The Employee
shall first receive written notice from the Company advising of the
acts or omissions that constitute the cause of termination of his/her
employment with the Company in accordance with this subsection 3.1(a)
and the employee shall have a reasonable opportunity to correct the
act or omission so complained of, unless they are of such serious
nature or so detrimental to the interests of the Company that the
Board of Directors of the Company has determined that any opportunity
to correct such acts or omissions would not serve the best interests
of the Company; or
(b) any material breach of this Agreement.
3.2 Termination for Disability/Death
Subject as I hereinafter provided, the Company may terminate the employment of
the Employee immediately upon notice to the Employee if the employee becomes
permanently disabled; provided however, if such termination would jeopardise the
Employee's right to receive long-term disability payment, which she would
otherwise receive from the Company's insurers, the Company may terminate the
employment of the Employee immediately upon cessation of the Employee's
entitlement thereto. The Employee shall be deemed to have become permanently
disabled if in any year during the employment period, because of ill health,
physical or mental disability, or for other causes beyond the control of the
Employee, the Employee has been continuously unable or unwilling or has failed
to perform his/her duties for one hundred and eighty (180) consecutive days, or
if, during any year of the employment period, the Employee has been unable or
unwilling or has failed to perform his/her duties for a total of one hundred
eighty (180) days, consecutive or not. The term any year of the employment
period means any period of twelve (12) consecutive months during the employment
period. This Agreement shall, subject to the provisions of Section 1.1,
terminate without notice upon the death of the Employee.
3.3 Termination Without Cause
The Company may terminate the employment of the Employee for any other reason
not set out in Sections 3.1 and 3.2, on twelve (12) months prior written notice.
3.4 Company's Remedies Not Affected
The Company's right of termination shall be in addition to and shall not affect
its other rights and remedies under this Agreement or at law, and such other
rights and remedies hereunder or at law shall survive termination of this
Agreement and the Employee's employment with the Company.
3.5 Termination by Employee
The Employee may terminate his/her employment with the Company by providing no
less than sixty (60) days notice in writing prior to the effective date of the
termination of his/her employment. Such notice may be reduced to a shorter term
at the option of the Company. Upon giving such notice, the Employee shall
forthwith execute and deliver to the Company his/her written resignation from
any and all offices of the Company and its affiliates, without claim for
compensation for loss of office.
<PAGE>
3.6 Payments Due on Termination
Upon termination of the Employee's employment:
(a) for Cause as defined in Section 3.1, the Employee shall not be
entitled to any payment other than compensation earned by the Employee
from Base Salary, benefits and entitlement to expense reimbursement
with respect to the period ending on the date of termination of
employment;
(b) as a result of the permanent disability or death of the Employee as
set forth in Section 3.2, the Employee or his/her estate, as
applicable, shall be entitled to receive, within thirty (30) days of
the date of such termination, an amount equal to the then applicable
Base Salary which would have been earned by the Employee during the
succeeding ninety (90) day period following the date of termination of
employment; and
(c) for any reason other than those set forth in Section 3.1, 3.2 or 3.5,
the Employee shall be entitled to be paid an amount equal to the
Employee's Base Salary for six months and, to the extent reasonably
available from the Company's insurers, shall be entitled to continue
to participate in the Company's benefit programs to which she was then
entitled in each case for the period in respect of which the Employee
was entitled to notice of termination of employment, or such portion
thereof in respect of which prior notice was not given.
3.7 Timing of Payments
Any payment referred to in subsection 3.6(a) or (C) will be made in instalments,
each instalment to be equivalent to the Employee's then current periodic salary
and other benefit payments and payable at the same time intervals.
3.8 Deductions
All payments made by the Company as a result of the Employee's termination shall
be subject to all required deductions for income tax and other statutory
withholdings.
3.9 Payments in Full Settlement
The Employee acknowledges and agrees that the payments pursuant to this Article
shall be in full satisfaction of all claims, losses, costs, damages or expenses
in connection with the termination of his/her employment, including termination
pay and severance pay pursuant to the applicable Labour Standards legislation
Code (Nova Scotia) as amended form time to time. Except as otherwise provided
in this Article, the Employee shall not be entitled to any further termination
payments, damages or compensation whatsoever in connection with the employment
of the Employee and the termination thereof. As a condition precedent to any
payment pursuant to this Article, the Employee agrees to deliver to the Company,
prior to any such payment , a full and final release form all actions or claims
in connection with the termination of his/her employment or any losses, costs,
damages or expenses resulting therefrom in favour of the Company, its
affiliates, subsidiaries, directors, officers, employees and agents, in form
satisfactory to the Company.
3.10 Return of Materials
On termination of the Employee's employment for any reason, the Employee shall
deliver promptly to the Company all property of the Company and its affiliates
in the possession of the Employee or directly or indirectly under his/her
control. The Employee agrees not to make reproductions or copies of any such
property of the Company and its affiliates for his/her personal or business use
or that of any other party.
ARTICLE 4 - ACKNOWLEDGEMENTS BY THE EMPLOYEE
4.1 Acknowledgements by Employee
The Employee acknowledges that:
<PAGE>
(a) the Company is presently engaged in the development of computer
software and the sale of products and services based upon such
software, primarily aimed at Internet and electronic commerce
applications;
(b) his/her services to the Company are special and unique and that she
has significant responsibilities in connection with the Company, its
business and affairs;
(c) his/her work for the Company gives his/her access to trade secrets of
and confidential information concerning the Company and its affiliates
(Confidential Information) which Confidential Information includes,
without limitation: trade secrets; know-how; marketing plans; cost
figures; client lists; names and addresses of suppliers and business
contacts; software and operating systems; and information relating to
employees and other persons in a contractual relationship with the
Company;
(d) the business of the Company is national and international in scope;
(e) a primary purpose of this Agreement is to evidence the agreements
between the Employee and the Company contained in Articles 5, 6 and 7
hereof; and
(f) the agreements contained in Articles 5,6 and 7 hereof are reasonable
and essential to protect the business and goodwill of the Company and
its business.
4.2 Remedies Available to Company
The Employee acknowledges that a breach by the Employee of the covenants
contained in Articles 5, 6 and 7 would result in immediate and irreparable
damages to the Company that could not adequately be compensated for by monetary
award. Accordingly, it is expressly agreed by the Employee that, in addition to
all other remedies available to it, the Company and its affiliates shall be
entitled to the immediate remedy of an interim, interlocutory and permanent
injunction as well as an accounting of all profits arising out of any breach by
the Employee.
ARTICLE 5 - NON-COMPETITION
5.1 Non-Competition
The Employee shall not, while employed by the Company or:
(a) for the two (2) year period following the termination of his/her
employment if the Employee initiated the termination; or
(b) for the twelve (12) month period following the termination of this
employment if the Company initiated the termination, whether with or
without Cause,
directly or indirectly, either individually or in partnership or in conjunction
in any way with any person or persons, whether as principal, agent, employee,
consultant, advisor, shareholder, director, guarantor, creditor or in any other
manner whatsoever:
(c) solicit, interfere with or endeavour to entice away from the Company
or its affiliates, accept any business from or the patronage of or
render any service to, sell to or contract or attempt to contract with
any person, firm or corporation who was a client, customer or supplier
of the Company, its affiliates or associates or a prospective client,
customer or supplier of the Company, its affiliates or associates with
whom the Company, its affiliates or associates have had any dealing,
to the extent that such business, patronage, service, or contract is
competitive with the business of the Company;
(d) offer employment to or endeavour to entice away from the Company or
its affiliates, any person employed by the Company or its affiliates
at the date of the termination of his/her employment, or
<PAGE>
who was so employed at any time during the previous twelve (12) month
period or interfere in any way with the employment relationship
between any such employee and the Company or its affiliates; or
(e) engage in, carry on or otherwise be concerned with or have any
interest in, or advise, lend money to, guarantee the debts or
obligations of, permit his/her name, or any part thereof, to be used
or employed by any person, firm, association, syndicate or corporation
engaged in or concerned with or having any interest in a business
which is the same as or substantially the same as or competes with the
Company's business (Competitive Business).
5.2 Covenants are Reasonable
The Employee has and will have specific knowledge of the affairs of the Company
and its business, including Confidential Information. Therefore, the Employee
hereby acknowledges and agrees that all covenants, provisions and restrictions
contained in this Article are reasonable, necessary and valid in the
circumstances of this Agreement (including the time and geographic limitations)
and all defences to the strict enforcement thereof by the Company or its
affiliates are hereby waived. The Employee acknowledges and agrees that any
breach by the Employee of the covenants, provisions and restrictions contained
in this Article during the term of his/her employment shall constitute Cause for
termination.
5.3 Revision to Restrictions
If the provisions of this Article 5 are ever adjudicated to exceed the
limitations on time or geographic scope permitted by applicable law, then such
provisions shall be deemed reformed to the maximum time or geographic scope
permitted by applicable law.
5.4 Portfolio Exception
Notwithstanding the foregoing, nothing in this Agreement shall prevent the
Employee from acquiring and holding, directly or indirectly (and including the
holdings of any other person not acting at arm's length with the Employee (as
defined in the Income Tax Act (Canada)) not more than five percent (5%) of the
outstanding share of any corporation engaged in a Competitive Business if such
shares are listed on a stock exchange, provided that the Employee is not a
member of the board of directors or an officer or employee of, or consultant to,
or otherwise involved with, directly or indirectly, such corporation.
ARTICLE 6 - CONFIDENTIALITY
6.1 Confidentiality
The Employee acknowledges and agrees that the Confidential Information as
defined in Article 4 is the exclusive property of the Company and its affiliates
and that such property is being held by the Employee in trust for the Company.
Except as may be required in the course of carrying out his/her duties
hereunder, the Employee covenants and agrees that the Employee will not disclose
(directly or indirectly) any of the Confidential Information to any person,
other than to the directors, officers or employees of the Company, nor will the
Employee disclose, for any purpose other than for the purpose of the Company,
the private affairs of the Company or any other information which the Employee
may acquire during his/her employment with respect to the business and affairs
of the Company.
6.2 Permitted Disclosure
Notwithstanding Section 6.1, the Employee shall be entitled to disclose such
Confidential Information if required pursuant to a subpoena or order issued by a
court, arbitrator or governmental body, agency or official, provided that the
Employee shall first have:
(a) promptly notified the Company of the request to make such disclosure;
<PAGE>
(b) consulted with the Company on the advisability of taking steps to
resist such requirements; and
(c) if the disclosure is required or deemed advisable, co-operate with the
Company in an attempt to obtain an order or other assurance that such
information will be accorded confidential treatment.
6.2 Remedies of Company
Nothing in this Article 6 shall be construed as limiting or impair in any way
any of the rights of the Company whether at law, in equity or otherwise against
the Employee with respect to the disclosure, use or exploitation in any manner
whatsoever to any person or for any purpose, as the case may be, of any of the
Confidential Information.
6.3 Obligations Survive in Perpetuity
The obligations of the Employee under this Article 6 shall continue during the
course of his/her employment with the Company and, unless otherwise authorized
in writing by the Company, shall survive the termination of this Agreement,
regardless of which party initiated the termination and whether with or without
Cause.
ARTICLE 7 - INTELLECTUAL PROPERTY
7.1 Inventions
The Company shall be the sole owner of all of the products and proceeds of the
Employee's services as an Employee of the Company, whether before or after the
date of this Agreement, including, but not limited to, all materials, ideas,
concepts, formats, suggestions, developments, writings, arrangements, packages,
programs, trade secrets, discoveries, research materials, data bases and other
intellectual property that the Employee may acquire, obtain, develop or create
in connection with and during the term of the Employee's employment by the
Company, whether before or after the date of this Agreement, including any and
all inventions and improvements relating or in any way appertaining to or
connected with the business of the Company free and clear of any claims by the
Employee (or anyone claiming under the Employee) of any kind or character
whatsoever. The Employee shall, at the request of the Company, execute such
assignments, certificates or other instruments as the Company may from time to
time deem necessary or desirable to evidence, establish, maintain, perfect,
protect, enforce or defend its right, title and interest in or to any such
properties, including all such applications, assignments and other instruments
with which the Company shall deem necessary in order to apply for and obtain
patents in Canada or foreign countries for such inventions or improvements and
in order to assign and convey to the Company the sole and exclusive right, title
and interest in the inventions or improvements, all expenses in connection
therewith to be borne by the Company. The Employee's obligation to execute such
documents shall continue beyond the termination of the period of his/her
employment with respect to any and all such properties, inventions or
improvements.
7.2 Career Opportunities
Any business opportunities related to the business of the Company and its
affiliates which become known to the Employee during his/her employment with the
Company must be fully disclosed and made available to the Company by the
Employee. The Employee agrees not to take or attempt to take any action if the
result will be to divert from the Company any opportunity which is within the
scope of the Company's business or that of its affiliates.
7.3 Disclosure
During the employment period, the Employee shall promptly disclose to the board
of directors of the Company full information, concerning any material interest,
direct or indirect, of the Employee (as owner, shareholder, partner, lender or
other investor, director, officer, employee, consultant or otherwise) or any
member of his/her family in any business that is reasonably known to the
Employee, to purchase or otherwise obtain a material amount of services or
products from, or to sell or otherwise provide services or products to the
Company and its affiliates or to any of their suppliers or customers.
<PAGE>
ARTICLE 8 - NOTICES
8.1 Notices
Any notice, direction or other communication to be given under this Agreement or
any ancillary agreement shall be in writing and given by delivering it or
sending it by telecopy or other similar form of recorded communication
addressed:
If to the Employee at:
1360 Lower Water Street
Suite 207
Halifax, Nova Scotia
B3S 3N2
Telephone: 425-3302
If to the Company at:
6 Antares Drive, Phase 3, Suite 101
Nepean, Ontario
K2E 8A9
Telephone: (613) 225-8446
Fax: (613) 225-0721
8.2 Timing
Any communication shall be deemed to have been validly and effectively given (i)
if personally delivered, and the date of such delivery if such date is a
business day and such delivery was made prior to 4:00 p.m. (Halifax time) and
otherwise on the next business day: or (ii) if transmitted by telecopy or
similar means of recorded communication on the business day following the date
of transmission. Any party may change its address for service from time to
timely notice given in accordance with the foregoing and any subsequent notice
shall be sent to such party at its changed address.
ARTICLE 9 - GENERAL
9.1 Amendment and Waiver
This Agreement may not be amended, supplemented or waived except in writing
signed by the party against which such amendment or waiver is to be enforced.
The waiver by any party of a breach of any provision of this Agreement shall not
operate to, or be construed as a waiver of, any other breach of that provision
nor as a waiver of any breach of another provision.
9.2 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the Province of Nova Scotia and the laws of Canada applicable therein.
9.3 Severability
If any provision of this Agreement shall be held by any court of competent
jurisdiction to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remaining provisions, or part thereof, of this Agreement and such
remaining provisions, or part thereof, shall remain enforceable and binding.
<PAGE>
9.4 No Restriction on Conduct of Business
Nothing in this Agreement shall restrict the Company in the conduct of its
business and affairs and, without limiting the generality of the foregoing, the
Company shall be free to sell any or all of its assets, to merge, amalgamate or
combine its business with the business of any other person or to discontinue the
business, and no such event shall constitute a breach of the Company's
obligations hereunder.
9.5 Successors
This Agreement shall be binding on and ensure to the benefit of the successors
and assigns of the Company and the heirs and executors of the Employee.
9.6 Entire Agreement
This Agreement constitutes the entire agreement and understanding between the
parties with respect to the employment arrangement addressed herein and
supersedes all prior agreements and understandings, written or oral, between the
parties relating to such subject matter.
9.7 Legal Advice
The Employee hereby represents and warrants to the Company and acknowledges and
agrees that he had the opportunity to seek and was encouraged by the Company to
seek independent legal advice prior to the execution and delivery of this
Agreement and that, in the event that he did not avail himself of that
opportunity prior to signing this Agreement, he did so voluntarily without any
undue pressure and agrees that his/her failure to obtain independent legal
advice shall not be used by him as a defence to the enforcement of his/her
obligations under this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.
SIGNED, SEALED and DELIVERED )
)
) ___________________________________
in the presence of: ) CORY REID
)
) THINWEB SOFTWARE INCORPORATED
)
) per:________________________________
)
)
) per:________________________________
<PAGE>
SCHEDULE "A"
EMPLOYEE DUTIES
Employee is engaged as Vice-President of Product Development and shall
perform all duties normally associated with such a position and any duties
reasonably ancillary thereto.
<PAGE>
SCHEDULE "B"
EMPLOYEE BENEFITS
Company group health and insurance benefits plan (currently through Sun
Life).
Employee stock option plan.
<PAGE>
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the day of August, 1999.
BETWEEN:
JAMES ENMAN (hereinafter referred to as the Employee)
OF THE FIRST PART
-and-
THINWEB SOFTWARE INCORPORATED, a company incorporated under the laws
of the Province of Nova Scotia (hereinafter referred to as the
Company)
OF THE SECOND PART
WHEREAS:
(a) The Company is presently engaged in the business of computer software
concentrating on the development of Internet and electronic commerce
applications;
(b) The Company and the Employee have agreed to enter into this Employment
Agreement upon the terms and conditions hereafter set out.
NOW THEREFOR IN CONSIDERATION OF the foregoing and the mutual covenants and
agreements set forth below, and for other good and valuable consideration, the
parties covenant and agree as follows:
ARTICLE 1 - EMPLOYMENT
1.1 Term of Agreement
The term of this Agreement shall commence effective on the date of this
Agreement and shall continue for an indefinite period or until and if terminated
by the Company or the Employee as contemplated herein; provided, however, that
the provisions hereof shall survive the termination of this Agreement with
respect to the rights and entitlements of the parties hereto which have accrued
prior to, or as a consequence of, such termination.
1.2 Survival of Covenants
Notwithstanding Section 1.1, the provisions of Articles 5, 6 and 7 of this
Agreement shall survive the termination of this Agreement and shall continue in
effect in accordance with the terms thereof.
1.3 Employment and Duties
Subject to the terms of this Agreement, the Employee shall perform the duties as
set forth on Schedule A hereto and shall serve the Company and any affiliates of
the Company in such capacity or capacities and shall perform such further duties
and exercise such powers as may be determined from time to time by the President
of the Company; provided however such duties shall be reasonably consistent with
the scope and stature of the duties and responsibilities with which the Employee
is empowered. The Employee shall:
(a) devote his/her full time and attention to the business and affairs of
the Company;
(b) perform those duties assigned to them faithfully and diligently and to
the best of his/her ability;
<PAGE>
(c) use his/her best efforts to promote the interests and goodwill of the
Company and its affiliates; and
(d) comply with the Company's policies as they are established from time
to time.
1.4 Reporting Procedures
The Employee shall be based in Halifax and will report to or at the direction of
the President of the Company. The Employee shall report fully on the
management, operations and business affairs of the Company advising to the best
of his ability and in accordance with reasonable standards on matters that may
arise from time to time during the terms of this Agreement.
ARTICLE 2 - COMPENSATION AND BENEFITS
2.1 Remuneration and Benefits
The Employee remuneration shall be a base salary of CDN. $100,000 per year (Base
Salary) and the benefits contemplated herein. The Base Salary shall be reviewed
annually, or more frequently if the Board of Directors of the Company so
determine in its absolute discretion. Notwithstanding anything contained
herein, the Company shall be under no obligation to increase the Base Salary at
the time of any such review. All payments of Base Salary shall be made twice
monthly, and all payments made by the Company on account of Base Salary and
other remuneration (if any) shall be subject to all required deductions for
income tax and other statutory withholdings.
2.2 Benefits
The Employee shall also be entitled to such benefits as are set out in Schedule
B hereto. In addition, the Employee shall be entitled to participate in such
other benefits as are provided by the Company generally to other employees of
the Company. The Employee acknowledges and agrees that the Company has the
right to unilaterally revise the terms of any insurance of health benefits
package.
2.3 Bonus
Bonuses, if any, to be paid to the Employee and the criteria for determining the
same shall be as determined by Board of Directors of the Company.
2.4 Employee Stock Option Plan
The Employee shall be entitled to participate in any employee stock option plan
(ESOP) established by the Company from time to time for the general benefit of
employees of the Company at a level that is commensurate with his/her position,
provided that the Employee is and remains eligible for such participation in
accordance with the terms and conditions of the ESOP. We have agreed that you
will be entitled to an option on 350,000 common shares of the Company, or its
parent thinWEB.com Corporation, to be issued at such time as the Company's
shares become publicly traded, at a strike price equal to the opening price on
the first day of trading.
2.5 Vacation
The Employee shall be entitled to four (4) weeks paid vacation per calendar year
in accordance with the vacation policies and practices of the Company.
2.6 Business Expenses
The Company shall pay or reimburse the Employee for all reasonable and approved
out-of-pocket expenses actually and properly incurred from time to time in
connection with carrying out his/her duties hereunder in accordance with the
Company's general policies as they may be established or amended form time to
time. The Employee shall furnish to the Company an expense statement and
invoices or receipts (or such other supporting information as the Company may
require) for expenses for which the Employee seeks reimbursement or payment.
<PAGE>
ARTICLE 3 - TERMINATION
3.1 Termination for Cause
Notwithstanding anything contained in this Agreement, the Company may terminate
the employment of the Employee for cause without notice, or any payment in lieu
of notice, for Cause, which for the purposes of this Agreement shall be
restricted to the following;
(a) any cause which would entitle the Company at law to terminate the
services of the Employee without either notice or pay in lieu of
notice, including, without limitation, serious misconduct, habitual
neglect of duty, incompetence, conduct incompatible with his/her
duties, conduct prejudicial to the Company's business or disobedience
to the Company's directions in a matter of substance. The Employee
shall first receive written notice from the Company advising of the
acts or omissions that constitute the cause of termination of his/her
employment with the Company in accordance with this subsection 3.1(a)
and the employee shall have a reasonable opportunity to correct the
act or omission so complained of, unless they are of such serious
nature or so detrimental to the interests of the Company that the
Board of Directors of the Company has determined that any opportunity
to correct such acts or omissions would not serve the best interests
of the Company; or
(b) any material breach of this Agreement.
3.2 Termination for Disability/Death
Subject as I hereinafter provided, the Company may terminate the employment of
the Employee immediately upon notice to the Employee if the employee becomes
permanently disabled; provided however, if such termination would jeopardise the
Employee's right to receive long-term disability payment, which she would
otherwise receive from the Company's insurers, the Company may terminate the
employment of the Employee immediately upon cessation of the Employee's
entitlement thereto. The Employee shall be deemed to have become permanently
disabled if in any year during the employment period, because of ill health,
physical or mental disability, or for other causes beyond the control of the
Employee, the Employee has been continuously unable or unwilling or has failed
to perform his/her duties for one hundred and eighty (180) consecutive days, or
if, during any year of the employment period, the Employee has been unable or
unwilling or has failed to perform his/her duties for a total of one hundred
eighty (180) days, consecutive or not. The term any year of the employment
period means any period of twelve (12) consecutive months during the employment
period. This Agreement shall, subject to the provisions of Section 1.1,
terminate without notice upon the death of the Employee.
3.3 Termination Without Cause
The Company may terminate the employment of the Employee for any other reason
not set out in Sections 3.1 and 3.2, on twelve (12) months prior written notice.
3.4 Company's Remedies Not Affected
The Company's right of termination shall be in addition to and shall not affect
its other rights and remedies under this Agreement or at law, and such other
rights and remedies hereunder or at law shall survive termination of this
Agreement and the Employee's employment with the Company.
3.5 Termination by Employee
The Employee may terminate his/her employment with the Company by providing no
less than sixty (60) days notice in writing prior to the effective date of the
termination of his/her employment. Such notice may be reduced to a shorter term
at the option of the Company. Upon giving such notice, the Employee shall
forthwith execute and deliver to the Company his/her written resignation from
any and all offices of the Company and its affiliates, without claim for
compensation for loss of office.
<PAGE>
3.6 Payments Due on Termination
Upon termination of the Employee's employment:
(a) for Cause as defined in Section 3.1, the Employee shall not be
entitled to any payment other than compensation earned by the Employee
from Base Salary, benefits and entitlement to expense reimbursement
with respect to the period ending on the date of termination of
employment;
(b) as a result of the permanent disability or death of the Employee as
set forth in Section 3.2, the Employee or his/her estate, as
applicable, shall be entitled to receive, within thirty (30) days of
the date of such termination, an amount equal to the then applicable
Base Salary which would have been earned by the Employee during the
succeeding ninety (90) day period following the date of termination of
employment; and
(b) for any reason other than those set forth in Section 3.1, 3.2 or 3.5,
the Employee shall be entitled to be paid an amount equal to the
Employee's Base Salary for six months and, to the extent reasonably
available from the Company's insurers, shall be entitled to continue
to participate in the Company's benefit programs to which she was then
entitled in each case for the period in respect of which the Employee
was entitled to notice of termination of employment, or such portion
thereof in respect of which prior notice was not given.
3.7 Timing of Payments
Any payment referred to in subsection 3.6(a) or (C) will be made in instalments,
each instalment to be equivalent to the Employee's then current periodic salary
and other benefit payments and payable at the same time intervals.
3.8 Deductions
All payments made by the Company as a result of the Employee's termination shall
be subject to all required deductions for income tax and other statutory
withholdings.
3.9 Payments in Full Settlement
The Employee acknowledges and agrees that the payments pursuant to this Article
shall be in full satisfaction of all claims, losses, costs, damages or expenses
in connection with the termination of his/her employment, including termination
pay and severance pay pursuant to the applicable Labour Standards legislation
Code (Nova Scotia) as amended form time to time. Except as otherwise provided
in this Article, the Employee shall not be entitled to any further termination
payments, damages or compensation whatsoever in connection with the employment
of the Employee and the termination thereof. As a condition precedent to any
payment pursuant to this Article, the Employee agrees to deliver to the Company,
prior to any such payment , a full and final release form all actions or claims
in connection with the termination of his/her employment or any losses, costs,
damages or expenses resulting therefrom in favour of the Company, its
affiliates, subsidiaries, directors, officers, employees and agents, in form
satisfactory to the Company.
3.10 Return of Materials
On termination of the Employee's employment for any reason, the Employee shall
deliver promptly to the Company all property of the Company and its affiliates
in the possession of the Employee or directly or indirectly under his/her
control. The Employee agrees not to make reproductions or copies of any such
property of the Company and its affiliates for his/her personal or business use
or that of any other party.
ARTICLE 4 - ACKNOWLEDGEMENTS BY THE EMPLOYEE
4.1 Acknowledgements by Employee
The Employee acknowledges that:
<PAGE>
(a) the Company is presently engaged in the development of computer
software and the sale of products and services based upon such
software, primarily aimed at Internet and electronic commerce
applications;
(b) his/her services to the Company are special and unique and that she
has significant responsibilities in connection with the Company, its
business and affairs;
(C) his/her work for the Company gives his/her access to trade secrets of
and confidential information concerning the Company and its affiliates
(Confidential Information) which Confidential Information includes,
without limitation: trade secrets; know-how; marketing plans; cost
figures; client lists; names and addresses of suppliers and business
contacts; software and operating systems; and information relating to
employees and other persons in a contractual relationship with the
Company;
(d) the business of the Company is national and international in scope;
(e) a primary purpose of this Agreement is to evidence the agreements
between the Employee and the Company contained in Articles 5, 6 and 7
hereof; and
(f) the agreements contained in Articles 5,6 and 7 hereof are reasonable
and essential to protect the business and goodwill of the Company and
its business.
4.2 Remedies Available to Company
The Employee acknowledges that a breach by the Employee of the covenants
contained in Articles 5, 6 and 7 would result in immediate and irreparable
damages to the Company that could not adequately be compensated for by monetary
award. Accordingly, it is expressly agreed by the Employee that, in addition to
all other remedies available to it, the Company and its affiliates shall be
entitled to the immediate remedy of an interim, interlocutory and permanent
injunction as well as an accounting of all profits arising out of any breach by
the Employee.
ARTICLE 5 - NON-COMPETITION
5.1 Non-Competition
The Employee shall not, while employed by the Company or:
(a) for the two (2) year period following the termination of his/her
employment if the Employee initiated the termination; or
(b) for the twelve (12) month period following the termination of this
employment if the Company initiated the termination, whether with or
without Cause,
directly or indirectly, either individually or in partnership or in conjunction
in any way with any person or persons, whether as principal, agent, employee,
consultant, advisor, shareholder, director, guarantor, creditor or in any other
manner whatsoever:
(c) solicit, interfere with or endeavour to entice away from the Company
or its affiliates, accept any business from or the patronage of or
render any service to, sell to or contract or attempt to contract with
any person, firm or corporation who was a client, customer or supplier
of the Company, its affiliates or associates or a prospective client,
customer or supplier of the Company, its affiliates or associates with
whom the Company, its affiliates or associates have had any dealing,
to the extent that such business, patronage, service, or contract is
competitive with the business of the Company;
(d) offer employment to or endeavour to entice away from the Company or
its affiliates, any person employed by the Company or its affiliates
at the date of the termination of his/her employment, or
<PAGE>
who was so employed at any time during the previous twelve (12) month
period or interfere in any way with the employment relationship
between any such employee and the Company or its affiliates; or
(e) engage in, carry on or otherwise be concerned with or have any
interest in, or advise, lend money to, guarantee the debts or
obligations of, permit his/her name, or any part thereof, to be used
or employed by any person, firm, association, syndicate or corporation
engaged in or concerned with or having any interest in a business
which is the same as or substantially the same as or competes with the
Company's business (Competitive Business).
5.2 Covenants are Reasonable
The Employee has and will have specific knowledge of the affairs of the Company
and its business, including Confidential Information. Therefore, the Employee
hereby acknowledges and agrees that all covenants, provisions and restrictions
contained in this Article are reasonable, necessary and valid in the
circumstances of this Agreement (including the time and geographic limitations)
and all defences to the strict enforcement thereof by the Company or its
affiliates are hereby waived. The Employee acknowledges and agrees that any
breach by the Employee of the covenants, provisions and restrictions contained
in this Article during the term of his/her employment shall constitute Cause for
termination.
5.3 Revision to Restrictions
If the provisions of this Article 5 are ever adjudicated to exceed the
limitations on time or geographic scope permitted by applicable law, then such
provisions shall be deemed reformed to the maximum time or geographic scope
permitted by applicable law.
5.4 Portfolio Exception
Notwithstanding the foregoing, nothing in this Agreement shall prevent the
Employee from acquiring and holding, directly or indirectly (and including the
holdings of any other person not acting at arm's length with the Employee (as
defined in the Income Tax Act (Canada)) not more than five percent (5%) of the
outstanding share of any corporation engaged in a Competitive Business if such
shares are listed on a stock exchange, provided that the Employee is not a
member of the board of directors or an officer or employee of, or consultant to,
or otherwise involved with, directly or indirectly, such corporation.
ARTICLE 6 - CONFIDENTIALITY
6.1 Confidentiality
The Employee acknowledges and agrees that the Confidential Information as
defined in Article 4 is the exclusive property of the Company and its affiliates
and that such property is being held by the Employee in trust for the Company.
Except as may be required in the course of carrying out his/her duties
hereunder, the Employee covenants and agrees that the Employee will not disclose
(directly or indirectly) any of the Confidential Information to any person,
other than to the directors, officers or employees of the Company, nor will the
Employee disclose, for any purpose other than for the purpose of the Company,
the private affairs of the Company or any other information which the Employee
may acquire during his/her employment with respect to the business and affairs
of the Company.
6.2 Permitted Disclosure
Notwithstanding Section 6.1, the Employee shall be entitled to disclose such
Confidential Information if required pursuant to a subpoena or order issued by a
court, arbitrator or governmental body, agency or official, provided that the
Employee shall first have:
(a) promptly notified the Company of the request to make such disclosure;
<PAGE>
(b) consulted with the Company on the advisability of taking steps to
resist such requirements; and
(c) if the disclosure is required or deemed advisable, co-operate with the
Company in an attempt to obtain an order or other assurance that such
information will be accorded confidential treatment.
6.2 Remedies of Company
Nothing in this Article 6 shall be construed as limiting or impair in any way
any of the rights of the Company whether at law, in equity or otherwise against
the Employee with respect to the disclosure, use or exploitation in any manner
whatsoever to any person or for any purpose, as the case may be, of any of the
Confidential Information.
6.3 Obligations Survive in Perpetuity
The obligations of the Employee under this Article 6 shall continue during the
course of his/her employment with the Company and, unless otherwise authorized
in writing by the Company, shall survive the termination of this Agreement,
regardless of which party initiated the termination and whether with or without
Cause.
ARTICLE 7 - INTELLECTUAL PROPERTY
7.1 Inventions
The Company shall be the sole owner of all of the products and proceeds of the
Employee's services as an Employee of the Company, whether before or after the
date of this Agreement, including, but not limited to, all materials, ideas,
concepts, formats, suggestions, developments, writings, arrangements, packages,
programs, trade secrets, discoveries, research materials, data bases and other
intellectual property that the Employee may acquire, obtain, develop or create
in connection with and during the term of the Employee's employment by the
Company, whether before or after the date of this Agreement, including any and
all inventions and improvements relating or in any way appertaining to or
connected with the business of the Company free and clear of any claims by the
Employee (or anyone claiming under the Employee) of any kind or character
whatsoever. The Employee shall, at the request of the Company, execute such
assignments, certificates or other instruments as the Company may from time to
time deem necessary or desirable to evidence, establish, maintain, perfect,
protect, enforce or defend its right, title and interest in or to any such
properties, including all such applications, assignments and other instruments
with which the Company shall deem necessary in order to apply for and obtain
patents in Canada or foreign countries for such inventions or improvements and
in order to assign and convey to the Company the sole and exclusive right, title
and interest in the inventions or improvements, all expenses in connection
therewith to be borne by the Company. The Employee's obligation to execute such
documents shall continue beyond the termination of the period of his/her
employment with respect to any and all such properties, inventions or
improvements.
7.2 Career Opportunities
Any business opportunities related to the business of the Company and its
affiliates which become known to the Employee during his/her employment with the
Company must be fully disclosed and made available to the Company by the
Employee. The Employee agrees not to take or attempt to take any action if the
result will be to divert from the Company any opportunity which is within the
scope of the Company's business or that of its affiliates.
7.3 Disclosure
During the employment period, the Employee shall promptly disclose to the board
of directors of the Company full information, concerning any material interest,
direct or indirect, of the Employee (as owner, shareholder, partner, lender or
other investor, director, officer, employee, consultant or otherwise) or any
member of his/her family in any business that is reasonably known to the
Employee, to purchase or otherwise obtain a material amount of services or
products from, or to sell or otherwise provide services or products to the
Company and its affiliates or to any of their suppliers or customers.
<PAGE>
ARTICLE 8 - NOTICES
8.1 Notices
Any notice, direction or other communication to be given under this Agreement or
any ancillary agreement shall be in writing and given by delivering it or
sending it by telecopy or other similar form of recorded communication
addressed:
If to the Employee at:
1883 Seldon Street
Halifax, Nova Scotia
B3H 3X3
Telephone: 423-2617
If to the Company at:
6 Antares Drive, Phase 3, Suite 101
Nepean, Ontario
K2E 8A9
Telephone: (613) 225-8446
Fax: (613) 225-0721
8.2 Timing
Any communication shall be deemed to have been validly and effectively given (i)
if personally delivered, and the date of such delivery if such date is a
business day and such delivery was made prior to 4:00 p.m. (Halifax time) and
otherwise on the next business day: or (ii) if transmitted by telecopy or
similar means of recorded communication on the business day following the date
of transmission. Any party may change its address for service from time to
timely notice given in accordance with the foregoing and any subsequent notice
shall be sent to such party at its changed address.
ARTICLE 9 - GENERAL
9.1 Amendment and Waiver
This Agreement may not be amended, supplemented or waived except in writing
signed by the party against which such amendment or waiver is to be enforced.
The waiver by any party of a breach of any provision of this Agreement shall not
operate to, or be construed as a waiver of, any other breach of that provision
nor as a waiver of any breach of another provision.
9.2 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the Province of Nova Scotia and the laws of Canada applicable therein.
9.3 Severability
If any provision of this Agreement shall be held by any court of competent
jurisdiction to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remaining provisions, or part thereof, of this Agreement and such
remaining provisions, or part thereof, shall remain enforceable and binding.
<PAGE>
9.4 No Restriction on Conduct of Business
Nothing in this Agreement shall restrict the Company in the conduct of its
business and affairs and, without limiting the generality of the foregoing, the
Company shall be free to sell any or all of its assets, to merge, amalgamate or
combine its business with the business of any other person or to discontinue the
business, and no such event shall constitute a breach of the Company's
obligations hereunder.
9.5 Successors
This Agreement shall be binding on and ensure to the benefit of the successors
and assigns of the Company and the heirs and executors of the Employee.
9.6 Entire Agreement
This Agreement constitutes the entire agreement and understanding between the
parties with respect to the employment arrangement addressed herein and
supersedes all prior agreements and understandings, written or oral, between the
parties relating to such subject matter.
9.7 Legal Advice
The Employee hereby represents and warrants to the Company and acknowledges and
agrees that he had the opportunity to seek and was encouraged by the Company to
seek independent legal advice prior to the execution and delivery of this
Agreement and that, in the event that he did not avail himself of that
opportunity prior to signing this Agreement, he did so voluntarily without any
undue pressure and agrees that his/her failure to obtain independent legal
advice shall not be used by him as a defence to the enforcement of his/her
obligations under this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.
SIGNED, SEALED and DELIVERED )
)
) ___________________________________
in the presence of: ) JAMES ENMAN
)
) THINWEB SOFTWARE INCORPORATED
)
) per:________________________________
)
)
) per:________________________________
<PAGE>
SCHEDULE "A"
EMPLOYEE DUTIES
Employee is engaged as Vice-President of Corporate Affairs and General
Counsel and shall perform all duties normally associated with such a position
and any duties reasonably ancillary thereto.
<PAGE>
SCHEDULE "B"
EMPLOYEE BENEFITS
Company group health and insurance benefits plan (currently through Sun
Life).
Employee stock option plan.
<PAGE>
EXHIBIT 10.16
VOLUNTARY TRADING RESTRICTIONS AGREEMENT
THIS AGREEMENT is dated for reference the __ day of August, 1999
AMONG: THOSE CERTAIN HOLDERS OF COMMON
SHARES OF thinWEB.com AS SET FORTH IN
SCHEDULE "A" TO THIS AGREEMENT. (the "Shareholders")
AND: THINWEB SOFTWARE INC.
1510 - 1505 Barrington Street
Halifax, Nova Scotia B3J 3K5 (the "Corporation")
AND: thinWEB.com CORPORATION
Suite 101, Phase 3, 6 Antares Drive
Nepean, Ontario K2E 8A9 ("thinWEB")
WHEREAS:
(1) by a Share Exchange and Share Purchase Agreement dated for reference the
22/nd/ day of April, 1999, thinWEB, through its subsidiary Thinweb.com
Inc., acquired all of the issued and outstanding shares of the Corporation
(the "Acquisition");
(2) the Shareholders will own collectively, among other shares, a total of
1,002,500 common shares in the capital stock of ThinWeb.com Inc,
convertible into thinWEB.com Corporation shares (both sets of shares
collectively referred to herein as the "thinWEB Shares") in the amounts as
set forth in Schedule "A"; and
(3) the parties wish to set forth the conditions under which the thinWEB Shares
owned by the Shareholders may be sold or traded,
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of
$10.00 now paid to the Shareholders by the Corporation and thinWEB (the receipt
and sufficiency of which is hereby acknowledged by the Shareholders), the
parties hereto agree:
1. The Shareholders shall deposit the thinWEB Shares into separate accounts
(the "Accounts") opened for the purpose of holding such shares with a
brokerage firm (the "Broker") selected by the Corporation.
2. The thinWEB Shares shall be held in the Account subject to the following
sale and trade restrictions:
(1) commencing on the later of the day that at least a portion of the
thinWEB Shares become freely tradeable or the day the shares of the
thinWEB are quoted on the NASD Bulletin Board, up to 10% of the
original number of thinWEB Shares held by a Shareholder be sold or
traded by that Shareholder in any 30-day period; and
<PAGE>
(2) any portion of the said 10% of thinWEB Shares held by a Shareholder
and not sold by that Shareholder in any 30-day period month shall not
be carried over to any subsequent 30-day period.
3. Upon presentation to the Broker of authority in the form attached to this
Agreement as Schedule B, duly signed by a Shareholder, the Corporation
and/or thinWEB shall have the right to communicate with the Broker, at any
time and from time to time, to ascertain the current balance of thinWEB
Shares remaining in the Account of such Shareholder.
4. This Agreement shall be governed by, and interpreted and enforced in
accordance with the laws in force in the Province of Nova Scotia and the
laws of Canada applicable therein.
5. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators,
successors and assigns.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day and
year first above written.
______________________________________________________________________________
Witness: (Shareholder)
______________________________________________________________________________
Witness: (Shareholder)
______________________________________________________________________________
Witness: (Shareholder)
______________________________________________________________________________
Witness: (Shareholder)
______________________________________________________________________________
Witness: (Shareholder)
THINWEB SOFTWARE INC.
By its Authorized Signatory:
______________________________________
<PAGE>
3
thinWEB.com CORPORATION
By its Authorized Signatory:
______________________________________
SCHEDULE "A"
thinWEB.com SHAREHOLDERS
Name of Shareholder No. of Shares
- --------------------- -------------
<PAGE>
SCHEDULE B
DIRECTION AND AUTHORIZATION
TO: ______________________________(NAME OF BROKER)
THIS IS MY IRREVOCABLE DIRECTION AND AUTHORIZATION THAT A REPRESENTATIVE OF
THINWEB SOFTWARE INC. AND/OR thinWEB.com CORPORATION MAY AT ANY TIME AND FROM
TIME TO TIME ENQUIRE OF AND BE INFORMED BY YOU AS TO THE BALANCE OF SHARES OF
thinWEB.com CORPORATION (or ThinWeb.com Inc.) REMAINING IN ACCOUNT
NUMBER____________.
DATED ________DAY OF ______________1999.
___________________________________________
Shareholder
<PAGE>
VOLUNTARY TRADING RESTRICTIONS AGREEMENT
THIS AGREEMENT is dated for reference the __ day of _____, 1999
BETWEEN: JAMES CASSIDY
1504 R Street N.W.
Washington, D.C. 20009 ("Cassidy")
AND: THINWEB.COM CORPORATION
6 Antares Drive
Phase 3, Suite 101
Ottawa, Ontario
K2E 8A9 (the Corporation"")
WHEREAS:
(1) by a Share Exchange and Share Purchase Agreement dated for reference the
22/nd/ day of April, 1999, the Corporation, then named Warwick Acquistion
Corporation, through its subsidiary Thinweb.com Inc., acquired all of the
issued and outstanding shares of ThinWeb Software Incorporated (the
"Acquisition");
(2) On the closing of the Acquisition Cassidy, through TPG Capital Corporation,
owned 150,000 common shares in the capital stock of the Corporation (the
"ThinWeb Shares");
(3) the parties wish to set forth the conditions under which the ThinWeb Shares
owned by Cassidy may be sold or traded,
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of
$10.00 now paid to Cassidy by the Corporation (the receipt and sufficiency of
which is hereby acknowledged by Cassidy), the parties hereto agree:
1. Cassidy shall deposit the ThinWeb Shares into an account (the "Account")
opened for the purpose of holding such shares with a brokerage firm (the
"Broker") acceptable to all parties.
2. The ThinWeb Shares shall be held in the Account subject to the following
sale and trade restrictions:
(1) commencing on the later of the day the ThinWeb Shares become freely
tradable or are quoted on the NASD Bulletin Board, up to 25,000 of the
ThinWeb Shares may be sold or traded by Cassidy in any 30-day period;
and
(2) any portion of the 25,000 ThinWeb Shares not sold by Cassidy in any
30-day period month shall not be carried over to any subsequent 30-day
period.
3. Upon presentation to the Broker of authority in the form attached to this
Agreement as a schedule, duly signed by Cassidy, the Corporation shall have
the right to communicate with
<PAGE>
the Broker, at any time and from time to time, to ascertain the current
balance of ThinWeb Shares remaining in the Account.
4. This Agreement shall be governed by, and interpreted and enforced in
accordance with the laws in force in the Province of Nova Scotia and the
laws of Canada applicable therein.
5. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators,
successors and assigns.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day and
year first above written.
______________________________________________________________________________
Witness: JAMES CASSIDY
THINWEB.COM CORPORATION
By its Authorized Signatory:
______________________________________
<PAGE>
DIRECTION AND AUTHORIZATION
TO: ______________________________(NAME OF BROKER)
THIS IS MY IRREVOCABLE DIRECTION AND AUTHORIZATION THAT A REPRESENTATIVE OF
THINWEB.COM CORPORATION MAY AT ANY TIME AND FROM TIME TO TIME ENQUIRE OF AND BE
INFORMED BY YOU AS TO THE BALANCE OF SHARES OF THINWEB.COM CORPORATION REMAINING
IN ACCOUNT NUMBER ____________.
DATED ________ DAY OF ______________ 1999.
___________________________________________
JAMES CASSIDY
<PAGE>
Exhibit 23.1
Consent of Independent Accountants
We hereby consent to the use in the prospectus constituting part of this
Registration Statement on Form SB-2 of our report dated May 20, 1999, relating
to the December 31, 1998 financial statements of ThinWeb Software Incorporated,
which appears in such prospectus. We also consent to the reference to us under
the heading "Experts" in such prospectus. It should be noted that
PricewaterhouseCoopers LLP has not prepared or certified the information under
the heading "Selected Financial Data" or the September 30, 1999 financial
statements included in such prospectus.
/s/PricewaterhouseCoopers LLP
Halifax, Canada Chartered Accountants
February 16, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 42,479
<SECURITIES> 0
<RECEIVABLES> 68,620
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 176,139
<PP&E> 80,772
<DEPRECIATION> 12,270
<TOTAL-ASSETS> 1,297,174
<CURRENT-LIABILITIES> 905,147
<BONDS> 0
0
0
<COMMON> 1,857
<OTHER-SE> 393,884
<TOTAL-LIABILITY-AND-EQUITY> 1,297,174
<SALES> 2,756
<TOTAL-REVENUES> 2,756
<CGS> 0
<TOTAL-COSTS> 6,112,866
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,058,684
<INCOME-PRETAX> (7,168,794)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,168,794)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,168,794)
<EPS-BASIC> (0.63)
<EPS-DILUTED> (0.63)
</TABLE>
