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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
WCOLLECT.COM, INC.
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(Exact name of Company as specified in its charter)
FLORIDA 95-4727693
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 650, 9107 Wilshire Boulevard
Beverly Hills, California 90210-5519
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 1-800-730-5505
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
50,000,000 Shares of Common Stock
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(Title of class)
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TABLE OF CONTENTS
Page
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COVER PAGE 1
TABLE OF CONTENTS 2
PART I 3
DESCRIPTION OF BUSINESS 3
DESCRIPTION OF PROPERTY 23
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES 24
REMUNERATION OF DIRECTORS AND OFFICERS 27
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITYHOLDERS 27
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS 29
SECURITIES BEING OFFERED 30
PART II 34
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS 34
LEGAL PROCEEDINGS 35
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 35
RECENT SALES OF UNREGISTERED SECURITIES 35
INDEMNIFICATION OF DIRECTORS AND OFFICERS 37
PART F/S 39
FINANCIAL STATEMENTS F-1
PART III 40
INDEX TO EXHIBITS 40
SIGNATURES 41
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PART I
The issuer has elected to follow Form 10-SB, Disclosure Alternative
2.
Item 6. Description of Business
WCollect.Com, Inc. (the "Company") is an electronic commerce
company which specializes in offering fine art, sports memorabilia
and entertainment collectible products for sale via the Company's
Web sites on the Internet. The Company offers products for sale at
fixed prices through the Gallery Shop sections of the Company's Web
sites and through auctions conducted through the Auction House
sections of the Company's Web sites. The Company generally acts as
an intermediary for sales of fine art, sports memorabilia and
entertainment collectibles which are purchased through the
Company's Web sites. The Company earns revenues on a commission and
fee basis.
The Company started operations of its Web sites in February, 1999.
The Company remains in the development stage. The Company did not
achieve any revenues through to the period ending June 30, 1999 and
has achieved minimal revenues through to the date of this
registration statement. The Company's Web sites are not fully
operational as of the date of this registration statement due to
the inability of the Company to operate the Auction House sections
of its Web sites. The Company is currently in the process of
attempting to restore its Web sites to operation as early as
possible by installing its own auction engine software for the
operation of the Auction House sections of its Web sites. See Item
6. "Description of Business - Operations and Technology".
CORPORATE BACKGROUND
Corporate Organization
The Company is a Florida corporation which was incorporated on
October 10, 1989. The Company completed a change of name from
"HHHP, Inc." to "WCollect.Com, Inc." on February 12, 1999. The
Company was inactive prior to February, 1999 when the Company
completed the acquisition of Mindcorp, LLC, as discussed below.
The shares of the Company are quoted for trading on the Nasdaq OTC
Bulletin Board under the symbol "WCLT".
The Company is the owner of two wholly owned subsidiaries,
MindCorp, LLC ("MindCorp") and ArtWorks International Corp.
("ArtWorks"). MindCorp is a limited liability company organized
under the laws of the State of Nevada on August 4, 1998. ArtWorks
is a Barbados international business corporation incorporated on
March 6, 1998.
Acquisition of MindCorp, LLC
The Company acquired MindCorp from Mr. Stewart Irvine ("Irvine"), a
director and the President of the Company, pursuant to an agreement
between the Company and Mr. Irvine dated February 1, 1999 (the
"Mindcorp Acquisition Agreement"). The Company issued a total of
2,375,000 restricted shares of common stock of the Company to Mr.
Irvine in consideration for the transfer of MindCorp by Irvine to
the Company. The closing date of the acquisition of Mindcorp was
February 16, 1999.
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MindCorp undertook the initial development of
the Company's business during the period from August, 1998 to
February, 1999.
Acquisition of ArtWorks International Corp.
The Company acquired ArtWorks from Stewart Irvine, Robin Hendry,
Raymond Spence, Richard Blank and Scott Lanoff (collectively, the
"ArtWorks Shareholders") pursuant to an agreement between the
Company and the Artworks Shareholders dated February 19, 1999 (the
"Artworks Acquisition Agreement"). The closing date of the
acquisition of Artworks was March 19, 1999. The Company issued a
total of 375,000 restricted shares of common to the ArtWorks
Shareholders in consideration for the transfer of ArtWorks to the
Company. Mr. Stewart Irvine, a director and the President of the
Company, was the holder of a majority of the shares of ArtWorks and
received 196,875 shares of common stock of the Company on
completion of this acquisition. Artworks designed and developed a
collection of artwork by artist Peter Max and photographer Tim
Graham known as the "Princess Diana Collection".
The financial statements of the Company up to February 16, 1999
reflect the operations of Mindcorp and Artworks pursuant to the
accounting requirements for reverse acquisitions.
INDUSTRY BACKGROUND
Growth of the Internet and the World Wide Web (the "Web")
The Internet and the World Wide Web are experiencing dramatic
growth in terms of the number of users. International Data
Corporation ("IDC") has estimated that the number of Web users will
increase from approximately 31 million in 1998 to 183 million by
2003. The growth in the number of Web users and the amount of time
users spend on the Web is being driven by the increasing importance
of the Internet as a communications medium and an information
resource and a sales and distribution channel.
Growth of Online Electronic Commerce
The Internet is dramatically affecting the methods by which
consumers and businesses are buying and selling goods and services.
IDC has also estimated that the amount of commerce conducted over
the Web may top $1 trillion by 2003. Electronic commerce offers
the opportunity to establish new competitive standards by expanding
distribution channels, integrating internal and external processes
and offering a cost-effective method of providing products and
services. The Internet provides online merchants with the ability
to reach a global audience and to operate with minimal
infrastructure, reduced overhead and greater economies of scale,
while providing consumers and businesses with a broad selection,
increased pricing power and unparalleled convenience. As a result,
a growing number of parties are transacting business on the Web.
Growth of Online Auctions
Online auctions have become increasingly popular on the Internet as
the use of the Internet has grown. The Internet provides the means
to overcome the limitations of traditional auctions as it can
handle large quantities of data, appears to be able to support an
almost infinite number of products and services and provide a
central platform for buyers and sellers to trade on an almost
global basis. IDC stated that the online auction is quickly
becoming a critical component for any electronic
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commerce site that wants to market a portion of its merchandise
online. The online auction represents a new way for companies to
conduct business with an increasingly global customer base.
The Company's Market Opportunity
The market for fine art, entertainment collectibles and sports
memorabilia products has traditionally been conducted through
trading forums such as auction houses, traditional retailing and
direct purchases from artists, owners and collectors. These
traditional markets often contain inefficiencies, including:
A. traditional markets are fragmented and regional in nature, making
it difficult and expensive for buyers and sellers to meet,
exchange information and complete transactions;
B. consumers have access to a limited variety of products;
C. artists, owners and collectors may be forced to pay high
transaction costs to intermediaries;
D. transactions are inefficient as both buyers and sellers lack a
reliable and convenient means for setting prices for sales or
purchases.
The Company's Solution
The Company's business uses the Internet to create an exciting and
accessible marketplace in which artists, owners and collectors can
sell fine art, entertainment collectibles and sports memorabilia
directly to consumers with lower transaction costs. The Company's
business offers the following benefits:
A. artists, owners and collectors are able to efficiently access a
broad base of consumers without regional limitations;
B. consumers are able to access and compare a wide variety of
products, irrespective of their regional location;
C. the Company is able to offer its services as an intermediary at
prices which are less than traditional intermediaries;
D. consumers can purchase products at all hours;
E. consumers are able to review on-line information about products
offered.
WCCOLLECT.COM BUSINESS
The Company specializes in offering fine art, sports memorabilia
and entertainment collectible products for sale via the Company's
Web sites. The Company's objective is to provide a distinct range
of content for sale with the objective of establishing the Company
as the premier Web sites for the purchase of fine art,
entertainment collectibles and sports memorabilia products. The
Company commenced operations of its Web sites in February, 1999.
The Company's business and its Web sites remain in the development
stage.
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Due to the dispute with Varcom described herein, the Company's Web
sites are not fully operational as of the date of this registration
statement. See Item 6. "Description of Business - Operations and
Technology".
Internet consumers are offered the opportunity to purchase fine
art, entertainment collectibles and sports memorabilia products
through the Auction House and the Gallery Shop sections of the
Company's Web sites. Products which are offered for sale through
the Gallery Shop are offered at fixed prices. Products that are
offered for sale through the Auction House are sold through an
automated auction bidding process.
The Company generally does not purchase products itself for sale to
consumers. The Company generally acts as an intermediary for sales
of fine art, sports memorabilia and entertainment collectibles
products which are purchased through the Company's Web sites. The
Company earns revenues on a commission and fee basis.
The Company's business is summarized as follows:
A. The Company enters into contractual arrangements with content
providers, who may be artists, owners or collectors, who are
prepared to offer fine art, entertainment collectibles or
sports memorabilia products for sale through the Company's Web
sites;
B. The Company posts the products for sale through the Auction
House or the Gallery Shop sections of the Company's Web sites;
C. Internet consumers access the Company's Web sites and are
offered the opportunity to bid on products through the Auction
House or purchase products directly through the Gallery Shop;
D. The Company secures payment of products from Internet users
and arranges for delivery of products to purchasers.
Product Content and Procurement
With limited exceptions, the Company does not purchase these
products for re-sale but enters into contractual agreements with
owners of the products whereby the products are offered for sale on
its Web sites.
The Company has entered into agreements and continues to negotiate
with collectors, publishers, reproduction companies and artists.
The Company attempts to enter into fixed term agreements with
content providers which provide that the Company will be the
exclusive Internet market of the content providers products. The
Company intends to use these contractual agreements to establish
strategic partnerships with a wide range of highly regarded store
owners, dealers and private collectors who are able to provide
products.
The Company recognizes that the quality of products offered for
sale by the Company is essential to the success of its business.
Accordingly, the Company is continually attempting to expand its
network of content providers in order to maintain an optimal
product mix of products which may be offered for sale. The Company
believes that obtaining secure access to marketable products will
enable the Company to create a competitive advantage over its
competitors.
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The Company has created a content acquisition team in order to
secure products for its Web sites. The content acquisition team
is able to go to a providers location with digital computer
technology to document authenticated fine art and collectibles for
uploading to its Web sites for sale in the Gallery Shop or for
bidding in the Auction House.
Authentication Process
The Company's objective is to ensure that all products offered for
sale on the Company's Web sites are authenticated and are true
originals. The Company recognizes that authentication is a key to
differentiating its Web sites from general auction Web sites, such
as eBay, Ubid, where there is no control over the products which
are posted for auction. To preserve this competitive advantage,
the Company takes measures to ensure that products are not the
subject of fraud or misrepresentation.
The Company undertakes what it believes are reasonable efforts to
distinguish itself from competitors and protect itself from
liability to customers by marketing only products which have either
been determined by the Company to be the genuine article, or which,
whenever possible, have been authenticated by an individual or
assembly of experts in their given fields. In the event that the
Company is not able to determine the origin of an article with
reasonable certainty and the Company desires to place the article
on sale or at auction, the Company will make an effort to alert
customers of the difficulties in ascertaining the origin of the
article and will direct the customer to use the customer's own best
decision making judgment before making a purchase.
The Company will note products which are "guaranteed authentic" by
the Company or which have been "authenticated" by experts. The
Company may be liable to purchasers of products which it indicates
are "guaranteed authentic" or "authenticated" in the event that the
product purchased is not the genuine article. The Company intends
to note products which the Company has not been able to
authenticate with a "use caution" seal or similar notation.
Notwithstanding that the Company undertakes to place purchasers on
notice to use their own due diligence in items noted with the "use
caution" seal, there is no assurance that the Company will not be
held liable to a purchaser who has purchased a product which is not
the genuine article and has been noted with the "use caution" seal.
Advisors
The Company has established a network of advisors who have various
expertise in the areas of art, entertainment collectibles and
sports memorabilia. These advisors provide consulting services to
the Company and assist the Company in obtaining content for the
Company's Web sites and in the authentication process. The Company
views its network of advisors as an important component of the
Company's content acquisition process as these advisors are capable
of introducing the Company to content providers, to assessing the
products of content providers and assisting the Company to enter
into agreements with content providers. The Company's advisors are
also an important component in completion of the Company's
authentication process. The Company is able to consult with its
advisors in determining whether products to be sold on the
Company's Web sites are genuine or if there is a risk that a
product may not be a genuine article.
The Company had anticipated formalizing its network of advisors by
establishing an advisory board. The Company has not yet
established a formal advisory board but may pursue this objective
in the future.
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Posting of Products on the Web Sites
The Company posts products for sale through the Gallery Shop or for
auction through Auction House sections of the Company's Web sites
once an agreement with a content provider is reached.
The Company employs high speed digital scanners, digital
photographic equipment and computer software to create digital
images of products to be offered for sale. The Company then posts
a description of each product for sale on its Web sites together
with a digital image of the product. The Company uses multi-media
presentations of products with the objective of providing an
entertaining and engaging experience for Internet users.
The Company charges a fee to each content provider whose products
are posted for auction through its Web sites. The fee consists of
a nominal placement fee and a success fee that steps down from 10%
to 2.5% of the transaction purchase price. The success fee is
payable only if the auction is concluded with a successful bid. The
Auction House enables content providers to bypass traditionally
expensive, regionally fragmented intermediaries and transact
business on a 24 hours a day, seven days a week basis. Reduction
of intermediary costs gives rise to the potential for lower selling
costs and an increased likelihood that a content provider will find
buyers willing to pay his or her target price. As a result,
relatively inexpensive items that had previously been prohibitively
expensive to list through most traditional trading forums may be
sold through the Company's Web sites.
The Company charges a negotiated fee or commission for sales of
products which are sold through the Gallery Shop. The Company
earns the fee or commission upon completion of the sale of a
product and receipt by the Company of funds from the purchaser.
Fees and commissions charged are generally within the range of 25%
to 50% of the purchase price
Interaction between the Internet User and the Web Sites
Internet users accessing the Company's Web sites are presented with
the opportunity to purchase products at the Gallery Shop or to bid
for products listed at the Auction House. Internet users are able
to view pictures and descriptions of products offered for sale in
an entertaining and engaging multimedia format on the Company's Web
sites.
The Company has attempted to create a distinctive environment on
its Web sites by utilizing an entertaining and interactive format.
The Company attempts to establish a sense of community with the
objective of promoting trade and communications between collectors,
buyers and sellers, without the need for the Company to intervene
and play a significant role in the trading process. The auction
format is designed to create a sense of urgency among buyers to bid
for goods because of the uncertain future availability of a unique
item on the site. Similarly, by accepting multiple bids at
increasing prices, the auction format provides sellers a more
efficient means of obtaining a maximum price for their products.
The Company's Web sites contain an online interactive self-service
to assist customers with product selection, final choice and method
of payment, reducing time, effort and expense by allowing customers
to set up their own information and receive e-mail notification of
products that interest them, thereby reducing their catalogue
perusal time.
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Product Delivery and Payment
Customers purchasing products through the Company's Web sites are
given the option of entering their credit card information and
purchasing directly on the Internet or calling the Company in order
to confirm their order and payment by telephone. The Company
offers this service as many Internet users perceive a security risk
in using their credit card information to purchase products
directly on the Internet. The Company uses secured transaction
software in order to ensure that customers are able to purchase
products on its Web sites with minimal risk. The Company
recognizes that secured credit card transactions are essential to
convincing users to purchase products via its Web sites.
The Company has entered into a merchant arrangement with eCharge
Corporation, a company which offers an alternative payment option
to Internet consumers by allowing them to "charge" purchases of
goods from e-commerce sites to their local telephone bill. The
eCharge billing system has been represented to the Company as being
more secure than other Internet payment alternatives as there is no
transfer of private data or account numbers over the Internet. The
Company views this alternative as an attractive means of enabling
Internet consumers who are concerned about private data issues and
credit card fraud to purchase products from the Company's web site.
Once a product is purchased, the Company provides the content
provider with the purchaser's information. The content provider is
responsible for delivering the product to the consumer and for
obtaining appropriate insurance coverage. The Company pays the
content provider within 30 days of delivery of confirmation of a
purchase.
STATUS OF THE DEVELOPMENT OF THE COMPANY'S BUSINESS
The development of the Company's business was started in August,
1998 by MindCorp. The Company's "www.wcollect.com" Web site was
launched in February, 1999 and has been in active operation since
that date. The Company did not achieve any revenues through to the
period ending June 30, 1999 and remains in the development stage.
The Company has achieved minimal revenues through to the date of
this registration statement. The Company's Web sites are not
fully operational as of the date of this registration statement due
to the inability of the Company to operate the Auction House
sections of its Web sites. See Item 6. "Description of Business -
Operations and Technology". The Company has achieved minimal
revenues from the operations of its Web sites to date.
The Company is continuing to work to optimize its business format
and Web site operations. The Company has been evaluating the
performance of its auction engine, gallery and shopping cart
software since the commencement of operations and has continued
with the development of its own software for its Web site
operations. The Company has also been undertaking preliminary
marketing efforts, including: researching the demographics of its
users to better define its marketing plan, creating relationships
in the entertainment and sports industries and building
relationships with content providers. The Company has not been
able to implement all components of its marketing strategy since
the commencement of operations due to a lack of funds.
The Company is commencing the process of changing its operating
name from "WCollect.Com" to "unific.com". The Company plans to
change the principal Web site for the Company's business operations
to "www.unific.com" as this change of business name is completed.
The Company is also in the process of upgrading its Web site
operations infrastructure. The Company anticipates that this
upgrade will be completed within the next three to six months
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The Company has entered into agreements with over one hundred (100)
content providers who have agreed to offer products for sale via
the Company's Web sites. The Company has to date entered into
agreements whereby the Company will offer original works of art by
Andy Warhol, Peter Max, Tony Bennett, John Lennon, Elliot Arkin and
Barret DeBusk for sale via the Company's Web sites.
The Company's subsidiary, Artworks, designed and developed the
Princess Diana Collection, consisting of a collection of art work
by artist Peter Max and photographer Tim Graham. ArtWorks
established a strategic marketing relationship in 1998 with the
International Red Cross and Red Crescent Foundation for the
distribution and sale of the Princess Diana/Peter Max Commemorative
series of posters and other products based on original paintings by
world renowned artist, Peter Max. ArtWorks completed the first
global Internet charity event with International Red Cross and Red
Crescent Foundation in 1998 whereby the Princess Diana Collection
was marketed via the Internet and a portion of the proceeds of sale
donated to Red Cross and Red Crescent Foundation. The Company is
not currently marketing or completing any sales of the Princess
Diana Collection. The Company anticipates marketing the Princess
Diana Collection in the Year 2000.
The Company entered into an agreement with the National Academy of
Recording Arts and Sciences Inc. ("NARAS") dated February 10, 1999
(the "NARAS Agreement") whereby the Company obtained the exclusive
rights to market and sell the "41st Annual Grammy Awards Official
Poster" over the Internet. This agreement represented the first
time that NARAS had extended reproduction and distribution rights
of their event poster to an outside independent organization. The
rights were granted to the Company in consideration for the payment
by the Company to NARAS of $25,000. The Company implemented
widespread distribution and sales of this poster through its Web
sites and through other promotions. A copy of the NARAS Agreement
is attached to this registration statement and is made a part of
this registration statement by reference. The information provided
in this registration statement with respect to the NARAS Agreement
is qualified in its entirety by reference to the complete texts of
the agreement.
The Company entered into an agreement with Justsystem Corporation
of Japan ("Justsystem") dated July 21, 1999 (the "Justsystem
Agreement"). The Justsystem Agreement sets forth the understanding
between the Company and Justsystem for the marketing and promotion
of the Company's Web sites to users in Japan. The Company and
Justsystem have agreed to consult with each other on various issues
in connection with the marketing of the Company's business in
Japan; including, establishment of a marketing plan, public
relations and promotional events, identification and purchase of
advertising, selection of appropriate artwork and collectible
products for sale to Japanese consumers, appropriate use of
technology and customer service and technical support. As part of
this arrangement, the Company anticipates establishing a localized
Japanese Web site which will be hosted in Japan by Justsystem and
will be in the Japanese language. Each party will be responsible
for its own costs incurred in connection with the agreement. The
Company will pay to Justsystem a fee ranging from 10% to 15% of all
items sold by the Company which originate from Japan until such
time as the gross revenues realized by the Company from sales
originating in Japan from the localized Web site exceed 20,000,000
Japanese yen. The fee to be paid by the Company to Justsystem will
be negotiated in good faith after such time as the gross revenues
realized by the Company from sales originating in Japan from the
localized Web site exceed 20,000,000 Japanese yen (approximately
$186,000 based on exchange rates as of October 13, 1999). The
Company and Justsystem have agreed on the first quarter of the year
2000 for the commencement of their joint marketing efforts in
Japan. No revenues have been realized by the Company to date from
sales attributable to the Justsystem Agreement. A copy of the
Justsystem Agreement is attached to this
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registration statement and is made a part of this registration
statement by reference. The information provided in this
registration statement with respect to the Justsystem Agreement
is qualified in its entirety by reference to the complete texts
of the agreement.
BUSINESS DEVELOPMENT AND MARKETING STRATEGY
The Company's objective is to become the Internet electronic
commerce site of choice for potential purchasers and suppliers of
art, entertainment collectibles and sports memorabilia. The
Company intends to achieve this objective by pursuing the following
key strategies:
Expansion of Business Scope and New Revenue Streams
The Company has determined to pursue the expansion of its scope of
business beyond its current business of retailing and auctioning
art, entertainment collectible and sports memorabilia products
through the Company's Web sites. The Company's expansion is
proposed to generate additional revenue opportunities while
building on the Company's current operational base. The Company is
considering expansion in the following areas as a means of
increasing the Company's business and revenue opportunities:
A. hosting online Internet auctions for charities, cause related
events and other special events;
B. marketing special event ticket sales and on-line broadcasting of
special events;
C. developing new products in partnership with content providers,
such as entertainment companies, celebrities and sports figures,
and marketing these products on the Company's Web sites;
D. establishing localized Web sites of the Company's North American
Web sites in countries outside of North America;
E. entering into strategic relationships with entertainment
companies, celebrities and sports figures for the co-marketing of
events and products
The Company has not completed expansion into the proposed areas and
has yet to realize any revenue from these opportunities. The
Company is continually evaluating its proposed expansion and may
elect not to pursue expansion in the areas listed and may alter the
proposed expansion. There is no assurance that the Company will
complete the expansion or achieve revenues from this expansion.
Adoption of Trade Name "Unific.Com"
The Company has adopted the new operating trade name Unific.com.
The Company has undertaken this change of name in anticipation of
the expansion of its business scope, as discussed above. The
Company believes that the new name will be more advantageous when
the Company starts to expand its business scope. The Company's
objective will be to create the Unific.com name as a recognized
brand name associated with the Company's business and Web sites.
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Offer a Unique Internet Source of Fine Art, Entertainment
Collectibles and Sports Memorabilia
The Company will attempt to ensure that the content provided on its
Web sites consists of unique fine art, entertainment collectibles
and sports memorabilia which is not available elsewhere on the
Internet. The Company will attempt to reinforce and expand its
network with content providers in order to achieve this objective.
The Company recognizes that establishment of the Company as a
recognized leader in the Internet marketing of fine art,
entertainment collectibles and sports memorabilia products is
essential to continuing to attract high quality products for
marketing through the Company's Web sites.
Increasing Awareness of the WCollect.Com Web Site
The Company operates in a market in which awareness of the
Company's Web sites is essential to attracting a high level of
customer awareness and traffic. The Company's strategy is to
increase recognition of the Web sites and its brand names through a
variety of marketing and promotional techniques. Specifically, the
Company intends to increase awareness of the Company's Web sites
and business using advertising and special event promotions with
high profile organizations, such as the National Academy of
Recording Arts and Sciences.
The Company plans to conduct direct mailing and advertising
programs in traditional media to directly contact prospective
customers for the Company's business. The Company plans to
initiate a direct response program which would include supplements
in high profile newspapers, magazines and sky-malls introducing the
Company's unique products and services.
The Company plans to conduct Internet auction and cause-related
events with well-known charities and organizations. An example of
a cause-related event planned by the Company is a celebrity auction
for the New World Symphony. The Company will host the Internet
auction of items which have been donated for the benefit of the New
World Symphony. The Company will receive a commission on all
auction sales completed at this cause-related event. The Company's
objective in undertaking cause-related events is to both achieve
operating revenues and increase the exposure of the Company and its
business.
Promote Repeat Visits and Usage of the Web Sites
The Company has designed its Web sites to encourage repeat use by
customers and potential customers, since each return visit
represents another opportunity for the Company. The Company
believes that its auction format and unique content encourage
bidders to return. The Company also employs multimedia
presentations of sections in its Web sites in order to stimulate
buyer interest and provide an engaging experience for the Internet
consumer.
Expand the Capabilities of the Company's Web Sites
The Company will pursue the continual enhancement of the
functionality and attractiveness of its Web sites. The Company is
completing the upgrade of its Internet servers and Web site
operations in order to increase the capacity and functionality of
the Company's Web sites. The Company also plans to expand the
capability and increase the performance of its Web sites by
incorporating additional features, such as: advanced search
capabilities, artificial intelligence modules, robust text and
graphics and user preference search results. The Company is
currently undertaking this
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development and anticipates starting to integrate additional
features into its Web sites by the end of the calendar year.
Customer Monitoring and Data Gathering
The Company believes that increased information regarding the
customers using the Web sites will assist the Company in marketing
its business and increasing revenues. At present, the Company
gathers minimal information regarding users of the Company's Web
sites. The Company is proposing to expand the capability of its
Web sites to obtain personal and business profile information
regarding users of the Web sites. This information will assist in
marketing the Company's business to content providers who may
choose to market their products for sale on the Company's Web
sites. Information regarding the location, nature of business,
wealth and other marketing criteria of users of its Web sites will
assist the Company in developing user profiles which will assist in
convincing content providers to market their products via its Web
sites. The Company has no plans to sell any customer lists
generated by this information gathering.
PLAN OF OPERATIONS
The Company's plan of operations for the twelve months following
the date of this registration statement is to complete the
following objectives within the time period specified:
A. The Company plans to hire public relations and marketing firms
to assist in marketing of the Company's business and Web
sites. The Company anticipates spending approximately
$250,000 on this marketing expense over the next twelve
months. This marketing expense includes the change of the
Company's business name from "WCollect.Com" to Unific.com;
B. The Company plans to complete the upgrade and relocation of
its Web sites by the end of December, 1999. The Company will
continue the upgrade of computer hardware and software as
required to manage usage of the Company's Web sites and to
implement enhancements to the Company's Web sites. The
Company anticipates spending approximately $440,000 on this
operational expense over the next twelve months;
C. The Company plans to undertake advertising and marketing
promotions in both traditional and Internet media. The
Company anticipates spending approximately $550,000 on this
market expense over the next twelve months;
D. The Company plans to continue to secure products for the
Company's Web sites by pursuing and entering into additional
agreements with content providers. The Company anticipates
spending approximately $236,000 on this expense over the next
twelve months.
E. The Company plans to increase the size and staffing of its
Beverly Hills, California office. The cost and timing of this
expansion will depend on a number of factors, including the
acceptance of the Company's business, the revenues achieved by
the Company and the financing available to the Company. The
Company anticipates spending approximately $250,000 on this
operational expense over the next twelve months.
The Company anticipates that it will spend approximately $1,700,000
over the next twelve month period in pursuing the Company's stated
plan of operations. Of these anticipated expenditures, the Company
anticipates that approximately $700,000 will be required to be
spent on the Company's
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plan of operations in the next six months.
Of this amount, the Company anticipates that $15,000 will be
realized from operating revenues of the Company and $685,000 will
be raised by additional equity financings of the Company.
The Company anticipates it will be able to complete the stated plan
of operations if the additional equity financing can be achieved.
The actual expenditures and business plan of the Company may differ
from the stated plan of operations. The Board of Directors of the
Company may decide not to pursue the stated plan of operations. In
addition, the Company may modify the stated plan of operations
based on the available amount of financing in the event that the
Company cannot achieve the required equity financings to complete
the stated plan of operations. The Company does not have any
arrangement in place for any debt or equity financing which would
enable the Company to meet the stated plan of operations.
The Company has agreed to retain the firm of McKenzie Shea, Inc.
("MSI") to advise the Company on its capital structure and the
structure of future financings. The Company will issue to MSI a
total of 925,155 shares of its Common Stock upon commencement of
this engagement. The Company has also agreed to pay to MSI a
monthly consulting fee and a success fee on any financings
resulting from the Company's arrangement with MSI. There is
however no assurance that the Company's arrangement with MSI will
result in any additional equity or debt financing for the Company.
MSI is not obligated to provide any financing for the Company.
The Company entered into an agreement with Universal Commerce Ltd.
("Universal Commerce") dated August 15, 1999 (the "Universal
Commerce Agreement"). The Company has engaged Universal Commerce
to provide corporate finance services to the Company, including
sourcing of interim financing, corporate structuring, introducing
the Company to investment banking firms and assisting the Company
with corporate development plans. The Company has agreed to issue
800,000 shares of Common Stock to Universal Commerce upon
successful completion of the corporate finance services by
Universal Commerce. The Company issued 200,000 shares of Common
Stock to Universal Commerce on October 13, 1999 in consideration of
the services completed by Universal Commerce to October 13, 1999. A
copy of the Universal Commerce Agreement is attached to this
registration statement and is made a part of this registration
statement by reference. The information provided in this
registration statement with respect to the Universal Commerce
Agreement is qualified in its entirety by reference to the complete
text of the agreement.
In the event the Company is not successful in achieving any further
sales of its common stock, the Company anticipates that it could
sustain its business operations for approximately three months
without additional equity financing based on the Company's current
cash position. Due to the Company's lack of operating history and
minimal revenues, there exits substantial doubt about the Company's
ability to continue as a going concern, as stated in Note 1 to the
Company's financial statements.
The Company anticipates continuing operating losses in the
foreseeable future as the Company has had a short operating history
with minimal revenues. The Company bases this expectation in part
on the basis that the Company will incur substantial operating
expenses in completing its stated plan of operations. The
Company's future financial results are also uncertain due to a
number of factors, many of which are outside the Company's control.
These factors include, but are not limited to:
A. the ability to increase customer traffic on the Company's Web
sites;
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B. the ability to attract customers who are prepared to purchase
products on the Company's web site;
C. the ability of the Company to enter into agreements with
content providers who are prepared to give the Company
exclusive rights to market their products on the Internet;
D. the amount and timing of costs relating to expansion of the
Company's operations;
E. the announcement or introduction of competing Web sites and
products of competitors; and
F. general economic conditions and economic conditions specific
to the Internet and electronic commerce.
The Company believes the above statements may be forward-looking
statements. Actual results of the Company and the Company's actual
plan of operations may differ materially from what is stated above.
Factors which may cause the actual results of the Company or its
actual plan of operations to vary include, among other things,
decisions of the board of directors not to pursue a specific course
of action based on its re-assessment of the facts or new facts,
changes in the Internet business or general economic conditions and
those other factors identified herein. The Company relies upon the
protection afforded forward-looking statements provided by the
United States Securities Act of 1933 and the Securities and
Exchange Act of 1934.
EMPLOYEES
As of October 13, 1999, the Company had four (4) employees,
including Mr. Stewart Irvine, President of the Company, Mr. Andrew
Zucker, Secretary of the Company, Mr. Ken Maude, Chief Financial
Officer of the Company and Mr. Clifford Wildes, Chief Operating
Officer of the Company. Of these employees, two (2) are full-
time employees and two (2) are part-time employees. In addition,
the Company has ten (10) full-time equivalent contract personnel
and seven (7) part-time contract personal.
The services of Mr. Stewart Irvine as President of the Company are
provided pursuant to an employment agreement dated February 1, 1999
between the Company and Mr. Irvine (the "Irvine Employment
Agreement"). The term of the Irvine Employment Agreement is for a
five year term commencing on February 1, 1999. The agreement is
automatically renewable for successive periods of two (2) years
unless terminated by either party upon (90) days prior written
notice. The Company paid to Mr. Irvine a base salary of $120,000
per year ($10,000 per month) from February 1, 1999 to June 30,
1999. The base salary was increased to $175,000 per year effective
as of July 1, 1999 upon the Company and Mr. Irvine agreeing that
the Company had completed certain financial milestones, as
contemplated in the Irvine Employment Agreement. The Irvine
Employment Agreement also provides that the compensation will be
determined by industry standards once the Company is operating
profitably. In addition, Mr. Irvine is entitled to be paid a bonus
based on the Company's gross revenues for each year of the term of
the Irvine Employment Agreement based on the Company's annual
audited financial statements. The bonus payable is determined as
follows: the bonus will equal $25,000 in the event the Company
achieves annual revenues of between $1,000,000 to $3,000,000; the
bonus will equal $75,000 in the event the Company achieves annual
revenues of between $3,000,000 to $5,000,00; the bonus will equal
$125,500 in the event the Company achieves annual revenues of
between $5,000,000 to $10,000,00; and the bonus will equal $250,000
in the
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event the Company achieves annual revenues in excess of
$10,501,000. The Company has also agreed to reimburse Mr. Irvine
for any relocation expenses in the event that Mr. Irvine is
requested to relocate outside of Vancouver, British Columbia.
The Company is obligated to Mr. Irvine to obtain and maintain a
directors and officers insurance policy with Mr. Irvine as a named
insured. The Company does not currently have any directors and
officers insurance policy in place but does intend to obtain this
coverage if available. The Company has agreed to indemnify Mr.
Irvine in accordance with the Company's By-laws. Mr. Irvine
provides his services to the Company on a full-time basis.
The Company does not compensate Mr. Andrew Zucker with any salary
or consulting fee for acting as a director of the Company and
Secretary of the Company. Mr. Zucker provides legal services to
the Company through Mr. Zucker's law firm, Lowy & Zucker LLP. The
Company has entered into a retainer agreement with Lowy & Zucker
LLP (the "Lowy & Zucker Retainer Agreement") whereby Lowy & Zucker
LLP bills the Company for Mr. Zucker's legal services at Mr.
Zucker's normal professional rates. The Company is also obligated
pursuant to the Lowy & Zucker Retainer Agreement to pay to Lowy &
Zucker a retainer of $7,500 per month which is applied to the
professional fees billed by Lowy & Zucker. Mr. Zucker served as
Treasurer of the Company from February 16, 1999 to October 1, 1999.
Mr. Zucker provides his services to the Company on a part-time
basis, as required for the business of the Company. In addition,
the Company issued 50,000 shares of Common Stock to Mr. Andrew
Zucker on September 30, 1999 in consideration of services provided
by Mr. Zucker as a director and officer of the Company.
The Company does not compensate Mr. Ken Maude directly for his
providing services as Chief Financial Officer of the Company. The
services provided by Mr. Maude are provided through Mr. Maude's
accounting firm, Maude & Associates. The Company pays to Maude &
Associates the professional fees billed form Mr. Maude's services
at Mr. Maude's normal hourly rates. The Company is billed by
Maude & Associates for the time provided by Mr. Maude in fulfilling
his duties as Chief Financial Officer of the Company. The Company
does not have any written agreement with Maude & Associates. Mr.
Maude provides his services to the Company on a part-time basis, as
required for the business of the Company.
The services of Mr. Clifford Wildes, as Chief Operating Officer of
the Company, are provided pursuant to an agreement between the
Company and Mr. Wildes dated September 27, 1999 (the "Wildes
Agreement"). The Company has agreed to pay Mr. Wildes a fee equal
to $750 per day in consideration for Mr. Wildes performing the
duties of Chief Operating Officer. In addition, the Company has
agreed to issue to Mr. Wildes a total of 100,000 shares of the
Company's Common Stock upon execution of the Wildes Agreement. Of
these shares, 25,000 have been released to Mr. Wildes, an
additional 25,000 shares are to be released to Mr. Wildes upon
filing of this registration statement and 50,000 shares are to be
released on the date which is 180 days from the date of the Wildes
Agreement. Mr. Wildes provides his services to the Company on a
part-time basis, as required for the business of the Company.
The services of Mr. Robert Cabral, a director of the Company, are
provided pursuant to a consulting agreement between the Company and
Cortez Capital Inc. dated August 3, 1999 (the "Cortez Capital
Agreement"). Cortez Capital Inc. is a company beneficially owned
and controlled by Mr. Robert Cabral. The Company pays to Cortez
Capital Inc. a consultant fee of $10,000 per month in consideration
for business, financial, strategic planning and organizational
structure consulting services to be provided to the Company. The
Cortez Capital Agreement has a term of twelve months from the date
of execution, provided that either the Company or Cortez Capital
may terminate within
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the first 90 days of the term upon the delivery of 30 days written
notice of termination to the other. Mr. Cabral provides his services
to the Company on a full-time basis.
A copy of each of the Irvine Agreement, the Lowy & Zucker Retainer
Agreement, the Wildes Agreement and the Cortez Capital Agreement
are attached to this registration statement and is made a part of
this registration statement by reference. The information provided
in this registration statement with respect to each of the Irvine
Agreement, the Zucker Agreement, the Wildes Agreement and the
Cortez Capital Agreement is qualified in its entirety by reference
to the complete texts of each agreement.
The Company's future performance depends upon the continued
contributions of members of senior management and other key
personnel. The Company does not have long-term employment
agreements with a number of its key personnel and does not maintain
key person life insurance. Competition for attracting and
retaining personnel in the industry is intense, and the Company
needs to succeed in the future. If one or more of its key
personnel leaves and/or joins or forms a competitor, this could
have a harmful effect on the Company's business.
OPERATIONS AND TECHNOLOGY
The Company's Web Site Operations
The Company's Web site operations are carried on by the Company at
its Vancouver, British Columbia premises. The Company's operations
in Vancouver consist of a local area network with eleven computer
workstations used by the Company's web system administrators and
developers. The Company's Web site operations are hosted on two
Pentium III class servers which are located on the premises of the
Company's Internet service provider in Seattle, Washington. Of
these two servers, one of the servers is used as the primary server
while the other is used as a redundant, back-up server which can
operate the Web sites in the event of a failure of the primary
server. The Company is in the process of establishing a redundant
web server located in Vancouver in case of the failure of the
Company's web servers in Seattle. The Company's web operations
system has been designed to operate on multiple servers with built-
in redundancy for reliability and fault tolerance.
The Company's Web site operations staff consists of systems
administrators who manage, monitor and operate the Company's Web
sites from Vancouver, British Columbia. The Company's system
administrators access the web servers in Seattle, Washington using
remote access from its local area network through the Internet.
The Company is in the process of acquiring additional "enterprise"
class servers which it intends to use as the primary servers for
its Web sites. These servers have the ability of handling higher
traffic flow than the Company's existing servers. The Company is
upgrading its servers in anticipation of increased traffic flow and
the acquisition of additional content for the web site.
Varcom, Inc.
The Company's Web sites had been hosted by Varcom, Inc. ("Varcom")
as the Company's Internet service provider from the launch of the
Company's Web sites in February, 1999 until October 9, 1999.
During this period, the Company's primary server for its Web site
operations was located at the Company's premises in Vancouver,
British Columbia. The Company had received written notice of a
demand for payment from Varcom with whom the Company had contracted
for Web site
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development and hosting charges. The demand for
payment has been contested by the Company. As a result of Varcom's
demand, the Company has switched its Web site operations to
Seattle, Washington and no longer uses Varcom to host its Web sites
or provide Internet services. The Company is also re-locating its
server, which is now a back-up server, to another Internet service
provider located in Vancouver, British Columbia.
In addition to ceasing to act as an Internet service provider,
Varcom has terminated the Company's access to the auction software
engine developed by Varcom under contract with the Company, as
discussed below. As a consequence, the Company is currently
unable to operate the Auction House sections of the Company's Web
sites. The Company is attempting to restore the full operation of
its Web sites by incorporating its own auction software engine that
was purchased on September 24, 1999. The Company anticipates
completing this installation by the end of October 1999. In the
interim, the Company may incur material losses as its Web sites
will not be fully operational.
The Company has contested the amounts which Varcom alleges are
owing. Other issues in dispute with Varcom include ownership of
the auction software engine developed by Varcom under contract with
the Company and the operational performance of this auction
software engine. The Company is currently attempting to negotiate
a resolution to these issues. There is a risk that the disputes
will not be resolved and the Company may be named as a defendant in
an action commenced by Varcom. The Company may also commence
action against Varcom or counter-claim against Varcom.
Computer Software
The Company uses a combination of proprietary technology and
commercially available licensed technology to operate its business
and Web sites.
The Company entered into an agreement dated September 24, 1999 with
Classified Projects, Inc. of San Francisco, California ("Classified
Projects") for the purchase of exclusive rights and the source code
to auction engine software developed by Classified Projects. The
acquisition of this auction engine software was completed on
September 24, 1999. The Company has agreed to pay to Classified
Projects a purchase price of $38,560 for the auction software plus
interest at the rate of 9% per annum until the payment date. The
purchase price plus all accrued interest is payable on January 22,
2000. Classified Projects may elect to convert the purchase price
into shares of the Company's Common Stock at a price of $1.00 per
share at the election of the Classified Projects. See Item 11.
"Securities Being Registered" and Part II - Item 4. "Recent Sales
of Unregistered Securities". Ownership of the auction engine
software will revert to Classified Projects in the event that the
Company defaults on the payment of the purchase price on the
payment date in the event that the purchase price is not converted.
The Company is attempting to incorporate the Classified Projects'
auction engine software into its Web sites as early as possible as
a result of its dispute with Varcom. The auction engine software
will manage online bids and auction items for the Auction House
sections of the Company's Web sites. The Company had used an
auction software engine developed by Varcom for the operation of
auctions conducted through the Auction House until the time of the
Company's dispute with Varcom.
The Company currently uses software developed by the Company for
the operation of the Gallery Shop on its Web sites. The Company is
in the process of developing upgraded software for the operation of
the Gallery Shop. The Company anticipates that it will upgrade the
existing software
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upon completion of the development of its own
software and successful implementation of this software on its Web
sites.
The Company licenses commercially available technology whenever
possible instead of purchasing custom-made or internally developed
solutions. Commercially available software used by the Company's
includes software for the Company's operating systems and networks.
The Company believes that this strategy enables it to lower
operating costs, to concentrate on creating and enhancing the
specialized, proprietary software that is unique to its business.
The Company continues the development of proprietary software to
enhance and expand the capabilities of its Web sites. The Company
believes that this continued development is essential to the
commercial success of the its business.
Back End Operations
The Company's back end operations handle the following functions
upon the completion of product sales through the Company's Web
sites:
A. product order fulfillment systems;
B. procurement of payment procurement, including credit card
verification;
C. sales, variance and activity reporting systems;
D. advertising and marketing feedback reporting and data
gathering.
The Company is developing a carrier class sequel server back-end to
its Web sites which will incorporate features found in state-of-
the-art electronic commerce and auction Web sites. The system is
being phased in and integrated at present. The Company anticipates
that the upgraded system will be substantially complete by the end
of 1999.
YEAR 2000 RISK
Background
Computer systems, software packages, and microprocessor dependent
equipment may cease to function or generate erroneous data when the
Year 2000 arrives. The problem affects those systems or products
that are programmed to accept a two-digit code in date code fields.
To correctly identify the Year 2000, a four-digit date code field
will be required to be what is commonly termed "Year 2000
compliant."
Readiness
The Company has completed an assessment of all internal systems and
operations to determine Year 2000 compliance. The Company's
assessment has included an assessment of computer hardware systems
and Web site operations systems by an independent third party
consultant. The report received from the Company's Year 2000
consultant concluded that the Company's networking hardware and
server are Year 2000 compliant. The report noted the potential on
four of the Company's work station computers for minor Year 2000
problems which can be remedied manually on January 1, 2000. The
report recommended upgrades to the Company's operating system,
exchange server and proxy server software. The Company has
undertaken to complete the necessary upgrades. As such, the Company
does not anticipate any material adverse operational issues to
arise from the Year 2000 problem affecting internal systems and
operations.
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The Company has made inquires of its Internet service provider,
Northshore Technologies ("Northshore"), as to the Year 2000
compliance of the Internet service provider's systems and
operations. Northshore has given written representations to the
Company that its systems and operations are Year 2000 compliant.
The Company had requested written confirmation of Northshore's Year
2000 compliance representations as part of its Year 2000 compliance
plan. However, there is no assurance that the Company will not be
affected by Year 2000 problems arising from problems with the
Internet service provider's systems and operations or experienced
by the Internet service provider as a result of third party
problems.
Risks
The Company may realise exposure and risk if the systems for which
it is dependent upon to conduct day-to-day operations are not year
2000 compliant. The Company's worst case scenario would be the
inability of the Web sites to function due to the inability of the
computer hardware systems and Web site operations systems to
function properly and disruptions to telecommunications services
experienced by Internet service providers and their users
throughout the world. Under this worst case scenario, the Company
would not be able to continue operations and Company's Web sites
would be inoperable until such time as the Company had replaced or
upgraded computer hardware or software components. If the Year
2000 problem affects the Company's Internet service provider, the
Web sites would remain inoperable until the Internet service
provider re-commenced operations or until a replacement Internet
service provider is found. In a worst case scenario, the Year 2000
problem will result in increased expense to the Company and
decreased revenues being earned from its Web sites or a delay in
the realization of revenues.
Estimated Year 2000 Costs
The Company estimates that its total internal cost for ensuring
Year 2000 compliance for all internal systems to date to be
approximately $10,000. The Company anticipates incurring internal
costs of approximately $1,000 in completing its Year 2000
compliance plan. The Company estimates that is has incurred costs
of approximately $1,500 to date in ensuring Year 2000 compliance,
including the cost of obtaining the Company's Year 2000 compliance
report. The Company anticipates incurring external costs of
approximately $1,500 in completing its Year 2000 compliance plan.
Contingency Planning
The Company is developing a contingency plan to address situations
that may result if the Company is affected by Year 2000 problems.
Contingency plans include back-up of all computer databases. The
Company will continue to back-up all computer bases every second
day, both before and after January 1, 2000. The Company maintains
and will continue to maintain separate back-ups of its databases at
all times. The Company will continue to ensure that any computer
hardware or software purchased prior to January 1, 2000 is Year
2000 compliant.
The Company is unable to make contingency plans if any significant
number of the computers constituting the Internet fail to process
dates properly for the year 2000 and there is a system-wide
slowdown or breakdown. The Company's business is dependent on the
continued successful operation of the Internet. Any interruption or
significant degradation of Internet operations due to Year 2000
problems could harm the Company's business.
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INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
The Company's performance and ability to compete are dependent to a
significant degree on its proprietary technology. The Company
relies on a combination of trademark, copyright and trade secret
laws, as well as confidentiality agreements and non-compete
agreements executed by employees and consultants as measures to
establish and protect its proprietary rights.
The Company has commenced an application to the United States
Trademark Office for the registration of "Unific" and "Unific.com"
as trademarks. There can be no assurance that the Company will be
able to obtain a trademark for either Unific or Unific.com. The
Company has not commenced the registration of WCollect.com as a
trademark with the United States Trademark Office. There can be no
assurance that the Company would be able to obtain a trademark for
"wcollect.com" or to secure significant protection for its service
marks or trademarks if such an application was commenced. It is
possible that competitors of the Company or others will adopt
product or service names similar to Unific, Unific.com or
WCollect.com or other service marks or trademarks of the Company,
thereby impeding the Company's ability to build brand identity and
possibly leading to customer confusion. The inability of the
Company to protect the names Unific, Unific.com or "wcollect.com"
adequately could have a material adverse effect on the Company's
business, results of operations and financial condition.
The Company's proprietary software is protected by copyright laws.
The source code for the Company's proprietary software also is
protected under applicable trade secret laws. The Company generally
enters into agreements with employees and consultants to ensure
that any software, computer programs, documentation or other
proprietary information developed by the employee or the consultant
remains the property of the Company. There can be no assurance
that the steps taken by the Company will prevent misappropriation
of its technology or that agreements entered into for that purpose
will be enforceable. Notwithstanding the precautions taken by the
Company, it might be possible for a third party to copy or
otherwise obtain and use the Company's software or other
proprietary information without authorization or to develop similar
software independently. Policing unauthorized use of the Company's
technology is difficult, particularly because the global nature of
the Internet makes it difficult to control the ultimate destination
or security of software or other data transmitted. The laws of
other countries may afford the Company little or no effective
protection of its intellectual property.
The Company may in the future receive notices from third parties
claiming infringement by the Company's software, by the use of the
names Unific, Unific.com or Wcollect.com or other aspects of the
Company's business. While the Company is not currently subject to
any such claim, any future claim, with or without merit, could
result in significant litigation costs and diversion of resources
including the attention of management which could have a material
adverse effect on the Company's business, results of operations and
financial condition. In the future, the Company may also need to
file lawsuits to enforce the Company's intellectual property
rights, to protect the Company's trade secrets or to determine the
validity and scope of the proprietary rights of others. Such
litigation, whether successful or unsuccessful, could result in
substantial costs and diversion of resources, which could have a
material adverse effect on the Company's business, results of
operations and financial condition.
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COMPETITION
The Company currently or potentially competes with a variety of
other companies which market fine art, sports memorabilia and
entertainment collectible products for sale, both through
traditional means and through the Internet. These competitors
include:
A. companies that compete on the Internet in collectibles
and memorabilia industry such as Zoom and ArtRock. The
major strengths of these competitors are established
commercial Internet presence, access to brand name
product, and the ability to expand their customer base
and sales through newsgroups etc. on the Internet;
B. various Internet auction houses such as ONSALE, eBay,
Yahoo! Auctions, First Auction (the auction site for
Internet Shopping Network, a wholly-owned subsidiary of
Home Shopping Network Inc.), Surplus Auction (a
wholly-owned subsidiary of Egghead, Inc.), WebAuction
(the auction site for MicroWarehouse, Inc.), Insight
Auction (the auction site for Insight Enterprises, Inc.)
and Amazon.com Auctions. The Company views its business
as distinct from these Internet auction businesses as the
Company's specializes solely on art, entertainment
collectibles and sports memorabilia. While these auction
businesses do provide for the sale of art, entertainment
collectibles and sports memorabilia, these auction
business do not provide a focus in this product
specialization. Accordingly, the Company views its Web
sites as more advantageous to both Internet consumers and
content providers for the marketing of art, entertainment
collectibles and sports memorabilia products;
C. a number of indirect competitors that specialize in
electronic commerce or derive a substantial portion of
their revenue from electronic commerce, including
Internet Shopping Network, AOL and Cendant Corp.;
D. a variety of other companies that offer merchandise
similar to that of the Company but through physical
auctions and with which the Company competes for sources
of supply;
E. a variety of other companies in the traditional retailing
industry that offer merchandise similar to that available
at the Gallery Shop through physical stores and which the
Company competes against for purchasers.
Increased competition could materially adversely affect the
Company's business, results of operations and financial condition.
Increased competition could significantly impact on the ability of
the Company to establish itself as a leading Internet marketer of
art, entertainment collectibles and sports memorabilia. If the
Company fails to achieve this goal, the Company may not be able to
secure agreements with content providers who are prepared to market
their products on the Company's Web sites. Many of the Company's
current and potential competitors have significantly greater
financial, marketing, technical and other resources than the
Company. As a result, such competitors may be able to attract
potential users and content providers away from the Company's Web
sites. In addition, competitors may be able to devote greater
resources to the development, promotion and sale of their web-sites
than can the Company. Competitors may target the Company's business
directly and may offer products comparable to the products offered
by the Company at prices below the prices offered by the Company or
products with greater commercial appeal than the
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products offered by the Company. There is no assurance that the
Company will have the financial or technical resources to compete
with these competitors.
GOVERNMENT REGULATION
The Company's experience is that the Company's Web sites are used
by users from multiple state and international jurisdictions.
Several states have laws that regulate auctions and auction
companies within their jurisdiction. These states may interpret
their statutes to apply to auction transactions carried out by the
Company with consumers in such states. The burdens of complying
with auction laws in these states could materially increase the
Company's cost of doing business. Similarly, other states may
construe their existing laws governing issues such as property
ownership, sales tax, libel and personal privacy to apply to
Internet companies servicing consumers within their boundaries.
Applicability of these laws to the business of the Company may have
the effect of increasing the Company's cost of doing business.
Due to the increasing popularity and use of the Internet, it is
possible that a number of laws and regulations may be adopted with
respect to the Internet generally, covering issues such as user
privacy, pricing, and characteristics and quality of products and
services. Similarly, the growth and development of the market for
Internet commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on those
companies conducting business over the Internet. The adoption of
any additional laws or regulations may decrease the growth of
commerce over the Internet, increase the Company's cost of doing
business or otherwise have a harmful effect on the Company's
business
The Company may have to qualify to do business in other
jurisdictions. As the Company's Web sites are available over the
Internet in multiple states and foreign countries, and as the users
of the Company's Web sites are resident in such states and foreign
countries, such jurisdictions may claim that the corporation is
required to qualify to do business as a foreign corporation in each
such state and foreign country. Failure to qualify as a foreign
Company in a jurisdiction where required to do so could subject the
Company to taxes and penalties.
The Company is not aware of any environmental laws which are
applicable to the operation of the Company's business.
RESEARCH AND DEVELOPMENT EXPENDITURES
The Company incurred expenditures on research and development
activities in the amount of $81,515 for the period from inception
of its business to December 31, 1998. The Company incurred
expenditures on research and development activities in the amount
of $268,958 (of which $63,589 is capitalized as a fixed asset) for
the period from January 1, 1999 to June 30, 1999. Research and
development activities completed by the Company included
development of software for the Company's Web sites and planning
and development costs associated with the creation of the Web
sites.
Item 7. Description of Property
The executive offices of the Company are located at leased premises
located at Suite 650, 9107 Wilshire Boulevard, Beverly Hills,
California. The premises are comprised of approximately 1000
square feet and are leased for a term commencing on August 1, 1999
and expiring on November 30,
23
<PAGE>
2000. The Company pays a monthly lease rent of $1,000 per month
for the period to December 31, 1999 and will pay a monthly lease
rent of $1,200 per month for the balance of the term. The premises
are sub-leased pursuant to a sub-lease agreement between the Company
and the law firm of Lowy & Zucker LLP dated May 15, 1999. Mr. Andrew
Zucker, a director and the Secretary of the Company, is a partner of
Lowy & Zucker LLP. See Item 11. - "Interest of Management and Others
in Certain Transactions".
The Web site operations of the Company are conducted from leased
premises at 7th Floor, 1201 West Pender Street, Vancouver, British
Columbia V6E 2V2. The premises are comprised of 5,905 square
feet and are leased for a term of 5 years expiring on April 30,
2004. The premises are leased pursuant to a lease agreement
between the Company, Varcom. and Igear Development Corporation, as
tenants, and Firwood Land and Trading Company Limited, as landlord,
dated February 22, 1999. The monthly lease payments for the
period ending April 30, 2000 are $3,335 ($4,921 CDN) per month,
plus the proportionate share of operating costs and taxes for the
premises. The monthly lease payments increase by an amount equal
to approximately $325 ($492 CDN) per month during each subsequent
year of the term of the lease agreement. The Company has entered
into a verbal agreement between Varcom and Igear Development
Corporation whereby the Company is responsible for a 40%
proportionate share of the lease payments, plus 40% of operating
expenses. Notwithstanding the Company's agreement with Varcom and
Igear Development Corporation, the landlord may claim that the
Company is liable for the total amount of the lease obligation in
the event of a default under the lease.
The Company's physical property consists of its computer network
server and associated network hardware and eleven computer
workstations and associated computer peripherals. All of the
Company's physical property is located at its premises in Beverly
Hills, California and Vancouver, British Columbia, with the
exception of the Company's primary servers which are located in
Seattle, Washington on the premises of the Company's Internet
service provider.
Item 8. Directors, Executive Officers and Significant Employees
The following information sets forth the names of the officers and
directors of the Company, their present positions with the Company,
and their biographical information.
Name Age Position
- --------------- --- --------
Stewart Irvine 44 Director
Andrew Zucker 42 Director
Robert Cabral 31 Director
Name of Officer Age Office
- ---------------- --- ------
Stewart Irvine 44 President
24
<PAGE>
Andrew Zucker 42 Secretary
Clifford Wildes 49 Chief Operating Officer
Ken Maude 56 Chief Financial Officer
Mr. Stewart Irvine, a director and the President of the Company,
joined the Company as a director and President on February 16, 1999
upon completion of the acquisition of MindCorp by the Company. Mr.
Irvine is the founder of MindCorp and has been involved in
developing the Company's business since August, 1998. Mr. Irvine
established Artworks in 1998 and worked to establish the business
of Artworks. Mr. Irvine was a founder of the Interactive
Achievement Center Inc., a company which developed a web-based
learning library and with operations in Vancouver, British Columbia
and New York, New York. Mr. Irvine worked for Interactive
Achievement Center Inc. from 1996 to 1997 when Mr. Irvine sold his
interest in Interactive Achievement Center Inc. Mr. Irvine was
also a founder of LifeStart Learning Systems Corp., a company based
in Vancouver, British Columbia and Seattle, Washington. Mr. Irvine
worked for LifeStart Learning Systems Corp. from 1990 to 1995 when
Mr. Irvine sold his interest in LifeStart Learning Systems Corp. to
a publicly traded company.
Mr. Andrew Zucker, a director and the Secretary of the Company,
joined the Company as a director and Secretary and Treasurer on
February 16, 1999 upon completion of the acquisition of MindCorp by
the Company. Mr. Zucker served as Treasurer of the Company from
February 16, 1999 to October 1, 1999. Mr. Zucker is an attorney
and a partner with the law firm of Lowy & Zucker LLP located in
Beverley Hills, California. Mr. Zucker joined the law firm of
Lowy & Zucker LLP in 1993. Mr. Zucker's areas of legal expertise
are in the areas of Internet and entertainment law. Mr. Zucker has
extensive experience in formulating strategic joint venture
relationships for computer software companies in the United States
and Japan involved in establishing proprietary online and Internet
businesses. Mr. Zucker serves as general legal counsel to
technology based public companies. Mr. Zucker was an attorney
with the law firm of Irwin & Rowan from August, 1989 to November,
1993. Mr. Zucker's law practice focused on television while at the
same time developing legal experience in the music industry. Mr.
Zucker began his entertainment legal career at Capital Cities/ ABC
in 1987 where he handled issues relating to the licensing of prime
time and children's programming and talent. Mr. Zucker founded the
"Academy of Interactive Arts and Sciences" in 1991. The Academy of
Interactive Arts and Sciences was founded with the objective of
bridging the gap between Hollywood artists and entertainers and the
Silicon Valley computer industry. Mr. Zucker was president of the
Academy from April, 1991 to November, 1996. Mr. Zucker received
his Juris Doctor degree from University of LaVerne School of Law in
1986, and has been a member of the California Bar since 1987.
Mr. Robert Cabral, a director of the Company, was appointed a
director of the Company on September 30, 1999. Mr. Cabral was the
chief executive officer and the chairman of the board of directors
of Rainmaker Entertainment Group from January, 1997 to March, 1999.
Rainmaker Entertainment Group is a publicly traded entertainment
and technology company whose shares are listed for trading on the
Toronto Stock Exchange. Mr. Cabral managed all aspects of the
digital and entertainment production business of Rainmaker
Entertainment Group, including the completion of business
acquisitions and implementation of corporate strategy. Mr. Cabral
was executive vice-president of Rainmaker Digital Pictures Inc.,
the predecessor of Rainmaker Entertainment Group
25
<PAGE>
from February, 1995 to January, 1997. Mr. Cabral was a director of
Leigh Resources Ltd. from July, 1995 to August 1996. Leigh Resources
is a mineral exploration company, the shares of which are traded on
the Vancouver Stock Exchange. Mr. Cabral was a business consultant
with the firm of Piller Natale & Oh Management Consultants of
Toronto, Canada from January, 1993 to February, 1995. The business
consultant services included corporate strategy development and
business process re-engineering consulting services to several
international clients. Mr. Cabral received an honors degree in
business administration from the University of Western Ontario
(Canada) in May, 1991.
Mr. Clifford Wildes, the Chief Operating Officer of the Company,
was appointed Chief Operating Officer on October 4, 1999. Mr.
Wildes provides business and financial consulting services to
technology companies through Meridian Capital, Inc. Mr. Wildes
founded Meridian Capital in 1997 and has been president of Meridian
Capital from 1997 to date. Mr. Wildes has been providing business
and financial consulting services through Meridian Capital since
1997. Mr. Wildes is also the co-founder and a current director of
Barclay Partners Inc., an investment consulting firm. Mr. Wildes
was chief executive officer of Beverly Hills Limited from May, 1999
to July, 1999. Beverly Hills Limited is a publicly traded company
on the OTC Bulletin Board. Mr. Wildes founded Nova Interactive,
Inc., a distributor of computer components, peripherals and
systems, in 1996. Mr. Wildes sold his interest in Nova Interactive
to GlobalNet Systems Ltd. in December, 1997. Mr. Wildes acted as
chief executive officer of GlobalNet Systems, a publicly traded OTC
Bulletin Board company, and its subsidiary, On-line Entertainment
Network, from December, 1997 to June, 1998. Mr. Wildes was
formerly the president, chief executive officer and a co-founder of
Microtech International, Inc. (1985), a manufacturer of memory and
mass storage produced for the Macintosh, PC and NeXT computing
platforms. Mr. Wildes sold his interest in Microtech International
to ADO Electronic Industrial, Inc., a publicly traded Japanese
company. Mr. Wildes was from 1983 to 1992 the co-founder and
chairman of the Board of Ram State Tokyo, an electronics exporter
and importer. Mr. Wildes received a bachelor of science degree
from Boston State College in 1972. Boston State College is now the
University of Massachusetts in Boston.
Mr. Ken F. Maude, C.G.A., the Chief Financial Officer of the
Company, was appointed as Chief Financial Officer of the Company on
October 1, 1999. Mr. Maude has maintained his own private
accounting firm of Maude & Associates since the early 1970's. Mr.
Maude is a member of the British Columbia Institute of Certified
General Accountants. Mr. Maude received his Certified General
Accountant designation in 1973 through his studies at the
University of British Columbia. Mr. Maude's practice as a
Certified General Accountant has included acting as the accountant
and providing tax advice for private Canadian corporations and for
foreign corporations operating in Canada.
Terms of Office
Directors of the Company are appointed for one year terms to hold
office until the next annual general meeting of the holders of the
Company's Common Stock or until removed from office in accordance
with the Company's By-laws. Officers of the Company are appointed
by the Company's board of directors and hold office until removed
by the Company's board of directors.
26
<PAGE>
Item 9. Remuneration of Directors and Officers
The following table sets forth certain information as to the
Company's three highest paid officers and directors for the period
from January 1, 1999 to June 30, 1999. No other compensation was
paid or will be paid to any such officer or directors other than
the cash compensation set forth below.
Summary Compensation Table
Name of Individual or Capacities in which Aggregate
Identity of Group Remuneration was Received Remuneration
- --------------------- ------------------------- ------------
Stewart Irvine Director and President $ 50,000(1)
Andrew Zucker Director, Secretary $ 63,874(2)
and Legal Consultant
Ken F. Maude Consultant $ 22,947(3)
Officers and Directors Directors and Officers $113,874(4)
of the Company as a Group
- ------------------------------------------------------------------
(1) The services of Mr. Irvine are provided pursuant to the Irvine
Employment Agreement. See Item 6. "Description of Business -
Employees".
(2) The remuneration consists of the amounts paid by the Company
for the professional legal services of Lowy & Zucker LLP,
including professional fees, disbursements and taxes, billed
to the Company pursuant to the Lowy & Zucker Retainer
Agreement. See Item 6. "Description of Business - Employees".
In addition, the Company issued 50,000 shares of Common Stock
to Mr. Andrew Zucker on September 30, 1999 in consideration of
services provided by Mr. Zucker to the Company.
(3) The remuneration consists of the amounts paid by the Company
for the professional accounting services of Maude & Associate,
including professional fees, disbursements and taxes, billed
to the Company by Maude & Associates. See Item 6.
"Description of Business - Employees".
(4) The aggregate remuneration paid to June 30, 1999 does not
include any remuneration paid to Mr. Ken Maude or
Maude & Associates as Mr. Maude was appointed as Chief
Financial Officer of the Company on October 1, 1999.
Item 10. Security Ownership of Management and Certain Security
Holders
The following table sets forth, as of October 13, 1999, the
beneficial ownership of the Company's Common Stock by each officer
and director of the Company, by each person known by the Company to
beneficially own more than 10% of the Company's Common Stock
outstanding and by the officers and directors of the Company as a
group. Except as otherwise indicated, all shares are owned
directly.
Name and address Number of Shares Percentage of
Title of class of beneficial owner of Common Stock(1) Common Stock(1)
- -------------- ------------------- ------------------ ---------------
Common Stock Stewart Irvine 2,521,875 shares 27.8%
President and Director 175,000 options
7th Floor, 87,000 convertible
1201 West Pender notes
Vancouver,
British Columbia
Canada V6E 2V2
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<PAGE>
Common Stock Andrew Zucker 100,000 shares 1.5%
Secretary 50,000 options
and Director
Suite 650,
9107 Wilshire Blvd
Beverly Hills,
California
USA 90210-5519
Common Stock Robert Cabral 175,000 options 1.7%
Director
No. 36,
1386 Nicola Street
Vancouver,
British Columbia
Canada V6G 2G2
Common Stock Clifford Wildes 100,000 shares(2) 1.0%
387 South Shore Drive
Sarasota, Florida 34234
Common Stock Ken F. Maude 50,000 options 0.5%
Chief Financial Officer
Suite 755
1130 West Pender Street
Vancouver, British Columbia
Canada V6E 4A4
Common Stock Directors and 2,721,875 shares 32.5%
Officers as 450,000 options
a Group (5 persons) 87,000 convertible notes
- -------------------------------------------------------------------
(1) Under Rule 13d-3, certain shares may be deemed to be
beneficially owned by more than one person (if, for example,
persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially
owned by a person if the person has the right to acquire the
shares (for example, upon exercise of an option) within 60
days of the date as of which the information is provided. In
computing the percentage ownership of any person, the amount
of shares outstanding is deemed to include the amount of
shares beneficially owned by such person (and only such
person) by reason of these acquisition rights. As a result,
the percentage of outstanding shares of any person as shown in
this table does not necessarily reflect the person's actual
ownership or voting power with respect to the number of shares
of Common Stock actually outstanding at October 13, 1999. As
of October 13, 1999, there were 9,030,000 shares of the
Company's common stock issued and outstanding. In addition,
there were 983,893 shares subject to options and warrants
exercisable and convertible notes convertible within 60 days
of the date of this registration statement.
(2) The shares owned by Mr. Clifford Wildes are subject to a
release agreement between the Company and Mr. Wildes. See
Item 6. "Description of Business - Employees".
The following table shows the issued and outstanding stock options
held by the officers and directors of the Company (See Item 12. -
"Securities Being Registered" and Part II - Item 4. "Recent Sales
of Unregistered Securities"):
Name of Number of Exercise
Optionee Stock Options Price Vesting Date Expiration Date
- -------- ------------- -------- ------------ ---------------
Stewart Irvine 50,000 $1.15 3/26/99 3/26/02
Andrew Zucker 50,000 $1.15 3/26/99 3/26/02
Robert Cabral 50,000 $1.15 9/30/99 9/22/02
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<PAGE>
Stewart Irvine 125,000 $1.15 9/22/99 9/22/02
Robert Cabral 125,000 $1.15 9/22/99 9/22/02
Ken F. Maude 50,000 $1.15 9/22/99 9/22/02
There is no person known by the Company who beneficially owns more
than 10% of the Company's Common Stock as of October 13, 1999, with
the exception of Mr. Stewart Irvine, as disclosed above.
Item 11. Interest of Management and Others in Certain Transactions
Except as set forth below, none of the following persons has any
direct or indirect material interest in any transaction to which
the Company is a party during the past two years or in any proposed
transaction to which the Company is proposed to be a party:
(A) any director or officer of the Company;
(B) any proposed nominee for election as a director of the
Company;
(C) any person who beneficially owns, directly or indirectly,
shares carrying more than 10% of the voting rights
attached to the Company's Common Stock; or
(D) any relative or spouse of any of the foregoing persons,
or any relative of such spouse, who has the same
residence as such person or who is a director or officer
of any parent or subsidiary of the Company.
The Company acquired MindCorp, LLC, a limited liability company
organized under the laws of the State of Nevada, from Mr. Stewart
Irvine ("Irvine"), a director and the President of the Company
pursuant to the Mindcorp Acquisition Agreement. The Company issued
to Irvine a total of 2,375,000 restricted shares of Common Stock
pursuant to the Acquisition Agreement in consideration for
MindCorp.
The Company acquired ArtWorks from the ArtWorks Shareholders
pursuant to the Artworks Acquisition Agreement. The Company issued
a total of 375,000 restricted shares of common stock of the Company
in consideration for all of the issued and outstanding shares of
ArtWorks. Mr. Stewart Irvine, a director and the President of the
Company, was issued 196,875 restricted shares of Common Stock on
completion of this acquisition.
The Company paid an investor relations fee of $100,000 to Mercury
Capital in April, 1999. Mr. John Xinos, a former director of the
Company, is the President of Mercury Capital.
The Company leases the premises for its head office located at
Suite 650, 9107 Wilshire Boulevard, Beverly Hills, California from
Lowy & Zucker LLP. The premises are sub-leased pursuant to a sub-
lease agreement between the Company and Lowy & Zucker LLP dated
May 15, 1999. Mr. Andrew Zucker, a director and the Secretary of
the Company, is partner of Lowy & Zucker LLP. See Item 7. -
"Description of Property".
The Company has entered into the Irvine Agreement with Mr. Stewart
Irvine, a director and the President of the Company. See Item 6. -
"Description of Business - Employees".
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<PAGE>
The Company has entered into the Lowy & Zucker Retainer Agreement
with Lowy & Zucker LLP. Mr. Andrew Zucker, a director and the
Secretary of the Company, is a partner with the law firm of Lowy &
Zucker LLP. See Item 6. - "Description of Business - Employees".
The Company issued 50,000 shares of Common Stock to Mr. Andrew
Zucker on September 30, 1999 in consideration of services provided
by Mr. Zucker to the Company.
The Company has issued convertible notes in the principal amount of
$87,000 to a company controlled by Stewart Irvine, the President
and a director of the Company. See Item 12. - "Securities Being
Registered". This private company related to Mr. Irvine has also
advanced to the Company 550 shares of Microsoft Corporation as
collateral for the establishment of a merchant banking account by
the Company. The Company has agreed to return these shares upon
demand and the difference in value of the shares on the date of
return from the advance date in the event of a decline in the price
of the shares, plus interest at the rate of 10% per annum on the
difference.
The Company has entered into the Cortez Capital Agreement with
Cortez Capital Inc. Cortez Capital Inc. is a company beneficially
owned and controlled by Mr. Robert Cabral, a director of the
Company. See Item 6. - "Description of Business - Employees".
The Company has entered into the Wildes Agreement with Clifford
Wildes, the Chief Operating Officer of the Company. See Item 6.
- - "Description of Business - Employees".
The services of Ken Maude, the Chief Financial Officer of the
Company, are provided to by the Company by Mr. Maude's accounting
firm, Maude & Associates. See Item 6. - "Description of Business -
Employees".
Item 12. Securities Being Registered
The securities being registered are the shares of the Company's
common stock, par value $0.001 per share. Under the Company's
Articles of Incorporation, as Amended, the total number of shares
of all classes of stock that the Company shall have authority to
issue is 50,000,000 shares of common stock, par value $0.001 per
share. As of October 13, 1999, a total of 9,030,000 shares of
Common Stock are issued and outstanding. All issued and
outstanding shares of the Common Stock are fully paid and
non-assessable.
Common Stock
Holders of Common Stock have the right to cast one vote for each
share held of record on all matters submitted to a vote of holders
of Common Stock, including the election of directors. Holders of
Common Stock do not have cumulative voting rights in the election
of directors. Holders of one-third of the voting power of the
capital stock issued and outstanding and entitled to vote,
represented in person or by proxy, are necessary to constitute a
quorum at any meeting of the Company's stockholders, and the vote
by the holders of a majority of such outstanding shares is required
to effect certain fundamental corporate changes such as
liquidation, merger or amendment of the Company's Articles of
Incorporation, as Amended. Holders of Common Stock are entitled to
receive dividends pro rata based on the number of shares held,
when, as and if declared by the Board of Directors, from funds
legally available therefor. In the event of the liquidation,
dissolution or winding up of the affairs of the Company, all assets
and funds of the Company remaining after the payment of all debts
and other liabilities shall be distributed, pro rata, among the
holders of the Common Stock. Holders of Common Stock are not
entitled to pre-emptive or subscription or
30
<PAGE>
conversion rights, and there are no redemption or sinking fund
provisions applicable to the Common Stock.
31
<PAGE>
Transfer Agent
Interwest Stock Transfer Co. Inc. of 1981 East 4800, South-Suite
100, Salt Lake City, Utah 84117 is the transfer agent for the
Common Stock.
Share Purchase Warrants
The Company has issued warrants to purchase 125,000 shares of the
Common Stock. All warrants are exercisable by the holders on or
before July 25, 2000 at a price of $1.50 per share. See Part II -
Item 4. "Recent Sales of Unregistered Securities".
Options
The Company has granted options to purchase 881,000 shares of
Common Stock pursuant to the Company's Amended Stock Option Plan
dated May 28, 1999 to the Company's directors, officers, employees
and eligible consultants. See Part II - Item 4. "Recent Issuances
of Unregistered Securities". The outstanding options are
summarized as follows:
The Company has granted the following options to directors of the
Company in their capacity as directors of the Company:
Number of Exercise
Optionee Stock Options Price Vesting Date Expiration Date
- -------- ------------- -------- ------------ ---------------
Stewart Irvine 50,000 $1.15 3/26/99 3/26/02
Andrew Zucker 50,000 $1.15 3/26/99 3/26/02
Robert Cabral 50,000 $1.15 9/30/99 9/22/02
The Company has granted the following options to directors and
officers of the Company in their capacity as employees and
consultants of the Company:
Number of Exercise
Optionee Stock Options Price Vesting Date Expiration Date
- -------- ------------- -------- ------------ ---------------
Stewart Irvine 125,000 $1.15 9/22/99 9/22/02
Robert Cabral 125,000 $1.15 9/22/99 9/22/02
Kenneth Maude 50,000 $1.15 9/22/99 9/22/02
The Company has granted the following options to consultants of the
Company who are not directors or officers of the Company:
Number of Exercise
Stock Options Price Vesting Date Expiration Date
- ------------- -------- ------------ ---------------
90,000 $1.15 3/26/99 9/22/02
185,000 $1.15 9/22/00 9/22/02
11,000 $2.25 9/22/00 9/22/02
85,000 $1.15 One Year from date of 9/22/02
consultants' engagement
by the Company
32
<PAGE>
The Company has granted the following options to employees of the
Company who are not directors or officers of the Company:
Number of Exercise
Stock Options Price Vesting Date Expiration Date
- ------------- -------- ------------ ---------------
60,000 $1.15 50% on the one year anniversary 9/22/02
of employee's commencement
of employment; 50% on the
second anniversary of employee's
commencement of employment
A copy of the Amended Stock Option Plan is attached to this
registration statement and is made a part of this registration
statement by reference. The information provided in this
registration statement with respect to the Amended Stock Option
Plan is qualified in its entirety by reference to the complete
texts of each agreement. The Amended Stock Option Plan authorizes
the grant of options equal to 15% of the issued and outstanding
shares of the Company, measured at the Company's most recent
balance sheet date, provided that the number of options granted
pursuant to the Stock Option Plan will in no event exceed the
number of options permitted to be granted by Rule 701 of the
Securities Act of 1933, as amended until the Company becomes a
reporting issuer under the Securities Exchange Act of 1934.
Convertible Securities
The Company has issued convertible notes totaling $87,000 to a
private company controlled by Mr. Stewart Irvine. The convertible
notes were issued in the principal amount of $57,000 with respect
to an advance on June 24, 1999 and in the principal amount of
$30,000 with respect to an advance on September 17, 1999. The
convertible notes are convertible into shares of Common Stock at a
price of $1.00 per share for the first year after the date of the
advance. The convertible notes mature and are due and payable on
the date which is one year from the date of the advance, provided
that 50% of the principal amount and accrued interest is due and
payable upon the Company receiving debt and/ or equity financing in
aggregate of $1,000,000. See Part II - Item 4. "Recent Sales of
Unregistered Securities".
The Company has agreed to pay to Classified Project a purchase
price of $38,560 for the auction software plus interest at the rate
of 9% per annum until the payment date. See Item 6. "Description
of Business - Operations and Technology". The purchase price plus
all accrued interest is payable on January 22, 2000. Classified
Projects may elect to convert the purchase price into shares of the
Company's Common Stock at a price of $1.00 per share at the
election of the Vendor. The Company has the right to convert the
purchase price into shares of the Company's common stock at a price
of $1.00 per share in the event that the trailing average 30 day
closing trading price of the Company's Common Stock is greater than
$4.00 per share, with no single day closing below $4.00 per share.
Also see Part II - Item 4. "Recent Sales of Unregistered
Securities".
The Company has completed the issuance of 10% convertible notes due
October 31, 2000 in the principal amount of $60,000 (the
"Convertible Notes") on September 23, 1999. The Convertible Notes
are convertible into shares of the Company's Common Stock at the
option of the holder at the price of $1.00 per share. In the event
that the Convertible Notes are not converted into Common Stock, the
full amount of the principal amount of the Convertible Notes
together will all accrued
33
<PAGE>
interest will be due and payable on October 31, 2000. See
Part II - Item 4. "Recent Sales of Unregistered Securities".
The Company has completed the issuance of 9% convertible notes due
October 31, 2002 in the principal amount of $100,000 (the
"Convertible Notes") pursuant to Regulation S of the Act on October
7, 1999. The Convertible Notes are convertible into shares of the
Company's Common Stock at the option of the holder at the price of
$0.75 per share for a one year period. In the event that the
Convertible Notes are not converted into Common Stock, the full
amount of the principal amount of the Convertible Notes together
will all accrued interest will be due and payable on October 31,
2002. The Company also granted to the investor the right to cause
the Company to sell to the investor additional convertible notes,
on the same terms and conditions, in the aggregate principal amount
of up to $150,000 for a 120 day period. See Part II - Item 4.
"Recent Sales of Unregistered Securities".
The Company has not issued and does not have outstanding any other
securities convertible into shares of Common Stock or any rights
convertible or exchangeable into shares of Common Stock with the
exception of the Convertible Notes.
34
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Stockholder Matters
The Company's Common Stock is traded on the OTC Bulletin Board
under the symbol "WCLT". The first day in which the Company's
shares traded was February 16, 1999. The high and the low bid
prices for the Company's shares for each quarter of actual trading
were:
Quarter High Low
- ------- ---- ----
February 16, 1999 to $5.25 $2.1875
March 31, 1999
April 1, 1999 to $4.0625 $1.125
June 30, 1999
July 1, 1999 to $2.0625 $0.875
September 30, 1999
October 1, 1999 to $1.125 $0.875
October 13, 1999
The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
As of October 13, 1999, there were 39 registered shareholders of
the Company. The Company estimates there are in excess of 130
beneficial shareholders of the Company.
The Company has not declared any dividends on its Common Stock
since its inception. There are no dividend restrictions that limit
the Company's ability to pay dividends on Common Stock in the
Company's Articles of Incorporation, as Amended or its By-Laws.
The Company's governing statute, the Florida Business Corporations
Act, does provide limitations on the ability of the Company to
declare dividends. Article 607.06401 of the Florida Business
Corporations Act prohibits the Company from declaring dividends
where, after giving effect to the distribution of the dividend:
(A) the Corporation would not be able to pay its debts as
they become due in the usual course of business; or
(B) the Corporation's total assets would be less than the sum
of its total liabilities plus the amount that would be
needed, if the corporation were to be dissolved at the
time of distribution, to satisfy the preferential rights
upon dissolution of stockholders who may have
preferential rights and whose preferential rights are
superior to those receiving the distribution.
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<PAGE>
Item 2. Legal Proceedings
The Company is not currently a party to any legal proceedings which
may or could have a material adverse impact on the Company or its
operations. The Company may become party to a legal proceeding
commenced by Varcom. See Item 6. - "Description of Business -
Operations and Technology".
Item 3. Changes in and Disagreements with Accountants
Not applicable.
Item 4. Recent Sales of Unregistered Securities
The Company completed the issuance of 2,375,000 shares of Common
Stock to Stewart Irvine, President and a director of the Company,
pursuant to the MindCorp Acquisition Agreement dated February 1,
1999 pursuant to Section 4(2) of the Securities Act of 1933 (the
"Act"). The 2,375,000 shares of Common Stock are "restricted"
shares, as defined pursuant to the Act.
The Company completed an offering of 4,000,000 shares of Common
Stock to a total of 13 purchasers at a price of $0.08 per share on
February 5, 1999. Each of the purchasers was a private investor.
The offering was completed pursuant to Rule 504 of Regulation D of
the Act. The Company did not pay any fee or commission for this
offering of securities.
The Company completed the issuance of 375,000 shares of Common
Stock to the ArtWorks Shareholders pursuant to the ArtWorks
Acquisition Agreement dated February 19, 1999 pursuant to Section
4(2) of the Act. The 375,000 shares of Common Stock are
"restricted" shares, as defined pursuant to the Act.
The Company granted options to purchase 615,000 shares of Common
Stock to its officers, directors and consultants on March 26, 1999
pursuant to Rule 701 of the Act. All options were for a three year
term and were exercisable at a price of $2.50 in the first year,
$5.00 in the second year, and $7.50 in the third year. Of these
options, a total of 425,000 options were terminated by agreement or
in accordance with the terms of the option agreements by September
22, 1999. The Company re-priced the outstanding options at an
exercise price of $1.15 per share on September 22, 1999.
The Company completed an offering of 680,000 shares of Common Stock
to a total of 13 purchasers at a price of $1.00 per share on March
31, 1999. Each of the purchasers was a private investor. The
offering was completed pursuant to Rule 504 of Regulation D of the
Act. The Company did not pay any fee or commission for this
offering of securities.
The Company completed an offering of 250,000 units to two
purchasers at a price of $1.00 per unit on July 25, 1999. The
offering was completed to two (2) private investors, each of whom
is a non-U.S. persons, as defined in the Act, pursuant to
Regulation S of the Act. Each unit was comprised of one share of
Common Stock and one-half of one warrant to purchase one share of
Common Stock at a price of $1.50 per share at any until July 25,
2000. In aggregate, the Company issued 250,000 shares of Common
Stock and warrants to purchase 125,000 shares of Common Stock at a
price of $1.50 per share at any time until July 25, 2000 on
completion of the offering. The Company did not pay any fee or
commission for this offering of securities.
36
<PAGE>
The Company has issued convertible notes in the aggregate principal
amount of $87,000 pursuant to Section 4(2) of the Act to a private
company related to Mr. Stewart Irvine. See Item 11. - "Interest of
Management and Others in Certain Transactions" and Item 12. -
"Securities Being Registered". The convertible notes were issued
pursuant to Section 4(2) of the Act in the principal amount of
$57,000 with respect to an advance on June 24, 1999 and in the
principal amount of $30,000 with respect to an advance on September
17, 1999. The convertible notes are convertible into shares of
Common Stock at a price of $1.00 per share for the first year after
the date of the advance. The convertible notes mature and are due
and payable on the date which is one year from the date of the
advance, provided that 50% of the principal amount and accrued
interest is due and payable upon the Company receiving debt and/ or
equity financing in aggregate of $1,000,000. The Company did not
pay any fee or commission for this offering of securities.
The Company granted options to purchase 691,000 shares of Common
Stock to its officers, directors, employees and consultants on
September 22, 1999 pursuant to Rule 701 of the Act. All options
are exercisable at a price of $1.15 per share, with the exception
of options to purchase 11,000 shares of Common Stock which are at a
price of $2.25 per share. The options are subject to various
vesting requirements. See Part I - Item 12. - "Securities Being
Registered".
The Company has agreed to pay to Classified Projects a purchase
price of $38,560 for its auction software plus interest at the rate
of 9% per annum until the payment date on completion of the
Classified Projects Agreement on September 24, 1999. The purchase
price plus all accrued interest is payable on January 22, 2000.
Classified Projects may elect to convert the purchase price into
shares of the Company's Common Stock at a price of $1.00 per share
at the election of the Vendor. The Company has the right to convert
the purchase price into shares of the Company's common stock at a
price of $1.00 per share in the event that the trailing average 30
day closing trading price of the Company's Common Stock is greater
than $4.00 per share, with no single day closing below $4.00 per
share. See Item 6. - "Description of Business - Operations and
Technology" and Item 11. "Securities Being Registered".
The Company issued 50,000 shares of Common Stock to Mr. Andrew
Zucker, a director and the Secretary of the Company, on September
30, 1999 pursuant to Section 4(2) of the Act. The shares were
issued to Mr. Zucker in consideration of services provided by Mr.
Zucker to the Company.
The Company issued 100,000 shares of Common Stock to Mr. Clifford
Wildes upon the appointment of Mr. Wildes as Chief Operating
Officer of the Company on October 1, 1999. The shares issued to
Mr. Wildes were issued pursuant to Section 4(2) of the Act. The
shares are to be released to Mr. Wildes in accordance with the
terms and conditions of the letter of understanding executed
between the Company and Mr. Wildes. See Item 6. - "Description
of Business - Employees".
The Company completed the issuance of 10% convertible notes due
October 31, 2000 in the principal amount of $60,000 (the
"Convertible Notes") pursuant to Regulation S of the Act on
September 23, 1999. All Convertible Notes were issued to one
investor who is a non-U.S. person, as defined by Regulation S of
the Act. The Convertible Notes are convertible into shares of the
Company's Common Stock at the option of the holder at the price of
$1.00 per share. In the event that the Convertible Notes are not
converted into Common Stock, the full amount of the principal
amount of the Convertible Notes together will all accrued interest
will be due and payable on October 31, 2000. The Company did not
pay any fee or commission for this offering of securities.
37
<PAGE>
The Company has completed the issuance of 9% convertible notes due
October 31, 2002 in the principal amount of $100,000 (the
"Convertible Notes") pursuant to Regulation S of the Act on October
7, 1999. All Convertible Notes were issued to one investor who is a
non-U.S. person, as defined by Regulation S of the Act. The
Convertible Notes are convertible into shares of the Company's
Common Stock at the option of the holder at the price of $0.75 per
share for a one year period. In the event that the Convertible
Notes are not converted into Common Stock, the full amount of the
principal amount of the Convertible Notes together will all accrued
interest will be due and payable on October 31, 2002. The Company
also granted to the investor the right to cause the Company to sell
to the investor additional convertible notes, on the same terms and
conditions, in the aggregate principal amount of up to $150,000 for
a 120 day period. The Company did not pay any fee or commission for
this offering of securities.
The Company issued 200,000 shares of Common Stock to Universal
Commerce pursuant to Section 4(2) of the Act on October 13, 1999.
The shares were issued in consideration of services provided by
Universal Commerce pursuant to the Universal Commerce Agreement.
See Part I - Item 6 - "Description of Business - Plan of
Operations.
Item 5. Indemnification of Directors and Officers
The officers and directors of the Company are indemnified as
provided under the Florida Business Corporation Act (the "FBCA")
and the Bylaws of the Company.
The Company is empowered by the FBCA to indemnify officers and
directors of the Company in the following circumstances:
(1) The FBCA provides that the Company shall have power to
indemnify any person who was or is a party to any proceeding
(other than an action by, or in the right of, the
corporation), by reason of the fact that he or she is or was
a director, officer, employee, or agent of the Company or is
or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against
liability incurred in connection with such proceeding,
including any appeal thereof, if he or she acted in good faith
and in a manner he or she 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 or her conduct was unlawful.
The termination of any proceeding by judgment, order,
settlement, or conviction or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he
or she reasonably believed to be in, or not opposed to, the
best interests of the corporation or, with respect to any
criminal action or proceeding, had reasonable cause to believe
that his or her conduct was unlawful.
(2) The FBCA provides that the Company shall have power to
indemnify any person, who was or is a party to any proceeding
by or in the right of the Company to procure a judgment in
its favor by reason of the fact that the person is or was a
director, officer, employee, or agent of the corporation or is
or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise,
against expenses and amounts paid in settlement not
exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion,
actually and reasonably incurred in connection with the
defense or settlement of such proceeding, including any appeal
thereof. Such indemnification shall be authorized if such
person acted in good faith and in a manner he or she
reasonably believed to be in, or not
38
<PAGE>
opposed to, the best interests of the corporation, except that
no indemnification shall be made under this subsection in respect
of any claim, issue, or matter as to which such person shall have been
adjudged to be liable unless, and only to the extent that, the
court in which such proceeding was brought, or any other court
of competent jurisdiction, shall determine upon application
that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such
court shall deem proper.
The FBCA requires the Company to indemnify an officer or director
of the Company in the event that the officer or director has been
successful on the merits or otherwise in defense of any proceeding
referred to above or in defense of any claim, issue, or matter
therein to the extent of any expenses actually and reasonably
incurred by the officer or director.
The By-laws of the Company provide that the Company will indemnify
its directors and officers to the fullest extent not prohibited by
the Florida Business Corporations Act; provided, however, that the
corporation may modify the extent of such indemnification by
individual contracts with its directors and officers; and,
provided, further, that the corporation shall not be required to
indemnify any director or officer in connection with any proceeding
(or part thereof) initiated by such person unless (i) such
indemnification is expressly required to be made by law, (ii) the
proceeding was authorized by the Board of Directors of the Company,
(iii) such indemnification is provided by the corporation, in its
sole discretion, pursuant to the powers vested in the Company under
the Florida Business Corporations Act or (iv) such indemnification
is required to be made pursuant to the By-laws.
The By-laws of the Company provide that the Company will advance to
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director
or officer, of the Company, or is or was serving at the request of
the Company as a director or executive officer of another Company,
partnership, joint venture, trust or other enterprise, prior to the
final disposition of the proceeding, promptly following request
therefor, all expenses incurred by any director or officer in
connection with such proceeding upon receipt of an undertaking by
or on behalf of such person to repay said amounts if it should be
determined ultimately that such person is not entitled to be
indemnified under the By-laws of the Company or otherwise.
The By-laws of the Company provide that no advance shall be made by
the Company to an officer of the Company (except by reason of the
fact that such officer is or was a director of the Company in which
event this paragraph shall not apply) in any action, suit or
proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made
(i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or
(ii) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, that the facts known to the decision-
making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in
a manner that such person did not believe to be in or not opposed
to the best interests of the Company.
39
<PAGE>
PART F/S
FINANCIAL STATEMENTS
The Company's audited Financial Statements, as described below, are
attached hereto.
1. Audited financial statements for the six month period ending
June 30, 1999 and for the period beginning March 6, 1998 to
December 31, 1998, including:
(a) Balance Sheets;
(b) Statements of Changes in Stockholders' Equity;
(c) Statements of Operations;
(d) Statements of Cash Flows;
(e) Summary of Significant Accounting Policies;
(f) Notes to Consolidated Financial Statements.
2. Consent of the Company's auditor, BDO Dunwoody, LLP, Chartered
Accountants.
40
<PAGE>
Wcollect.Com, Inc.
(A Development Stage Company)
Consolidated Financial Statements
June 30, 1999 and December 31, 1998
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
- -------------------------------------------------------------------
Table of Contents
Auditors' Report
Comments by Auditors for U.S. Readers On Canada-U.S. Reporting
Differences
Consolidated Financial Statements
Balance Sheets
Statements of Changes in Stockholders' Equity
Statements of Operations
Statements of Cash Flows
Summary of Significant Accounting Policies
Notes to the Financial Statements
<PAGE>
BDO
BDO Dunwoody LLP
Chartered Accountants
600 Park Place
666 Burrard Street
Vancouver, B.C. Canada V6C 2X8
Telephone: (604) 688-5421
Telefax: (604) 688-5132
E-mail: [email protected]
www.bdo.ca
===================================================================
Auditors' Report
- -------------------------------------------------------------------
To the Directors and Stockholders of
Wcollect.Com, Inc.
(A Development Stage Company)
We have audited the Consolidated Balance Sheets of Wcollect.Com,
Inc. (a development stage company) as at June 30, 1999 and
December 31, 1998, the Consolidated Statements of Changes in
Stockholders' Equity for the six-month period ended June 30, 1999
and for the period from March 6, 1998 (inception) to December 31,
1998 and the Consolidated Statements of Operations and Cash Flows
for the period from March 6, 1998 (inception) to June 30, 1999,
for the six-month period ended June 30, 1999 and for the period
from March 6, 1998 (inception) to December 31, 1998. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted 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 consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as at June 30, 1999 and December 31, 1998 and the results
of its operations and its cash flows for the period from March 6,
1998 (inception) to June 30, 1999, for the six-month period ended
June 30, 1999 and for the period from March 6, 1998 (inception) to
December 31, 1998 in accordance with accounting principles
generally accepted in the United States.
Vancouver, Canada \s\ BDO Dunwoody LLP
October 7, 1999 Chartered Accountants
2
<PAGE>
BDO
BDO Dunwoody LLP
Chartered Accountants
600 Park Place
666 Burrard Street
Vancouver, B.C. Canada V6C 2X8
Telephone: (604) 688-5421
Telefax: (604) 688-5132
E-mail: [email protected]
www.bdo.ca
===================================================================
Comments by Auditors for U.S. Readers
On Canada-U.S. Reporting Differences
- -------------------------------------------------------------------
To the Directors and Stockholders of
Wcollect.Com, Inc.
(A Development Stage Company)
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 consolidated financial statements. Our report to
the stockholders dated October 7, 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.
Vancouver, Canada \s\ BDO Dunwoody LLP
October 7, 1999 Chartered Accountants
3
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
June 30 December 31
1999 1998
- -------------------------------------------------------------------
Assets
Current
Cash $ 30,386 $ 3,213
Receivables 11,864 -
Inventories 25,813 -
Prepaid expenses 23,775 5,000
---------------------------
91,838 8,213
License advance (Note 7) 38,000 38,000
Fixed assets (Note 3) 112,169 -
---------------------------
$ 242,007 $ 46,213
===================================================================
Liabilities and Stockholders' Equity (Deficit)
Liabilities
Current
Accounts payable and accrued
and liabilities $ 169,859 $ -
Due to related party (Note 8) 81,271 -
Shareholder advances (Note 9) - 150,000
---------------------------
251,130 150,000
Stockholders' equity (deficit)
Share capital
Authorized
50,000,000 Common shares,
par value $0.001
Issued
8,430,000 Common shares
(December 31, 1998 - 2,750,000) 8,430 2,750
Additional paid-in capital 1,204,260 59,940
Deficit accumulated during the
development stage (1,221,813) (166,477)
---------------------------
(9,123) (103,787)
---------------------------
$ 242,007 $ 46,213
===================================================================
The accompanying summary of significant accounting policies and notes
form an integral part of the consolidated financial statements.
4
<PAGE>
======================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Consolidated Statements of Changes in Stockholders' Equity
- ----------------------------------------------------------------------
Deficit Total
Common Stock Accumulated Stock-
--------------- Additional During the Holders'
Paid-in Development Equity
Shares Amount Capital Stage (Deficit)
- ----------------------------------------------------------------------
Initial capital
contribution to
Artworks
International
Corp. on
March 6, 1998 1,000 $ 1 $ - $ - $ 1
Capital
contributions
to Mindcorp, LLC
during the period - - 62,689 - 62,689
Restatement for
the recapital-
ization of
Mindcorp and
Artworks 2,749,000 2,749 (2,749) - -
Net loss for
the period - - - (166,477) (166,477)
Balance,
December 31,
1998 2,750,000 2,750 59,940 (166,477) (103,787)
Adjustment to
reflect the
reverse
acquisition
on February 16,
1999 1,000,000 1,000 (1,000) - -
-------------------------------------------------------
3,750,000 3,750 58,940 (166,477) (103,787)
Issuance of
common stock
on private
placements
for cash
- - on February
16, 1999 for
$0.08 per
share 4,000,000 4,000 316,000 - 320,000
- - in March
through May,
1999 at $1.00
per share 680,000 680 679,320 - 680,000
Forgiveness of
shareholder
advances
(Note 9) - - 150,000 - 150,000
Net loss for
the period - - - (1,055,336) (1,055,336)
--------------------------------------------------------
Balance,
June 30, 1999 8,430,000 $ 8,430 $ 1,204,260 $(1,221,813)$ (9,123)
======================================================================
The accompanying summary of significant accounting policies and notes
form an integral part of the consolidated financial statements.
5
<PAGE>
====================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
Period from
March 6, March 6,
1998 1998
(inception) Six-Months (inception)
to June 30, Ended to
1999 June 30 December 31,
(cumulative) 1999 1998
- --------------------------------------------------------------------
General and
administrative expenses
Bank charges and interest $ 7,451 $ 6,663 $ 788
Corporate consultants 169,173 169,173 -
Depreciation 4,274 4,274 -
Investor relations 100,000 100,000 -
Foreign exchange 28,525 28,525 -
License fee (Note 7) 35,000 - 35,000
Marketing and promotion 198,108 175,408 22,700
Office, postage and
stationary 55,358 49,279 6,079
Professional fees 237,614 230,714 6,900
Rent 5,457 5,457 -
Transfer agent fees 4,616 4,616 -
Telephone 12,684 11,052 1,632
Travel 53,328 43,216 10,112
Wages and employee benefits 77,996 76,245 1,751
Website development 234,030 152,515 81,515
---------------------------------------
1,223,614 1,057,137 166,477
Interest income 1,801 1,801 -
Net loss for the period $(1,221,813) $(1,055,336) $ (166,477)
====================================================================
Basic and diluted loss
per share $ (0.16) $ (0.06)
=========================
Weighted average shares outstanding 6,793,267 2,750,000
=========================
The accompanying summary of significant accounting policies and notes
form an integral part of the consolidated financial statements.
6
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
Period from
March 6, March 6,
1998 1998
(inception) Six-Months (inception)
to June 30, Ended to
1999 June 30 December 31,
(cumulative) 1999 1998
- --------------------------------------------------------------------
Cash provided by (used in)
Operatiarges activities
Net Loss for the period $ (1,221,813) $(1,055,336) $ (166,477)
Items not involving cash
Depreciation 4,274 4,274 -
Expenses satisfied by
capital contributions 62,689 - 62,689
(Increase) decrease in
assets
Receivables (11,864) (11,864) -
Inventories (25,813) (25,813) -
Prepaid expenses and
deposits (23,775) (18,775) (5,000)
Increase (decrease) in
liabilities
Accounts payable and
accrued liabilities 169,859 169,859 -
---------------------------------------
(1,046,443) (937,655) (108,788)
---------------------------------------
Financing activities
Advances from related party 81,271 81,271 -
Issuance of common stock 1,000,001 1,000,000 1
Shareholder advances 150,000 - 150,000
---------------------------------------
1,231,272 1,081,271 150,001
Investing activities
Purchase of capital assets (116,443) (116,443) -
License advance (38,000) - (38,000)
---------------------------------------
(154,443) (116,443) (38,000)
---------------------------------------
Increase in cash for the
period 30,386 27,173 3,213
Cash, beginning of period - 3,213 -
---------------------------------------
Cash, end of period $ 30,386 $ 30,386 $ 3,213
====================================================================
Supplementary information:
Non-cash investing and
financing activities
Forgiveness of
shareholder advances $ 150,000 $ -
==========================
The accompanying summary of significant accounting policies and notes
form an integral part of the consolidated financial statements.
7
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Summary of Significant Accounting Policies
June 30, 1999 and December 31, 1998
- -------------------------------------------------------------------
Principles of Consolidation
These consolidated financial statements
are expressed in US dollars and are
prepared in accordance with accounting
principles generally accepted in the
United States. These consolidated
financial statements include the accounts
of the Company and its wholly-owned
subsidiaries: Mindcorp, LLC ("Mindcorp")
and Artworks International Corp.
("Artworks").
In accordance with principles governing
the accounting for reverse acquisitions,
the figures presented for the period from
March 6, 1998 (incorporation of Artworks)
to the respective dates of acquisition are
the combined accounts of Mindcorp and
Artworks.
All significant intercompany accounts and
transactions have been eliminated on
consolidation. All per share information
for fiscal 1998 has been restated to
reflect the recapitalization.
The Company has selected December 31 as
its fiscal year end.
Fixed Assets
Fixed assets are carried at cost less
accumulated depreciation. Computers are
depreciated using the straight-line method
over their estimated useful life of three
years. Furniture and fixtures are
depreciated over their estimated useful
life of five years. Leasehold
improvements are capitalized and amortized
over the shorter of their estimated useful
lives or the terms of the respective
leases.
The Company has adopted Statement of
Position ("SOP") 98-1, "Accounting for the
Costs of Computer Software Developed or
Obtained for Internal Use". Accordingly,
direct internal and external costs
associated with the development of the
features, content and functionality of the
Company's online auction site,
transaction-processing systems,
telecommunications infrastructure and
network operations, incurred during the
application development stage, will be
capitalized and amortized over the
estimated useful life of three years once
development is complete.
Financial Instruments
The Company's financial instruments
consist of cash, receivables, accounts
payable and accrued liabilities and
amounts due to a related party and a
shareholder. Unless otherwise noted, it
is management's opinion that the Company
is not exposed to significant interest,
currency or credit risks arising from
these financial instruments. The fair
values of these financial instruments
approximate their carrying values, unless
otherwise noted, since they are short-term
in nature or they are receivable or
payable on demand.
8
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Summary of Significant Accounting Policies - Continued
June 30, 1999 and December 31, 1998
- -------------------------------------------------------------------
Inventories
Inventories are stated at the lower of
cost and net realizable value.
Income Taxes
The Company follows the provisions of
Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting
for Income Taxes", which requires the
Company to recognize deferred tax
liabilities and assets for the expected
future tax consequences of events that
have been recognized in the Company's
financial statements or tax returns using
the liability method. Under this method,
deferred tax liabilities and assets are
determined based on the temporary
differences between the financial
statement carrying amounts and tax bases
of assets and liabilities using enacted
rates in effect in the years in which the
differences are expected to reverse.
Foreign Currency Transactions
Transactions undertaken in currencies
other than the US dollar are translated to
US dollars using the exchange rate in
effect as of the transaction date.
Monetary assets and liabilities
denominated in foreign currencies are then
translated to US dollars using the period
end rate. Any exchange gains and losses
are included in the Statement of
Operations.
Loss Per Share
Loss per share is computed in accordance
with SFAS No. 128, "Earnings Per Share".
Basic loss per share is calculated by
dividing the net loss available to common
stockholders by the weighted average
number of common shares outstanding for
the period. Diluted earnings per share
reflects the potential dilution of
securities that could share in earnings of
an entity. In loss periods, dilutive
common equivalent shares are excluded as
the effect would be anti-dilutive. Basic
and diluted earnings per share are the
same for the periods presented.
For the six-month period ended June 30,
1999 and for the period from March 6, 1998
(inception) to December 31, 1998, total
stock options of 565,000 and Nil were not
included in the computation of diluted
earnings per share because the effect was
anti-dilutive.
9
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Summary of Significant Accounting Policies - Continued
June 30, 1999 and December 31, 1998
- -------------------------------------------------------------------
Stock Based Compensation
The Company applies Accounting Principles
Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees", and
related interpretations in accounting for
stock option plans. Under APB 25,
compensation cost is recognized for stock
options granted at prices below the market
price of the underlying common stock on
the date of grant.
SFAS No. 123, "Accounting for Stock-Based
Compensation", requires the Company to
provide pro-forma information regarding
net income as if compensation cost for the
Company's stock option plan had been
determined in accordance with the fair
value based method prescribed in SFAS No.
123.
Use of Estimates
The preparation of financial statements in
accordance with generally accepted
accounting principles requires management
to make estimates and assumptions that
affect the reported amounts of assets and
liabilities and disclosure of contingent
assets and liabilities at the date of the
financial statements, and the reported
amounts of revenues and expenses during
the reporting period. Actual results
could differ from management's best
estimates as additional information
becomes available in the future.
New Accounting Pronouncements
In June 1998, SFAS No. 133, "Accounting
for Derivative Instruments and Hedging
Activities", was issued. SFAS No. 133
requires companies to recognize all
derivatives contracts as either assets or
liabilities on the balance sheet and to
measure them at fair value. If certain
conditions are met, a derivative may be
specifically designated as a hedge, the
objective of which is to match the timing
of gain or loss recognition on the hedging
derivative with the recognition of (i) the
changes in the fair value of the hedged
asset or liability that are attributable
to the hedged risk or (ii) the earnings
effect of the hedged forecasted
transaction. For a derivative not
designated as a hedging instrument, the
gain or loss is recognized in income in
the period of change. SFAS No. 133 is
effective for all fiscal quarters of
fiscal years beginning after June 15,
2000.
10
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Summary of Significant Accounting Policies - Continued
June 30, 1999 and December 31, 1998
- -------------------------------------------------------------------
New Accounting Pronouncements - Continued
Historically, the Company has not entered
into derivatives contracts either to hedge
existing risks or for speculative
purposes. Accordingly, the Company does
not expect adoption of the new standards
on January 1, 2000 to affect its financial
statements.
In April 1998, the American Institute of
Certified Public Accountants issued SOP
98-5, "Reporting on the Costs of Start-Up
Activities" which provides guidance on the
financial reporting of start-up costs and
organization costs. It requires costs of
start-up activities and organization costs
to be expensed as incurred. The Company
adopted SOP 98-5 effective upon inception
of Mindcorp and Artworks.
11
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999 and December 31, 1998
- -------------------------------------------------------------------
1. Nature of Business and Continued Operations
The Company, originally known as Household Helpers, Inc. and
subsequently as HHHP, Inc., was incorporated in the state of
Florida on October 10, 1989 and was inactive until the
acquisition of Mindcorp, LLC ("Mindcorp") via reverse
acquisition on February 16, 1999 and the acquisition of
Artworks International Corp. ("Artworks") on February 19,
1999 (Note 2). Upon completion of the acquisitions, the
Company amended its Articles to change its name to
Wcollect.Com, Inc. With these acquisitions, the Company is
now engaged in internet electronic commerce including the
operation of an online auction and gallery store from its
website. The website specializes in offering authentic art,
sports and entertainment collectibles to internet users
through partnerships with dealers, storeowners and private
collectors.
These accompanying financial statements have been prepared on
a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities and commitments in
the normal course of business. As at June 30, 1999, the
Company has recognized no revenue and has accumulated
operating losses of $1,221,813 since its inception. The
continuation of the Company is dependent upon the continuing
financial support of creditors and stockholders and obtaining
long-term financing as well as achieving a profitable level
of operations. Management plans to raise equity capital to
finance the operations and capital requirements of the
Company. It is management's intention to raise new equity
financing of approximately $4 million within the upcoming
year. Amounts raised will be used to enhance the Company's
e-commerce ability through its website, to provide financing
for the marketing and promotion of its site, to secure
products and for other working capital purposes including
operational hardware and software upgrades. While the
Company is expending its best efforts to achieve the above
plans, there is no assurance that any such activity will
generate funds that will be available for operations.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern. These financial
statements do not include any adjustments that might arise
from this uncertainty.
- -------------------------------------------------------------------
2. Business Acquisitions
a) On February 16, 1999, the Company acquired all of the
membership interest in Mindcorp, a limited liability
company formed in August 4, 1998 in Nevada and engaged in
the development of an e-commerce website dealing
exclusively in authenticated fine art, entertainment
collectibles and sports memorabilia.
12
<PAGE>
2. Business Acquisitions - Continued
Consideration for the purchase was the issuance of
2,375,000 shares of common stock of the Company.
(b) On February 19, 1999, the Company acquired all the
issued and outstanding shares of Artworks, a Barbados
international business company incorporated on March 6,
1998 with a license to obtain specific works of art from an
artist. A total of 375,000 shares of common stock were
issued to the shareholders of Artworks as consideration.
These transactions are accounted for as a recapitalization of
the Company using accounting principles applicable to reverse
acquisitions. Following reverse acquisition accounting,
these financial statements are presented as a continuation of
the combined business of Mindcorp and Artworks, both formerly
controlled by the Company's President. The net book value of
the net assets of HHHP, Inc. at the date of acquisition was
$Nil as the Company had been previously inactive since
incorporation. Accordingly, the value assigned to the
consideration paid for these acquisitions, being the common
stock of the Company, was $Nil.
- -------------------------------------------------------------------
3. Fixed Assets
June 30 December 31
1999 1998
------------------------------------------
Accumulated Net Book Net Book
Cost Depreciation Value Value
Computer hardware $ 35,201 $ 2,933 $ 32,268 $ -
Furniture and
fixtures 16,852 843 16,009 -
Computer software 63,589 458 63,131 -
Leasehold
improvements 801 40 761 -
--------------------------------------------------
$ 116,443 $ 4,274 $ 112,169 $ -
==================================================
13
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999 and December 31, 1998
- -------------------------------------------------------------------
4. Stock Options
On May 28, 1999, the Company's Board of Directors approved
amendments to the Company's Stock Option Plan originally
adopted on January 29, 1999. The Plan provides for the
granting of stock options to purchase up to 15% of the issued
and outstanding shares of the Company. The stock option plan
permits the granting of incentive and non-qualified stock
options to employees, directors and consultants of the
Company and its subsidiaries. Under the Plan, the granting
of stock options, vesting privileges and exercise prices and
terms are determined by the Compensation Committee of the
Board of Directors. For incentive options, the exercise
price shall not be less than the fair market value of the
Company's common stock on the grant date and shall not be
less than 85% of the fair market value of the Company's
common stock on the grant date for other options. (In the
case of options issued to an employee who owns stock
possessing more than 10% of the voting power of all classes
of the Company's stock on the date of grant, the option price
must not be less than 110% of the fair market value of common
stock on the grant date.). Options granted are not to exceed
terms beyond ten years (5 years in the case of an incentive
stock option granted to a holder of 10 percent of the
Company's common stock).
On March 26, 1999, the Company granted options exercisable
immediately to directors and consultants to purchase 615,000
shares of common stock at $2.50 per share until March 26,
2000, at $5.00 until March 26, 2001 and $7.50 until expiry on
March 26, 2002. All the options, except for 50,000 which
were cancelled, remained outstanding at June 30, 1999. There
were no options granted during the prior period.
Subsequent to June 30, 1999, 375,000 stock options granted on
March 26, 1999 were cancelled. The remaining 190,000 options
were repriced to $1.15 per share. On September 22, 1999, an
additional 680,000 stock options were granted to directors and
consultants having an exercise price of $1.15 per share and
11,000 options were granted to a consultant having an exercise
price of $2.25 per share. All options granted subsequent to
June 30, 1999 expire in September 2002. The options vest
immediately except for 196,000 options which vest on September
22, 2000 and 145,000 which vest in two equal instalments on
the first and second year anniversaries of the optionee's
employment or consulting contract with the Company.
Pro-forma information regarding Net Loss and Loss per Share
is required under SFAS No. 123, and has been determined as if
the Company had accounted for its stock options under the
fair value method of SFAS No. 123. The fair value of options
granted in the six-month period ended June 30, 1999 was $Nil.
The fair value of these options was estimated at the date of
the grant using a Black-Scholes option pricing model with the
following assumptions: no dividends, a risk-free interest
rate of 4.95%, volatility factor of the expected market price
of the Company's common stock of 0.001 and a weighted average
expected life of the options of twelve months.
14
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999 and December 31, 1998
- -------------------------------------------------------------------
4. Stock Options - Continued
Under the accounting provisions of SFAS No. 123, the
Company's Net Loss and Loss per Share on a pro-forma basis
would be unchanged for the six-month period ended June 30,
1999.
- -------------------------------------------------------------------
5. Related Party Transactions
Related party transactions not disclosed elsewhere in these
consolidated financial statements include:
a) legal fees paid to a firm in which a director is a partner
totalling $63,874 for the six-month period ended June 30,
1999 (1998 - $Nil). Additionally, the Company has agreed to issue
5000 shares of common stock to this director for no consideration
September 30, 1999.
b) investor relation fees of $100,000 paid to a company in
which a former director is its President.
c) website development costs paid to a company controlled by
the Company's President in 1998 totalling $43,737.
Related party transactions are recorded at the exchange
amount, being the amount of consideration established and
agreed to by the related parties.
- -------------------------------------------------------------------
6. Income Taxes
The tax effects of temporary differences that give rise to the
Company's deferred tax asset are as follows:
June 30 December 31
1999 1998
------------------------------
Tax loss carryforwards $ 360,000 $ -
Valuation allowance (360,000) -
------------------------------
$ - $ -
==============================
15
<PAGE>
6. Income Taxes - Continued
The provision for income taxes differs from the amount
computed using the federal statutory income tax rate as
follows:
Period from
Six months March 4, 1998
ended (incorporation)
June 30 to December 31
1999 1998
------------------------------
Provision (benefit) at federal
statutory rate $ (363,000) $ (57,000)
Foreign income taxes at other than
the federal statutory rate 3,000 35,000
Income taxes of the limited
liability company taxed to the
former shareholder of Mindcorp - 22,000
Increase in valuation allowance 360,000 -
------------------------------
$ - $ -
==============================
Prior to the reverse acquisition, Mindcorp, as a limited
liability company, was not subject to taxation by the Internal
Revenue Service. Instead, any income and losses of the
Company flowed through to its member. (Had Mindcorp been a
taxable entity for the period from its inception on August 4,
1998 to February 16, 1999 (acquisition date), there would be
no impact on the Company's tax provision or deferred taxes not
covered by a valuation allowance.) The Company evaluates its
valuation allowance requirements based on projected future
operations. When circumstances change and this causes a
change in management's judgement about the recoverability of
deferred tax assets, the impact of the change on the valuation
allowance is reflected in current income.
At June 30, 1999, the Company had losses available for income
tax purposes of approximately $1,055,000 which will expire in
2019.
16
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999 and December 31, 1998
- -------------------------------------------------------------------
7. Commitments
a) The Company subleases office premises in Beverly Hills,
California from a partnership of which a director is a
partner for $1,000 per month until December 31, 1999 and
thereafter at $1,200 per month until expiry on November 30,
2000. The Company and two unrelated companies also lease
premises in Vancouver, Canada. Terms of the lease with the
three companies includes minimum aggregate annual lease
payments under the lease agreement expiring on April 30, 2004
as follows:
For the periods
ending December 31 Amount
- ------------------------------------------------------
1999 (six months) - $ 19,683
2000 - 42,110
2001 - 45,928
2002 - 49,864
2003 - 53,800
Thereafter 18,384
---------------
$ 229,769
===============
The Company's portion of the above lease payments, based on
square footage, is approximately 40%. However, each of the
parties is contingently liable for the other parties to the
lease should they fail to pay the agreed upon percentage.
b) The Company has entered into three royalty agreements
covering the reproduction and sale of licensed art for
terms expiring in 2000 to 2002. Term of the agreements
provide for royalties ranging from $5 per unit to 80% of
net sales of licensed products.
Under terms of a royalty agreement with a specific artist,
the Company has advanced $38,000 to be applied against
future royalties payable. A further $35,000 non-refundable
payment has been charged to the Statement of Operations.
A third agreement was signed with a Japanese company on
July 21, 1999 to market and promote the Company's website
to users in Japan. Pursuant to the agreement, the Company
will pay a fee to the Japanese company ranging from 10 -
15% of items sold which originate from Japan until sales
from the localized website exceed 20 million yen (approximately
$180,000).
c) The Company has entered into an employment agreement with
its President for an annual fee of $175,000 plus bonuses
based on revenue for a term expiring on January 31, 2004.
17
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999 and December 31, 1998
- -------------------------------------------------------------------
8. Due to Related Party
a) Unpaid amounts due to the Company's President for
management fees and reimbursable expenses totalling $24,271
are unsecured, bear interest at 12% per annum and are
repayable on demand.
b) A loan of $57,000 from a company controlled by the
Company's President is unsecured, bears interest at 10% per
annum and is due on June 30, 2000. Subsequent to June 30,
1999, the Company received an additional unsecured loan of
$30,000 from this company bearing interest at 10% per
annum and repayable on September 17, 2000. The lender can
demand earlier repayment of 50% of the amount outstanding
should the Company receive debt and/or equity financing in
aggregate of $1,000,000.
The loans totalling $87,000 are convertible into common
stock of the Company at a price of $1 per common share as
a result of an agreement dated September 17, 1999.
c) Additionally, the President has provided 550 shares of
Microsoft Corporation to the Company's bank to be used as
collateral for a merchant banking account. As
consideration, in the event that Microsoft Corporation's
share value declines, the President will receive the
difference between the value of the Microsoft Corporation
shares on July 17, 1999(the date of the advance) of
approximately $54,000 and the value on the date of return plus
10% interest per annum on the difference.
- -------------------------------------------------------------------
9. Shareholder Advances
Amounts due to a former shareholder of Artworks were
unsecured, non-interest bearing and due on demand. Upon the
acquisition by Wcollect.Com, Inc. on February 19, 1999 (Note
2), the shareholder waived his right to repayment of the
outstanding advances.
- -------------------------------------------------------------------
10. Subsequent Events
a) On July 25, 1999, the Company issued 250,000 units for
total proceeds of $250,000, with each unit comprising one
share of common stock and one-half of one warrant to
purchase one share of the Company's common stock at a
price of $1.50 per share. Each warrant is exercisable
until expiry on July 25, 2000.
18
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999 and December 31, 1998
- -------------------------------------------------------------------
10. Subsequent Events - Continued
b) On September 24, 1999, the Company entered into an
agreement to acquire proprietary internet auction engine
software and source code. The purchase price totaled
$38,560 and is due on January 22, 2000 together with
interest at 9% per annum. At any time before the due
date, at the vendor's option, the indebtedness plus
accrued interest may be converted to common stock of the
Company at the conversion ratio of one share for each
dollar of indebtedness. If the indebtedness remains
unconverted on the due date, the Company has the option to
convert the indebtedness (subject to regulatory approval)
to stock in the same ratio if the trailing 30 day average
closing trading price of its common stock is greater than
$4 per share with no specific day closing below $4 per
share.
c) The Company has received notice of a dispute from a
supplier regarding the payment of amounts allegedly due
for website development and hosting charges. Management
believes the dispute to be frivolous and, at this time,
the likelihood of losses to the Company stemming from this
action are indeterminable. Any losses will be recorded in
the period of settlement.
d) The Company has received $60,000 upon the issuance of a
convertible note due on October 31, 2000. The note is
unsecured, bears interest at 10% per annum and is
convertible at the lender's option into common stock at a
conversion price of $1 per share.
Additional 9% convertible notes totalling $100,000 were
issued on October 7, 1999. The notes are convertible at
the lenders' option at a price of $0.75 per common share
for a one year period. If the notes are not converted,
the balance of principal and interest (adjusted to prime
plus 3%, not to be less than 9% per annum) will be due on
October 31, 2002. The Company has also granted the
noteholders an option for an 120 day period to acquire a
further $150,000 of convertible notes under the same terms
and conditions except that the conversion price will be based
upon a 25% discount to the trailing 30 day closing price of
the Company's stock.
e) The Company has entered into an agreement dated September
27, 1999 with a consultant to act as Chief Operating
Officer. Compensation for this individual includes the
issuance of 100,000 common shares (for no consideration)
of which 25,000 shares were issued upon signing the
agreement. The remaining shares are held in escrow to be
released upon filing of the Company's 10-SB registration
statement (25,000 shares) and after 180 days (50,000
shares).
19
<PAGE>
===================================================================
Wcollect.Com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999 and December 31, 1998
- -------------------------------------------------------------------
10. Subsequent Events - Continued
f) The Company has entered into an agreement (subject to the
satisfaction of certain conditions, including raising
financing of $300,000) with another consulting firm to
provide corporate strategy services. Consideration
includes a cancellable (with appropriate notice) monthly
fee of $10,000 plus expenses for two years and the future
issuance of 925,155 shares of common stock. Additionally,
the contract includes clauses which require the payment of
a finders fee calculated as 3 - 5% should the Company
enter into a business combination with any affiliates,
consultants or personnel of the consulting firm within 24
months of contract termination.
g) Pursuant to an agreement dated August 15, 1999, the Company
will issue 800,000 shares of common stock to another
consultant for corporate financial services.
Common stock to be issued pursuant to Notes 10(f) through (g)
will be valued using the market value of the Company's stock on
the date of release.
20
<PAGE>
BDO
BDO Dunwoody LLP
Chartered Accountants
600 Park Place
666 Burrard Street
Vancouver, B.C. Canada V6C 2X8
Telephone: (604) 688-5421
Telefax: (604) 688-5132
E-mail: [email protected]
www.bdo.ca
===================================================================
CONSENT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------
We hereby consent to the inclusion of our Auditor's Report dated
October 7, 1999, on the consolidated financial statements of
Wcollect.Com, Inc. for the six-month period ended June 30, 1999
and for the period from March 6, 1998 (inception) to December 31,
1998 in the Company's Form 10-SB registration statement to be filed
with the United States Securities and Exchange Commission. We also
consent to the application of such report to the financial information
in the Form 10-SB, when such financial information is read in
conjunction with the financial statements referred to in our
report.
\s\ BDO Dunwoody LLP
Chartered Accountants
Vancouver, Canada
October 14, 1999
<PAGE>
PART III
INDEX TO EXHIBITS
Exhibit Number Description of Exhibit
- -------------- ----------------------
2.1 Articles of Amendment to Household Helpers, Inc.
2.2 Articles of Amendment to Articles of Incorporation
re: Name Change
2.3 Amended By-Laws of the Company
3.1 Amended Stock Option Plan
6.1 MindCorp Acquisition Agreement dated February 1,
1999 between the Company and Stewart Irvine
6.2 Artworks Acquisition Agreement dated February 19,
1999 between the Company and Stewart Irvine, Robin
Hendry, Raymond Spence, Richard Blank, Scott Lanoff
6.3 Agreement between the Company and National Academy
of Recording Arts and Sciences Inc. dated February
10, 1999
6.4 Agreement between the Company and Justsystem
Corporation of Japan dated July 21, 1999
6.5 Sub-Lease Agreement between the Company and Lowy &
Zucker dated May 15, 1999
6.6 Lease Agreement between the Company, Varcom Inc. and
Igear Development Corporation, as tenants, and
Firwood Land and Trading Company Limited, as
landlord, dated February 22, 1999.
6.7 Agreement between the Company and Stewart Irvine
dated February 1, 1999
6.8 Agreement between the Company and Andrew Zucker
dated December 10, 1998
6.9 Agreement between the Company and Clifford Wildes
dated September 27, 1999
6.10 Agreement between the Company and Cortez
Capital Inc. dated August 3, 1999
6.11 Agreement between the Company and Universal
Commerce Ltd. dated August 15, 1999
6.12 Agreement between the Company and Classified
Project Inc. dated September 24, 1999
41
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: October 15, 1999
WCOLLECT.COM, INC.
\s\ Stewart Irvine
By: _______________________________
STEWART IRVINE
Director and President
42
<PAGE>
FILED
98 JUN 15 PM 4:07
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
ARTICLES OF AMENDMENT TO
HOUSEHOLD HELPERS, INC.
THE UNDERSIGNED, being the sole director and president
of Household Helpers, Inc., does hereby amend its Articles
of Incorporation as follows:
ARTICLE I
CORPORATE NAME
The name of the Corporation shall be HHHP, Inc.
ARTICLE II
PURPOSE
The Corporation shall be organized for any and all
purposes authorized under the laws of the state of Florida.
ARTICLE III
PERIOD OF EXISTENCE
The period during which the Corporation shall continue
is perpetual.
ARTICLE IV
SHARES
The capital stock of this corporation shall consist of
50,000,000 shares of common stock, $0.001 par value.
ARTICLE V
PLACE OF BUSINESS
The address of the principal place of business of this
corporation in the State of Florida shall be 7695 S.W. 104th
Street, Suite 210, Miami, FL 33156. The Board of
Directors may at any time and from time to time move the
principal office of this corporation.
ARTICLE VI
DIRECTORS AND OFFICERS
The business of this corporation shall be managed by
its Board of Directors. The number of such directors shall
be not be less than one (1) and, subject to such minimum
may be increased or decreased from time to time in the
manner provided in the By-Laws.
1
<PAGE>
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No shareholder shall have any right to acquire shares
or other securities of the Corporation except to the extent
such right may be granted by an amendment to these Articles
of Incorporation or by a resolution of the board of
Directors.
ARTICLE VIII
AMENDMENT OF BYLAWS
Anything in these Articles of Incorporation, the
Bylaws, or the Florida Corporation Act notwithstanding,
bylaws shall not be adopted, modified, amended or repealed
by the shareholders of the Corporation except upon the
affirmative vote of a simple majority vote of the holders
of all the issued and outstanding shares of the corporation
entitled to vote thereon.
ARTICLE IX
SHAREHOLDERS
9.1 Inspection of Books. The board of directors
shall make reasonable rules to determine at what times and
places and under what conditions the books of the
Corporation shall be open to inspection by shareholders or
a duly appointed representative of a shareholder.
9.2 Control Share Acquisition. The provisions
relating to any control share acquisition as contained in
Florida Statues now, or hereinafter amended, and any
successor provision shall not apply to the Corporation.
9.3 Quorum. The holders of shares entitled to one-
third of the votes at a meeting of shareholder's shall
constitute a quorum.
9.4 Required Vote. Acts of shareholders shall
require the approval of holders of 50.01% of the
outstanding votes of shareholders.
ARTICLE X
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the fullest extent permitted by law, no director or
officer of the Corporation shall be personally liable to
the Corporation or its shareholders for damages for breach
of any duty owed to the Corporation or its shareholders.
In addition, the Corporation shall have the power, in its
By-Laws or in any resolution of its stockholders or
directors, to undertake to indemnify the officers and
directors of this corporation against any contingency or
peril as may be determined to be in the best interests of
this corporation, and in conjunction therewith, to procure,
at this corporation's expense, policies of insurance.
2
<PAGE>
ARTICLE XI
CONTRACTS
No contract or other transaction between this
corporation and any person, firm or corporation shall be
affected by the fact that any officer or director of this
corporation is such other party or is, or at some time in
the future becomes, an officer, director or partner of such
other contracting party, or has now or hereinafter a direct
or indirect interest in such contract.
I hereby certify that the following was adopted by a
majority vote of the shareholders and directors of the
corporation on June 10, 1998 and that the number of votes
cast was sufficient for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and
executed this Amendment to Articles of Incorporations on
June 10, 1998.
\s\ Marc A. Kuperman
- ---------------------------------------------
Marc A. Kuperman, Sole Director and President
The foregoing instrument was acknowledged before me on
June 10, 1998, by Marc A. Kuperman, who is personally known
to me.
\s\ Isabel J. Cantera
---------------------
Notary Public
My Commission expires: MY COMMISSION #cc429309
EXPIRES FEBRUARY 25, 1999
BONDED THRU NOTARY PUBLIC
UNDERWRITERS
3
<PAGE>
FILED
99 FEB 15 PM 2:49
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
HHHP, INC.
-----------------------------------------------------------
(Present Name)
Pursuant to the provisions of section 607.1006. Florida Statutes,
this Florida profit corporation adopts the following articles of
amendment to its articles of incorporation:
FIRST: Amendment(s) adopted: (indicate article number(s) being
amended, added or deleted)
Article I is hereby amended to read as follows:
The name of this corporation is "WCollect.Com, Inc."
SECOND: If an amendment provides for an exchange, reclassification
or cancellation of issued shares, provisions for implementing the
amendment if not contained in the amendment itself, are as follows:
THIRD: The date of each amendment's adoption: February 11, 1999
------------------
FOURTH: Adoption of Amendment(s) (CHECK ONE)
[X] The amendment(s) was/were approved by the shareholders.
The number of votes cast for the amendment(s) was/were
sufficient for approval.
[ ] The amendment(s) was/were approved by the shareholders
through voting groups.
<PAGE>
The following statements must be separately provided for each
voting group entitled to vote separately on the amendment(s):
"The number of votes cast for the amendment(s) was/were sufficient
for approval by _________________________________."
voting group
[ ] The amendment(s) was/were approved by the board of
directors without shareholder action and shareholder
action was not required.
[ ] The amendment(s) was/were approved by the incorporators
without shareholder action and shareholder action was not
required.
Signed this 11th day of February, 1999.
---- -------- --
Signature \s\ John Xinos
---------------------------------------------
(By the Chairman or Vice Chairman of the Board of
Directors, President, or other officer if adopted
by the shareholders)
OR
(By a director if adopted by the directors)
OR
(By an incorporator if adopted by the incorporators)
John Xinos
--------------------------------------
Typed or printed name
President
--------------------------------------
Title
<PAGE>
BYLAWS
OF
WCOLLECT.COM, INC.
(A FLORIDA CORPORATION)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
corporation in the State of Florida shall be in the City of Miami,
State of Florida.
Section 2. Other Offices. The corporation shall also have
and maintain an office or principal place of business at such place
as may be fixed by the Board of Directors, and may also have
offices at such other places, both within and without the State of
Florida as the Board of Directors may from time to time determine
or the business of the corporation may require.
ARTICLE II
CORPORATE SEAL
Section 3. Corporate Seal. The corporate seal shall consist
of a die bearing the name of the corporation and the inscription,
"Corporate Seal-Florida." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or
otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
Section 4. Place of Meetings. Meetings of the stockholders
of the corporation shall be held at such place, either within or
without the State of Florida, as may be designated from time to
time by the Board of Directors, or, if not so designated, then at
the office of the corporation required to be maintained pursuant to
Section 2 hereof.
Section 5. Annual Meeting.
(a) The annual meeting of the stockholders of the corporation,
for the purpose of election of directors and for such other
business as may lawfully come before it, shall be held on such
date and at such time as may be designated from time to time
by the Board of Directors.
<PAGE>
(b) At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought
before the meeting. To be properly brought before an annual
meeting, business must be: (A) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the
Board of Directors, (B) otherwise properly brought before the
meeting by or at the direction of the Board of Directors, or (C)
otherwise properly brought before the meeting by a stockholder.
For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof
in writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation not later than
the close of business on the sixtieth (60th) day nor earlier than
the close of business on the ninetieth (90th) day prior to the
first anniversary of the preceding year's annual meeting; provided,
however, that in the event that no annual meeting was held in the
previous year or the date of the annual meeting has been changed by
more than thirty (30) days from the date contemplated at the time
of the previous year's proxy statement, notice by the stockholder
to be timely must be so received not earlier than the close of
business on the ninetieth (90th) day prior to such annual meeting
and not later than the close of business on the later of the
sixtieth (60th) day prior to such annual meeting or, in the event
public announcement of the date of such annual meeting is first
made by the corporation fewer than seventy (70) days prior to the
date of such annual meeting, the close of business on the tenth
(10th) day following the day on which public announcement of the
date of such meeting is first made by the corporation. A
stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting:
(i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and address, as they
appear on the corporation's books, of the stockholder proposing
such business, (iii) the class and number of shares of the
corporation which are beneficially owned by the stockholder, (iv)
any material interest of the stockholder in such business and (v)
any other information that is required to be provided by the
stockholder pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), in his capacity
as a proponent to a stockholder proposal. Notwithstanding the
foregoing, in order to include information with respect to a
stockholder proposal in the proxy statement and form of proxy for a
stockholder's meeting, stockholders must provide notice as required
by the regulations promulgated under the 1934 Act. Notwithstanding
anything in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the
procedures set forth in this paragraph (b). The chairman of the
annual meeting shall, if the facts warrant, determine and declare
at the meeting that business was not properly brought before the
meeting and in accordance with the provisions of this paragraph
(b), and, if he should so determine, he shall so declare at the
meeting that any such business not properly brought before the
meeting shall not be transacted.
(c) Only persons who are confirmed in accordance with the
procedures set forth in this paragraph (c) shall be eligible for
election as directors. Nominations of persons for election to the
Board of Directors of the corporation may be made at a meeting of
stockholders by or at the direction of the Board of Directors or by
any stockholder of the corporation entitled to vote in the election
of directors at the meeting who complies with the notice procedures
set forth in this paragraph (c). Such nominations, other than
those made by or at the direction of the Board of Directors, shall
be made pursuant to timely notice in writing to the Secretary of
the corporation in accordance with the provisions of paragraph (b)
of this Section 5. Such stockholder's notice shall
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set forth (i) as to each person, if any, whom the stockholder
proposes to nominate for election or re-election as a director:
(A) the name, age, business address and residence address of such
person, (B) the principal occupation or employment of such person,
(c) the class and number of shares of the corporation which are
beneficially owned by such person, (D) a description of all
arrangements or understandings between the stockholder and each
nominee and any other person or persons (naming such person or
persons) pursuant to which the nominations are to be made by the
stockholder, and (E) any other information relating to such person
that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the 1934 Act (including without
limitation such person's written consent to being named in the
proxy statement, if any, as a nominee and to serving as a director
if elected); and (ii) as to such stockholder giving notice,
the information required to be provided pursuant to paragraph (b)
of this Section 5. At the request of the Board of Directors, any
person nominated by a stockholder for election as a director shall
furnish to the Secretary of the corporation that information
required to be set forth in the stockholder's notice of nomination
which pertains to the nominee. No person shall be eligible for
election as a director of the corporation unless nominated in
accordance with the procedures set forth in this paragraph (c).
The chairman of the meeting shall, if the facts warrant, determine
and declare at the meeting that a nomination was not made in
accordance with the procedures prescribed by these Bylaws, and if
he should so determine, he shall so declare at the meeting, and the
defective nomination shall be disregarded.
(d) For purposes of this Section 5, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press or comparable national news service
or in a document publicly filed by the corporation with the
Securities and Exchange Commission pursuant to Section 13, 14 or
15(d) of the Exchange Act.
Section 6. Special Meetings.
(a) Special meetings of the stockholders of the corporation
may be called, for any purpose or purposes, by (i) the Chairman of
the Board of Directors, (ii) the Chief Executive Officer, or (iii)
the Board of Directors pursuant to a resolution adopted by a
majority of the total number of authorized directors (whether or
not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the
Board of Directors for adoption), and shall be held at such place,
on such date, and at such time as the Board of Directors, shall
determine.
(b) If a special meeting is called by any person or persons
other than the Board of Directors, the request shall be in writing,
specifying the general nature of the business proposed to be
transacted, and shall be delivered personally or sent by registered
mail or by telegraphic or other facsimile transmission to the
Chairman of the Board of Directors, the Chief Executive Officer, or
the Secretary of the corporation. No business may be transacted at
such special meeting otherwise than specified in such notice. The
Board of Directors shall determine the time and place of such
special meeting, which shall be held not less than thirty-five (35)
nor more than one hundred twenty (120) days after the date of the
receipt of the request. Upon determination of the time and place
of the meeting, the officer receiving the request shall cause
notice to be given to the stockholders entitled to vote, in
accordance with the provisions of Section 7 of these Bylaws. If
the notice is not given within sixty (60) days after the receipt of
the request, the person or persons requesting the
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meeting may set the time and place of the meeting and give the notice.
Nothing contained in this paragraph (b) shall be construed as limiting,
fixing, or affecting the time when a meeting of stockholders called
by action of the Board of Directors may be held.
Section 7. Notice of Meetings. Except as otherwise provided
by law or the Articles of Incorporation, written notice of each
meeting of stockholders shall be given not less than ten (10) nor
more than sixty (60) days before the date of the meeting to each
stockholder entitled to vote at such meeting, such notice to
specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of
stockholders may be waived in writing, signed by the person
entitled to notice thereof, either before or after such meeting,
and will be waived by any stockholder by his attendance thereat in
person or by proxy, except when the stockholder attends a meeting
for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is
not lawfully called or convened. Any stockholder so waiving notice
of such meeting shall be bound by the proceedings of any such
meeting in all respects as if due notice thereof had been given.
Section 8. Quorum. At all meetings of stockholders, except
where otherwise provided by statute or by the Articles of
Incorporation, or by these Bylaws, the presence, in person or by
proxy duly authorized, of the holder or holders of not less than
one third (33 1/3%) of the outstanding shares of stock entitled to
vote shall constitute a quorum for the transaction of business. In
the absence of a quorum, any meeting of stockholders may be
adjourned, from time to time, either by the chairman of the meeting
or by vote of the holders of a majority of the shares represented
thereat, but no other business shall be transacted at such meeting.
The stockholders present at a duly called or convened meeting, at
which a quorum is present, may continue to transact business until
adjournment, notwithstanding the withdrawal of enough stockholders
to leave less than a quorum. Except as otherwise provided by law,
the Articles of Incorporation or these Bylaws, all action taken by
the holders of a majority of the votes cast, excluding abstentions,
at any meeting at which a quorum is present shall be valid and
binding upon the corporation; provided, however, that directors
shall be elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Where a separate vote by a
class or classes or series is required, except where otherwise
provided by the statute or by the Articles of Incorporation or
these Bylaws, a majority of the outstanding shares of such class or
classes or series, present in person or represented by proxy, shall
constitute a quorum entitled to take action with respect to that
vote on that matter and, except where otherwise provided by the
statute or by the Articles of Incorporation or these Bylaws, the
affirmative vote of the majority (plurality, in the case of the
election of directors) of the votes cast, including abstentions, by
the holders of shares of such class or classes or series shall be
the act of such class or classes or series.
Section 9. Adjournment and Notice of Adjourned Meetings. Any
meeting of stockholders, whether annual or special, may be
adjourned from time to time either by the chairman of the meeting
or by the vote of a majority of the shares casting votes, excluding
abstentions. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting, the corporation may transact
any business which might have been transacted at the original
meeting. If the adjournment is for more than thirty (30) days or
if after the adjournment
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a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 10. Voting Rights. For the purpose of
determining those stockholders entitled to vote at any meeting of
the stockholders, except as otherwise provided by law, only persons
in whose names shares stand on the stock records of the corporation
on the record date, as provided in Section 12 of these Bylaws,
shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote shall have the right to do so either in
person or by an agent or agents authorized by a proxy granted in
accordance with Florida law. An agent so appointed need not be a
stockholder. No proxy shall be voted after three (3) years from
its date of creation unless the proxy provides for a longer period.
Section 11. Joint Owners of Stock. If shares or other
securities having voting power stand of record in the names of two
(2) or more persons, whether fiduciaries, members of a partnership,
joint tenants, tenants in common, tenants by the entirety, or
otherwise, or if two (2) or more persons have the same fiduciary
relationship respecting the same shares, unless the Secretary is
given written notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the
relationship wherein it is so provided, their acts with respect to
voting shall have the following effect: (a) if only one (1) votes,
his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but
the vote is evenly split on any particular matter, each faction may
vote the securities in question proportionally, or may apply to a
court of competent jurisdiction. If the instrument filed with the
Secretary shows that any such tenancy is held in unequal interests,
a majority or even-split for the purpose of subsection (c) shall be
a majority or even-split in interest.
Section 12. List of Stockholders. The Secretary shall
prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote
at said meeting, arranged in alphabetical order, showing the
address of each stockholder and the number of shares registered in
the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not specified, at
the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole
time thereof and may be inspected by any stockholder who is
present.
Section 13. Action Without Meeting. No action shall be
taken by the stockholders except at an annual or special meeting of
stockholders called in accordance with these Bylaws, or by the
written consent stockholders.
Section 14. Organization.
(a) At every meeting of stockholders, the Chairman of the
Board of Directors, or, if a Chairman has not been appointed or is
absent, the President, or, if the President is absent, a chairman
of the meeting chosen by a majority in interest of the stockholders
entitled to vote, present in person
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or by proxy, shall act as chairman. The Secretary, or, in his
absence, an Assistant Secretary directed to do so by the President,
shall act as secretary of the meeting.
(b) The Board of Directors of the corporation shall be
entitled to make such rules or regulations for the conduct of
meetings of stockholders as it shall deem necessary, appropriate or
convenient. Subject to such rules and regulations of the Board of
Directors, if any, the chairman of the meeting shall have the right
and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are
necessary, appropriate or convenient for the proper conduct of the
meeting, including, without limitation, establishing an agenda or
order of business for the meeting, rules and procedures for
maintaining order at the meeting and the safety of those present,
limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted
proxies and such other persons as the chairman shall permit,
restrictions on entry to the meeting after the time fixed for the
commencement thereof, limitations on the time allotted to questions
or comments by participants and regulation of the opening and
closing of the polls for balloting on matters which are to be voted
on by ballot. Unless and to the extent determined by the Board of
Directors or the chairman of the meeting, meetings of stockholders
shall not be required to be held in accordance with rules of
parliamentary procedure.
ARTICLE IV
DIRECTORS
Section 15. Number and Qualification. The authorized
number of directors of the corporation shall be not less than one
(1) nor more than twelve (12) as fixed from time to time by
resolution of the Board of Directors; provided that no decrease in
the number of directors shall shorten the term of any incumbent
directors. Directors need not be stockholders unless so required
by the Articles of Incorporation. If for any cause, the directors
shall not have been elected at an annual meeting, they may be
elected as soon thereafter as convenient at a special meeting of
the stockholders called for that purpose in the manner provided in
these Bylaws.
Section 16. Powers. The powers of the corporation shall
be exercised, its business conducted and its property controlled by
the Board of Directors, except as may be otherwise provided by
statute or by the Articles of Incorporation.
Section 17. Election and Term of Office of Directors.
Members of the Board of Directors shall hold office for the terms
specified in the Articles of Incorporation, as it may be amended
from time to time, and until their successors have been elected as
provided in the Articles of Incorporation.
Section 18. Vacancies. Unless otherwise provided in the
Articles of Incorporation, any vacancies on the Board of Directors
resulting from death, resignation, disqualification, removal or
other causes and any newly created directorships resulting from any
increase in the number of directors, shall unless the Board of
Directors determines by resolution that any such vacancies or newly
created directorships shall be filled by stockholder vote, be
filled only by the affirmative vote
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of a majority of the directors then in office, even though less
than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the
remainder of the full term of the director for which the vacancy
was created or occurred and until such director's successor shall
have been elected and qualified. A vacancy in the Board of
Directors shall be deemed to exist under this Bylaw in the case of
the death, removal or resignation of any director.
Section 19. Resignation. Any director may resign at any
time by delivering his written resignation to the Secretary, such
resignation to specify whether it will be effective at a particular
time, upon receipt by the Secretary or at the pleasure of the Board
of Directors. If no such specification is made, it shall be deemed
effective at the pleasure of the Board of Directors. When one or
more directors shall resign from the Board of Directors, effective
at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each
director so chosen shall hold office for the unexpired portion of
the term of the director whose place shall be vacated and until his
successor shall have been duly elected and qualified.
Section 20. Removal. Subject to the Articles of
Incorporation, any director may be removed by:
(a) the affirmative vote of the holders of a majority of the
outstanding shares of the Corporation then entitled to vote, with
or without cause; or
(b) the affirmative and unanimous vote of a majority of the
directors of the Corporation, with the exception of the vote of the
directors to be removed, with or without cause.
Section 21. Meetings.
(a) Annual Meetings. The annual meeting of the Board of
Directors shall be held immediately after the annual meeting of
stockholders and at the place where such meeting is held. No
notice of an annual meeting of the Board of Directors shall be
necessary and such meeting shall be held for the purpose of
electing officers and transacting such other business as may
lawfully come before it.
(b) Regular Meetings. Except as hereinafter otherwise
provided, regular meetings of the Board of Directors shall be held
in the office of the corporation required to be maintained pursuant
to Section 2 hereof. Unless otherwise restricted by the Articles
of Incorporation, regular meetings of the Board of Directors may
also be held at any place within or without the state of Florida
which has been designated by resolution of the Board of Directors
or the written consent of all directors.
(c) Special Meetings. Unless otherwise restricted by the
Articles of Incorporation, special meetings of the Board of
Directors may be held at any time and place within or without the
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State of Florida whenever called by the Chairman of the Board, the
President or any two of the directors.
(d) Telephone Meetings. Any member of the Board of
Directors, or of any committee thereof, may participate in a
meeting by means of conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by such
means shall constitute presence in person at such meeting.
(e) Notice of Meetings. Notice of the time and place of all
special meetings of the Board of Directors shall be orally or in
writing, by telephone, facsimile, telegraph or telex, during normal
business hours, at least twenty-four (24) hours before the date and
time of the meeting, or sent in writing to each director by first
class mail, charges prepaid, at least three (3) days before the
date of the meeting. Notice of any meeting may be waived in
writing at any time before or after the meeting and will be waived
by any director by attendance thereat, except when the director
attends the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
(f) Waiver of Notice. The transaction of all business at any
meeting of the Board of Directors, or any committee thereof,
however called or noticed, or wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice, if
a quorum be present and if, either before or after the meeting,
each of the directors not present shall sign a written waiver of
notice. All such waivers shall be filed with the corporate records
or made a part of the minutes of the meeting.
Section 22. Quorum and Voting.
(a) Unless the Articles of Incorporation requires a greater
number and except with respect to indemnification questions arising
under Section 43 hereof, for which a quorum shall be one-third of
the exact number of directors fixed from time to time in accordance
with the Articles of Incorporation, a quorum of the Board of
Directors shall consist of a majority of the exact number of
directors fixed from time to time by the Board of Directors in
accordance with the Articles of Incorporation provided, however, at
any meeting whether a quorum be present or otherwise, a majority of
the directors present may adjourn from time to time until the time
fixed for the next regular meeting of the Board of Directors,
without notice other than by announcement at the meeting.
(b) At each meeting of the Board of Directors at which a
quorum is present, all questions and business shall be determined
by the affirmative vote of a majority of the directors present,
unless a different vote be required by law, the Articles of
Incorporation or these Bylaws.
Section 23. Action Without Meeting. Unless otherwise
restricted by the Articles of Incorporation or these Bylaws, any
action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without
a meeting, if all members of the Board of Directors or committee,
as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of
Directors or committee.
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Section 24. Fees and Compensation. Directors shall be
entitled to such compensation for their services as may be approved
by the Board of Directors, including, if so approved, by resolution
of the Board of Directors, a fixed sum and expenses of attendance,
if any, for attendance at each regular or special meeting of the
Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other
capacity as an officer, agent, employee, or otherwise and receiving
compensation therefor.
Section 25. Committees.
(a) Executive Committee. The Board of Directors may by
resolution passed by a majority of the whole Board of Directors
appoint an Executive Committee to consist of one (1) or more
members of the Board of Directors. The Executive Committee, to the
extent permitted by law and provided in the resolution of the Board
of Directors shall have and may exercise all the powers and
authority of the Board of Directors in the management of the
business and affairs of the corporation, including without
limitation the power or authority to declare a dividend, to
authorize the issuance of stock and to adopt a certificate of
ownership and merger, and may authorize the seal of the corporation
to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to
amending the Articles of Incorporation (except that a committee
may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board
of Directors fix the designations and any of the preferences or
rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the
conversion into, or the exchange of such shares for, shares of any
other class or classes or any other series of the same or any other
class or classes of stock of the corporation or fix the number of
shares of any series of stock or authorize the increase or decrease
of the shares of any series), adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property
and assets, recommending to the stockholders a dissolution of the
corporation or a revocation of a dissolution, or amending the
bylaws of the corporation.
(b) Other Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors,
from time to time appoint such other committees as may be permitted
by law. Such other committees appointed by the Board of Directors
shall consist of one (1) or more members of the Board of Directors
and shall have such powers and perform such duties as may be
prescribed by the resolution or resolutions creating such
committees, but in no event shall such committee have the powers
denied to the Executive Committee in these Bylaws.
(c) Term. Each member of a committee of the Board of
Directors shall serve a term on the committee coexistent with such
member's term on the Board of Directors. The Board of Directors,
subject to the provisions of subsections (a) or (b) of this Bylaw
may at any time increase or decrease the number of members of a
committee or terminate the existence of a committee. The
membership of a committee member shall terminate on the date of his
death or voluntary resignation from the committee or from the Board
of Directors. The Board of Directors may at any time for any
reason remove any individual committee member and the Board of
Directors may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the
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committee. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the committee,
and, in addition, in the absence or disqualification of any member
of a committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
(d) Meetings. Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other
committee appointed pursuant to this Section 25 shall be held at
such times and places as are determined by the Board of Directors,
or by any such committee, and when notice thereof has been given to
each member of such committee, no further notice of such regular
meetings need be given thereafter. Special meetings of any such
committee may be held at any place which has been determined from
time to time by such committee, and may be called by any director
who is a member of such committee, upon written notice to the
members of such committee of the time and place of such special
meeting given in the manner provided for the giving of written
notice to members of the Board of Directors of the time and place
of special meetings of the Board of Directors. Notice of any
special meeting of any committee may be waived in writing at any
time before or after the meeting and will be waived by any director
by attendance thereat, except when the director attends such
special meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. A majority
of the authorized number of members of any such committee shall
constitute a quorum for the transaction of business, and the act of
a majority of those present at any meeting at which a quorum is
present shall be the act of such committee.
Section 26. Organization. At every meeting of the
directors, the Chairman of the Board of Directors, or, if a
Chairman has not been appointed or is absent, the President, or if
the President is absent, the most senior Vice President, or, in the
absence of any such officer, a chairman of the meeting chosen by a
majority of the directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed
to do so by the President, shall act as secretary of the meeting.
ARTICLE V
OFFICERS
Section 27. Officers Designated. The officers of the
corporation shall include, if and when designated by the Board of
Directors, the Chairman of the Board of Directors, the Chief
Executive Officer, the President, one or more Vice Presidents, the
Secretary, the Chief Financial Officer, the Treasurer, the
Controller, all of whom shall be elected at the annual
organizational meeting of the Board of Direction. The Board of
Directors may also appoint one or more Assistant Secretaries,
Assistant Treasurers, Assistant Controllers and such other officers
and agents with such powers and duties as it shall deem necessary.
The Board of Directors may assign such additional titles to one or
more of the officers as it shall deem appropriate. Any one person
may hold any number of offices of the corporation at any one time
unless specifically prohibited therefrom by law.
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The salaries and other compensation of the officers of the
corporation shall be fixed by or in the manner designated by the
Board of Directors.
Section 28. Tenure and Duties of Officers.
(a) General. All officers shall hold office at the pleasure
of the Board of Directors and until their successors shall have
been duly elected and qualified, unless sooner removed. Any
officer elected or appointed by the Board of Directors may be
removed at any time by the Board of Directors. If the office of
any officer becomes vacant for any reason, the vacancy may be
filled by the Board of Directors.
(b) Duties of Chairman of the Board of Directors. The
Chairman of the Board of Directors, when present, shall preside at
all meetings of the stockholders and the Board of Directors. The
Chairman of the Board of Directors shall perform other duties
commonly incident to his office and shall also perform such other
duties and have such other powers as the Board of Directors shall
designate from time to time. If there is no President, then the
Chairman of the Board of Directors shall also serve as the Chief
Executive Officer of the corporation and shall have the powers and
duties prescribed in paragraph (c) of this Section 28.
(c) Duties of President. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of
Directors, unless the Chairman of the Board of Directors has been
appointed and is present. Unless some other officer has been
elected Chief Executive Officer of the corporation, the President
shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general
supervision, direction and control of the business and officers of
the corporation. The President shall perform other duties commonly
incident to his office and shall also perform such other duties and
have such other powers as the Board of Directors shall designate
from time to time.
(d) Duties of Vice Presidents. The Vice Presidents may
assume and perform the duties of the President in the absence or
disability of the President or whenever the office of President is
vacant. The Vice Presidents shall perform other duties commonly
incident to their office and shall also perform such other duties
and have such other powers as the Board of Directors or the
President shall designate from time to time.
(e) Duties of Secretary. The Secretary shall attend all
meetings of the stockholders and of the Board of Directors and
shall record all acts and proceedings thereof in the minute book of
the corporation. The Secretary shall give notice in conformity
with these Bylaws of all meetings of the stockholders and of all
meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties
given him in these Bylaws and other duties commonly incident to his
office and shall also perform such other duties and have such other
powers as the Board of Directors shall designate from time to time.
The President may direct any Assistant Secretary to assume and
perform the duties of the Secretary in the absence or disability of
the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such
other duties and have such other powers as the Board of Directors
or the President shall designate from time to time.
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(f) Duties of Chief Financial Officer. The Chief Financial
Officer shall keep or cause to be kept the books of account of the
corporation in a thorough and proper manner and shall render
statements of the financial affairs of the corporation in such form
and as often as required by the Board of Directors or the
President. The Chief Financial Officer, subject to the order of
the Board of Directors, shall have the custody of all funds and
securities of the corporation. The Chief Financial Officer shall
perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board
of Directors or the President shall designate from time to time.
The President may direct the Treasurer or any Assistant Treasurer,
or the Controller or any Assistant Controller to assume and perform
the duties of the Chief Financial Officer in the absence or
disability of the Chief Financial Officer, and each Treasurer and
Assistant Treasurer and each Controller and Assistant Controller
shall perform other duties commonly incident to his office and
shall also perform such other duties and have such other powers as
the Board of Directors or the President shall designate from time
to time.
Section 29. Delegation of Authority. The Board of
Directors may from time to time delegate the powers or duties of
any officer to any other officer or agent, notwithstanding any
provision hereof.
Section 30. Resignations. Any officer may resign at any
time by giving written notice to the Board of Directors or to the
President or to the Secretary. Any such resignation shall be
effective when received by the person or persons to whom such
notice is given, unless a later time is specified therein, in which
event the resignation shall become effective at such later time.
Unless otherwise specified in such notice, the acceptance of any
such resignation shall not be necessary to make it effective. Any
resignation shall be without prejudice to the rights, if any, of
the corporation under any contract with the resigning officer.
Section 31. Removal. Any officer may be removed from
office at any time, either with or without cause, by the
affirmative vote of a majority of the directors in office at the
time, or by the unanimous written consent of the directors in
office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of
Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION
Section 32. Execution of Corporate Instrument. The Board
of Directors may, in its discretion, determine the method and
designate the signatory officer or officers, or other person or
persons, to execute on behalf of the corporation any corporate
instrument or document, or to sign on behalf of the corporation the
corporate name without limitation, or to enter into contracts on
behalf of the corporation, except where otherwise provided by law
or these Bylaws, and such execution or signature shall be binding
upon the corporation.
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Unless otherwise specifically determined by the Board of
Directors or otherwise required by law, promissory notes, deeds of
trust, mortgages and other evidences of indebtedness of the
corporation, and other corporate instruments or documents requiring
the corporate seal, and certificates of shares of stock owned by
the corporation, shall be executed, signed or endorsed by the
Chairman of the Board of Directors, or the President or any Vice
President, and by the Secretary or Treasurer or any Assistant
Secretary or Assistant Treasurer. All other instruments and
documents requiting the corporate signature, but not requiring the
corporate seal, may be executed as aforesaid or in such other
manner as may be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositaries on
funds to the credit of the corporation or in special accounts of
the corporation shall be signed by such person .or persons as the
Board of Directors shall authorize so to do.
Unless authorized or ratified by the Board of Directors or
within the agency power of an officer, no officer, agent or
employee shall have any power or authority to bind the corporation
by any contract or engagement or to pledge its credit or to render
it liable for any purpose or for any amount.
Section 33. Voting of Securities Owned by the
Corporation. All stock and other securities of other corporations
owned or held by the corporation for itself, or for other parties
in any capacity, shall be voted, and all proxies with respect
thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such
authorization, by the Chairman of the Board of Directors, the Chief
Executive Officer, the President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
Section 34. Form and Execution of Certificates.
Certificates for the shares of stock of the corporation shall be in
such form as is consistent with the Articles of Incorporation and
applicable law. Every holder of stock in the corporation shall be
entitled to have a certificate signed by or in the name of the
corporation by the Chairman of the Board of Directors, or the
President or any Vice President and by the Treasurer or Assistant
Treasurer or the Secretary or Assistant Secretary, certifying the
number of shares owned by him in the corporation. Any or all of
the signatures on the certificate may be facsimiles. In case any
officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued with the same effect as if
he were such officer, transfer agent, or registrar at the date of
issue. Each certificate shall state upon the face or back thereof,
in full or in summary, all of the powers, designations,
preferences, and rights, and the limitations or restrictions of the
shares authorized to be issued or shall, except as otherwise
required by law, set forth on the face or back a statement that the
corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative,
participating, optional, or other special rights of each class
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of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Within a
reasonable time after the issuance or transfer of uncertificated
stock, the corporation shall send to the registered owner thereof a
written notice containing the information required to be set forth
or stated on certificates pursuant to this section or otherwise
required by law or with respect to this section a statement that
the corporation will furnish without charge to each stockholder who
so requests the powers, designations, preferences and relative
participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Except as
otherwise expressly provided by law, the rights and obligations of
the holders of certificates representing stock of the same class
and series shall be identical.
Section 35. Lost Certificates. A new certificate or
certificates shall be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have
been lost, stolen, or destroyed, upon the making of an affidavit of
that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a
condition precedent to the issuance of a new certificate or
certificates, the owner of such lost, stolen, or destroyed
certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require or to give
the corporation a surety bond in such form and amount as it may
direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been
lost, stolen, or destroyed.
Section 36. Transfers.
(a) Transfers of record of shares of stock of the corporation
shall be made only upon its books by the holders thereof, in person
or by attorney duly authorized, and upon the surrender of a
properly endorsed certificate or certificates for a like number of
shares.
(b) The corporation shall have power to enter into and
perform any agreement with any number of stockholders of any one or
more classes of stock of the corporation to restrict the transfer
of shares of stock of the corporation of any one or more classes
owned by such stockholders in any manner not prohibited by the
Florida Business Corporations Act.
Section 37. Fixing Record Dates.
(a) In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may
fix, in advance, a record date, which record date shall not precede
the date upon which the resolution fixing the record date is
adopted by the Board of Directors, and which record date shall not
be more than sixty (60) nor less than ten (10) days before the date
of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice
is given, or if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix
a new record date for the adjourned meeting.
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(b) In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders
entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record
date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted, and which record date
shall be not more than sixty (60) days prior to such action. If no
record date is filed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating
thereto.
Section 38. Registered Stockholders. The corporation shall
be entitled to recognize the exclusive right of a person registered
on its books as the owner of shares to receive dividends, and to
vote as such owner, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on
the part of any other person whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws
of Florida.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
Section 39. Execution of Other Securities. All bonds,
debentures and other corporate securities of the corporation, other
than stock certificates (covered in Section 34), may be signed by
the Chairman of the Board of Directors, the President or any Vice
President, or such other person as may be authorized by the Board
of Directors, and the corporate seal impressed thereon or a
facsimile of such seal imprinted thereon and attested by the
signature of the Secretary or an Assistant Secretary, or the Chief
Financial Officer or Treasurer or an Assistant Treasurer; provided,
however, that where any such bond, debenture or other corporate
security shall be authenticated by the manual signature, or where
permissible facsimile signature, of a trustee under an indenture
pursuant to which such bond, debenture or other corporate security
shall be issued, the signatures of the persons signing and
attesting the corporate seal on such bond, debenture or other
corporate security may be the imprinted facsimile of the signatures
of such persons. Interest coupons appertaining to any such bond,
debenture or other corporate security, authenticated by a trustee
as aforesaid, shall be signed by the Treasurer or an Assistant
Treasurer of the corporation or such other person as may be
authorized by the Board of Directors, or bear imprinted thereon the
facsimile signature of such person. In case any officer who shall
have signed or attested any bond, debenture or other corporate
security, or whose facsimile signature shall appear thereon or on
any such interest coupon, shall have ceased to be such officer
before the bond, debenture or other corporate security so signed or
attested shall have been delivered, such bond, debenture or other
corporate security nevertheless may be adopted by the corporation
and issued and delivered as though the person who signed the same
or whose facsimile signature shall have been used thereon had not
ceased to be such officer of the corporation.
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ARTICLE IX
DIVIDENDS
Section 40. Declaration of Dividends. Dividends upon the
capital stock of the corporation, subject to the provisions of the
Articles of Incorporation, if any, may be declared by the Board of
Directors pursuant to law at any regular or special meeting.
Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the provisions of the Articles of
Incorporation.
Section 41. Dividend Reserve. Before payment of any
dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the Board
of Directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property
of the corporation, or for such other purpose as the Board of
Directors shall think conducive to the interests of the
corporation, and the Board of Directors may modify or abolish any
such reserve in the manner in which it was created.
ARTICLE X
FISCAL YEAR
Section 42. Fiscal Year. The fiscal year of the corporation
shall be fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
Section 43. Indemnification of Directors, Executive Officers,
Other Officers, Employees and Other Agents.
(a) Directors Officers. The corporation shall indemnify its
directors and officers to the fullest extent not prohibited by the
Florida Business Corporations Act; provided, however, that the
corporation may modify the extent of such indemnification by
individual contracts with its directors and officers; and,
provided, further, that the corporation shall not be required to
indemnify any director or officer in connection with any proceeding
(or part thereof) initiated by such person unless (i) such
indemnification is expressly required to be made by law, (ii) the
proceeding was authorized by the Board of Directors of the
corporation, (iii) such indemnification is provided by the
corporation, in its sole discretion, pursuant to the powers vested
in the corporation under the Florida Business Corporations Act or
(iv) such indemnification is required to be made under subsection
(d).
(b) Employees and Other Agents. The corporation shall have
power to indemnify its employees and other agents as set forth in
the Florida Business Corporations Act.
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(c) Expense. The corporation shall advance to any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director or officer, of the
corporation, or is or was serving at the request of the corporation
as a director or executive officer of another corporation,
partnership, joint venture, trust or other enterprise, prior to the
final disposition of the proceeding, promptly following request
therefor, all expenses incurred by any director or officer in
connection with such proceeding upon receipt of an undertaking by
or on behalf of such person to repay said mounts if it should be
determined ultimately that such person is not entitled to be
indemnified under this Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined
pursuant to paragraph (e) of this Bylaw, no advance shall be made
by the corporation to an officer of the corporation (except by
reason of the fact that such officer is or was a director of the
corporation in which event this paragraph shall not apply) in any
action, suit or proceeding, whether civil, criminal, administrative
or investigative, if a determination is reasonably and promptly
made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or
(ii) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, that the facts known to the decision-
making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in
a manner that such person did not believe to be in or not opposed
to the best interests of the corporation.
(d) Enforcement. Without the necessity of entering into an
express contract, all rights to indemnification and advances to
directors and officers under this Bylaw shall be deemed to be
contractual rights and be effective to the same extent and as if
provided for in a contract between the corporation and the director
or officer. Any right to indemnification or advances granted by
this Bylaw to a director or officer shall be enforceable by or on
behalf of the person holding such right in any court of competent
jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim
is made within ninety (90) days of request therefor. The claimant
in such enforcement action, if successful in whole or in part,
shall be entitled to be paid also the expense of prosecuting his
claim. In connection with any claim for indemnification, the
corporation shall be entitled to raise as a defense to any such
action that the claimant has not met the standard of conduct that
make it permissible under the Florida Business Corporations Act for
the corporation to indemnify the claimant for the amount claimed.
In connection with any claim by an officer of the corporation
(except in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such
officer is or was a director of the corporation) for advances, the
corporation shall be entitled to raise a defense as to any such
action clear and convincing evidence that such person acted in bad
faith or in a manner that such person did not believe to be in or
not opposed in the best interests of the corporation, or with
respect to any criminal action or proceeding that such person acted
without reasonable cause to believe that his conduct was lawful.
Neither the failure of the corporation (including its Board of
Directors, independent legal counsel or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in
the Florida Business Corporations Act, nor an actual determination
by the corporation (including its
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Board of Directors, independent legal counsel or its stockholders)
that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that
claimant has not met the applicable standard of conduct. In any
suit brought by a director or officer to enforce a right to
indemnification or to an advancement of expenses hereunder, the
burden of proving that the director or officer is not entitled to be
indemnified, or to such advancement of expenses, under this Article
XI or otherwise shall be on the corporation.
(e) Non-Exclusivity of Rights. The rights conferred on any
person by this Bylaw shall not be exclusive of any other right
which such person may have or hereafter acquire under any statute,
provision of the Articles of Incorporation, Bylaws, agreement, vote
of stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another
capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of
its directors, officers, employees or agents respecting
indemnification and advances, to the fullest extent not prohibited
by the Florida Business Corporations Act.
(f) Survival of Rights. The rights conferred on any person
by this Bylaw shall continue as to a person who has ceased to be a
director, officer, employee or other agent and shall inure to the
benefit of the heirs, executors and administrators of such a
person.
(g) Insurance. To the fullest extent permitted by the
Florida Business Corporations Act, the corporation, upon approval
by the Board of Directors, may purchase insurance on behalf of any
person required or permitted to be indemnified pursuant to this
Bylaw.
(h) Amendments. Any repeal or modification of this Bylaw
shall only be prospective and shall not affect the rights under
this Bylaw in effect at the time of the alleged occurrence of any
action or omission to act that is the cause of any proceeding
against any agent of the corporation.
(i) Saving Clause. If this Bylaw or any portion hereof shall
be invalidated on any ground by any court of competent
jurisdiction, then the corporation shall nevertheless indemnify
each director and officer to the full extent not prohibited by any
applicable portion of this Bylaw that shall not have been
invalidated, or by any other applicable law.
(j) Certain Definitions. For the purposes of this Bylaw, the
following definitions shall apply:
(i) The term "proceeding" shall be broadly construed and
shall include, without limitation, the investigation,
preparation, prosecution, defense, settlement, arbitration and
appeal of, and the giving of testimony in, any threatened,
pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative.
(ii) The term "expenses" shall be broadly construed and
shall include, without limitation, court costs, attorneys'
fees, witness fees, fines, amounts paid in settlement or
judgment and any other costs and expenses of any nature or
kind incurred in connection with any proceeding.
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(iii) The term the "corporation" shall include, in
addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so
that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director,
officer, employee or agent or another corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under the provisions of this Bylaw
with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its
separate existence had continued.
(iv) References to a "director," "executive officer,"
"officer," "employee," or "agent" of the corporation shall
include, without limitation, situations where such person is
serving at the request of the corporation as, respectively, a
director, executive officer, officer, employee, trustee or
agent of another corporation, partnership, joint venture,
trust or other enterprise.
(v) References to "other enterprises" shall include
employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the
request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee
benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner he reasonably believed
to be in the interest of the participants and beneficiaries of
an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation"
as referred to in this Bylaw.
ARTICLE XII
NOTICES
Section 44. Notices.
(a) Notice to Stockholders. Whenever, under any provisions
of these Bylaws, notice is required to be given to any stockholder,
it shall be given in writing, timely and duly deposited in the
United States mail, postage prepaid, and addressed to his last
known post office address as shown by the stock record of the
corporation or its transfer agent.
(b) Notice to directors. Any notice required to be given to
any director may be given by the method stated in subsection (a),
or by facsimile, telex or telegram, except that such notice other
than one which is delivered personally shall be sent to such
address as such director shall have filed in writing with the
Secretary, or, in the absence of such filing, to the last known
post office address of such director.
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(c) Affidavit of Mailing. An affidavit of mailing, executed
by a duly authorized and competent employee of the corporation or
its transfer agent appointed with respect to the class of stock
affected, specifying the name and address or the names and
addresses of the stockholder or stockholders, or director or
directors, to whom any such notice or notices was or were given,
and the time and method of giving the same, shall in the absence of
fraud, be prima facie evidence of the facts therein contained.
(d) Time Notices Deemed Given. All notices given by mail, as
above provided, shall be deemed to have been given as at the time
of mailing, and all notices given by facsimile, telex or telegram
shall be deemed to have been given as of the sending time recorded
at time of transmission.
(e) Methods of Notice. It shall not be necessary that the
same method of giving notice be employed in respect of all
directors, but one permissible method may be employed in respect of
any one or more, and any other permissible method or methods may be
employed in respect of any other or others.
(f) Failure to Receive Notice. The period or limitation of
time within which any stockholder may exercise any option or right,
or enjoy any privilege or benefit, or be required to act, or within
which any director may exercise any power or right, or enjoy any
privilege, pursuant to any notice sent him ill the manner above
provided, shall not be affected or extended in any manner by the
failure of such stockholder or such director to receive such
notice.
(g) Notice to Person with Whom Communication Is Unlawful.
Whenever notice is required to be given, under any provision of law
or of the Articles of Incorporation or Bylaws of the corporation,
to any person with whom communication is unlawful, the giving of
such notice to such person shall not be require and there shall be
no duty to apply to any governmental authority or agency for a
license or permit to give such notice to such person. Any action
or meeting which shall be taken or held without notice to any such
person with whom communication is unlawful shall have the same
force and effect as if such notice had been duly given. In the
event that the action taken by the corporation is such as to
require the filing of a certificate under any provision of the
Florida Business Corporations Act, the certificate shall state, if
such is the fact and if notice is required, that notice was given
to all persons entitled to receive notice except such persons with
whom communication is unlawful.
(h) Notice to Person with Undeliverable Address. Whenever
notice is required to be given, under any provision of law or the
Articles of Incorporation or Bylaws of the corporation, to any
stockholder to whom (i) notice of two consecutive annual meetings,
and all notices of meetings or of the taking of action by written
consent without a meeting to such person during the period between
such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or
interest on securities during a twelve-month period, have been
mailed addressed to such person at his address as shown on the
records of the corporation and have been returned undeliverable,
the giving of such notice to such person shall not be required.
Any action or meeting which shall be taken or held without notice
to such person shall have the same force and effect as if such
notice had been duly given. If any such person shall deliver to
the corporation a written notice setting forth his then current
address, the requirement that notice be given to such
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person shall be reinstated. In the event that the action taken by
the corporation is such as to require the filing of a certificate
under any provision of the Florida Business Corporations Act, the
certificate need not state that notice was not given to persons to
whom notice was not required to be given pursuant to this
paragraph.
ARTICLE XII
AMENDMENTS
Section 45. Amendments.
The Board of Directors shall also have the power to adopt,
amend, or repeal Bylaws as set forth in the Articles of
Incorporation.
ARTICLE XIV
LOANS TO OFFICERS
Section 46. Loans to Officers. The corporation may lend
money to, or guarantee any obligation of, or otherwise assist any
officer or other employee of the corporation or of its
subsidiaries, including any officer or employee who is a Director
of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may
reasonably be expected to benefit the corporation. The loan,
guarantee or other assistance may be with or without interest and
may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in these Bylaws shall
be deemed to deny, limit or restrict the powers of guaranty or
warranty of the corporation at common law or under any statute.
Declared as the By-Laws of WCollect.Com, Inc., as amended, as of
the 1st day of March, 1999
Signature of Officer: \s\ Stewart Irvine
________________________
Name of Officer: STEWART IRVINE
Position of Officer: President and Director
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AMENDED STOCK OPTION PLAN
OF
WCOLLECT.COM , INC.
A Florida Corporation
MAY 28, 1999
<PAGE>
AMENDED STOCK OPTION PLAN OF
WCOLLECT.COM, INC.
TABLE OF CONTENTS
Page No.
--------
PURPOSE OF THE PLAN .......................................... 1
TYPES OF STOCK OPTIONS ....................................... 1
DEFINITIONS .................................................. 1
ADMINISTRATION OF THE PLAN ................................... 2
GRANT OF OPTIONS ............................................. 3
STOCK SUBJECT TO PLAN ........................................ 3
TERMS AND CONDITIONS OF OPTIONS .............................. 3
TERMINATION OR AMENDMENT OF THE PLAN ......................... 8
INDEMNIFICATION .............................................. 8
EFFECTIVE DATE AND TERM OF THE PLAN .......................... 9
<PAGE>
STOCK OPTION PLAN OF
WCOLLECT.COM, INC.
A Florida Corporation
===================================================================
1. PURPOSE OF THE PLAN
The purpose of this Plan is to strengthen WCollect.Com, Inc.
(hereinafter the "Company") by providing incentive stock options as
a means to attract, retain and motivate key corporate personnel,
through ownership of stock of the Company, and to attract
individuals of outstanding ability to render services to and enter
the employment of the Company or its subsidiaries.
2. TYPES OF STOCK OPTIONS
There shall be two types of Stock Options (referred to herein as
"Options" without distinction between such different types) that
may be granted under this Plan: (1) Options intended to qualify as
Incentive Stock Options under Section 422 of the Internal Revenue
Code ("Qualified Stock Options"), and (2) Options not specifically
authorized or qualified for favorable income tax treatment under
the Internal Revenue Code ("Non-Qualified Stock Options").
3. DEFINITIONS
The following definitions are applicable to the Plan:
(a) Board. The Board of Directors of the Company.
(b) Code. The Internal Revenue Code of 1986, as amended from
time to time.
(c) Common Stock. The shares of Common Stock of the Company.
(d) Company. WCollect.Com, Inc., a Florida corporation.
(e) Consultant. An individual or entity that renders
professional services to the Company as an independent
contractor and is not an employee or under the direct
supervision and control of the Company.
(f) Disabled or Disability. For the purposes of Section 7, a
disability of the type defined in Section 22(e)(3) of the
Code. The determination of whether an individual is
Disabled or has a Disability is determined under
procedures established by the Plan Administrator for
purposes of the Plan.
(g) Fair Market Value. For purposes of the Plan, the "fair
market value" per share of Common Stock of the Company at
any date shall be: (a) if the Common Stock is listed on
an established stock exchange or exchanges or
<PAGE>
2
the NASDAQ National Market, the closing price per share
on the last trading day immediately preceding such date
on the principal exchange on which it is traded or as
reported by NASDAQ; or (b) if the Common Stock is not
then listed on an exchange or the NASDAQ National Market,
but is quoted on the NASDAQ Small Cap Market, the NASDAQ
electronic bulletin board or the National Quotation
Bureau pink sheets, the average of the closing bid and
asked prices per share for the Common Stock as quoted by
NASDAQ or the National Quotation Bureau, as the case may
be, on the last trading day immediately preceding such
date; or (c) if the Common Stock is not then listed on an
exchange or the NASDAQ National Market, or quoted by
NASDAQ or the National Quotation Bureau, an amount
determined in good faith by the Plan Administrator.
(h) Incentive Stock Option. Any Stock Option intended to be
and designated as an "incentive stock option" within the
meaning of Section 422 of the Code.
(i) Non-Qualified Stock Option. Any Stock Option that is not
an Incentive Stock Option.
(j) Optionee. The recipient of a Stock Option.
(k) Plan Administrator. The board or the Committee designated
by the Board pursuant to Section 4 to administer and
interpret the terms of the Plan.
(l) Stock Option. Any option to purchase shares of Common
Stock granted pursuant to Section 7.
4. ADMINISTRATION OF THE PLAN
This Plan shall be administered by a Compensation Committee
(hereinafter the "Committee" or "Plan Administrator") composed of
members selected by, and serving at the pleasure of, the Board of
Directors. Subject to the provisions of the Plan, the Plan
Administrator shall have authority to construe and interpret the
Plan, to promulgate, amend, and rescind rules and regulations
relating to its administration, to select, from time to time, among
the eligible employees and non-employee consultants (as determined
pursuant to Section 5) of the Company and its subsidiaries those
employees and consultants to whom Stock Options will be granted, to
determine the duration and manner of the grant of the Options, to
determine the exercise price, the number of shares and other terms
covered by the Stock Options, to determine the duration and purpose
of leaves of absence which may be granted to Stock Option holders
without constituting termination of their employment for purposes
of the Plan, and to make all of the determinations necessary or
advisable for administration of the Plan. The interpretation and
construction by the Plan Administrator of any provision of the
Plan, or of any agreement issued and executed under the Plan, shall
be final and binding upon all parties. No member of the Committee
or Board shall be liable for any action or determination undertaken
or made in good faith with respect to the Plan or any agreement
executed pursuant to the Plan.
<PAGE>
3
All of the members of the Committee shall be persons who, in the
opinion of counsel to the Company, are outside directors and
"non-employee directors" within the meaning of Rule 16b-3(b)(3)(i)
promulgated by the Securities and Exchange Commission. From time
to time, the Board may increase or decrease the size of the
Committee, and add additional members to, or remove members from,
the Committee. The Committee shall act pursuant to a majority vote,
or the written consent of a majority of its members, and minutes
shall be kept of all of its meetings and copies thereof shall be
provided to the Board. Subject to the provisions of the Plan and
the directions of the Board, the Committee may establish and follow
such rules and regulations for the conduct of its business as it
may deem advisable.
At the option of the Board, the entire Board of Directors of the
Company may act as the Plan Administrator during such periods of
time as all members of the Board are "outside directors" as defined
in Prop. Treas. Regs. 1.162-27(e)(3), except that this requirement
shall not apply during any period of time prior to the date the
Company's Common Stock becomes registered pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended.
5. GRANT OF OPTIONS
The Company is hereby authorized to grant Incentive Stock Options
as defined in section 422 of the Code to any employee or director
(including any officer or director who is an employee) of the
Company, or of any of its subsidiaries; provided, however, that no
person who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, or
any of its parent or subsidiary corporations, shall be eligible to
receive an Incentive Stock Option under the Plan unless at the time
such Incentive Stock Option is granted the Option price is at least
110% of the fair market value of the shares subject to the Option,
and such Option by its terms is not exercisable after the
expiration of five years from the date such Option is granted.
An employee may receive more than one Option under the Plan.
Non-Employee Directors shall be eligible to receive Non-Qualified
Stock Options in the discretion of the Plan Administrator. In
addition, Non-Qualified Stock Options may be granted to Consultants
who are selected by the Plan Administrator.
6. STOCK SUBJECT TO PLAN
The stock available for grant of Options under the Plan shall be
shares of the Company's authorized but unissued, or reacquired,
Common Stock. The maximum number of shares issuable at any time
pursuant to the exercise of outstanding Options granted under the
Plan, as amended, shall not exceed the greater of 15% of the issued
and outstanding shares of the Company, measured at the Company's
most recent balance sheet date (subject to adjustment as provided
herein). The maximum number of Options granted pursuant to the
Plan during any consecutive twelve month period will not exceed the
number of options permitted to be granted by Rule 701 of the
Securities Act of 1933, provided that this limitation will cease
upon the Company becoming a reporting issuer
<PAGE>
4
under the United States Securities Exchange Act of 1934. The
maximum number of shares for which an Option may be granted to
any Optionee during any calendar year shall not exceed two percent
(2%) of the issued and outstanding common shares of the Company.
In the event that any outstanding Option under the Plan for any
reason expires or is terminated, the shares of Common Stock
allocable to the unexercised portion of the Option shall again
be available for Options under the Plan as if no Option had been
granted with regard to such shares.
7. TERMS AND CONDITIONS OF OPTIONS
Options granted under the Plan shall be evidenced by agreements
(which need not be identical) in such form and containing such
provisions that are consistent with the Plan as the Plan
Administrator shall from time to time approve. Such agreements may
incorporate all or any of the terms hereof by reference and shall
comply with and be subject to the following terms and conditions:
(a) Number of Shares. Each Option agreement shall specify the
number of shares subject to the Option.
(b) Option Price. The purchase price for the shares subject
to any Option shall be determined by the Plan
Administrator at the time of the grant, but shall not be
less than 85% of Fair Market Value per share. Anything to
the contrary notwithstanding, the purchase price for the
shares subject to any Incentive Stock Option shall not be
less than 100% of the Fair Market Value of the shares of
Common Stock of the Company on the date the Stock Option
is granted. In the case of any Option granted to an
employee who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of
the Company, or any of its parent or subsidiary
corporations, the Option price shall not be less than
110% of the Fair Market Value per share of the Common
Stock of the Company on the date the Option is granted.
For purposes of determining the stock ownership of an
employee, the attribution rules of Section 424(d) of the
Code shall apply.
(c) Notice and Payment. Any exercisable portion of a Stock
Option may be exercised only by: (a) delivery of a
written notice to the Company prior to the time when such
Stock Option becomes unexercisable herein, stating the
number of shares bring purchased and complying with all
applicable rules established by the Plan Administrator;
(b) payment in full of the exercise price of such Option
by, as applicable, delivery of: (i) cash or check for an
amount equal to the aggregate Stock Option exercise price
for the number of shares being purchased, (ii) in the
discretion of the Plan Administrator, upon such terms as
the Plan Administrator shall approve, a copy of
instructions to a broker directing such broker to sell
the Common Stock for which such Option is exercised, and
to remit to the Company the aggregate exercise price of
such Stock Option (a "cashless exercise"), or (iii) in
the discretion of the Plan Administrator, upon such terms
as the Plan
<PAGE>
5
Administrator shall approve, shares of the
Company's Common Stock owned by the Optionee, duly
endorsed for transfer to the Company, with a Fair Market
Value on the date of delivery equal to the aggregate
purchase price of the shares with respect to which such
Stock Option or portion is thereby exercised (a
"stock-for-stock exercise"); (c) payment of the amount of
tax required to be withheld (if any) by the Company, or
any parent or subsidiary corporation as a result of the
exercise of a Stock Option. At the discretion of the
Plan Administrator, upon such terms as the Plan
Administrator shall approve, the Optionee may pay all or
a portion of the tax withholding by: (i) cash or check
payable to the Company, (ii) a cashless exercise, (iii) a
stock-for-stock exercise, or (iv) a combination of one or
more of the foregoing payment rnethods; and (d) delivery
of a written notice to the Company requesting that the
Company direct the transfer agent to issue to the
Optionee (or his designee) a certificate for the number
of shares of Common Stock for which the Option was
exercised or, in the case of a cashless exercise, for any
shares that were not sold in the cashless exercise.
Notwithstanding the foregoing, the Company, in its sole
discretion, may extend and maintain, or arrange for the
extension and maintenance of credit to any Optionee to
finance the Optionee's purchase of shares pursuant to the
exercise of any Stock Option, on such terms as may be
approved by the Plan Administrator, subject to applicable
regulations of the Federal Reserve Board and any other
laws or regulations in effect at the time such credit is
extended.
(d) Terms of Option. No Option shall be exercisable after
the expiration of the earliest of: (a) ten years after
the date the Option is granted, (b) three Months after
the date the Optionee's employment with the Company and
its subsidiaries terminates, or a Non-Employee Director
or Consultant ceases to provide services to the Company,
if such termination or cessation is for any reason other
than Disability or death, (c) one year after the date the
Optionee's employment with the Company, and its
subsidiaries, terminates, or a Non-Employee Director or
Consultant ceases to provide services to the Company, if
such termination or cessation is a result of death or
Disability; provided, however, that the Option agreement
for any Option may provide for shorter periods in each of
the foregoing instances. In the case of an Incentive
Stock Option granted to an employee who owns stock
possessing more than 10% of the total combined voting
power of all classes of stock of the Company, or any of
its parent or subsidiary corporations, the term set forth
in (a) above shall not be more than five years after the
date the Option is granted.
(e) Exercise of an Option. No Option shall be exercisable
during the lifetime of an Optionee by any person other
than the Optionee. Subject to the foregoing, the Plan
Administrator shall have the power to set the time or
times within which each Option shall vest or be
exercisable and to accelerate the time or times of
vesting and exercise; provided, however each Option
<PAGE>
6
shall provide the right to exercise at the rate of at
least 20% per year over five years from the date the
Option is granted. Unless otherwise provided by the Plan
Administrator, each Option granted under the Plan shall
become exercisable on a cumulative basis as to one-third
(1/3) of the total number of shares covered thereby at
any time after one year from the date the Option is
granted and an additional one-third (1/3) of such total
number of shares at any time after the end of each
consecutive one-year period thereafter until the Option
has become exercisable as to all of such total number of
shares. To the extent that an Optionee has the right to
exercise an Option and purchase shares pursuant hereto,
the Option may be exercised from time to time by written
notice to the Company, stating the number of shares being
purchased and accompanied by payment in full of the
exercise price for such shares.
(f) No Transfer of Option. No Option shall be transferable by
an Optionee otherwise than by will or the laws of descent
and distribution.
(g) Limit on Incentive Stock Option. The aggregate Fair
Market Value (determined at the time the Option is
granted) of the stock with respect to which an Incentive
Stock Option is granted and exercisable for the first
time by an Optionee during any calendar year (under all
Incentive Stock Option plans of the Company and its
subsidiaries) shall not exceed $100,000. To the extent
the aggregate Fair Market Value (determined at the time
the Stock Option is granted) of the Common Stock with
respect to which Incentive Stock Options are exercisable
for the first time by an Optionee during any calendar
year (under all Incentive Stock Option plans of the
Company and any parent or subsidiary corporations)
exceeds $100,000, such Stock Options shall be treated as
Non-Qualified Stock Options. The determination of which
Stock Options shall be treated as Non-Qualified Stock
Options shall be made by taking Stock Options into
account in the Order in which they were granted.
(h) Restriction on Issuance of Shares. The issuance of
Options and shares shall be subject to compliance with
all of the applicable requirements of law with respect to
the issuance and sale of securities, including, without
limitation, any required qualification under state
securities laws. If an Optionee acquires shares of
Common Stock pursuant to the exercise of an Option, the
Plan Administrator, in its sole discretion, may require
as a condition of issuance of shares covered by the
Option that the shares of Common Stock be subject to
restrictions on transfer. The Company may place a legend
on the share certificates reflecting the fact that they
are subject to restrictions on transfer pursuant to the
terms of this Section. In addition, the Optionee may be
required to execute a buy-sell agreement in favor of the
Company or its designee with respect to all or any of the
shares so acquired. In such event, the terms of any such
agreement shall apply to the optioned shares.
<PAGE>
7
(i) Investment Representation. Any Optionee may be required,
as a condition of issuance of shares covered by his or
her Option, to represent that the shares to be acquired
pursuant to exercise will be acquired for investment and
without a view toward distribution thereof, and in such
case, the Company may place a legend on the share
certificate(s) evidencing the fact that they were
acquired for investment and cannot be sold or transferred
unless registered under the Securities Act of 1933, as
amended, or unless counsel for the Company is satisfied
that the circumstances of the proposed transfer do not
require such registration.
(j) Rights as a Shareholder or Employee. An Optionee or
transferee of an Option shall have no right as a
stockholder of the Company with respect to any shares
covered by any Option until the date of the issuance of a
share certificate for such shares. No adjustment shall
be made for dividends (Ordinary or extraordinary, whether
cash, securities, or other property), or distributions or
other rights for which the record date is prior to the
date such share certificate is issued, except as provided
in paragraph (m) below. Nothing in the Plan or in any
Option agreement shall confer upon any employee any right
to continue in the employ of the Company or any of its
subsidiaries or interfere in any way with any right of
the Company or any subsidiary to terminate the Optionee's
employment at any time.
(k) No Fractional Shares. In no event shall the Company be
required to issue fractional shares upon the exercise of
an Option.
(l) Exercise in the Event of Death. In the event of the death
of the Optionee, any Option or unexercised portion
thereof granted to the Optionee, to the extent
exercisable by him or her on the date of death, may be
exercised by the Optionee's personal representatives,
heirs, or legatees subject to the provisions of paragraph
(d) above.
(m) Recapitalization or Reorganization of the Company.
Except as otherwise provided herein, appropriate and
proportionate adjustments shall be made (1) in the number
and class of shares subject to the Plan, (2) to the
Option rights granted under the Plan, and (3) in the
exercise price of such Option rights, in the event that
the number of shares of Common Stock of the Company are
increased or decreased as a result of a stock dividend
(but only on Common Stock), stock split, reverse stock
split, recapitalization, reorganization, merger,
consolidation, separation, or like change in the
corporate or capital structure of the Company. In the
event there shall be any other change in the number or
kind of the outstanding shares of Common Stock of the
Company, or any stock or other securities into which such
common stock shall have been changed, or for which it
shall have been exchanged, whether by reason of a
complete liquidation of the Company or a merger,
reorganization, or consolidation with any other
corporation in which
<PAGE>
8
the Company is not the surviving corporation, or the
Company becomes a wholly-owned subsidiary of another
corporation, then if the Plan Administrator shall, in its
sole discretion, determine that such change equitably
requires an adjustment to shares of Common Stock currently
subject to Options under the Plan, or to prices or terms
of outstanding Options, such adjustment shall be made in
accordance with such determination.
To the extent that the foregoing adjustments relate to
stock or securities of the Company, such adjustment shall
be made by the Plan Administrator, the determination of
which in that respect shall be final, binding, and
conclusive. No right to purchase fractional shares shall
result from any adjustment of Options pursuant to this
Section. In case of any such adjustment, the shares
subject to the Option shall he rounded down to the
nearest whole share. Notice of any adjustment shall be
given by the Company to each Optionee whose Options shall
have been so adjusted and such adjustment (whether or not
notice is given) shall be effective and binding for all
purposes of the Plan.
In the event of a complete liquidation of the Company or
a merger, reorganization, or consolidation of the Company
with any other corporation in which the Company is not
the surviving corporation, or the Company becomes a
wholly-owned subsidiary of another corporation, any
unexercised Options granted under the Plan shall be
deemed cancelled unless the surviving corporation in any
such merger, reorganization, or consolidation elects to
assume the Options under the Plan or to issue substitute
Options in place thereof; provided, however, that
notwithstanding the foregoing, if such Options would be
cancelled in accordance with the foregoing, the Optionee
shall have the right exercisable during a ten-day period
ending on the fifth day prior to such liquidation,
merger, or consolidation to exercise such Option in whole
or in part without regard to any installment exercise
provisions in the Option agreement.
(n) Modification, Extension and Renewal of Options. Subject
to the terms and conditions and within the limitations of
the Plan, the Plan Administrator may modify, extend or
renew outstanding options granted under the Plan and
accept the surrender of outstanding Options (to the
extent not theretofore exercised). The Plan
Administrator shall not, however, without the approval of
the Board, modify any outstanding Incentive Stock Option
in any manner that would cause the Option not to qualify
as an Incentive Stock Option within the meaning of
Section 422 of the Code. Notwithstanding the foregoing.
no modification of an Option shall, without the consent
of the Optionee, alter or impair any rights of the
Optionee under the Option.
<PAGE>
9
(o) Other Provisions. Each Option may contain such other
terms, provisions, and conditions not inconsistent with
the Plan as may be determined by the Plan Administrator.
8. TERMINATION OR AMENDMENT OF THE PLAN
The Board may at any time terminate or amend the Plan; provided
that, without approval of the holders of a majority of the shares
of Common Stock of the Company represented and voting at a duly
held meeting at which a quorum is present or the written consent of
a majority of the outstanding shares of Common Stock, there shall
be (except by operation of the provisions of paragraph (m) above)
no increase in the total number of shares covered by the Plan, no
change in the class of persons eligible to receive options granted
under the Plan, no reduction in the exercise price of Options
granted under the Plan, and no extension of the latest date upon
which Options may be exercised; and provided further that, without
the consent of the Optionee, no amendment may adversely affect any
then outstanding Option or any unexercised portion thereof.
9. INDEMNIFICATION
In addition to such other rights of indemnification as they may
have as members of the Board Committee that administers the Plan,
the members of the Plan Administrator shall be indemnified by the
Company against reasonable expense, including attorney's fees,
actually and necessarily incurred in connection with the defense of
any action, suit or proceeding, or in connection with any appeal
therein to which they, or any of them, may be a party by reason of
any action taken or failure to act under or in connection with the
Plan or any Option granted thereunder, and against any and all
amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the
Company). In addition, such members shall be indemnified by the
Company for any amount paid by them in satisfaction of a judgment
in any action, suit, or proceeding, except in relation to matters
as to which it shall have been adjudged that such member is liable
for negligence or misconduct in the performance of his or her
duties, provided however that within 60 days after institution of
any such action, suit, or proceeding, the member shall in writing
offer the Company the opportunity, at its own expense, to handle
and defend the same.
<PAGE>
10
10. EFFECTIVE DATE AND TERM OF THE PLAN
This Plan shall become effective (the "Effective Date") on the date
of adoption by the board of directors. Options granted under the
Plan prior to shareholder approval are subject to cancellation by
the Plan Administrator if shareholder approval is not obtained
within 12 months of the date of adoption. Unless sooner terminated
by the Board in its sole discretion, this Plan will expire on
January 31, 2009.
IN WITNESS WHEREOF, the Company by its duly authorized officer, has
caused this Plan to be executed as of the 28th day of May, 1999.
WCOLLECT.COM, INC.
\s\ Stewart Irvine
_____________________________________
By: Stewart Irvine
Its: President
<PAGE>
HHHP, INC.
A Florida Corporation
- -------------------------------------------------------------------
February 1, 1999
MINDCORP, LLC
a Nevada Limited Liability Company
- - and to -
MR. STEWART IRVINE
1324 25th Street
West Vancouver, British Columbia
V7V 4J3
Dear Sirs:
Re: HHHP, INC. (the "Company")
- - Offer to Acquire 100% of MindCorp, LLC., a Nevada Limited
Liability Company ("MindCorp")
- ------------------------------------------------------------------
We write to set out the offer of the Company to you, as the sole
member of MindCorp (the "Member") to acquire all of the membership
interest of MindCorp.
This offer is on the terms and is subject to the conditions set
forth in this letter. If this offer is acceptable, we ask that you
indicate your agreement by signing this letter where indicated
below, completing the required information and returning an
executed copy to us. This offer is open for acceptance until
12:00 p.m. (Pacific Time) on February 1, 1999 (the "Expiry Time"),
at which time this offer will terminate unless extended in writing.
The Company's offer is as follows:
1. Offer to Purchase
-----------------
The Company offers to purchase from the Member all of the
membership interest of MindCorp (the "Membership Interest") on the
terms and subject to the conditions set forth in this offer.
<PAGE>
-2-
2. Payment for the Membership Interest
-----------------------------------
Upon acceptance, the Company will issue to the Member 2,375,000
common shares of the Company (each a "Company Share" and together,
the "Company Shares") in consideration for the Membership Interest.
The Member acknowledges and agrees that the Company Shares are
being issued pursuant to available exemptions from the prospectus
and registration requirements of each of the Securities Act
(British Columbia) and the United States Securities Act of 1933.
The Member agrees to abide by all applicable resale restrictions
and hold periods imposed by such statutes.
All shares certificates representing the Company Shares will be
endorsed with the following legend pursuant to the United States
Securities Act of 1933 and the British Columbia Securities Act:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AND ARE
BEING OFFERED AND SOLD ONLY TO ACCREDITED INVESTORS IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT. SUCH SECURITIES MAY NOT BE
REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE REGISTERED UNDER THE APPLICABLE
PROVISIONS OF THE ACT OR ARE EXEMPT FROM SUCH
REGISTRATION. THE SECURITIES REPRESENTED BY THIS SHARE
CERTIFICATE ARE SUBJECT TO A HOLD PERIOD AND MAY NOT BE
TRADED IN BRITISH COLUMBIA UNTIL THE EXPIRY OF THE HOLD
PERIOD EXCEPT AS PERMITTED BY THE SECURITIES ACT BRITISH
COLUMBIA) AND THE REGULATIONS MADE UNDER THE ACT.
The Member acknowledges that the Company may issue prior to the
Closing Date a total of up to 4,000,000 common shares at a price of
$0.08 per share for proceeds of $320,000 US. The Member
acknowledges and agrees that the Company may issue prior to the
Closing Date up to 680,000 common shares at a price of $1.00 US per
share for proceeds of up to $680,000. The Member consents to these
issuances of shares which may be completed prior to or after
Closing, and agrees the Company has no obligation to complete these
share issuances.
The Member consents to the change of the name of the Company from
"HHHP, Inc." to WCollect.Com Corp.", which name change may be
completed prior to the Closing Date.
3. Closing Date
------------
The date of the closing of the purchase and sale of the Membership
Interest will be the 16th day of February, 1999 (the "Closing
Date").
<PAGE>
-3-
4. Representations and Warranties of MindCorp and the Member
---------------------------------------------------------
The Company's purchase will be based on the joint and several
representations and warranties by MindCorp and the Member that:
(A) MindCorp is a limited liability corporation duly
organized, validly existing and in good standing under
the laws of the State of Nevada;
(B) the Membership Interest is owned by the Member are owned
free and clear of all liens, charges, encumbrances and
security interests;
(C) the Member is the sole member of MindCorp.;
(D) MindCorp has no indebtedness, debt or other liability to
the Member;
(E) the Member is the sole officer and director of MindCorp;
(F) no person has any option, warrant or other right to
acquire any membership interest in or assets of MindCorp;
(G) MindCorp is the owner of all assets required for the
conduct of its business as disclosed in its financial
statements, in its business plan and as represented to
the Company. The Member is not the owner of any assets
used by MindCorp in the conduct of its business or
necessary for the completion of the business plan of
MindCorp;
(H) the liabilities and indebtedness of MindCorp do not
exceed the amount set forth in the Financial Statements
and there will not be any increase in such liabilities
prior to the Closing Date other than in the ordinary
course of business;
(I) all assets of MindCorp are owned by MindCorp free and
clear of all liens, charges and other financial
encumbrances;
(J) the books and records of MindCorp fairly and correctly
set out and disclose in all material respects, in
accordance with generally accepted accounting principles,
the financial position of MindCorp as at the date hereof,
and all material financial transactions of MindCorp
relating to its business have been accurately recorded in
such books and records;
(K) the balance sheet of MindCorp as at @, 1999 and the
income statement of MindCorp for the period from @, 1998
to @, 1999 (the "Financial Statements") as attached
hereto, present fairly and correctly the assets,
liabilities (whether accrued, absolute, contingent or
otherwise) and the financial condition of MindCorp as at
the date
<PAGE>
-4-
thereof and there will not be, prior to the
Closing Date, any increase in such liabilities or other
material change other than in the ordinary course of
business;
(L) the business of MindCorp has been carried on in the
ordinary and normal course by MindCorp since the date of
financial statements;
(M) MindCorp is not in material default or breach of any
agreements to which it is a party and there exists no
state of facts which after notice or lapse of time or
both which would constitute a default or breach of any
such agreements;
(N) there are no actions, suits or proceedings pending or
threatened against or affecting MindCorp and the Member
is not aware of any existing ground on which any such
action, suit or proceeding might be commenced with any
reasonable likelihood of success;
(O) MindCorp owns all intellectual property, including
patents, trademarks, copyrights and confidential
information, as required to conduct its business in
accordance with its business plan and promotional
material.
5. Representations and Warranties of The Company
---------------------------------------------
The Company represents and warrants to the Member that:
(A) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the State
of Florida;
(B) upon issue, the Company Shares will be fully paid and
non-assessable shares in the capital of the Company;
(C) the authorized capital of the Company consists of
50,000,000 shares of common stock, par value of $0.001
per share (the "Common Stock"), of which 1,000,000 shares
of Common Stock have been issued and are outstanding as
of the date of this Agreement;
(D) no person has any option, warrant or other right to
acquire any shares of the Company, except as disclosed in
this Agreement;
(E) the Company does not own any assets;
(F) the Company does not have any liabilities or
indebtedness to any party;
(G) the Company is not party to any material agreements;
<PAGE>
-5-
(H) there are no actions, suits or proceedings pending or
threatened against or affecting the Company and the
Company is not aware of any existing ground on which any
such action, suit or proceeding might be commenced with
any reasonable likelihood of success
(I) the shares of Common Stock of the Company are traded on
the NASD OTC Bulletin Board and the Company is in
compliance with all applicable United States securities
laws.
6. Conditions Precedent to Closing
-------------------------------
The Company's obligation to complete the purchase of the Membership
Interest is subject to each of the following conditions:
(A) all representations and warranties of the Member will be
true and correct in all material respects on the Closing
Date;
(B) there shall have been no material adverse change to the
business of MindCorp between the date of acceptance and
the Closing Date;
(C) the Member will have made the deliveries contemplated in
this offer on the Closing Date;
(D) all books, accounting records, legal documentation,
financial statements, material contracts relating to
MindCorp will have been delivered to the Company prior to
or on the Closing Date.
The Member's obligation to complete the sale of the Membership
Interest to the Company is subject to each of the following
conditions:
(A) all representations and warranties of the Company will be
true and correct in all material respects on the Closing
Date;
(B) the Company will have made the deliveries contemplated in
this offer on the Closing Date.
7. Closing Deliveries
------------------
On the Closing Date, the Member will deliver to the Company:
(A) all executed documents and assignments necessary to
transfer the Membership Interest held by the Member to
the Company;
<PAGE>
-6-
(B) written confirmation by the Member, in his individual
capacity and as an officer of MindCorp, as to the truth
and correctness of the representations and warranties of
the Member as of the Closing Date;
(C) all other corporate resolutions, agreements, assignments,
consents and documentation as deemed necessary by the
Company's solicitors to give effect to the transactions
contemplated by this agreement in accordance with
accepted commercial practice.
On the Closing Date, the Company will deliver to each the Member
the certificates representing the Company Shares to which the
Member is entitled, with the legend contemplated by this Agreement
endorsed upon the share certificates.
8. Appointment of Directors
------------------------
On completion of the Closing, the following will be appointed the
officers and directors of the Company:
(A) Directors
Stewart Irvine
Andrew Zucker
(B) Officers Office
-------- ------
Stewart Irvine President
Andrew Zucker Secretary and Treasurer
9. Acceptance
----------
If the Member wishes to accept this offer, the Member must:
(A) execute this offer where indicated below;
(B) complete all information;
<PAGE>
-7-
(C) deliver a copy of the Member's acceptance to the Company
by no later than 12:00 p.m. (Pacific Time) on February 1,
1999.
Yours truly,
HHHP, INC.
by its Authorized Signatory:
Per: \s\ John Xinos
________________________
Director
This offer is accepted and agreed to this 1 day of February, 1999.
--- --------
MINDCORP, LLC
by its authorized signatory:
\s\ Stewart Irvine
____________________________
STEWART IRVINE, President
- - and by -
\s\ Stewart Irvine
____________________________
STEWART IRVINE
in his personal capacity
<PAGE>
WCOLLECT.COM, INC.
A Florida Corporation
- -------------------------------------------------------------------
February 18, 1999
ARTWORKS INTERNATIONAL CORP.
a Barbados International Business Company
- - and to -
EACH OF THE SHAREHOLDERS OF
ARTWORKS INTERNATIONAL CORP.
Dear Sirs:
Re: WCOLLECT.COM, INC. (the "Company")
- - Offer to Acquire 100% of Artworks International Corp., a
Barbados international business company ("Artworks")
- ------------------------------------------------------------------
We write to set out the offer of the Company to each of you, as the
holders of all of the issued and outstanding shares of Artworks
(each a "Shareholder" and together the "Shareholders") to acquire
all of the issued and outstanding shares of Artworks (the "Artworks
Shares").
This offer is on the terms and is subject to the conditions set
forth in this letter. If this offer is acceptable, we ask that you
indicate your agreement by signing this letter where indicated
below, completing the required information and returning an
executed copy to us. This offer is open for acceptance until
12:00 p.m. (Pacific Time) on February 19, 1999 (the "Expiry Time"),
at which time this offer will terminate unless extended in writing.
The offer is conditional upon acceptance by all of the
Shareholders.
The Company's offer is as follows:
1. Offer to Purchase
-----------------
The Company offers to purchase from the Shareholders all of the
Artworks Shares on the terms and subject to the conditions set
forth in this offer.
<PAGE>
-2-
2. Payment for the Artworks Shares
-------------------------------
Upon acceptance, the Company will issue to the Shareholders a total
of 375,000 common shares of the Company (each a "Company Share" and
together, the "Company Shares") in consideration for the Artworks
Shares. The number of Company Shares issued to each Shareholder
will equal the percentage interest of the Artworks Shares held by
the Shareholder of the total Artworks Shares outstanding,
multiplied by the total number of Company Shares to be issued, as
more particularly set forth in Schedule A to this Agreement.
Each Shareholder acknowledges and agrees that the Company Shares
are being issued pursuant to available exemptions from the
prospectus and registration requirements of each of the Securities
Act (British Columbia) and the United States Securities Act of
1933. Each Shareholder agrees to abide by all applicable resale
restrictions and hold periods imposed by such statutes.
All shares certificates representing the Company Shares will be
endorsed with the following legend pursuant to the United States
Securities Act of 1933 and the British Columbia Securities Act:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AND ARE
BEING OFFERED AND SOLD ONLY TO ACCREDITED INVESTORS IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT. SUCH SECURITIES MAY NOT BE
REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE REGISTERED UNDER THE APPLICABLE
PROVISIONS OF THE ACT OR ARE EXEMPT FROM SUCH
REGISTRATION. THE SECURITIES REPRESENTED BY THIS SHARE
CERTIFICATE ARE SUBJECT TO A HOLD PERIOD AND MAY NOT BE
TRADED IN BRITISH COLUMBIA UNTIL THE EXPIRY OF THE HOLD
PERIOD EXCEPT AS PERMITTED BY THE SECURITIES ACT BRITISH
COLUMBIA) AND THE REGULATIONS MADE UNDER THE ACT.
Each Shareholder acknowledges that the Company may issue prior to
the Closing Date a total of up to 700,000 common shares at a price
of $1.00 per share for proceeds of $700,000 US. Each Shareholder
consents to these issuances of shares that may be completed prior
to or after Closing, and agrees the Company has no obligation to
complete these share issuances.
3. Closing Date
------------
The date of the closing of the purchase and sale of the Artworks
Shares will be the 19th day of February, 1999 (the "Closing Date").
<PAGE>
-3-
4. Representations and Warranties of Artworks and the Shareholder
--------------------------------------------------------------
The Company's purchase will be based on the joint and several
representations and warranties by Artworks and each Shareholder,
jointly and severally, which will survive closing, that:
(A) Artworks is a limited liability corporation duly
organized, validly existing and in good standing under
the laws of Barbados;
(B) the Artworks Shares are owned by each Shareholder free
and clear of all liens, charges, encumbrances and
security interests;
(C) the Shareholders are the sole shareholders of Artworks.;
(D) the Shareholder is a resident of the jurisdiction
indicated on the execution page of this Agreement;
(E) except as set forth in Schedule B to this Agreement,
Artworks has no indebtedness, debt or other liability to
any Shareholder;
(F) the directors of Artworks consist of Stewart Irvine,
Robin Hendry and John Meyers and the officers of Artworks
consist of Stewart Irvine as President and Brian Hendry
as Secretary;
(G) except as set forth in Schedule C to this Agreement, no
person has any option, warrant or other right to acquire
any shares of Artwork or any interest in the assets or
property of Artworks;
(H) Artworks is the owner of all assets required for the
conduct of its business as disclosed in its financial
statements, in its business plan and as represented to
the Company. The Shareholders are not the owners of any
assets used by Artworks in the conduct of its business or
necessary for the completion of the business plan of
Artworks;
(I) the liabilities and indebtedness of Artworks do not
exceed the amount set forth in the Financial Statements
and there will not be any increase in such liabilities
prior to the Closing Date other than in the ordinary
course of business;
(J) except as provided for in Schedule D to this Agreement,
all assets of Artworks are owned by Artworks free and
clear of all liens, charges and other financial
encumbrances;
(K) the books and records of Artworks fairly and correctly
set out and disclose in all material respects, in
accordance with generally accepted accounting principles,
the
<PAGE>
-4-
financial position of Artworks as at the date hereof,
and all material financial transactions of Artworks
relating to its business have been accurately recorded in
such books and records;
(L) the balance sheet of Artworks as at @, 1999 and the
income statement of Artworks for the period from @, 1998
to @, 1999 (the "Financial Statements") as attached
hereto, present fairly and correctly the assets,
liabilities (whether accrued, absolute, contingent or
otherwise) and the financial condition of Artworks as at
the date thereof and there will not be, prior to the
Closing Date, any increase in such liabilities or other
material change other than in the ordinary course of
business;
(M) the business of Artworks has been carried on in the
ordinary and normal course by Artworks since the date of
financial statements;
(N) except as disclosed in the schedules to this Agreement,
Artworks is not in material default or breach of any
agreements to which it is a party and there exists no
state of facts which after notice or lapse of time or
both which would constitute a default or breach of any
such agreements;
(O) there are no actions, suits or proceedings pending or
threatened against or affecting Artworks and the
Shareholders are not aware of any existing ground on
which any such action, suit or proceeding might be
commenced with any reasonable likelihood of success;
(P) Artworks owns all intellectual property, including
patents, trademarks, copyrights and confidential
information, as required to conduct its business in
accordance with its business plan and promotional
material.
5. Representations and Warranties of The Company
---------------------------------------------
The Company represents and warrants to the Shareholders that:
(A) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the State
of Florida;
(B) upon issue, the Company Shares will be fully paid and
non-assessable shares in the capital of the Company;
(C) the authorized capital of the Company consists of
50,000,000 shares of common stock, par value of $0.001
per share (the "Common Stock"), of which 7,375,000 shares
of Common Stock have been issued and are outstanding as
of the date of this Agreement;
<PAGE>
-5-
(D) with the exception of incentive stock options to purchase
800,000 shares of common stock of the Company granted to
officers, directors, employees and consultants of the
Company, no person has any option, warrant or other right
to acquire any shares of the Company, except as disclosed
in this Agreement;
(E) the Company entered into an agreement dated February 1,
1999 with Stewart Irvine and MindCorp, LLC whereby the
Company agreed to acquire MindCorp from Irvine;
(F) the Company does not have any liabilities or
indebtedness to any party, other than obligations
occurred in connection with the acquisition of MindCorp;
(G) there are no actions, suits or proceedings pending or
threatened against or affecting the Company and the
Company is not aware of any existing ground on which any
such action, suit or proceeding might be commenced with
any reasonable likelihood of success
(H) the shares of Common Stock of the Company are traded on
the NASD OTC Bulletin Board and the Company is in
compliance with all applicable United States securities
laws.
6. Conditions Precedent to Closing
-------------------------------
The Company's obligation to complete the purchase of the Artworks
Shares is subject to each of the following conditions:
(A) all representations and warranties of each Shareholder
will be true and correct in all material respects on the
Closing Date;
(B) there shall have been no material adverse change to the
business of Artworks between the date of acceptance and
the Closing Date;
(C) each Shareholder will have made the deliveries
contemplated in this offer on the Closing Date;
(D) all books, accounting records, legal documentation,
financial statements, material contracts relating to
Artworks or authority over such books, accounting
records, legal documentation, financial statements and
material contracts will have been delivered to the
Company prior to or on the Closing Date.
Each Shareholder's obligation to complete the sale of its Artworks
Shares to the Company is subject to each of the following
conditions:
<PAGE>
-6-
(A) all representations and warranties of the Company will be
true and correct in all material respects on the Closing
Date;
(B) the Company will have made the deliveries contemplated in
this offer on the Closing Date.
7. Closing Deliveries
------------------
On the Closing Date, each Shareholder will deliver to the Company:
(A) all executed documents and assignments necessary to
transfer the Artworks Shares held by the Shareholder to
the Company;
(B) written confirmation by each Shareholder, in his
individual, as to the truth and correctness of the
representations and warranties of the Shareholder as of
the Closing Date;
(C) a release, in the form attached hereto as Schedule E,
executed by each of the Shareholders and Artworks;
(D) all other corporate resolutions, agreements, assignments,
consents and documentation as deemed necessary by the
Company's solicitors to give effect to the transactions
contemplated by this agreement in accordance with
accepted commercial practice.
On the Closing Date, the Company will deliver to each Shareholder
the certificates representing the Company Shares to which the
Shareholder is entitled, with the legend contemplated by this
Agreement endorsed upon the share certificates.
<PAGE>
-7-
8. Acceptance
----------
If the Shareholder wishes to accept this offer, the Shareholder
must:
(A) execute this offer where indicated below;
(B) complete all information;
(C) deliver a copy of the Shareholder's acceptance to the
Company by no later than 12:00 p.m. (Pacific Time) on
February 19, 1999.
This Offer may be accepted by the Shareholders in counterparts.
Yours truly,
WCOLLECT.COM, INC.
by its Authorized Signatory:
Per: \s\ Stewart Irvine
________________________
President and Director
This offer is accepted and agreed to this 28th day of February,
---- ---------
1999.
ARTWORKS INTERNATIONAL CORP.
by its authorized signatory:
\s\ Stewart Irvine
____________________________
President
SIGNATURE OF ACCEPTING SHAREHOLDER: \s\ Stewart Irvine
NAME OF ACCEPTING SHAREHOLDER: STEWART IRVINE
NUMBER OF SHARES OF ARTWORKS HELD: 525
ADDRESS OF ACCEPTING SHAREHOLDER: West Vancouver, BC
JURISDICTION OF ACCEPTING SHAREHOLDER: BC
<PAGE>
-8-
SIGNATURE OF ACCEPTING SHAREHOLDER: \s\ Robin Hendry
NAME OF ACCEPTING SHAREHOLDER: ROBIN HENDRY
NUMBER OF SHARES OF ARTWORKS HELD: 350
ADDRESS OF ACCEPTING SHAREHOLDER: Comrie Wood Contin
By Strathpeffr Rossshire Scotland
JURISDICTION OF ACCEPTING SHAREHOLDER:
SIGNATURE OF ACCEPTING SHAREHOLDER: \s\ Raymond Spence"
NAME OF ACCEPTING SHAREHOLDER: RAYMOND SPENCE
NUMBER OF SHARES OF ARTWORKS HELD: 50
ADDRESS OF ACCEPTING SHAREHOLDER: 141 E. 47th Ave
Vancouver, BC
JURISDICTION OF ACCEPTING SHAREHOLDER: BC
SIGNATURE OF ACCEPTING SHAREHOLDER: \s\ Richard Blank
NAME OF ACCEPTING SHAREHOLDER: RICHARD BLANK
NUMBER OF SHARES OF ARTWORKS HELD: 45
ADDRESS OF ACCEPTING SHAREHOLDER: 57 Touchstone Way
Millwood, New York 10546
JURISDICTION OF ACCEPTING SHAREHOLDER: New York
<PAGE>
-9-
SIGNATURE OF ACCEPTING SHAREHOLDER: \s\ Scott Lanoff
NAME OF ACCEPTING SHAREHOLDER: SCOTT LANOFF
NUMBER OF SHARES OF ARTWORKS HELD: 30
ADDRESS OF ACCEPTING SHAREHOLDER: 30 E. 9th St.
NY, NY 10003
JURISDICTION OF ACCEPTING SHAREHOLDER:
<PAGE>
-10-
SCHEDULE A
to the Artworks Acquisition Agreement dated February 19, 1999
Name of Artworks Shareholder Number of Shares
- ---------------------------- ----------------
Stewart Irvine 196,875
Robin Hendry 131,250
Raymond Spence 18,750
Richard Blank 15,000
Scott Lanoff 13,125
<PAGE>
-11-
SCHEDULE B
to the Artworks Acquisition Agreement dated February 18, 1999
By agreement entered into with Artworks and Robin Hendry certain
sums were to be paid to Robin Hendry out of the revenues generated
by sales of posters; as well as certain sums were agreed to be paid
to various parties; By virtue of the share issuances completed
under the terms of this agreement as consideration therefor, Robin
Hendry and the other shareholders provide the form of release
attached as a closing document to the share issuances.
<PAGE>
-12-
SCHEDULE C
to the Artworks Acquisition Agreement dated February 18, 1999
FORM OF RELEASE ATTACHED
<PAGE>
<PAGE>
MUTUAL GENERAL RELEASE OF ALL CLAIMS
WHEREAS:
1. By virtue of the acquisition by WCollect.Com, Inc., a
Florida Corporation, of the shares in Artworks International
Corp. owned by the signatories to this release, the parties
hereto agreed in an agreement dated February 18, 1999 that all
matters as between Artworks and themselves personally and/or
corporately were to be finalized and completed, full consideration
therefore being delivery of the shares in WCollect.Com, Inc. in
exchange for the shares in Artworks (the "Agreement");
NOW THEREFORE by these presents, Stewart Irvine, Robin Hendry,
Raymond Spence, Richard Blank and Scott Lanoff (collectively
herein called Shareholders) for and in consideration of the
premises and other good and valuable consideration (the receipt
and sufficiency of which is hereby acknowledged) HEREBY REMISE,
RELEASE AND FOREVER DISCHARGE each other and Artworks
International Corp. of and from any and all manner of actions,
causes of action, suits, debts, dues, sums of money, accounts,
covenants, contracts, undertakings, claims, loss, expenses
(including solicitors fees and disbursements on a solicitor and
his own client basis), and damages, of every nature and kind
whatsoever, at law or in equity, which the Shareholders ever had
or now has, or which the Shareholders shall or may have by reason
of any matter, thing or cause whatsoever existing up to the
present time at all and any and all covenants and agreements
otherwise binding upon them in connection with or arising out of
the creation and operation of Artworks, any and all agreements
between Artworks and any or all of the Shareholders, including any
agreements giving rise to any indebtedness of Artworks to any of
the Shareholders, and the transfer by the Shareholders to Artworks
of assets in consideration for any shareholders loans or shares of
Artworks.
FURTHER THEREFORE by these presents, for and in consideration of
the premises and other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged) Artworks
International Corp. HEREBY REMISES, RELEASES AND FOREVER
DISCHARGES the Shareholders as hereinbefore defined jointly and
severally of and from any and all manner of actions, causes of
action, suits, debts, dues, sums of money, accounts, covenants,
contracts, undertakings, claims, loss, expenses (including
solicitors fees and disbursements on a solicitor and his own
client basis), and damages, of every nature and kind whatsoever,
at law or in equity, which Artworks ever had or now has, or which
Artworks shall or may have by reason of any matter, thing or cause
whatsoever existing up to the present time at all and any and all
covenants and agreements otherwise binding upon them in connection
with or arising out of the creation and operation of Artworks, any
and all agreements between Artworks and the Shareholders and the
transfer by the Shareholders to Artworks of assets in
consideration for any shareholders loans or shares of Artworks.
This Release shall be binding upon all of the parties hereto and
their respective heirs, executors, administrators, successors and
assigns and it shall endure to the benefit of all parties.
<PAGE>
This Release may be executed in counterparts, and such parts if
more than one, when taken together, shall be deemed to constitute
on completely executed Release.
IN WITNESS WHEREOF Artworks International Corp by its authorized
signatory and the Shareholders have duty executed this Release at
Vancouver, British Columbia, this 28 day of February, 1999.
ARTWORKS INTERNATIONAL CORP. )
By its authorized signatory: )
)
\s\ Stewart Irvine )
_________________________________ )
Signature of Authorized Signatory )
)
)
_________________________________ )
Name of Authorized Signatory )
SIGNED, SEALED AND DELIVERED )
BY Stewart Irvine in the presence of: )
)
\s\ Doug Sarkissian )
__________________________________ )
Signature )
Doug Sarkissian ) \s\ Stewart Irvine
__________________________________ ) __________________
Name ) STEWART IRVINE
)
307 1497 Marine Dr. )
__________________________________ )
Address )
)
W.Vancouver, BC )
__________________________________ )
SIGNED, SEALED AND DELIVERED )
BY Robin Hendry in the presence of: )
)
)
__________________________________ )
Signature )
)
Fraser Hill ) \s\ Robin Hendry
__________________________________ ) _________________
Name ) Robin Hendry
)
Little Scatwell )
__________________________________ )
Address )
)
Ross-shire 1V149EW )
__________________________________ )
2
<PAGE>
all parties.
This Release may be executed in counterparts, and such parts if
more than one, when taken together, shall be deemed to constitute
on completely executed Release.
IN WITNESS WHEREOF Artworks International Corp by its authorized
signatory and the Shareholders have duly executed this Release at
Vancouver, British Columbia, this 28 day of February 1999.
Executed by Artworks International Corp. )
By its authorized signatory: )
)
\s\ Stewart Irvine )
___________________________________ )
Authorized Signatory )
Signed, Sealed, and Delivered by )
Stewart Irvine in the presence of: ) \s\ Stewart Irvine
) ____________________
____________________________________ )
Name )
Signed, Sealed, and Delivered by )
Robin Hendry in the presence of: )
) ____________________
____________________________________ )
Name )
Signed, Sealed, and Delivered by )
Richard Blank in the presence of: ) \s\ Richard Blank
) _____________________
\s\ Stephen Konepid )
____________________________________ )
Name )
Signed, Sealed, and Delivered by )
Raymond Spence in the presence of: ) \s\ Raymond Spence
) _____________________
\s\ Doug Sarkissian )
____________________________________ )
Name )
Signed, Sealed, and Delivered by )
Scott Lanoff in the presence of: )
) \s\ Scott Lanoff
\s\ Richard Blank ) _____________________
____________________________________ )
Name )
2
<PAGE>
-13-
SCHEDULE D
to the Artworks Acquisition Agreement dated February 18, 1999
The contracts with Peter Max and Tim Graham have certain royalty
and payment provisions that are contingent upon sales as well as
performance by provision of certain artworks yet to be received.
Particulars of these items are in negotiation and may be obtained
from management. In addition, the endorsement of the Red Cross
carries with it the requirement to make royalty payments and timing
of the final implementation of the project has moved past certain
earlier milestone dates. Management believes that these factors
will not be material with the continuation of the projects as
provided for by this agreement.
<PAGE>
-14-
SCHEDULE E
to the Artworks Acquisition Agreement dated February 18, 1999
Inventory of the latest runs of the Diana posters is at the
publishers. While copyright, subject to artists remainder rights,
remains with Artworks, the posters will be released upon completion
of agreements for consideration.
<PAGE>
To: Artworks International Corp., a Barbados IBC;
From: Robin Hendry
Re: Execution, Escrow and Closing of Share Exchange with
Wcollect.com, Inc. a Florida Corporation;
Date: February 28, 1999
Attached hereto are the form of share exchange agreement, release
and power of attorney transferring shares. These documents are
delivered to Douglas Sarkissian on the trust condition that they
be released in original form when share certificates evidencing my
ownership of shares in Wcollect.com, Inc. have been delivered to
Douglas Sarkissian in trust for me.
At the time that the shares in Wcollect.com, Inc, are delivered to
Douglas Sarkissian I hereby tender this letter as my resignation
as a director and officer of Artworks International Corp.
effective the date of the delivery of the Wcollect.com, Inc. share
certificate aforesaid.
Yours truly,
\s\ Robin Hendry
Robin Hendry
<PAGE>
RESOLUTIONS CONSENTED TO IN WRITING
BY ALL OF THE DIRECTORS OF
Artworks International Corp.
(the "Company")
WHEREAS documents evidencing the transfer of shares in the capital
of the Company have been provided to the directors for approval of
such transfer;
Be it resolved that the transfer of shares in the outstanding
capital of the Company as setout below (being all the issued
shares of the Company) from the noted shareholders to
Wcollect.com, Inc., a Florida company, evidenced by the endorsement
of the authorized signatory to the powers of attorney for such
transfers attached hereto, be ratified, confirmed and approved
effective the date appearing on this resolution.
Transferor No. Shares Transferee No. Shares
Stewart Irvine 525 Wcollect.com, Inc. 1000
Robin Hendry 350
Raymond Spence 50
Richard Blank 45
Scott Lanoff 30
Be it further resolved that the President of the Company is
authorized on behalf of the board to take all necessary steps to
cause the aforesaid transfers to take place and to cause entries
in the registers of the company to be made such that all of such
shares are registered in the name of Wcollect.com, Inc.
And in that regard share certificates 5, 6, 7, 8 and 9 be
cancelled, and in its place certificate 10 for 1000 common shares
be issued in the name of Wcollect.com Inc.
Be it further resolved that upon the aforementioned transfer of
shares taking place the resignation of Robin Hendry is hereby
accepted as a director of the Company. The resignation of Brian
Hendry as secretary of the Company is also accepted.
Dated at West Vancouver, British Columbia, this 3rd day of March,
1999.
\s\ Stewart Irvine
__________________________
director
\s\ Robin Hendry
__________________________
director
__________________________
director
<PAGE>
SIGNED, SEALED AND DELIVERED )
BY Richard Blank in the presence of: )
)
\s\ Stephen Konepid )
__________________________________ )
Signature )
)
Stephen Konepid ) \s\ Richard Blank
__________________________________ ) __________________
Name ) Richard Blank
)
162 Monitor St. )
__________________________________ )
Address )
)
Brooklyn, NY 11222 )
__________________________________ )
3
SIGNED, SEALED AND DELIVERED )
BY Raymond Spence in the presence of: )
)
)
__________________________________ )
Signature )
)
) \s\ Raymond Spence
__________________________________ ) ___________________
Name ) Raymond Spence
)
)
__________________________________ )
Address )
)
)
__________________________________ )
SIGNED, SEALED AND DELIVERED )
BY Scott Lanoff in the presence of: )
)
\s\ Rich Blank )
__________________________________ )
Signature )
)
Rich Blank ) \s\ Scott Lanoff
__________________________________ ) __________________
Name ) SCOTT LANOFF
)
57 Touchstone Way )
__________________________________ )
Address )
)
Millwood, NY 10546 )
__________________________________ )
<PAGE>
Lowy & Zucker LLP
ATTORNEYS AT LAW
February 8, 1999,
as revised February 10, 1999
Via Facsimile 310-399-3090/ First Class Mail
- --------------------------------------------
Chris Andrews
Director Business Development
National Academy of Recording Arts and Sciences, Inc.
3402 Pico Boulevard
Santa Monica, CA 90405
Re: Mindcorp, LLC -w- NARAS
- ---------------------------
Dear Chris:
This document sets forth the basic points of the agreement
reached by you, on behalf of the National Academy of Recording
Arts and Sciences, Inc. ("NARAS"), on the one hand, and Stewart
Irvine on behalf of Mindcorp, LLC ("Mindcorp"), on the other, as
regards Mindcorp's sale of NARAS' official 1999 commemorative
Grammy Awards posters (collectively, the "Poster") via its
Internet based Web site, "WCollect." Please confirm your
understanding by signing below and returning a copy to the
undersigned.
1. In consideration of the Advance (as defined below), NARAS
hereby grants Mindcorp the right to sell the Poster via its
Internet based Web server(s), and, subject to NARAS' reasonable
approval, by such other means as Mindcorp deems commercially
feasible.
2. The rights set forth in paragraph 1. above include the
exclusive right to sell, advertise, market and promote the Poster
over the Internet via WCollect, either alone or in combination;
and non-exclusively, via such other methods or media as may be
deemed appropriate given the parties' desires to preserve and
protect the prestigious reputations of the Grammy Awards, the
Poster, and NARAS, itself.
3. As consideration for the rights set forth in paragraph 1.
above, Mindcorp agrees to pay to NARAS a non-refundable advance
of $25,000 ("Advance"), payable on receipt of NARAS' wire
transfer instructions, but not later than February 19, 1999, (or,
if Mindcorp desires to post information on its Web site earlier
than February 19, payment to be made prior to such information
being posted). Such Advance is fully recoupable against Poster
sales at the rate of $5.00/unit finally sold, or in the event of
a limited or specialty version (e.g., an autographed edition), as
against 25% of the retail selling price of each unit sold,
whichever amount is greater. Mindcorp shall account to NARAS no
less often than once per calendar quarter, which accounting shall
include an accurate statement of the number of units sold, minus
returns, and which accounting shall be accompanied by payment for
any additional amounts due to be paid. NARAS shall have the right
to audit Mindcorp's books upon 30 days written notice, but no
more
Suite 650 - 9107 Wilshire Boulevard - Beverly Hills,
California 90210-6519
Telephone (310) 275-9999 - Facsimile (310) 275-1683
<PAGE>
Mr. Chris Andrews
February 8, 1999
as revised February 10, 1999
often than once per calendar year and only with respect to
this transaction. All statements will be deemed conclusive if not
contested within one year from the date of mailing.
4. Each party agrees to cooperate with the other in
connection with the sales, promotion and advertising of Posters,
in the delivery of artwork, provided however, NARAS makes
no representations regarding its ability to help promote
or sell the Poster, nor does it guarantee that Mindcorp
will receive any links or promotion on any Grammy Awards Web
site. Each party agrees to use good faith efforts to protect the
names, logos, trademarks and goodwill of the other. NARAS
warrants and represents that it has the right to enter into this
agreement, and that it owns, or has the right to use the artwork
and other NARAS-supplied logos depicted in the Poster.
5. Subject to NARAS' reasonable approval to continue the
relationship beyond the initial one (1) year term, this Agreement
is renewable on an annual basis so as to allow Mindcorp to sell
the succeeding year's Grammy Awards poster, provided however,
that an additional Advance shall be paid to NARAS for each such
year that Mindcorp renews this Agreement.
The remaining terms of this agreement, if any, are subject
to good faith negotiation between the parties.
Warmest regards.
Sincerely,
Mindcorp, LLC, a
Nevada limited liability
company
\s\ Andrew Zucker
By: Andrew Zucker
Lowy & Zucker LLP
cc: Mr. Stewart Irvine
Accepted and agreed as of the
date first above written:
National Academy of Recording
Arts and Sciences, Inc.
By: \s\ Richard Senn 2/13/99
Authorized signatory
This agreement is solely for the sales of the poster, and implies
no strategic relationship or sponsorship arrangement. All sales,
promotion, and advertising must be pre-approved by NARAS. All
press materials, including press plans, must be pre-approved by NARAS.
<PAGE>
July 21, 1999
Via Fedex
Kazunori Ukigawa,
President and CEO
Justsystem Corporation
Aoyama Building
1-2-3 Kita-Aoyama
Minato-ku 107 Japan
Via Fedex
Stewart Irvine,
President and CEO
WCollect.com, Inc.
7th Floor
1201 West Pender Street
Vancouver, BC
Canada V6E 2V2
Re: Letter of Understanding
Gentlemen:
When signed by the parties named below, this letter will serve
to set forth and confirm the basic points of mutual understanding
reached by and between Mr. Kazunori Ukigawa on behalf of Justsystem
Corporation, a Japanese corporation ("justsystem") on the one hand;
and Mr. Stewart Irvine on behalf of WCollect.com, Inc., a Florida
corporation ("Wcollect"), on the other with respect to the
marketing and promotion of the WCollect Web site "WCollect.com" to
Japanese speaking users in Japan. Notwithstanding anything to the
contrary elsewhere set forth, the parties hereto hereby agree as
follows, to wit:
1. WCollect and Justsystem have established the goals of
making WCollect the leading e-commerce Web site in Japan and
permitting Justsystem to earn 10 to 15% of its gross
<PAGE>
income from
WCollect. In connection therewith, the parties have agreed to
fully cooperate in a commercially reasonable manner so as to allow
WCollect to reach these goals incrementally, within a mutually
agreeable period of time, and in accordance with the outside time
frame dictated by the re-development of Justsystem's Internet
service company ("Justnet") and its new business infrastructure.
2. In connection with the foregoing, the parties have agreed to
consult with each other in regard to any and all issues related to
jointly reaching out to and servicing Japanese customers, including
without limitation: the establishment of a marketing plan; market
research; the creation of market recognition; the development of
brand loyalty; generation of promotional events; public relations;
the identification and purchase of appropriate media advertising;
the selection of appropriate artwork and collectible products for
sale to Japanese consumers; the building and maintenance of a
customer base; the appropriate use of technology (including
Justsystem's ConceptBase, Ichitaro Ark for Java, Digimarc, etc.);
customer service and technical support; Web design; localization
and translation; etc.
3. The parties have intended that the aforementioned will be
effected in a multi-stage process, with the stages arranged
generally as follows:
a. Stage 0. (As early as possible): Justsystem to provide
WCollect.com with hypertext link on the top page of Justnet (at
fees or upon a pricing structure to be discussed), and to
prepare a business plan.
b. Stage 1. (From inception to gross revenues totaling
approximately Yen 20,000,000/ year): Parties to begin to jointly
focus on market research, marketing, advertising, promotion,
formulation of strategic partnerships, partial localization and
translation, in addition to any other activities, at an annual cost
not to exceed approximately Yen 10,000,000. Each party will be
responsible for its own costs of development, overhead, personnel
and travel, which costs (along with any other similar charges) will
be considered "soft" costs, to be recouped, if at all, as per
below. Wcollect will be responsible for the payment of any "hard"
costs, including amounts charged by outside third-parties, such as
the costs of purchasing advertising space, to be recouped, if at all,
as per below.
Reduced costs for ad space on JustNet may, at Justsystem's option,
be considered a "hard" cost. All hard costs shall be subject to
Wcollect's pre-approval, and shall be
<PAGE>
pre-paid or reimbursed pursuant to customary payment terms. Justsystem
will not be responsible for customer support nor for the transactions
themselves.
c. Stage 2. (From gross revenues totaling
approximately Yen 20,000,000/ year to Yen 100,000,000/ year ):
Same as above, with furtherance of implementation of market research,
marketing, advertising, promotion, localization and translation.
Possible adaptation of ConceptBase for use in localized site.
Establishment of "japan.wcollect.com" URL, core online community,
including e-mail, "chat," synergy, additional technology as
necessary or desirable. Obtaining of additional commercial venture
partners. Justsystem will undertake customer support, but will
remain uninvolved in the transactions themselves.
d. Stage 3. (From gross revenues totaling
approximately Yen 100,000,000/ year to Yen 1,500,000,000+): Same as
above, with establishment of Japan WCollect.com, Inc. as
autonomous, separately run, Japanese company. Server operations
located in Japan. Justsystem may begin to become involved in
transactions.
4. During Stages 0-1, Justnet will received 10-15% of all
gross revenues from the sale of items by WCollect which originate
from, or can be attributed to Justnet, payable in advance of and as
applicable against 50% of the net profits. As used herein, the term
"gross revenues" means and shall be defined as 100% of all moneys
collected; and "net profits" means and shall be defined as all gross
revenues actually actually collected by Wcollect or Justsystem or
any party acting on their behalf, minus any returns, less only the
costs of fulfillment and costs of collection (e.g., legal fees),
if any. "Fulfillment costs" are intended to mean the costs
associated with the acquisition of any item (including third party
royalties) and/or manufacture of any item for sale, along with the
costs of shipping and insurance, if any. No responsibility is taken
by either party for the fluctuation of currencies. The fee structure
for Stages beyond Stage 1 shall be subject to good faith negotiation
between the parties.
5. All URLs, trademarks and logos are and shall continue to
remain the property of their respective owners, and, except as
specifically agreed in writing, no assignment thereof is intended
nor implied. Any URLs, trademarks and logos which are created
pursuant to or during the term of this agreement shall belong to
WCollect regardless of
<PAGE>
which party has actually registered or initiated the use of same.
This document may be subject to modification by a more formal
agreement setting forth these points and others which are found to
be standard in agreements of such nature. In the interim, this
document shall set forth the fundamental principles governing both
parties and is intended as a binding agreement embodying the terms
set forth above.
If the foregoing accurately reflects the parties=
understanding, please so indicate by signing in the spaces allotted
for such purposes below.
Thank you.
Sincerely,
Lowy & Zucker LLP
By: Andrew Zucker
cc: Mr. Joshua Arai
Accepted and agreed as of the first date written above:
Justsystem Corporation WCollect.com, Inc.
By: \s\Kazunori Ukigawa By: \s\ Stewart Irvine
_________________________ ________________________
Kazunori Ukigawa, Stewart Irvine,
President and CEO President and CEO
<PAGE>
OFFICE SUB-LEASE
----------------
LEASE made as of this 15th day of May, 1999, by and between
Lowy & Zucker LLP (hereinafter referred to as "Sub-Lessor") and W
Collect. Com, Inc. (hereinafter referred to as "Sub-Lessee").
RECITALS
--------
A. Sub-Lessor maintains an office for the practice of law at
9107 Wilshire Blvd, Suite 650, Beverly Hills, California 90210
(hereinafter referred to as "Office").
B. The parties desire to enter into a sub-lease agreement
defining their respective rights, duties and liabilities relating
to the premises.
IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED HEREIN,
THE PARTIES AGREE AS FOLLOWS:
1. Description of the Premises.
----------------------------
Sub-Lessor sub-leases to Sub-Lessee the most easterly window
office of the Office and the most easterly secretarial space
(inclusive of secretarial desk ) and the common portions of the
Office (hereinafter referred to as "the Premises").
2. Term of Lease.
--------------
The sub-lease shall be for a period commencing August 1,
1999 and will terminate November 30, 2000.
3. Rental Payments and Deposit.
----------------------------
(a) In consideration of the rights granted to Sub-
Lessee by the Sub-Lessor hereunder, the Sub-Lessee agrees to pay
to the Sub-Lessor a monthly rental equal to the following sums,
payable in advance of each month on or before the first day of
the month:
(i) $1000.00 per month through December 31,
1999; and
(ii) $1200.00 per month through the balance
of the Lease Term set forth in Paragraph 2
above.
(b) Upon mutual execution hereof, Sub-Lessee shall pay
Sub-Lessor the sum of $1000.00 for the period from August 1, 1999
through September 30, 1999 and $1200.00 as a security deposit
which will be refunded to Sub-Lessor upon termination of this
Sub-Lease and delivery of the Premises to Sub-Lessor in good
condition, reasonable wear and tear excepted for a total payable
upon mutual execution of $2200.00.
1
<PAGE>
4. Master Lease Requirements.
--------------------------
Notwithstanding the provisions contained herein, Sub-Lessee
agrees to be bound by the terms and conditions of the Master
Lease, a copy of which is attached hereto and the terms of which
are deemed incorporated herein by this reference and made a part
hereof.
5. Abandoning Premises or Personal Property.
Sub-Lessee shall not vacate nor abandon the premises at any
time during the term, but if Sub-Lessee does vacate or abandon
the Premises or is dispossessed by process or law, any personal
property belonging to Sub-Lessee and left on the Premises shall
be deemed abandoned at the option of Sub-Lessor, upon the giving
of thirty (30) days notice in writing to Sub-Lessee, and shall
become the property of Sub-Lessor if not retrieved by Sub-Lessee
within said thirty (30) day period.
6. Taxes.
------
Sub-Lessee shall pay one-sixth (1/6 th) of all assessments,
pass-throughs or real property taxes assessed to Sub-Lessor on
the Premises pursuant to the Master Lease and which are not paid
by third party who is primarily liable for same. However, Sub-
Lessor shall not be liable for personal property taxes assessed
to Sub-Lessee for Sub-Lessee's personal property; nor shall Sub-
Lessee be liable for personal property taxes assessed to Sub-
Lessor for Sub-Lessor's personal property.
7. Utilities and Elevators.
------------------------
(a) To the extent that Sub-Lessor is afforded same by his
Master Lease for the Office, Sub-Lessor shall (at not additional
cost to Sub-Lessee) furnish all heat and air conditioning to the
demised Premises on all business days during the appropriate
seasons and all electricity and all hot and cold water required
by Sub-Lessee in the normal conduct of business activities on the
Premises.
(b) Sub-Lessor shall furnish telephone and fax equipment to
the Premises. However, Sub-Lessee shall be responsible for
charges for use of said equipment at the rates and charges which
Sub-Lessor is charged b the appropriate company and shall be
responsible for installation and payment of Sub-Lessee's phone
lines.
(c) Sub-Lessee may (subject to Sub-Lessor's prior approval
and at Sub-Lessee's expense) list, on the building directories,
Sub-Lessee's name.
(d) Sub-Lessor shall (at no extra expense to Sub-Lessee)
maintain a photocopying machine on the Premises, however, Sub-
Lessee shall be responsible for payment of his use thereof at the
rate of $.15/copy. Sub-Lessee may use Sub-Lessor's fax machine
at the rate of
2
<PAGE>
$.40/page.
(e) Sub-Lessee shall provide (at Sub-Lessee's sole expense)
all equipment, personnel and supplies incidental to Sub-Lessee's
business at the Premises.
(f) From the hours of 9:30 a.m. to 5:00 p.m., Sub-Lessor
shall provide Sub-Lessee the services of Sub-Lessor's
receptionist, at all other times the parties shall use reasonable
efforts to answer the phones.
(g) Sub-Lessee shall occasionally contribute coffee, or
other coffee related supplies and may utilize the coffee
utilities.
8. Alterations and Modification Repairs.
-------------------------------------
Sub-Lessee shall take good care of the Premises and shall
not alter, repair, or change the Premises without written consent
of Sub-Lessor. All alterations, improvements and changes that
Sub-Lessee may desire shall be done either by or under the
direction of Sub-Lessor, but at the expense of Sub-Lessee and
shall become the property of Sub-Lessor and remain on the
premises. Notwithstanding the foregoing, Sub-Lessee may hang his
own artwork in his office. All damage or injury done to the
premises by Sub-Lessee or any person who may be in or on the
premises with the consent of Sub-Lessee shall be paid for by Sub-
Lessee. Sub-Lessee shall, at the termination of this lease,
surrender the premises to Sub-Lessor in as good condition and
repair as reasonable and proper use thereof will permit.
9. Relationship of Parties and Personnel; Indemnities.
---------------------------------------------------
(a) Nothing contained herein shall be deemed to render any
personnel now or hereafter employed by the Sub-Lessor at the
Premises to be employees of Sub-Lessee; and Sub-Lessee shall
neither have nor exercise any control, supervision or direction
over such personnel.
(b) Nothing contained herein shall be deemed to render any
personnel, professional, or non-professional, employed or
associated with the Sub-Lessee, to be employees of the Sub-
Lessor; and the Sub-Lessor shall neither have nor exercise
control, direction or supervision over such personnel.
(c) Nothing contained herein shall be deemed to render the
Sub-Lessee an employee or agent of Sub-Lessor, nor Sub-Lessor an
employee or agent of the Sub-Lessee, it being the intention of
the parties that their relationship shall be solely that of Sub-
Lessor and Sub-Lessee. Without limiting the foregoing, neither
party shall have any right, power or authority to act for or bind
the other unless otherwise mutually agreed in writing.
(d) Nothing contained herein shall be deemed to vest in the
Sub-Lessee any right, title or interest in and to the Premises
except as herein specifically set forth.
3
<PAGE>
(e) Sub-Lessee shall at all times during the term hereof
maintain a liability insurance policy wherein Sub-Lessor is named
as an additional insured.
10. Assignment and Sub-Lease.
-------------------------
Sub-Lessee may not assign any rights or duties under this
sub-lease or sublet the Premises or any part thereof, or allow
any other person or entity to occupy or use the Premises.
11. Breach or Default.
------------------
Sub-Lessee shall have breached this lease and shall be
considered in default hereunder if:
(a) Sub-Lessee fails to pay any rent when due and does
not make the delinquent payment within three (3) days after
receipt of written notice thereof from Sub-Lessor, or
(b) Sub-Lessee fails to perform or comply with any of
the covenants and conditions of this lease and such failure
continues for a period of ten (10) days after receipt of notice
thereof from Sub-Lessor.
12. Unlawful Detainer and Attorneys Fees.
-------------------------------------
In case suit shall be brought for an unlawful detainer of
the Premises, for the recovery of any rent due under the
provision of this lease, or for Sub-Lessee's breach of any other
condition contained herein, Sub-Lessee shall pay to Sub-Lessor
reasonable attorney's fees which shall be fixed by the Court, and
such attorney's fees shall be deemed to have accrued on the
commencement of the action and shall be paid on the successful
completion of the action by Sub-Lessor. Sub-Lessee shall be
entitled to attorney's fees in the same manner if judgment is
rendered to Sub-Lessee.
13. Holding Over.
-------------
If Sub-Lessee holds possession of the Premises after the
term of this lease, Sub-Lessee shall become a tenant from month
to month on the terms herein specified, but at a monthly rental
as set forth in Paragraph 3(a) (ii) herein. Said rent shall be
payable monthly on the first day of each month for the following
monthly period; and Sub-Lessee shall continue to be a month to
month tenant until the tenancy shall be terminated by Sub-Lessor,
or until Sub-Lessee has given to Sub-Lessor a written notice at
least sixty (60) days prior to the date of termination of the
monthly tenancy of his intention to terminate the tenancy.
14. Remedies Cumulative.
--------------------
The remedies herein provided shall be cumulative and the
exercise of any one remedy
4
<PAGE>
shall not be to the exclusion of any other remedy.
15. Notices.
--------
All notices and demands which may or are required to be
given by either party to the other hereunder shall be in writing.
All notices and demands by the Sub-Lessor to the Sub-Lessee shall
be sent by United States certified or registered mail, postage
prepaid, addressed to the Sub-Lessee at the Premises, or to such
other place as the Sub-Lessee may from time to time designate in
a notice to the Sub-Lessor. All notices and demands by the Sub-
Lessee to the Sub-Lessor shall be sent by United States certified
or registered mail, postage prepare, addressed to the Sub-Lessor
at the building, or to such other person or place as the Sub-
Lessor may from time to time designate in a notice to the Sub-
Lessee.
16. Defined Terms and Marginal Headings.
------------------------------------
The words "Sub-Lessor" and "Sub-Lessee" as used herein shall
include the plural as well as the singular. Words used in
masculine gender include the feminine and neuter. If there be
more than one Sub-Lessee or Sub-Lessor, the obligations hereunder
imposed upon Sub-Lessee or Sub-Lessor shall be joint and several.
The marginal headings and titles to the paragraphs of this lease
are not a part of this lease and shall have no effect upon the
construction or interpretation of any part hereof.
17. Time.
-----
Time is of the essence of this lease agreement and each and
all of its provisions.
18. Successors and Assigns.
-----------------------
The covenants and conditions herein contained shall apply to
and bind the heirs, successors, executors, administrators and
assigns of the parties hereto.
19. Warranties and Indemnities.
---------------------------
(a) Sub-Lessor hereby agrees to indemnify Sub-Lessee and
hold Sub-Lessee harmless against any and all damages,
liabilities, costs, expenses, and fees (including reasonable
attorney's fees) incurred by Sub-Lessee as a result of, or in
connection with any claim, suit or proceeding instituted against
Sub-Lessee or the Premises and arising out of any breach or
claimed breach by Sub-Lessor of any warranty, representation or
covenant of Sub-Lessor's herein.
(b) Without limiting the foregoing, the Sub-Lessor shall
indemnify Sub-Lessee and hold sub-lessee harmless from and
against any and all claims, demands, and causes of actions,
including, but not limited to reasonable attorney's fees, arising
by virtue of Sub-Lessor's or Sub-Lessor's agents' or successors'
acts or omissions.
5
<PAGE>
(c) Likewise, Sub-Lessee shall indemnify and hold Sub-
Lessor harmless from and against any and all claims, demands,
causes of action, including but not limited to reasonable
attorney's fees, arising by virtue of Sub-Lessee's or Sub-
Lessees's agents' or successors' acts or omissions in Sub-
Lessee's practice or from Sub-Lessee's breach of any warranty,
representation or covenant herein contained.
20. Miscellaneous.
--------------
(a) The waiver of any term, covenant or condition herein
contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained.
(b) Should any part of this Agreement for any reason be
declared invalid, void or unenforceable, the remaining portions
shall remain in full force and effect.
(c) This Agreement constitutes the entire agreement of the
parties and may not be amended or modified except in writing,
signed by all of the parties hereto.
(d) This Agreement shall be construed in accordance with
the laws of the State of California. This Agreement is not
intended to create a partnership or joint venture or
employer/employee relationship between any of the parties hereto.
This Agreement is not intended as an agreement into for the
benefit of a third party.
IN WITNESS WHEREOF, the parties have executed this Sub-Lease
the day and year first above written.
LOWY & ZUCKER LLP
"Sub-Lessor"
Dated: 05/28/1999 By: \s\ Steven R. Lowy
---------- -------------------
STEVEN R. LOWY
Dated: 05/28/1999 By: \s\ Andrew Zucker
---------- -------------------
ANDREW ZUCKER
Dated: May 28/99 By: \s\ Stewart Irvine
---------- --------------------
WCollect.Com
By:_________________________
Its:_________________________
6
<PAGE>
THIS INDENTURE made the 22nd day of February, 1999
BETWEEN:
FIRWOOD LAND AND TRADING COMPANY LIMITED, a company incorporated in
British Columbia and having its registered office at Suite 404,
1199 West Hastings Street, Vancouver, British Columbia
(hereinafter called the "Landlord")
OF THE FIRST PART
AND:
WCOLLECT.COM, CORP., a company incorporated in Florida and having
its registered office at Suite 700, 1201 West Pender Street,
Vancouver, BC
(hereinafter called the "Tenant")
OF THE SECOND PART
AND:
VARCOM INC., a company incorporated in British Columbia and having
its registered office at Suite 700, 1201 West Pender Street,
Vancouver, BC
(hereinafter called the "Tenant")
OF THE THIRD PART
AND:
IGEAR DEVELOPMENT CORPORATION, a company incorporated in British
Columbia and having its registered office at Suite 700, 1201 West
Pender Street, Vancouver, BC
(hereinafter called the "Tenant")
OF THE FOURTH PART
Premises
1.00 Witnesseth that in consideration of the rents, covenants,
conditions and agreements hereinafter reserved and contained on the
part of the Tenant to be paid, observed and performed the Landlord
doth demise and lease unto the Tenant all and singular those
certain premises being (approximately) 5,633 square feet of Usable
Area plus a 272 square feet apportionment of Common Area for a
total of 5,905 square feet of Rentable Area as described in the
first part of Schedule A annexed hereto (hereinafter referred to as
the "Demised Premises") situate in the City of Vancouver in the
Province of British Columbia and forming part of the building known
as EA House (hereinafter referred to as the "Building"), the
Building being erected and situate upon the lands (hereinafter
referred to as the "Lands") more particularly described in Schedule
B annexed hereto. In this lease, "Rentable Area", "Usable Area",
"Common Area" and "Gross Rentable Area" shall take the meanings
found in the "BOMA International Standards of Measurement".
1.01 The Demised Premises shall be addressed as Suite 700, 1201
West Pender Street, Vancouver, BC
<PAGE>
-2-
Term
2.00 To have and to hold the demised premises for and during the
term of five (5) years commencing on the first day of May, 1999 and
ending on the last day of April, 2004.
Rent
3.00 Yielding and paying therefor the following sums (hereinafter
referred to as "Rent"):
Year 1
------
For the period between May 1, 1999 and April 30, 2000 the sum
of $59,050.00 of lawful money of Canada being rental at the
rate of $10.00 per square foot.
<PAGE>
-3-
Business Tax, Etc.
4.01 The Tenant shall pay all business, goods and services, or any
other taxes from time to time levied in respect of the Tenant's use
or occupancy of the demised premises, in respect of any payment(s)
required to be made by the Tenant under this lease, or in respect
of any other right or obligation of the Tenant arising from this
lease, including penalties and/or interest for late payment
thereof. Where such taxes are payable to the Landlord as agent for
a taxing authority, the terms of any penalty and/or interest
provisions applicable to taxed in arrears imposed by the taxing
authority on the Landlord will also be imposed by the Landlord on
the Tenant.
Evidence of Payments
4.02.01 The Tenant shall produce to the Landlord from time to time
at the request of the Landlord satisfactory evidence of the due
payment by the Tenant of all payments required to be made by the
Tenant under this lease.
Allocation of Payments
4.02.02 Payments by the Tenant shall be allocated by the Landlord
to amounts due and/or coming due pursuant to the lease in any
reasonable fashion, notwithstanding any notation by the Tenant to
the contrary.
Acts Conflicting With Insurance
4.03 The Tenant shall not do or permit to be done any act or thing
that may render void or voidable or conflict with the requirements
of any policy or policies of insurance, including any regulations
of fire insurance underwriters applicable to such policy or
policies, whereby the demised premises or the building are insured
or that may cause any increase in premium to be paid in respect of
any such policy. In the event that any such policy or policies is
or are cancelled by reason of any act or omission of the Tenant,
the Landlord shall have the right at its option to terminate this
lease forthwith by giving notice of termination to the Tenant, and
in the event that the premium to be paid in respect of any such
policy is increased by any act or omission of the Tenant, the
Tenant shall pay to the Landlord the amount by which said premium
shall be so increased.
No Nuisance
4.04 The Tenant shall not at any time during the said term use,
exercise or carry on or permit or suffer to be used, exercised or
carried on in or upon the demised premises or any part hereof any
noxious, noisome or offensive act, trade, business, occupation or
calling, and no act, matter or thing whatsoever shall at any time
during the said term be done in or upon the demised premises or any
part thereof which shall or may be or grow to the annoyance,
nuisance, damage or disturbance of the occupiers or owners of the
said building or adjoining land and properties.
Comply With Laws, Etc.
4.05 The Tenant shall comply promptly at its expense with all laws,
ordinances, regulations, requirements and recommendations, which
may be applicable to the Tenant or to the manner of use of the
demised premises, of any and all federal, provincial, civic,
municipal and other authorities or association of insurance
underwriters or agents and all notices in pursuance of same and
whether served upon the Landlord or the Tenant.
Comply With Rules and Regulations
4.06 The Tenant agrees that the rules and regulations endorsed on
this lease or attached hereto as Schedule C with such reasonable
variations, modifications and additions as shall from time to time
be made by the Landlord and any other and further reasonable rules
and regulations that may be made by the Landlord and intimated to
the Tenant in writing shall be observed and performed by the Tenant
and its agents, clerks, servants or employees and all such rules
and regulations now in force or hereafter put in force shall be
read as forming part of the terms and conditions of this lease as
if the same were embodied herein; all such rules and regulations
shall be deemed to be a part of this lease.
<PAGE>
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Damage to Building by Tenant
4.07 The Tenant shall reimburse the Landlord for costs incurred by
the Landlord in making good any damage caused to the said building
or any part thereof including the furnishings and amenities thereof
as a result of the negligence or wilful act of the Tenant, or
persons for whom the Tenant shall be responsible in law, from time
to time in or about the demised premises.
Notice of Accidents, Defects, Etc.
4.08 The Tenant shall give the Landlord prompt written notice of
any damage to or defect in the heating and air conditioning
apparatus, water pipes, gas pipes, telephone lines, electric light
or other wires or other casualty.
Assigning or Subletting
4.09.01 The Tenant shall not sublet or otherwise part with
possession of the whole or any part of the demised premises for the
whole or any part of the term without the prior written consent of
the Landlord, which consent shall not be unreasonably withheld.
The Tenant shall not assign this lease for the whole or any part of
the terms without the prior consent in writing of the Landlord,
which consent shall not be unreasonably withheld. Provided that
the Tenant shall, at the time the Tenant shall request the consent
of the Landlord, deliver to the Landlord such information in
writing (herein called the "Required Information") as the Landlord
may reasonably require respecting the proposed assignee or
subtenant including the name, address, nature of business,
financial responsibility and standing of such proposed assignee or
subtenant together with a copy of the offer or agreement relating
to the proposed assignment, certified by the Tenant to be a true
copy. Provided further that after receiving such request, the
Landlord shall have the right, at its option, to terminate this
lease by giving, within ten days after receiving the Required
Information, not less than thirty nor more than sixty days written
notice of termination to the Tenant. In the event of such
termination the Rent and other payments required to be made by the
Tenant hereunder shall be adjusted to the date of termination.
Provided further that the Landlord's right to terminate as
aforesaid shall not apply to an assignment by the Tenant as the
result of a merger or amalgamation or an assignment to a wholly
owned subsidiary of the Tenant. Provided further that the Tenant
shall cause any permitted assignee of the Tenant to execute and
deliver to the Landlord, concurrently with the happening of the
assignment, an agreement with the Landlord, on terms reasonably
satisfactory to the Landlord wherein the Assignee covenants to
observe and perform all of the obligations of the Tenant as and
from the effective date of the assignment for the balance of the
term of the lease.
4.09.02 In no event shall any assignment or subletting, to which
the Landlord may have consented release, relieve the Tenant from
its obligations fully to perform all the terms, convenants and
conditions of this lease on its part to be performed and in any
event the Tenant shall be liable for the Landlord's reasonable
costs incurred in connection with the Tenant's request for consent.
4.09.03 If the Tenant is an incorporated company, any change in
the control of such company shall be deemed, for the purposes
hereof, to be an assignment of this lease.
Indemnity to Landlord
4.10 Provided that it is not the result of negligence on the part
of the Landlord or any person for whom the Landlord is responsible
in law, the Tenant shall indemnify and save harmless the Landlord
from any and all liabilities, damages, costs, claims, suits or
actions growing out of:
(a) any breach, violation or non-performance of any covenant,
condition or agreement in this lease set forth and contained on the
part of the Tenant, to be fulfilled, kept, observed and performed;
<PAGE>
-5-
(b) any damage to property while said property shall be in or
about the demised premises; and
(c) any injury to any person for whom the Tenant if responsible in
law, including death resulting at any time therefrom, occurring in
or about the demised premises and/or on the lands;
and this indemnity shall survive the expiry or sooner determination
of this lease, only with respect to any of the above occurring
while the lease was in force.
Tenant Insurance
4.11.01 The tenant shall, at its expense, provided and maintain
in force during the term of this lease or of any renewal thereof:
(a) interior glass insurance, for the benefit of the Landlord and
the Tenant, covering all glass in the demised premises, including
glass windows and doors, in an amount equal to the full insurable
value thereof, unless the cost of similar insurance is included in
the Operating Costs;
(b) public liability insurance, for the benefit of the Landlord
and the Tenant, in such reasonable amounts as may be required by
the Landlord in respect of injure or death to one or more persons
or property damage;
(c) fire insurance, extended coverage endorsement, theft, and
water damage insurance (including, if applicable, sprinkler
leakage) covering all the Tenant's property in the demised premises
including, without limitation, its furniture, improvements,
equipment, fittings, fixtures and stock in trade to full insurable
value.
4.11.02 All insurance shall be effected with insurers and brokers
and upon terms and conditions reasonably satisfactory to the
Landlord and copies of all policies shall be delivered to the
Landlord.
4.11.03 All policies of insurance shall contain a waiver of
subrogation clause in favour of the Landlord and shall also contain
a clause requiring the insurer not to cancel or change the
insurance without first giving the Landlord 30 days' prior written
notice thereof.
4.11.04 The Tenant agrees that if it does not provide or maintain
in force such insurance, the Landlord may take out the necessary
insurance and pay the premium therefor for periods of one (1) year
at a time, and the Tenant shall pay to the Landlord as additional
rental the amount of such premium immediately on demand.
4.11.05 In the event that both the Landlord and the Tenant have
claims to be indemnified under any such insurance, the indemnity
shall be applied first to the settlement of the claim of the
Landlord and the balance, if any, to the settlement of the claim of
the Tenant.
Goods and Chattels Not To Be Removed
4.12 The Tenant agrees that all goods and chattels moved into the
demised premises shall not, except in the normal course of
business, be removed from the demised premises until all Rent due
or to be become due during the term during the term of this lease
is fully paid.
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Repairs
4.13.01 The Tenant shall, during the said term, well and
sufficiently repair, maintain, amend and keep the demised premises,
with the appurtenances and all fixtures, in good and substantial
repair when, where and so often as need shall be, reasonable wear
and tear and damage by fire and other risks against which the
Landlord is insured (hereinafter collectively referred to as
"Tenant Repair Exceptions") only excepted.
4.13.02 The Landlord and its agents shall have the right to all
reasonable times during the said term upon 24 hours notice
excepting an emergency situation to enter the demised premises to
examine the condition thereof, and further, that all want of
reparation that upon such view shall be found, and for the
amendment of which notice in writing shall be left at the demised
premises, the Tenant shall well and sufficiently repair and make
good accordingly.
Use of Premises
4.14 The Tenant shall not use the demised premises nor allow the
demised premises to be used for any other purpose than that for
which the premises are hereby leased, namely, as a general business
office.
Signs
4.15 The Tenant shall not paint, display, inscribed, place or
affix any sign, picture, advertisement, notice, lettering or
direction on any part of the outside of the building or visible
from the outside of the building or in any corridor, hallway,
entrance or other public part of the said building. Provided that
the Landlord shall prescribe a uniform pattern for identification
signs for tenants to be placed on the outside of the main door
leading into the demised premises. Provided that at the request of
the Tenant and at the Tenant's expense, the Landlord shall cause
such a sign to be placed in position.
Alterations Etc.
4.16.01 The Tenant shall not without the prior written consent of
the Landlord, which consent shall not be unreasonably withheld,
make any alterations, repairs or improvements to the demised
premises or construct or place therein or alter any interior
partitions (including moveable partitions, partial partitions or
other installations) or do anything that might affect the proper
operation of the lighting, hearing or air conditioning systems.
The Tenant shall submit to the Landlord detailed plans and
specifications of any such work or installation when applying for
consent, and the Landlord reserves the right to recover from the
Tenant the cost of having its architects or engineers examine such
plans and specifications. The Tenant understands that, in granting
consent, the Landlord may impose conditions with respect to the
electrical and mechanical services (which term includes heating and
air conditioning) and those conditions may require the Tenant to
pay for reasonable alterations or modifications to the said
electrical and mechanical services. The Landlord may require that
any or all work to be done, or materials to be supplied hereunder
shall be done or supplied by the Landlord's materials to be
supplied hereunder shall be done or supplied by the Landlord's
materials to be supplied hereunder shall be done or supplied by the
Landlord's contracts and/or workmen or by contractors and/or
workmen engaged by the Tenant but first approved by the Landlord,
which approval shall not e unreasonably withheld. In any event,
any and all work to be done or materials to be supplied hereunder
shall be at the sole cost and expense of the Tenant and shall be
done and supplied and paid for in the manner and according to such
terms and conditions, if any, as the Landlord may reasonably
prescribe. Any connections of apparatus to the electrical system,
other than a connection to an existing base receptacle, and/or any
connection of apparatus to the heating or air conditioning systems
shall be deemed to be an alteration within the meaning of this
clause.
4.16.02 The Tenant covenants with the Landlord that the Tenant
shall promptly pay all charges incurred by the Tenant for any work,
materials or services that may be done, supplied or performed in
respect of the demised premises and shall forthwith discharge any
liens at any time filed against and keep the lands and premises of
which the
<PAGE>
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demised premises form a part free from liens and in the
event that the Tenant fails to do so, the Landlord may, but shall
be under no obligation to, pay into Court the amount required to
obtain a discharge of any such lien in the name of the Tenant and
any amount so paid together with all disbursements and costs in
respect of such proceedings on a solicitor and client basis shall
be forthwith due and payable by the Tenant to the Landlord as
additional rent. The Tenant shall allow the Landlord to post and
keep posted on the demised premised any notices that the Landlord
may desire to post under the provisions of the Builders Lien Act or
other legislation.
4.16.03 The Tenant shall not without the prior written consent not
be to unreasonably withheld of the Landlord put up any window
drapes, blinds, awnings or other similar things or cover the floors
with anything other than loose rugs.
Peaceful Surrender
4.17.01 Upon the termination of this Lease from any cause
whatsoever, all alterations, additions, partitions and improvements
which may be made or installed upon the demised premises by the
Tenant or by the Landlord on behalf of the Tenant and which in any
manner are attached to the floors, walls or ceilings will remain
upon and be surrendered with the demised premises as a part thereof
without disturbance, molestation or injury and together with any
floor covering affixed to the floor of the demised premises and the
drapes or other window coverings will be and become the property of
the Landlord absolutely.
4.17.02 All articles of personal property and all business and
trade fixtures, machinery and equipment, cabinet work, furniture
owned or installed by the Tenant at the expense of the Tenant in
the demised premises shall remain the property of the Tenant and
may be removed by the Tenant at any time during the term, provided
that the Tenant at its expense shall repair any damage to the
demised premises of the Building caused by such removal of the
original installation.
Utilities
4.18 The Tenant shall pay all telephone, electric and other
utility charges in connection with the demised premises that there
is not a separate meter for measuring the consumption of and
charging for electricity used in the demised premises the Tenant
shall pay to the Landlord as additional rent in advance by monthly
instalments such amount as may be required by the Landlord from
time to time as a reasonable estimate of the cost of such
electricity. The Tenant shall advise the Landlord forthwith of any
appliances or business machines installed by the Tenant consuming
or likely to consume large amounts of electricity and further on
request from time to time shall provide the Landlord with a list of
all electrical appliances and business machines used in the demised
premises. The amount of electricity consumed on the demised
premises in excess of electricity required by the Tenant for normal
office use shall be as determined by the Landlord acting
reasonably. The Tenant shall pay the Landlord for any such excess
on demand.
Realty Taxes
4.19.01 In this paragraph the following phrases shall have the
following meanings:
(a) "Tax" means an amount equivalent to all taxes, rates, duties,
levies and assessments whatsoever whether municipal, parliamentary,
school or otherwise charged upon the building, the lands and all
improvements now or hereafter thereon or upon the Landlord on
account thereof including all taxes, rates, duties, levies and
assessments for local improvements but excluding any tax that has
been attracted by the Tenant's improvements and equipment and
excluding such taxes as corporate, income, profits or excess profit
taxes assessed upon
<PAGE>
-8-
the income of the Landlord and shall also include any and all
taxes that may in future be levied in lieu of Tax as
hereinbefore defined: less any applicable Advance Tax but
including taxes falling or having fallen due on a date outside the
term of this lease.
(b) "Advance Tax" means any pre-billing or partial billing of Tax,
including advance taxes falling or having fallen due on a date
outside the term of this lease.
(c) "Proportionate Share" means that ratio having as its numerator
the Rentable Area of the demised premises and as its denominator
the Gross Rentable Area of the building of which the premises from
a part. Notwithstanding the foregoing, in the event that the
Landlord or its agent, acting in good faith, determines that in its
opinion a more equitable allocation in appropriate for any specific
cost or costs, the Proportionate Shares as it applies to such
cost(s) shall take on a meaning consistent with such an allocation.
(d) "Pro Rata" means that ratio having as its numerator the number
of days covered by both the term of this lease and the period to
which the Tax or Advance Tax relates and having as its denominator
the number of days in the period to which the Tax or Advance Tax
relates.
4.19.02 The Tenant shall pay the Landlord as additional rent the
Pro Rata. Proportionate Share of any Tax and of any Advance Tax at
least one working day before such Tax or Advance Tax is payable by
the Landlord to the taxing authority.
4.19.03 If any Tax shall be increased by reason of any alterations
made in or to the demised premises by the Tenant or by the Landlord
on behalf of the Tenant, the Tenant shall pay the amount of such
increase as additional rent.
4.19.04 The Tenant shall pay the Landlord as additional rent the
Pro Rata, Proportionate Share of any expense incurred by the
Landlord in obtaining or attempting to obtain a reduction in the
amount of Tax. In the event that the Tenant shall have paid its
Proportionate Share pursuant to Clause 4.19.02 of this lease and
the Landlord shall thereafter receive a refund of any portion of
such Tax, the Landlord shall make an appropriate refund to the
Tenant.
4.19.05 The Landlord will pay or cause to be paid all Taxes and
Advance Taxes as directed by the relevant taxing authority when
due. Compliance with this covenant notwithstanding, the terms of
any penalty and/or interest provisions applicable to Taxes or
Advance Taxes in arrears imposed by the taxing authority on the
Landlord will also be imposed by the Landlord on the Tenant.
Operating Costs
4.20.01 In this paragraph the following phrases shall have the
following meanings:
(a) "Operating Costs" means the total amount, without duplication,
of all costs incurred or which will be incurred by the Landlord
during the term, in accordance with generally accepted accounting
principles, for the complete maintenance, repair, operation and
administration of the lands, the building and the improvements
thereon such as are in keeping with maintaining the standard of a
first class commercial building complex and including, without
limitation, the costs of: repairs and replacements as are of a non
capital nature (except to the extent that the same are paid by
insurance) and decoration of common areas,
<PAGE>
-9-
maintaining parking areas, all repairs and replacements required
for such maintenance, heating, ventilating and air conditioning
costs including, without limitation, the purchase of fuel, gas
and steam for heating or other purposes and the cost of making
repairs to the heating and air conditioning equipment, repair,
maintenance and operation of all elevators and escalators,
providing hot and cold water, providing electricity not
otherwise chargeable to tenants, painting interior areas not
normally rented to tenants and painting and otherwise
maintaining the outside of the building, snow removal,
landscape maintenance, janitorial services, refuse removal and
window cleaning, fire, casualty, liability, loss of rental income
and other insurance costs to limits that would be obtained by a
prudent owner of a similar property, telephone and other utility
costs and supplies and stationery, service contracts with
independent contractors, provision or porters, reception staff and
other non administrative personnel, including salaries, wages and
fringe benefits, provision of security provision of accounting
services and operational auditing, legal and other professional
fees, sales and excise tax on goods and services provided by the
Landlord in connection with the repair, maintenance, administration
and operation as aforesaid and all other expenses including
management fees paid or payable by the Landlord in connection with
the operation of the building, improvements and lands, but, shall
not include interest on debt or capital retirement of debt, costs
as determined by the Landlord of repairing structural defects in
the building or any amounts directly chargeable by the Landlord to
any tenant or tenants as otherwise provided herein;
(b) "Proportionate Share" means that ratio having as its numerator
the Rentable Area of the demised premises, and as its denominator
the Gross Rentable Area of the building of which the premises from
a part. Notwithstanding the foregoing, in the event that the
Landlord or its agent acting in good faith, determines that in its
opinion a more equitable allocation is appropriate for any specific
cost or costs, then "Proportionate Share" as it applies to such
cost(s) shall take on a meaning consistent with such an allocation.
(c) "Pro Rata" means that ratio having as its numerator the number
of days covered by both the term of this lease and the Landlord's
fiscal year and having as its denominator the number of days in the
Landlord's fiscal year.
4.20.02 The Tenant shall pay the Landlord as additional rent the
Pro Rata Proportionate Share of Operating Costs on receipt of
notice from the Landlord. Such Proportionate Share payable
hereunder may be estimated by the Landlord, in which event, the
amount so estimated shall be paid by the Tenant in equal monthly
rental payment date. If on this basis any overpayment shall have
been made by the Tenant, or should any operating costs still be due
and owing by the Tenant then, an adjustment within a reasonable
time following the close of each fiscal year end of the Landlord
shall be made by the Tenant or the Landlord as the situation
warrants.
Care of Premises
4.21.01 The Tenant shall take good care of the demised premises
and keep same in a clean, tidy and healthy condition.
4.21.02 The Tenant shall at its own expense replace or repair,
under the direction and to the reasonable satisfaction of the
Landlord, the glass, locks and trimmings of the doors and windows
in or upon the demised premises that become damaged or broken
<PAGE>
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except any glass, locks or trimmings damaged or broken by the
Landlord, its employees, agents or contractors.
Quiet Enjoyment
5.00 The Landlord hereby covenants with the Tenant that the
Tenant, paying the Rent hereby reserved and performing the
covenants hereinbefore on the Tenant's part contained, shall and
may peaceable possess and enjoy the demised premises for the term
hereby granted without any interruption or disturbance from the
Landlord or any other person or persons lawfully claiming by, from
or under the Landlord.
Heating and Air Conditioning
5.01 The Landlord shall provide heating and air conditioning so
that when heat is reasonably required for the reasonable use of the
demised premises the Landlord will furnish heat therefore up to a
reasonable temperature and when the heating systems is not in use
and the Landlord considers that the air conditioning is reasonably
required the Landlord will operate the air conditioning system in
said building. The heating and air conditioning system shall be
operated on an open floor basis adequate to service open and
unpartitioned floors, but capable of being extended to service
partitioned areas. The Landlord shall be relieved from its
obligations to provide reasonable heating and air conditioning
under the following circumstances:
(a) in any part of the demised premises on Saturdays, Sundays and
public holidays, and before the hour of 8:00 a.m. and after of 6:00
p.m. on each business day;
(b) in those areas having exterior windows exposed to the sun
where and when the Tenant fails to keep the window shading thereon
fully closed;
(c) in those areas where the human occupation exceeds one person
per 100 square fee of Rentable Area;
(d) in those offices, the formation of which has not been
consented to in accordance with Clause 4.16.01 of this lease;
(e) in areas where the average amount of electrical energy
consumed by the lights and machines exceeds four watts per square
foot.
The term "offices" as used herein shall mean any part of the
demised premises that is partitioned off or substantially separated
from the remainder of the demised premises;
Janitor Services
5.02 The Landlord shall cause, the floors and demised premises to
be swept or vacuumed, and normal office refuse removed, the windows
washed and the desks, tables and other furniture dusted but the
Landlord shall not be responsible for any act of omission or
commission on the part of any person or persons employed to perform
these tasks and such tasks will be carried out by bonded
contractors on a daily basis, excepting weekends, and statutory
holidays save and except for window washing.
Building Directory
5.03 The Landlord shall keep in the main entrance of the building,
by which entry is made to the demised premises, a proper index or
directly of the building and to insert thereon the name of the
Tenant and the number of the Tenant's office in proper lettering,
the character of which shall be at the option of the Landlord.
Damage or Destruction of Premises
6.00.01 Provided that if during the term hereby demised or any
renewal thereof the demised premises shall be damaged or destroyed
by a peril or perils that would be
<PAGE>
-11-
covered by a standard fire insurance policy with Extended Coverage
Endorsement attached thereto, the Rent shall abate in the proportion
that the part of the demised premises rendered unfit to occupancy
bears to the whole of the demised premises until the demised
premises are rebuilt, and the Landlord agrees that it will with
reasonable diligence repair the demised premises unless the Tenant
is obligated to repair under the terms hereof or unless this lease
is terminated as hereinafter provided; subject always to the
provisions of paragraphs 6.00.02 and 6.00.03.
6.00.02 If the demised premises are damaged or destroyed by any
clause whatsoever and if in the opinion of the Landlord reasonably
arrived at the demised premises cannot be rebuilt or made fit for
the purposes of the Tenant within 90 days of the damage or
destruction, the Landlord, instead of rebuilding or making the
demised premises fit for the Tenant, may, at its option, determine
this lease by giving the Tenant within 30 days of such damage or
destruction notice of termination and thereupon Rent and any other
payment for which the Tenant is liable under this lease shall be
appointed and paid to the date of such damage or destruction and
the Tenant shall immediately deliver up possession of the demised
premises to the Landlord.
6.00.03 Provided that if the building or part thereof shall be
damaged or destroyed and such damage or destruction shall, in the
opinion of the Landlord, materially interfere with the enjoyment of
the demised premises by the Tenant, the Rent in respect of the
demised premises shall abate in proportion to such interference
during the period such interference shall continue.
6.00.04 Provided further that, irrespective of whether the demised
premises are damaged or destroyed in the event that 50% or more of
the Gross Rentable Area in the building is damaged or destroyed by
any cause whatsoever and if in the opinion of the Landlord
reasonably arrived at the said Rentable Area cannot be rebuilt or
made fit for the purposes of the tenants of such space within 180
days of the damage or destruction, the Landlord may at its option
terminate this lease by giving the Tenant within 30 days after such
damage or destruction notice of termination requiring vacant within
30 days after such damage or destruction notice of termination
requiring vacant possession of the demised premises 60 days after
the delivery of the notice of termination and thereupon Rent and
any other payment for which the Tenant is liable under this lease
shall be apportioned and paid to the date upon which vacant
possession is required and the Tenant shall deliver up possession
of the demised premises to the Landlord in accordance with such
notice of termination.
Access to Premises, Use of Common Areas, Etc.
6.01 The Landlord agrees that during the term of this lease the
Tenant and the employees, agents, customers and invitees
respectively of the Tenant shall have the rights and shall comply
with the provisions set forth in the Second Part of Schedule A
hereto annexed, subject as set forth in this lease, including said
part of said Schedule; said Schedule A shall be deemed to be a part
of this lease. The Tenant shall comply with such provisions.
Landlord's Right To Do Work
6.02.01 The Landlord shall have the right to make additions to
and/or improvements or installations in and/or repairs to the
building and/or the common outside areas and whenever reference is
made in this lease to the building or the common outside areas, it
shall mean the building and/or the common outside areas as the same
may be changed, added to or improved from time to time and in
relation to any such additions, improvements, installations, or
repairs the Landlord may cause such reasonable obstructions of and
interference with the use of enjoyment of the building, the demised
premises and/or common outside areas as may be reasonably necessary
for the purposes aforesaid and may interrupt or suspend the supply
of electricity, water or
<PAGE>
-12-
other services when necessary and until said additions,
improvements, installations or repairs shall have been
completed and there shall be no abatement in Rent nor shall
the Landlord be liable by reason thereof provided that all such
additions, improvements, installations or repairs shall be made as
expeditiously as reasonably possible.
6.02.02 The Landlord and any persons authorized by the Landlord
shall have the right to use, install, maintain and/or repair pipes,
wires, ducts or other installations in, under or through the
demised premises for or in connection with the supply of any
services shall include, without limiting the generality of the
foregoing, gas, electricity, water, sanitation, heating, air
conditioning and ventilation.
6.02.03 The Landlord and any persons authorized by the Landlord
shall have the right to enter upon the demised premises upon
reasonable notice to the Tenant to make such decorations, repairs,
alterations, improvements or additions as it may deem reasonable
and the Landlord or any persons authorized by the Landlord shall be
allowed to take all materials into and upon the said premises that
may be required therefore. The Rent hereunder shall in no way
abate while such decorations, repairs, alterations, improvements or
additions are being made by reason of loss or interruption of the
business of the Tenant because of the prosecution of any such work.
Landlord's Right To Inspect and Display Sign
6.03 Provided also that during the term hereby created any person
or persons may inspect the demised premises and all parts thereof
at all reasonable times and with reasonable notice on producing a
written order to that effect signed by the Landlord or its agents.
Landlord May Perform Tenant's Covenants Etc.
6.04 If the Tenant shall fail to perform or cause to be performed
each and every one of the covenant and obligations of the Tenant in
this lease contained the Landlord shall have the right (but shall
not be obligated) to perform or cause the same to be performed and
to do or cause to be done such things as may be necessary or
incidental thereto (including, without limiting the foregoing, the
right to make repairs, installations, erections and expend moneys)
and all payments, expenses, charges, fees and disbursements
incurred or paid by or on behalf of the Landlord in respect thereof
shall be paid by the Tenant to the Landlord forthwith.
Re-Entry
6.05.01 Provided, and it is hereby expressly agreed, that if and
whenever the Rent hereby reserved, or any part thereof, shall be
unpaid for fifteen days after any of the days on which the same
ought to have been paid or remain unpaid after five (5) days
written notice thereof, or in the case of the breach or non-
performance of any of the covenants or agreements herein contained
on the part of the Tenant that is not cured by the Tenant within
30 days from the date of its happening and such breach continues by
the Tenant within 30 days from the date of its happening and such
breach continues after ten (10) days written notice thereof (or
such further periods as may be reasonably necessary provided that
the Tenant has commenced the curing forthwith and continues with
same with all due diligence), then and in either of such cases, it
shall be lawful for the Landlord at any time thereafter, to enter
the demised premises or any part thereof, in the name of the whole
to re-enter, and the same to have again, repossess and enjoy, as of
the Landlord's former estate, anything hereinafter contained to the
contrary notwithstanding.
6.05.02 In case the Landlord shall re-enter the demised premises
prior to the expiry of this lease by reason of default by the
Tenant hereunder, the Tenant shall be liable to the Landlord for
the amount of the Rent for the remainder of the term of this lease
as if such re-entry had not been made less the actual amount
received by the Landlord after
<PAGE>
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such re-entry in respect of any subsequent leasing applicable to
the remainder of the term.
Waiver of Exemptions
6.06 That in consideration of the premises and of the leasing and
letting by the Landlord to the Tenant of the demised premises for
the term hereby created (and it is upon that express understanding
that these presents are entered into) that notwithstanding anything
contained in any Statue or in any Statue that may hereafter be
passed, none of the goods or chattels of the Tenant at any time
during the continuance of the term hereby created situate on the
demised premises shall be exempt from levy by distress for Rent in
arrears by the Tenant as provided for in any such Statute or any
amendment or amendments thereto, and that upon any claim being made
for such exemption by the Tenant or on distress being made by the
Landlord this covenant and agreement may be pleaded as an estoppel
against the Tenant in any action brought to test the right to the
levying upon any such goods as are named as exempted in any such
Statute or amendment or amendments thereto; the Tenant waiving as
the Tenant hereby does all and every benefit that could or might
have accrued to the Tenant under and by virtue of any such Statute
or any amendment or amendments thereto but for this covenant.
Bankruptcy, Etc.
6.07 The Tenant covenants that if the term hereby granted shall be
at any time seized or taken in execution or in attachment by any
creditor of the Tenant or if the Tenant shall make any assignment
for the benefit of creditors, or becoming bankrupt or insolvent
shall take the benefit of any Act that may be in force for bankrupt
or insolvent debtors, then in any such case the said term shall at
the option of the Landlord, immediately become forfeited and void
and the then current month's Rent and the Rent for the three months
next following shall immediately become due and payable and in such
case it shall be lawful for the Landlord at any time thereafter
enter into and upon the demised premises, or any part thereof, in
the name of the whole to re-enter and the same to have again,
repossess and enjoy as of its former estate; anything herein
contained to the contrary notwithstanding.
Follow Chattels
6.08 Provided that in case of removal by the Tenant of the goods
and chattels of the Tenant from the premises, the Landlord may
follow the same for thirty days.
Overlooking and Condoning
6.09 Any condoning, excusing or overlooking by the Landlord of any
default, breach or non-observance by the Tenant at any time or
times in respect of any covenant, proviso or condition herein
contained shall not operate as a waiver of the Landlord's rights
hereunder in respect of any subsequent default, breach or non-
observance nor so as to defeat or affect in any way the rights of
the Landlord hereunder in respect of the subsequent default, breach
or non-observance.
Occupancy Availability
6.10 If the demised premises shall not be available for occupancy
by the Tenant upon the date of commencement of the term hereby
demised, the Rent under this lease shall abate until the demised
premises are available for occupancy and the Landlord shall not be
liable in any way for the consequences of occupancy not being
available to the Tenant upon the date of commencement.
Overholding
6.11 If at the expiration of the term of this lease the Tenant
shall hold over with the consent of the Landlord, the tenancy of
the Tenant thereafter shall, in the absence of written agreement to
the contrary, be from month to month only at a Rent per month equal
to one-tenth of the Rent payable for the year immediately preceding
such
<PAGE>
-14-
expiration, payable monthly in advance on the first day of
each lease month and shall be subject to all other terms and
conditions of this lease.
Removal of Fixtures, Etc.
6.12 The Landlord may elect to require the Tenant to remove all or
any part of the business and trade fixtures, machinery and
equipment, cabinet work furniture and movable and immovable
partitions owned or installed by or on behalf of the Tenant at the
expiration of this Lease, in which event such removal shall be done
at the Tenant's expense and the Tenant shall, at its expense,
repair any damage to the demised premises or to the Building caused
by such removal.
If the Tenant does not remove the property as set out in this
paragraph after written demand by the Landlord, such property
shall, if the Landlord elects, be deemed to become the Landlord's
property or the Landlord may remove the same at the expense of the
Tenant and the cost of such removal will be paid by the Tenant
forthwith to the Landlord on written demand, and the Landlord will
not be responsible for any loss or damage to such property because
of such removal and any written demand for removal of the same
shall be given within thirty (30) days after the termination of
this Lease.
Unavoidable Failures or Delays by Landlord
6.13 Whenever and to the extent that the Landlord shall be unable
to fulfill or shall be delayed or restricted in the fulfilment of
any obligations hereunder in respect of the supply or provision of
heating, air conditioning, elevator or janitor services, or any
other service or utility or the doing of any work by reason of
being unable to obtain the material, goods, equipment, service,
utility or labour required to enable it to fulfil such obligation
or by reason of any statue, law or order-in-council or any
regulation or order passed or made pursuant thereto or by reason of
the order or direction of any administration controller or board of
any governmental department or officer or other authority or by
reason of not being able to obtain any permission or authority
required thereby or by reason of any other cause beyond its control
whether of the foregoing character or not, the Landlord shall be
relived from the fulfilment of such obligation and the Tenant shall
not be entitled to compensation for any inconvenience, nuisance or
discomfort thereby occasioned. There shall be no deduction from
the Rent by reason of any such failure or cause, provided such is
rectified within a reasonable time acting expeditiously and in good
faith of such occurrence.
Landlord Not Responsible For Injuries, Loss, Damage, Etc.
6.14 Provided that the same shall not be as a consequence of the
negligent act or omission of the Landlord, or of default of the
Landlord's covenants herein, the Landlord shall not be responsible
in any way for any injury to any person or for any loss of or
damage to any property belonging to the Tenant or to other
occupants of the demised premises or to any person for whom the
Tenant shall be responsible in law from time to time attending at
the demised premises while such person or property is in or about
the building or any areaways, parking areas, lawns, sidewalks,
steps, truckways, platforms, corridors, stairways, elevators or
escalators in connection therewith, including without limiting the
foregoing, any loss of or damage to any such property caused by
theft or breakage, or by steam, water, rain or snow that may leak
into, issue or flow from any part of the said building or any
adjacent or neighbouring lands or premises or from any other place
or quarter or for any loss of or damage caused by or attributable
to the condition or arrangements of any electric or other wiring or
for any damage caused by smoke or for any other loss whatsoever
with respect to the demised premises and/or any business carried on
therein.
No Liability For Indirect Damages, Etc.
6.15 Under no circumstances shall the Landlord be liable for
indirect or consequential damage or damages for personal discomfort
or illness by reason of the
<PAGE>
-15-
non-performance of partial performance of any covenants of the
Landlord herein contained including the heating of the demised
premises or the operation of the air conditioning equipment,
elevators, plumbing or other equipment in the said building or
the demised premises.
No Representation by Landlord
6.16 There is no promise, representation or undertaking by or
binding upon the Landlord with respect to any alterations,
remodelling or decorating of or installation of equipment or
fixtures in the demised premises or the building except such, if
any, as is expressly set forth in this lease, and this lease
contains all the agreements and conditions made between the parties
hereto.
Subordination
6.17.01 The Tenant covenants and agrees with the Landlord that the
Tenant shall from time to time upon the written request of the
Landlord, enter into an indenture (I) subordinating the term hereby
demised and the rights of the Tenant hereunder to any mortgage or
ground lease, present or future, which includes the demised
premises or, at the option of the Landlord, (ii) agreeing that the
term hereby demised shall be prior to any such mortgage or ground
lease.
6.17.02 Notwithstanding any such postponement or subordination as
aforesaid the Tenant agrees that its obligations under the lease
and pursuant to this indenture shall remain in full force and
effect notwithstanding any action at any time taken by a mortgagee
of the lands to enforce the security of any mortgage; provided,
however, that any postponement or subordination given hereunder
shall reserve to the Tenant the right to continue in possession of
the demised premises under the terms of this lease so long as the
Tenant shall not be in default under such terms.
Notices
6.18 Any notice herein provided for or given hereunder if given by
the Tenant to the Landlord shall be sufficiently give if mailed in
Canada by registered mail, postage prepaid to the Landlord at #404
- - 1199 West Hastings Street, Vancouver, British Columbia V6E 3T5.
Any notice herein provided for or given hereunder, if given by the
Landlord to the Tenant, shall be sufficiently given if mailed as
aforesaid addressed to the Tenant at the demised premises or left
at the demised premises. Any notice mailed as aforesaid shall be
conclusively deemed to have been given on the fourth business day
following the day on which such notice is mailed as aforesaid.
Either the Landlord or the Tenant may at any time give notice in
writing to the other of any change or address of the party giving
such notice and from and after the giving of such notice the
address therein specified shall be deemed to be the address of such
party for the giving of such notices thereafter. The word
"notices" in this paragraph shall be deemed to include any request,
demand, direction or statement in writing in this lease provided or
permitted to be given by the Landlord to the Tenant or by the
Tenant to the Landlord.
Payments to Landlord
6.19.01 All payments required to be made by the Tenant under or in
respect of this lease shall be made, at such place or places as the
Landlord may designate in writing, to the Landlord or to such agent
or agents of the Landlord as the Landlord shall hereinafter from
time to time direct in writing to the Tenant. The Tenant shall pay
to the Landlord interest at twenty four per cent (24%) per annum,
calculated and due daily and compounded monthly, on all payments of
Rent and other sums required to be made under the provisions of
this lease that have become overdue so long as such payments remain
unpaid.
6.19.02 All sums paid or expenses incurred hereunder by the
Landlord that ought to have been paid or incurred by the Tenant or
for which the Landlord hereunder is entitled to reimbursement from
the Tenant, including any interest owing to the Landlord
<PAGE>
-16-
hereunder, may be recovered by the Landlord as additional rental
by any and all remedies available to it for the recovery of Rent
in arrears.
No Changes or Waivers
6.20 No assent or consent to changes in or waiver of any of this
indenture in spirit or letter shall be deemed or taken as made
unless the same be done in writing and attached to or endorsed
hereon by the Landlord; the Landlord's janitors, superintendents
and/or agents (unless such agents are authorised in writing by the
Landlord) are not authorised to amend this indenture and any
alterations, amendments or qualifications made by the said
Landlord's janitors, superintendents and/or agents (unless such
agents are so authorised) shall be null and void.
Marginal Notes
6.21 The marginal notes in this lease form no part of this lease
and shall be deemed to have been inserted for convenience of
reference only.
Interpretations
6.22 Unless the context otherwise requires, the word "Landlord"
wherever it is used herein shall be construed to include and shall
mean the Landlord, its successors and/or assigns, and the word
"Tenant" shall be construed to include and shall mean the Tenant,
and the executors administrators, successors and/or assigns of the
Tenant and when there are two or more Tenants or two or more
persons bound by the Tenant's covenants herein contained their
obligations hereunder shall be joint and several; the word "Tenant"
and the personal pronoun "it" relating thereto and used therewith
shall be read and construed as Tenants, and "his", "its" or "their"
respectively as the number and gender of the party or parties
referred to each require and the number of the verb agreeing
therewith, shall be construed and agree with the said word or
pronoun so substituted.
Registration
6.23 The parties hereto agree that this lease may be registered in
any Land Title Office provided that any costs thereto, whether
direct or indirect, are borne by the Tenant.
Heating and Air Conditioning
6.24 Notwithstanding anything contained in Clause 5.01, the Tenant
acknowledges that a reasonable time will be required in order to
fully adjust and balance the heating and air conditioning systems
if and when such adjustments and balancing are required. If any of
the apparatus of the heating and air conditioning systems is
defective or is in need or repair or maintenance or becomes damaged
or inoperative, the Landlord shall have a reasonable time to
correct same and will use all reasonable efforts to do so with due
diligence.
Enuring Effect
6.25 This lease will enure to the benefit of and be binding upon
the Landlord and Tenant and their respective heirs, executors,
administrators, successors and assigns.
Option to Renew
6.26 Provided the Tenant is not in default under this lease and
shall have given to the Landlord, at least three (3) months prior
to the expiration of this lease, written notice of its election to
renew this lease, the Tenant shall have the option to renew this
lease for a further term of 60 months upon the same terms and
conditions as outlined herein except for any tenant inducements or
allowances and option to terminate, this option to renew provision,
and the Base Rent, which Base Rent shall be negotiated and in no
case shall be less than the final Base Rent outlined herein.
Failing agreement, the Base Rent shall be determined by a single
arbitrator under the Commercial Arbitration Act of British Columbia
from time to time.
Option to Terminate
6.27 The Tenant shall have the option to terminate this lease on
the third anniversary of the commencement date of the lease by
giving the Landlord six (6)
<PAGE>
-17-
months' written notice of its intention of doing so. Along with
this notice, the Tenant shall submit a cheque payable to the
Landlord equal to three months' gross rent, as a payment for
this termination option.
<PAGE>
-18-
IN WITNESS WHEREOF the parties hereto have executed this Indenture.
THE CORPORATE SEAL OF
FIRWOOD LAND AND TRADING
COMPANY LIMITED WAS HEREUNTO
AFFIXED THIS 4th DAY OF MARCH, 1999
IN THE PRESENCE OF
\s\ W. Campbell
______________________________________
\s\ Michael Johnson
______________________________________
THE CORPORATE SEAL OF
WCOLLECT.COM CORP.,
WAS HEREUNTO AFFIXED THIS
1st DAY OF MARCH, 1999
IN THE PRESENCE OF
\s\ Stewart Irvine \s\ Marsh McLeod
__________________________ ________________________________
(WITNESS)
C/S
<PAGE>
-19-
THE CORPORATE SEAL OF
VARCOM INC.
WAS HEREUNTO AFFIXED THIS
1st DAY OF MARCH, 1999
IN THE PRESENCE OF
\S\ Paul Cultum \s\ Marsh McLeod
__________________________ ________________________________
(WITNESS)
THE CORPORATE SEAL OF
IGEAR DEVELOPMENT CORPORATION
WAS HEREUNTO AFFIXED THIS
1st DAY OF MARCH, 1999
IN THE PRESENCE OF
\s\ Tracy Kurz \s\ Marsh McLeod
__________________________ ________________________________
(WITNESS)
<PAGE>
SCHEDULE "A"
Referred to in Annexed Lease
First Part
The demised premises, being (approximately)
5,633 square feet of Usable Area plus a 272 square
feet apportionment of Common Area for a total of
5,905 square feet of Rentable Area, are situated on
the 7th floor(s) of the building and are shown on the
floor plan hereto annexed to this Schedule A. Said
building is situate upon the lands described in
Schedule B to the said lease.
The demised premises shall exclude the outside face
of all perimeter walls of the demised premises but
shall include windows and doors in said perimeter
walls. The demised premises shall include all
installations, fixtures and furnishings and other
amenities situate in the demised premises.
Second Part
The Tenant and the employees, agents, customers
and invitees respectively of the Tenant shall
(subject as provided in said lease) have the
following rights as appurtenant to the demised
premises in common with all others from time to time
entitled thereto:
(a) between the hours of 8:00 a.m. and 6:00 p.m.
daily except on Saturdays, Sundays and public
holidays, the right to use, for the purpose of
access to and egress from the demised premises,
such entrances to and exits from the building and
for the purposes aforesaid the right to use the
elevator or elevators (except during the making
of repairs thereto) and corridors in connection
therewith as may be designated from time to time
by the Landlord. At times other than those
mentioned in the preceding sentence, access to
and egress from the building shall be available
to the Tenant subject to such safeguards as the
Landlord may, in its reasonable discretion, take
for the security of the building. And
(b) if washrooms for both sexes are not included
within the demised premises, the right to use
such washrooms as may be designated from time to
time by the Landlord.
<PAGE>
[Blueprint diagram of leased area]
WICKLOW WEST HOLDINGS LTD.
1201 WEST PENDER ST.
VANCOUVER B.C.
Date: May 24, 1989
Scale: 1:209
<PAGE>
SCHEDULE "B"
Referred to in Annexed Lease
Legal Description:
Lots 21 and 22
Block 29
District Lot 185
Plan 92
Municipal Address:
1201 West Pender Street, Vancouver, BC
<PAGE>
SCHEDULE "C"
Rules and Regulations Referred to in Annexed Lease
1. The sidewalks, entrances, elevators, stairways and
corridors of the building shall not be obstructed by any
of the tenants or used by them for any other purpose than
for ingress and egress to and from their respective
premises; and no tenant shall place or allow to be placed
in the hallways, corridors or stairways, entrances,
elevators, etc., any waste paper, garbage, refuse or
anything that shall tend to make them appear unclean or
untidy.
2. The doors and windows or other apertures that reflect or
admit light or air into the passageways or into any
portion of the building will not be covered or obstructed
by tenants.
3. The washrooms shall be used only for the purpose for
which they were designed and nothing shall be placed down
lavatories that might cause them to block
4. Elevator doors will not be held open while conversations
are carried on.
5. During peak periods, the elevators will be used for
transporting passengers only and during these periods no
large parcels or items of equipment will be permitted on
the elevators, and the doors will be permitted to remain
open only long enough to enable passengers to step on or
off the elevator cab. For the purposes of this rule,
peak periods are considered as between 8:00 a.m. and 9:30
a.m. in the morning, between 12:00 noon and 2:00 p.m. in
the afternoon and between 4:00 p.m. and 5:30 p.m. in the
evening.
6. Arrangements must be made with the Landlord ahead of time
when elevators are to be used for carrying freight,
furniture, etc. the elevators must not be used for this
purpose until the Landlord has given its consent and the
elevator cabs have been properly protected.
7. Tenants will assume full responsibility for any damage
occasioned to the elevators, passageways, staircases,
doorways, windows, etc. as a result of moving any freight
or furniture in or out of the premises.
8. The Landlord's janitors shall be permitted access for the
purpose of cleaning the office areas at the appointed
hours and they must not be delayed in their work.
9. [Deleted]
10. No noise shall be made that might disturb other
tenants.
11. No animals shall be allowed on the premises at any
time.
12. No bicycle or other vehicles will be brought within
the building.
<PAGE>
13. The premises shall not be used as overnight
sleeping accommodation, for public sales, or for
entertaining purposes.
14. Arrangements must be made with the Landlord ahead of
time if any public meeting is to be held and the meeting
shall not be held until the Landlord's consent is
obtained.
15. Arrangements must be made with the Landlord ahead of
time when tenants wish to install telephones, business
machines, electrical appliances, etc.; and these
installations will not be made until the Landlord's
consent is obtained.
16. Windows will not be left open so as to admit rain or
snow.
17. Tenants will not alter any existing locks nor will
any additional locks or similar devices be attached to
any door or window, without Landlord consent. Such
consent not to be unreasonably withheld.
18. Any keys made available to tenants for the purpose
of providing access to the exterior doors of the building
shall not be duplicated and shall be returned to the
Lessor immediately the lease has terminated.
19. All adjustments to mechanical equipment such as
thermostats, radiators, diffusers, etc., must be made by
the Landlord's staff and no one else.
20. If a tenant wishes to put up any drapes or blinds in
any of the windows of the exterior of the building, the
Landlord's consent must be obtained and the drapes or
blinds put up must conform in every way with others
existing at the present time in other exterior areas of
the building.
21. No admittance to the roof or equipment rooms by any
unauthorized personnel is permitted.
22. It shall be the responsibility of tenants to prevent
any person from throwing objects out of windows or into
the ducts or stairwells of the building, and the Tenant
will pay for any cost, damage or injury resulting from
any such act or acts.
23. Tenants shall provide adequate receptacles for
garbage, refuse and waste paper and all such garbage,
refuse and waste paper shall be placed in such
containers.
24. Tenants shall not bring upon their premises any
safes, heavy equipment, motors or any other thing that
might damage the said building.
<PAGE>
EMPLOYMENT AGREEMENT
Dated for reference the 1st day of February 1999
This EMPLOYMENT AGREEMENT dated as of February 1, 1999 is
between Stewart Irvine (hereinafter "Employee") and
WCollect.com Inc. (hereinafter "Employer").
WITNESSETH:
WHEREAS, Employer desires to employ Employee and to be
assured of its rights to Employee's services upon the terms
and conditions hereinafter set forth; and
WHEREAS, Employee is willing to accept such employment on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, the
covenants and conditions contained herein, the promises made
hereby and other good and valuable consideration, the receipt
of which is hereby acknowledged, it has been and IT IS HEREBY
AGREED AS FOLLOWS:
1. Employment. Employer hereby employs Employee
as CEO.
Subject to the terms of this Agreement, Employee
hereby agrees to serve Employer, and the Employer hereby
agrees to serve Employee, in this capacity for a five (5) year
period commencing on February 1, 1999. This agreement is
automatically renewable for periods of two (2) years unless
terminated by either party upon (90) day prior written notice.
2. Acceptance of the Employment and Extent and Place of
Service. The Employee's full time, attention and energies,
during regular and customary business hours, or as otherwise
directed by the Board of Directors of Employers, shall be
devoted to the business of Employer (including its
subsidiaries and affiliates), and Employee shall assume and
perform such responsibilities and duties as are associated
with the position described in Paragraph 1 of this Agreement.
3. Working Facilities. Employee shall be furnished with
appropriate facilities and services adequate for the
performance of Employee's duties.
4. Compensation. As compensation for the services to
Employer during the Employment Term, in whatever capacity
rendered, Employee following the commencement of the
Employment Term, shall receive a salary of $10,000 USD per
month during the initial funding stage, not to exceed ninety
(90) days. After completion of the initial funding stage
Employee shall receive salary of $175,000 USD per year.
The Employee shall also be entitled to receive an
incentive bonus computed according to the following formula:
<PAGE>
Annual Company Revenues Bonus Payable
From Operations to Employee
$ 1,000,000 to $ 3,000,000 $ 25,000USD
$ 3,000,000 to $ 5,000,000 $ 75,000USD
$ 5,000,000 to $ 10,000,000 $ 125,500USD
Over $10,501,000 $ 250,000USD
The term "annual Company Revenues" shall mean the
combined gross revenues of the Employer (net of returns,
allowances and discounts) as shown in the Employer's audited
financial statements.
The Employee shall also be granted options to purchase
shares of the Company's Common Stock.
The Employee shall be entitled to receive additional
stock options, stock bonuses and similar forms of compensation
to the extent such compensation is approved by the Employer's
Board of Directors. Nothing herein however shall preclude the
payment of cash bonuses if such bonuses are approved by the
Employer's Board of Directors.
Once the company is operating profitably, compensation to
the Employee shall be determined by industry standards subject
to Board of Director approval.
5. Employee Benefits. During the Employment Term,
Employee shall be entitled to four weeks of paid vacation and
the right to participate, subject to qualification
requirements, in any life insurance, group insurance,
hospitalization , profit sharing, pensions or thrift plan
presently in effect, or hereinafter instituted by Employer,
and applicable to its officers and employees generally.
6. Expenses. During the Employment Term, Employer
will reimburse Employee for expenses reasonably incurred by
Employee which is payable upon receipt unless other
arrangements are specified at the time of expenditures in
connection with the performance of Employee's services
hereunder.
7. Disclosure of Information. Employee acknowledges
that from time to time during the Employment term, Employee
will come into possession of certain information regarding
Employer, and its scientific and intellectual property,
including, but not limited to, chemical information,
copywritable brochures, customer lists, price books,
mechanical drawings, research and development data and other
information considered confidential. Employee will not,
during or after the Employment Term disclose, except to other
employees of Employer and its Board of Directors, without
authorization of the Board of Directors, all or any portion of
such information to any person, firm, corporation, association
or other entity. In the event of a threatened breach of the
provisions
<PAGE>
of this paragraph, Employer shall be entitled to an
injunction restraining Employee from making any such
disclosure. If Employee breaches the provisions of this
paragraph during the Employment Term, such action shall be
grounds for termination of this Agreement as hereinafter
provided.
If Employee retains in any manner or form any of the
information specified hereinafter after the termination of
this Agreement for whatever reason or Employee discloses all
of or any portion of such specified information, all
Employer's obligations, if any, hereunder shall be deemed to
be completely fulfilled.
Nothing herein shall be construed as prohibiting Employer
from pursuing any other remedies available to Employer for
such breach or threatened breach, including the recovery of
damages from Employee.
8. Inventions, Patent Rights and Copyrights. All
inventions made by the Employee during the employment term,
which inventions apply to the Employer's business, will be
assigned to the Employer. In the event any of such inventions
are of a patentable nature, Employee agrees to apply for a
patent on the invention and assign any patent rights relating
to the invention to the Employer. The Employer will bear the
costs of any patent applications pursued by the Employee.
Employee understands that the Employee's duties may
involve writing or drafting various documents, brochures or
publications for the Employer. Employee hereby assigns any
and all rights to such documents, brochures or publications to
Employer, together with the right to secure copyright
therefore and all extensions and renewals of copyright
throughout the entire world. Employer shall have the right to
make any and all versions, omissions, additions, changes,
specifications and adaptations, in whole or in part, with
respect to such documents, brochures or publications.
9. Engaging in a Competing Business. Except as
otherwise expressly consented to in writing by Employer,
Employee agrees that during the Employment Term and for a one
(1) year period thereafter, Employee will not, directly or
indirectly, own, manage, operate, control, join, or
participate in the ownership, management, operation or control
of, or be employed by, or be connected with, any business
which is in competition with the business of Employer.
Nothing herein contained shall prevent Employee, upon
termination of the Employment Term, from holding or making
investments in securities on a national securities exchange or
sold in the over-the-counter market provided such investments
do not exceed in the aggregate 5% of the issued and
outstanding capital stock of a corporation which is a
competitor within the meaning of this paragraph 9.
10. Termination of Employment Term. The Employment Term
and all obligations of the Employer hereunder, except as
hereinafter provided, shall be terminated only by and
notwithstanding the following any termination of employment
shall not terminate any payment obligations included
hereunder:
(a) The death of Employee;
<PAGE>
(b) the vote of a majority of the disinterested
members of the Board of Directors of the
Employer, which determination shall be based upon
competent medical evidence, that Employee will be
unable to perform the Employee's duties hereunder
by reason of injury, illness, or other physical
or mental disability after absences for a period
or periods aggregating in excess of ninety (90)
working days in any 12-month period during the
Employment Term hereunder;
(c) the vote of a majority of the disinterested
members of the Board of Directors of Employer to
so remove Employee any time after Employee shall
be absent from employment for whatever cause,
excluding allowable vacations or sickness and
disability, for a period of more than 180 working
days in any calendar year;
(d) the vote of a majority of the disinterested
members of the Board of Directors of Employer
determining that Employee has become so
intemperate in the use of alcohol or drugs as
seriously to interfere with the performance of
the Employee's duties under this agreement.
(e) A bona fide decision by the Employer to
terminate its business and liquidate its assets,
not including a sale of substantially all of the
assets.
(f) A vote of a majority of the disinterested
members of Employer's Board of Directors finding
that Employee has: (1) breached any of the
substantive provisions of this Agreement; or (2)
knowingly violated any statute or regulation, or
earnings or welfare, or has been grossly
negligent or engaged in willful misconduct in the
performance of the Employee's duties hereunder;
(g) The expiration of the Employment term as
provided in Section 1 of this Agreement.
As used herein, the term "Disinterested Director" means
any director other than the Employee, should the Employee than
be a director of the Employer and the term "cause" means, the
occurrence of any circumstances set forth in clauses a, b, c,
d, and of Section 10.
Notwithstanding anything contained herein to the
contrary, in the event the Employee, during the Employment
Term, becomes totally and permanently disabled, and such
disability is not the result of the intemperate use of drugs
or alcohol, then the Employee will pay to the Employee a
disability benefit equal to 50% of the Employee's base salary,
determined at the time of disability, and payable to the
Employee for what would have been the remaining term of this
Agreement, provided however that this disability benefit will
in any event, terminate upon the Employee's death.
11. Indemnification. Throughout the Term of Employment, Company
shall obtain and maintain in force and effect a policy of Directors
and Officers Liability Insurance, naming Employee as an additional
insured. The terms and policy limits of said insurance shall be
determined by the Company in its discretion. Notwithstanding
the foregoing, throughout the Term of Employment, Employee
shall be indemnified by the Company in accordance with the terms of
Company's By-Laws.
12. Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and
shall be deemed to have been duly given on the date of service
if served
<PAGE>
personally on the party to whom notice is to be
given, or on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid to the address last
shown on the payroll records of the Employer.
12. Miscellaneous Provisions. This Agreement contains
the entire Agreement and understanding between the parties
hereto, and supersedes all prior agreements and
understandings. The section headings throughout this
Agreement are for convenience and reference only, and shall in
no way be deemed to define, limit, or add to the meaning of
any provision of this Agreement. This Agreement and any
provision hereof, may not be waived, changed, modified, or
discharged orally, but only by an agreement in writing signed
by the party against whom enforcement of any waiver, change,
modification, or discharge is sought. Except as otherwise
expressly provided herein, no waiver of any covenant,
condition, or provision of this Agreement shall be deemed to
have been made unless expressly in writing and signed by the
party against whom such waiver is charged; and (i) the failure
of any party to insist in any one or more cases upon the
performance of any of the provisions, covenants, or
conditions, (ii) the acceptance of performance of the breach
or failure of a covenants, or conditions of this Agreement or
to exercise any option herein contained shall not be construed
as a waiver by any party of one breach by another party shall
be construed as a waiver with respect to any other or
subsequent breach. This Agreement and its application shall
be governed by the laws of the State of California. This
Agreement shall inure to and be binding upon the heirs,
executors, personal representatives, successors and assigns of
each of the parties to this Agreement. If any of the
provisions of this Agreement shall be held invalid, the
remainder of this Agreement shall not be affected thereby.
IN WITNESS WHEREOF, Employer has caused this
Agreement to be executed on its behalf by a duly authorized
officer and its corporate seal to be affixed hereto and
attested by its Secretary, each of whom has been thereto duly
authorized, and Employee has hereunto signed this Agreement,
all as of the day and year first written above.
WCollect.com Inc.
\s\ Stewart Irvine \s\ Andrew Zucker
________________________ ________________________
Stewart Irvine, Director Andrew Zucker, Director
EMPLOYEE:
\s\ Stewart Irvine
_________________________
Stewart Irvine
<PAGE>
Lowy & Zucker LLP
ATTORNEYS AT LAW
as of December 10, 1998
Via First Class Mail
- --------------------
Mr. Stewart Irvine
1324 25th Street
West Vancouver V7V 4J3
CANADA
Re: Legal Representation
Dear Stewart:
I have enjoyed getting to know you by telephone over the last
two days, and I look forward to having the opportunity to work with
you and provide you with legal assistance.
As discussed, please find below a summary of the terms by
which our firm will be pleased to represent you and your companies,
MindCorp LLC, and ArtWorks International Corp. (individually and
collectively, Ayou@), and such other projects as may from time to
time arise. I look forward to hearing from you to discuss any
questions or to clarify any issues which arise in connection with
this document or otherwise. Accordingly, this letter will confirm
the agreement between you on the one hand, and Lowy & Zucker LLP
("we"/"us"/ "our firm") on the other hand.
1. You engage us during the term of this agreement as your
attorneys. The term of this agreement shall commence as of the
date above, and shall continue until either party shall notify the
other in writing, which notice shall be personally delivered or
mailed by certified or registered mail, postage prepaid. Said
notice shall be effective upon personal delivery or mailing, as
applicable, and upon such notice, we will cease all work for you,
consistent with our ethical obligations. No termination of this
agreement by you shall affect our right to be paid our fees and
costs as set forth below.
2. (a) As compensation for our services in connection with
the Project, you acknowledge and you agree to pay our firm such
fees as follows: US $260.00 per hour for partners and US $165.00
per hour for associates. We shall compute our time hourly and
invoice you monthly including a detailed statement outlining
credits to your account, the time spent and the services performed.
You shall also be responsible for paying all reasonable costs
incurred by us in connection with rendering our services as your
attorneys, including without limitation, photocopying charges,
Suite 650 - 9107 Wilshire Boulevard - Beverly Hills, California 90210-5519
Telephone (310) 275-9999 - Facsimile (310) 275-1683
<PAGE>
Mr. Stewart Irvine
as of December 10, 1998
Page 2
long distance telephone charges, fax charges, parking, travel expenses
(including transportation, accommodations and meals) if we travel
at your request or with your consent, messengers, couriers and
"express mail" charges, expenses associated with required outside
services or overtime assistance subject to your advance approval
and other similar projects.
(b) In connection with the foregoing, it is our request
that we be paid and receive a monthly initial retainer of US
$7,500.00 from which to draw funds. We request that this retainer
be wire-transferred into our general account at the beginning of
each month. As each subsequent month approaches, your new
statement will confirm our receipt of the retainer of the previous
month, set forth any amounts left uncovered by the previous month=s
retainer and request a retainer for that new month.
Like all businesses, we expect our bills to be paid promptly.
Without limiting the previous sentence, if you fail to pay our
bills within thirty (30) calendar days, we may resign as your
attorneys, and if we so elect, in such event you agree to execute
promptly all documents necessary to relieve us of our
responsibilities as your attorneys.
3. For the compensation described above, we shall arrange
meetings, review, negotiate, draft, modify and otherwise assist you
in connection with all agreements and contracts in connection with
the Project and shall consult with you and advise you with respect
to the same.
4. We shall diligently and professionally represent you
and will at all times strive to achieve the most favorable result
although we make no representation as to the success of these
efforts. As you know, this firm represents many clients in the
Internet and entertainment industries. Accordingly, we shall keep
you advised where reasonably possible of any potential conflicts of
interest relating to your matters if and when they arise. If a
conflict arises we will discuss an appropriate resolution with you
at that time. You acknowledge that such resolution may require you
and/or the other client to engage other legal counsel, and if such
event should arise, we agree to negotiate a good faith modification
to this retainer agreement.
5. You understand that certain agreements entered into by
you may require you to give notice, exercise your rights, or make
other decisions within certain time periods (for example, granting
an approval or consent). You understand and agree that we will not
be responsible for monitoring those time periods, or any dates or
calendar items, on your behalf.
6. Our firm is not responsible for and will not render legal
services with respect to taxes and tax planning (including ERISA
and related matters), securities work (with the exception of
private-placements), family law, criminal matters, probate,
litigation, arbitration and similar proceedings or other matters
which are outside our areas of expertise. At your request, we will
recommend other counsel to advise you with respect to any such
matter.
<PAGE>
Mr. Stewart Irvine
as of December 10, 1998
Page 3
7. We maintain errors or omissions insurance coverage
applicable to the services to be rendered under this agreement.
8. Generally, we keep each client's legal files for five (5)
years after we close each file or after the last activity in each
file. After the file has been closed or inactive for at least five
(5) years, and if we have not previously heard from you with
respect to returning or destroying your file, we will attempt to
contact you to determine whether you wish to have the closed or
inactive files returned to you. Unless you request in writing
within ninety (90) days after we so notify you that these files be
returned to you or that we continue to retain them, these files
will be destroyed.
9. If you disagree with our fees as shown on any statement,
please contact us to discuss this matter. Typically, we resolve
disagreements to the satisfaction of both ourselves and our clients
with little inconvenience and formality. If any dispute arises
between you and us with respect to any statement for fees and/or
costs which cannot be resolved, either you or we will have the
right to require that the dispute be initially submitted to
arbitration (which will be binding arbitration) in Los Angeles
County in accordance with the rules of the State Bar of California,
before an arbitrator or arbitrators selected in accordance with
those rules or the rules of any local Bar Association within Los
Angeles County which is operating under the auspices of the State
Bar or, if none, in accordance with the arbitration laws of
California. The arbitrator will have the discretion to order that
the cost of arbitration, including the arbitrator's fees or other
costs, and reasonable attorneys' fees and costs, will be borne by
the losing party. If we commence a suit for any payment of fees
and/or costs, we will be entitled to costs connected with such suit
and attorneys' fees.
In as much as this letter constitutes an agreement between you
and us, we cannot, of course, advise you concerning it, other than
to suggest that you retain outside counsel to advise you in this
regard.
I appreciate the trust, understanding and confidence you have
placed in us, and we are pleased to represent you. I am committed
to providing you with efficient and responsive services at a
reasonable cost, and in an atmosphere of mutual trust and
confidentiality. If the foregoing meets with your approval, please
sign and return the original of this letter.
Sincerely,
Lowy & Zucker LLP
\s\ Andrew S. Zucker
By: Andrew S. Zucker
<PAGE>
Mr. Stewart Irvine
as of December 10, 1998
Page 4
ACCEPTED AND AGREED TO:
MindCorp LLC, a Nevada limited liability company;
ArtWorks International Corp., a corporation organized under
the laws of Barbados, and individually.
\s\ Stewart Irvine
___________________________
By: Stewart Irvine
cc: Steven R. Lowy, Esq.
<PAGE>
WCOLLECT.COM, INC.
9107 Wilshire Boulevard
Suite 650
Beverly Hills, CA 90210
(310) 275-8080
27 September, 1999
Mr. Cliff Wildes
387 South Shore Drive
Sarasota, FL 34234
Dear Cliff:
This letter confirms our understanding regarding your engagement by
WCollect.com, Inc. (AWCollect@). We agree as follows:
1. You will act as WCollect=s Chief Operating Officer on a
non-exclusive basis (i.e., you shall be free to pursue
other business opportunities concurrent with your
engagement with WCollect);
2. You will devote such time and attention as is mutually
agreeable to fulfill your duties as WCollect=s COO;
3. You will be paid 100,000 shares of WCollect=s common
stock upon execution of a definitive engagement
agreement, which shall be placed in escrow; provided,
however, that only 25,000 of the aforementioned shares
shall be released as follows: 25,000 shares released
upon WCollect=s filing of a Form 10-SB and 50,000 shares
released 180 days after the execution of his engagement
agreement;
4. You will be paid a day-rate equal to $750 for each day
you work on WCollect=s behalf in your capacity as COO;
provided, however, that you agree to accrue these fees
until WCollect obtains a financing over and above the
$300,000 financing it anticipates receiving within the
next two (2) weeks;
5. You will have your pre-approved expenses reimbursed in a
timely manner;
6. We agree to obtain Directors and Officers professional
liability insurance in a minimum amount of $1,000,000
concurrent with the secondary financing referenced in
paragraph 4 above.
Assuming this is acceptable, we will prepare a definitive agreement
for our mutual signature immediately.
Very truly yours,
APPROVED AND AGREED
this 27 day of September, 1999
\s\ Stuart Irvine
Stuart Irvine By: \s\ Cliff Wildes
-------------
President CLIFF WILDES
<PAGE>
WCOLLECT.COM, INC.
General Information
1-800-730-5505
Investor Relations
1-877-608-1611
Media & PR
1-888-761-8887
[email protected]
www.wcollect.com
9107 Wilshire Boulevard, Suite 650
Beverly Hills, CA 90210
(310) 275-8080
1520 Spruce St.
Suite 708
Philadelphia, PA
USA 19102
Tel: (215) 875-0111
Fax: (215) 875-0112
7th Floor
1201 West Pender St.
Vancouver, BC
Canada V6E 2V2
Tel: (604) 683-8556
Fax: (604) 683-8554
This is a Letter of Understanding, dated this 03 day of August,
1999.
BETWEEN:
Cortez Capital Inc.
c/o Bob Cabral
#36 - 1386 Nicola Street
Vancouver, B.C. V6G 2G2
AND:
WCollect.Com, Inc.
7th Floor, 1201 West Pender Street
Vancouver, BC V6E 2V2
We are pleased to have you join us at WCollect.Com, Inc. Please
allow this to act as a Letter of Intent under the following
conditions:
1. You will be an independent contractor for WCollect for a 90
day term of US$10,000 per month, effective the 01 day of
August, 1999. Both Cortez Capital Inc. and WCollect.Com, Inc.
may elect to terminate this contract with or without cause at
any time during the first 90 days with 30 days written notice.
The terms and conditions provided in the "Confidentiality
Agreement" dated August 3, 1999 shall apply regardless of the
reason(s) for termination.
2. Upon favourable review an extension of the contract may be
granted for a further period of 12 months from the end of the
90 day period.
3. Payments will be made on a monthly basis as follows: A 50%
advance at the beginning of each month and the monthly balance
of the invoice amount will be paid by the 15th day of each
month.
4. In addition, WCollect is finalizing a qualified incentive
stock option program and employee benefits plan. Upon
finalization the Option and Benefits plans will be made
available to you.
5. Duties:
Consultant, providing:
a) Business plan
b) Financial plan
c) Strategic planning support at direction of CEO and CFO
d) Co-ordinate with Mercury Capital - weekly new releases as
required.
(ie. Oversee all public releases issued by Mercury Capital)
e) Assist with 10SB and Audit
f) Back End Logistics - organisation structure
- offshore merchant
- L.A. office transition
6. Public Announcements concerning Bob Cabral's involvement with
WCollect will state that he is acting as a consultant for the
first three months.
<PAGE>
WCOLLECT.COM, INC.
General Information
1-800-730-5505
Investor Relations
1-877-608-1611
Media & PR
1-888-761-8887
[email protected]
www.wcollect.com
9107 Wilshire Boulevard, Suite 650
Beverly Hills, CA 90210
(310) 275-8080
1520 Spruce St.
Suite 708
Philadelphia, PA
USA 19102
Tel: (215) 875-0111
Fax: (215) 875-0112
7th Floor
1201 West Pender St.
Vancouver, BC
Canada V6E 2V2
Tel: (604) 683-8556
Fax: (604) 683-8554
Signed and witnessed this 3 day of August, 1999.
- ------
WCollect.Com, Inc.
\s\ Stewart Irvine
- ------------------------------------
Stewart Irvine, President and C.E.O.
- ---------------------------------------------------------------
If you are in agreement with the above terms please sign below as
acknowledgement and acceptance of those terms.
Acknowledged and Accepted this 3 day of August, 1999.
- ------
\s\ Robert Cabral CORTEZ CAPITAL CORP.
- ---------------------------------- --------------------
Independent Consultant's Signature Consultant's name (Please print)
<PAGE>
WCOLLECT.COM, INC.
General Information
1-800-730-5505
Investor Relations
1-877-608-1611
Media & PR
1-888-761-8887
[email protected]
www.wcollect.com
9107 Wilshire Boulevard, Suite 650
Beverly Hills, CA 90210-5519
(310) 275-8080
1520 Spruce St.
Suite 708
Philadelphia, PA
USA 19102
Tel: (215) 875-0111
Fax: (215) 875-0112
7th Floor
1201 West Pender St.
Vancouver, BC
Canada V6E 2V2
Tel: (604) 683-8556
Fax: (604) 683-8554
Letter of Engagement
Between
WCollect.com, Inc. (the "Client")
AND
Universal Commerce Ltd. ("Universal")
Whereas the Client has engaged Universal to provide certain
corporate finance services as outlined in "services
provided". In exchange for providing these services, both
the Client and Universal have agreed that in consideration
for the consultant providing said services, the Client will
issue common stock to the contractor for successfully
completing said tasks and in accordance with the tasks as
outlined in the Duties and Responsibilities.
Compensation:
- -------------
A. The Client has agreed to compensate Universal, in
exchange for it's services, the sum of 800,000 common
shares in the Client's capital stock (the
"Compensation"). The share certificate(s) for 800,000
common shares will be deemed to have been fully
earned, in any event, on October 15, 1999.
B. WCollect's Board of Directors shall authorize that the
Engagement Securities shall be issued on, or shortly
after October 15, 1999 upon Universal's acceptance of
its engagement, and shall thereafter be delivered upon
such issuance to Universal's counsel, Jack Sousa, c/o
Brown Beattie O'Donnovan with an address of, 380
Wellington St., Suite 1600, London. Ont., Canada N6A
5B5. However, in no event shall the Engagement
Securities be delivered later than fifteen (10)
business days from October 15, 1999. Once issued, the
Engagement Securities shall be deemed fully earned and
shall have all the same rights and all the same
dilutive or anti-dilutive provisions as the "Founder's
Securities" held by the original shareholders.
C. Universal shall have "Piggyback Registration Rights"
to register the Engagement Securities as part of any
registration filing by WCollect and/or its successors
and assigns.
D. There is no other form of Compensation to be
considered by way of this agreement. The Contractor
will be responsible for all costs associated with
providing the services indicated under this agreement.
1
<PAGE>
WCOLLECT.COM, INC.
General Information
1-800-730-5505
Investor Relations
1-877-608-1611
Media & PR
1-888-761-8887
[email protected]
www.wcollect.com
9107 Wilshire Boulevard, Suite 650
Beverly Hills, CA 90210
(310) 275-8080
1520 Spruce St.
Suite 708
Philadelphia, PA
USA 19102
Tel: (215) 875-0111
Fax: (215) 875-0112
7th Floor
1201 West Pender St.
Vancouver, BC
Canada V6E 2V2
Tel: (604) 683-8556
Fax: (604) 683-8554
Services Provided :
- -------------------
Universal hereby agrees that in exchange for receiving
the Compensation, it will to the best of its ability,
and in a first class manner, provide the following
corporate finance consulting services:
* Sourcing of interim financing in the form of an
equity offering, convertible debenture offering
or debt on behalf of the Client.
* Capital re-structuring and introductions to US
based and international investment banking
firms.
* Assist the client in developing corporate
development plans and introduce the client to
potential strategic business partners
internationally.
REPRESENATIONS, WARRANTIES AND COVENANTS
- ----------------------------------------
A. Execution. The execution, delivery and performance of
this Agreement, in the time and manner herein
specified, will not conflict with, result in a breach
of, or constitute a default under any existing
agreement, indenture, or other instrument to which
either the Client or Universal is a party to or by
which either entity may be bound or affected.
B. Non-Circumvention. WCollect hereby irrevocably agrees
not to knowingly or intentionally circumvent, avoid,
bypass, or obviate, directly or indirectly, the intent
of this Agreement, including avoiding payment of fees
or other compensation to Universal or its affiliates
in connection with any transaction involving any
corporation, partnership, individual, or other entity
introduced by Universal to WCollect and/or its
Affiliates.
C. Timely Apprisals. WCollect shall keep Universal up to
date and apprised of all business market and legal
developments related to WCollect and its operations
and management.
1. Accordingly, WCollect shall provide Universal
with copies of all amendments, revisions and
change to its business and marketing plans,
bylaws, article of incorporation private
placement memoranda, key contracts, employment
and consulting agreements and other operational
agreements.
2. WCollect shall promptly notify Universal of the
threat or filing of any suit, arbitration or
administrative action, injunction, lien, claim or
complaint and promptly forward a copy of all
related documentation directly to Tri-Fino or at
Universal option to Universal counsel.
3. WCollect shall promptly notify Universal of all
new contracts, agreements, joint enters or filing
with any state, federal or local
2
<PAGE>
administrative agency, including without limitation
the SEC, NASD or any state agency, and shall provide
all elated documents, including copies of the exact
documents filed, to Universal, including, without
limitation all annual reports, quarterly reports
and notices of change of events, and registration
statements filed with the SEC and any state
agency, directly to Universal.
4. WCollect shall also provide directly to Universal
current financial statements, including balance
sheets, income statements, cash flows and all
other documents provided or generated by WCollect
in the normal course of its business and
requested by Universal from time to time.
5. Universal shall keep all documents and
information confidential as described in the
section below titled, 'CONFIDENTIAL DATA."
D. Corporate Authority. Both WCollect and Universal have
full legal authority to enter into this Agreement and
perform the same in the time and manner contemplated.
E. Authorized Signatures. The individuals whose
signatures appear below are authorized to sign this
Agreement on behalf of their respective corporations.
F. Properly Issued Shares. When issued to Universal, the
Engagement Securities shall be duly and validly
issued, fully paid and non-assessable, unless
otherwise required by law.
OTHER MATERIAL TERMS AND CONDITIONS
- -----------------------------------
A. Indemnity. Because Universal will be acting on
WCollect's behalf, it is Universal's practice to
receive indemnification from all its clients. WCollect
hereby wholly indemnifies Universal for any
activities initiated by WCollect which may result in
any shareholder, supplier or other affiliate lawsuit.
B. Additional Instruments. Each of the parties shall
from time to time, at the request of others, execute,
acknowledge and deliver to the other party any and all
further instruments that may by reasonably required to
give full effect and force to provisions of this
Agreement.
C. Laws of the Province of B.C. This Agreement shall be
deemed to be made in, governed by and interpreted
under and construed in all respects in accordance with
the laws of the Province of B.C., irrespective of the
country or place of domicile or residence of either
party. In the event of controversy arising out of the
interpretation, construction, performance of breach of
this Agreement, the parties hereby agree and consent
to the jurisdiction and venue of the Courts in
Vancouver, British Columbia, Canada.
3
<PAGE>
WCOLLECT.COM, INC.
General Information
1-800-730-5505
Investor Relations
1-877-608-1611
Media & PR
1-888-761-8887
[email protected]
www.wcollect.com
9107 Wilshire Boulevard, Suite 650
Beverly Hills, CA 90210
(310) 275-8080
1520 Spruce St.
Suite 708
Philadelphia, PA
USA 19102
Tel: (215) 875-0111
Fax: (215) 875-0112
7th Floor
1201 West Pender St.
Vancouver, BC
Canada V6E 2V2
Tel: (604) 683-8556
Fax: (604) 683-8554
D. Originals. This Agreement may be executed in any
number of counterparts, each of which so executed
shall be deemed an original and constitute one and the
same Agreement. Facsimile copies with signatures
shall be given the same legal effect as an original.
E. Addresses of Parties. Each party shall at all times
keep the other informed of its principal place of
business if different from that stated herein, and
shall promptly notify the other of any changes, giving
the address of the new place of business or residence.
F. Notices. All notices that are required to be or may
be sent pursuant to the provision of this Agreement
shall be sent by certified mail, return receipt
requested, or by overnight package delivery service to
each of the parties at the address appearing herein,
and shall count from the date of mailing or the
validated air bill.
APPROVED AND AGREED this 15 day of August, 1999
----
UNIVERSAL COMMERCE LTD. WCOLLECT.COM INC.
C/o Jack Sousa, Brown Beattie 650 - 9107 Wilshire Boulevard
Suite 1600, 380 Wellington St., Beverly Hills, CA 90210
London, Ont., Canada Phone: (310) 275-8080
N6A 5B5 Fax: (310) 275-1683
Phone: (519) 679-0400
\s\ Robert Cabral \s\ Stewart Irvine
- ------------------- ------------------
By Robert J. Cabral By Stewart Irvine
Authorized Signatory Its President
4
<PAGE>
SOFTWARE SALES AGREEMENT
AGREEMENT dated September 24, 1999 ("Closing Date") by and
between WCollect.com, Inc., a Florida corporation, with an
address at 9107 Wilshire Boulevard, Suite 650, Beverly Hills, CA
90210 (hereinafter referred to as "Purchaser") and Classified
Project Inc., a Delaware corporation, with an address at 1750
Vallejo Street, Suite 404, San Francisco, CA 94123 (herein
referred to as "Vendor").
WITNESSETH:
Whereas Purchaser and Vendor have executed a binding letter of
intent ("LOI") dated as of September 12, 1999 for the purposes of
setting forth the parties' rights and obligations in
connection with Purchaser's purchase and Vendor's sale of
Vendor's proprietary auction engine
software and source code developed by Vendor for use in
connection with Vendor's Web based auction Web site,
NonProfitAuction.com, (which software, along with all of its
source code is hereby collectively referred to as the "Assets");
and
Whereas Purchaser has agreed to purchase and Vendor has agreed to
sell exclusively to Purchaser, the Assets, which Assets are sold
in an "as is" condition, without warranty of any sort, either
express or implied, except as is expressly specified below; and
Whereas Purchaser has agreed to acquire the Assets from Vendor
for an aggregate price of US$38,560.00 (the "Purchase Price") in
the form of a convertible payment obligation, payable upon the
date of execution of the Agreement (the "Closing Date") as
specified below and which method of payment has been approved by
Vendor; and
Whereas both parties have agreed to work toward the execution of
this Software Sales Agreement (the "Agreement") based upon and
incorporating the basic terms of the transaction as are otherwise
set forth in the LOI and with the understanding that time is of
the essence for the execution of such A2reement;
NOW THEREFORE, the parties hereby agree as follows, to wit:
Article 1. DEFINITIONS
For the purpose of this Agreement, the following terms shall have
the following meanings:
1.1 Assets
The term "Assets" means Vendor's proprietary computer auction
engine software and its source code developed and previously or
currently used by Vendor in connection with Vendor's Web based
auction Web site, NonProfitAuction.com, along with any and all
Versions (as defined below) thereof produced on or prior to the
date hereof.
1
<PAGE>
1.2 Version(s)
The term "Version(s)" shall mean any release, addition, update or
version of any computer software.
1.3 Modification
The term "Modification" means any and all derivative works of the
Assets developed through any modification, enhancement,
extension, or addition of or to the Assets which may be
incorporated into any Product(s) (as defined below).
1.4 Product(s)
The terms "Product(s)" mean(s) any and all computer software
products or services developed, distributed, displayed or sold by
Purchaser or Purchaser's successors or licensees.
1.5 Deliverable(s)
The term Deliverable(s) means any and all material, item,
electronic file, software program etc., comprising or included as
part of the Assets, and/or any component thereof, as is to be
delivered to Purchaser in accordance with this Agreement.
Article 2. OBJECT OF THIS AGREEMENT
Subject to the terms and conditions hereof, for the consideration
specified below, Vendor hereby agrees to sell (and hereby sells)
and to deliver the Assets, including all rights therein and
thereto, for and including any and all Versions thereof, to
Purchaser.
Article 3. DELIVERY SCHEDULE
3.1 The delivery schedule consists of the schedule dates set
forth in Schedule A attached hereto, and which are subject to
modification by Vendor and Purchaser upon their mutual written
consent.
3.2 All files which comprise or are included in the
Assets, and which are incorporated into the Deliverables shall be
delivered to Purchaser on a CD-ROM, in an uncompressed, clearly
labeled and formatted, via delivery method and to an address all
as reasonably specified by Purchaser. Notwithstanding the
foregoing, if Vendor makes known to Purchaser in advance the
extant format of the Deliverables and/or the manner or mode of
its intended means of Delivery, and Purchaser accepts same in
writing, the latter shall have precedence.
Article 4. GRANT; NO RESTRICTIONS
4.1 Grant
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Subject to the terms and conditions of this Agreement, Vendor
hereby acknowledges that Purchaser shall be free to and shall
have the right to do any or all of the following:
4.1.1 to utilize, incorporate, reproduce, display, distribute,
market, advertise and promote the Assets in or in connection with
Purchaser's Products;
4.1.2 to modify any and all aspects of the Assets to develop any
Modification therein or thereto, and to utilize, incorporate,
reproduce, display, distribute, market, advertise and promote the
Modified Software in or in connection with Purchaser's Products;
4.1.3 to sell to third parties the Assets and or any rights
therein or thereto, as described in 4.1.1 and 4.1.2 above, or
otherwise;
4.1.4 to grant to each end-user of the Purchaser's Products a
license to use same for its internal purposes or otherwise;
4.1.5 to credit or to refer to Vendor as the originator of the
Software;
4.1.6 to refrain from doing any of the foregoing; and/or
4.1.7 any other purpose desired by Purchaser.
4.2 Trademarks / Copyrights
Trademarks and trade names, along with any copyrights under which
Purchaser may have heretofore marketed the Assets are hereby
exclusively assigned to Purchaser. This Agreement gives Purchaser
no rights in any of Vendor's trade marks, other than those
established by virtue of prior registration or publication
concerning the Assets, and the Assets alone.
Article 5. PAYMENTS
As full consideration for all rights and licenses granted to
Purchaser under Article 4 of this Agreement, Purchaser shall pay
to Vendor the sum of US $38,560 ("Purchase Price") which sum
shall be made payable as follows:
5.1 Purchaser shall pay to Vendor the Purchase Price on or
before 120 days following the Closing Date (the "Effective
Date"). Interest shall be accrued at an annualized rate of 9.0%
per annum beginning on the Closing Date, added to the Purchase
Price and paid by the Purchaser to the Vendor in the same
currency as Purchase Price amount, but only payable on the date
that the Purchase Price is paid.
5.2 At the election of Vendor, at any time on or before
the Effective Date, Vendor may elect that the Purchase Price plus
the accrued interest, as at that date, be converted to common
stock in the share capital of the Purchaser at a conversion rate
of US$ 1.00 per share, subject to regulatory approval if
necessary. Said election shall be executed in whole and not in
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part. This notice of conversion shall be submitted to Purchaser
by Vendor in written form, authorized by an officer or director
of the Vendor. If such conversion is effected, all debts to
Vendor payable by Purchaser shall be deemed as paid in full and
settled. This conversion transaction shall be referred to as the
"Put" option.
5.3 At the election of Purchaser, on the first business day
immediately prior to the Effective Date, if the trailing 30 day
average closing trading price of its share capital is greater
than US$4.00/share, with no single day closing below
US$4.00/share, Purchaser may trigger conversion of the Purchase
Price plus accrued interest as of that date, into common stock of
its share capital at a conversion rate of US$ 1.00 per share,
subject to regulatory approval, if necessary. Said election shall
be executed in whole and not in part. This notice of conversion
shall be submitted to Vendor by Purchaser in written form,
authorized by an officer or director of Purchaser. If such
conversion is effected, all debts to Vendor payable by Purchaser
shall be deemed as paid in full and settled. This conversion
transaction shall be referred to as the "Call" option.
5.4 If neither the Put option nor the Call option is
exercised by the Effective Date, then Purchaser will prepare and
deliver instructions to its banking institution to complete a
wire transfer of the Purchase Price plus accrued interest as of
that date, before 3:00 p.m. pacific time, to be deposited in the
account of Vendor. Vendor's banking information shall be attached
hereto as Schedule "B" and made a part hereof so as to mitigate
any risks of misinformation affecting this transaction. This
payment of debt shall be referred to as the "Payment".
5.5 If neither the Put option nor the Call option is
exercised, and Purchaser fails to meet the terms of the Payment,
all of the Assets and the exclusive ownership of the Assets shall
be immediately returned to Vendor, and Purchaser shall have no
further rights of any kind or nature relating to the Assets.
5.6 All payments to Vendor pursuant hereto shall be in the
form of check or other form of payment reasonably requested by
Vendor, and shall be addressed to Vendor in care of the address
set forth in Article 9 hereof.
Article 6. WARRANTIES AND REPRESENTATIONS
6.1. Assets Sold "As Is"
The Assets are sold in their present form "as is" which means
that Vendor makes no warranty or other representation concerning
the suitability of the Assets for Purchaser's purpose, nor that
the software which comprises the Assets is error free, nor with
respect to any other matter related to the Assets or the sale
thereof to Purchaser, except that Vendor does represent and
warrant (i) that it has no knowledge of any claim that the Assets
infringe any patent, copyright, trade secret or other
intellectual property right of any third party, and (ii) that it
has the full right and power to enter into this Agreement. The
liability of Vendor for any breach or breaches of any of the
foregoing representations and warranties shall be limited to the
consideration received by Vendor in accordance with Article 5
hereof.
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Article 7. TERM AND TERMINATION
7.1 Term
This Agreement shall come into force on the date first above
written and unless terminated pursuant to Article 7.2 hereof,
shall continue on in perpetuity.
7.2 Termination
If either party fails to comply with any of the material terms
and conditions of this Agreement, the other party may, at its
option, terminate this Agreement upon ten (10) days written
notice to the defaulting party. Any such notice shall specify the
nature of the breach, and the purported and/or desired remedy for
same. Upon receipt of such notice, the receiving party shall have
a period of ten (10) days in which to cure such breach.
7.3 Effect of Termination
In the event of termination of this Agreement by reason of
Purchaser's breach thereof, Purchaser shall discontinue use of
the Assets until such time same has been otherwise cured. In the
event of termination of this Agreement by reason of Vendor's
breach thereof, Purchaser shall have the right to withhold
payment or any un-remitted portions thereof until such time same
has been otherwise cured. These remedies are cumulative, and
exercise of any one shall not restrict a party from pursuing any
other remedies which may be at its lawful disposal.
Article 8. ASSIGNMENT
This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their successors and assigns, but neither
this Agreement, nor any rights and obligations hereunder, shall
be assigned by either party hereto to any other person, firm or
corporation or other entity, without the express written consent
thereto of the other party, which consent shall not be
unreasonably withheld. Any assignment or transfer of a part or
whole of this Agreement in violation of this Article shall be
null and void and of no effect.
Article 9. NOTICE
Any notice to be given to any party hereto hereunder shall be
given in writing and delivered personally, or by certified mail
(with appropriate postage prepaid), or in the form of a facsimile
transmission, followed immediately by a confirmation letter by
certified mail. Such notice shall be directed to the following
address, or facsimile number of such party or such other address,
or facsimile number as such party may designate by written notice
given to the other party. Each such notice shall become effective
(i) if given by mail, seven (7) calendar days after being
deposited in the mail, or (ii) if delivered by facsimile, when
received by such party.
To Vendor: 1750 Vallejo Street,
Suite 404,
San Francisco, CA 94123
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Facsimile No. 650-341-1395
Attn: Chris Tsakalakis
To Purchaser: 9107 Wilshire Boulevard,
Suite 650,
Beverly Hills, CA 90210
Facsimile No. 310-275-1683
Attn.: Andrew Zucker,
General Counsel
Article 10. GOVERNING LAW
This Agreement shall be governed in all respects by, and
construed in accordance with, the laws of the State of California
applicable to agreements entered into entirely within such State.
Article 11. MISCELLANEOUS
11.1 This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and
supersedes the LOI and any and all other prior agreements and
understandings between them with respect hereto.
11.2 Neither this Agreement nor any of the terms hereof maybe
amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by an authorized signatory of each
party hereto.
11.3 At no time shall the failure of any party to require
performance by the other party of any of its obligations
hereunder constitute or be construed by any party as a waiver of
the right to require such performance at any time thereafter. A
waiver by either Party of any remedy for any breach hereof shall
not be taken as a waiver of any remedy with respect to any
succeeding breach hereof.
11.4 The parties hereto shall act in all matters pertaining to
this contract as independent contractors. Nothing in this
Agreement shall constitute or be deemed as constituting a
partnership between the parties hereto. This Agreement shall not
be construed to authorize either party hereto to act as an agent
for or representative of the other party, or to authorize either
party to assume or create any obligations on behalf of the other
party.
11.5 The headings of this Agreement are for convenience only and
shall not define, modify or otherwise affect the construction of
any of the provisions hereof.
11.6 This Agreement may be executed simultaneously in several
counterparts, each of which shall be deemed an original, and all
of which together shall constitute one instrument.
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11.7 Upon Purchaser's reasonable request, Vendor agrees to
execute such additional documents, including Exhibit "A" attached
hereto and made a part hereof ("Short Form Assignment"), which
are intended to further effectuate the intentions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this Agreement as of the
day and year first above written.
Vendor: Purchaser:
Classified Project Inc. WCollect.com, Inc.
By:\s\ Alan Spoon By: \s\ Bob Cabral
--------------------- ---------------------
Printed name: Alan Spoon Printed name: Bob Cabral
---------- ----------
Title: Officer Title: Authorized Signatory
----------------- --------------------
Date: Sept. 24, 1999 Date: Sept. 28/99
------------------ ---------------------
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Exhibit "A"
SHORT FORM ASSIGNMENT
For good and valuable consideration, the undersigned ("Assignor")
does hereby sell, grant, convey and assign unto WCollect.com,
Inc. ("Assignee"), any and all rights in and to that certain
auction engine computer software created by Assignor for
Assignor's web-based auction site, along with any source code
thereto (collectively, the "Assets").
This Assignment shall be construed in accordance with the laws of
the state of California and shall be binding upon and shall inure
to the benefit of the parties hereto and their respective
successors, licensees and assigns.
IN WITNESS VTHEREOF, Assignor has executed and delivered this
Assignment as of the _ day of September, 1999.
ASSIGNOR
Classified Project, Inc.
By: \s\ Alan Spoon
-----------------------
Authorized Signatory
WITNESS
By: ______________
Address: __________________
__________________
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Schedule "A"
DELIVERY DATE
Delivery Date: Within 72 hours of Purchaser's execution of this
Agreement
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Schedule "B"
VENDOR'S BANKING INFORMATION
Citibank, N.A.
New York, NY
ABA# 021000089
Account# 40529291
Name: The Washington Post Company Corporate Control
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