[S]
[TYPE]
As filed with the
Securities and Exchange Commission
on August 10 ,1999
Registration No.333.-
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
STRATABASE.COM
(Name of Small Business Issuer in its Charter)
<SUBMISION> [TYPE]
<TABLE>
<S> <C> <C>
Nevada 737 88-041-4964
(State of Incorp- (Primary Standard (IRS Employer
oration) Industrial Classi- Identification
fication Code Number) Number)
34314 Marshall Road, Suite 203
Abbotsford, B.C., V2S1L2, Canada
(604) 504-5811
(Address and telephone number of principal
executive
offices and principal place of business)
Laughlin Associates, Inc.
2533 North Carson Street
Carson City, Nevada 89706
(775) 883-8484
(Name, address and telephone number of agent for
service)
Copies to:
James C. Jones, Esq.
65 West 96th Street, Suite 20H
New York, New York 10025
212-662-2767
Approximate date of commencement of proposed
sale to the public:
As soon as practicable after the effective date
of this Registration Statement.
(cover page continued)
Certain of the securities being registered on
this Form SB-2 are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the
Securities Act of 1933
</TABLE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title Maximum Maximum
of Each Class Amount Offering Aggregate Amount of
of Securities To be Price Per Offering Registra-
Being Regis- Registered Security (1) Price (1) tion Fee
tered
<S> <C> <C> <C> <C>
Units (2) 800,000 uts. $.50 $400,000 $121.20
Common Stock,
$.001 Par Value(3)(6) 800,000 Shs. $1.00 $800,000 $242.40
Common Stock,
$.001 Par Value(4)(6) 800,000 Shs. $3.00 $2,400,000 $727.20
Common Stock,
$.001 Par Value(5)(6) 800,000 Shs. $5.00 $4,000,000 $1,212.00
Total $7,600,000 $2,302.80
<FN>
<F1>
Estimated solely for purposes of calculating
the registration fee pursuant to Rule 457(a)
based on a
bona fide estimate of the maximum offering
price.
<2>
Consisting of one share of Common Stock,
$.001 par value, one Class A Warrant, one Class B
Warrant and one Class C Warrant to be offered
herein to the public.
<3>
Issuable upon exercise of the Class A
Warrants included as part of the Units offered
herein to the public.
<4>
Issuable upon exercise of the Class B
Warrants included as part of the Units offered
herein to the public.
<5>
Issuable upon exercise of the Class C
Warrants included as part of the Units offered
herein to the public.
<6>
Pursuant to Rule 416, there are also being
registered such additional shares as may become
issuable pursuant to antidilution provisions of the
Warrants.
</FN>
</TABLE>
The Registrant hereby amends this Registration
Statement on such date or dates as may be
necessary to delay its effective date until the Registrant
shall file a further amendment which
specifically states that this Registration Statement shall thereafter
become effective in accordance with Section 8(a)
of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on
such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<TABLE>
<CAPTION>
<PAGE>
STRATABASE.COM
CROSS REFERENCE SHEET FOR PROSPECTUS
Items in Form SB-2 Headings in Prospectus
<S> <C>
1. Front of the Registration Statement
and Outside Front Cover Page of the
Prospectus.-------------------------------------------Cover Page
2. Inside Front and Outside Back Cover
Pages of
Prospectus.-------------------------------------------Cover Page
3. Summary Information and Risk
Factors-----------------------------------------------Summary of Prospectus,
The Company, Risk Factors
4. Use of
Proceeds.---------------------------------------------Use of Proceeds,
Financial Statements,
Business, Certain
Transactions
5. Determination of Offering Price--------------------CoverPage, Risk Factors
6. Dilution.------------------------------------------Dilution
7. Selling Security
Holders.----------------------------------------------Not Applicable
8. Plan of
Distribution.-----------------------------------------Cover Page, Plan of
Distribution
9. Legal
Proceedings.------------------------------------------Legal Proceedings
10. Directors, Executive Officers, Promoters
and Control
Persons.----------------------------------------------Management, Principal
Shareholders, Certain
Transactions
11. Security Ownership of Certain Beneficial
Owners and Management.-----------------------------Principal Shareholders,
Certain Transactions
12. Description of the Securities to be
Registered.-------------------------------------------Description of Units
13. Interest of Named Experts and Counsel.------------Legal Matters
14. Statement as to
Indemnification.--------------------------------------Indemnification
15. Organization Within 5
Years.------------------------------------------------Certain Transactions,
Principal Stockholders
16. Description of
Business.---------------------------------------------Business, Financial
Statements
17. Management's Discussion and Analysis or
Plan of Operation.---------------------------------Management's Discussion
And Analysis of Financial
Conditions and Results of
Operations
18. Description of Property.--------------------------Business-Properties and
Equipment, Financial
Statement
19. Certain Relationships and Related Transactions.---Certain Transactions,
Management
20. Market for Common Equity and Related
Stockholder
Matters.----------------------------------------------Certain Transactions,
Description of Units,
Certain Market Information
21. Executive
Compensation.-----------------------------------------Management
22. Financial
Statements.-------------------------------------------Financial Statements
23. Changes In and Disagreements With
Accountants on Accounting and Financial
Disclosure.-------------------------------------------Not Applicable
</TABLE>
<PAGE>
All PAYMENTS FOR THESE SECURITIES SHALL BE MADE
BY CHECK OR MONEY ORDER PAYABLE TO "SECURITIES TRANSFER
CORPORATION, AS ESCROW AGENT FOR STRATABASE.COM"
PROSPECTUS
STRATABASE.COM
(a Nevada Corporation)
A Maximum of 800,000 Units consisting of 800,000
Shares of Common Stock,$.001 Par Value, and
800,000 Class A Redeemable Purchase Warrants,
800,000 Class B Redeemable Purchase Warrants
and 800,000 Class C Redeemable Warrants to
Purchase 2,400,000 shares of Common Stock
THESE SECURITIES ARE HIGHLY SPECULATIVE AND
INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL DILUTION.
PURCHASE OF THESE SECURITIES SHOULD BE CONSIDERED ONLY BY THOSE PERSONS WHO
CAN SUSTAIN A TOTAL LOSS OF THEIR INVESTMENT (SEE "RISK FACTORS" AND
"DILUTION".)
Prior to this offering, there has been no public
market for the Company's Units, Common Stock or
Redeemable Warrants. The public offering price
herein and the exercise prices of the Warrants
have been arbitrarily determined by the Company and
bear no relationship to assets, book value, net
worth, earnings, actual results of operations or any
other established investment criteria. (See
"Risk Factors", "Dilution" and Footnote Number 1 to the Table
below). The Units, Common Stock and Redeemable
Warrants will be available for trading on the
NASD over-the-counter electronic bulletin board.
There is no assurance that an active trading market for
the company's securities will develop, or, if
developed will be sustained. (See Risk Factors Numbered 22
and 23.) (Cover Page continued on the following
page.)
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
Underwriting Discounts Proceeds to
Price to Public Commissions (1) Company (2) (3
<S> <C> <C> <C>
Per Unit $.50 $-0- $.50
Total-Minimum $200,000 $-0- $200,000
Total-Maximum $400,000 $-0- $400,000
</TABLE>
STRATABASE.COM
34314 Marshall Road, Suite 203
Abbotsford, B.C., V2SlL2, Canada
604-504-5811
The date of this Prospectus is
, 1999
[FN]
<PAGE>
Footnotes to Table:
<1>
The Company intends to offer these
securities directly to the public. Accordingly,
no commission or any other form of remuneration will be paid. No
broker has been retained or is under any
obligation to purchase any of the Units offered herein. Since
there is no firm commitment with respect to the
sale of any of the securities offered herein, the
Company cannot state if the offering will be
successfully completed.
<2>
Before deducting filing, printing, legal,
accounting and miscellaneous expenses related to
this offering to be paid by the Company, estimated under both
the minimum and maximum offerings to be $40,000
(approximately $.10 per unit under the minimum
offering and $.05 per Unit under the maximum
offering). The net proceeds to the Company after
payment of all of the foregoing expenses under
the minimum offering will be approximately $160,000;
the net proceeds to the Company after payment of
all the foregoing expenses under the maximum
offering will be approximately $360,000.
<3>
To the extent that any of the Class A, B or
C Redeemable Warrants sold in this offering, if
any, are exercised, as to which there can be no
assurance, the Company will receive additional
proceeds which will be utilized as additional working capital.
</FN>
Each Unit consists of one share of Common Stock
($.001 par value), one Redeemable Class A
Common Stock Purchase Warrant ("Class A
Warrants"), one Redeemable Class B Common Stock
Purchase Warrant ("Class B Warrants") and one
Redeemable Class C Common Stock Purchase
<PAGE>
Warrant ("Class C Warrants") (collectively, the
"Warrants"). The Warrants are exercisable and
transferrable immediately upon the successful
closing of the offering herein. Each Class A
Warrant will entitle the holder to purchase one share of
Common Stock at a purchase price of $1.00 per
share. Each Class B Warrant will entitle the holder to
purchase one share of Common Stock at a purchase
price of $3.00 per share. Each Class C Warrant
will entitle the holder to purchase one share of
Common Stock at a purchase price of $5.00 per
share. No fractional shares will be issued upon
exercise of the Warrants. The Class A, B and C
Warrants shall be exercisable for a six month,
12 month and 18 month period, respectively. Each
commencing from the effective date of the
offering herein (i.e., , 1999). The
Company reserves the right to extend each
warrant exercise period, or any of them, at any time, and/or to
reduce the exercise price(s) by up to 50% upon
30 days prior written notice to the warrantholders.
Furthermore, the Warrants are subject to call
and/or redemption by the Company, upon 30 days prior
written notice, if the average bid price of the
common stock for any seven trading days within a 10
consecutive trading day period is greater than
20% above the respective exercise price, at a per warrant
price of $.01. Notice of any redemption will be
mailed to the holders thereof at their addresses of
record. Any holder who does not exercise his
Warrant prior to the time the Warrants are redeemed after notice
by the Company or prior to the expiration of the
respective exercise period, (or extended period,
if any), whichever occurs first, will forfeit
his rights to purchase the shares of Common Stock underlying
the Warrants. There will be no distribution of
the Units until the sale of at least 400,000 Units.
(See "Description of Units".)
The offering is being made on a "best efforts,
all-or-none" basis as to the first 400,000
Units, and on a "best efforts" basis as to the remaining Units.
If 400,000 Units are not sold within 90 days
from the date of this Prospectus (which period can be extended
for an additional 90 days), all funds received,
will be promptly refunded to subscribers in full,
without interest, or deduction, in accordance
with an escrow agreement with Securities Transfer Corporation.
If 400,000 Units are sold, the offering will
continue without any provision for refund: (1) until all
of the remaining 400,000 Units are sold; (2)
until 90 days (up to 180 days if so extended) from the date of
this Prospectus, or (3) upon the prior
termination of the offering by the Company, whichever occurs
first. The Units are being offered by the
Company when, as and if received and accepted by it,
subject to prior sale, allotment and withdrawal,
cancellation or modification of the offer
without notice and subject to the exclusive
right of the Company to reject any order in whole or in part
at any time, and to certain further conditions.
The offering may close in up to 14 days after the
end of the offering period.
THIS OFFERING INVOLVES:
A) Special Risks concerning the Company. For
information concerning such risks,.see "Risk
Factors".
B) Immediate substantial dilution, as the net
tangible book value of the Common Stock
immediately after the public offering will be substantially
less than the public offering price. (See
"Dilution".)
C) Substantial potential benefit to the present
stockholders of the Company as the net tangible
book value of the Common Stock of the Company as of
March 31, 1999 is approximately $.04 per share
<PAGE>
and assuming the sale of all of the Units
offered by the Company hereby, the net tangible
book value will be approximately $.09 per share, resulting
in an increase in the total net tangible book
value of the Common Stock held by the present stockholders of
the Company of approximately $.05 per share.
(See "Dilution".)
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE
ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS. ANY INFORMATION OR REPRESENTATION NOT HEREIN
CONTAINED, IF GIVEN OR MADE, MUST NOT BE. RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING OR SOLICITATION IN RESPECT TO THESE SECURITIES IN
ANY JURISDICTION IN WHICH SUCH AN OFFERING OR SOLICITATION WOULD BE
UNLAWFUL.
THE SECURITIES ARE OFFERED SUBJECT TO PRIOR
SALE, ACCEPTANCE OF AN OFFER TO PURCHASE, AND TO WITHDRAWAL OR
CANCELLATION OF THE OFFERING WITHOUT NOTICE. THE COMPANY RESERVES
THE RIGHT TO REJECT ANY ORDERS FOR THE PURCHASE OF THE SECURITIES IN
WHOLE OR IN PART.
UNTIL , 1999, (NINETY (90) DAYS AFTER
THE FIRST DATE UPON WHICH THE SECURITIES OFFERED HEREBY WERE BONA FIDE OFFERED
TO THE PUBLIC OR ON A SUBSEQUENT EXTENDED CLOSING DATE), ALL DEALERS
EFFECTIN TRANSACTIONS IN THE REGISTERED SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUESTED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
THE WARRANTS CONTAINED IN THE UNITS OFFERED
HEREBY MAY NOT BE REDEEMED IN THE ABSENCE OF A CURRENT PROSPECTUS.
IN SUCH EVENT, WARRANTHOLDERS WILL NOT BE ABLE TO EXERCISE
THEIR WARRANTS AND WILL RECEIVE ONLY THE REDEMPTION PRICE AT A TIME WHEN
THE MARKET VALUE OF THE WARRANTS BE SIGNIFICANTLY HIGHER.
STATEMENT OF AVAILABLE INFORMATION
The Company does not presently file reports or
other information with the United States
Securities and Exchange Commission (the "SEC"). However,
following completion of the minimum offering
herein, the Company, whose fiscal year ends on each December
31st, plans to distribute to stockholders annual
reports containing financial statements that
have been audited and reported upon, with an
opinion expressed by an independent public accountant
and such other information as management deems
desirable or as may be required by law. In this
regard, upon the completion of the minimum
offering herein, it will be subject to the informational
requirements of the Securities Exchange Act of
1934, as amended, (the "Exchange Act"), and in accordance
<PAGE>
therewith, will file reports, proxy statements
and other information with the SEC. Such reports,
proxy statements and other information will be available
for inspection and copying (for a specified fee)
at the SEC's public reference room located at
Room 1024, 450 Fifth Street, NW, Washington, D.C.
20549, and the public reference facilities in the SEC's
Northeast Regional Office, 7 World Trade Center,
New York, New York 10048; and its Midwest
Regional Office, Citicorp Center, 500 West
Madison Street, Suite 2400, Chicago, Illinois
60661. Copies of such material may also be obtained at
prescribed rates by writing to the United States
Securities and Exchange Commission, Public
Reference Section, 450 Fifth Street, NW,
Washington, D.C. 20549 upon payment of the fees prescribed
by the SEC. Please call the SEC at 1-800-SEC-
0330 for more information on the operation of
its Public reference Rooms. The SEC also
maintains a Web site that contains reports, proxy and
information statements and other materials that
are filed through the SEC's Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system. This Web
Site can be accessed at http: /www.sec.gov.
<PAGE>
PROSPECTUS SUMMARY
The following summary information is qualified
in its entirety by the more detailed information
and financial statements and related notes appearing
elsewhere in this Prospectus. Investors should
carefully consider the information set forth under "Risk
Factors".
The Company
Stratabase.com (the "Company") was incorporated
under the laws of the State of Nevada on
November 18, 1998.
The Company, a development stage corporation,
focuses on the development of web-based business
opportunities which emphasize content,
community, commerce and infrastructure. The
Company is presently engaged in the development of rich
media (streaming audio and video content) for
the web, web design and co-location/hosting services, the
development of niche web-based communities which
are vertically integrated and have e-commerce
components, and online direct marketing.
It is Management's intention to see the Company
become a leading source for streaming video
content and production, vertical community development,
web infrastructure services, e-commerce, and
online marketing. Management has already taken steps
toward realizing these objectives. Specifically,
the Company has created a sophisticated mobile video
production studio to specialize in web-based video
production, editing, encoding and distribution.
Furthermore, it has engaged a leading aggregator
and distributor of news to provide some of the
content for the vertical communities it is
creating. Finally, it has commenced development of its flagship direct
marketing website, an entirely opt-in,
permission based, e-mail direct marketing infrastructure.
The Company intends to carry out online and
offline marketing campaigns, develop advertising
<PAGE>
and distribution partnerships with leading websites,
and expand its web-development infrastructure
and content.
The Company intends to translate its activities
into revenues by: (1) selling its rich media
(audio/video) production services to potential clients; (2)
securing clients for its existing web design and
co-location/hosting services; (3) developing
e-commerce opportunities (potential revenue
streams) within vertical communities it is creating; and (4)
selling advertising space into the permission
based opt-in direct marketing infrastructure it is
developing.
The Company maintains its operations at 34314
Marshall Road, Suite 203, Abbotsford, BC V2S1L2,
Canada. The telephone number is (604) 504-5811.
<TABLE>
The Offering
<S> <C>
Units offered by the
Company(l)-----------------------------------800,000 Units (maximum offering)
-------------400,000 Units (minimum offering)
Common Stock to be outstanding after
this Offering--------------------------------6,353,772 shares (maximum offering)
---------5,953,772 shares (minimum offering)
Use of Proceeds
(maximum or minimum offer--------------------working capital and other general
corporate purposes including
advertising
<FN>
<1>
Each Unit is comprised of one share of
Common Stock, $.001 par value, one Class A
Redeemable Common Stock Purchase Warrant which entitles the
holder to purchase one share of Common Stock
at a price of $1.00 per share, one Class B
Redeemable Common Stock Purchase Warrant which
entitles the holder to purchase one share of
Common Stock at a price of $3.00 per share and one Class
C Redeemable Common Stock Purchase Warrant which
entitles the holder to purchase one share of
Common Stork at a price of $5.00 per share. See
"Description of Units".
Risk Factors
The Company was only recently organized, has not
yet commenced significant commercial operations,
has no significant revenues, earnings or
operating history, has incurred losses totaling
<PAGE>
approximately $21,726 from inception in November of 1998
through March 31, 1999 and is dependent upon the
net proceeds of this offering in order to commence
meaningful commercial operations, (See
"Management's Discussion and Analysis of Financial Condition
and Results of Operations-Liquidity and Capital
Resources".) The book value of the Common Stock
immediately after the public offering will be
substantially less than the public offering
price. For these and other reasons, an
investment in the Units offered hereby involves a high degree of risk.
See "Risk Factors" and "Dilution".
Summary of Financial Data
The following sets forth a summary of selected
financial data and is qualified in its entirety
by the more detailed financial statements and the notes
thereto included elsewhere herein.
</TABLE>
<TABLE>
<CAPTION>
From Inception (November 18, 1998)
Through March 31, 1999
Summary of Operating Data:
<S> <C>
Revenues----------------------------------------------------$0
Net Loss----------------------------------------------------$21,726
Net Loss per share of Common Stock (1)----------------------$.004
<FN>
<1>
This is equal to the actual sum of the net
loss per weighted average share outstanding
realized in the periods from November 18, 1998 (inception) to
March 31, 1999.
</FN>
<CAPTION>
March 31, 1999 Pro Forma (1)
Summary of Balance Sheet Data: (audited) (Unaudited)
<S> <C> <C>
Working Capital-------------------$214,106.00------$374,106.00
Property and Equipment-----------------205.00-----------205.00
Other Assets---------------------------572.00-----------572.00
Total Liabilities----------------------436.00-----------436.00
Deficit Accumulated During
Development Stage---------------------(21,726.00) (21,726.00)
Shareholders' Equity-------------------21,883.00 374,883.00
Shareholders' Equity Per Share of
common stock---------------------------------.0 .06 (2)
<FN>
<1>
After giving effect to the sale of the
minimum offering herein and receipt of the net
proceeds therefrom net the estimated costs and expenses
thereof.
<2>
Based on 5,953,772 shares of Common Stock
outstanding.
</FN>
</TABLE>
<PAGE>
RISK FACTORS
The securities being offered herein represent a
speculative investment and involve a high degree
of risk.
Prospective purchasers should carefully consider
the risk factors set forth below, as well as the
other information set forth in this Prospectus, prior
to making any investment in the securities
offered herein.
1. Minimal Working Capital; No Revenues.
The Company, as of March 31, 1999, had working
capital of $214,106 has not had operating
revenues, and is dependent upon the proceeds of
this offering to implement its business plan.
See the "Financial Statements" and "Management's
Discussion and Analysis of Financial Condition
and Results of Operations-Liquidity and Capital Resources".)
2. Development Stage Company.
The Company has only recently been organized,
has no significant operating history or
operating revenues and must be considered in its
development stage embarking upon new business
ventures. Accordingly, its business is subject to all of
the risks inherent in the establishment of a new
business enterprise. The likelihood of the success of the
Company must be considered in light of the
problems, expenses, complications and delays frequently
encountered in connection with the formation of
a new business, the development of new products or
services, the competitive and regulatory
environment in which the Company is operating, and the
possibility that its activities may not succeed
in obtaining a sufficient share of its intended market to
develop a profitable operation. Additionally, as
a result of the start-up nature of its business and the fact
that it virtually has no share of its intended
market, the Company may sustain operating losses for a
number of years. In this regard, in order to be
successful, the Company must attract a significant number of
users to the information and content delivered
through Stratabase.com, and generate significant
advertising and e-commerce revenues.
Specifically, as an early stage entity in the
rapidly evolving market for internet services,
the Company will face numerous risks and uncertainties
including its ability to:
a) anticipate and adapt to changing internet technologies;
b) attract a substantial number of internet users to the content
and information delivered through Stratabase.com;
c) generate significant advertising and e-commerce revenues;
d) develop an advertising sales force;
e) implement sales and marketing initiatives;
f) offer compelling content;
g) attract, retain and motivate qualified
personnel;
h) respond and adjust to actions taken by competitors;
i) build an operations and technical infrastructure to effectively
manage growth, if any; and
j) integrate new technologies and services.
<PAGE>
The possibility must be considered strong that
the Company may not be successful in
accomplishing these objectives. Its success, if any, will
depend upon the continued growth of the use of
the internet for advertising and e-commerce, and on general
economic conditions. Failure to achieve any or
all of these objectives will have an adverse effect on
operations and the financial condition of the
Company. See "Business", "Management's Discussion and
Analysis of Financial Condition and Results of
Operations" and "Financial Statements".
3. Uncertain Profitability; Anticipated Losses.
The Company's ability to generate revenues is
uncertain. It will incur substantial costs in
the development of Stratabase.com. Substantial
losses and negative cash flow may be expected
for at least the foreseeable future as start-up and
development expenses are incurred. If the
Company's revenues, if any, do not increase and spending levels are
not adjusted accordingly, the Company may not be
able to achieve profitability; or, if achieved,
sustain or increase them on a quarterly or
annual basis in the future. See "Business" "Management's Discussion
and Analysis of Financial Condition and Results
of Operations".
4. Volatility of Quarterly Operating Results.
Management expects quarterly operating results
to vary in the future due to a variety of
factors, many of which are out of its control. They include:
a) the demand for advertising on the internet in general and on
Stratabase.com;
b) usage levels for Stratabase.com;
c) the Company's ability to attract and retain
advertisers and e- commerce partners;
d) the relatively short term of many advertising
agreements (i.e. one to three months);
e) the timing and uncertainty of advertising
cycles;
f) varying internet advertising rates caused by
competition or other factors;
g) technical difficulties or system
downtime affecting the internet or the operation of Stratabase.com;
h) the amount and timing of costs related to advertising sales
and marketing efforts and other initiatives;
i) fees that are incurred, including for distribution or content, if the
Company expands its operations;
j) costs related to possible acquisitions of businesses, technologies
and services; and
k) economic conditions that are specific to the internet and internet
services.
If the Company experiences a shortfall in
revenues in relation to its expenses, or if its
expenses precede increased revenues, then its business, results
of operations and financial condition would be
materially and adversely affected. This, in turn, could
affect the market price, if any, of the common
stock. Usage
<PAGE>
levels of web services typically fluctuate
during the summer and year-end vacation and
holiday periods, which could result in a decrease in usage of
Stratabase.com's services during these periods.
Management believes that advertising sales in
traditional media, such as television and radio,
generally are lower in the first and third calendar
quarters each year. Accordingly, the Company
believes that similar patterns may develop in the internet
advertising industry. Due to all of the
foregoing, a potential investor should not rely upon quarter-to-quarter
comparisons of results of operations as an
indication of future performance. It is possible that in some
future periods results of operations may be
below the expectations of analysts and investors which may
have a depressive affect on the price of the
Company's common stock. See "Management's
Discussion and Analysis of Financial Condition
and Results of Operations".
5. Dependence on the Internet; Risks Associated
with an Evolving Market.
The Company's future success, if any, is
substantially dependent on the continued growth
in the use of the internet. The internet is relatively new and
is rapidly changing. Its business would be
adversely affected if internet usage does not continue to
grow. This usage may be inhibited for a number
of reasons, such as the internet infrastructure may
not be able to support the demands placed on it,
or its performance and reliability may decline as usage
grows. Similarly, an adverse affect may be
caused by privacy concerns, or by security and
authentication concerns with respect to
transmission over the internet of confidential information, such as
credit card numbers, and attempts by
unauthorized computer users to penetrate online security
systems.
The Company's market is characterized by rapidly
changing technologies, evolving industry
standards, frequent new service introductions and changing
customer demands. To be successful, it must
adapt to a rapidly evolving market by continually
enhancing Stratabase.com's infrastructure,
content, information and services to fulfill its users' needs. The
Company could incur additional costs if it
becomes necessary to modify its services or infrastructure in
order to adapt to these or other changes
affecting providers of internet services. The Company's business,
results of operations and financial condition
could be materially adversely affected if it incurs
significant costs to adapt, or it cannot adapt,
to these changes.
6. Risks Associated with Internet
Advertisements.
The Company expects to generate a significant
amount of its revenues, if any, from internet
advertising in the future. The internet advertising market
is new and rapidly changing, and management
cannot yet gauge its effectiveness as compared to
traditional advertising media. The Company's
business, results of operations and financial condition would be
materially adversely affected if the market for
internet advertising fails to develop or it develops more
slowly than expected. Most of the Company's
potential advertising and e-commerce partners have little
or no experience using the internet for
advertising purposes and they have allocated only a limited
portion of their advertising budgets to internet
advertising. The adoption of internet
advertising, particularly by those entities that
have historically relied upon traditional media for advertising, requires
the acceptance of a new way of conducting
business, exchanging information and advertising products
and services. Advertisers who have traditionally
<PAGE>
relied upon other advertising media may be reluctant to
advertise on the internet. Such customers may
find internet advertising to be less effective than
traditional advertising media for promoting
their products and services. No standards have been widely
accepted to measure the effectiveness of
internet advertising or to measure the demographics of
the Company's user base. If such standards do
not develop, advertisers may not choose to advertise
on the internet. Furthermore, advertisers and
e-commerce marketers may choose to not advertise
on Stratabase.com or pay less for advertising on
Stratabase.com if they do not perceive its
audience(s) to be valuable, which could have a
material adverse effect on its business, results of
operations, and financial condition. Various
pricing models are used to sell advertising on the internet. It is
difficult to predict which, if any, pricing
models for internet advertising will emerge as the industry
standard. Accordingly, it is difficult to
project future advertising rates and revenues, if any. Finally, "filter"
software programs that limit or prevent
advertising from being delivered to an internet user's computer are
available. Widespread use of such software could
adversely effect the commercial viability of
internet advertising. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations".
7. Government Regulation, Potential Liability
for Content, Legal Uncertainties.
There exist on various levels laws, rules and
regulations pertaining to the internet, and the
proliferation of such laws, rules and regulations can be
expected to continue. Currently, a number of
legislative and regulatory proposals are under consideration by
federal, state, local and foreign governments
and agencies. Laws or regulations may be adopted
with respect to the internet relating to
liability for information retrieved from or transmitted over
the internet, online content regulations, user
privacy, taxation, quality of products and services.
Moreover, the applicability to the internet of
existing laws governing issues such as intellectual property
ownership and infringement, copyright,
trademark, trade secret, obscenity, libel, employment and
personal privacy is uncertain and developing.
This could decrease the demand for the Company's services,
if any, increase its cost of doing business or
otherwise have a material adverse effect on the
Company, its business, results of operations and
financial condition. Any new legislation or
regulation, or the application or interpretation
of existing laws, may decrease the growth of the use of the
internet which would likely have an material
adverse effect on the business of the Company. Content may be
accessed in Stratabase.com or on the web sites
of possible partners of the Company. This content
may be downloaded by users and subsequently
transmitted to others over the internet. In
addition, sites hosted by Stratabase.com contain
annotated links to other web sites. In either case, claims
against the Company could result based upon a
variety of theories, including defamation, obscenity,
negligence, copyright or trademark infringement.
Other possible claimants' theories may be based upon
the nature, publication and distribution of
Stratabase.com content, or because of errors or
false or misleading information provided on
Stratabase.com including information deemed to
constitute professional advice such as legal,
medical, financial or investment advice. Furthermore, the
Company could be exposed to liability for
third-party content posted by users in chat roams or on
message boards offered through the
Stratabase.com infrastructure. Potential liability for
information disseminated through Stratabase.com
could lead the Company to implement measures to reduce exposure
to such liabilities, which would, in turn,
require substantial expenditures and limit the
attractiveness of Company's services, if any, to
potential users. See "Business-Government Regulations and Legal
Uncertainties".
<PAGE>
8. Development of a Direct Advertising Sales
Team.
In order to support its intended growth, the
Company intends to develop an internal
advertising sales team. Its ability to do so successfully involves
a number of factors. They include: the
competition in hiring and retaining advertising sales
personnel, the Company's ability to integrate
and motivate advertising sales personnel and the length of
time, if at all, it takes for new advertising
sales personnel to become effective. Failure of the Company to
develop and maintain an effective advertising
sales team may adversely effect its business, results of
operations and financial condition.
9. Competition.
The internet industry is, and can be expected to
remain, highly competitive since there are no
substantial barriers to entry into this arena. The number of
businesses competing for users, the spending of
internet advertisers and e-commerce marketers has
increased significantly. Competition may also
increase as a result of industry consolidation. Increased
competition could result in less usage of the
Company's services, price reductions for advertising
inventory, reduced margins or loss of market
share, any of which would have a material adverse effect on
the Company's business, results of operations
and financial condition.
The Company's competitors will include: internet
retrieval companies, search engines and other
internet "portal" companies such as Excite and Yahoo;
online content web sites such as CNet and ZDNet;
online community web sites such as iVillage and
Miningco.com; online personal homepage services
such as Geocities and Theglobe.com; publishers
and distributors of television, radio and print
such as CBS, Disney, NBC and Time-Warner; general
purpose consumer online services such as America
Online and Microsoft Network; and Web services
maintained by internet service providers such as
AT&T Worldnet and Earthlink.
The Company believes that its ability to compete
depends upon many factors. These factors include
the quality of content, information and services
provided by it and its competitors, the ease of
use of services developed either by the Company or its
competitors, the timing and market acceptance of
new and enhanced services developed either by the
Company or its competitors, and sales and
marketing efforts. Many of the Company's existing
competitors, as well as a number of potential
new competitors, have longer operating histories, greater name
recognition, larger customer bases and
significantly greater financial, technical and marketing resources
than the company. This may allow these competitors to
devote greater resources than the Company can to
the development and promotion of their services.
Such competitors may also engage in more
extensive research and development, undertake
more far-reaching marketing campaigns, adopt more
aggressive pricing policies and make more
attractive offers to existing and potential employees,
distribution partners, and advertisers and
e-commerce partners. Its competitors may develop services
that are equal or superior to Stratabase.com or
that achieve greater market acceptance than those of
Stratabase.com. Additionally, current and
<PAGE>
potential competitors have established or may establish
cooperative relationships among themselves or
with third parties to increase the ability of their
services to address the needs of advertisers and
e- commerce marketers. As a result, it is possible that new
competitors may emerge and rapidly acquire
significant market share. The Company may not be able to
compete successfully, or competitive pressures
may have a material adverse effect on its business,
results of operations and financial condition.
The Company will also compete with television,
radio, cable and print (i.e. the traditional
advertising media) for a share of advertisers' total
advertising budgets. If advertisers perceive the
internet or Stratabase.com to be a limited or ineffective
advertising medium, advertisers may be reluctant
to devote a significant portion of their advertising
budgets to internet advertising, in general, or
to advertise on Stratabase.com, in particular. See
"Business-Competition".
10. Need to Manage Growth.
If the Company develops and increases the size
of its business, the demands on its operational
systems will also increase. Accordingly, the Company
will be required to further develop its
operational and financial systems and managerial controls and
procedures. It will also then need to expand,
train and manage its team of staff. There can be no
assurance that the Company will have the ability
to manage growth, if any, effectively. Failure to do so,
if required, would have an adverse material
effect on its business, results of operations and financial
condition.
11. Officers' Salary to be Paid from Net
Proceeds.
Trevor Newton and Fred Coombes are the Company's
sole officers. Prior to February 1, 1999, Mr.
Newton did not receive any compensation from the
Company, and since inception to date, Mr.
Coombes has not received any compensation from
the Company. Since February 1, 1999, Mr.
Newton has been paid at the rate of $5,000 per
month. Upon the successful completion of at
least the minimum offering herein (until and if operating
revenues can support this expense), Mr. Newton
will continue to be compensated at the same rate of
$5,000 per month, and Mr. Coombes will be begin
to be compensated at the rate of $3,000 per month.
These salaries will be paid from the net
offering proceeds herein allocated to working capital
until and if operating revenues, if any, are
available for this purpose. Presently, the Company does not plan to
enter into employment contracts with its
officers. Accordingly, their salary and/or compensation
increases, if any, cannot be predicted. See
"Management-Executive Compensation" and "Use of
Proceeds".
12. Limited Staff; Conflict of Interest.
The Company Currently has only two employees,
its sole officers, Trevor Newton and Fred
Coombes. Assuming successful completion of the minimum
offering, the Company intends to retain the
services of independent contractors and/or outside
consultants, for the foreseeable future, rather
than to hire additional employees. There can be no assurance
that the Company will be able to attract
qualified individuals to join the Company. Both Messrs.
Newton and Coombes are employed by other
<PAGE>
businesses unrelated to the Company. They each
plan to continue these activities, which may
cause conflicts of interest with the Company,
including conflicts in terms of time and
business opportunities. There can be no assurance that such conflicts
will be resolved in favor of the Company.
Furthermore, because of these outside obligations, Messrs.
Newton and Coombes will not be able to devote
their full-time to the affairs of the Company.
However, it is each's intention to devote enough
time to the Company as each deems is necessary for the
Company to achieve its goals. See "Use of
Proceeds" and "Management".
13. Reliance on Key Personnel.
The Company is heavily dependent on the efforts
of its limited staff, especially its Chairman of
the Board, President, CEO Treasurer and Secretary,
Trevor Newton. Except for Mr. Newton, the other
officer (Mr. Fred Coombes) and Directors
(Messrs. Coombes and John Tarves) do not have
any significant experience in the internet industry.
The loss of the services of any of these
individuals, especially Mr. Newton, could have a material
adverse effect on the Company, its business,
results of operations and financial condition. Currently,
the Company does not have any employment
agreements with any of its officers and other personnel nor
does it have key man insurance coverage on Mr.
Newton or the others.
14. Expansion Risk.
From time to time, the Company may have
discussions regarding acquisitions of or
investments in complementary companies, technologies or
services. If an acquisition is made,
Stratabase.com could have difficulty in assimilating the acquired
company's personnel and operations. In addition,
the Company may not be able to retain the key
personnel of the acquired business or company.
Such difficulties could disrupt the ongoing business
of Stratabase.com. Furthermore, it could
distract its management and employees, increase its expenses
and otherwise adversely effect its results of
operations because of increased operating
expenses and charges, such as amortization of
acquired good will.
15. System Risks.
The technical performance of the Company's
systems is critical to its business and
reputation, and to its ability to attract users, advertisers and
e-commerce partners. Any system failure,
including network, software or hardware failure, that causes an
interruption in its service or a decrease in its
responsiveness could result in reduced usage and
reduced revenue, and could impair its
reputation. Any disruption in its Internet delivery systems
could have a material adverse effect on the
Company's business, results of operations and financial
condition. Stratabase.com could also be affected
by computer viruses, electronic break-ins or other
similar disruptions. The Company must be able to
accommodate a high volume of traffic and may
experience slower response times for a variety
of reasons. An increase in volume of users
accessing Stratabase.com could lead to systems
failures or slower response times and adversely affect the
Company's advertising revenues, if any. Users
<PAGE>
may become dissatisfied by any system failure that
interrupts its ability to provide
Stratabase.com's services to them. The Company's business, results of
operations and financial condition could be
materially adversely effected by any damage or failure that
interrupts or delays its operations. The
Company's users will depend on internet service providers,
online service providers, and other web site
operators for access to Stratabase.com. Each of these
providers has experienced significant outages in
the past, and could experience outages, delays and other
difficulties due to system failures unrelated to
the Company's systems in the future. Moreover, the
internet infrastructure, in general, may not be
able to support continued growth in its use. Any of
these problems could materially adversely effect
the Company's business, results of operations and
financial condition. (See "Business-Operating
Infrastructure".)
16. Intellectual Property.
The Company will attempt to protect its
proprietary rights. However, its efforts may be
inadequate to protect patents (if issued), trademarks or other
proprietary rights or to prevent third parties
from claiming violations of their proprietary rights.
Third parties may infringe or misappropriate the
Company's proprietary rights, which could have a
materially adverse effect on the Company's
business, results of operations or financial condition.
The validity, enforceability and scope of
protection of proprietary rights in internet related
industries is uncertain and still evolving.
Furthermore, third parties may assert infringement claims against the
Company. In fact, from time to time, the Company
may be subject to claims in the ordinary course of its
business, including claims of alleged
infringement of trademarks and other intellectual property
rights of third parties by the Company or its
partners. Such claims and any resulting litigation, should it
occur, could subject the Company to significant
liability for damages and could result in the invalidation of
its proprietary rights. In addition, if the
Company were to prevail, such litigation could be time consuming
and expensive, and could result in the diversion
of the Company's time, attention and resources, any of
which could have a material adverse effect on
its business, results of operation and financial
condition. Any claims from third parties may
also result in limitations on the Company's ability to use the
trademarks and other intellectual property
subject to such claims unless the Company enters into
agreements with third parties responsible for
such claims. Said agreements may not be available on
commercially reasonable terms. Despite its
efforts to protect its proprietary rights from unauthorized use or
disclosure, parties may attempt to disclose,
obtain or use the Company's proprietary information. See
"Business- Intellectual Property".
17. Year 2000 Risks.
The Company has begun to assess the Year 2000
readiness of its software. It is also in the
process of assessing third party vendors, licensors, and
providers of hardware, software and services
regarding their Year 2000 readiness. Following these
assessments, the Company will attempt to make an
evaluation of its state of readiness, potential
risks and costs, and to determine whether a
contingency plan is necessary. See "Management's Discussion
and Analysis of Financial Condition and Results
of operations".
<PAGE>
18. Best Efforts, Self Underwritten,
Minimum-Maximum Offering.
The offering is being made by the Company,
without an underwriter, on a "best efforts, 50%
or none" basis. There can be no assurance that the
minimum offering can be completed. This is
especially true in light of the fact that no underwriter is being
utilized, and that neither the Company nor any
of its management is experienced in the sales of
securities. Proceeds from the sale of the Units
offered hereby will be placed into an escrow account pending
the sale of all of the Units offered under the
minimum offering, and therefore unavailable to
purchasers for other purposes. Subscribers may
find funds unavailable to them for up to 180 days and then
returned without interest if all the Units being
offered under the minimum offering are not sold. If only
the minimum offering is completed, the Company
will realize approximately $160,000 (after deduction
of the costs and expenses of the offering), and
will be limited in its ability to achieve all of its
objectives as proposed herein. Furthermore,
there will be a greater likelihood that investors will lose
their entire investment. Similarly, if more than
the minimum offering but significantly less than the maximum
offering is completed, investors will have
subscribed for securities in a company of relatively limited
financial capacity and the risk of losing there
entire investment may be substantially increased. It
the maximum offering is completed, the costs and
expenses of the offering will be approximately
10% of the aggregate offering price and 20% of
the aggregate offering price if only the minimum
offering is completed. See "Business", "Use of
Proceeds" and the Cover Page.
19. Future Capital Needs; Uncertainty of
Additional Financing.
The Company presently anticipates that the net
proceeds from the maximum offering herein,
together with available funds, will be sufficient to meet
its anticipated needs for at least the next 12
months. It may require additional funds in the future in
order to fund more rapid expansion, to develop
new and enhanced services, to respond to competitive
pressures or to acquire complementary
businesses, technologies or services. Furthermore, if only
the minimum offering is completed (or if
significantly less than the maximum offering is completed), the
Company believes that there is an increased
likelihood that additional financing may be required. In
any event, here can be no assurance that any
required additional funding will be available on terms
favorable to it, or at all. If additional funds
are raised by the issuance of more equity securities, then
existing shareholders may experience dilution of
their ownership interest and such securities may have rights and
privileges senior to those of the holders of the
Company's common stock. If additional funds are
raised by the issuance of debt securities, their
issuance may impose certain limitations on the
Company's operations, including limitations on
the payment of dividends. If adequate funds are not
available, or not available on reasonable terms,
the Company may not be able to fund expansion,
successfully promote its name, take advantage of
acquisition opportunities, develop or enhance
services or respond to competitive pressures,
which, in turn, could have a material adverse effect on
its business, results of operations and
financial condition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations".
20. Control by Principal Shareholders.
<PAGE>
The Company's Certificate of Incorporation does
not provide for cumulative voting in connection
with the election of directors. After the minimum
offering (assuming no exercise of the Redeemable
Warrants offered herein), the Company's current principal
shareholders (owners of 5% or more of Company's
common stock and/or officers and directors) will
own approximately 93.3% of the outstanding
shares of its Common Stock. Similarly, after the
maximum offering, the Company's principal
shareholders will own approximately 87.4% of the outstanding
shares of its common stock. Accordingly, in
either case, the current principal shareholders will be able
to control the management policies and conduct
of the business of the Company. See "Principal
Shareholders" and "Description of Units".
21. Shares Eligible for Future Sale.
The prevailing market price, if any, of the
Units, Common Stock and Warrants after this
offering could be adversely affected by sales of Common Stock
by the Company's holders of Common Stock already
outstanding. All of the 5,553,772 shares of the outstanding
Common Stock are "restricted securities", and in
the future, after being held for a period of one
year, may be sold in compliance with Rule 144
adopted under the Securities Act of 1933, as amended.
Rule 144 provides, in essence, that a person
after holding "restricted securities" for a period of
one (1) year, may sell an amount that does not
exceed, within any three month period, the greater of
one percent of the Company's shares then
outstanding (i.e. one percent would equal 55,537 shares as of the
date of this Prospectus, 59,537 shares
immediately subsequent to the successful completion of the
minimum offering herein, and 63,537 shares
immediately subsequent to the successful completion of the
maximum offering herein, in each case, excluding
any exercise of the Redeemable Warrants offered
herein), or the average weekly trading volume
during the four (4) weeks preceding such sale. The amount
of "restricted securities" which a person, who
is not an affiliate of the Company, may sell is not
limited when his or her shares are held for over
two (2) years. The sale of shares under Rule 144 may have a
depressive effect upon the market price of the
Company's securities, should such a market
exist, and may make it difficult for the Company
to raise additional capital through the issuance of more
securities. Finally, the exercise of the
Redeemable Warrants, of which there can be no assurance,
may also have a depressive effect upon the
market price of the Company's Common Stock, should one exist.
See "Certain Transactions", "Description of
Units, Certain Market Information",and "Management's
Discussion and Analysis of Financial Condition
and Results of Operations-Liquidity and Capital
Resources".
22. No Public Market; Determination of Offering
Prices, Volatility.
Prior to this offering, there has been no public
market for any securities of the Company and
there can be no assurance that an active trading market
for the securities offered herein will develop
after this offering, or, if developed, be sustained. The
Company anticipates that, upon completion of
this offering, the Units, Common Stock and Redeemable Warrants
will be eligible for listing on the NASD
Over-the-Counter Electronic Bulletin Board
("0TC:BB"). If for any reason, however, the
Company's securities are not eligible for continued
listing or a public trading market does not
develop, purchasers of the Units, Common Stock and Redeemable
<PAGE>
Warrants may have difficulty selling their
securities should they desire to do so. If the Company is
unable to, satisfy the requirements for
quotation on the OTC:BB, trading, if any, in the Units, Common
Stock and Redeemable Warrants offered hereby,
would be conducted in the over-the-counter
market in what are commonly referred to as "pink
sheets". As a result, an investor may find it more
difficult to dispose of, or to obtain accurate
quotations as to the price of, the securities offered hereby. The
above-described rules may materially adversely
affect the liquidity of the market for the Company's
securities.
The initial public offering price of the Units,
as well as the exercise price of the Redeemable
Warrants was determined by the Company based upon several
factors such as the Company's financial
condition and prospects, market prices of similar
securities of comparable publicly traded
companies, certain financial and operating information of companies
engaged in similar activities to those of the
Company and general conditions of the securities market.
They may not be indicative of the market price,
if any, for the Units, Common Stock or the Redeemable
Warrants in the trading market after this
offering. The market price of the securities offered herein,
if any, may decline below the initial public
offering price. The stock market has experienced extreme price
and volume fluctuations. The market prices of
the securities of internet related companies have
been especially volatile. In the past,
securities class action litigation has often been instituted against a
company following periods of volatility in the
market price of its securities. If instituted against the
Company, regardless of the outcome, such
litigation could result in substantial costs and a diversion of
managements's attention and resources, and have
a materially adverse effect on the Company's business,
results of operations and financial condition.
23. Penny Stock Regulations.
The Securities and Exchange Commission has
adopted regulations which generally define a
"penny Stock" to be any equity security that has a
market price (as defined) of less than $5.00 per
share or an exercise price of less than $5.00 per share,
subject to certain exceptions. The Company's
securities may become subject to rules that impose
additional sales practice requirements on
broker-dealers who sell such securities to persons other than
established customers and accredited investors
(generally those with a net worth in excess of $1,000,000
or annual income exceeding $200,000, or $300,000
together with their spouse). For transactions
covered by these rules, the broker-dealer must
make a special suitability determination for the
purchase of such securities and must have
received the purchaser's written consent to the transaction
prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the
transaction, of a disclosure schedule prepared by the Securities
and Exchange Commission relating to the penny
stock market. The broker-dealer also must disclose the
commission payable to the broker-dealer and the
registered representative, current quotations
for the securities and, if the broker-dealer is
the sole market maker, the broker-dealer must disclose
this fact and the broker-dealer's presumed
control over the market. Finally, monthly statements must be
sent disclosing recent price information for the
penny stock held in the account and information on the
limited market in penny stocks. Consequently,
the "penny stock" rules may restrict the ability of
broker-dealers to sell the Company's securities
in the secondary market, if one is formed.
<PAGE>
24. Dilution.
The public investors in the Units offered hereby
will suffer an immediate substantial dilution
because the net tangible book value per share of Common
Stock after the offering (minimum or maximum)
will be substantially less than the public offering
price (assuming no value is attributable to the
Redeemable Warrants contained in the Units). See "Dilution.
25. Possible Future Dilution to Shareholders.
The Company is presently authorized to issue up
to 25,000,000 shares of Common Stock, $.001 par
value, without further shareholder approval.
Presently, there are 5,553,772 shares issued and
outstanding. If the minimum offering is
successfully completed, there will be 5,953,772
shares issued and outstanding. If the maximum offering is
successfully completed, there will be 6,453,772
shares issued and outstanding. Even in the event all of
the Redeemable Warrants offered herein under the
maximum offering are exercised, of which there
can be no assurance, there will be 8,853,772
shares issued and outstanding. Accordingly, the Company
can issue, at anytime(s), up to an additional
16,146,228 shares of Common Stock, $.001 par
value, possibly for nominal consideration,
without shareholder approval. This would result in the
proportionate dilution of the equity and voting
positions of the then existing shareholders. See
"Dilution" and "Capitalization".
26. No Dividends and None Anticipated.
To date, no dividends have been paid on the
Common Stock of the Company. It is anticipated
that income received from operations, if any, will be
devoted to the Company's future operations
and/or expansion. See "Description of
Securities-Dividends".
27. Broad Discretion in Application of Net
Proceeds.
All of the net proceeds of the offering (either
minimum or maximum) have been allocated to
working capital and general corporate purposes.
Accordingly, the Company's management will have
broad discretion as to the application of such
proceeds. In this regard, a portion of the funds
allocated to working capital will be utilized to pay the
salaries of the Company's officers. The Company
does not plan to enter into employment contracts with its
officers at this time. Accordingly, their salary
increases, if any, cannot be predicted. See Risk Factor
Number 11, "Use of Proceeds" and
Management-Executive Compensation".
28. Non-Arm's Length Transactions.
The shares of Common stock issued to certain of
the present shareholders were issued for
arbitrarily determined consideration and were not negotiated
at arm's length. See "Certain Transactions" for
further discussion of this including related
party transactions. The Company has not adopted
any provisions, resolutions or bylaws regarding
related party transactions nor does it intend to
do so in the future.
<PAGE>
29. Current Prospectus, Warrant Exercise and
Redemption Provisions.
Holders of the Redeemable Warrants will have the
right to exercise the Redeemable Warrants only
if a current prospectus is then in effect, and only
if such shares are qualified for sale under
applicable state securities laws of the states in which the
Redeemable Warrantholders reside. Pursuant to
Section 10(a)(3) of the Securities Act of 1933, as
amended, prospectus is considered "current" up
until the later of nine months from the date of the prospectus
or 16 months from the date of the audited
balance sheet in its financial statements contained therein
(i.e. July 31, 2000). As of the date of this
Prospectus, the Units offered hereby, and the shares of Common
Stock and Warrants offered contained therein
have been qualified in the State of New York only.
Accordingly, currently, residents of only New
York (or non-U.S. residents) can exercise Warrants.
Additionally, at any time, commencing on the
date of this Prospectus, the Warrants may be
redeemed by the Company, in whole or in part, upon not
less than 30 days' prior written notice at a
price of $.01 per Warrant. While the Redeemable Warrants may
be exercised during the period from the notice
until the date of redemption, the holder may be unable
(for financial or other reasons) to exercise the
Warrants within the time of receipt of the
redemption notice and the redemption date, even
if it appears to be profitable to do so. In other words, the
notice to redeem may force the holders to
exercise the Warrants and pay the exercise price at a time
when it may be disadvantageous for holders to do
so, or to sell the Warrants at the then current market
price when they might otherwise wish to hold the
Warrants, or to accept the redemption price,
which, at the time the Warrants are called for
redemption, is likely to be substantially less than the
market value of the Warrants. Finally, if a
notice of redemption of the Redeemable Warrants were issued during a
time when the Prospectus was not current, no
warrantholders would be permitted to exercise
his or her Redeemable Warrants thus rendering
them virtually valueless at a time when the market
value, if any, could be significantly higher.
See "Description of Units-Redeemable Warrants".
It is the intention of the Company to maintain a
current prospectus during the term of the
Redeemable Warrants, and to attempt to meet such state law
requirements in those states in which the
Redeemable Warrants are sold in the Offering. However, the
Redeemable Warrants may be deprived of any value
if a current prospectus concerning the Common Stock
underlying such Redeemable Warrants is not kept
effective or such shares are not registered in
the state in which the warrantholders then
resides.
30. Public Bears Risk of Loss.
The capital required by the Company to proceed
with its plan of operation and carry on its
business is being sought from the proceeds of this offering.
Therefore, public investors will bear most of
the risk of the Company's operations. See "Dilution" and
"Use of Proceeds".
31. Foreign Currency Risk.
<PAGE>
Although the Company is a Nevada corporation,
its operations emanate in Canada. Accordingly,
most of its revenues, if any, may be in Canadian
dollars. In recent years, the currency exchange
rate of the Canadian dollar into the US dollars has steadily
dropped. There can be no assurance that this
trend will not continue. Such continued lowering of
the value of the Canadian dollar vis a vis the
US dollar, may have a materially adverse effect on the
Company's business, results of operations and
financial condition.
32. Forward-Looking Statements; Market Data.
This Prospectus contains certain statements and
information relating to the Company that are
based upon the beliefs of management as well as
assumptions made by, and information currently
available to, the Company. When used in this Prospectus, the
words "anticipate", "believe", "estimate",
"expect", "could", "will", "may" and similar expressions,
are intended to identify forward-looking
statements. Such statements reflect the current views of
management with respect to future events and are
subject to certain risks, uncertainties and assumptions,
including those described in this Prospectus.
Should one or more of these risks or uncertainties
materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those described
herein.
This Prospectus contains market information
related to the Company and the internet. Such
market information may include projections that are
based upon a number of assumptions. The
assumptions include that: (i) no catastrophic failure of the
internet will occur; (ii) the number of people
online and the total number of hours spent online will increase
significantly over the next five years; (iii)
the value of online advertising dollars spent per online user
hour will increase; (iv) the download speed of
content will increase dramatically; and (v) internet
security and privacy concerns will be adequately
addressed. If any one or more of these assumptions turns
out to be incorrect, actual results may differ
from the projections based on such assumptions. The
internet related markets may not grow over the
next three to four years. The failure of these markets to
grow at projected rates may have a material
adverse effect on the Company's business, results of
operations and financial condition, and the
market prices of its securities.
In addition to the other information in this
Prospectus, the above factors should be
carefully considered in evaluating the Company and its business and
before purchasing the Units offered hereby.
THE COMPANY
The Company, a development stage company,
focuses on the development of web-based business
opportunities which emphasize content,
community, commerce and infrastructure. The
Company is presently engaged in the development of rich
media (streaming audio and video content) for
the web, video production services for the web, web
design and co-location/hosting services, the
development of niche web-based communities which are
vertically integrated and have e-commerce
components, and online direct marketing.
<PAGE>
The Company was incorporated in the State of
Nevada in 1998. Its principal executive offices
are at 34314 Marshall Road, Suite 203, Abbotsford, BC,
V2S1L2, Canada. The telephone number is
604-504-5811.
USE OF PROCEEDS
The Company, after deduction of the estimated
expenses of the issuance and distribution of the
securities offered herein, will receive net
proceeds of $160,000 if the minimum offering is
successfully completed, and $360,000 if the maximum offering
is successfully completed.
In the event of the successful completion of
either the minimum or maximum offering, the
Company intends to use the net proceeds thereof for
working capital and other general corporate
purposes, including advertising. The Company may also use
a portion of the proceeds for strategic
alliances and acquisitions. The Company has not yet determined
the amount of net proceeds to be used
specifically for each of the foregoing purposes. Accordingly,
management will have significant flexibility in
applying the net proceeds of either the minimum or
maximum offering. See Risk Factors "Expansion
Risks" and "Broad Discretion as to Use of Proceeds".
The Company anticipates that it will commence
the application of the proceeds of this offering
immediately upon availability (i.e. completion
of the minimum offering) and continuing over the
following 12 months. It believes that the proceeds of the
maximum offering will be sufficient to satisfy
its requirements over such period without the
necessity of obtaining additional funds.
However, the Company believes that if only the minimum
offering is completed, there is an increased
likelihood that additional funds may be required which may not
be available to it, or, if available, not on
reasonable terms. In addition, a change in circumstances or
business conditions may cause a need for
additional financing even if the maximum offering is
completed. Finally, any proceeds which the
Company receives from the exercise, if any, of the Warrants
contained in the Units offered herein shall be
applied to working capital.
DIVIDEND POLICY
The Company has not declared or paid any cash
dividends on its common stock nor does it
anticipate paying any on its common stock in the
foreseeable future. Furthermore, it expects that
any future earnings will be retained to finance the
Company's operations and expansion. The payment
of cash dividends in the future will be at the
discretion of the Board of Directors and will
depend upon the Company's earnings levels, if any, capital
requirements, any restrictive loan covenants and
other factors the Board may deem relevant.
CAPITALIZATION
The Company is currently authorized to issue
25,000,000 shares of $.001 par value Common
Stock. As of the date Of this Prospectus, 5,553,772,
shares of Common stock, which were purchased
<PAGE>
from the Company for a total capital contribution of
$236,609, are outstanding. See "Certain
Transactions" and "Dilution". The following table shows the
number of issued and outstanding shares of
Common Stock of the Company as of the date of this
Prospectus and which will be outstanding in the
event of the successful completion of both the minimum
and maximum offerings herein:
<TABLE>
<S> <C>>
Shares
Outstanding---------------------------------------------------5,553,772
Shares to be outstanding
in the event of the successful
completion of the minimum
offering------------------------------------------------------5,953,772
Shares to be outstanding
in the event of the successful
completion of the maximum
offering------------------------------------------------------6,353,772
</TABLE>
This table does not reflect the effect of the
possible exercise of the Redeemable Warrants
offered herein. Each share of Common Stock has equal
noncumulative voting rights and participates
equally in dividends, if any. The Common Stock has no
sinking fund provisions applicable thereto. The
Shares are fully paid for and nonassessable when issued.
Except for the Redeemable Warrants offered
herein, there are no outstanding options, warrants, or
rights to purchase any of the securities of the
Company and the Company does not plan to issue any. See
"Dilution".
The following table sets forth the
capitalization of the Company at March 31, 1999,
on an actual (audited) basis and on a pro forma basis
(unaudited) after giving effect to the minimum
offering herein (assuming no exercise of the Redeemable Warrants
offered herein). See "Use of Proceeds". This
table should be read in conjunction with the Company's
Financial Statements and Notes thereto, as well
as "Summary Financial Data", and the notes thereto,
appearing elsewhere in this Prospectus:
<TABLE>
<CAPTION>
March 31, 1999
Actual Pro Forma
(audited) (unaudited)
<S> <C> <C>
Debt:
Short-term debt $436 $436
Long-term debt - -
Stockholders's Equity:
Common Stock $5,544 $9,544
<PAGE>
Additional Paid-in Capital 231,065 387,065
Deficit Accumulated During
Development Stage (21,726) (21,726)
Total Stockholders' Equity $214,883 $374,883
Total Capitalization $215,319 $375,319
</TABLE>
DILUTION
The net tangible book value of the Company as of
March 31, 1999 (based upon the 5,543,772 shares
then outstanding) was approximately $.04 per
share of Common Stock. Net tangible book value
per share is equal to the Company's total tangible
assets less its total liabilities, divided by
the total number of outstanding shares of Common Stock at March
31, 1999. After giving effect to the sale by the
Company of the minimum number of Units offered
hereby, 400,000, the pro forma net tangible book
value per share as of March 31, 1999 would be
approximately $.06. This would result in an
immediate dilution to new shareholders (i.e. the
difference between the purchase price of the
Units, assuming no value assigned to the Redeemable Warrants, and
the net tangible book value per share after the
minimum offering) of $.44 per share, or
approximately 88% of the purchase price, and an
increase in the net tangible book value to the present
shareholders, at no additional cost to them, of
approximately $.02 per share.
Alternatively, after giving effect to the sale
of the maximum number of Units being offered by
the Company hereby, 800,000, the pro forma net
tangible book value per share as of March 31,
1999 would be approximately $.09. This would result
in an immediate dilution to new shareholders of
$.41 per share, or approximately 82% of the purchase
price, and an increase in the net tangible book
value to the present shareholders, at no additional
cost to them, of approximately $.05 per share.
The following table illustrates this per share
dilution under both the minimum and maximum
offerings:
<TABLE>
<CAPTION>
Minimum Offering Maximum Offering
<S> <C> <C>
Public offering price per share-------------$.50(1) $.50(1)
Net tangible book value per
share as of March 31, 1999 ----------- -$.04 $ .04
Increase per share attributable
to new shareholders --------------------$.02(2) $.05(3)
Pro forma net tangible book value
per share as of March 31, 1999 after
offering------------------------------------$.06(2) $.09(3)
Dilution per share to new shareholders------$.44 $.41
<PAGE>
<FN.
<1>
Assuming, for purposes of this table, no
value is assigned to the Redeemable Warrants
contained in
the Units offered hereby.
<2>
Includes proceeds of minimum offering net of
costs and expenses. See "Use of Proceeds".
<3>
Includes proceeds of maximum offering net of
costs and expenses. See "Use of Proceeds".
</FN>
</TABLE>
The following tables summarize, as of March 31,
1999, the number of shares of Common Stock
purchased from the Company, the total
consideration and the average price per share
paid to the Company by existing stockholders and to be paid
by purchasers in the minimum and maximum
Ooerings, assuming that no value is attributed
to the Redeemable Warrants:
<TABLE>
<CAPTION>
Minimum Offering (400,000 Units)
% of Total Average
Total % of Capital Effective Price
Shares Total Cash Cash Per
Purchased Shares Contribution Contribution Share
<S> <C> <C> <C> <C> <C>
New Share-
holders(l)-----400,000 06.7% $200,000 45.8% $.50
Old Share
holders------5,543,772 93.3% 236,609 54.2% $.04
TOTAL--------5,943,772 100.0% $436,609 100.0% $.07
<CAPTION>
Maximum Offering (800,000 Units)
<S> <C> <C> <C> <C> <C>
New Share
holders(l)----800,000 12.6% $400,000 62.8% $.50
Old Share
holders ----5,543,772 87.4% 236,609 37.2% .04
TOTAL-------6,353,772 100.0% $636,609 100.0% $.10
<FN>
<1>
Does not reflect the issuance of Common
Stock issuable upon the exercise of the
Redeemable Warrants contained in the Units offered herein.
</TABLE>
BUSINESS
The Company, incorporated on November 18, 1998,
is a development stage corporation, focusing on
the development of web-based business
opportunities which emphasize content,
community, commerce and infrastructure. The Company is presently
<PAGE>
engaged in the development of rich media
(streaming audio and video content) for the web, video
production services for the web, web design and
co-location/hosting services, the development of
niche web-based communities which are vertically
integrated and have e-commerce components, and
online direct marketing.
For the period from the Company's incorporation
on November 18, 1998 through March, 1999, the
Company's activities related primarily to the
recruitment of independent contractors and
suppliers, and the establishment of its organizational and
technical infrastructure. As the Company's
business develops, it is expected that revenues will come partly
from sales of advertising and direct marketing
opportunities on its websites. It is also anticipated that
revenue will be realized from the sale of the
Company's online video production services. Further into the
Company's development it is anticipated that
e-commerce will play an increasing revenue role. E-
commerce revenues will likely be derived from
revenue-sharing agreements with merchants whose sites are
affiliated with the Company's niche communities
now being developed. Any revenues the Company derives from
such revenue sharing arrangements will be
recognized by the Company upon notification from
its e- commerce merchant partners of sales
attributable to the niche communities of which
they are part.
Industry Overviews
The internet is a significant and rapidly
growing global medium for collecting and
exchanging information, communicating, entertaining and
conducting business. The growth of this medium
is being driven by the development of compelling internet
content, increasing consumer awareness of the
internet and inexpensive web access.
Internet Advertising and E-commerce.
The internet allows advertisers to target
specific audiences while tracking impression
levels, user demographics and advertisement effectiveness.
The internet is becoming a powerful e-commerce
platform. The Company believes that as the
volume of e-commerce transactions expands,
retailers will offer a greater variety of products and services
over the internet. The Company intends to
develop its e-commerce revenue streams in cooperation with
established e-commerce retailers.
Content.
A vast amount of content is being added to the
internet every day and the quality of this
content varies tremendously. The Company believes that quality
internet content is typically found on the topic
specific sites which tend to be widely dispersed. The
company believes that substantial value will be
created by developing vertical sites which are topic
specific in nature and aggregate quality content
across narrowly defined ranges of subject matter. The Company
also intends to focus on adding rich media to
the communities it plans to develop. The Company
believes that rich media (streaming audio and
video) will become more accessible to internet users in the
coming months and years.
<PAGE>
Community.
Internet users seek organized online communities
specific to given products, information or
services. The Company believes that, when structured
around proprietary and nonproprietary databases
which encourage continued usage, a significant core of
frequent users can result. The Company believes
that users are seeking (i) indexing that enables
users to efficiently locate quality and relevant
content, (ii) proprietary content and data developed by
knowledgeable contributors, and (iii) associated
services which enhance the value of the community. In
addition, the Company believes that internet
advertisers and e-commerce marketers are seeking highly
targeted audiences with interest in purchasing
goods and services online.
Infrastructure.
Management believes that as the web expands and
develops, there will be an increasing number of
individuals, businesses and organizations who
require sophisticated web services - be they
online video production, encoding, editing, distribution of
streaming content, web design, co-location, or
web-hosting. The Company believes that there is
substantial demand for these services, and that
such demand will continue to grow in the coming years
as more and more companies seek to develop a
sophisticated web presence.
The Solution
The Company, through its (i) commitment to
delivering proprietary and nonproprietary
information across narrowly defined topic areas, (ii)
understanding of efficient online information
delivery systems, (iii) dedication to the permission-based opt-in
model of direct marketing, and (iv) internal
infrastructure for the delivery of web services and online
streaming audio and video delivery, hopes to
provide an engaging experience for those who use its
websites, and effective marketing solutions for
its advertisers through the provision of highly targeted
advertising opportunities across narrowly
defined topic areas.
The Strategy
The Company's objective is to become a leading
source for streaming video content and
production, vertical community development, web
infrastructure services, e-commerce and online
direct marketing. The key elements of the Company's strategy
include:
Building Databases of Highly Targeted
Information.
The Company believes that developing and
delivering proprietary and nonproprietary
databases of information which are specific to each
community's topic area is critical to attracting
and retaining users, advertisers and e-commerce partners. The Company
believes that aggregating narrowly defined
information resources and making it easily
searchable and accessible is the most effective
way of creating useful online communities.
<PAGE>
Increasing Usage to Facilitate E-commerce.
The Company believes that successful communities
need to focus on creating opportunities for
their advertisers to sell goods and services to users
of the communities. By having this as the
Company's focus from the start, the Company believes it
will be differentiating its communities from
others which have tended to focus less on the e-commerce
aspect.
Increasing Usage to Facilitate and Opt-in
Permission Based Market Infrastructure.
The Company believes that its community of users
will voluntarily opt- in to the various direct
marketing programs it creates. It is anticipated that
users will do so in return for the providing of
information and services which they find to be of value. By
creating one-to-one relationships with users,
the Company believes it will have a unique and effective
infrastructure into which it can sell advertising space and
direct marketing opportunities.
Developing and Serving Rich Media.
The Company believes that the future of Internet
content is in the production and distribution of
streaming audio and video content. It is the
objective of Management to use the Company's
already existing web-video production infrastructure to
create rich media content for its vertical
communities, thereby differentiating its sites from various
other communities which tend to focus on text
based information only.
Governmental Regulation and Legal Uncertainties
There is an increasing number of laws and
regulations pertaining to the internet. In
addition, a number of legislative and regulatory proposals are under
consideration by federal, state, local and
foreign governments and agencies. Laws or regulations
may be adopted with respect to the internet
relating to liability for information retrieved from or
transmitted over the internet, online content
regulation, user privacy, taxation and quality of products and
services. Moreover, the applicability to the
internet of existing laws governing issues such as
intellectual property ownership and
infringement, copyright, trademark, trade secret, obscenity, libel,
employment and personal privacy is uncertain and
developing. Any new legislation or regulation, or the
application or interpretation of existing laws,
my decrease the growth in the use of the internet, which could
in turn decrease the demand for the Company's
service, increase the Company's cost of doing business or
otherwise have a material adverse effect on the
Company's business, results of operations and
financial condition.
Liability for Information Retrieved from the
Company and the Internet.
Content may be accessed on Stratabase.com or on
the web sites of the Company's partners and this
content may be downloaded by users and
subsequently transmitted to others over the
<PAGE>
internet. This could result in claims against the Company based
upon a variety of theories, including
defamation, obscenity, negligence, copyright or trademark
infringement or other theories based upon the
nature, publication and distribution of this content.
These types of claims have been brought,
sometimes successfully, against providers of internet
services in the past. The Company could also be
exposed to liability with respect to third party content
that may be posted by users in chat rooms or
message boards. It is also possible that if any
information, including information deemed to
constitute professional advice such as legal, medical,
financial, or investment advice, provided on
Stratabase.com contains errors or false or misleading
information, third parties could make claims
against the Company for losses incurred in reliance upon such
information. In addition, Stratabase.com
contains human-filtered annotated links to other web
sites. As a result, the Company may be subject
to claims alleging that, by directly or indirectly
providing links to other web sites, the Company
is liable for copyright or trademark infringement or wrongful
actions of third parties through their
respective web sites. While the Company attempts to reduce its
exposure to potential liability, the
enforceability and effectiveness of such measures are uncertain.
Any imposition of liability could have a
material adverse effect on the Company's business, results of
operations and financial condition. Even to the
extent that such claims do not result in liability to the
Company, it could incur significant costs in
investigating and defending against such claims. Potential
liability for information disseminated through
Stratabase.com could lead the Company to implement measures to
reduce its exposure to such liability, which may
require the expenditure of substantial resources
and limit the attractiveness of the Company's
service to users.
Online Content Regulations.
Several federal and state statutes prohibit the
transmission of certain types of indecent,
obscene or offensive content over the internet to certain
persons. In addition, pending legislation seeks
to ban internet gambling and federal and state
officials have taken action against businesses
that operate internet gambling activities. The enforcement of
these statutes and initiatives, and any future
enforcement activities, statutes and initiatives, may result
in limitations on the type of content and
advertisements available on Stratabase.com. Legislation
regulating online content could dampen the
growth in the use of the internet generally and decrease the
acceptance of the internet as an advertising and
e-commerce medium, which could have a material adverse
effect on the Company's business, results of
operations and financial condition.
Privacy Concerns.
The Federal Trade Commission (the "FTC") may be
adopting new regulations regarding the
collection and use of personal identifying information
obtained from individuals when accessing web
sites, with particular emphasis on access by minors. Such
regulation may include requirements that
companies establish certain procedures to, among other
things: (i) give adequate notice to consumers
regarding information collection and disclosure practices,
(ii) provide consumers with the ability to have
personal identifying information deleted from a company's
data base, (iii) provide consumer with access to
their personal information and with the ability to
rectify inaccurate information, (iv) clearly
<PAGE>
identify affiliations or a lack thereof with third parties that may
collect information or sponsor activities on a
company's web site and (v) obtain express parental consent
prior to collecting and using personal
identifying information obtained from children under 13
years of age. Such regulation may also include
enforcement and redress provisions. While the
Company has implemented or intends to implement
programs designed to enhance the protection of
the privacy of its users, including children,
there can be no assurance that such programs will conform
with any regulations adopted by the FTC.
Moreover, even in the absence of such regulations, the FTC
has begun investigations into the privacy
practices of companies that collect information on the
internet. One such investigation has resulted in
a consent decree pursuant to which an internet company
agreed to establish programs to implement the
principles noted above. The Company may become subject to
such an investigation, or the FTC's regulatory
and enforcement efforts may adversely affect the
ability to collect demographic and personal
information from users, which could have an adverse effect
on the Company's ability to provide highly
targeted opportunities for advertisers and e-commerce
marketers. Any such developments would have a
material adverse effect on the Company's
business, results of operations and financial
condition. It is also possible that "cookies" (information keyed
to a specific server, file pathway or directory
location that is stored on a user's hard drive, possibly
without the user's knowledge) used to track
demographic information and to target advertising may become
subject to laws limiting or prohibiting their
use. A number of internet commentators, advocates and
governmental bodies in the United States and
other countries have urged the passage of laws
limiting or abolishing the use of cookies.
Limitations on or the elimination of the Company's use of cookies
could limit the effectiveness of the Company's
targeting of advertisements, which could have a material
adverse effect on the Company's business,
results of operations and financial condition. The European
Union (the "EU") has adopted a directive (the
"Directive") that imposes restrictions on the
collection and use of personal data. Under the
Directive, EU citizens are guaranteed certain rights,
including the right of access to their data, the
right to know where the data originated, the right to have
inaccurate data rectified, the right to recourse
in the event of unlawful processing and the right to withhold
permission to use their data for direct
marketing. The Directive could, among other things, affect U.S.
companies that collect information over the
internet from individuals in EU member countries, and may
impose restrictions that are more stringent than
current internet privacy standards in the United
States. In particular, companies with offices
located in EU countries will not be allowed to send
personal information to countries that do not
maintain adequate standards of privacy. The Directive
does not, however, define what standards of
privacy are adequate. As a result, there can be no assurance
that the Directive will not adversely affect the
activities of entities such as the Company that engage in
data collection from users in EU member
countries.
Data Protection.
Legislative proposals have been made by the
federal government that would afford broader
protection to owners of databases of information (e.g.
stock quotes and sports scores). Such protection
already exists in the EU. If enacted, this legislation
could result in an increase in the price of
services that provide data to web sites. In addition, such
legislation could create potential liability for
unauthorized use of such data. Either of these possibilities
could have a material adverse effect on the
Company's business, results of operations and financial
condition.
<PAGE>
Internet Taxation.
A number of legislative proposals have been made
at the federal, state and local level, and by
certain foreign governments, that would impose
additional taxes on the sale of goods and
services over the internet and certain states have taken measures
to tax internet-related activities. Although
Congress recently placed a three year moratorium on state
or local taxes on internet access or on
discriminatory taxes on electronic commerce, existing state or
local laws were expressly excepted from this
moratorium. Further, once such moratorium is
lifted, some type of federal and/or state taxes
may be imposed upon internet commerce. Such legislation
or other attempts at regulating commerce over
the internet may substantially impair the growth of
commerce on the internet and, as a result,
adversely affect the Company's opportunity to derive
financial benefit from such activities.
Arrangements with E-Commerce Partners.
The Company intends to enter into agreements
with certain e-commerce partners under which the
Company may be entitled to receive a share of
certain revenues generated from the purchase of
goods and services through direct links from
Stratabase.com. Such agreements may expose the
Company to additional legal risks and uncertainties,
including potential liabilities to consumers of
such products or services by virtue of the Company's involvement
in providing access to such products or
services, even if the Company does not itself provide such
products or services. Any indemnification
provided to the Company in its agreements with these parties, if
ever available, may not be adequate.
Domain Names.
Domain names are the user's internet
"addresses". The current system for registering,
allocating and managing domain names has been the subject of
litigation, including trademark litigation, and
of proposed regulatory reform. The Company has
registered the domain "Stratabase.com. Although
the Company will seek to register "Stratabase.com"
as a trademark, third parties may bring
infringement claims against the Company for use of this
trademark. There can be no assurance that the
Company's domain names will not lose their value, or that
the Company will not have to obtain entirely new
domain names in addition to or in lieu of its current
domain names if reform efforts result in a
restructuring in the current system.
Jurisdictions.
Due to the global nature of the internet, it is
possible that governments of states and foreign countries
might attempt to regulate the Company's
transmissions or prosecute the Company for
violations of their laws. Such laws may be modified, or new laws
enacted, in the future. Any of the foregoing
developments could have a material adverse
effect on the Company's business, results of
operations and financial condition. In addition, as the
Company's service is available over the internet
in multiple states and foreign countries, such jurisdictions
may claim that the Company is required to
qualify to do business as a foreign corporation in each such
<PAGE>
state or foreign country. Failure by the Company
to qualify as foreign corporation in a jurisdiction
where it is required to do so could subject the
Company to taxes and penalties and could result in the
inability of the Company to enforce contracts in
such jurisdictions. Any such new legislation or
regulation, the application of laws and
regulations from jurisdictions whose laws do not currently apply
to the Company's business, or the application of
existing laws and regulations to the internet and other
online services could have a material adverse
effect on the Company's business, results of operations and
financial condition.
Intellectual Property
The Company seeks to protect its proprietary
rights, but its actions may be inadequate to
protect its patents (if issued), trademarks or other
proprietary rights or to prevent others from
claiming violations of their proprietary rights. Third parties may
infringe or misappropriate the Company's
proprietary rights, which could have a material adverse
affect on the Company's business, results of
operations and financial condition. The validity,
enforceability and scope of protection of
proprietary rights in internet-related industries is uncertain and
still evolving. Furthermore, third parties may
assert infringement claims against the Company. From
time to time, the Company expects to be subject
to claims in the ordinary course of its business,
including claims of alleged infringement of the
trademarks and other intellectual property rights of third
parties by the Company. Such claims and any
resultant litigation, should it occur, could subject the
Company to significant liability for damages and
could result in the invalidation of the Company's proprietary
rights. In addition, even if the Company
prevails, such litigation could be time consuming and expensive
to defend, and could result in the diversion of
management's time and attention, any of which
could have a material adverse affect on the
Company's business, results of operations and financial
condition. Any claims from third parties may
also result in limitations on the Company's ability to use the
trademarks and other intellectual property, if
any, subject to such claims unless the Company enters
into agreements with the third parties
responsible for such claims, which may be unavailable on
commercially reasonable terms. Despite the
Company's efforts to protect its proprietary rights from
unauthorized use or disclosure, parties may
attempt to disclose, obtain or use its proprietary
information. The steps the Company has taken may
not prevent misappropriation of its proprietary information.
Competition
With the rising number of businesses competing
for users, internet advertisers' and e-commerce
marketers' spending has increased significantly.
The Company expects that such competition will
continue to increase because there are no
substantial barriers to entry into the market.
Competition may also increase as a result of industry
consolidation. Increased competition could
result in less usage of the Company's services, price reductions for its
advertising industry, reduced margins or loss of
market share, any of which would have an material
adverse effect on its business, results of
operations and financial condition. The Company will compete
for users, advertisers and e-commerce marketers
with the following:
<PAGE>
- -internet retrieval companies, search
engines and other internet "portal" companies
(such as Excite and Yahoo);
- -online content web sites (such as CNet and ZDNet);
- -online personal homepage services (such as Geocities and Theglobe.com);
- -publishers and distributors of television,
radio and print (such as CBS, Disney, NBC and Time Warner);
- -general purpose consumer online services (such
as America Online and Microsoft Network);
- -web services maintained by internet service
providers (such as AT&T, Worldnet and Earthlink).
The Company believes that its ability to compete
depends upon many factors. They include: the
quality of content, information and services it provides
compared to its competitors, the ease of the use
of the services it develops as compared to those of its
competitors, the timing and market acceptance of
new and enhanced services it or its competitors
develop, and sales and marketing efforts. Many
of the Company's existing competitors, as well as a
number of potential new competitors, have
operating histories, greater name recognition, larger
customer bases and significantly greater
financial, technical and marketing resources than the Company. This
may allow them to devote greater resources than
the Company can to the development and promotion of
its services. Such competitors may also engage
in more extensive research and development,
undertake more far-reaching marketing campaigns,
adopt more aggressive pricing policies and make more
attractive offers to existing and potential
employees, distribution partners, and advertisers and
e-commerce partners. The Company's competitors
may develop services that are equal or superior to
Stratabase.com or that achieve greater market
acceptance than Stratabase.com. In addition,
current and potential competitors have
established or may establish cooperative relationships among
themselves or with third parties to increase the
ability of their services to address the needs of advertisers and
e-commerce marketers. As a result, it is
possible that new competitors may emerge and rapidly acquire
significant market shares. The Company may not
be able to compete successfully or competitive
pressures may have a material adverse effect on
its business, results or operations and financial
condition. Finally, the Company also competes
with television, radio, cable and print (i.e.
traditional advertising media) for a share of
advertisers' total advertising budgets. If advertisers perceive the
internet or Stratabase.com to be a limited or
ineffective advertising medium, advertisers may be reluctant
to devote a significant portion, if any, of
their advertising budgets to internet advertising or
to advertise on Stratabase.com.
Employees
As of March 31, 1999, the Company had two
employees, Trevor Newton, its Chairman of the
Board, President, Secretary, Treasurer and CEO, and
Fred Coombes, its Vice President of Corporate
Development and a Director, neither of whom are
devoting their full-time efforts to the Company
(See "Management" and Risk Factor Number 12, "Limited
Staff; Conflicts of Interest") or are subject of
a collective bargaining agreement with the
Company.
Currently, the Company retains the services, on
an as needed basis, of independent contractors
<PAGE.
and/or outside consultants. If at least the minimum
offering is successfully completed, the Company
intends to continue to retain such types of service
providers for the foreseeable future also on an
as needed basis.
Properties and Equipment
The Company does not own any real property. Its
offices are approximately 750 square feet
located at 34314 Marshall Road, Suite 203, Abbotsford,
B.C., V2SlL2, Canada. It is the subject of a one
year lease which commenced on March 1, 1999, and
calls for a monthly rent of $937 (Cnd). The
Company believes that the facilities will be adequate
for the foreseeable future.
The Company leases a Bandwidth/Connectivity (-T1
line with BCTEL) which is a Fiber Optics line.
It is the subject of a three year agreement which
commenced on May 1, 1999, and calls for a
monthly fee of $1,000 (US). The Company also has a two year
contract for a Newsfeed with COMTEX which
commenced June 1, 1999. The contract requires
monthly payments of $3,400 plus royalties which
are computed as follows: 25% of all advertising
revenues received by the Company from it
providing the online Newsfeed on the Stratabase.com websites.
Finally, the Company maintains a one year term
comprehensive general liability insurance policy
with the following coverages: general liability for
$2,000,000 (Cnd), Software for $22,000 (Cnd),
Hardware for $50,000 (Cnd), Flood/Earthquake for
$272,000 (Cnd) and Replacement Costs of
contents for $100,000 (Cnd). Annual premium is $ 2,000 (Cnd).
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be
read in conjunction with the financial
statements and notes thereto appearing elsewhere herein. This
discussion contains forward-looking statements
that involve risks and uncertainties. See Risk Factor
"Forward-looking Statements; Market Data".
Operations
The Company, which was incorporated on November
18, 1998, has had no revenues from inception to
March 31, 1999 and still is in its development
stage having incurred primarily only start-up
and organizational expenses. Accordingly, the
financial results of the Company, from inception
to March 31, 1999, are not meaningful as an indication of
future operations.
The Company intends to focus its development on
web-based business opportunities which emphasize
content, community, commerce and infrastructure.
The Company is presently engaged in the
development of rich media (streaming audio and
video content) for the web, video production
services for the web, web design and co-location/hosting
services, the development of niche web-based
communities which are vertically integrated and
have e-commerce components, and online
marketing.
<PAGE>
For the period from the Company's incorporation
on November 18, 1998 through March, 1999, the
Company's activities related primarily to the
recruitment of independent contractors and
suppliers, and the establishment of its organizational and
technical infrastructure. As the Company's
business develops, it is expected that revenues will be derived
partly from the sale of advertising and direct
marketing opportunities on its websites. It is also
anticipated that revenue will be realized from
the sale of the Company's online video production services and
web services. Further into the Company's
development, it is anticipated that e-commerce
will play an increasing revenue role. E-commerce
revenues will likely come from revenue- sharing
agreements with merchants whose sites are
affiliated with the Company's niche communities that are
being developed now. Any revenues that the
Company derives from revenue sharing arrangements will
be recognized by the Company upon notification
from its e-commerce merchant partners of sales
attributable to niche communities of which they
are a part.
The expected significant costs related to the
operation of Stratabase.com will include
hardware, software, its bandwidth fiber optic line, data
acquisition costs, human resource costs, and
advertising and market costs.
Liquidity and Capital Resources
From inception through March 31, 1999, the
Company received $236,609 in net proceeds from
an investor and its founders. See "Certain
Transactions". As of March 31, 1999, the Company
had approximately $215,000 in cash and cash
equivalents. To date, the Company has had
negative cash flows. Its ability to generate significant
revenue is uncertain. The Company expects losses
from operations and negative cash flow to continue
for the foreseeable future. If the Company's has
revenues, and if its spending levels are not
adjusted accordingly, the Company may not
generate sufficient revenues to achieve profitability,
which would have a material adverse effect on
the Company's business, results of operation and
financial condition. Even if the Company
achieves profitability, it may not sustain or increase
such profitability on a quarterly or annual
basis in the future. The Company currently anticipates the net
proceeds from the maximum offering, together
with available funds, will be sufficient to meet its
anticipated needs for at least 12 months. The
Company may need to raise additional funds in the future in order to
fund more rapid expansion, to develop new or
enhanced services, to respond to competitive pressures or
to acquire complementary businesses,
technologies or services, especially if only the minimum
offering is completed or if significantly less
than the maximum offering is completed. There can be no assurance
that any required additional financing will be
available on terms favorable to the Company, or at all. If
additional funds are raised by the issuance of
the Company's equity securities, such as through the
exercise of the Redeemable Warrants offered
hereby, then existing stockholders may experience
dilution of their ownership interest and such
securities may have rights senior to those of the then existing
holders of common stock. If additional funds are
raised by the issuance of debt by the Company, the
Company may be subject to certain limitations,
on its operations. If adequate funds are not available
or not available on acceptable terms, the
Company may be unable to fund its expansion, take advantage
of acquisition opportunities, develop or enhance
services or respond to competitive pressures,
which would have a material adverse effect on
<PAGE>
the Company's business, results of operations and
financial condition.
Impact of the Year 2000
Many currently installed computer systems and
software products are coded to accept or
recognize only two digit entries in the date code field.
These systems may recognize a date using "00"
as the year 1900 rather than the year 2000. As a result
computer systems and/or software used by many
companies and governmental agencies may need to
be upgraded to comply with such Year 2000
requirements or may risk system failure or
miscalculations causing disruptions of normal
business activities.
State of Readiness.
The Company has begun to assess the Year 2000
readiness of its information technology ("IT")
systems, including the hardware and software
that enable the Company to provide and deliver
its services. The Company's assessment plan consists
of (i) quality assurance testing of its
internally developed software incorporated in
Stratabase.com; (ii) contacting third- party
vendors and licensors of material hardware, software and services that
are both directly and indirectly related to the
delivery of its services; (iii) contacting vendors of
material non-IT systems; (iv) assessment and
repair or replacement requirements; (v) repair or
replacement; (vi) implementation; and (vii}
creation of contingency plans in the event of Year 2000
failures.
Costs.
To date, the Company has not incurred any
material costs in identifying or evaluating Year
2000 compliance issues. At this time, the Company
does not possess the information necessary to
estimate the potential costs of revisions to its software
should such revisions be required or the
replacement of third-party software, hardware or services that
are determined not to be Year 2000 compliant.
Although the Company does not anticipate that
such expenses will be material, such expenses,
if higher than anticipated, could have a material adverse
effect on the Company's business, results of
operations and financial condition.
Risks.
The Company is not currently aware of any Year
2000 compliance problems relating to its
software or its systems that would have a material adverse
effect on the Company's business, results of
operations and financial condition, without taking into
account the Company's efforts to avoid or fix
such problems. There can be no assurance that the Company will
not discover Year 2000 compliance problems in
its software that will require substantial revisions
or replacements. In addition, there can be
assurance that third- party software, hardware, or services
incorporated into the Company's material systems
will not need to be revised or replaced, which could be
time consuming and expensive. The failure of the
Company to fix its software or to fix or replace
third-party software, hardware or services on a
<PAGE>
timely basis could result in lost revenues, increased
operating costs and other business
interruptions, any of which could have a material adverse effect on
the Company's business, results of operations
and financial condition. Moreover, failure to
adequately address Year 2000 compliance issues
in its software, and its systems could result in claims
of mismanagement, misrepresentation or breach of
contract and related litigation, which could be
costly and time-consuming to defend. In
addition, there can be no assurance that governmental agencies,
utility companies, internet access companies,
third-party service providers and others outside
the Company's control will be Year 2000
compliant. The failure by such entities to be Year 2000
compliant could result in a systematic failure
beyond the control of the Company, such as prolonged
internet, telecommunications or electrical
failure, which could also prevent the Company from delivering
its services, decrease the use of the internet
or prevent users from accessing Stratabase.com, any of
which would have a material adverse effect on
the Company's business, results of operations and
financial condition.
Contingency Plan.
As discussed above, the Company is engaged in an
ongoing Year 2000 assessment and has not
developed any contingency plans yet. As the
Company completes its assessment of Year 2000
readiness, the contingency plans will be
developed.
MANAGEMENT
Directors and Executive Officers of the Company
The following sets forth the names and ages of
the Company's directors and executive officers
and their positions with the Company
<TABLE>
<S> <C> <C>
Name Age Position
Trevor Newton 30 President, Secretary, Treasurer,
Chairman of the Board of Directors and
Chief Operating and Executive Officer
Fred Coombes 46 Vice President of Corporate
Development and Director
John Tarves 45 Director
</TABLE>
The Directors have been elected to serve until
the next annual meeting of stockholders to be
held on or reasonably after November 18, 1999 and until
successor(s) have been elected and qualified, or
until death, resignation or removal. The Company does
not have formal employment agreements and
officers serve at the pleasure of the Board of Directors.
<PAGE>
TREVOR NEWTON, since its incorporation on
November 18, 1998 to the present, has been the
Company's President, Secretary, Treasurer,
Chairman of the Board of Directors and Chief
Operating and Executive Officer. From June, 1993 through
August, 1994, Mr. Newton was employed as a
Statistical Analyst with the British Columbia
Gas Co. Thereafter, from August, 1994 until
December, 1995, Mr. Newton taught Economics and Statistics
at the University College of Fraser Valley. From
February, 1996 until October, 1996, Mr. Newton
was a registered representative with Global
Resource Investments, a broker- dealer located
in Southern California. From October, 1996 until
the present, Mr. Newton was employed in various
capacities at Stockscape.com, a publicly traded
producer of a financial web site which has
published dozens of financial newsletters and
delivered financial information, such as stock quotes and
news, to its users 24 hours a day. Mr. Newton's
responsibilities at Stockscape.com have included
the overseeing of all aspects of operations such
as programming, content development, technical
infrastructure and marketing.
Mr. Newton, who will continue his employment at
Stockscape.com into the foreseeable future, will
devote as much time to the affairs of the
Company as he deems necessary for it to reach
its goals. There can be no assurance that any conflicts of
interest that may result from these outside
activities will be resolved in favor of the Company. Mr. Newton
has a B.S. degree in Economics from the
University of Victoria and an M.A. degree from Simon Fraser
University. Mr. Newton may be deemed a
"Promoter" of the Company as that term is
defined under the General Rules and Regulations
of the Securities Act of 1933, as amended.
FRED COOMBES, since its incorporation to the
present, has been a Director of the Company, and
since January 20, 1999 to the present, the
Company's Vice President of Corporate
Development. Since 1987 to the present, Mr. Coombes has also
acted as the President of Co-ab Marketing, Ltd.,
an investor and corporate relations firm, and,
since October, 1995, as Vice President and
Director of Yuma Copper Corp., a mineral exploration firm.
In addition, Mr. Coombes has been retained as an
outside investor relations consultant to the NBG
Radio Network. Presently, Mr. Coombes is devoting
minimal time to the affairs of the Company. Upon
the successful completion of the minimum offering,
Mr. Coombes who plans on continuing with his
other outside responsibilities, will devote as much
time to the affairs of the Company as he deems
necessary for it to achieve its goals. There can be no
assurance that any conflicts of interest that
may result from these outside activities will be resolved in
favor of the Company. He may be deemed a
"Promoter" of the Company as that term is defined under the
General Rules and Regulations of the Securities
Act of 1933, as amended.
JOHN TARVES has been a Director of the Company
since its incorporation. Since 1979, Mr. Tarves
has been a secondary school teacher in the
Chichester School District in Boothwyn,
Pennsylvania. He is a member of the school district's Technology
Leadership Team and has initiated an internet
usage program in the classroom. Mr. Tarves has a B.A.
degree from St. Francis College (Loretto, PA)
and an M.A. degree from Fairfield University
(Fairfield, CT.) He may be deemed a "Promoter"
of the Company as that term is defined under the
General Rules and Regulations of the Securities
Act of 1933, as amended.
<PAGE>
Executive Compensation
The following table sets forth information with
respect to compensation paid by the Company for
the period ended December 31, 1998 for services of
the executive officers. No executive officer was
paid by the Company (including salaries and benefits)
in excess of $100,000 during the period ending
December 31, 1998. No person is expected to
receive from the Company compensation in excess
of $100,000 for the twelve months ending December
31, 1999. A portion of the net proceeds of the
offering herein will be used to pay at least a
portion of officers' salaries. (See "Use of
Proceeds".):
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
Name and
Principal Position Year Salary
<S> <C> <C>
Trevor Newton, Chairman of
the Board, President, Secretary,
Treasurer and Chief Operating and
Executive Officer 1998 $0
Fred Coombes,
Vice President of Corporate
Development and Director 1998 $0
</TABLE>
Messrs. Newton and Coombes as founders or
promoters of the Company were issued 2,422,400
and 732,300 shares of the Common stock, $.001 par
value, of the Company, respectively, for nominal
consideration (i.e $.0025 per share). See
"Principal Shareholders" and "Certain
Transactions". The Company has not, nor does it intend to, in the
foreseeable future, enter into any employment
agreements with executive officers. The Company
maintains no other compensation plans for its
executive officers. However, it does plan to
institute an executive employee stock option
plan in the future, the terms of which have not been
determined or agreed upon. In addition, in the
future, the Company may consider an executive bonus plan.
Upon the successful completion of the minimum
offering herein, Messrs. Newton and Coombes will
be paid salaries at an annual rate of $60,000 and $
36,000, respectively. During 1999, Mr. Newton
has been paid $5,000 per month since February, 1999
in salary. Mr. Coombes has not been paid any
compensation in 1999, nor has he accrued any
compensation. It is intended that salaries be
paid from the net proceeds of the offering allocated to
working capital and revenues from operations, if
any. See "Use of Proceeds".
<PAGE>
Compensation of Directors
The Company does not pay any remuneration for
service as directors. Directors of the Company
are reimbursed for their out-of-pocket expenses
associated with meetings of the Board of
Directors. Mr. John Tarves, a director of the Company, was
issued 25,000 shares of the Common Stock, $.001
par value, for nominal consideration (i.e. $.0025
per share). The Company does not maintain a
stock option plan for Directors.
INDEMNIFICATION
The Company's bylaws provide for the
indemnification of officers and directors to the
fullest extent possible under Nevada law against expenses
(including attorney's fees), judgements, fines,
settlements, and other amounts actually and reasonably
incurred in connection with any proceeding,
arising by reason of the fact that such person is or was an
agent of the Company. The Company is also
granted the power, to the maximum extent and in the
manner permitted by Nevada Revised Statutes, to
indemnify each of its employees and agents
(other than directors and officers) against
expenses (including attorneys' fees), judgements, fines,
settlements and other amounts actually and
reasonably incurred in connection with any proceeding
arising by reason of the fact that such person
is or was an agent of the Company.
The Certificate of Incorporation of the Company
limits or eliminates the personal liability of
officers and directors for damages resulting from breaches of
their fiduciary duty for acts or omissions
except for damages resulting from acts or omissions which
involve intentional misconduct, fraud, a knowing
violation of law, or the inappropriate payment
of dividends in violation of Nevada Revised
Statutes.
Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as
amended, may be permitted to officers, directors and controlling
persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been
advised that in the opinion of the Securities
and Exchange Commission such indemnification is
against public policy as expressed in the
Securities Act of 1933, as amended, and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by an
officer, director or controlling person of the Company in
successful defense of any action, suit or
proceeding) is asserted by such officer, director or
controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by the controlling
precedent, submit to a court of appropriate
jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933, as amended, and will be
governed by the final adjudication of such issue.
CERTAIN TRANSACTIONS
The Company was incorporated in the State of
Nevada on November 18, 1998. At that time, it
had authorized 25,000 shares of Common Stock, no par
value. On January 20, 1999, in order to facilitate a
<PAGE>
public offering of its securities, it authorized
the amendment of its certificate of
incorporation to effect certain changes, which were: (1) a change in the
par value of the Common Stock to $.001 par
value; and (2) an increase in the number of shares of
Common Stock authorized to 25,000,000 shares.
All references to stock transactions hereinafter in
this section and throughout this Prospectus give
effect to the aforementioned amendments to the Company's
Certificate of Incorporation as if they occurred
previous to said stock transactions.
In connection with its organization, in
February, 1999, the Company issued 2,422,400,
1,464,072, 732,300 and 25,000 shares of Common Stork, $.001
par value, respectively, to its founders, Trevor
Newton, Mary Martin, Fred Coombes and John
Tarves. In each case, the consideration was
nominal, i.e. $.0025 per share.
In addition to the above, the Company's previous
counsel has received 10,000 shares of Common
Stock in lieu of receiving $2,500 of his legal
fee.
In March, 1999, the Company privately sold
900,000 shares of its Common Stock, at a price
of $.25 per share, to one affiliated investor for a
total of $225,000. To date, $75,000 of the
proceeds have been utilized for hardware, software,
programming and computing fees, content
acquisition, general operations, salaries, connectivity and costs
associated with is offering. The remaining
$150,000 has been retained for operating funds . See
"Management's Discussion and Analysis of
Financial Condition and Results of Operations-Liquidity and Capital
Resources". The investor, New Horizons LP is
affiliated with Ms. Mary Martin in that its
general partner and a minority limited partner
is Ms. Martin's husband, Joe MacDonald.
The Company has not adopted any provisions,
resolutions or bylaws regarding related party
transactions nor does it intend to do so in the
future.
Messrs. Trevor Newton, Fred Coombes and John
Tarves, as well as Ms. Mary Martin may each be
deemed a "Promoter" of the Company as that term
is defined under the General Rules and
Regulations of the Securities act of 1933, as amended.
PRINCIPAL SHAREHOLDERS
The following table sets forth as of the date of
this Prospectus certain information with respect
to each director, each executive officer, each
beneficial owner of 5% or more of the
outstanding Common Stock, and all directors and executive officers
of the Company as a group, as of that date.
<TABLE>
<CAPTION>
Beneficial % of Ownership
Ownership Prior After Offering of(l)(2):
to Offering
<PAGE.
<S> <C> <C> <C> <C>
Officers,
Directors, 5% No. of 400,000 800,000
Shareholders Shares % Units Units
Trevor Newton 2,422,400 43.6% 40.7% 38.1%
Mary Martin (3) 1,464,072 26.4% 24.6% 23.0%
Fred Coombes 732,300 13.2% 12.3% 11.5%
John Tarves 25,000 .5% .4% .4%
New Horizons LP (3) 900,000 16.2% 15.1% 14.2%
All directors and
executive officers
as a Group (3 persons) 3,179,700 57.3%. 53.4% 50.0%
<FN.
<1>
All shares are beneficially owned and the
sole voting and investment power is held by the
persons or entity named, unless otherwise indicated
below.
<2>)
Does not reflect the exercise of the
Redeemable Warrants offered herein.
<3>
These shareholders are affiliates of each
other, in that Mary Martin is the wife of Joe
MacDonald who is the general partner and a minority
limited partner of New Horizon LP. However, each
has represented to the Company that each (i.e. Ms.
Martin and New Horizon LP) does not have
beneficial, dispositive, voting or equitable interests or
rights in the other's stock ownership.
Accordingly, it is management's opinion that these shareholders'
respective stock holdings should not be deemed
to be combined or otherwise aggregated with each
other.
</FN>
</TABLE>
DESCRIPTION OF UNITS
Units
A minimum of 400,000 Units and a maximum of
800,000 Units are being offered by the Company
to the public pursuant to this Prospectus. Each
Unit consists of one share of Common Stock,
$.001 par value, and one Redeemable Class A Common Stock
Purchase Warrant ("Class A Warrant") to
purchase one share of Common Stock, $.001 par
value, one Redeemable Class B Common Stock
Purchase Warrant ("Class B Warrant") to purchase
one share of Common Stock, $.001 par value and
one Redeemable Class C Common Stock Purchase
Warrant ("Class C Warrant") to purchase one
share of Common Stock, $.001 par value. The
Warrants will be immediately detachable and
transferable upon successful closing of the
minimum offering herein.
Common Stock
The Company, a Nevada corporation, is authorized
to issue 25,000,000 shares of Common Stock,
<PAGE>
$.001 par value, which is the Common Stock
offered herein. After being sold pursuant to
this offering, the shares of Common Stock are not subject to
further assessment or call. The following
summary description of Common Stock is qualified in its
entirety by reference to the Company's
Certificate of Incorporation, as amended, and its Bylaws, as
amended.
Voting Rights
Holders of the shares of Common Stock are
entitled to one vote per share. None of the
Common Stock has cumulative voting rights, so that the
holders of more than 50% of the votes for the
election of Directors can elect all the Directors if they
choose to do so and, in such event, the holders
of the remaining shares will not be able to elect any
directors.
Dividends
Holders of shares of Common Stock are entitled
to receive such dividends as the Board of
Directors may from time to time declare out of funds of
the Company legally available for the payment of
dividends. The Company has not paid dividends to
its shareholders since its inception and does
not intend to pay dividends on its shares of Common
Stock in the foreseeable future.
Liquidation Rights
Upon liquidation, dissolution, or winding up of
the Company, holders of shares of Common Stock
are entitled to receive, pro rata, all of the assets
remaining for distribution to common
shareholders.
Preemptive Rights
Shareholders of the Company do not have any
preemptive rights to subscribe for or purchase
any shares, obligations, warrants or other
securities of the Company.
Redeemable Warrants
The Class A, Class B and Class C Warrants (the
"Warrants"), none of which are presently
outstanding, will be exercisable at a price of $1.00, $3.00
and $5.00 per share of Common Stock,
respectively, at any time after successful completion of the
minimum offering until six months, 12 months and
18 months, respectively, from the effective date of
the offering. The Company reserves the right to
extend each warrant exercise period, or any of them, at
anytime, and/or to reduce the exercise price(s)
by up to 50% upon 30 days prior written notice. One
warrant is required for the purchase of one
share of Common Stock. The following discussion of the
Warrants does not purport to be complete and is
qualified in its entirety by reference to the
Warrant Agreement. The essential provisions of
the Warrants are as follows:
(1) The Warrants, which will be issued pursuant
to a Warrant Agreement between the Company and
<PAGE>
its warrant agent, Security Transfer Corp., will be
in registered form and, after successful
completion of the minimum offering, may be sold, assigned or
conveyed separately and apart from the common
stock component of the Units.
(2) The exercise of one Warrant will be
necessary to enable the holder to purchase one
share of Common Stork. Unless exercised, the Warrants
will automatically expire 6 months (as to the
Class A Warrants), 12 months (as to the Class B
Warrants) and 18 months (as to the Class C
Warrants) from the effective date of the offering.
(3) Upon the successful completion of the
offering herein and during the reminder of the
term of the Warrants, the Company may, at its option and on
30 days' prior written notice mailed to the
Warrantholders, call and/or redeem, in whole or
in part, the Warrants at price of $0.01 per A, B
or C Warrant if the average bid price of the common
stock for any seven trading days during a 10
consecutive trading day period is greater than
20% above the respective exercise price.
(4) The holders of the Warrants are protected
against dilution of their interests represented
by the number of shares of Common Stock underlying the
Warrants upon the occurrence of certain events,
including stock dividends, splits, mergers,
reclassifications, and sale by the Company of
shares of Common Stock below the then book value, other
than sale to employee benefit and stock option
plans.
(5) The holders of the Warrants have no right to
vote on matters submitted to shareholders of the
Company and have no right to receive dividends.
The holders of the Warrants are not entitled to
share in the assets of the Company in the event of
liquidation, dissolution, or the winding up of
the Company's affairs.
(6) In the absence of an applicable exemption,
the Company is required to have a current,
effective registration statement on file with the
Securities and Exchange Commission and have
satisfied the "Blue Sky" registration requirements of the applicable
regulatory authority of the state in which the
holder of a Warrant resides, in order for the holder to
exercise the Warrant. Therefore, the Company
will be required to file post-effective amendments to
the Company's registration statement when
subsequent events require such amendments in order to
continue the registration of the shares of
Common Stock underlying the Warrants. Although it is the
intention of the Company to both maintain a
current prospectus and meet the requirements of the
appropriate state regulatory authorities during
the term of the Warrants, there can be no assurance that the
Company will be in a position to keep its
registration statement current and effective or to meet the
requirements of any state regulatory authority.
(7) The Company's transfer agent, Securities
Transfer Corp., has also been appointed as its
warrant agent to be responsible for all record keeping
and administrative functions in connection with
the Warrants. A copy of the form of the Warrant
Agreement is filed as an exhibit to the
registration statement.
Certain Market Information
The offering made pursuant to this Prospectus
is the initial offering of the Company's Units,
shares of Common Stock and Redeemable Class A, Class B and
Class C Warrants. Accordingly, there is no
public trading market for such Units, shares of
Common Stock or Warrants at the present time.
There can be no assurance that a public trading market
will ever develop or, if one develops, that it
will be maintained.
<PAGE>
Upon completion of the minimum offering, and
prior to the exercise of the Warrants offered
herein, the Company will have outstanding 5,953,772 shares
of Common Stock. Similarly, If the maximum
offering is completed, the Company will have 6,353,772
shares of cannon stock outstanding. Of the
shares outstanding, if the minimum offering is
completed, 400,000 shares (and, if the maximum
offering is completed, 800,000 shares) will be freely
tradeable without restriction under the
Securities Act of 1933, as amended, provided that such shares are
not subsequently acquired by "affiliates" of the
Company (i.e., a person that directly, or
indirectly through one or more intermediaries
controls or is controlled by, or is under common control with
the Company).
All of the 5,553,772 shares of Common Stock
presently outstanding (See "Certain
Transactions", "Capitalization" and "Principal Shareholders".)
are "restricted securities" as that term is
defined in Rule 144, promulgated under the Securities Act of
1933, as amended. In general, under Rule 144, a
person (or persons whose shares must be aggregated) who
has satisfied a one- year holding period may,
under certain circumstances, publicly sell within any
three (3) month period, a number of shares which
does not exceed the greater of one percent (1%) of
the then outstanding shares of Common Stock or
the average weekly trading volume during the four
calendar weeks preceding such sale. Rule 144
also permits, under certain circumstances, the sale
of shares of Common Stock by a person without
any quantity limitation. Future sales under Rule 144
may have a depressive effect on the market price
of the Common Stock of the Company, should a public
market develop for such shares. None of the
current shareholders, with respect to any portion of
their current holdings, have already satisfied
the one-year holding period. The Company is unable to predict
the effect that such sales, under Rule 144 or
otherwise, may have on the then prevailing
market price of the shares of Common Stock.
Transfer and Warrant Agent
The Company has appointed Securities Transfer
Corp. With offices at 1690 Dallas Parkway, Suite
100 Dallas, TX 75248, (972) 447-9890 as transfer
agent for its shares of Common Stock and warrant
agent for the Warrants.
Reports to Shareholders
The Company intends to forward annual reports to
its shareholders which shall include audited
financial statements and will also forward such interim
reports it deems appropriate.
PLAN OF DISTRIBUTION
The Company is offering, directly to the public,
up to 800,000 Units on a "best efforts" basis.
There can be no assurance that any of the Units will be
sold. If at least 400,000 of the offered Units
are not sold within the offering period (90 days from the
effective date of this prospectus, unless
extended for an additional 90 days by the Company), the offering
will be terminated and the subscription payments
will be promptly refunded in full to subscribers,
without payment of interest or deducting
expenses.
<PAGE>
If the minimum number of Units is sold within the
specified period, the offering will continue
until expiration of the offering period and any extension thereof,
unless sooner terminated by the Company.
All subscription payments should be sent to the
Company along with a separate sheet indicating
the name, address and social security number of the
subscriber(s), as well as the number of shares
for which subscription is being made. Payments
should be made payable to "Securities Transfer
Corporation, as escrow agent for
Stratabase.com". The subscription payments will
be transmitted by the Company, no later than noon of the next
business day following receipt, to an escrow
account maintained by Securities Transfer Corporation,
16910 Dallas Parkway, Suite 100, Dallas, Texas
75248. Securities Transfer Corporation is only
acting as escrow, transfer and warrant agent in
connection with this offering and has made no
investigation of the Company or this offering
nor makes any recommendation with respect thereto. The
escrow agent will hold all subscriptions
payments pending the sale of the minimum number of Units
within the specified period. Subscription
payments will only be withdrawn from the escrow account for
the purpose of paying the Company for the Units
hereunder, if at least 400,000 of the Units
offered hereunder are sold, or for the purpose
of refunding subscription payments to subscribers.
Subscribers will not earn interest on the funds
held in escrow and will not have use or right to return of such
funds during the escrow period, as extended,
which may last as long as 180 days. If the minimum number of
Units is sold within the escrow period, as
extended, payments from subscriber will thereafter be
deposited into the above account for collection
and all funds will be disbursed to the Company.
The public offering price of the Units and the
exercise prices of the Warrants included therein
were determined by the Company based arbitrarily upon
considerations including market conditions and
the perceived reception of the offering price and
exercise prices by potential investors. The
public offering price and the exercise prices do not bear any
relationship to assets, book value or any other
traditionally recognized indicia of value.
The Company has not engaged a market maker of
securities and does not propose to engage any
entity to make a market in its securities following
completion of the offering, Therefore, the
development of a trading market following the completion of this
offering will be particularly dependent on
broker-dealers initiating quotations in inter-dealer quotation
mediums, in maintaining trading positions and in
otherwise engaging in market making activities in the
Company's securities. No broker-dealer has
agreed to engage in such activities, and there is no
assurance that any trading market for the
Company's securities will develop following the offering.
LEGAL PROCEEDINGS
The Company is not involved in any material
pending litigation, nor is it aware of any
material pending or contemplated proceedings against it. The
Company knows of no material legal proceedings
pending or threatened, or judgments entered against any
Director or Officer of the Company in his
capacity as such.
<PAGE>
LEGAL OPINIONS
The legality of the issuance of the securities
offered pursuant to this Prospectus will be
passed upon for the Company by James C. Jones, Esq., 65 West
96th Street, Suite 20H, New York, New York
10025.
EXPERTS
The financial statements of the Company included
in the Prospectus, to the extent and for the
period indicated in their report with respect thereto,
have been audited by Moss Adams LLP, independent
certified public accountants, as stated in their
report appearing elsewhere herein, and are
included in reliance upon such report given upon the
authority of that firm as experts in accounting
and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and
Exchange Commission ("SEC") a Registration
Statement on Form SB-2 under the Securities Act of 1933,
as amended, with respect to the Units, shares of
Common Stock and Redeemable Warrants offered
hereby (SEC. File No.333- ). This
Prospectus, filed as part of such Registration
Statement, does not contain certain information
set forth in or annexed as exhibits to such Registration
Statement. For further information with respect
to the Company and the securities offered pursuant to
this Prospectus, reference is made to such
Registration Statement and to its annexed exhibits which may
be inspected at the Public Reference Room of the
principal office of the Securities and Exchange
Commission, 450 5th Street, N.W., Washington,
D.C. 20549 or at any of the Public reference Rooms of
its regional offices in Chicago, Illinois, and
New York, New York, without charge, or copies of
which may be obtained upon payment of the fee
prescribed by the Securities and Exchange
Commission. Information on the operation of the
Public Reference Rooms may be obtained by calling the
SEC at 1-800-SEC-0330. The Registration
Statement and annexed exhibits may also be
reviewed on the SEC's Internet site at
http://www.sec.gov.
Statements contained in this Prospectus and the
contents of any contract or other document are
not necessarily complete, and in each instance,
reference is made to the copy of such contract
or document filed as an exhibit to such Registration
Statement, each such statement being qualified
in all respects by such reference.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS
Page
<S> <C>
Independent Accountant's Report dated May 28, 1999 52
Balance Sheet dated March 31, 1999 53
Statement of Operations for the period from
inception (11/18/98) to 3/31/99 54-55
Statement of Stockholders' Equity for the period
from inception (11/18/98) to 3/31/99 55-56
Statement of Cash Flows for the period from
inception (11/18/98) to 3/31/98 56-57
Notes to Financial Statements (3/31/99) 57-58
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Stratabase.com
We have audited the accompanying balance sheet
of Stratabase.com (a development stage company)
as of March 31, 1999, and the related statements
of operations, stockholders' equity, and cash
flows for the period from inception (November 18,
1998) to March 31, 1999. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on
these financial statements based on our audit
We conducted the audit in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the
financial statements are free of material misstatement. An
audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all
material respects, the financial position of Stratabase.com (a
development stage company) as of March 31, 1999,
and the changes in its operations and its cash flows for
the period from inception (November 18, 1998) to
March 31, 1999, in conformity with generally
accepted accounting principles.
/s/ Moss Adams LLP
Portland, OR
May 28, 1999
<PAGE>
<TABLE>
<CAPTION>
STRATABASE.COM
(a development stage company)
BALANCE SHEET
MARCH 31,1999
ASSETS
<S> <C>
CURRENT ASSETS
Cash $214,396
GST receivable 146
Total current assets 214,542
OFFICE EQUIPMENT 205
DEPOSITS 572
Total assets $ 215,319
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Shareholder loans $436
<S> <C>
Total current liabilities 436
COMMITMENTS (Note 3)
SHAREHOLDERS' EQUITY
Common stock, $.001 par value; 25,000,000 shares
authorized, 5,543,772 shares issued and
outstanding 5,544
Additional paid-in capital 231,065
Deficit accumulated in the development stage (21,726)
Total shareholders' equity 214,883
Total liabilities and shareholders' equity $ 215,319
See accompanying notes.
<PAGE>
<CAPTION>
STRATABASE.COM
(a development stage company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (NOVEMBER 18,
1998) TO MARCH 31,1999
<S> <C>
REVENUE $ -0-
OPERATING EXPENSES
Subcontract - web site 667
Excess of operating expenses over revenue 667
GENERAL AND ADMINISTRATIVE EXPENSES
Management fees 10,000
Legal fees 6,215
Insurance expense 1,517
Rent 1,145
Organizational costs 695
Office 463
Telephone 442
Licenses and dues 305
Advertising 140
Equipment rental 51
Travel 25
Entertainment 19
Bank service charges 17
Courier 17
Vehicle 8
21,059
Net loss in the development stage $ 21,726
See accompanying notes.
<PAGE>
<CAPTION>
STRATABASE.COM
(a development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (NOVEMBER 18,
1998) TO MARCH 31, 1999
DEFICIT
ACCUMULATED
ADDITION IN THE TOTAL
COMMON STOCK PAID-IN DEVELOPMENT STOCKHOLDERS'
SHARES AMOUNT CAPITAL STAGE EQUITY
<S> <C> <C> <C> <C> <C>
Issuance of
common stock
at $.0025
per share 4,643,772 $4,664 $6,965 - $11,609
Issuance of
common stock
at $.25 per
share 900,000 900 $224,100 - $225,000
Net loss in
the development
stage - - - (21,726) (21,726)
5,543,772 $5,544 $231,065 (21,726) $214,883
See accompanying notes.
<PAGE>
<CAPTION>
STRATABASE.COM
(a development stage company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (NOVEMBER 18,1998)
TO MARCH 31, 1999
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss in the development stage $ (21,726)
Adjustments to reconcile net loss to net
cash from operating activities:
Increase in assets:
GST receivable (146)
Deposits
(572)
Net cash from operating activities (22,444)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of office equipment (205)
Net cash from investing activities (205)
CASH FLOWS FROM FINANCING ACTIVITIES
Shareholder loan 436
Sale of common stock 236,609
Net cash from financing activities 237,045
NET INCREASE IN CASH AND CASH EQUIVALENTS 214,396
CASH AND CASH EQUIVALENTS, at date of inception -
CASH AND CASH EQUIVALENTS, end of period $ 214,396
See accompanying notes.
<FN>
<PAGE>
<CAPTION>
STRATABASE.COM
(a development stage company)
NOTES TO FINANCIAL STATEMENTS MARCH 31,1999
<F1>
NOTE 1 - NATURE OF OPERATIONS AND ORGANIZATION
Stratabase.com is a Nevada company
specializing in the provision of online content,
information, and services in specific topic areas, with an
emphasis on relationship (name) development and
corresponding database management. The Company
operates from its headquarters in Abbotsford,
British Columbia, Canada.
For the period from inception (November 18,
1999) to March 31, 1999, the Company has been in
the development stage. Substantially, all activity
during this period has been devoted to the
raising of equity capital and development of a long-term business
plan.
<F2>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Cash and cash equivalents - The
Company considers all highly liquid investments
purchased with a maturity of three months or less to be cash
equivalents.
Revenue recognition - Revenues will be
recognized as website related services, video
production and encoding services, or direct e-mail marketing
services are provided to customers.
Office equipment - Office equipment is recorded
at cost and depreciated over its useful life
which ranges from three to five years. No depreciation
expense was recognized for the period from
inception to March 31, 1999.
Advertising - Advertising costs are expensed as
incurred.
Income taxes - The Company follows the asset and
liability method of accounting for income taxes
whereby deferred tax assets and liabilities are
recognized for the future tax consequences of
differences the financial statement carrying amounts of
existing assets and liabilities and their
respective tax bases.
Use of estimates - The preparation of financial
statements in conformity with generally accepted
accounting principles requires management to
make estimates and assumptions that affect the
amounts reported in the financial statements and
accompanying notes. Actual results could differ
from those estimates.
<F3>
NOTE 3 - COMMITMENTS
Lease obligations - The company leases
its office space and certain equipment under
operating lease agreements. The agreements provide for
monthly office rents of $937 (Canadian dollars)
for a term of one year and equipment rentals of $1,100
for a term of three years. For the period from
inception to March 31, 1999, rent expense was
$1,145.
Legal services - The Company has engaged legal
counsel to provide corporate services during
1999 that will be paid partly in cash of
approximately $15,000 and the remainder with
10,000 shares of common stock valued at $.25 per share.
Management fees - The Company has agreed to pay
its President a salary of $5,000 a month
commencing February 1999. Compensation of
$10,000 through March 31, 1999, has been
recorded as management fees in the accompanying financial
statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
(BACK COVER)
TABLE OF CONTENTS PAGE
<S> <C> <C>
STRATABASE. COM
Summary of Prospectus ..... 9
Risk Factors 12 (A Nevada Corporation)
The Company 25 A Maximum of 800,000 Units
Use of Proceeds .......... 26
Dividend Policy ........... 26
Capitalization ............ 26
Dilution.................. 28 OFFERING PRICE:
Business...................... 29 $.50 PER UNIT
Management's Discussion
and Analysis of Results
of Operations and
Financial Condition ....... 38
Management 41 PROSPECTUS
Indemnification .......... 41
Certain Transactions ...... 44
Principal Shareholders .... 45
Description of Units 46 August , 1999
Plan of Distribution ..... 49
Legal Proceedings ......... 50
Legal Opinions ............ 51
Experts ................... 51
Additional Information .... 51
Financial Statements ...... 51
<PAGE>
STRATABASE.COM
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and
Officers
The Company is incorporated under the laws of
the State of Nevada. As authorized by Section
78.751 of the Nevada General Corporation law, the
Company may indemnify its officers and directors
against expenses incurred by such persons in connection
with any threatened, pending or completed
action, suit or proceedings, whether civil, criminal,
administrative or investigative, involving such
persons in their capacities as officers and directors, so long as
such persons acted in good faith and in a manner
which they reasonably believed to be in the best
interests of the Company. If the legal
proceeding, however, is by or in the right of the Company, the director
or officer may not be indemnified in respect of any claim,
issue or matter as to which he is adjudged to be
liable for negligence or misconduct in the
performance of his duty to the Company unless a court
determines otherwise.
Under Nevada Law, corporations may also purchase
and maintain insurance or make other financial
arrangements on behalf of any person who is or
was a director or officer (or is serving at the
request of the corporation as a director or officer of
another corporation) for any liability asserted
against such person and any expenses incurred by him in his
capacity as a director or officer. These
financial arrangements may include trust funds, self
insurance programs, guarantees and insurance
policies.
The Twelfth Article of the Articles of
Incorporation, as amended, provides that no
director or officer of the Company shall be personally liable to the
Company or any of its stockholders for damages
for breach of fiduciary duty as a director or
officer involving any act or omission of any
such director; provided, however, that the foregoing provision
shall not eliminate or limit the liability of a
director or officer (i) for acts or omissions which involve
intentional misconduct, fraud or knowing
violation of law, or (ii) the payment of dividends in violation of
Section 78.300 of the Nevada Revised Statutes.
Article V of the Company's bylaws provides for
the indemnification of officers and directors,
and former officers and directors, or any person who
may have served at the Company's request as an
officer and director of another corporation in
which the Company owns shares of capital stock
or of which it is a creditor, against expenses
actually and necessarily incurred by them in
connection with the defense of any action, suit or proceeding in
which they, or any of them, are made parties, or
a party, by reason of being or having been director(s) or
officer(s) of the Company, or of another
corporation, except, in relation to matters as to which any
such director or officer or former director or
person shall be adjudged in such action, suit or proceeding
to be liable for negligence or misconduct in the
performance of duty. Such indemnification shall
not be deemed exclusive of any rights to which
those indemnified may be entitled, under by-law,
agreement, vote of shareholders or otherwise.
<PAGE>
Currently, the Company does not maintain
Director and Officer Liability Insurance
coverage. However, it may do so in the future.
Item 25. Other Expenses of Issuance and
Distribution
The expenses to be paid by the Registrant in
connection with the issuance and distribution of
the securities being registered, under both the
minimum and maximum offerings, are estimated to
be as follows:
</TABLE>
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee----------------$2,302.80
Printing and Engraving Expenses-------------------------------------2,000.00
Accounting Fees and Expenses----------------------------------------5,000.00
Legal Fees ($15,500) and Expenses ($500.00)(1)---------------------16,000.00
Blue Sky Expenses, and other Fees-----------------------------------2,500.00
Registrar and Warrant and Transfer Agent Fees-----------------------2,500.00
Miscellaneous-------------------------------------------------------9,697.20
Total------------------------------------------------------------ $40,000.00
<FN>
<F1>
In addition, the Registrant's prior
legal counsel has accepted 10,000 shares of the
Registrant's Common Stock as a portion of his legal fee
($2,500) in connection with this offering.
</FN>
</TABLE>
Item 26. Recent Sales of Unregistered Securities
During the past three years, the Registrant sold
securities which were not registered under the
Securities
Act of 1933, as amended, as follows:
<TABLE>
<CAPTION>
Date(s) of Number of Shares of
Shareholders Issuance Common Stock (1) Consideration
<S> <C> <C> <C>
Trevor Newton 2/5 and 2/17/99 2,422,400 $6,056.00
Mary Martin 2/5 and 2/17/99 1,464,072 3,660.18
Fred Coombes 2/5 and 2/17/99 732,000 1,830.75
John Tarves 2/5/99 25,000 62.50
New Horizons LP 3/19/99 900,000 225,000.00
Thomas E. Boccieri 6/24/99 10,000 2,500.00(2)
<PAGE>
<FN>
<F1>
Reflects a recapitalization whereby,
pursuant to an amendment to the Company's
Certificate of Incorporation authorized on November 18, 1999
the par value of the Company's Common Stock was
changed from no par value to $.001 par value,
and the Company's total authorized shares of
Common Stock was increased from 25,000 shares to
25,000,000 shares.
<F2>
Mr. Boccieri, the Registrant's prior counsel
in connection with the offering herein, agreed
to accept these shares in lieu of $2,500 of his legal fee.
</FN>
</TABLE>
The foregoing transactions are exempt from the
registration provisions of the Securities Act of
1933, as amended, by reason of Section 4(2) thereof as
constituting private transactions not involving
a public offering. A restricted legend has been placed on
all shares issued in these transactions and the
registrant's transfer agent will be given the
appropriate stop transfer instructions. The
offers and sales should not be integrated with the public
offering herein since such sales and those sales
to be made to the public (a) are not part of a single plan of
financing; (b) have not and will not be made at
or about the same time; and (c) have not and will not be made
for the same general purpose. Furthermore, said
sales should not be integrated in reliance upon the
safe harbor interpretation of Rule 152 under
which it is the view of the staff of the U.S. Securities and
Exchange Commission that the filing of a
registration statement following an offering otherwise exempt
under Section 4(2) does not vitiate the
exemption under that Section.
Item 27. Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
3.1 Certificate of Incorporation of Registrant.
3.2 Registrant's Certificate of Amendment of its
Certificate of Incorporation.
3.3 By-Laws of Registrant.
4.1 Specimen Common Stock Certificate.
4.2 Specimen of Class A Redeemable Common Stock Purchase
Warrant.
4.3 Specimen of Class B Redeemable Common Stock Purchase
Warrant.
4.4 Specimen of Class C Redeemable Common Stock Purchase
Warrant.
4.5 Form of Warrant Agreement with the Warrant Agent.
5.1. Opinion of James C. Jones, Esq.
10.1 Form of Escrow Agreement.
10.2 Lease with SGS Enterprises.
10.3 Internet Business Service Agreement with BCTEL.
10.4 Distributor Agreement with COMTEX
24.1 Consent of James C. Jones, Esq.
24.2 Consent of Moss Adams LLP.
<PAGE>
Item 28. Undertakings
Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as
amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the
foregoing provisions or otherwise, the Registrant has been
advised that in the opinion of the Securities
and Exchange Commission such indemnification is
against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a
claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by
such director, officer or controlling person in
connection with the securities being registered,
the Registrant will, unless in the opinion of its Counsel the
matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against
public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which
offers or sales are being made, a post-effective
amendment to this Registration Statement:
(i) To include any prospectus required
by Section 10(a)(3) of the Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any
facts or events arising after the effective date
of the Registration Statement (or the most recent
post-effective amendment thereof) which,
individually or in aggregate, represent a fundamental change in the
information set forth in the Registration
Statement;
(iii) To include any material
information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the
Registration Statement.
2. That for the purpose of determining any
liability under the Securities Act of 1933, as
amended, each such post-effective amendment shall be
deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of
such securities at the time shall be deemed to
be the initial bona fide offering thereof.
3. To remove from registration by means of a
post-effective amendment any of the securities
being registered which remain unsold at the
termination of the offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, as amended, the Registrant
certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2
and has duly caused its Registration Statement to be
signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Abbotsford, British
Columbia, Canada, on the 11th day of August,
1999.
STRATABASE.COM
(Registrant)
/s/ Trevor Newton
By: Trevor Newton,
President and Director
Pursuant to the requirements of the Securities
Act of 1933, as amended, this Form SB-2
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
</TABLE>
<TABLE>
<CAPTION>
Signature Capacity Date
<S> <C> <C>
/s/ Trevor Newton August 11, 1999
Trevor Newton President, Treasurer Secretary
and Chairman of the Board of
Directors (Principal Executive,
Officer Principal Operating Officer,
and Principal Financial Officer)
/s/ Fred Coombes August 11, 1999
Fred Coombes Vice President and Director
/s/ John Tarves August 11, 1999
John Tarves Director
<PAGE>
EXHIBITS TO
THE REGISTRATION STATEMENT
ON
FORM SB-2
FILED ON AUGUST 10, 1999
BY
STRATABASE.COM
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
DESCRIPTION EXHIBIT NUMBER
<S> <C>
Certificate of Incorporation of Registrant 3.1
Registrant's Certificate of Amendment of its
Certificate of Incorporation 3.2
By-Laws of Registrant 3.3
Specimen of Common Stock Certificate 4.1
Specimen of Class A Redeemable Common Stock
Purchase Warrant 4.2
Specimen of Class B Redeemable Common Stock
Purchase Warrant 4.3
Specimen of Class C Redeemable Common Stock
Purchase Warrant 4.4
Form of Warrant Agreement with Warrant Agent 4.5
Opinion of James C. Jones, Esq. 5.1
Form of Escrow Agreement with Escrow Agent 10.1
Lease with SGS Enterprises 10.2
Internet Business Service Agreement with BCTEL 10.3
Distributor Agreement with COMTEX 10.4
Consent of James C. Jones, Esq. 24.1
Consent of Moss Adams LLP 24.2
<PAGE>
<PAGE>
EXHIBIT 3.1
Filed
IN THE OFFICE OF THE
SECRETARY OF STATE OF the
STATE OF NEVADA
NOV 18 1998
No. C26897-98
Dean Heller
DEAN HELLER SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF STRATABASE.COM
FIRST. The name of the corporation is:
STRATABASE.COM
SECOND. Its registered office in the State of
Nevada is located at 2533 North Carson Street, Carson
City, Nevada 89706 that this Corporation may
maintain an office, or offices, in such other
place within or without the State of Nevada as may be from
time to time designated by the Board of
Directors, or by the By-Laws of said Corporation, and that
this Corporation may conduct all Corporation
business of every kind and nature, including the holding
of all meetings of Directors and Stockholders,
outside the State of Nevada as well as within the State
of Nevada
THIRD. The objects for which this Corporation is
formed are: To engage in any lawful activity,
including, but not limited to the following:
(A) Shall have such rights, privileges and
powers as may be conferred upon corporations by
any existing law.
(B) May at any time exercise such rights,
privileges and powers, when not inconsistent
with the purposes and objects for which this corporation
is organized.
C) Shall have power to have succession by its
corporate name for the period limited in its
certificate or articles of incorporation, and when no period is
limited, perpetually, or until dissolved and its
affairs wound up according to law.
(D) Shall have power to sue and be sued in any
court of law or equity.
(E) Shall have power to make contracts.
(F) Shall have power to hold, purchase and
convey real and personal estate and to mortgage
or lease any such real and personal estate with its
franchises. The power to hold real and personal
estate shall include the power to take the same by devise or
bequest in the State of Nevada, or in any other
state, territory or country.
(G) Shall have power to appoint such officers
and agents as the affairs of the corporation
shall require, and to allow them suitable compensation.
(H) Shall have power to make By-Laws not
inconsistent with the constitution or laws of
the United States, or of the State of Nevada, for the
management, regulation and government of its
affairs and property, the transfer of its stock, the
transaction of its business, and the calling and
holding of meetings of its stockholders.
(1) Shall have power to wind up and dissolve
itself, or be wound up or dissolved.
(J) Shall have power to adopt and use a common
seal or stamp, and alter the same at pleasure.
The use of a seal or stamp by the corporation on any
corporate documents is not necessary. The
corporation may use a seal or stamp, if it desires, but such
use or non-use shall not in any way affect the
legality of the document.
(K) Shall have power to borrow money and
contract debts when necessary for the
transaction of its business, or for the exercise of its corporate
rights, privileges or franchises, or for any
other lawful purpose of its incorporation; to issue
bonds, promissory notes, bills of exchange,
debentures, and other obligations and evidences of indebtedness,
payable at a specified time or times, or payable
upon the happening of a specified event or events,
whether secured by mortgage, pledge or
otherwise, or unsecured, for money borrowed, or in payment for
property purchased, or acquired, or for any
other lawful object.
(L) Shall have power to guarantee, purchase,
hold, sell, assign, transfer, mortgage, pledge
or otherwise dispose of the shares of the capital stock of,
or any bonds, securities or evidences of the
indebtedness created by, any other corporation or
corporations of the State of Nevada, or any
other state or government, and, while owners of such stock,
bonds, securities or evidences of indebtedness,
to exercise all the rights, powers and privileges
of ownership, including the right to vote, if
any.
(M) Shall have power to purchase, hold, sell and
transfer shares of its own capital stock, and
use therefor its capital, capital surplus, surplus,
<PAGE>
or other property or fund.
(N) Shall have power to conduct business, have
one or more offices, and hold, purchase,
mortgage and convey real and personal property in the State
of Nevada, and in any of the several states,
territories, possessions and dependencies of the United
States, the District of Columbia, and any
foreign countries.
(0) Shall have power to do all and everything
necessary and proper for the accomplishment of
the objects enumerated in its certificate or
articles of incorporation, or any amendment
thereof, or necessary or incidental to the protection and
benefit of the corporation, and, in general, to
carry on any lawful business necessary or incidental to the
attainment of the objects of the corporation,
whether or not such business is similar in nature to the
objects set forth in the certificate or articles
of incorporation of the corporation, or any amendment thereof.
(P) Shall have power to make donations for the
public welfare or for charitable, scientific or
educational purposes.
(Q) Shall have power to enter into partnerships,
general or limited, or joint ventures, in
connection with any lawful activities, as may be allowed by law.
FOURTH. That the total number of common stock
authorized that may be issued by the Corporation
is TWENTY FIVE THOUSAND (25,000) shares of stock
without nominal par value and no other class
of stock shall be authorized. Said shares may be
issued by the corporation from time to time for
such considerations as may be fixed by the Board of
Directors.
FIFTH. The governing board of this corporation
shall be known as directors, and the number of
directors may from time to time be increased or
decreased in such manner as shall be provided by
the By-Laws of this Corporation, providing that the
number of directors shall not be reduced to
fewer than one (1).
The name and post office address of the first
board of Directors shall be one (1) in number
and listed as follows:
NAME POST OFFICE ADDRESS
Brent Buscay 2533 North Carson Street
Carson City, Nevada 89706
SIXTH. The capital stock, after the amount of
the subscription price, or par value, has been
paid in, shall not be subject to assessment to pay the
debts of the corporation.
SEVENTH. The name and post office address of the
Incorporator signing the Articles of
Incorporation is as follows
<PAGE>
NAME POST OFFICE ADDRESS
Brent Buscay 2533 North Carson Street
Carson City, Nevada 89706
EIGHTH. The resident agent for this corporation
shall be:
LAUGHLIN ASSOCIATES, INC.
The address of said agent, and, the registered
or statutory address of this corporation in the
state of Nevada, shall be:
2533 North Carson Street
Carson City, Nevada 89706
NINTH. The corporation is to have perpetual
existence.
TENTH. In furtherance and not in limitation of
the powers conferred by statute, the Board of
Directors is expressly authorized:
Subject to the By-Laws, if any, adopted by the
Stockholders, to make, alter or amend the By-
Laws of the Corporation.
To fix the amount to be reserved as working
capital over and above its capital stock paid
in; to authorize and cause to be executed, mortgages
and liens upon the real and personal property of
this Corporation.
By resolution passed by a majority of the whole
Board, to designate one (1) or more committees,
each committee to consist of one or more of the
Directors of the Corporation, which, to the
extent provided in the resolution, or in the By-Laws of the
Corporation, shall have and may exercise the
powers of the Board of Directors in the management of the
business and affairs of the Corporation. Such
committee, or committees, shall have such name, or names,
as may be stated in the By-Laws of the
Corporation, or as may be determined from time to time by
resolution adopted by the Board of Directors.
When and as authorized by the affirmative vote
of the Stockholders holding stock entitling them
to exercise at least a majority of the voting power
given at a Stockholders meeting called for that
purpose, or when authorized by the written consent of the
holders of at least a majority of the voting
stock issued and outstanding, the Board of Directors shall
have power and authority at any meeting to sell,
lease or exchange all of the property and assets of the
Corporation, including its good will and its
corporate franchises, upon such terms and conditions as
its board of Directors deems expedient and for
the best interests of the Corporation.
ELEVENTH. No shareholder shall be entitled as a
matter of right to subscribe for or receive
<PAGE>
additional shares of any class of stock of the Corporation,
whether now or hereafter authorized, or any
bonds, debentures or securities convertible into stock,
but such additional shares of stock or other
securities convertible into stock may be issued or disposed
of by the Board of Directors to such persons and
on such terms as in its discretion it shall deem
advisable.
TWELFTH. No director or officer of the
Corporation shall be personally liable to the
Corporation or any of its stockholders for damages for breach
of fiduciary duty as a director or officer
involving any act or omission of any such director or officer;
provided, however, that the foregoing provision
shall not eliminate or limit the liability of a director
or officer (i) for acts or omissions which
involve intentional misconduct, fraud or a knowing violation of law,
or (ii) the payment of dividends in violation of
Section 78.300 of the Nevada Revised Statutes. Any
repeal or modification of this Article by the
stockholders of the Corporation shall be prospective only,
and shall not adversely affect any limitation on
the personal liability of a director or officer of
the Corporation for acts or omissions prior to
such repeal or modification.
THIRTEENTH. This Corporation reserves the right
to amend, alter, change or repeal any provision
contained in the Articles of Incorporation, in
the manner now or hereafter prescribed by
statute, or by the Articles of Incorporation, and all rights
conferred upon Stockholders herein are granted
subject to this reservation.
I, THE UNDERSIGNED, being the Incorporator
hereinbefore named for the purpose of forming a
Corporation pursuant to the General Corporation
Law of the State of Nevada, do make and file
these Articles of Incorporation, hereby declaring and
certifying that the facts herein stated are
true, and accordingly have hereunto set my hand this
November 17, 1998.
/s/Brent Buscay
STATE OF NEVADA )
)ss.:
CARSON CITY )
On this November 17, 1998 in Carson City,
Nevada, before me, the undersigned, a Notary
Public in and for Carson City, State of Nevada, personally
appeared:
Brent Buscay
Known to me to be the person whose name is
subscribed to the foregoing document and acknowledged to me that he executed
the same.
TERRI L. CONETTO
NOTARY PUBLIC NEVADA
Appt. Recorded in CARSON CITY
No.98-0922-S My Appt. Exp. Feb 18, 2002
/s/ Terri L. Conetto
Notary Public
I, Laughlin Associates, Inc. hereby accept as
Resident Agent for the previously named Corporation.
November 17, 1998 /s/ Brent Buscay
Date Vice President
<PAGE>
EXHIBIT 3.2
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
MAY 19 1999
No. C-26897-98
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE AMENDING ARTICLE OF INCORPORATION
OF
STRATABASE.COM
The undersigned being President and Secretary of
STRATABASE.COM, a Nevada Corporation,
hereby certify that by majority vote of the
Board of Directors and majority vote of the
<PAGE>
stockholders at a meeting held on the 21st Day of January,
1999, it was agreed by unanimous vote that this
CERTIFICATE AMENDING THE ARTICLES OF
INCORPORATION be filed.
The undersigned further certify that the
original Article of Incorporation of
Stratabase.com, were filed
with the Secretary of State on the 18th day of
November, 1998. The undersigned further certify
that ARTICLE FOURTH of the original Article of
Incorporation filed on the 18th day of November.
1998 herein is amended to read as follows:
ARTICLE FOURTH:
That the total number of authorized shares to be
issued by the Corporation is TWENTY FIVE
MILLION SHARES (25,000,000) common stock @ $.001
par value, no other class of stock shall be
authorized.
<PAGE>
EXHIBIT 3.3
STRATABASE.COM
BY-LAWS
ARTICLE I MEETINGS OF SHAREHOLDERS
1. Shareholders' Meetings shall be held in the
office of the corporation, at Carson City, NV,
or. at such other place or places as the Directors shall,
from time to time, determine.
2. The annual meeting of the shareholders of
this corporation shall be held at 11: 00 a.m.,
on the 18th day of November of each year beginning in 1999,
at which time there shall be elected by the
shareholders of the corporation a Board of
Directors for the ensuing year, and the
shareholders shall transact such other business as shall properly
come before them. If the day fixed for the
annual meeting shall be a legal holiday such meeting shall be
held on the next succeeding business day.
3. A notice signed by any Officer of the
corporation or by any person designated by the
Board of Directors, which sets forth the place of the
annual meeting, shall be personally delivered to
each of the shareholders of record, or mailed postage
prepaid, at the address as appears on the stock
book of the corporation, or if no such address appears in
the stock book of the, corporation, to his last
known address, at least ten (10) days prior to the
<PAGE>
annual meeting. Whenever any notice whatever is required to be
given under any article of these By-Laws, a
waiver thereof in writing, signed by the person or
persons entitled to the notice, whether before
or after the time of the meeting of the shareholders, shall
be deemed equivalent to proper notice.
4. A majority of the shares issued and
outstanding, either in person or by proxy, shall
constitute a quorum for the transaction of business at any
meeting of the shareholders.
5. If a quorum is not present at the annual
meeting, the shareholders present, in person or
by proxy, may adjourn to such future time as shall be
agreed upon by them, and notice of such
adjournment shall be mailed, postage prepaid, to each shareholder
of record at least ten (10) days before such
date to which the meeting was adjourned; but if a quorum
is present, they may adjourn from day to day as
they see fit, and no notice of such adjournment need
be given.
6. Special meetings of the shareholders may be
called at anytime by the President; by all of
the Directors provided there are no more than three,
or if more than three, by any three Directors;
or by the holder of a majority share of the capital
stock of the corporation. The Secretary shall
send a notice of such called meeting to each shareholder of
record at least ten (10) days before such
meeting, and such notice shall state the time and place of
the meeting, and the object thereof. No business
shall be transacted at a special meeting except as stated
in the notice to the shareholders, unless by
unanimous consent of all shareholders present, either in
person or by proxy.
7. Each shareholder shall be entitled to one
vote for each share of stock in his own name on
the books of the corporation, whether represented in
person or by proxy.
8. At all meetings of shareholders, a
shareholder may vote by proxy executed in
<PAGE>
writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with
the Secretary of the corporation before or at the time of the
meeting.
9. The following order of business shall be
observed at all meetings of the shareholders so
far as is practicable:
a. Call the roll;
b. Reading, correcting, and approving of the
minutes of the previous meeting;
c. Reports of Officers;
d. Reports of Committees;
e. Election of Directors;
f. Unfinished business; and
g. New business.
10. Unless otherwise provided by law, any action
required to be taken at a meeting of the
shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth
the action to be taken, shall be signed by all
of the shareholders entitled to vote with respect to
the subject matter thereof.
ARTICLE 11 STOCK
1. Certificates of stock shall be in a form
adopted by the Board of Directors and shall be
signed by the President and Secretary of the corporation.
2. All certificates shall be consecutively
numbered; the name of the person owning the
<PAGE>
shares represented thereby, with the number of such
shares and the date of issue shall be entered on
the company's books.
3. All certificates of stock transferred by
endorsement thereon shall be surrendered by
cancellation and new certificates issued to the purchaser or
assignee.
4. Upon surrender to the corporation or the
transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence
of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a
new certificate to the person entitled thereto,
and cancel the old certificate; every such transfer shall
be entered on the transfer book of the
corporation.
5. The corporation shall be entitled to treat
the holder of record of any share as the holder
in fact thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to or
interest in such share on the part of any other person
whether or not it shall have express or other
notice thereof, except as expressly provided by the laws of this
state.
ARTICLE III DIRECTORS
1. A Board of Directors, consisting of at least
one (1) person shall be chosen annually by the
shareholders at their meeting to manage the
affairs of the corporation. The Directors' term
of office shall be one (1) year, and Directors may be reelected
for successive annual terms.
2. Vacancies on the Board of Directors by reason
of death, resignation or other causes shall be
filled by the remaining Director or Directors choosing a
Director or Directors to fill the unexpired term
<PAGE>
3. Regular meetings of the Board of Directors
shall be held at 1:00 p.m., on the 18th day of
November of each year beginning in 1999 at the office of
the company at Carson City, NV, or at such other
time or place as the Board of Directors shall by
resolution appoint; special meetings may be
called by the President or any Director giving ten (10) days
notice to each Director. Special meetings may
also be called by execution of the appropriate waiver of
notice and called when executed by a majority of
the Directors of the company. A majority of the
Directors shall constitute a quorum.
4. The Directors shall have the general
management and control of the business and
affairs of the corporation and shall exercise all the powers
that may be exercised or performed by the
corporation, under the statutes, the Articles of
Incorporation, and the By-Laws. Such management
will be by equal vote of each member of the Board of Directors
with each Board member having an equal vote.
5. The act of the majority of the Directors
present at a meeting at which a quorum is
present shall be the act of the Directors.
6. A resolution, in writing, signed by all or a
majority of the members of the Board of
Directors, shall constitute action by the Board of Directors to
effect therein expressed, with the same force
and effect as though such resolution had been passed at a
duly convened meeting; and it shall be the duty
of the Secretary to record every such resolution in the
Minute Book of the corporation under its proper
date.
7. Any or all of the Directors may be removed
for cause by vote of the shareholders or by
action of the Board. Directors may be removed without cause
only by vote of the shareholders.
8. A Director may resign at any time by giving
written notice to the Board, the President or
the Secretary of the corporation. Unless otherwise
specified in the notice, the resignation shall
take effect upon receipt thereof by the Board or such
<PAGE>
Officer, and the acceptance of the resignation
shall not be necessary to make it effective.
9. A Director of the corporation who is present
at a meeting of the Directors at which action on
any corporate matter is taken shall be presumed to
have assented to the action taken unless his
dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such
action with the person acting as the Secretary of the meeting
before the adjournment thereof or shall forward
such dissent by registered mail to the Secretary of
the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply
to a Director who voted in favor of such action.
ARTICLE IV OFFICERS
1. The Officers of this company shall consist
of: a President, one or more Vice Presidents,
Secretary, Treasurer, and such other officers as shall,
from time to time. be elected or appointed by
the Board of Directors.
2. The PRESIDENT shall preside at all meetings
of the Directors and the shareholders and shall
have general charge and control over the affairs of
the corporation subject to the Board of
Directors. He shall sign or countersign all certificates,
contracts and other instruments of the
corporation as authorized by the Board of Directors and shall perform all
such other duties as are incident to his office
or are required by him by the Board of Directors.
3. The VICE PRESIDENT shall exercise the
functions of the President during the absence or
disability of the President and shall have such powers and
such duties as may be assigned to him, from time
to time, by the Board of Directors.
<PAGE.
4. The SECRETARY shall issue notices for all
meetings as required by the By-Laws, shall keep
a record of the minutes of the proceedings of the
meetings of the shareholders and Directors,
shall have charge of the corporate books, and shall make
such reports and perform such other duties as
are incident to his office, or properly required of
him by the Board of Directors. He shall be
responsible that the corporation complies with Section
78.105 of the Nevada Revised Statutes and
supplies to the Nevada Resident Agent or Registered Office in
Nevada, any and all amendments to the
corporation's Articles of Incorporation and any and all
amendments or changes to the By-Laws of the
corporation. In compliance with Section 78.105, he will also
supply to the Nevada Resident Agent or
Registered Office in Nevada, and maintain, a current
statement setting out the name of the custodian
of the stock ledger or duplicate stock ledger, and the
present and complete Post Office address,
including street and number, if any, where such stock ledger or
duplicate stock ledger is kept.
5. The TREASURER shall have the custody of all
monies and securities of the corporation and
shall keep regular books of account. He shall disburse
the funds of the corporation in payment of the
just demands against the corporation, or as may be
ordered by the Board of Directors, making proper
vouchers for such disbursements and shall render
to the Board of Directors, from time to time, as
may be required of him, an account of all his
transactions as Treasurer and of the financial
condition of the corporation. He shall perform all duties
incident to his office or which are properly
required of him by the Board of Directors.
6. The RESIDENT AGENT shall be in charge of the
corporation's registered office in the State of
Nevada, upon whom process against the
corporation may be served and shall perform all
duties required of him by statute.
<PAGE.
7. The salaries of all Officers shall be fixed
by the Board of Directors and may be changed,
from time to time, by a majority vote of the Board.
8. Each of such Officers shall serve for a term
of one (1) year or until their successors are
chosen and qualified. Officers may be reelected or
appointed for successive annual terms.
9. The Board of Directors may appoint such other
Officers and Agents, as it shall deem necessary
or expedient, who shall hold their offices for such
terms and shall exercise such powers and perform
such duties as shall be determined, from time to
time, by the Board of Directors.
10. Any Officer or Agent elected or appointed by
the Directors may be removed by the Directors
whenever in their judgment the best interests of
the corporation would be served thereby, but
such removal shall be without prejudice to the
contract rights, if any, of the person so
removed.
11. A vacancy in any office because of death,
resignation, removal, disqualification or
otherwise, may be filled by the Directors for the unexpired
portion of the term.
ARTICLE V INDEMNIFICATION OF OFFICERS AND
DIRECTORS
The corporation shall indemnify any and all of
its Directors and Officers, and its former
Directors and Officers, or any person who may have served at
the corporation's request as a Director or
Officer of another corporation in which it owns shares of
capital stock or of which it is a creditor,
against expenses actually and necessarily incurred by
them in connection with the defense of any
action, suit or proceeding in which they, or any of them, are
made parties, or a party, by reason of being or
having been Director(s) or Officer(s) of the
corporation, or of such other corporation,
except, in relation to matters as to which any such Director or Officer
or former Director or Officer or person shall be
adjudged in such action, suit or proceeding to
be liable for negligence or misconduct in the
performance of duty. Such indemnification shall not be
deemed exclusive of any other rights to which
those indemnified may be entitled, under By-Law,
agreement, vote of shareholders or otherwise.
ARTICLE VI DIVIDENDS
The Directors may, from time to time, declare,
and the corporation may pay, dividends on its
outstanding shares in the manner and upon the
terms and conditions provided by law.
ARTICLE VII WAIVER OF NOTICE
Unless otherwise provided by law, whenever any
notice is required to be given to any
shareholder or Director of the corporation under the provisions
of these By-Laws or under the provisions of the
Articles of Incorporation, a waiver thereof in
writing, signed by the person or persons
entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the
giving of such notice.
ARTICLE VIII AMENDMENTS
1. Any of these By-Laws may be amended by a
majority vote of the shareholders at any annual
<PAGE>
meeting or at any special meeting called for
that purpose.
2. The Board of Directors may amend the By-Laws
or adopt additional By-Laws, but shall not alter
or repeal any By-Laws adopted by the shareholders
of the company.
CERTIFIED TO BE THE BY-LAWS OF:
STRATABASE.COM
BY: /s/ Trevor Newton, Secretary
<PAGE>
EXHIBIT 4.1
SPECIMEN OF COMMON STOCK CERTIFICATE FOR
STRATABASE.COM
<PAGE>
EXHIBIT 4.2
SPECIMEN OFCLASS A REDEEMABLE COMMON STOCK
PURCHASE WARRANT FOR
STRATABASE.COM
<PAGE>
EXHIBIT 4.3
SPECIMEN OF CLASS B REDEEMABLE COMMON STOCK
PURCHASE WARRANT FOR
STRATABASE.COM
<PAGE>
EXHIBIT 4.4
SPECIMEN OF CLASS C REDEEMABLE COMMON STOCK
PURCHASE WARRANT FOR
STRATABASE.COM
<PAGE>
EXHIBIT 4.5
WARRANT AGREEMENT
BETWEEN STRATABASE.COM AND SECURITIES TRANSFER
CORPORATION (Warrant Agent)
Agreement made this _ day of , 1999 by
and among Stratabase.com, a Nevada Corporation,
and
Securities Transfer Corporation, a Texas
Corporation ("Warrant Agent"), with reference to
the following facts and circumstances:
WHEREAS the Company is distributing up to
2,400,000 warrants, comprised of 800,000 Class A
warrants, 800,000 Class B warrants, and 800,000
Class C warrants, (collectively referred to as
"the Warrants"), each giving the right to purchase
one share of Common Stock, such rights to be
evidence by a Common Stock Purchase Warrant ("the
Warrant");
WHEREAS, in connection with the distribution,
the Company will issue up to 2,400,000 warrants
(800,000 Class A warrants, 800,000 Class B
warrants, and 800,000 Class C warrants) to
purchase an aggregate of 2,400,000 shares (the "Warrant
Shares");
WHEREAS, the Company desires to provide for
issuance of warrant certificates (the "Warrant
<PAGE>
Certificates") representing up to 2,400,000
warrants (800,000 Class A warrants, 800,000 Classs B
warrants, and 800,000 Class C warrants).
WHEREAS, the Company desires the Warrant Agent
to act on behalf of the Company, and the
Warrant Agent is willing so to act, in
connection with the issuance, registration,
transfer and exchange of
Warrant Certificates and exercise of the
Warrants.
NOW, THEREFORE, in consideration of the promises
and the mutual agreements hereinafter set forth,
it is agreed that:
Each Warrant shall entitle the holder (the
"Registered Holder" or, in the aggregate, the
"Registered
Holders") in whose name the Warrant Certificate
shall be registered on the books maintained by
the
Warrant Agent to purchase one share of Common
Stock of the Company on exercise thereof,
subject
to modification and adjustment as provided
below.
The Warrant Agent shall deliver Warrant
Certificates in required whole number
denominations to
Registered Holders in connection with any
transfer or exchange permitted under this
Agreement.
The Warrant Certificates shall be substantially
in the form attached as Exhibit A. The Warrant
Certificates shall be dated as of the date of
their issuance, whether on initial issuance,
transfer or
exchange or in lieu of mutilated, lost, stolen
or destroyed Warrant Certificates.
<PAGE>
The Warrant Certificates shall be countersigned
by the Warrant Agent and shall not be valid for
any purpose unless so countersigned. In the event
any officer of the Company who executed the
Warrant
Certificates shall cease to be an officer of the
Company before the date of issuance of the
Warrant
Certificates or before countersignature and
delivery by the Warrant Agent, such Warrant
Certificates
may be countersigned, issued and delivered by
the Warrant Agent with the same force and effect
as
though the person who signed such Warrant
Certificates had not ceased to be an officer of
the
Company.
Each Class A warrant entitles the holder to
purchase one share of common stock at a purchase
price of
$ 1.00 per share. Each Class B warrant entitles
the holder to purchase one share of Common stock
at
a purchase price of $3.00 per share. Each Class
C warrant entitles the holder to purchase one
share of common stock at a purchase price of $5.00 per
share. No fractional shares will be issued upon
exercise of the warrants.
The Class A, B, and C warrants are exercisable
for a six month, twelve month, and eighteen
month period, respectively, each commencing from (the
effective date of the offering). Unless
exercised, the warrants will automatically expire 6 months (as
to the Class A warrants), 12 months (as to the
Class B warrants), and 18 months (as to the Class C
warrants) from the effective date of the
offering. Stratabase.com reserves the right to extend each
of the warrant exercise periods, or any of them,
and/or to reduce the exercise price(s) by up to
50%, upon 30 days prior written notice to the
<PAGE>
Warrant Holders. Stratabase.com reserves the right to
redeem the warrants, in whole or in part, at a
price of $0.01 per A, B, or C warrant, if the average bid
price of the common stock for 7 trading days
during a 10 consecutive trading day period is greater
than 20% above the respective exercise price.
Notice of any redemption will be mailed to the holders
thereof at their addresses of record. Any holder
who does not exercise his warrant prior to the time the
warrants are redeemed after notice by
Stratabase.com or prior to the expiration of the respective
exercise period, (or extended period, if any),
whichever occurs first, will forfeit his rights to purchase the
shares of common stock underlying the warrants.
The warrants are in registered form and may be
sold, assigned or conveyed separately and apart
from the common stock component of the units.
The exercise of one warrant will be necessary to
enable the holder to purchase one share of
common stock. The holders of the warrants are protected
against dilution of their interests represented
by the number of shares of common stock underlying the
warrants upon the occurrence of certain events,
including stock dividends, splits, mergers,
reclassifications, and sale by Stratabase.com of
shares of common stock below the then book value, other
than sale to employee benefit and stock option
plans.
The holders of the warrants have no right to
vote on matters submitted to shareholders of the
company and have no right to receive dividends. The
holders of the warrants are not entitled to
share in
<PAGE>
the assets of Stratabase.com in the event of liquidation,
dissolution, or the winding up of Stratabase.com's affairs.
The Company covenants that it will at all times
reserve and have available from its authorized
Common Stock such number of shares as shall then be
issuable on the exercise of all outstanding
Warrants. The Company covenants that all Warrant Shares which
shall be so issuable shall be duly and validly
issued, fully paid and non-assessable, and free from all
taxes, liens and charges with respect to the
issue thereof.
In the absence of an applicable exemption,
Stratabase.com is required to have a current,
effective registration statement on file with the
Securities and Exchange Commission and have
satisfied the "Blue Sky" registration requirements of the applicable
regulatory authority of the state in which the
holder of a warrant resides, in order for the holder to
exercise the warrant. Therefore, Stratabase.com
will be required to file post-effective arnendments to
its registration statement when subsequent
events require such amendments in order to continue the
registration of the shares of common stock
underlying the warrants. Although it is the intention of
Stratabase.com to both maintain a current
prospectus and meet the requirements of the appropriate state
regulatory authorities during the term of the
warrants, there can be no assurance that Stratabase.com will be
in a position to keep its registration statement
current and effective or to meet the requirements of any
state regulatory authority.
In the event the Warrant Agent ceases to also
serve as the stock transfer agent for the
<PAGE>
Company, the Warrant Agent is irrevocably authorized to
requisition the Company's new transfer agent
from time to time for Certificates of Warrant Shares required
upon exercise of the Warrants, and the Company
will authorize Such transfer agent to comply with all
such requisitions. The Company will file with
the Warrant Agent a statement setting forth the name
and address of its new transfer agent, for
shares of Common Stock or other capital stock issuable
upon exercise of the Warrants and of each
successor transfer agent.
The Warrant Agent shall keep transfer books at
its Corporate Office which shall register
Warrant Certificates and the transfer thereof. On due
presentment for registration of transfer of any
Warrant Certificate at such office, the Company shall
execute and the Warrant Agent shall issue and
deliver to the transferee or transferees a new Warrant
Certificate or Certificates representing an
equal aggregate number of Warrants. All Warrant Certificates
presented for registration of transfer or
exercise shall be duly endorsed or be accompanied by a written
instrument or instruments or transfer in form
satisfactory to the Warrant Agent. The established transfer
fee for any registration of transfer or Warrant
Certificates shall be paid by the Registered
Holder or the person presenting the warrant
certificate for transfer. The Company may also require payment
of a sum sufficient to cover any tax or other
government charge that may be imposed in
connection therewith.
All Warrant Certificates so surrendered, or
surrendered for exercise, or for exchange in
case of mutilated Warrant Certificates, shall be
promptly canceled by the Warrant Agent and
thereafter retained by the Warrant Agent until termination
of the agency created by this Agreement. Prior
<PAGE>
to due presentment for registration of transfer
thereof, the Company and the Warrant Agent may
treat the Registered Holder of any Warrant Certificate as
the absolute owner thereof (notwithstanding any
notations of ownership or writing thereon made
by anyone other than the Company or the Warrant
Agent), and the parties hereto shall not be
affected by any notice to the contrary.
On receipt by the Company and the Warrant Agent
of evidence satisfactory as to the ownership of
and the loss, theft, destruction or mutilation of
any Warrant Certificate, the Company shall,
execute, and the Warrant Agent shall countersign and deliver in
lieu thereof, a new Warrant Certificate
representing an equal aggregate number of Warrants. In case of
loss, theft or destruction of any Warrant
Certificate, the individual requesting reissuance of a new
Warrant Certificate shall be required to
indemnify the Company and Warrant Agent, and also to post an
open-penalty insurance bond. In the event a
Warrant Certificate is mutilated, such
Certificate shall be surrendered and canceled by
the Warrant Agent prior to delivery of a new Warrant
Certificate. Applicants for a new Warrant
Certificate shall also comply with such other regulations and pay
such other reasonable charges as the Company may
prescribe.
This Warrant Agent Agreement shall be
incorporated by reference on the Warrant
Certificates.
The Warrant Agent shall act hereunder as agent
and in a ministerial capacity for the Company,
and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not,
by issuing and delivering Warrant Certificates or by any other
act hereunder, be deemed to make any
<PAGE>
representations as to the validity, value or authorization or
the Warrant Certificates or the Warrants
represented thereby or of the Common Stock or other property
delivered on exercise of any Warrant. The
Warrant Agent shall not at any time be under any duty or
responsibility to any holder of the Warrant
Certificates to make or cause to be made any adjustment of the
Exercise Price or to determine whether any fact
exists which may require any such adjustments.
The Warrant Agent shall not (i) be liable for
any recital or statement of fact contained
herein or for any action taken or omitted by it in reliance on any
Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and
to have been signed or presented by proper party
or
parties, (ii) be responsible for any failure on
the part of the Company to comply with any of
its
covenants and obligations contained in this
Agreement except for its own negligence or
willful
misconduct, or (iii) be liable for any act or
omission in connection with this Agreement
except for its
own negligence or willful misconduct.
The Company agrees to indemnify the Warrant
Agent against any and all losses, expenses and
liabilities
which the Warrant Agent may incur in connection
with the delivery of copies of the Company's
prospectus to exercising Registered Holders upon
the exercise of any Warrants.
The Company agrees to pay the Warrant Agent all
compensation for its services hereunder and to
reimburse the Warrant Agent for its expenses as
set forth in the attached fee schedule. The
Company
further agrees to indemnify the Warrant Agent
against any and all losses, expenses and
liabilities,
<PAGE>
including judgments, costs and counsel fees, for
any action taken or omitted by the Warrant Agent
in
the execution of its duties and powers
hereunder, excepting losses, expenses and
liabilities arising as a
result of the Warrant Agent's negligence or
willful misconduct.
The Warrant Agent may resign its duties or the
Company may terminate the Warrant Agent and the
Warrant Agent shall be discharged from all
further duties and liabilities hereunder (except
liabilities
arising as a result of the Warrant Agent's own
negligence or willful misconduct), on 30 days'
prior
written notice to the other party.
The Warrant Agent, its officers or directors and
its subsidiaries or affiliates may buy, hold or
sell
Warrants or other securities of the Company and
otherwise deal with the Company in the same
manner
and to the same extent and with like effect as
though it were not Warrant Agent. Nothing herein
shall
preclude the Warrant Agent from acting in any
other capacity for the Company or for any other
legal
entity.
The Warrant Agent and the Company may by
Supplemental agreement make any changes or
corrections in this Agreement (i) that they
shall deem appropriate to cure any ambiguity or
to correct
any defective or inconsistent provision to
mistake or error herein contained; or (ii) that
they may deem
necessary or desirable and which shall not
adversely affect the interest of the holders of
Warrant
Certificates.
<PAGE>
All notices, demands, elections, opinions or
request (however characterized or described)
required or
authorized hereunder shall be deemed given
sufficiently if in writing and sent by
registered or certified
mail, return receipt requested and postage
prepaid, or by tested telex, telegram or cable
to, in case of
the Company:
Stratabase.com
34314 Marshall Rd., Suite 203
Abbotsford, BC, V2SlL2 Canada
and in the case of the Warrant Agent:
Securities Transfer Corporation
P. 0. Box 701629
Dallas, Texas 75370-0001
and if to the Registered Holder of a Purchase
Warrant Certificate, at the address of such
holder as set
forth on the books maintained by the Warrant
Agent.
This Agreement shall be binding upon and inure
to the benefit of the Company, the Warrant Agent
and
their respective successors, and assigns, and
the holders from time to time of Purchase
Warrant
Certificates. Nothing in this Agreement is
intended or shall be construed to confer upon
any other
person any rights, remedy or claim or to impose
on any other person any duty, liability or
obligation.
The parties shall execute and deliver any and
all such other instruments and shall take any
<PAGE>
and all other actions as may be reasonably necessary to carry
out the intention of this Agreement.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of
the date first above written.
Stratabase.com
Trevor Newton, President
WARRANT AGENT
SECURITIES TRANSFER CORPORATION
Kevin Halter, President
<PAGE>
EXHIBIT 5.1 - OPINION OF COUNSEL
August 10, 1999
Stratabase.com
343154 Marshall Road, Suite 2032
Abbotsford, B.C. V2S1L2 Canada
<PAGE.
Gentlemen:
I refer to the registration statement and all
amendments thereto on Form SB-2 (the
"Registration Statement") to be filed by Stratabase.com (the
"Company") with the U.S. Securities and Exchange
Commission under the Securities Act of 1933, as
amended. Said Registration Statement relates to
an offering of Units comprised of Common Stock
($.001 par value) and Redeemable Warrants to
purchase shares of Common Stock to be sold by
the Company.
As counsel for the Company, I have examined such
corporate records, documents and such questions
of law as I have considered necessary or
appropriate for the purposes of this opinion,
and, upon the basis of such examination, advise you that in my
opinion the:
1. 800,000 shares of $.001 par value Common
Stock; and
2. 2,400,000 shares of Common stock issuable
upon the exercise of the Redeemable Warrants
included in the Units being offered,
have been duly and validly authorized and when
sold in the manner contemplated by the
Registration Statement, and upon the receipt by the Company
of payment therefore as provided in the
Registration Statement, the aforementioned securities will be
legally issued, fully paid and non-assessable.
Very truly yours,
James C. Jones, Esq.
JCJ:bt
<PAGE>
EXHIBIT 10.1
Escrow Agreement
Agreement made this _ day of _, 1999 by and
among Stratabase.com, a Nevada Corporation, and
Securities Transfer Corporation, a Texas
Corporation ("Escrow Agent"), with reference to
the
following facts and circumstances:
The company has offered and is presently
offering (the "Offering") for sale to investors
up to 800,000
units of its common stock as described on the
form SB-2 of the company (File No. )
filed with the
Securities and Exchange Commission and, as
amended, declared effective on ,
1999.
Description of the Units
A total of 800,000 units are available to be
sold for $0.50 per unit. Each unit consists of
one share of
common stock ($.001 par value), one redeemable
Class A common stock purchase warrant ("Class A
Warrants"), one redeemable Class B common stock
purchase warrant ("Class B Warrants"), and one
redeemable Class C common stock purchase warrant
("Class C Warrants").
The Offering is being made on a best-efforts,
all or none basis as to the first 400,000 units,
and on a
best efforts basis as to the remaining units. If
400,000 units are not sold within 90 days from
the
effective date of the offering (which period can
be extended for an additional 90 days), all
funds
received will be promptly refunded to
subscribers in full, without interest, or
deduction. If 400,000 units
are sold, the Offering will continue without any
provision for refund: (1) until all of the
remaining
400,000 units are sold; (2) until 90 days (or
180 days if extended) from the date of the
effective date of
the offering; or (3) upon the prior termination
of the offering by Stratabase.com, whichever
occurs first.
The units are being offered by Stratabase.com
when, as and if received and accepted by it,
subject to
prior sale, allotment and withdrawal,
cancellation or modification of the offer
without notice and subject
to the exclusive right of Stratabase.com to
reject any order in whole or in part at any
time, and to
certain further conditions. The Offering may
close in up to 14 days after the end of the
Offering period.
A. Stratabase.com and Escrow Agent have executed
that certain Transfer Agent Agreement, dated
, 1999 (the "Transfer Agent
Agreement") whereby the Escrow Agent acts as the
Transfer
Agent for Stratabase.com.
B. Stratabase.com desires the Escrow Agent to
act on behalf of Stratabase.com, and the Escrow
Agent is willing so to act, in connection with
the receipt of funds from subscribers in payment
of the
subscription price of the units pursuant to the
terms of the offering.
THEREFORE, in consideration of the mutual
covenants and agreements hereinafter set forth,
the
parties agree as follows:
1. Escrow Amount:
The Escrow Agent shall promptly notify
Stratabase.com in writing of any subscription
and of the
number of units subscribed and shall cause
payment of an amount in cash equal to the
subscription price
of the units to be promptly deposited into the
Escrow Account. The Parties contemplate such
payments
will be deposited to the Escrow Account on a
weekly basis and will consist of collected funds
only. The
Escrow Agent shall hold any proceeds collected
in an escrow account federally insured, at all
times
relevant hereto. Stratabase.com hereby consents
and authorizes the agent to establish said
escrow
account and to sign and execute whatever forms
or documents are necessary to establish the
account.
Stratabase.com also authorizes the agent to
endorse any checks received as subscription
payment
which are made payable to Stratabase.com for
deposit into said account. As soon as collected
funds
are equal to the minimum offering ($200,000) and
have cleared, Escrow Agent will release
collected
funds to Stratabase.com. All funds collected
thereafter will be turned over to Stratabase.com
on a
weekly basis once cleared.
2. Rights of Escrow Agent:
2.1 No person, firm, or corporation will be
recognized by the Escrow Agent as a successor or
assignee
of Stratabase.com until there shall be presented
to the Escrow Agent evidence satisfactory to it
of such
succession or assignment.
2.2 The Escrow Agent shall not be responsible
for the identity, authority or rights of any
person, firm,
or corporation executing or delivering or
purporting to execute or deliver this escrow
agreement or any
document or instrument deposited hereunder or
any endorsement thereon or assignment thereof.
2.3 The Escrow Agent may rely upon any
instrument in writing believed by it to be
genuine and
<PAGE>
sufficient and properly presented, and shall not
be liable or responsible for any action taken or
omitted
in accordance with the provisions thereof.
2.4 The Escrow Agent shall not be liable or
responsible for any act it may for or omit to do
in the
exercise of reasonable care.
2.5 In the event any property held by the Escrow
Agent hereunder shall be attached garnisheed or
levied upon under any court order, or if the
delivery of such property shall be stayed or
enjoined by any
court order, or if any court order, judgment or
decree shall be made or entered affecting such
property
or affecting any act by the Escrow Agent, the
Escrow Agent may, in its sole discretion, obey
and
comply with all writs, orders, judgments or
decrees so entered or issued, whether with or
without
jurisdiction notwithstanding any provision of
the Escrow Agreement to the contrary. If the
Escrow
Agent obeys and complies with any such writs
orders, judgments or decrees it shall not be
liable to any
of the parties hereto or to any other person,
firm or corporation, by reason of such
compliance,
notwithstanding that such writs, orders,
judgments or decrees may be subsequently
reversed, modified,
annulled, set aside or vacated.
2.6 The Escrow Agent shall be entitled to
receive its normal fees as compensation for its
services
hereunder, as shall be set forth in Schedule A
hereof. Furthermore, the Company shall reimburse
the
Escrow Agent for any and all reasonable
expenses, disbursements and advances made by it
in the
performance of its duties hereunder including
reasonable: fees, expenses and disbursements
incurred by
its counsel.
2.7 If the delivery of the Escrow Amount to the
Company is disputed, the Escrow Agent shall,
subject
to the provisions of this Section 2, withhold
such delivery until the dispute is resolved by
written
agreement between The parties or by court
decree. Such court decree shall also be
accompanied by a
legal opinion by counsel for the party
requesting delivery that such adjudication is
final and
unappealable.
2.8 The Escrow Agent makes no representation as
to the validity, value, genuineness or the
collectibility
of any security or other document or instrument
held by or delivered to it.
3. Miscellaneous Provisions:
3.1 All the terms and provisions hereof shall be
binding upon and inure to the benefit of and be
enforceable by the representatives, successors,
heirs and assign, of the parties hereto.
3.2 This Escrow Agreement constitutes the entire
understanding between the parties with respect
to the
subject matter hereof superseding all
negotiations, prior discussions and preliminary
agreements. This
Escrow Agreement may not be changed except in
writing by an instrument or instruments executed
by
and Escrow Agent.
3.3 No Waiver of any provisions of this Escrow
Agreement nor waiver of any breach or default
under
<PAGE>
this Escrow Agreement shall be considered valid
unless in writing and signed by the party giving
such
waiver, and no such waiver shall be deemed a
waiver of any other provision or any subsequent
breach
or default of a similar nature.
3.4 The invalidity or unenforceability of any
particular provision of this Escrow Agreement
shall not
affect the other provisions hereof and this
Escrow Agreement shall be construed in all
respects as if
such invalid or unenforceable provisions were
omitted.
3.5 This Agreement may be executed in one or
more counterparts each of which shall be deemed
an
original, and all of which taken together shall
constitute one and the same instrument.
Execution and
delivery of this Agreement by exchange of
facsimile copies bearing facsimile signature of
a party shall
constitute a valid and binding execution and
delivery of this Agreement by such party. Such
facsimile
copies shall constitute enforceable original
documents.
3.6 Section headings are contained in this
Escrow Agreement only for purposes of
convenience of
reference and shall not affect the
interpretation of this Escrow Agreement or
modify any of its terms or
provisions.
3.7 This Agreement shall be construed and
enforced according to the internal laws of the
State of
Texas, without regard to its rule pertaining to
conflicts of laws.
3.8 Any notice or other communication permitted
or required to be given hereunder shall be in
writing
andshall be deemed to have been given upon
mailing by first class registered mail, postage
prepaid
addressed to the parties as set forth below:
To Escrow Agent: Security Transfer
Corporation
16910 Dallas
Parkway, Suite 100
Dallas, Texas
75249
Attn: Kevin
Halter, President
To the Company: Stratabase.com
3414 Marshall
Road, Suite 203
Abbotsford, B.C.
V2S1L2, Canada
Trevor Newton,
President
Each of the foregoing shall be entitled to
specify a different address by giving notice as
aforesaid to the
other parties
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of
the day and year first above written,
ESCROW AGENT:
SECURITIES TRANSFER CORPORATION
By:
Kevin Halter, President
The Company:
Stratabase.com
By:
Trevor Newton, President
<PAGE>
EXHIBIT 10.2 - LEASE WITH SGS ENTERPRISES
</TABLE>
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Article 1 Basic Terms
Article 2 Term
Article 3 Rent and Deposit
<PAGE>
Article 4 Use of Demised Premises
Article 5 Miscellaneous Covenants of the Tenant
Article 6 Miscellaneous Covenants of the Landlord
Article 7 Use of Common Areas and Facilities
Article 8 Alterations and Installations
Article 9 Subordination
Article 10 Liability for Property Damage
and/or Personal Injury
Article 11 Damage to or Destruction of
the Demised Premises
Article 12 Expropriation
Article 13 Access to Demised Premises
Article 14 Taxes
Article 15 Operating Expenses
Article 16 Additional Rent
Article 17 Default
Article 18 Distress
Article 19 Landlord's Expenses Enforcing Lease
Article 20 Waiver
Article 21 Holdover
Article 22 Rules and Regulations
Article 23 Inability to Perform
Article 24 Notices
Article 25 Interpretation
Article 26 Definitions
Article 27 Obligations of Guarantor
Article 28 Additional Covenants
</TABLE>
THIS LEASE, made the
22 day of 1999, between the
Landlord and the
Tenant named herein WITNESSES that in
consideration of the rents, covenants and
agreements hereinafter reserved and contained on
the part of the Tenant to be paid, observed and
performed the Landlord hereby demises and leases
unto the Tenant the Premises hereinafter
described
all on the terms, conditions and covenants as
hereinafter set forth.
ARTICLE 1
BASIC TERMS
1.1 Landlord: SGS Enterprises Ltd.
Address: 301-34252 Marshall Rd.
Abbotsford, BC V2S1L2
1.2 Tenant: Stratabase.com Inc.
2533 N. Carson
Address: Carson City, Nevada 89706
1.3 Guarantor:
Address:
1.4 Area of Premises: 736 square feet.
Address: 203-34314 Marshall Rd.
Abbotsford, BC
1.5 (a)Term: 1 year and - 0 months;
(b)Commencement date: March 1, 1999
1.6 Minimum Rent:
Lease Years $/Sq. Ft. $/Annum
$/Month
From To
<PAGE>
03/01/99 2/28/00 $
$858.67
1.7 Deposit: $ 858.67 + GST
1.8 Permitted Use of Premises: Computer and
internet related operations
1.9. Renewal Options:
(a) number of terms
(b) length of each term
(c) notice of exercise to be delivered
180 days prior to expiry of term.
The foregoing Basic Terms are hereby approved by
the parties and each reference in this Lease to
any
of the Basic Terms shall be construed to include
the provisions set forth above as well as all of
the
additional terms and conditions of the
applicable sections of this lease where such
Basic Terms are
more fully set forth.
ARTICLE 2
TERM
2.1 TO HAVE AND TO HOLD the Premises for and
during the Term set out
in Section 1.5(a) hereof commencing on the
Commencement Date set out in Section 1.5(b)
hereof and
from thenceforth next ensuing at the rent
hereinafter covenanted to be paid by the Tenant.
<PAGE>
ARTICLE 3
RENT AND DEPOSIT
3.1 YIELDING AND PAYING therefore unto the
Landlord without deduction or setoff in each
year of the Term the Minimum Rent set out in
Section 1.6(b) hereof in respect of such year,
payable in
advance in equal monthly installments in the
amount set out in Section 1.6(c) hereof in
respect of such
year, the first of such installments on the
Commencement Date and subsequent monthly
installments on
the 1st day of each month thereafter. All
Minimum Rent and Additional Rent (as hereinafter
described)
shall bear interest at the rate of 2% per month
(26.824% per annum from the date upon which it
becomes payable by the Tenant until paid. If the
Commencement Date is not the first day of a
calendar
month, the Tenant will pay on the Commencement
Date, as the installment of Minimum Rent for the
calendar month in which the Commencement Date
occurs, the amount otherwise payable for that
calendar month pro-rated on a per them basis.
Minimum Rent has been determined on the basis
that the square foot area of the Premises is as
set out
in Section 1.4 hereof and that rent in respect
thereof is the amount set out in Section 1.6(a)
hereof.
GST shall be charged on all rent and additional
rent.
3.2 The Tenant will deliver to the Landlord
at the start of the Term and thereafter before
the start of
<PAGE>
each calendar year within the Term post-dated
for each month of the Term which falls within
such
calendar year, in each an amount equal to the
aggregate of the Minimum Rent payable monthly
and the
monthly estimated Additional Rent for such year
of the Term.
3.3 The Landlord acknowledges receipt from
the Tenant of the Deposit set out in Section 1.7
hereof
which will be held by the Landlord as security
for the due performance by the Tenant of its
obligations
hereunder and will be returned to the Tenant
upon the termination of this Lease and the
Tenant vacating
the Premises, provided that the Landlord may
apply the Deposit to payment of any costs
incurred by
the Landlord in returning the Premises pursuant
to Section 8.3 hereof.
ARTICLE 4
USE OF DEMISED PREMISES
4.1 The Tenant shall use the Premises for
the purposes set out in Section 1.8 hereof and
for no other
purpose without the prior written consent of the
Landlord.
ARTICLE 5
MISCELLANEOUS COVENANTS OF THE TENANT
<PAGE>
The Tenant covenants with the Landlord:
5.1 To pay Rent as set out herein.
5.2 To pay all other charges for telephone
or other services supplied, delivered to or made
available
upon the Premises and if at any time for any
reason during the term hereof or any renewal or
extension,
the Landlord is required to pay all or any of
the foregoing, then a sum equal to the amount so
paid shall
forthwith become due and collectable as if the
same were rent reserved hereunder.
5.3 To repair and maintain the Premises to
the standard of a prudent owner
in occupation, subject to the Landlord being
responsible for any structural defects in
the Building, to include walls, foundations and
roof.
5.4 That the Landlord may enter and view the
state of repair and that the Tenant will repair
according to notice save as aforesaid.
5.5 That it will leave the Premises in good
repair, save as aforesaid.
5.6 To restore forthwith at the Tenant's
expense any broken or damaged glass or windows
on the Premises from time to time.
<PAGE>
5.7 Not to do or suffer any waste or damage,
disfiguration or injury to the Premises or the
fixtures,
and equipment therein nor to permit or suffer
any overloading of the floors thereof and not to
use or
permit the use of any part of the Premises for
any dangerous, noxious or offensive trade or
business and
not to permit, cause or maintain any nuisance or
interference with the comfort of any of the
occupants
of the said Building.
5.8 Not to exhibit signs of any nature on
walls, doors or windows without the prior
written approval
of the Landlord.
5.9 Not to do or permit anything to be done
whereby any policy of insurance on the said
Building or
any part thereof may become void or voidable or
whereby the premium thereon may be increased
and,
in addition to any other rights granted to the
Landlord under this lease, if the Tenant does or
permits
anything to be done whereby the premium for any
insurance policy in respect to the Building is
increased, the Landlord may require the Tenant
to pay to the Landlord an amount equal to the
whole
of such increase. If an insurance policy or part
or all of the Building is canceled or threatened
to be
canceled by the insurer or the coverage
thereunder reduced or threatened to be reduced
by the insurer
because of the Tenant's use and occupation of
the Premises and the Tenant fails to remedy the
condition giving rise to the cancellation,
reduction or threatened cancellation or
reduction within 48
hours of notice thereof by the Landlord, the
Landlord may:
(a) reenter the Premises in which case
Article 17 hereof shall apply; or
<PAGE>
(b) enter the Premises and remedy such
condition and the Tenant will pay the Landlord
the cost
thereof on demand as Additional Rent, and the
Landlord will not be responsible for damage or
injury to
the Tenant or others as a result of such entry.
5.10 (a) The Tenant shall not permit any
part of the Premises to be used or occupied by
any
persons other than the Tenant, any assignees or
subtenants permitted under subclause 5. 10(b)
and the
employees of the Tenant and of any such
permitted assignee or subtenant, or permit any
part of the
Premises to be used or occupied by any licensee
or concessionaire, or permit any persons to. be
upon
the Premises other than the Tenant, such
permitted assignees or subtenants and their
respective
employees, customers and others having lawful
business with them.
(b) The Tenant shall not assign this
lease or sublet the whole or any part of the
demised premises
unless (1) it shall have received or procured a
bona fide written offer to take an assignment or
sublease
which is not inconsistent with, and the
acceptance of which would not breach any
provision of this lease if this subclause
5.10(b) is complied with and which the Tenant
has determined to
accept subject to this subclause 5.10(b) being
complied with, and (2) it shall have first
requested and
obtained the consent in writing of the Landlord
thereto. Any request for such consent will be in
writing
and accompanied by a true copy of such offer and
the Tenant shall furnish to the Landlord all
information available to the Tenant and
requested by the Landlord as to the
responsibility, reputation,
financial standing and business of the proposed
assignee or subtenant. Within 15 days after the
receipt
by the Landlord of such request for consent and
of all information which the Landlord shall have
requested hereunder (and if no such information
has been requested), within 15 days after
receipt of
<PAGE>
such request for consent the Landlord shall have
the right upon written notice to the Tenant, if
the
request is to assign this lease or sublet the
whole of the Premises, to cancel and terminate
this lease or if
the request is to sublet a part of the Premises
only, to cancel and terminate this lease with
the respect to
such part, in each case as of termination date
to be stipulated in the notice of termination
which shall be
not less than sixty (60) days or more than
ninety (90) days following the giving of such
notice and in
such event the Tenant shall surrender the whole
or part as the case may be of the Premises in
accordance with such notice and rent shall be
apportioned and paid to the date or surrender
and if a
part of the Premises is surrendered, rent
payable under clause 3.1 shall thereafter abate
proportionately. If the Landlord shall not
exercise the foregoing right of termination,
then the Landlord's
consent to the Tenant's request for consent to
assign or sublet shall not be unreasonably
withheld and if
such consent be given the Tenant shall assign or
sublet, as the case may be, only upon the terms
set out
in the offer submitted to the Landlord as
aforesaid and not otherwise.
(c) The consent by the Landlord to an
assignment or subletting will not constitute a
waiver of its
consent to a subsequent assignment or
subletting. This prohibition against assignment
or subletting
includes a prohibition against an assignment or
subletting by operation of law. If this Lease is
assigned,
or if all or part of the Premises is sublet or
occupied by anybody other than the Tenant, in
any case
without the consent of the Landlord when
required, the Landlord may collect rent from the
assignee,
subtenant or occupant, and apply the net amount
collected to the rent herein reserved, but no
such
assignment, sublease, occupancy or collection
will be considered a waiver of this covenant, or
the
acceptance of the subtenant or occupant as
Tenant. Despite an assignment the Tenant remains
fully
<PAGE>
liable under this Lease. An assignment of the
Lease if consented to by the Landlord will be
prepared by
the Landlord or its solicitors, and all legal
costs of its preparation will be paid by the
Tenant.
(d) If after the date of execution of
this Lease shares of the Tenant or of a
corporation which
controls the Tenant are transferred by sale,
assignment, bequest, inheritance, operation of
law of other
disposition, or issued by subscription or
allotment, or canceled or redeemed, so as to
result in a change
in the effective voting or other control of the
Tenant or of a corporation which controls the
Tenant or if
other steps are taken to accomplish a change of
such control, the Tenant promptly will notify
the
Landlord in writing of the change, which will be
considered to be assignment of this Lea se to
which
section 5.10(b) applies, and whether or not the
Tenant notifies the Landlord, the Landlord may
terminate this Lease within sixty (60) days
after the Landlord learns of the change unless
the Landlord
previously had consented to the change.
5.11 To keep the Premises free of rubbish and
debris at all times and to provide proper and
sufficient
receptacles for waste.
5.12 To maintain and keep clean at the
Tenant's expense the Premises and light fixtures
on the
Premises.
5.13 To conduct its business in and use the
whole of the Premises continuously throughout
the Term
in an up-to-date, first class and reputable
manner befitting the Building and on the days
and during the
hours that the Landlord from time to time
designates.
<PAGE>
5.14 To abide by and comply with all laws,
rules and regulations of every municipal or
other authority
which in any manner relate to or affect the
business or
profession of the Tenant or the use of the
Premises by the Tenant and to save harmless the
Landlord
from all costs, charges or damages which the
Landlord may incur or suffer by reason of the
breach by
the Tenant of any such law, rule or regulation.
5.15 To take out and keep in full force and
effect throughout the term and during such other
time as
the Tenant occupies the Premises or any part
thereof:
(a) Comprehensive general liability
insurance against claims or personal injury,
death or property
damage or loss upon, in or about the Premises or
otherwise howsoever arising out of the
operations of
the Tenant or any person conducting business
from the Premises, to the combined limit as may
be
reasonably required by the Landlord from time to
time, but, in any case of not less than
$2,000,000.00
in respect to injury or death to any one person
and in respect of any one occurrence concerning
property damage;
(b) The policy of insurance required
of the Tenant as aforesaid shall name the
Landlord and any
persons or corporations designated by the
Landlord as additional named insured as their
interest may
appear and will contain, as appropriate, a
waiver of rights of subrogation against the
Landlord and the
Tenant and a cross-liability and/or severability
or interest clause protecting the Landlord
against claims
<PAGE>
by the Tenant as if the Landlord were separately
insured and protecting the Tenant against claims
by the
Landlord as if the Tenant were separately
insured as well as a clause that the insurer
will not cancel or
change or refuse to renew the insurance without
first giving the Landlord thirty (30) days prior
written
notice. All such policies will be with insurers
acceptable to the Landlord and in a form
satisfactory to
the Landlord and the Tenant will deliver a copy
of all such policies or certificates of such
insurance.
5.16 The Tenant will take out and maintain,
if required by statute, workers' compensation or
similar
insurance affording statutory coverage and
containing statutory limits.
5.17 In the event the landlord wishes to
obtain lease guarantee insurance insuring in
favour of the
Landlord the rents payable under the Lease or
mortgage insurance insuring the payment under
the
mortgage charging the lands, the Tenant agrees
that upon seven (7) days notice it shall deliver
to the
Landlord such information and material as the
Landlord may reasonably require to make
application
for, obtain and maintain such insurance,
including true and complete financial
statements.
5.18 The Landlord, having advised the Tenant
that it plans to renovate the Building, may
enter the
Premises and use such reasonable portions of the
Premises as shall be necessary for such
renovations
including but not restricted to the Landlord's
requirements for stairways, elevator shafts,
utilities, rights-
of-way, heating or air conditioning shafts,
hallways or any other passageway or areaway
required by
the Landlord. The Landlord shall make every
effort to minimize any inconvenience to the
Tenant and
rent shall abate on any of the Tenant's space
used by the Landlord for such renovations.
<PAGE>
5.19 Except to the extent that the loss of
life, personal injury or damage to property
referred to in this
sentence is caused by the negligence of the
Landlord or another person for whose negligence
the
Landlord is responsible in law, the Tenant will
indemnify the Landlord and save it harmless from
and
against any and all claims, actions, damages,
liability and expenses in connection with loss
of life,
personal injury or damage to property arising
from any occurrence on the Premises or the
occupancy
or use of the Premises or occasioned wholly or
in part by an act or omission of the Tenant, its
officers,
employees, agents, customers, contractors or
other invitees licensees or concessionaires or
by anyone
permitted by the Tenant to be on the Premises.
In case the Landlord, without fault on its part
or on the
part of those for whom the Landlord is
responsible in law, is made a party to
litigation begun by or
against the Tenant, excepting a bona fide action
by the Tenant against the Landlord, the Tenant
will
protect and hold the Landlord harmless and will
pay all costs, expenses and reasonable legal
fees
incurred or paid by the Landlord in connection
with the litigation.
ARTICLE 6
MISCELLANEOUS COVENANTS OF THE LANDLORD
The Landlord covenants with the Tenant:
6.1 For quiet enjoyment, subject to Article
5.15 herein
<PAGE>
6.2 To maintain and operate the Building,
provided always the Tenant shall pay in advance
its rent.
ARTICLE 7
USE OF COMMON AREAS AND FACILITIES
7.1 The Tenant, its officers, employees,
customers and other invitees in common with
others
designated by the Landlord or otherwise
entitled, have the use and benefit of the common
areas and
facilities of the Building for the purpose from
time to time permitted, approved or designated
by the
Landlord, subject to the management and control
of such common areas and facilities by the
Landlord.
7.2 The Landlord has the exclusive right to
manage and control the Building and from time to
time to
establish, modify and enforce reasonable rules
and regulations regarding the use, maintenance
and
operation of its common areas and facilities,
and the rules and regulations in all respects
will be
observed and performed by the Tenant, its
officers, employees, customers and other
invitees.
ARTICLE 8
ALTERATIONS AND INSTALLATIONS
8.1 The Tenant shall make no alterations,
installations, removals, additions or
improvements in or
<PAGE>
about the Premises without the Landlord's prior
written consent and in the event of such consent
all
work shall be done at the Tenant's sole expense
and at such times and in such manner as the
Landlord
may approve, and only by such contractors or
tradesmen approved in writing by the Landlord,
such
approval not to
be unreasonably withheld.
8.2 The Tenant shall and does hereby
indemnify and save the Landlord harmless from
and against
claims which might arise pursuant to Builders
Lien Act of British Columbia as it may from time
to time
be amended in respect of any materials or
services supplied in respect of the Premises at
the Tenant's
request and the Tenant shall forthwith remove
any such builders liens placed against the Lands
of which
the Premises form a part and in any case shall
cause such liens to be removed from title to the
Lands
within seven (7) days of notice thereof by the
Landlord. In the event that the Tenant fails to
remove
such liens, the Landlord may post security or
make payments sufficient to cause such liens to
be
removed and the cost thereof, together with the
Landlord's legal costs in respect thereof, shall
be
charged to the Tenant as Additional Rent and
together with the interest shall be payable by
the Tenant
on demand.
8.3 All permanent fixtures or improvements
installed by the Tenant at the expense of the
Tenant or
by the Landlord on behalf of the Tenant in the
Premises become on affixation the property of
the
Landlord and will not be removed from the
Premises before the end of the Term without the
prior
written consent of the Landlord. The Landlord
may elect to require the Tenant to remove all,
or any
<PAGE>
part of the afore described property and/or any
fixtures or permanent partitions 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 Premises or to
the Building caused by such removal. If the
Tenant
does not remove its property forthwith after
written demand by the Landlord such property
shall, if the
Landlord may remove the same at the expense of
the Tenant the cost of such removal to be paid
by the
Tenant forthwith to the Landlord on written
demand, the Landlord not to be responsible for
any loss or
damage to such property because of such removal.
Such written demand for removal of the Tenant's
property shall be given within thirty (30) days
after the termination of the Lease.
ARTICLE 9
SUBORDINATION
9.1 This Lease is subject and subordinate to
all mortgages which now or hereafter during the
said
term shall be recorded in the Land Title Office
aforesaid as mortgages against the Lands. The
Tenant
shall execute promptly from time to time any
assurances the Landlord may require to confirm
this
subordination, with respect to any mortgage now
or hereafter recorded as aforesaid, provided
that
subordination to any such mortgage hereafter
recorded shall be on terms whereby the Tenant is
entitled
to remain in possession of the Premises while
not in default hereunder.
The Tenant appoints the landlord as its agent
or attorney at its option to execute all
documents in
<PAGE>
confirmation of a subordinate of this Lease in
favour of a mortgage or an attornment to a
mortgagee. If
the Landlord elects not to execute such
documents as agent or attorney of the Tenant and
if the Tenant
fails to execute them or any of them after being
requested by the Landlord the Landlord may
terminate
this Lease after the expiration of ten (10)
days' notice of its intention to do so because
of the Tenants
failure unless within the ten (10) day period
the Tenant executes the documents.
ARTICLE 10
LIABILITY FOR PROPERTY DAMAGE AND/OR PERSONAL
INJURY
10.1 The Landlord shall not be responsible for
any damage which may be caused, nor shall the
Tenant
be entitled to claim any diminution of rent or
other compensation, for stoppage of any heating
apparatus
or any air conditioning apparatus or any
electric light or water service, or any of the
engines, boilers or
machinery appertaining thereto, but in such case
the Landlord shall use its best efforts to
recommence
any such operations as may have been affected
and the Landlord shall not be liable for any
damage or
loss which may be caused to the Tenant or to the
employees of the Tenant as a result of such
stoppages. The Landlord shall not be liable for
any damage in or upon the Premises, arising from
any
reason or cause whatsoever, or for any personal
injury including death sustained by the Tenant,
its
officers or employees, or other person, or for
any property loss, however occurring, and the
Tenant
shall have no right to any diminution of rent in
any of such cases provided that such damage,
injury or
loss is not caused by negligent acts or
omissions of the Landlord and without
restricting the generality of
<PAGE>
the foregoing, the Landlord shall not be liable
for any injury or damage to persons or property
resulting
from fire, explosion, falling plaster, steam,
gas, electricity, water, rain or snow or leaks
from any part of
the Building or from pipes, appliances or
plumbing works or from the roof, street or
subsurface, or from
any other place, or by dampness, or by Act of
God, or for any such injury or damage by any
cause
whatsoever nature, provided such injury or
damage is not caused by negligent acts or
omissions of the
Landlord or its servants or agents.
<PAGE>
ARTICLE 11
DAMAGE TO OR DESTRUCTION OF THE DEMISED PREMISES
11.1 Should the Premises or the Building be
damaged by fire or wholly unfit for occupancy:
(a) If the damage cannot be reasonably
repaired within one hundred twenty (120) days
after the
date thereof, either party may terminate this
Lease as of the said date by notice to the other
given within
thirty (30) days after such damage, and in that
case the Tenant shall immediately surrender the
Premises
to the Landlord and shall pay rent accrued to
the date on which the said damage occurred but
shall not
be entitled to any damages or compensation.
(b) If the damage can reasonably be
repaired within one hundred twenty (120) days
after the
date thereof or if neither the Tenant nor the
Landlord shall have given notice of termination
pursuant to
the provisions of subclause (a) the Landlord
shall forthwith commence and carry out with due
diligence
the repair thereof, and this Lease shall
continue in full force and effect save that the
rent hereby reserved
shall abate proportionately, having regard to
such part of the Premises as has been rendered
unfit for
occupancy, until the repairs have been
completed, provided that there shall be no
abatement or rent if
such fire or other casualty shall be caused by
or be due to the negligence of the Tenant, its
servants,
agents, employees or invitees or for any time
required for the replacement or repair of any
property of
the Tenant.
<PAGE>
(C) If there is a dispute between the
parties as whether the damage can reasonably be
repaired
within the said period of one hundred twenty
(120) days the certification of a professional
engineer or
architect agreed upon by both parties as to
whether or not the said damage can be reasonably
repaired
within a period of one hundred twenty (120) days
from the commencement of repairs shall be
binding
on both the Landlord and Tenant. If the Landlord
and Tenant are unable to agree upon such
engineer
or architect within thirty (30) days after the
date of such damage, the question which
otherwise would
be subject of such certificate shall be settled
by arbitration by a single arbitrator otherwise
and subject
to the provisions of the Commercial Arbitration
Act, R.S.B.C. 1979, and the amendments thereto.
ARTICLE 12
EXPROPRIATION
12.1 If the Premises shall be acquired or
condemned by an authority having the power for
such
acquisitions or condemnation then and in that
event the term of this Lease shall cease from
the date of
entry by such authority. If only a portion of
the Premises being an area of thirty percent or
more of the
area of the Premises shall be so acquired or
condemned this Lease shall cease and terminate
at the
Landlord's option, or at the Tenant's option,
and if such option is not immediately exercised
by the
Landlord or by the Tenant an equitable
adjustment of rent payable by the Tenant for the
remaining
portion of the Premises shall be made. In either
event, however, and whether all or only a
portion of the
<PAGE>
Premises shall be so acquired or condemned
nothing herein contained shall prevent the
Landlord or the
Tenant or both from recovering damages from such
authority for the value of their respective
interests
or for such other damages and expenses allowed
by law.
ARTICLE 13
ACCESS TO PREMISES
13.1 The Tenant shall permit the Landlord, to
erect, build, use and maintain pipes, ducts and
conduits
in and through the Premises. The Landlord, its
servants and agents shall have the right to
enter the
Premises at reasonable times to examine the same
and make such repairs, alterations, improvements
or
additions as the Landlord may deem necessary or
desirable in the Premises or as the Landlord may
be
required to make by law or in order to repair
and maintain the Building, and the Landlord
shall be
allowed to take all material into the Premises
that may be required therefore without the same
constituting an eviction of the Tenant in whole
or in part and the rent reserved shall in no
wise abate
while said repairs, alterations, improvements or
additions are being made by reason of
interruption of
the business of the Tenant. The Landlord will
exercise reasonable diligence so as to minimize
the
disturbance to or interruption of the Tenant's
operations.
13.2 During the six (6) months prior to the
expiration of the term of this Lease or any
renewal term,
the Landlord may exhibit the Premises to
prospective tenants and in the case of ground
floor premises
<PAGE>
may place "For Rent" signs thereon and for such
purposes the Landlord shall have the right of
entry to
the Premises at any reasonable time whether or
not the Tenant or any servant or agent shall be
present
at the time of such entry.
ARTICLE 14
TAXES
14.1 Deleted
14.2 Deleted
14.3 Deleted
ARTICLE 15
OPERATING EXPENSES
15.1 It is the intention of the parties
hereto that this Lease be a gross net lease.
ARTICLE 16.
<PAGE>
ADDITIONAL RENT
16.1 Any money payable by the Tenant to the
Landlord hereunder other than the rent expressed
in
Article 3.1 shall be deemed to be rent and shall
be paid as Additional Rent and shall be
collected as
such in the absence of any other provisions
hereunder and shall be payable by the Tenant
with the next
ensuing monthly instalment of rent.
ARTICLE 17
DEFAULT
17.1 If the Tenant fails to pay rent that is
in arrears within five (5) days after notice
from the Landlord
that it is in arrears, or to observe or perform
any other of the terms, conditions or covenants
of this
Lease to be observed or performed by the Tenant,
and such default continues for a period of seven
(7)
days after the notice thereof by the Landlord,
or if the Tenant or an agent of the Tenant
falsifies a report
required to be furnished to the Landlord
pursuant to this Lease , or if reentry is
permitted under other
terms of this Lease, The Landlord in addition to
any other right or remedy it may have will have
the right
of immediate reentry and may remove all persons
and property from the Premises and the property
may be removed and stored in a public warehouse
or elsewhere at the cost of and for the account
of
the Tenant, all without service of notice or
resort to legal process and without being
considered guilty of
<PAGE>
trespass or becoming liable for loss or damage
occasioned thereby.
17.2 if:
(a) any of the goods and chattels of
the Tenant on the Premises at any time during
the Term are
seized or taken in execution or attachment by
creditor of the Tenant,
(b) The Tenant or a guarantor or
indemnifier of this Lease makes an assignment
for the benefit of
creditors or a bulk sale from the Premises other
than a bulk sale to an assignee or subleasee
pursuant to
an assignment or sublease which under section
13.1 was consented to or did not require a
consent,
(c) a receiver-manager is appointed to
control the conduct of the business on or from
the
Premises,
(d) the tenant becomes bankrupt or
insolvent or takes the benefit of an Act now or
hereafter in
force for bankrupt or insolvent debtors
(e) an order is made for the winding
- -up of the Tenant,
(f) the premises without the written
consent of the Landlord, become and remain
vacant for a
period of ten (10) days or are used by any other
person than those entitled to use them under the
terms
of this Lease, or
(g) The Tenant without the written
consent of the Landlord, abandons or attempts to
abandon the Premises or sells or disposes of its goods
or chattels or removes any of them from the
Premises so
<PAGE>
that there would not in the event of
abandonment, sale or disposal be sufficient
goods on the Premises
subject to distress or satisfy all rentals due
or accruing due hereunder, the then current
month's and the
next ensuing three (3) months' rent immediately
will become due and payable as accelerated rent
and
the Landlord may re-enter and take possession of
the Premises as though the Tenant or the
servants of
the Tenant or any other occupant of the Premises
were holding over after the expiration of the
Term
and the Lease, at the option of the Landlord,
forthwith will become forfeited and determined.
In every
one of the cases above mentioned the accelerated
rent may be recoverable by the Landlord in the
same
manner as rent reserved and in arrears and the
option will be considered to have been exercised
if the
Landlord or its agents give notice to that
effect to the Tenant.
17.3 If the Tenant fails to perform an
obligation of the Tenant under this Lease the
Landlord may
perform the obligation and for that purpose may
enter upon not less than five (5) days prior
notice to
the Tenant or without notice in the case of an
emergency and do such things upon or in respect
of the
Premises as the Landlord considers necessary.
The Tenant will pay as additional rent all
expenses
incurred by or on behalf of the Landlord under
this section plus ten percent (10%) for overhead
upon
presentation of a bill thereof. The Landlord
will not be liable to the Tenant for loss or
damage resulting
from such action by the Landlord unless caused
by the negligence of the Landlord or other
person for
whose negligence the Landlord is responsible in
law.
(17.4 If the Landlord reenters, as herein
provided, it may either terminate this Lease or
it may from time
<PAGE>
to time without terminating the Tenant's
obligations under this Lease, make alterations
and repairs
considered by the Landlord necessary to
facilitate a reletting, and relet the Premises
or any part thereof
as agent of the Tenant for such term or terms
and at such rental or rentals and upon such
other terms
and conditions as the Landlord in its reasonable
discretion considers advisable. Upon each
reletting all
rent and other monies received by the Landlord
from the reletting will be applied, first to the
payment of
indebtedness other than rent due hereunder from
the Tenant to the Landlord, secondly to the
payment
of costs and expenses of the reletting including
brokerage fees and solicitor's fees and costs of
the
alterations and repairs, and third to the
payment of rent due and unpaid hereunder. The
residue, if any,
will be held by the Landlord and applied in
payment of future rent as it becomes due and
payable. If
rent received from the reletting during a month
is less than the rent to be paid during that
month by the
Tenant, the Tenant will pay the deficiency to
the Landlord. The deficiency will be calculated
and paid
monthly. No reentry by the Landlord will be
construed as an election on its part to
terminate this Lease
unless a written notice of that intention is
given to the Tenant. Despite a reletting without
termination, the
Landlord may elect at any time to terminate this
Lease for a previous breach. If the Landlord
terminates
this Lease for any breach, in addition to other
remedies it may recover from the Tenant all
damages it
incurs by reason of the breach including the
cost of recovering the Premises, reasonable
legal fees and
the worth at the time of termination of the
excess, if any, of the amount of rent and
charges equivalent to
rent reserved in this Lease for the remainder of
the Term over the then reasonable rental value
of the
Premises for the remainder of the Term, all of
which amounts immediately will be due and
payable by
the Tenant to the Landlord. In determining the
rent which would be payable by the Tenant after
default,
the annual rent for each year of unexpired Term
will be equal to the average fixed minimum and
percentage rents paid or payable by the Tenant from
<PAGE>
the beginning of the Term to the time of
default, or
during the preceding three (3) full calendar
years, whichever period is the shorter. In any
of the events
referred to in sections 16.1, 16.2 and 16.3, in
addition to all other rights, including the
rights referred to
in this section and section 16.1, the full
amount of the current month's minimum rent,
monthly
contributions towards taxes, insurance premiums,
the Tenants Pro Rata Share of the Operating
Costs
and all other payments required to be made
monthly and the next three (3) months minimum
rent
immediately will become due and payable, and the
Landlord may immediately distrain for it,
together
with arrears then unpaid.
ARTICLE 18
DISTRESS
18.1 Whensoever the Landlord shall be
entitled to levy distress against the goods and
chattels of
the Tenant it may use such force as it may deem
necessary for the purpose and for gaining
admission to
the Premises without being liable to any action
in respect thereof or for any loss or damage
occasioned
thereby and the Tenant hereby expressly releases
the Landlord from all action, proceedings,
claims or
demand whatsoever for or on account or in
respect of any such forcible entry or any loss
or damage
sustained by the Tenant in connection therewith.
ARTICLE 19
<PAGE>
LANDLORD'S EXPENSES ENFORCING LEASE
19.1 In the event that it shall be
necessary for the Landlord to retain the
services of a Solicitor
or any other proper person for the purpose of
assisting the Landlord in enforcing any of its
rights
hereunder in the event of default on the part of
the Tenant it shall be entitled to collect from
the Tenant
the cost of all such services as if the same
were rent reserved and in arrears hereunder.
ARTICLE 20
WAIVER
20.1 The failure of either party to
insist upon strict performance of any covenant
or condition
contained in this Lease or to exercise any right
or option hereunder shall not be construed as a
waiver
or relinquishment for the future of any such
covenant, condition, right or option. The
acceptance of any
rent from or the performance of any obligation
hereunder by a person other than the Tenant
shall not be
construed as an admission by the Landlord of any
right, title or interest of such person as a
subtenant,
assignee, transferee or otherwise in the place
and stead of the Tenant.
20.2 No exercise of a specific right
or remedy by the Landlord or by the Tenant
precludes it
from or prejudices it in exercising another
right or pursuing another remedy or maintaining
an action to
which it may otherwise be entitled either at law
or in equity.
<PAGE>
ARTICLE 21
HOLDOVER
21.1 If the Tenant shall hold over
after the expiration of the term granted and the
Landlord shall
accept rent the new tenancy thereby created
shall be deemed a monthly tenancy and not a
yearly
tenancy and shall be subject to the covenants
and conditions herein contained insofar as the
same are
applicable to a tenancy from month to month,
provided that the monthly rental payable in
advance on
the first day of each month shall be equal to
the sum of twice the monthly instalment of
Minimum Rent
payable for the last month of the Term and
one-sixth of the Additional Rent payable by the
Tenant for
the year immediately preceding the last year of
the Term.
ARTICLE 22
RULES AND REGULATIONS
22.1 The Tenant and its servants,
employees and agents shall observe faithfully
and comply
strictly with the rules and regulations attached
hereto and made part of this Lease and such
other from
time to time adopt. Written notice of additional
Rules and Regulations shall be given to the
Tenant.
Nothing in this Lease contained shall be
construed to impose upon the Landlord any duty
or obligation to enforce the Rules and Regulations or the
<PAGE>
terms, of the Building and the Landlord shall
not be liable to
the Tenant for violation of the same by any
other Tenant, its servants, employees, agents,
visitors or
licensees.
ARTICLE 23
INABILITY TO PERFORM
23.1 The Landlord does not warranty
that any service or facility provided by it
hereunder will be
free from interruptions caused or required by
maintenance repairs, renewals, modifications,
strikes,
riots, insurrections, labour controversies,
accidents, fuel shortages, Government
intervention, force
majeure, Act of God or other cause or causes
beyond the Landlord's reasonable care and
control. No
such interruption shall be deemed an eviction or
disturbance of the Tenant's enjoyment of the
demised
premises nor render the Landlord liable in
damages to the Tenant nor relieve the parties
from their
obligations under this Lease provided that the
Landlord shall without delay take all reasonable
steps to
remove the cause of such interruptions.
26.3 "Building" shall mean the
Building located on the Lands in which the
Premises are situated.
26.4 "Business Days" shall mean Monday
to Friday inclusive in each week, save and
except any
such day that shall be declared by lawful
authority a holiday.
<PAGE>
26.5 "Land" means the land and
premises located at City of Abbotsford,
Province of British
Columbia, legally described as
.
26.6 "Landlord" as used in this Lease
means only the owner or the mortgagee in
possession for
the time being of the Building or the owner of a
lease of the Building so that in the event of
any transfer
of title to the Building or in the event of a
lease of the Building with or without land on
which it is located
the landlord herein specifically described and
any intervening successor shall be and hereby is
and are
entirely freed and relieved of all covenants and
obligations of the Landlord hereunder thereafter
accruing.
26.7 "Office Hours" shall mean the
hours during which the Tenant is open for
business or for
carrying on its profession or other proper
activity in the demised premises.
26.8 "Operating Expenses" shall mean
and include all ordinarily chargeable against
income in
connection with the operation, maintenance and
repair of the Building and without restricting
the
generality of the foregoing shall include:
(a) insuring the building pursuant to
the covenant in this Lease, and such other
reasonable types
and amounts of insurance as the Landlord
effects;
(b) the costs incurred in heating and
ventilating and air-conditioning the Building,
including without limitation the cost of fuel,
electricity, operation of air distribution
equipment, labour, materials, non-capital reports, maintenance,
service and other such
<PAGE>
costs and depreciation of fixtures
and equipment used therefore which by their
nature require periodic replacement;
(c) repairs and replacements to and maintenance
of the Building including without limitation the
cost of
maintaining and repairing the roof and the area
occupied by the central heating or cooling
equipment;
(d) water rates, special taxes and licences
(other than Taxes and Tenant's Taxes as herein
defined or
taxes on income or profits), electrical power
and all other utility expenses whatsoever
incurred in the
operation of the Building;
(e) Salaries and wages (including but not
restricted to employee benefits, workmen's
compensation,
unemployment insurance) and the costs of
independent service contracts incurred in the
cleaning,
maintenance and operation of the Building;
(f) the costs of Building and cleaning supplies,
rental equipment, employees' uniforms and dry
cleaning;
(g) management of the Building and all
accounting and legal services in connection with
the operation of
the Building;
(h) Such other expenses as may be incurred in
operating the Building in an efficient manner;
<PAGE>
but shall not include amounts charged to interest on debt or
capital retirement of debt. The Landlord shall
each year
draw up a budget and estimate the above
Operating Expenses and such estimate shall be
referred to
herein as "estimated Operating Expenses" or
"estimate of Operating Expenses.
26.9 "Premises" means that portion
of the building located on the Land outlined in
red on
Schedule "A" hereto.
26.10 "Pro Rata Share" of the
Tenant shall mean the proportion that the net
leasable area of
the Premises bears to the total net leasable
area of the Building, as measured by the
Landlord in
accordance with BOMA standard measurement.
26.11 "Taxes" means all taxes, rates
and assessments whether general or special
levied or
assessed by the City of Abbotsford for
municipal, school or other purposes, or levied
or assessed by
other lawful Government authority for such
purposes payable by the Landlord in respect of
the Lands
and immovable accessories and shall include any
other taxes payable by the Landlord which are
imposed in substitution of the foregoing Taxes,
the whole as finally determined for each
calendar year as
a result of assessment, appeal or judicial
review and shall include any legal fees or
appraisers' fees
incurred by the Landlord in respect of such
final determination thereof.
26.12 "Tenants Taxes" shall mean all
taxes, licences, rates, duties and assessments
imposed
<PAGE>
or levied by lawful authority covering any period
during the term and relating to or in respect of
the
business or profession of the Tenant or relating
to or in respect of improvements, fixtures,
machinery or
chattels or equipment brought on to the Premises
by the Tenant or being the property of the
Tenant, or
relating to or in respect of improvements to the
Premises built, made or installed by the Tenant,
or at the
Tenants request, whether any such taxes are
included by the taxing authority in the Taxes,
licences,
rates duties and assessments imposed or levied
on or in respect, to the Building.
ARTICLE 27
OBLIGATIONS OF GUARANTOR
27.1 Guarantee of Tenant's
Obligations
The Guarantor, in consideration of the sum of
one dollar ($1.00) now paid by the Landlord to
the
Guarantor and of other valuable consideration
(the receipt of which is hereby acknowledged by
the
Guarantor) hereby directly and unconditionally
guarantees to and covenants with the Landlord
that the
Tenant will duly perform, observe and keep each
and every covenant, proviso, condition and
agreement in this Lease on the part of the
Tenant to be performed, observed and kept,
including the
payment of rent and all other sums and payments
agreed to be paid or payable under this Lease on
the
days and at the times and in the manner herein
specified, and that if any default shall be made
by the
Tenant, whether in payment of rent or other sums
from time to time falling due hereunder as and
when
the same becomes due and payable or in the
performance, observance or keeping of any of the
said
covenants, provisos, conditions or agreements
which under the terms of this Lease are to be
performed, observed or kept by the Tenant, the
Guarantor will forthwith pay to the Landlord on
demand the said rent and other sums in respect
of which such default shall have occurred and
all
damages that may arise in consequence of the
non-observance or non- performance of any of the
said
covenants, provisos, conditions or agreements.
27.2 Principle Debtor
The Guarantor covenants with the Landlord that
the Guarantor is jointly and severally bound
with the
Tenant as principle debtor or obligator and not
as surety, for the fulfilment of all obligations
of the
Tenant under this Lease. In enforcement of its
rights hereunder the Landlord may proceed
against the
Guarantor as if the Guarantor were named as
Tenant hereunder, and any notice given by the
Landlord
to the Tenant shall be deemed to have been given
also to the Guarantor.
27.3 Waiver
The Guarantor hereby waives any right to require
the Landlord to proceed against the Tenant or to
proceed against or to exhaust any security held
from the Tenant or to purse any other remedy
whatsoever which may be available to the
Landlord before proceeding against the
Guarantor.
27.4 Effect of Landlord's Delay
No neglect or forbearance of the Landlord in
endeavoring to obtain payment of the rent
observed
herein or other payments required to be made
under the provisions of this Lease as and when
the same
becomes due, no delays of the Landlord in taking
any steps to enforce performance or observance
of
the several covenants, provisos and conditions
contained in the Lease to be performed, observed
or
kept by the Tenant, no extension or extensions
of time which may be given by the Landlord from
time
to time to the Tenant, and no other act or
failure to act of or by the Landlord shall
release, discharge or
in any way reduce the obligations of the
Guarantor under the provisions of this Article.
27.5 Execution of New Lease
In the event of termination of this Lease other
than by surrender accepted by the Landlord, or
in the
event of disclaimer of this Lease pursuant to
any statute, or in the event that the Tenant
(being a
corporation) ceases to exist, then at the option
of the Landlord the Guarantor shall execute a
new lease
of the Premises between the Landlord as Landlord
and the Guarantor as Tenant for a term equal in
duration to the residue of the term remaining
unexpired at the date of such termination or
such
disclaimer or such cessation of existence. Such
lease shall contain the like Landlord's and
Tenant's
obligations respectively and the like covenants,
provisos, agreements and conditions in all
respects
(including the proviso for reentry) as are
contained herein.
27.6 Submission to Jurisdiction
The Guarantor hereby submits to the jurisdiction
of the Courts of the Province Of British
Columbia in
any action or proceeding whatsoever by the
Landlord to enforce its rights hereunder.
ARTICLE 28
ADDITIONAL COVENANTS
28.1 Registration of Lease
The Tenant shall not register this Lease.
28.2 Estoppel Certificate
The Tenant shall from time to time at the
request of the Landlord and within fifteen (15)
days of such
request, execute and deliver to the Landlord or
any proposed purchaser or proposed or existing
mortgagee of the Premises, a certificate
acknowledging the following:
(a) the current Minimum Rent payable
by the Tenant;
(b) the Tenant's current monthly
contribution to payment of Taxes and Operating.
Costs;
c) That all charges and expenses
payable under this Lease are payable as
Additional Rent and
are paid in full to the date of the certificate;
(d) that the Tenant is in possession
of the demised premises;
(e) that this Lease is unmodified and
in force and effect and in accordance with its
terms (or if
there have been any modifications, that this
Lease is in force and effect as modified, and
identifying the
modification agreement, or if this Lease is not
in force and effect, that it is not);
(f) whether or not there is an
existing default by the Tenant in the payment of
rent or any other
sum of money under this Lease, and if there is
such a default, specifying its nature and
extent;
(g) whether or not there are any
set-offs, defences or counter claims against the
enforcement of
the obligations to be performed by the Tenant
under this Lease and if so the nature of such
set- offs,
defences or counterclaims;
(h) that the Landlord is currently
not in default under any term, condition, or
covenant required
to be performed by the Landlord hereunder, or if
the Landlord is in default under one or more of
such
terms, conditions or covenants specifying the
nature of each such default;
(i) the date to which rents
hereunder have been paid; and
(j) the amount of any deposit
hereunder.
28.3 Attornment & Non-Disturbance
The Tenant shall, if requested to do so by the
Landlord, agree with any mortgagee of the whole
or any
portion of the demised premises to attorn to and
become a tenant of such mortgagee if the
mortgagee
shall become a mortgagee in possession, if such
a mortgagee shall agree that so long as the
Tenant pays
the rent and observes and performs the covenants
and provisos herein contained on its part to be
performed, the Tenant shall be entitled to hold,
occupy and enjoy the Premises, subject to any
rights the
mortgagee may have as a lessor, free from any
interference by the mortgagee or any person
claiming by
or through the mortgagee.
28.4 Headings
The Headings in this Lease form no part of this
Lease and shall be deemed to have been inserted
for
convenience of reference only.
28.5 Acceptance of Premises
The Tenant accepts the Premises on an "as is"
basis.
28.6 Triple Net Lease
Deleted
28.7 Relief of Landlord on Sale
If the Landlord sells the Landlord's interest in
the Lands and Building the Landlord shall be
released
from all obligations, responsibilities and
liabilities under this Lease to the extent that
the purchaser of the
Landlord's interest assumes them from the
Landlord.
28.8 Additional Covenants
Any additional covenants, conditions or
agreements set forth in writing and attached
hereto whether at
the commencement of the term or at any
subsequent time and signed and initialled by the
parties hereto
shall be read and construed together with and as
part of this lease provided always that when the
same
shall be at variance with any written clause in
this lease such additional covenants, conditions
and
agreements shall be deemed to supersede such
clause.
28.9 Whole Agreement
The Tenant agreed that the demised premises are
leased by the Tenant without representations or
warranties other than as contained in this
lease.
28.10 Option to Renew
The Landlord agrees that if the Tenant duly and
regularly pays 'the rent hereunder and performs
all and
every covenant, proviso and agreement herein
contained and on the part of the Tenant to be
paid and
performed the Landlord will upon the written
request of the Tenant made not less than the
number of
the day prior to the expiration of the Term set
out in section 1.9(c) hereof, and at the cost of
the Tenant,
grant to the Tenant a renewal of this lease for
the renewal term or terms set out in section 1.9
hereof at
a basic rent to-be agree d upon, or failing
agreement, at rate not less than the basic rent
hereby
reserved and to be determined by reference to
one arbitrator if the parties can agree in
selecting one
and failing that be determined by the decision
of three arbitrators or a majority of them, with
one to be
named by the Landlord or the Tenant, not more
than fourteen (14) days after the giving of the
notice by
the Landlord or Tenant requesting such
arbitration and the two arbitrators as chosen
shall within seven
(7) days after the appointment of the said two
arbitrators select a third arbitrator, it being
expressly
agreed that:
(a) The award of the said arbitrator
or arbitrators or a majority of them shall be
made not later
than twenty-one (21) days after the date of the
appointment of the arbitrators or third
arbitrator (as the
case may be) so appointed hereunder;
(b) The Landlord and Tenant shall
each pay their own costs of the said arbitration
proceedings,
provided that in the case of a single arbitrator
the arbitrators fee shall be paid equally
between them and
in the case of three arbitrators the fee of the
third arbitrator shall be paid equally between
them;
(c) If the Landlord or the Tenant
shall neglect or refuse to name its arbitrator
in the time
hereinbefore limited or fail to proceed with the
said arbitration the arbitrator named by the
other of them
shall determine the basic rent and the decision
of such arbitrator shall be final and binding on
both the
Landlord and the Tenant;
(d) Any arbitration hereunder shall be
governed by the Commercial Arbitration Act of
the
Province of British Columbia.
28.11 Cross Default
If the Tenant has entered into one or more
leases with the Landlord in respect of premises
located
within the Building which leases have a Term
which wholly or partially coincides with the
Term of this
Lease (such lease or leases being referred to
herein as the "Additional Lease"), the Tenant
agrees that
any default in the payment of Minimum Rent or
Additional Rent or in the performance of other
covenants and agreements therein shall
constitute a default hereunder and that upon
such default the
Landlord may exercise any of the remedies
granted to it hereunder in respect of the
Premises and the
Minimum Rent and Additional Rent herein
reserved.
This Indenture shall endure to the benefit of
and be binding upon the parties hereto and their
representative heirs, executors, administrators,
successors and permitted assigns.
IN THE WITNESS OF the parties hereto have
hereunder affixed their corporate seals in the
presence
of their officers duly authorized in that behalf
or have hereunder set their hands and seals as
the case
may be, on the 2nd---day of February 1999 .
The Corporate Seal of SGS Enterprises Ltd.
was hereunto affixed in the presence of:
Authorize Signatory
Authorized Signatory
The Corporate seal of the
Tenant was hereunder affixed in the presence of:
Authorized Signatory
Authorized Signatory
Name of Witness
(Tenant/Guarantor)
Address of Witness
Occupation of Witness
RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts,
elevators, vestibules, stairways, corridors or
halls shall
not be obstructed or encumbered by any Tenant or
used for any purpose other than ingress and
egress
to and from the demised premises.
2. No awnings or other projections shall be
attached to the outside walls of the Building.
All curtains,
blinds, shades, or screens attached to or hung
in, or used in connection with, any window or
door of the
demised premises shall be subject to the
approval of the Landlord.
3. No sign, advertisement, notice or other
letting shall be exhibited, inscribed, painted
or affixed by any
Tenant on any part of the outside or the inside
of the demised premises or Building without the
prior
written consent of the Landlord. In the event of
the violation of the foregoing by any Tenant,
Landlord
may remove same without any liability, and may
charge the expense incurred by such removal to
the
Tenant or Tenants violating this rule. Interior
signs on doors and directory tablet shall be
inscribed,
painted or affixed for each Tenant by the
Landlord at the expense of such Tenant, and
shall be of a size,
colour and stye
acceptable to the Landlord.
4. The sashes, sash doors, skylights, windows
and doors that reflect or admit light and air
into the halls,
passageways or other public places in the
Building shall not be covered or obstructed by
any Tenant,
nor shall any bottles, parcels, or other
articles be placed on the window sills.
5. No show cases or other articles shall be put
in front of or affixed to any part of the
exterior of the
Building, nor placed in the halls, corridors or
vestibules without the written consent of the
Landlord.
6. The water and wash closets and other plumbing
fixtures shall not be used for any purpose other
than
those for which they were constructed, and no
sweepings, rubbish, rags, or other substances
shall be
thrown therein. All damages resulting from any
misuse of the fixtures shall be borne by the
Tenant who,
or whose servants, employees, agents, visitors
or licensees, shall have caused the same.
7. No Tenant shall mark, paint, drill into, or
in any way deface any part of the demised
premises or the
Building of which they form a part. No boring,
cutting, or stringing of wires shall be
permitted, except
with the prior written consent of the Landlord,
and as the Landlord may direct. No Tenant shall
lay
linoleum, or other similar floor covering, so
that the same shall come in direct contact with
the floor of
the demised premise, and, if linoleum or other
similar floor covering is desired to be used an
interlining
of builder's deadening felt shall be first
affixed to the floor, by a paste or other
material soluble in water,
the use of cement or other similar adhesive
material being expressly prohibited.
8. No bicycles, vehicles or animals of any kind
shall be brought into or kept in or about the
demised
premises, and, without prior written consent of
the Landlord, no cooking shall be done or
permitted by
any Tenant on said demised premises. No Tenant
shall cause or permit any unusual or
objectionable
odours to be produced upon or emanate from the
demised premises.
9. No space in the Building shall be used for
manufacturing, for the storage of merchandise or
for the
sale of merchandise, goods or property of any
kind at auction.
10. No Tenant shall make, or permit to be made,
any unseemly or disturbing noises or disturb or
interfere with the occupants of this or
neighboring buildings, or premises or those
having business with
them whether by the use of any musical
instrument, radio, talking machine, unmusical
noise, whistling,
singing, or in any other way. No Tenant shall
throw anything out of the doors, windows or
skylight or
down the passageways.
11 No Tenant, nor any of the Tenants servants,
employees, agents, visitors or licensees, shall
at any
time bring or keep upon the demised premises any
inflammable, combustible or explosive fluid,
chemical or substance.
12. No additional locks or bolts of any kind
shall be placed upon any of the doors or windows
by any
Tenant, nor shall any changes be made in
existing locks or the mechanism thereof. Each
Tenant must,
upon termination of his tenancy, restore to the
Landlord all keys of stores, offices and toilet
rooms,
either furnished to, or otherwise procured by,
such Tenant, and in the event of the loss of any
keys so
furnished, such Tenant shall pay to the Landlord
the cost thereof.
13 All removals, or the carrying in or out of
any safes, freight, furniture, or bulky matter
of any
description must take place during the hours
which the Landlord or his agent may determine
from time
to time. The Landlord reserves the right to
inspect all freight to be brought into the
Building and to
exclude from the Building all freight which
violates any of these Rules and Regulations or
the Lease of
which these Rules and Regulations are part of.
14. The premises shall not be used for lodging
or sleeping or for any immoral or illegal
purpose.
15. The requirement of Tenants will be attended
to only upon application at the office of the
Building.
Building employees shall not perform any work or
do anything outside of their regular duties,
unless
under special instruction from the office of the
Landlord.
16. Canvassing, soliciting and peddling in the
Building is prohibited and each Tenant shall
cooperate to
prevent the same.
17. There shall not be used in any space, or in
the public halls of the Building, either by the
Tenant or by
jobbers or others, in the delivery or receipt of
merchandise, mail or other materials, any hand
trucks,
except those equipped with rubber tires and side
guards.
18. The Landlord shall not be responsible for or
in regard to the sufficiency or insufficiency of
any safe
or vault used by the Tenant to withstand fire,
burglars or thieves, and the use of such safe or
vault by
the Tenant is accepted by the Tenant at its own
risk, and without recourse whatever against the
Landlord for or on account of any loss or damage
which may occur in any manner of or to any
money,
securities, valuables, books, papers or other
property which may be placed therein.
<PAGE>
EXHIBIT 10.3
INTERNET BUSINESS SERVICES AGREEMENT
General Terms and Conditions
1. Definitions
In this Agreement and the Exhibits
attached, the following words have the meanings
set out below
"Customer Equipment" means Customer owned
equipment that provides the interface to
Supplier
Equipment;
"Customer Particulars Exhibit" means the Exhibit
of particulars respecting Customer attached to
this
Agreement;
"Customer Sites" means the Customer end-user
locations described in the Customer Particulars
Exhibit;
"Effective Date" mean, the date upon which this
Agreement shall have effect, as specified on
page I of
this Agreement;
"Fees" means, in respect of any Services, the
fees payable by Customer to Supplier in respect
of the
Services described in each Services Exhibit.
"Indemnitees" means the persons described in
section 8.3 of this Agreement
"Service Effective Date" means the date upon
which the Services am available for use by
Customer,
unless otherwise specified in respect of a
particular Service in a Services Exhibit;
"Services Exhibit" means, in respect of each of
the Services provided pursuant to this
Agreement, the
Services Exhibit which describes the Service,
the Fees applicable to each Service, the
Customer
Equipment required for each Service and the date
by which the Services are available for use by
Customer
"Service(s)" shall mean the services to be
supplied to Customer in accordance with the
terms of this
Agreement, al) as described in the Services
Exhibit,
"Supplier Communication System" means Supplier
Equipment and all Supplier owned software and
electronics used to provide Services to
Customer;
"Supplier Equipment" means Supplier's equipment
and hardware dedicated exclusively to the supply
of
Services to Customer as may be described in the
Services Exhibit; and
"Term" means the term of this Agreement as set
out on the Customer Particulars Exhibit, unless
other-wise specified in respect of a particular
Service in a Services Exhibit.
2. Services
2.1 Supplier shall provide the Services in
accordance with the terms of this Agreement,
Customer shall
receive the Services from Supplier and comply
with the terms of this Agreement.
2.2 Throughout the Term, Customer may request in
writing additional Services or that Services be
made. available at additional Customer Sites or
that additional access feeds be provided at
existing
Customer Sites. if Supplier can accommodate such
requests, Supplier shall provide a quote
respecting
the Fees applicable for such request and specify
a date by which the requested Services will he
available to Customer.
3. Installation
3.1 Suppliers shall be responsible to install
and maintain the cabling required to provide
Services to the
legal boundary of the properties upon which the
Customer Sites are located. Customer shall be
responsible to obtain at its sale cost all
rights-of-way, permissions and/or third party
consents required
to permit. Supplier to install and maintain the
cabling from such legal boundary to the Customer
Equipment. Customer shall at its sole cost
undertake all necessary preparations required to
comply with
Supplier's reasonable installation and
maintenance instructions,
3.2 Customer shall ensure that:
(a) all work required to be done by Customer
pursuant to section 3.1 shall be done in
accordance with
all applicable laws and in accordance with
Supplier's instructions; and
(b) all utilities, accesses and building
alterations required to install and service the
Supplier Equipment
are provided at Customer's sole cost at least
seven days prior to the date the Services are
available for
use by Customer.
4. Service Effective Date
4.1 Suppliers shall exert All reasonable efforts
to ensure that the Services are available for
use by
Customer by the data specified in writing by
Supplier to Customer upon Supplier's receipt of
a signed
copy of this Agreement from Customer. Customer
shall use all reasonable efforts to complete its
obligations set out in section 3.1 in a timely
manner.
5. Service Performance
5.1 Supplier shall use all reasonable efforts to
ensure the continuous supply of Services to
Customer.
Evaluation of the performance of the Services
does not include performance during maintenance
windows reserved to allow installation, system
upgrades and to add or re- configure Customer's
end-users and other Customers, unplanned outages
or problems originating from parties other than
Supplier or Supplier's contractors. The
maintenance windows will be scheduled, based on
Customer
feedback, to minimize the impact on Customer's
use of the Services.
6. Equipment
6.1 Subject to sections 3.1 and 3.2, Supplier
shall supply and install Supplier Equipment at
the
Customer Sites. Supplier shall lease to Customer
the Supplier Equipment upon the following terms
(a) Fees include any lease payments for
Supplier Equipment and Such shall be deemed
terminated on
expiry of the Term or termination of this
Agreement or upon removal of Supplier Equipment
pursuant to
sections 12.1 or 12.2;
(b) Supplier Equipment shall at all times remain
the property of Supplier, notwithstanding that
such
equipment or any pan thereof may at any time be
affixed or attached to real property or any
building,
and
(c) Customer shall be liable for any loss, theft
or damage to Supplier Equipment situated on
Customer's
property, whether such loss, theft or damage is
attributable, to the fault of Customer or
otherwise,
ordinary wear and tear excepted.
6.2 Customers shall be responsible for the use
and compatibility of equipment or software which
is not
Supplier Equipment. If Customer uses equipment
or software which is not Supplier Equipment
which
impairs Customer's use of the Service, Customer
shall remain liable for payment for the Service.
Upon
notice from Supplier that the equipment or
software which is not Supplier Equipment is
causing or is
likely to cause hazard, interference or service
disruption, Customer shall eliminate the
likelihood of
hazard, interference or service disruption.
Customer shall, If necessary, pay Supplier to
address
difficulties caused by equipment or software
which is not Supplier Equipment.
7. Maintenance Obligations
7.1 Subject to section 7.2. Supplier shall at
its sole cost maintain Supplier Communication
System in
good operating condition provided that Supplier
shall not be responsible for any repair or
maintenance
caused by:
(a) Supplier Equipment being used other than for
the purposes intended under this Agreement of
being
operated other than in accordance with
Supplier's specifications;
(b) catastrophe, accidents or The fault,
negligence, misuse, improper or unauthorized use
of Supplier
Equipment by Customer, its employees, agents or
contractors;
(c) removal of Supplier Equipment from the
locations authorized pursuant to this Agreement
without the
Supplier's prior written consent, such consent
not to be unreasonably withheld; or
(d) Customer uses, additions or alterations to
Supplier Equipment without the Supplier's prior
written
consent, such consent not to be unreasonably
withheld.
7.2 Supplier, its employees, contractors, and
agents shall at all times enjoy reasonableaccess
to any
Customer controlled cabling or facilities which
Supplier is obligated in any manner to maintain
including
Supplier Equipment and shall be provided a safe
environment in which to perform any work to be
undertaken by Supplier in accordance with this
Agreement. Customer shall be responsible for
ensuring
timely access by Supplier to each Customer Site.
If Supplier is delayed by Customer in any manner
in
obtaining reasonable access to each Customer's
Site, the obligations of Supplier shall be
waived to the
extent attributable to delayed or prohibited
access. Customer shall upon request reimburse
Supplier at
Supplier's current labour rates if such delayed
or prohibited access results in travel or
waiting time for
Supplier.
8. Customer Obligations
8.1 Customer shall at its expense maintain all
Customer Equipment. Customer shall ensure that
all
equipment used by Customer (excluding Supplier
Equipment) is technically and operationally
compatible with Supplier Equipment and the
Supplier Communication System. Supplier shall
not be
obligated to connect any Supplier Equipment to
any equipment used by Customer which does not
comply with these requirements.
8.2 Customer shall use all reasonable efforts
not to do and shall advise its customers not to
do any of
the following:
(a) knowingly disclose confidential information,
except as required by law;
(b) knowingly engage in any activity which, in
the reasonable opinion of Supplier, might
restrict, inhibit
or deny any customer of Supplier from using or
accessing the whole or any part of the Internet;
or
(c) knowingly facilitate the communication of
any material that constitutes or encourages
conduct that
might constitute a criminal offense, give rise
to civil liability, or otherwise violate any
applicable laws and
regulations.
8.3 Supplier and its officers, directors,
employees, affiliates and suppliers
(collectively, the
"Indemnitees") do not assume any liability in
connection with breach by Customer of the
foregoing
obligations or for acts or omissions of Customer
which occasion direct, indirect, incidental or
consequential damages to Supplier Communication
System or to other third parties and Customer
shall
indemnify and hold harmless the Indemnities for
any and all such breaches, acts or omissions.
Customer
agrees to defend, indemnify and hold the
Indemnitees harmless from any and all
liabilities, costs and
expenses, including reasonable attorneys' fees,
related to or arising from:
(a) any violation of this Agreement by Customer;
(b) the use of the Service or the Internet or
the placement or transmission of any message,
information,
software or other materials on the Internet by
Customer;
(c) negligent acts or omissions of Customer, its
officers, employees, agents or contractors in
connection
with the installation, maintenance, use or
removal of any equipment or software not
provided by
Supplier which is connected to the Services; or
(d) claims for infringement of proprietary
rights arising from the use by Customer of
equipment,
hardware or software, apparatus or systems not
provided by Supplier in connection with the
Service.
9. Limited Software License
9.1 All rights, title and interest in and to any
software programs forming part of the Supplier
Equipment
or Supplier Communication System shall remain
that of Supplier or the licensing party which
authorized
its use by Supplier. Customer shall, not change
or copy such software programs (except for
safeguard
or archive copies marked to show Supplier's
ownership) nor make it available to any
employees,
contractors, agents or third parties other than
those who require it to receive the Services.
10. Fees
10.1 Customer shall pay Fees commencing on the
Service Effective Date and continuing monthly in
advance thereafter throughout the Term.
10.2 All Fees shall be payable no later than 30
days following receipt of an invoice which shall
be
deemed accepted by Customer if not disputed
within 30 days of the invoice date All payments
shall be
made by Customer at the address specified by
Supplier. Interest on overdue amounts shall
accrue at 21
% per annum For any incomplete calendar month,
Fees shall be adjusted on a daily basis.
10.3 Customer shall pay in addition to the Fees,
all taxes, assessments and government charges
including but not limited to Social Service Tax,
Excise Tax, Goods and Services Tax, and any
other
taxes applicable to the receipt of the Services
excluding taxes on the income of the Supplier.
11. Renewal of Term
11.1 This Agreement shall be renewed and
extended automatically an the same terms and
conditions as
are contained in this Agreement except for the
Fees, which shall be set at Supplier's then
current rates,
unless either party gives to the other at least
60 days written notice of its election to
terminate the
Agreement prior to the expiry of the Term or any
renewal period.
12. Termination and Suspension of Service
12.1 In addition to any other remedies available
to Supplier for breach or default, Supplier may
immediately terminate, restrict or suspend the
provision Of Services to Customer:
(a) if any Fees payable hereunder are not paid
when due; or
(b) if, upon 20 days written notice, Customer
fails to comply with any of its other
obligations under this
Agreement.
In the event or default or breach by Customer,
Supplier may enter Customer's premises and
remove all
Supplier Equipment.
12.2 Supplier may immediately deny Customer
access to all or part of the Internet upon
notice if
Customer engages in any conduct or activities
that Supplier in its sole discretion believes
violates this
Agreement or any policy adopted by Supplier from
time to time of which notice is given in advance
to
Customer including, without limitation,
Supplier's Acceptable Use Policy a copy of which
can be
obtained from the Internet address
http://www.hoteladvanced.com/aup/index.html. If
Supplier denies
Customer access to the Internet because of such
a violation, neither Customer nor its customers
shall
have any right to:
(a) access through Supplier any materials stored
on the Internet; or
(b) access third party services, merchandise or
information on the Internet through Supplier,
and
Supplier shall have no responsibility to notify
any third-party providers of services,
merchandise or
information nor any responsibility for any
consequences resulting from lack of
notification.
12.3 If Supplier fails to comply with any of its
obligations hereunder and Customer provides
prompt
Written notice of such failure to Supplier,
Supplier shall have 30 days from receipt of such
notice to
rectify the failure. If, at the end of such 30
day period, Supplier has not remedied the
failure, Customer
May, within a further ten day period, elect in
writing to terminate Services to the affected
Customer
Sites. If Customer does so, Supplier shalt
terminate Services between those points and no
further Fees
shall be applicable in connection with the
discontinued Service from the date of the
original written
notification from the Customer to terminate the
Service and Supplier shall be entitled at its
sole cost to
remove all Supplier Equipment located at
Customer Site.
13. Limitation of Liability
13.1 Customer understands that the Indemnitees
do not operate or control the Internet in any
way, and
that all merchandise, information and Services
offered Or made available on the Internet are
offered or
made available by third parties who are not
affiliated with the Indemnitees. The indemnities
do not make
any express or implied warranties or
representations whatsoever (including without
limitation warranties
of title or non-infringement, or the implied
warranties of merchantability or fitness for a
particular
purpose) with regard to any merchandise,
information or service provided through the
Internet, and
they shall not be liable for any cost or damage
arising either directly Or indirectly from any
such
transaction.
13.2 Under no circumstances shall Supplier, its
affiliates or contractors be liable for any
indirect
incidental, special. punitive or consequential
damages that result in any way from Customer's
use of or
inability to use the Service or to access the
Internet or any pan thereof, or Customer's
reliance on or
use of information, services or merchandise
provided an or through the Service, or that
result from
mistakes, omissions, interruptions, deletion of
files, errors, defects, delays in operation, or
transmission,
or any failure of performance.
13.3 Without in any manner limiting the express
limitations contained in this section, Supplier
shall not
be liable to Customer for any;
(a) act or omission of a telecommunications
carrier whose facilities are used in
establishing connections
to points which Supplier does not directly
serve;
(b) disclosure of private communications to
parties other than the intended recipient, or
the disclosure
of confidential information;
(c) restriction or inhibition imposed by a party
other than Supplier from using or accessing the
Internet;
(d) posting, transmittal or receipt over
Supplier's communications system of any material
that constitutes
Or encourages conduct that might constitute a
criminal offense. give rise to civil liability,
or otherwise
violate any applicable laws and regulations
(e) posting or transmittal of any information or
software that Customer is aware contains a
virus, worm,
cancel hot or other harmful component; or
(f) infringement of patents or other proprietary
rights arising from combining or using
Customer-provided facilities with Supplier
Equipment or the Services.
13.4 The foregoing limitations shall apply to
all acts or omissions of Supplier whether
negligent or
otherwise which would, but for this section,
give rise to a "cause of action in contract
and/or tort law.
14.General
14.1 This Agreement shall inure to the benefit
of and be binding upon Supplier and Customer,
and their
respective heirs, executors, administrators,
successors arid permitted assigns. Customer
shall not assign
this Agreement without Supplier's prior written
consent, such consent not to be unreasonably
withheld.
14.2 This Agreement forms the entire agreement
between the parties concerning the subject
matter
hereof and supersedes all prior written and oral
agreements between the parties. Any modification
of
this Agreement shall not be valid unless reduced
to writing and agreed to by Customer and
Supplier.
14.3 Notwithstanding any other term of this
Agreement, neither Party shall be liable for any
delay,
interruption or fault in the performance of its
obligations hereunder if caused by acts of God,
war,
declared or undeclared, fire, flood, storm,
slide, earthquake, power failure, inability to
obtain
equipment, supplies or other facilities not
caused by failure, to pay the then prevailing
prices, labour
disputes or any other similar event beyond the
control of the party affected which may prevent
or delay
such performance. If any such
act or event occurs or is likely to occur the
party affected shall promptly notify the other
party, giving
particulars of the event. The party so affected
shall use all reasonable efforts to eliminate or
remedy the
event. but shall not be obligated to take any
action relating to a labour dispute
14.4 Supplier reserves the right to refuse to
carry out any work at any Customer Sites which,
in
Supplier's reasonable opinion is, or may be a
hazardous workplace environment. Supplier shall
comply
with all of Customer's safety requirements where
applicable, however, any protective clothing or
any
other equipment required as a result of
Customer's requirements shall be provided to
Supplier at no
cost.
14.5 The parties hereto represent that they have
full authority to enter into this Agreement and
that no
further act or approval is required to make this
Agreement binding other than signature by each
party is
authorized signatory. Should any portion of this
Agreement be held to be void in Jaw, this
Agreement
shall be construed, so far at is possible, as if
such portion had never been contained herein
This
Agreement shall be construed and interpreted in
accordance with the laws of the Province of
British
Columbia.
14.6 Notice to be provided under this
Agreement shall be effectively delivered if
delivered by hand,
sent by facsimile transmission, or forwarded by
registered mail to the business address of the
other
party, and to the attention of the authorized
signatories as described on the first page of
this Agreement.
Notice shall be deemed to be delivered on the
date of delivery or the date following facsimile
transmission or if sent by
registered mail on the third day after mailing,
Services Fees
The agreement between Supplier and
STRATABASE.COM, consists of the following
services.
Description Setup or Monthly Fees Onetime Fees
Connectivity Services
1.544 Mbps Fibre Internet Connection $1.000.00 $1,600.00
Term of the Agreement: This Agreement shall have
effect from and after the Effective Date and
shall
continue for a period of 3 years following the
"Service Effective Date".
Service Descriptions
SECTION I - CONNECTIVITY SERVICES
1.544 Mbps Fibre Internet Connection
Includes the facilities, facility termination
unit, and a customer premise router with a Token
Ring or
Ethernet AUI connector (transceiver is not
included). The equipment is owned, installed and
maintained
b) Supplier. Service will be delivered via
Supplier owned Fibre Optic media. Usage fees do
not apply.
COMPLEMENTARY SERVICES
The following services are provided at no charge
when a Connectivity Service is purchased.
Simple Mail Transfer Protocol (SMTP) Mail Feed
Supplier will route SMTP traffic to Customer's
primary mail server,
Usenet News Server
Supplier provides Customer with access to
approximately 25,000 news and discussion groups
through
Supplier's Usenet news server. For a one time
fee, Supplier will provide newsgroup filtering
services
(See section on News filtering),
IP Address Registration
Every user/computer accessing the Internet must
have a unique Internet (IP) address. Supplier
will
register/provide Customer with sufficient IP
addresses for Customer' hosts.
A typical IP address is structured as 4 sets
numbers separated by periods (e.g.
131.108.122.204). The
first 3 numbers in the address identifies the
customer's network (e.g 131.108.122), while the
last
number identify the individual hosts on the
network (e.g. 204). Subnetting of a full class
'C'' address
may be required.
As representatives of Customer, Supplier will
negotiate with Internic to acquire and justify
the
requested number of addresses. The number of
addresses will be determined by the Internic and
not by
Supplier.
Addresses assigned to Customer an the property
of Supplier. At the end of the Term, the
assigned IP
addresses shall be returned to Supplier.
Secondary Domain Name Server (SDNS) Supplier
will provide secondary Domain Name Server
Service for Customer.
Contract No:
INTERNET BUSINESS SERVICES AGREEMENT
This Agreement is made between
STRATABASE.COM, a Company
British Columbia, V3G IK2 ("Customer")
AND
BC TEL ADVANCED COMMUNICATIONS, a division of BC
TEL SYSTEMS SUPPORT INC.,
a company incorporated pursuant to the laws of
British Columbia and having its head office at
2200
4720 Kingsway, Burnaby, British Columbia, V5H
4N2 ("Supplier")
WHEREAS Supplier wishes to provide and Customer
wishes to receive Internet Business Services
subject to and in accordance with the terms of
this Agreement
NOW THEREFORE, this Agreement witnesses that
Customer and Supplier agree to be bound by the
General Terms and Conditions and the Exhibits
attached to this Agreement which form an
integral part
of this Agreement.
This Agreement shall have effect as of the date
upon which Supplier receives a copy of this
Agreement
duly executed by Customer.
IN WITNESS WHEREOF, Customer and Supplier have
executed this Agreement by their authorized
signatories.
STRATABASE.COM
BY: /s/ Trevor Newton
Authorized Signatory
Name: Trevor New ton
(Please Print)
Title: President
Date: 1/23/99
BC TEL ADVANCED COMMUNICATIONS,
a division of BC TEL SYSTEMS SUPPORT INC.
BY: /s/ Jim McLean
Authorized Signatory
Name: Jim McLean
Title: Manager, Business Internet Services
Date: 2/18/99
<PAGE>
EXHIBIT 10.4
DISTRIBUTOR AGREEMENT
This Distributor Agreement ("Agreement"), is
effective as of the 1st day of May 1999 by and
between
COMTEX Scientific Corporation ("COMTEX"), a New
York corporation with Its principal offices at
4900 Seminary Road. Suits 800 Virginia 22311,
and Stratabase.com (the ''Distributor") a
Canadian
corporation:
1. Definitions.
a. Content. The term "Content" means all
stories, articles or other material, whether or
not protected
by copyright, including but not limited to text,
images, and other multimedia data, that COMTEX
obtains from various Information Providers or
creates Itself.
b. End-user. The term "End-User" means each and
every third party to whom Distributor transmits
or
otherwise makes available the Services as
authorized in Exhibit A,
c. Effective Date, The term "Effective Date'
means the date first written above. If no date
is written
above, the Effective Date shall be the date
Distributor executes this Agreement.
d. Information Providers. The term "Information
Providers" means third parties from whom COMTEX
acquires the right to distribute Content that
COMTEX transmits or otherwise makes available to
Distributor.
e. Services. The term "the Services" means the
electronic Information services offered by
Distributor
that make available the Content, as authorized
in Exhibit A.
2. Distribution
a. Grant of Rights; Distribution by Distributor.
Subject to the terms and conditions of this
Agreement,
COMTEX grants Distributor a nonexclusive license
and right (A) to distribute the Content to
End-Users as part of the Services as authorized
in Exhibit A, and (B) to license End-Users to
use the
Content as authorized by the End-User Agreement.
b. No Distribution for Print, Television or
Radio News Media. Distributor shall not
knowingly license,
transmit distribute or otherwise make available
the Content to entities for use in print,
television or radio
news media, without first obtaining for each
such entity COMTEX' prior written consent. In
the event
that such unauthorized distribution occurs,
Distributor immediately shall notify COMTEX and
use its
best efforts to immediately cease such
distribution.
c. No Distribution to Redistributors.
Distributor shall not knowingly license,
transmit, distribute or
otherwise make available the Content to any
entity which relicenses, retransmits,
redistributes or
otherwise makes available the Content to its
customers, with or without charge, without first
obtaining
for each such entity COMTEX' prior written
consent. In the event that such unauthorized
distribution
occurs, Distributor Immediately shall notify
COMTEX and use its best efforts to immediately
cease
such distribution.
d. End-User Agreements. Distributor shall
obtain from each End-user, either in writing or
via
acknowledgment of an electronic form (which
acknowledgment can be provided by the End-Users
use
of Distributor's Services), consent to the
provisions set forth in Exhibit C to this
Agreement or
provisions substantially equivalent thereto. For
the period this Agreement Is in affect and three
(3) years
thereafter, Distributor agrees to retain for
each End-user evidence of (1) such consent, and
(11) the
agreement's terms and conditions. Distributor
shall provide COMTEX a copy of the agreement's
terms
and conditions and, upon the request of COMTEX a
copy of any writing or electronic record
evidencing consent thereto.
e. Acknowledgment and Reservation. Distributor
acknowledges that COMTEX aggregates material
from various Information Providers to create the
collections of Content distributed by COMTEX.
COMTEX reserves the right to add or withdraw
Information Providers and items of coverage from
the
Content without notice.
3. Marketing
a. Promotion. Distributor agrees to use
commercially reasonable efforts to promote and
market the
Services to prospective End-Users and to enter
into agreements pursuant to Subsection 2.d.
granting
End-Users the right to use the Services
b. Expenses. Distributor shall be responsible
for all expenses incurred by Distributor In
promoting and
marketing the Services.
c. Use of Name. Distributor shall name COMTEX as
one of its information services in all (i)
marketing
and other promotional materials, including but
not limited to press releases, advertisements,
and
brochures (whether using print, broadcast or
on-line media or Distributor's Internet Web
site) referring
to the Services that identify Distributor's
content sources, and (ii) documentation
regarding the Services
provided to End-Users.
d. Prior Approval for Publicity. The parties
each agree, at least on (10) business days prior
to use, to
submit to the other party for approval all
marketing and other promotional materials,
including but not
limited to press releases, advertisements, and
brochures (whether using print, broadcast or
on-line
media) that: (i) are produced by COMTEX and
describe the Services, provided, however, that
COMTEX may identify Distributor as aCOMTEX
distributor without obtaining Distributor's
consent;
or (ii) are produced by Distributor and describe
the Content or identify COMTEX' information
Providers.
Approval of use of such promotional materials
shall be deemed granted unless written notice of
disapproval is received within five (5) business
days. A party shall not unreasonably withhold
its
approval.
4. Delivery of the Content
a. Transmission by COMTEX. Subject to the terms
and conditions of this Agreement, COMTEX shall
transmit the Content to Distributor and
Distributor shall receive the Content
transmitted by COMTEX
in accordance with the specifications in Exhibit
A.
b. Transmission by Distributor. Distributor
shall offer Content to prospective End-Users and
have the
technical capability to transmit Content to End-
Users within sixty (60) days of the Effective
Date of this
Agreement.
c. Obligation to Block Content Not Licensed. In
the event Distributor is not authorized to
distribute all
Content transmitted by COMTEX, Distributor
agrees to block and not license, transfer, make
available
or otherwise distribute to End-Users or any
other third parties nor use in any manner
whatsoever
Content Distributor is not authorized to
distribute as part of the Services,
d. Timeliness. Distributor acknowledges that
COMTEX relies on the performance of Information
Providers outside the control of COMTEX in order
to make available the Content to Distributor.
Subject to any disruptions or delays
attributable to the performance of such
Information Providers,
COMTEX shall use commercially reasonable efforts
to maintain the timeliness of its transmission
of the
Content to Distributor.
e. Notices.
I. Copyright. Distributor shall cause the
Services to display as part of each story,
article or other
material that includes Content transmitted by
COMTEX to Distributor the copyright notice
transmitted
therewith by COMTEX indicating that the
copyright owner is a COMTEX Information Provider
or
COMTEX. Such notice Shall be conspicuous to the
End-User and comply with any further
requirements set forth in Exhibit A.
II. Content Attribution. The term "Standard
Attribution Statement" shall mean the phrase
"News
Provided by COMTEX'' or, effective no sooner
than thirty (30) days after Distributor's
receipt of
COMTEX' notice, any other reasonable phrase.
Distributor shall cause the Services to display
as part
of each story, article or other material that
includes Content transmitted by COMTEX to
Distributor (i)
the Standard Attribution Statement, (ii) the
COMTEX logo, as set forth in Exhibit A hereto
or, effective
no sooner than thirty (30) days after
Distributor's receipt of COMTEX' notice any
other reasonable
logo, and (iii) an operational link to
www.COMTEXnew.COM or, effective no sooner than
thirty (30)
days after Distributor's receipt of COMTEX'
notice. any other COMTEX World.
III. Wide Web site. Such Standard Attribution
Statement, logo and link shall be conspicuous to
the
End-User and comply with any further
requirements set forth In Exhibit A. COMTEX
shall waive the
requirement for display of the COMTEX logo
and/or establishment of the link for such
periods that
Distributor demonstrates the commercial or
technical unfeasibility of complying with these
requirements.
f. Modifications. Distributor shall not edit,
abridge, rewrite, translate or in any other way
alter or modify
the Content or create any work derived from the
Content, except (i) to the minimum extent
necessarily
incident to forming the look and feel of
Distributor's Services provided that such
modification does not
materially alter the Content, and (ii) to make
available to End-Users only the headlines, as
transmitted
by COMTEX, for the Content's articles and
stories. Distributor may choose not to
distribute to
End-Users every story or article that
Distributor is authorized to distribute,
g. Review by COMTEX
i. Access. During the period this Agreement is
in affect, Distributor shall provide COMTEX
reasonable
access to the Services for the purposes of
reviewing Distributor's incorporation of the
Content into the
Services and evaluating compliance with this
Agreement. This access shall be provided by
Distributor at
no charge to COMEX.
ii. Opportunity to Review. Prior to Distributor
commencing transmission of Content as part of
the
Services or implementing any substantial changes
in the Services, or as soon as possible
thereafter,
Distributor shall provide notice thereof to
COMTEX to allow COMTEX a reasonable opportunity
to
access the Services.
h. Corrections.
Upon receipt of notice from COMTEX of an error
in the distribution and transmission of Content
to
Distributor or in the provision of the Services
by Distributor to End-Users, Distributor
immediately shall
(i) consult, if necessary, with COMTEX regarding
the appropriate correction or other remedy for
such
error, (ii) implement as directed by COMTEX such
correction or other remedy, such as retracting a
story or article or transmitting a correction,
and (iii) provide COMTEX documentation
evidencing such
correction or other remedy.
i. Content Archiving.
Distributor may retain copies of the Content for
thirty (30) days after receipt from COMTEX, or
such
other time period as authorized In Exhibit A,
5. Payment
a. In General. Distributor shall pay COMTEX (i)
Minimums, Fees and Royalties and (ii)
Communications Charges, each as set forth in
Exhibit B. Subject to the provisions of this
Agreement,
Distributor, commencing upon the Effective Date,
shall pay the Minimums regardless of any delay
in
Distributor commencing, or any interruption in
Distributor continuing, transmission of Content
to
End-Users. Effective upon the commencement of
each Renewal Term, the Fees and Royalties shall
be
110% of the Fees and Royalties during the
immediately preceding term and the monthly
Minimums shall
equal the greater of (i) 110% of the monthly
Minimum in effect during the last month of the
prior term,
or (ii) seventy five percent (75%) of the
average monthly Fees and Royalties owed by
Distributor for
the last three months of the prior term. These
increases are predicated upon the overall amount
of
Content increasing during the course of the
Initial Term. If the amount of Content remains
the same, or
decreases, no such increase will take affect.
b. Invoices and Due Date. Each month, COMTEX
shall provide Distributor an Invoice stating the
Minimum, Fees and Royalties and the
Communications Charges owed by Distributor to
COMTEX.
Distributor shall pay COMTEX the net amount owed
on each invoice within thirty (30) days of the
date
of the Invoice (the "Due Data"). Distributor
acknowledges that the Invoice received for a
month shall
state the Minimums and Fees owed for such month
and the unpaid Royalties and other amounts owed
for prior months.
c. Taxes. Distributor shall be responsible for
all taxes, including sales, excise, and value
added taxes,
which may be levied upon the delivery of the
Content or on any payments by Distributor to
COMTEX
under this Agreement, other than franchise,
personal property and Income taxes of COMTEX.
d. Interest; Collection Costs. All amounts owed
under Subsections a, b and c, above, and not
paid
within ten (10) days of the Due Date shall bear
interest at the rate of one and one- half
percent (1.5 %)
per month, or at the highest rate allowed by
law, whichever is less, from the Due Date until
paid.
Distributor's obligation to pay interest to
COMTEX on such overdue amounts shall not limit
in any way
COMTEX' rights under Subsection 5.1. below or
Section 6 of this Agreement. In addition, COMTEX
shall be entitled to reimbursement from
Distributor for all reasonable costs of
collection, including
reasonable attorneys' fees and expenses.
e. Ad-Tracking Reports. Within ten (10) days
after the end of each month, Distributor shall
provide
COMTEX an Ad-Tracking Report setting forth all
information necessary to calculate the Royalties
for
the prior month. In the event Distributor falls
to provide COMTEX the Ad-Tracking Report within
ten
(10) days after the close of each month, (i)
Distributor shall pay COMTEX a late fee in the
amount of
ten percent (10%) of the Minimum for such month,
and (ii) notwithstanding Distributor's
obligation to
pay the late fee, such failure shall constitute
a material breach of this Agreement,
f. Suspension/Termination for Failure to Pay or
Report. Without in any way limiting Section 6,
in the
event Distributor either fails to make payment
in full in accordance with Subsections a, b, c
and d,
above, within sixty (60) days of the date of the
invoice or fails to provide COMTEX the
Ad-Tracking
Report as required by Subsection 5.e., COMTEX at
its sole election, shall have the right to
suspend
transmission of the Content to Distributor
pursuant to Subsection 6.b.ii and/or to
terminate this
Agreement pursuant to Subsection 6.b.iii.
Distributor hereby consents to such suspension
and
acknowledges that such suspension does not
constitute a breach of this Agreement by COMTEX.
In
the event of suspension, promptly upon COMTEX
receipt of such Ad-Tracking Report and payment
in
full of all amounts due, COMTEX shall commence
transmission of the Content to Distributor in
accordance with the terms and conditions of this
Agreement.
g. Audit No more than once in any six (6) month
period, COMTEX or its representative may, during
business hours and upon reasonable notice,
inspect and audit the relevant books and records
of
Distributor for the sole purpose of verifying
all information related to determining the
amounts owed
under this Agreement. Such Inspection and audit
shall be at the expense of COMTEX unless the
audit
shows an error of ten percent (10%) or more in
the calculation of Minimums, Fees and Royalties
or
Communications Charges, in which case
Distributor shall bear the reasonable expense of
such
Inspection and audit. Any deficiency discovered
by the audit shall be paid by Distributor to
COMTEX
within thirty (30) days of COMTEX notifying
Distributor of the deficiency, plus interest at
the rate of
one and one-half percent (1.5 %) per month, or
at the highest rate allowed by law, whichever is
less,
from the original Due Date until paid.
6. Term; Remedies
a. Term
i. In General. This Agreement is binding on the
parties as of the last day that a party hereto
executes this
Agreement and shall remain in effect through the
last day of the Initial Term or any subsequent
Renewal
Term, as provided below.
ii. Initial Term. The Initial Term shall
commence on the Effective Date and shall
continue for the duration
of the Initial Term set forth In Exhibit A.
iii. Renewal, Renewal Terms. This Agreement
shall renew automatically for successive periods
"Renewal Terms") of the duration of the Renewal
Term set forth in Exhibit A, unless either party
notifies
the other party, in writing, at least ninety
(90) days before the end of the then current
term of its election
not to renew.
b. Remedies for Breach by Distributor
i. Withdrawal of Information Provider. In the
event that Distributor's or Its End-Users'
breach of this
Agreement has a reasonable possibility of
causing COMTEX to breach its agreement with an
information Provider, in addition to and not In
lieu of any other remedies permitted hereunder,
COMTEX may In its sole discretion immediately
cease delivery of such information Provider's
Content
to Distributor until the breach is remedied by
Distributor, during which period Distributor
acknowledges
that such action by COMTEX shall not constitute
a breach of any provision of this Agreement.
COMTEX shall resume delivery of such Content
only after Distributor has taken action
satisfactory to
COMTEX to assure that no further breach of this
Agreement shall occur.
ii. Suspension. Notwithstanding any other
remedies granted by this Agreement, COMTEX may
in its
sole discretion upon ten (10) days notice
suspend delivery of Content to Distributor if
Distributor
materially breaches any provision of this
Agreement. Such suspension shall continue until
the breach is
remedied by Distributor, during which period
Distributor acknowledges that such action by
COMTEX
shall not constitute a breach of any provision
of this Agreement. COMTEX shall resume delivery
of the
Content only after Distributor has taken action
satisfactory to COMTEX to assure that no further
breach of this Agreement shall occur.
iii. Termination. Notwithstanding any other
remedies granted by this Agreement, COMTEX may
terminate this Agreement if Distributor
materially breaches any provision of this
Agreement provided
that (i) COMTEX first shall provide notice to
Distributor describing the breach and
identifying the
section of this Agreement breached,
and (ii) if the breach remains uncured for sixty
(60) days after delivery of such notice, than
termination
shall take effect immediately upon Distributor's
receipt of notice of termination received within
thirty
(30) days of the end of such sixty (60) day
cure-period. Immediately upon receipt of the
initial notice
identifying the breach, Distributor shall use
best efforts to cure the breach. In the event
that a breach
substantially similar to a prior breach occurs
within 180 days of COMTEX initial notice
describing such
prior breach, COMTEX may terminate this
Agreement effective immediately upon giving
notice of
termination to Distributor.
c. Remedies for Breach by COMTEX. Distributor
may terminate this Agreement if COMTEX
materially breaches any provision of this
Agreement, provided that (i) Distributor first
shall provide
notice to COMTEX describing the breach and
identifying the section of this Agreement
breached, and
(ii) if the breach remains uncured for sixty
(60) days after delivery of such notice, then
termination shall
take effect immediately upon COMTEX' receipt of
notice of termination received within thirty
(30)
days of the end of such sixty (60) day
cure-period.
d. Obligations upon Termination. Effective upon
termination of the Agreement, Distributor shall
not
license, transfer, make available or otherwise
distribute the Content nor access, use or
retransmit the
Content. Distributor shall (i) within thirty
(30) days of termination, pay to COMTEX all
charges then
owed under Section 5 above, (ii) for the
reminder of the then-current term pay to COMTEX
all
Minimums required under Section 5 above unless
the termination is due solely to COMTEX'
material
breach of this Agreement, and (iii) within
fifteen (15) days of termination, deliver to
COMTEX all
hardware owned by COMTEX. If such hardware is
not returned, (A) Distributor shall Pay COMTEX
the replacement value thereof. Within thirty
(30) days of termination, Distributor shall
erase and purge
the Content from any on-line and off-line
storage media and certify, in writing, to COMTEX
that such
erasure and purge has been completed, or (B)
certify, in writing, to COMTEX that certain
Content has
been retained in making back-ups during the
normal course of business; and that such Content
shall not
be used in any manner whatsoever without the
prior written consent of COMTEX. Immediately
upon
termination Distributor shall return to COMTEX
all other materials proprietary to COMTEX or
containing COMTEX Confidential Information and
all hardware owned by COMTEX.
e. Survival. The provisions of Sections 5, 6, 7,
8, 9, 13, 14, 15, 16 and 17 of this Agreement
shall
survive termination of this Agreement.
7. Confidential Information.
a. Definition. "Confidential Information" shall
mean information described In Subsection 7.e.
below or
which is designated as Confidential Information
by the party disclosing such Information (the
"Disclosing
Party") (i) In Exhibit D to this Agreement, (ii)
with respect to information provided on paper,
by
facsimile or electronic mail, on magnetic media,
electronically or by any other medium
(collectively {"in
writing"), by labeling such Information as
"CONFIDENTIAL INFORMATION" before the
Information is provided to the other party (the
"Receiving Party"). or (iii) with respect to
Information
disclosed either verbally or in writing, by
notifying the Receiving Party, in writing within
thirty (30) days
of the disclosure, that the information
identified in such notice is designated
Confidential Information
effective as of the Receiving Party's receipt of
such notice,
b. Exclusions. "Confidential Information" shall
not include Information that (i) is or shall
become
generally available without fault of the
Receiving Party, (ii) is in the Receiving
Party's possession prior to
its disclosure by the Disclosing Party, (iii) is
independently developed by the Receiving Party,
or (iv) is
rightfully obtained by the Receiving Party from
third parties without similar restrictions.
c. Restrictions. The Receiving Party shall not
disclose or otherwise transfer Confidential
Information of
the Disclosing Party to any third party, without
first obtaining the Disclosing Party's consent,
and shall
take all reasonable precautions to prevent
inadvertent disclosure of such Confidential
Information.
d. Injunctive Relief; Exclusion of Liability
Limitation. The parties agree that damages shall
be an
inadequate remedy in the event of a breach by
either party of this Section 7 and that any such
breach
by a Receiving Party will cause the Disclosing
Party great and irreparable injury and damage.
Accordingly, a party shall be entitled, without
waiving any additional rights or remedies
otherwise
available at law or in equity or by statute, to
injunctive and other equitable relief in the
event of a breach
or intended or threatened breach of this Section
7. The provisions of Section 13 shall not apply
to any
breach of this Section 7.
e. Contract Term:s; Pricing, Product
Information. The parties shall not disclose the
terms and conditions
of this Agreement, any information regarding
COMTEX' prices, or any information concerning
the
composition of COMTEX' products, including
analysis of the composition of COMTEX products,
to
any third party except to potential investors,
potential merger partners or acquirers subject
to
appropriate nondisclosure agreements, or
required by law.
8. Content
a. Ownership. Distributor acknowledges that this
Agreement does not transfer to Distributor or
End-Users any proprietary right, title or
interest, including copyright, in the Content.
b. Acknowledgment Distributor acknowledges that
COMTEX relies on the performance of Information
Providers outside the control of COMTEX in order
to make available the Content to Distributor.
Distributor acknowledges and agrees that COMTEX
does not warrant that the Content will not
infringe
any copyright or other right of any third party.
D. Trademarks
Each party agrees that (i) the other party's
trademarks are the sole and exclusive property
of such
Party that owns the marks, and (ii) the
trademarks of the Information Providers are the
sole and
exclusive property of the respective Information
Providers. Pursuant to subsection 3.d, COMTEX
shall
have the right to approve the use of its
trademarks by Distributor to promote and
describe the Services.
10. Limited Warranties of COMTEX
a. Agreement. COMTEX warrants that its entry
into this Agreement does not violate any
agreement
between COMTEX and any third party.
b. Laws and Regulations. COMTEX warrants that
its performance under this Agreement and the
delivery to Distributor of the Content conforms
to all applicable laws and government rules and
regulations, subject to the terms and conditions
of this Agreement.
c. Content. Distributor agrees that the Content
is provided by COMTEX "AS IS". COMTEX does not
warrant the accuracy, completeness or timeliness
of the Content.
11. Limited Warranties of Distributor
a. Agreement. Distributor warrants that its
entry into this Agreement does not violate any
agreement
between Distributor and any third party.
b. Laws and Regulations. Distributor warrants
that its performance under this Agreement and
the use of
the Content as part of the Services conform to
all applicable laws and government rules and
regulations,
subject to the terms and conditions of this
Agreement.
12. Disclaimer of All Other Warranties
THE PARTIES AGREE THAT (a) THE LIMITED
WARRANTIES SET FORTH IN SECTIONS
10 AND 11 OF THIS AGREEMENT ARE THE SOLE AND
EXCLUSIVE WARRANTIES
PROVIDED BY EACH PARTY, AND (b) EACH PARTY
DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, RELATING TO THIS
AGREEMENT, PERFORMANCE OR INABILITY TO PERFORM
UNDER THIS
AGREEMENT, THE CONTENT, AND EACH PARTY's
COMPUTING AND DISTRIBUTION
SYSTEM.
13. Limitation of Liability
In no event shall either party be liable to the
other for any indirect, special, exemplary or
consequential
damages, including lost profits, whether or not
foreseeable or alleged to be based on breach of
warranty, contract, negligence or strict
liability, arising under this Agreement or any
performance under
this Agreement.
14. Indemnification
a. By Distributor. Distributor shall indemnify
and hold harmless COMTEX and its Information
Providers from and against any third party
losses, expenses, liabilities, damages and other
claims,
including reasonable legal fees and expenses
arising out of Distributor's or its End- User's
(i) breach of
any provision of this Agreement, (ii)
distribution, transmission, duplication or use
of the Content or the
Services, or (iii) alteration or modification of
the Content.
b. By COMTEX. COMTEX shall Indemnify and hold
harmless Distributor from and against any third
party losses, expenses, liabilities, damages and
other claims, including reasonable legal fees
and
expenses, arising out of COMTEX' breach of any
provision of this Agreement.
c. Procedures. Each party agrees to notify the
other of any such claim for indemnification
promptly in
writing. The parties agree to cooperate fully
during such proceedings. Each party shall have
the right to
defend and select its own counsel or call upon
the indemnifying party to defend and assist them
and
their counsel. Neither party shall make any
settlement which materially effects the rights
of the other
party, nor shall either party be responsible for
indemnifying the other party for any settlement
made
without the first party's consent, which shall
not be unreasonably withheld.
15. Non-Solicitation
Commencing on the Effective Date of this
Agreement and extending until expiration or
termination of
this Agreement. Distributor shall not contact
any Information Provider whose Content is
delivered via
COMTEX for the purpose of procuring Content from
such Information Provider. The foregoing
sentence does not apply to any Information
Providers that Distributor currently has a
business
relationship with, if COMTEX does not make
available Content to Distributor from an
Information
Provider, this Section 15 shall not apply to
such information Provider.
15. Force Majeure
Neither party shall be liable for any delay
or failure to perform under this Agreement if
caused by
conditions beyond its reasonable control.
Including but not limited to fire, flood,
accident, storm, acts of
war, riot, government interference, strikes or
walkouts; provided, however, no such event shall
excuse
any delay or failure to perform by Distributor
of its obligations to make payment to COMTEX
under
Section 6 of this Agreement. However, if a force
majeure prevents Distributor from distributing
or
making available the Services or the Content,
then Distributor's obligation to pay shall be
suspended for
the duration of the force majeure. The affected
performing party shall promptly notify the other
party of
the nature and anticipated length of continuance
of such force majeure.
17. Notices
All notices and demands hereunder shall be
in writing and delivered by hand delivery,
certified or
registered mail, return receipt requested,
confirmed facsimile transmission or confirmed
e-mail
transmission at the addresses set forth below
(or at each different address as may be
designated by
either party by notice to the other party.
Delivery shall be deemed to occur (i) if by hand
delivery, upon
such delivery, (ii) if by mail, four (4) days
after deposit with the U.S. Postal Service,
(iii) if by facsimile
transmission, upon receipt of confirmation of
delivery, and (iv) if by e-mail, upon receipt of
confirmation
of delivery.
If to COMTEX:
Deborah Woolum Ikins, Vice President, Sales
COMTEX Scientific Corporation
490O Seminary Road
Suite 800
Alexandria, Virginia 22311
Facsimile transmission: 703-820-2005
E-mail transmission: [email protected]
If to Distributor
Mr. Trevor Newton
Stratabase.com
95315 Belanger Dr.
Abbotsford, BC, V3G 1K2
Facsimile transmission (604) 688-3388
E-mail transmission: [email protected]
18. General Terms and Conditions
a. Not Agent. Neither party shall be considered
an agent of the other party nor shall either
party have
the authority to bind the other party.
b. Assignments. Subject to the terms of this
subsection, either party may assign this
Agreement only in
connection with a transaction in which (i)
substantially all of the assets related to its
rights and
obligations under this Agreement are assigned to
a third party, or (ii) the party is acquired,
reorganizes
or merges. In the event such a transaction is
contemplated, the assigning party shall provide
the other
party at least sixty (60) days prior written
notice. If, within thirty (30) days of receipt
of such notice,
COMTEX objects and certifies, in writing, to
Distributor that the proposed assignment will
result in a
breach of any obligations of COMTEX under any
agreements between COMTEX and its Information
Providers, then the assignment is prohibited.
Except as specifically authorized by this
subsection, neither
party may assign this Agreement without the
prior written consent of the other party.
c. Beneficiaries. The rights and limitations in
this Agreement are for the benefit of COMTEX and
its
Information Providers, each of which shall have
the right to enforce its rights hereunder
directly and on
its own behalf. Distributor expressly
acknowledges and agrees that the Information
Providers are third
party beneficiaries of this Agreement and may
enforce the provisions of this Agreement against
Distributor to the same extent as COMTEX.
d. Governing Law. This Agreement and performance
hereunder shall be construed and governed by the
laws of the Commonwealth of Virginia without
giving effect to conflict of laws principles.
Any action or
claim related to this Agreement or performance
hereunder shall be brought in the federal or
state courts
in Alexandria, Virginia, and each party submits
to the jurisdiction of such courts and agrees
that any
such action or claim may be brought in such
courts.
e. Severability. In case any one or more of the
provisions contained herein shall, for any
reason, be held
to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality or
unenforceability shall
not affect any other provisions of this
Agreement and this Agreement shall be construed
as if such
provision(s) had never been contained herein,
provided that such provision(s) shall be
curtailed, limited
or eliminated only to the extent necessary to
remove the invalidity, illegality or
unenforceability.
f. Waiver. No waiver of any breach of any of the
provisions of this Agreement shall be deemed a
waiver of any preceding or succeeding breach of
the same or any other provisions hereof. No such
waiver shall be effective unless in writing and
then only to the extent expressly set forth in
writing.
g. Complete Agreement. The parties agree that
this Agreement is the complete and exclusive
statement
of the agreement between the parties, which
supersedes and merges all prior proposals,
understandings
and other agreements, oral or written, between
the parties relating to this Agreement.
h. Amendment. This Agreement may not be modified
altered or amended except by written instrument
duly executed by both parties.
i. Attorneys' Fees. Should any action be brought
by either party to enforce the provisions of
this
Agreement, the prevailing party, whether by
settlement, adjudication or arbitration, shall
have the right
to collect reasonable attorneys' fees, expenses
and costs from the non prevailing party.
j. No Inference Against Author. No provision of
this Agreement shall be interpreted against any
party
because such party or its legal representative
drafted such provision.
k. Headings. The headings used in this Agreement
are for convenience only and are not to be
construed
to have a legal significance.
l. Read and Understood. Each party acknowledges
that it has read and understands this Agreement
and agrees to be bound by its terms and
conditions,
m. Duly Authorized Representative. Each party
warrants that their representative whose
signature
appears below is duly authorized by all
necessary appropriate corporate actions to
execute this
Agreement.
AGREED Stratabase.com
By:
COMTEX Scientific Corporation
By:
/s/ Trevor Newton
/s/ Debbie Ikins
Signature
Signature
Trevor Newton
Debbie Ikins
Printed Name Printed
Name
Title: President Title: Vice
President, Sales
Date: May 17, 1999 Date: May 17, 1999
<PAGE>
Exhibit A
The Service; Term
The term "the Service" means the following
electronic information services: the Web site
and e-mail
alerting product known as Stratabase.com
To support the Service, COMTEX will supply the
Distributor with the following products:
Healthcare Custom Wire
Energy CustomWire
High Tech CustomWire
Community CustomWire
International Custom Wire
Sports CustomWire
Environment CustomWire
Government Custom Wire
Finance CustomWire
Business CustomWire
The Distributor has the right to use and display
the Content upon any Web site or product that
has been
expressly approved by COMTEX. Any other Web site
or product other than those listed above
require the written permission of COMTEX prior
to any use of the Content.
The Distributor has the right to archive the
Content for a period of time up to one year,
except in cases
noted below where an information Provider has
set a lesser archive limitation. Access to
archived
Content in excess of 30 days, however, must be
presented to the End-User as a separate service,
and
require the End-User to register before access
to the extended archive is permitted. In each
instance
below, this is the maximum archive allowable
under the terms of this Agreement.
Associated Press, AP WordStream, Canada Press,
Kyodo 30 Days
PR Newswire, BusinessWire, Futures World News
Six Months
2. Technical Specifications
The data format will be the standard COMTEX
proprietary format. All communication charges
are the
responsibility of the Distributor. COMTEX
recommends delivery by FTP Stream at a monthly
cost of
$400.
3. The Initial term shall be two years
4. Each Renewal Term shall be two years.
<PAGE>
Exhibit B
Payment Schedule
A. Start-up/installation Fee; Upon final
signature a one-time fee of $1500 will be
invoiced. This fee
covers the costs of initiating a communications
link, assistance in the integration of a news
feed, and all
costs associated with the Content for an Initial
30-day integration period. Communications are
billed
normally.
B. Monthly Fees: The following fee schedule will
apply for use of the Content:
June, 1999
$750
July, 1999
$1500
August, 1999
$2250
September, 1999 and thereafter
$3000
If billing is scheduled to begin mid-month, than
the appropriate pro-rated amount will be
invoiced.
C. Royalties; Commencing May, 1999, the
Distributor agrees to remit a royalty equivalent
to 25% of
the net advertising dollars invoiced that are
attributable to the use of the Content. These
royalties are in
addition to any monthly fees that are due.
D. Royalty Reporting: Monthly reporting is
required.
<PAGE>
Exhibit C
COMTEX End-User Agreement Provisions
1. Ownership . End-User agrees that COMTEX
Scientific Corporation ("COMTEX") and its
Information Providers retain all proprietary
right, title or interest, including copyright,
in the stories,
articles or other material, including but not
limited to text and other multimedia data, that
COMTEX
provides as part of Distributors Services (the
"Content").
2. Restrictions on Use. End-User agrees that it
will not copy nor license, sell, transfer, make
available
or otherwise distribute the Content to any
entity or person. End-User shall use its best
efforts to stop
any such Copying or distribution immediately
after such use becomes known,
3. No Warranty. The Content Is provided "AS
IS"COMTEX AND ITS INFORMATION
PROVIDERS DISCLAIM ANY AND ALL WARRANTIES,
EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO THE IMPLIED
WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, RELATING TO THIS
AGREEMENT, THE CONTENT AND ALL PERFORMANCE
HEREUNDER. COMTEX and its
Information Providers make no warranties
regarding the completeness, accuracy or
availability of the
Content.
4. Limitation of Liability . In no event shall
COMTEX or its Information Providers be liable to
End-User or any other person or entity for any
direct, indirect, special, exemplary or
consequential
damages, including lost profits arising under
this Agreement or from performance thereunder
based in
contract, negligence. strict liability or
otherwise, whether or not they or it had any
knowledge, actual or
constructive, that such damages might be
incurred.
5. Indemnification. End-User shall indemnify and
hold harmless COMTEX and its Information
Providers against any claim, damages, loss,
liability or expense, including attorneys fees,
arising out of
End-User's use of the Content in any way
contrary to this Agreement.
6. Beneficiaries of this Agreement. The rights
and limitations in this COMTEX End- User
Agreement
are for the benefit of COMTEX and its
information providers, each of which shall have
the right to
enforce its rights hereunder directly and on its
own behalf.
<PAGE>
Exhibit D
Information Contacts
In addition to the signatory of this Agreement,
the following are the contact persons for
(the
Distributor) and COMTEX Scientific Corporation
("COMTEX") at the time this Agreement is
executed:
Distributor Information
Sales contact:
Title:
Email Address:
Address: (If different from main address)
Telephone:
Fax:
Accounting Contact:
Title:
Email Address:
Address: (If different from main address)
Telephone:
Fax,
Technical Contact:
Title:
Email Address:
Address. (if different from main address)
Telephone:
Fax:
Marketing Contact:
Title:
Email Address:
Address: (If different from main address)
Telephone:
Fax:
COMTEX Information
Sales Contact: Debbie Ikins
Title: Vice President, Sales
Email Address: [email protected]
Telephone: 703-820-2000 ext, 3055
Fax:
703-820-2005
Accounting Contact: Robin Deal
Title: Controller
Email Address: [email protected]
Telephone: 703-820-2000. ext. 3008
Fax: 703-820-2005
Technical Contact: Tom Christian
Title: Vice President of Operations/CIO
Email Address: [email protected]
Telephone: 703-820-2000 ext. 3080
Fax: 703-820-2005
Marketing Contact: Sandy Schulman
Title: Vice President, Marketing Email Address,
Telephone: 703-820-2000 ext. 3015
Fax: 703-820-2005
<PAGE>
EXHIBIT 24.1
CONSENT OF COUNSEL
August 10, 1999
Stratabase.com
34314 Marshall Road, Suite 203
Abbotsford, BC V2S1L2, Canada
Gentlemen:
I hereby consent to the reference to me under
the heading "Legal Opinions" in the Prospectus
constituting part of the registration statement
on Form SB-2 of Stratabase.com.
Very truly yours,
/s/ James C. Jones
JAMES C. JONES, ESQ.
JCJ:bt
<PAGE>
EXHIBIT 24.2
[MOSS ADAMS LLP]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in this
Registration Statement of our report dated May
28, 1999, relating to the financial statements of Stratabase.com,
and to the reference to our Firm under the
caption "Experts" in the Prospectus.
/s/ MOSS ADAMS LLP
Portland, Oregon
August 10, 1999
