UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from To
COMMISSION FILE NUMBER 0-27739
-------
MENTOR ON CALL, INC.
--------------------
(Exact name of small business issuer as specified in its charter)
NEVADA 77-0517966
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
40 KING ST. WEST, SUITE 4900, TORONTO, ONTARIO, CANADA M5H 4A2
--------------------------------------------------------------
(Address of principal executive offices)
(416) 777-6714
---------------
(Issuer's telephone number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practical date: March 31, 2000 13,850,000
-------------------------------
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE). YES ; NO X
---- ----
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
INDEPENDENT ACCOUNTANT'S REPORT
Mentor On Call, Inc.
(A Development Stage Company)
We have reviewed the accompanying balance sheets of Mentor On Call,
Inc. (a development stage company) as of March 31, 2000, and the related
statements of operations, and cash flows for the three month period then ended.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statement taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
Respectfully submitted
/S/ Robison, Hill & Co.
Certified Public Accountants
Salt Lake City, Utah
May 4, 2000
<PAGE>
MENTOR ON CALL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
March 31, December 31,
ASSETS 2000 1999
----------- -----------
Current Assets:
Cash & Cash Equivalents .......................... $ 127,517 $ --
----------- -----------
Total Current Assets ........................ 127,517 --
Fixed Assets:
Equipment ........................................ 26,451 --
Less Accumulated Depreciation .................... (660) --
----------- -----------
Total Fixed Assets .......................... 25,791 --
Other Assets:
Intangible Assets ................................ 5,000 --
Less Accumulated Amortization .................... (61) --
----------- -----------
Total Other Assets .......................... 4,939 --
----------- -----------
Total Assets ................................ $ 158,247 $ --
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable & Accrued Expenses .............. $ 76,192 $ 4,813
Shareholder Loans ................................ 508,400 --
----------- -----------
Total Liabilities ........................... 584,592 4,813
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 13,850,000 and 4,500,000
Shares at March 31, 2000 and December 31, 1999 13,850 4,500
Paid-In Capital ................................ 3,163,635 --
Currency Translation Adjustments ............... (1,561) --
Retained Deficit ............................... (1,200) (3,215)
Deficit Accumulated During the
Development Stage ............................ (3,601,069) (6,098)
----------- -----------
Total Stockholders' Equity .................. (426,345) (4,813)
----------- -----------
Total Liabilities and
Stockholders' Equity ...................... $ 158,247 $ --
=========== ===========
See accompanying notes and accountants' report.
<PAGE>
MENTOR ON CALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Cumulative
since
inception
For the three months ended of
March 31, development
--------------------------
2000 1999 stage
----------- ----------- -----------
Revenues: .......................... $ -- $ -- $ --
Expenses:
Research & Development ........... 3,026,400 -- 3,026,400
General & Administrative ......... 568,571 -- 574,669
----------- ----------- -----------
Net Loss ...................... $(3,594,971) $ -- $(3,601,069)
=========== =========== ===========
Basic & Diluted loss per share ..... $ (0.26) $ --
=========== ===========
See accompanying notes and accountants' report.
<PAGE>
MENTOR ON CALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
Since
Inception
For the three months ended of
March 31, Development
--------------------------
2000 1999 Stage
----------- ----------- -----------
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C> <C>
Net Loss .................................... $(3,594,971) $ -- $(3,601,069)
Adjustments to reconcile net loss to net cash
Provided by operating activities
Depreciation & Amortization ............... 721 -- 721
Currency Translation Adjustment ........... (1,561) -- (1,561)
Stock issued for Research & Development ... 2,995,000 -- 2,995,000
Compensation Expense on Stock Options .... 175,000 -- 175,000
Increase (Decrease) in:
Accounts Payable & Accrued Expenses ....... 71,379 -- 75,992
----------- ----------- -----------
Net Cash Used in operating activities ..... (354,432) -- (355,917)
----------- ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of Fixed Assets .................... (26,451) -- (26,451)
----------- ----------- -----------
Net cash provided by
investing activities ...................... (26,451) -- (26,451)
----------- ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Capital contributed by shareholder .......... -- -- 1,485
Proceeds from Shareholder Loans ............. 508,400 -- 508,400
----------- ----------- -----------
Net Cash Provided by
Financing Activities ...................... 508,400 -- 509,885
----------- ----------- -----------
Net (Decrease) Increase in
Cash and Cash Equivalents ................. 127,517 -- 127,517
Cash and Cash Equivalents
at Beginning of Period .................... -- -- --
----------- ----------- -----------
Cash and Cash Equivalents
at End of Period .......................... $ 127,517 $ -- $ 127,517
=========== =========== ===========
</TABLE>
<PAGE>
MENTOR ON CALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(CONTINUED)
<TABLE>
<CAPTION>
Cumulative
Since
Inception
For the three months ended of
March 31, Development
--------------------------
2000 1999 Stage
----------- ----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
<S> <C> <C> <C>
Interest .................................. $ -- $ -- $ --
Franchise and income taxes ................ $ -- $ -- $ 250
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Common Stock exchanged for Intangible Assets $ 5,000 $ -- $ 5,000
</TABLE>
See accompanying notes and accountants' report.
<PAGE>
MENTOR ON CALL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Mentor On Call, Inc. is
presented to assist in understanding the Company's financial statements. The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
The unaudited financial statements as of March 31, 2000 and for the
three months then ended reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to fairly state the
financial position and results of operations for the three months. Operating
results for interim periods are not necessarily indicative of the results which
can be expected for full years.
ORGANIZATION AND BASIS OF PRESENTATION
The Company was incorporated under the laws of the State of Nevada on
October 22, 1996 under the name PSM Corp. The Company ceased all operating
activities during the period from October 22, 1996 to July 9, 1999 and was
considered dormant. On July 9, 1999, the Company obtained a Certificate of
renewal from the State of Nevada. On January 11, 2000, the company changed its
name to Mentor On Call, Inc. Since July 9, 1999, the Company is in the
development stage, and has not commenced planned principal operations.
NATURE OF BUSINESS
The company has no products or services as of December 31, 1999. The
Company was organized as a vehicle to seek merger or acquisition candidates. On
January 15, 2000, the Board of Directors approved the proposed Asset Acquisition
Agreement (the "Agreement") with Mentor On Call Holdings, Inc., a Barbadian
International Business Corporation.
The Company is in business to provide managed distance learning
systems, corporate training, professional continuing education and infomercial
marketplaces.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
<PAGE>
MENTOR ON CALL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
DEPRECIATION
Equipment is stated at cost. Depreciation is computed using the
straight-line method over the estimated economic useful lives of the related
assets as follows:
Equipment 5 - 7 years
Maintenance and repairs are charged to operations; betterments are
capitalized. The cost of property sold or otherwise disposed of and the
accumulated depreciation thereon are eliminated from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.
AMORTIZATION
Intangible assets consist of patents and trademarks. Amortization is
computed using straight- line method over the estimated useful lives of the
related assets as follows:
Patents and Trademarks 17 years.
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE>
MENTOR ON CALL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
LOSS PER SHARE
The reconciliations of the numerators and denominators of the basic
loss per share computations are as follows:
Per-Share
INCOME SHARES AMOUNT
------ ------ ------
(Numerator) (Denominator)
FOR THE THREE MONTHS ENDED MARCH 31, 2000
Basic Loss per Share
Loss to common shareholders ........ $(3,594,971) 13,850,000 $(0.26)
=========== =========== ======
FOR THE THREE MONTHS ENDED MARCH 31, 1999
Basic Loss per Share
Loss to common shareholders ......... $ -- 9,000,000 $ --
=========== =========== ======
The effect of outstanding common stock equivalents are anti-dilutive
for March 31, 2000 and 1999 and are thus not considered.
NOTE 2 - INCOME TAXES
As of March 31, 2000, the Company had a net operating loss carryforward
for income tax reporting purposes of approximately $570,000 that may be offset
against future taxable income through 2011. Current tax laws limit the amount of
loss available to be offset against future taxable income when a substantial
change in ownership occurs. Therefore, the amount available to offset future
taxable income may be limited. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater chance the
carry-forwards will expire unused. Accordingly, the potential tax benefits of
the loss carry-forwards are offset by a valuation allowance of the same amount.
<PAGE>
MENTOR ON CALL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(CONTINUED)
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
NOTE 4 - RENT EXPENSE
The Company occupies certain executive offices in Toronto, Ontario,
Canada under a noncancellable leases. This lease is for office space and expires
August 2000. The current lease requires rental payments of approximately $1,173
($1,750 Canadian Dollars) per month.
On April 1, 2000, the Company signed a one year noncancellable lease on
development center offices in Toronto, Ontario, Canada. This lease expires April
2001. The current lease requires rental payments of approximately $938 ($1,400
Canadian Dollars) per month.
It is expected that in the normal course of business, leases that
expire will be renewed or replaced by leases on other properties.
The minimum future lease payments under these leases for the next five
years are:
Year Ended December 31,
- ---------------------------------------
2000 $ 37,023
2001 6,258
2002 -
2003 -
2004 -
Thereafter -
--------------------
Total minimum future lease payments $ 43,281
====================
<PAGE>
MENTOR ON CALL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(CONTINUED)
NOTE 5 - STOCK SPLIT
On May 6, 1999 the Board of Directors authorized 1,000 to 1 stock
split, changed the authorized number of shares to 100,000,000 shares and the par
value to $.001 for the Company's common stock. As a result of the split, 999,000
shares were issued. All references in the accompanying financial statements to
the number of common shares and per-share amounts for 1999 have been restated to
reflect the stock split.
On January 15, 2000, the Board of Directors authorized 9 to 1 stock
split. As a result of the split, 4,000,000 shares were issued. All references in
the accompanying financial statements to the number of common shares and
per-share amounts for 1999 have been restated to reflect the stock split.
NOTE 6 - STOCK OPTIONS AND WARRANTS
On March 16, 2000 the Board of Directors authorized and issued stock
options to a Director for purchase 50,000 shares of the Company's restricted
common stock at a price of $2.00 per share. The options expire March 2002. As of
March 31, 2000, no options have been exercised. Compensation in the amount of
$175,000 has been recorded in the accompanying financial statements as a result
of the issuance of these options
NOTE 7 - RELATED PARTY TRANSACTIONS
During 2000, shareholders of the Company have loaned $508,400 to the
Company. The loans are payable on demand and accrue interest at 10% beginning
April 1, 2000.
<PAGE>
MENTOR ON CALL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(CONTINUED)
NOTE 8 - EMPLOYMENT CONTRACTS
The Company signed employment contracts with Messrs. Rodgers, Austin,
Pritchard and Figueroa as follows:
Annual Deferred
Name Remuneration Amount
- -------------------------------------- ------------------ ------------------
Rodgers .............................. $250,000 $ 75,000
Austin ............................... $180,000 $ 60,000
Pritchard ............................ $120,000 $ 25,000
Figueroa ............................. $100,000 $ 15,000
Deferred Salaries vest when the Company retains earnings of $750,000 in
one quarter and are then payable in equal monthly amounts over the ensuing six
month period.
Benefits are in a packaged value at a minimum of ten percent of salary
and a maximum of fifteen percent of salary. Fully paid vacation of four weeks
per annum each.
Automobile allowance available when the Company is earning a profit of
a minimum of $750,000 in any one quarter as follows: Rodgers $450 per month,
Austin $375 per month, Prichard $300 per month, and Figueroa $300 per month.
A Project Completion Bonus of $125,000 for each of Rodgers, Austin,
Pritchard and Figueroa is available and payable on the completion and acceptance
of the Learning Management System by the Chief Executive Officer of the Company
and by outside clients and conditional upon receipt of a minimum of $1,500,000
from licences.
Each of Rodgers, Austin, Pritchard and Figueroa will be granted stock
options of 250,000 to each with a strike price of $2.00 per share exercisable
for a period of five years upon payment of the project completion bonus.
<PAGE>
MENTOR ON CALL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(CONTINUED)
NOTE 9 - ASSET ACQUISITION
The Board of Directors has approved the proposed Asset Acquisition
Agreement (the "Agreement") with Mentor On Call Holdings, Inc. (Formerly Mentor
On Call, Inc.), a Barbadian International Business Corporation ("Holdings"). The
name of the Company has been changed to Mentor On Call, Inc. to reflect the
Company's new direction, and, effective January 15, 2000, the Company declared a
nine-for-one forward stock split of its common stock.
The assets acquired include the Mentor On Call Managed E-Learning
System which is a proprietary and web-enabled managed distance and e-learning
system with patents pending and priority dates set in eighty-nine countries. The
Mentor On Call system operates on Windows 95, 98 and NT platforms, on Novell and
Intranet and will support industry standard web servers and browsers. The system
is SQL compliant. The assets also include the Trademark and domain name "Mentor
On Call".
The Company hopes to provide the best managed distance learning system
in the world, and intends to grow and achieve an above-average financial return
by maintaining a large share of the public school distance and e-learning
market, as well as the corporate training, professional continuing education and
infomercial marketplaces.
Under the terms of the Agreement, signed on January 17, 2000, the
Company issued 9,350,000 post-split restricted shares of the Company as
consideration for the assets, resulting in a total of 13,850,000 issued and
outstanding shares of the Company, of which Holdings controls approximately
67.5%. Holdings management has stepped in and taken over all day-to-day
operations of the Company. James N. Rodgers has agreed to assume the position of
President, Chief Executive Officer and Chairman of the Board of Directors, and
Edwin W. Austin has agreed to step in as Chief Financial Officer, Chief
Operating Officer and Director.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
General
The Company is in business to provide quality managed distance learning systems,
and intends to grow and achieve an above-average financial return by maintaining
a large share of the public school distance and e-learning market, as well as
the corporate training, professional continuing education and infomercial
marketplaces.
On January 15, 2000 the Company acquired the Mentor On Call Managed E-Learning
System which is a proprietary and web-enabled managed distance and e-learning
system with patents pending and priority dates set in eighty-nine countries. The
Mentor On Call system operates on Windows 95, 98 and NT platforms, on Novell and
Intranet and will support industry standard web servers and browsers. The system
is SQL compliant. The assets also include the Trademark and domain name "Mentor
On Call".
Under the terms of the asset acquisition agreement, the Company issued 9,350,000
restricted shares as consideration for the acquired assets. The Company may
incur significant post-acquisition registration costs in the event management
wishes to register a portion of these shares for subsequent sale. The Company
will also incur significant legal and accounting costs in connection with the
acquisition including the costs of preparing post- effective amendments, Forms
8-K, agreements and related reports and documents.
The Company will not have sufficient funds (unless it is able to raise funds in
a private placement) to undertake any significant development, marketing and
manufacturing of the products acquired. Accordingly, following the acquisition,
the Company will, in all likelihood, be required to either seek debt or equity
financing or obtain funding from third parties, in exchange for which the
Company may be required to give up a substantial portion of its interest in the
acquired product. There is no assurance that the Company will be able either to
obtain additional financing or interest third parties in providing funding for
the further development, marketing and manufacturing of any products acquired.
Plan of Operation
The business plan for the Company includes completion of financing pursuant to
Private Placement announced March 27, 2000 in the amount of $7,750,000 minus
placement fees when fully subscribed.
The plan calls for the Company to follow up on Drake International testing of
the Mentor On Call proprietary E-learning System.
The company shall allocate $200,000 to perfection of patent pending numbers in
89 countries pursuant to the Paris Convention, from proceeds of Private
Placement.
<PAGE>
The company will continue the customization of its E-learning System to meet the
specific needs of subscribers with prime emphasis targeted to the requirements
of Application System Service Providers. An amount of $1,300,000 is allocated
towards this goal pursuant to our business plan.
The company, in conjunction with the system refinements, shall migrate the
Mentor On Call E- learning System to industry standard building tools. The
company has allocated $100,000 to this project.
Mentor On Call, Inc. shall allocate the balance of Private Placement when fully
subscribed to complete business contemplated pursuant to executed Letters of
Intent and to market the product worldwide and for general working capital
purposes.
Competition
The Company is an insignificant participant among firms which engage in managed
distance learning systems, corporate training, professional continuing education
and infomercial marketplaces. There are other established companies in these
industries which have significantly greater financial and personnel resources,
technical expertise and experience than the Company. In view of the Company's
limited financial resources and management availability, the Company will
continue to be at a significant competitive disadvantage vis-a-vis the Company's
competitors.
Employees
At March 31, 2000, the Company had 8 full-time employees.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not engaged in any legal proceedings other than the
ordinary routine litigation incidental to its business operations, which the
Company does not believe, in the aggregate, will have a material adverse effect
on the Company, or its operations.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits are included as part of this report:
Exhibit
NUMBER EXHIBIT
3.1 ARTICLES OF INCORPORATION (1)
3.2 AMENDED ARTICLES OF INCORPORATION (1)
3.3 BYLAWS (1)
10.1 Asset Acquisition Agreement
10.2 Unanimous Shareholders Agreement
10.3 Executive Employment Contract with James N. Rodgers
10.4 Executive Employment Contract with Edwin W. Austin
10.5 Executive Employment Contract with John J. Pritchard
10.6 Executive Employment Contract with Jason R. Figueroa
10.7 Escrow Agreement
27.1 Financial Data Schedule
(1) Incorporated by reference to the Registrant's registration statement on
Form 10-SB filed on October 20, 1999.
(b) The Company filed a report on Form 8-K on April 5, 2000 to
report a change in control of the company effective January
15, 2000.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
MENTOR ON CALL, INC.
(Registrant)
Date: May 5, 2000 By: /s/ James N. Rodgers
James N. Rodgers,
President, CEO and Chairman
Date: May 5, 2000 By: /s/ Edwin W. Austin
Edwin W. Austin,
CFO, COO and Director
ASSET ACQUISITION AGREEMENT
THIS ASSET Acquisition Agreement (the "Agreement") effective January
- --, 2000, is by and between PSM Corp., a Nevada corporation ("PSM"), having its
principal offices at 11300 W. Olympic Boulevard, Suite 800, Los Angeles,
California 90064; and MENTOR ON CALL, INC., an International Business
Corporation organized pursuant to the laws of the Country of Barbados, West
Indies ("MENTOR"), and with respect to certain representations, those
shareholders owning a controlling interest in MENTOR (the "Majority
Shareholders").
RECITALS:
--------
A. PSM desires to acquire all of the assets identified on Exhibit "A"
to this Agreement (the "ASSETS"), CONSTITUTING A MAJORITY OF THE ASSETS OF
MENR0R AND MENTOR desires to sell all of the Assets in exchange for shares of
PSM authorized but unissued Common Stock as hereinafter provided.
B. It is the intention of the parties hereto that: (i) PSM shall
acquire all or almost all of the ASSETS OF MENTOR IN EXCHANGE SOLELY FOR THE
NUMBER OF shares of PSM's authorized but unissued shares of Common Stock, par
value S.0001 ("Common Stock"), set forth below (the "Exchange"); and (ii) and
the Exchange shall QUALIFY AS A transaetion in securities exempt from
registration or qualification under the Securities Act of 1933, as amended, and
under the applicable securities laws of each state or jurisdiction where a
majority of the shareholders of MENTOR (the "Shareholders") reside.
C. THE BOARD OF DIRECTORS OF PSM DEEMS IT to be in the best interest of
PSM and its shareholders TO ACQUIRE THE ASSETS OF MENTOR.
D. THE BOARD OF DIRECTORS OF MENTOR deems it to be in the best interest
of the Shareholders and of MENTOR to accept the Common shares of PSM, as
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
SECTION 1. EXCHANGE OFS]EIARES
1.1 EXCHANAE OF SHAREA. FSM AND MENTOR HEREBY AGREE THAT MENTOR shall,
on the Closing Date (as HEREINAFTER DEFINED), EXCHANGE A] OF THE ASSETS LISTED
ON EXHIBIT "A", OF MENTOR, FOR 9,350,000 post-split Shares of PSM Common Stock
(the "PSM Shares"). The PSM Shares will be restricted against resale pursuant to
the provisions of Federal and State securities laws, and have
<PAGE>
issuance and convertibility restrictions as set forth below. The Mentor
Assets to be tendered will represent substantially all of the assets of Mentor.
The Mentor shares owned by each shareholder of MENTOR are set forth in Exhibit B
hereto.
1.2 DELIVERY OF SHARES.. On the Closing Date, title to the Assets of
MENTOR to be xchanged for Shares of PSM will be delivered to PSM, fully executed
and endorsed so as to make `SM the sole owner thereof, and a list setting for
the disposition of the certificates representing the ommon Shares will be
delivered to PSM IDENTIFYING THE RECIPIENTS OF THE PSM COMMON SHARES. WITHIN 5
business days of the Closing Date, PSM will deliver certificates representing
the PSM ;h&es to MENTOR, or as may be otherwise directed by MENToR.
1.3 RESTRICTED SECURITIES. THE PSM Shares have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be resold unless the resale thereof is egistered under the Securities Act or an
exemption from such registration is available. Each :ertificate representing the
PSM Shares will have a legend thereon in substantially the following brm:
The Shares represented by the certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"). The shares
have been acquired for investment and may not be sold or transferred in
THE ABSENCE OF AN EFFECTIVE REGISTRATION Statement for the resale of
the shares under the Act unless in the opinion of counsel satisfactory
to the Company, registration is not required under the Act.
RECTION 2. REPRESENTATIONS AND WARRANRESOF MENTOR
------ -- --------------- --- ----------- ------
MENTOR and the Majority Shareholders, jointly and not severally, hereby
represent and ?varrant as follows:
2.1 ORGANIZATION AND GOOD STANDING. By the Closing Date, MENTOR will be
a ~orporation duly ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE
LAWS OF THE COUNTRY OF 3ARBADOS. MENTOR has the CORPORATE POWER AND AUTHORITY TO
CARRY ON ITS BUSINESS AS PRESENTLY ~ONDUCTED. BY THE CLOSING DATE, MENTOR will
be qualified to do business in all jurisdictions where he failure to be so
qualified would have a material adverse effect on its business.
2.2 CORPORATE AUTHORITY. MENTOR has the corporate power to enter into
this Agreement tad to perform its obligations hereunder. The execution and
delivery of this Agreement and the ;onsummation of the transaction contemplated
hereby have been duly authorized by the Board of Directors and a majority of the
Shareholders of MENTOR. The execution and performance of this kgreement will not
constitute a material breach of any agreement, indenture, mortgage, license or
Dther instrument or document to which MENTOR is a party and will not violate any
JUDGMENT, DECREE, DRDER, WRIT, RULE, STATUTE, OR REGULATION APPLICABLE TO MENTOR
or its properties. The execution and
<PAGE>
performance of this Agreement will not violate or conflict with any provision of
the Certificate of Incorporation OR BY-LAWS OF MENTOR.
2.3 OWNERSHIP OF SHARES. The Shareholders described on Exhibit "B" are
the owners of record and beneficially of the issued and outstanding shares of
capital stock of MENTOR as described therein. Each Majority Shareholder
represents and warrants that he, she or it owns such shares free and clear of
all rights, claims, liens and encumbrances, and the shares have not been sold,
pledged, assigned or otherwise transferred except pursuant to this Agreement.
2.4 RECEIPT OF CORPORATE INFORMATION; INDEPENDENT INVESTIGATION:
ACCESS. All requested publicly-available documents, records and books pertaining
to PSM and the [`SM Shares have been delivered to MErcrort, and to the
respective Majority Shareholder and/or its advisors. All of the Shareholder's
questions and requests for information have been answered to the Shareholder's
satisfaction. Shareholder acknowledges that Shareholder, in making the decision
to vote for the exchange of the MENTOR Assets for PSM Shares, has relied upon
independent investigations made by it and its representatives, if any, and
Shareholder and such representatives, if any, have, prior to the Closing Date,
been given access to and the opportunity to examine all material contracts and
documents relating to this offering and an opportunity to ask questions of, and
to receive information from, PSM or any person acting on its behaLf concerning
the terms and conditions of this Agreement Shareholder and its advisors, if any,
have been furnished with access to all publicly available materials relating to
the business, finances and operation of PSM and materials relating to the offer
and sale of the PSM Shares which have been requested. Shareholder and its
advisors, if any, have received complete and satisfactory answers to any such
inquiries.
2.5 RISKS. THE SHAREHOLDER ACKNOWLEDGES AND UNDERSTANDS THAT THE
EXCHANGE FOR THE PSM Shares involves a high degree of risk and is suitable only
for persons of adequate financial means who have no need for liquidity in this
investment in that (1) the Shareholder may not be able to liquidate the
investment in the event of an emergency; (ii) transferability is extremely
limited; and (iii) in the event of a disposition, the Shareholder could sustain,
a complete loss of its entire investment. The Shareholder is sufficiently
experienced in fmancial and business matters to be capable of evaluating the
merits and risks of an investment in PSM; has evaluated such merits and risks,
including risks particular to the Shareholder's situation; and the Shareholder
has determined that this investment is suitable for the Shareholder. The
Shareholder has adequate financial resources and can bear a complete loss of the
Shareholder's investment.
2.6 INVESTMENT INTENT. The Shareholder hereby represents that the PSM
Shares, if not to be retained by MENTOR, are being acquired for the
Shareholder's own account with no intention of distributing such securities to
others. The Shareholder has no contract, undertaking, agreement or arrangement
with any person to sell, transfer or otherwise distribute to any person or to
have any person sell, transfer or otherwise distribute the Shares for the
Shareholder. The Shareholder is presently not engaged, nor does the Shareholder
plan to engage within the presently foreseeable future, in any discussion with
any person regarding such a sale, transfer or other distribution of the Shares
or any interest therein.
<PAGE>
2.7 COMPLIANCE WITH FEDERAL AND STATE SECURITIES LAWS. THE SHAREHOLDER
UNDERSTANDS THAT THE PSM SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT. THE SHAREHOLDER UNDERSTANDS THAT THE PSM SHARES MUST be held indefinitely
unless the sale or other transfer thereof is subsequently registered under the
Securities Act or an exemption from such registration is available. Moreover,
the Shareholder understands that its right to transfer the PSM Shares will be
subject to certain restrictions, which include restrictions against transfer
under the Securities Act and applicable state securities laws. in addition to
such restrictions, the Shareholder realizes that it may not be able to sell or
dispose of the PSM Shares as there may be no public or other market for them.
The Shareholder understands that certificates evidencing the Shares shall bear a
restrictive legend.
2.8 APPROVALS. No approval, authorization, consent, order or other
action of, or filing with, any person, firm or corporation or any court,
administrative agency or other governmental authority is required in connection
with the execution and delivery of this Agreement by the Shareholder or the
consummation of the transactions described herein.
2.9 NO GENERAL SOLICITATIOJI. Shareholder is not purchasing the PSM
Shares because of or following any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio, or presented at any seminar or meeting, or any
solicitation or a subscription by a person other than a representative of PSM.
2.10 BOOKS AND RECORDS. Attached as Exhibit 2.11 are requisite books
and records necessary to allow appraisal and valuation, for accounting purposes,
of the Assets. The books and records are in all respects complete and correct in
all material respects and are maintained in accordance with good business and
accounting practices.
2.11 NO MATERIAL ADVERSE CHANGES. SINCE AUGUST 31, 1999, there has not
been:
(I) ANY MATERIAL ADVERSE CHANGE IN THE STATUS OF THE ASSETS OF
MENTOR except changes arising in the ordinary course of business, which
changes will in no event materially AND ADVERSELY AFFECT THE VALUATION
AND/OR UTILITY OF THE ASSETS BEING TRANSFERRED BY MENTOR;
(II) ANY DAMAGE, DESTRUCTION OR LOSS MATERIALLY AFFECTING THE
ASSETS OF MENTOR whether or not covered by insurance;
(iii) any sale of an Asset (other than in the ordinary course
of business) or any mortgage or pledge by MENTOR of any Assets; or
2.12 NO BREACH, The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby wiU not:
(i) violate any provision of the Certificate of Incorporation
or By-Laws of MENTOR;
<PAGE>
(ii) violate, conflict with or result in the breach of any of
the terms of, result in a material modification of, otherwise give any
other contracting party the right to terminate, or constitute (or with
notice or lapse of time, or both constitute) a default under any
CONTRACT OR OTHER AGREEMENT TO WHICH MENTOR is a party or by or to
which it or any of its assets or properties may be bound or subject;
(iii) violate any order, judgment, injunction., award or
decree of any court, ARBITRATOR OR GOVERNMENTAL OR REGULATORY BODY
AGAINST, OR BINDING UPON, MENTOR or upon the PROPERTIES OR BUSINESS OF
MENTOR; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions contemplated herein `which
could have a material, adverse effect on the business or operations of
MENTOR.
2.13 ACTIONS AND PROCEEDINGS. MENTOR is not a party to any material
pending litigation or, to the knowledge of the Majority Shareholders, after
reasonable inquiry, any governmental investigation or proceeding NOT REFLECTED
IN THE MENTOR books and records concerning the Assets and, to their best
knowledge, no material LITIGATION, CLAIMS, ASSESSMENTS OR NON-GOVERNMENTAL
PROCEEDINGS ARE THREATENED AGAINST MENTOR with respect to the Assets except as
set forth on Schedule 2.14 attached hereto and made a part hereof.
2.14 AGREEMENTS. SCHEDULE 2.15 SETS FORTH ANY MATERIAL CONTRACT OR
ARRANGEMENT TO WHICH MENTOR is a party or by or to which it or its assets,
properties or business are bound or subject, whether written or oral and which
would have any impact on the ability to deliver the Assets unencumbered.
2.15 BROKERS OR FINDERS. No broker's or finder's fee will be payable by
MENTOR in connection with the transactions contemplated by this Agreement, nor
will any such fee be incurred as a result of any actions by MENTOR or any of its
Shareholders.
2.16 TARIGIBLE ASSETS. MENTOR has full tide and interest in all
distance learning management systems, hardware firewall solutions,
patent-pending filings with respect to these hardware items, and the patented
smart card identity and payment technology licensed, owned or leased by MENTOR,
and any related CAPITALIZED ITEMS OR OTHER TANGIBLE PROPERTY MATERIAL TO THE
ASSETS BEING DELIVERED BY MENTOR (the "Tangible Assets"), other than as set
forth in Section 2.19. MENTOR holds all rights, title and interest in all the
Tangible Assets owned by it and being transferred pursuant to this Agreement
free and clear of all liens, pledges, mortgages, security interests, conditional
sales contracts or any other encumbrances. All of the Tangible Assets are in
good operating condition and repair and are usable in the ordinary course of
business of MENTOR and conform to all applicable laws, ordinances and government
orders, rules and regulations relating to THEIR CONSTRUCTION AND OPERATION,
EXCEPT AS SET FORTH ON SCHEDULE 2.19 HERETO. MENTOR has clear title to all of
its fictional business names, trading names, registered and unregistered
trademarks, service marks and applications (collectively, the "Marks") and these
items of "Intel lectual Property"
<PAGE>
are included as Tangible Assets
2.17 LIABILITIES. MENTOR DID not have any direct or indirect
indebtedness, liability, claim, loss, DAMAGE, DEFICIENCY, OBLIGATION OR
RESPONSIBILITY, KNOWN OR UNKNOWN, FIXED OR unfixed, liquidated or unliquidated,
secured or unsecured, accrued or absolute, contingent or otherwise, including,
without limitation, any liability on account of taxes, any governmental charge
or lawsuit (all of the foregoing collectively defined to as "Liabilities"),
which are not fully, fairly and adequately reserved on the books and records,
except for any specific Liabilities set forth on Schedule 2.20 attached hereto
and made a part hereof. As of the date of CLOSING, MENTOR will not have any
material liabilities, other than liabilities fully and adequately reflected on
the books and records, for which the Assets could stand as collateral. To the
best knowledge of the Shareholders, there is no circumstance, condition, event
or arrangement which may hereafter give rise to any liabilities allowing for a
claim against the Assets.
2.18 ACCESS TO RECORDS. The corporate books and records pertaining the
Assets and an evaluation of the Assets have been made available to PSM prior to
the Closing hereof.
2.19 FULL DISCLOSURE. NO REPRESENTATION OR WARRANTY BY MENTOR or the
Majority Shareholders in this Agreement or in any document or schedule to be
delivered by them pursuant hereto, and no written statement, CERTIFICATE OR
INSTRUMENT FURNISHED OR TO BE FURNISHED BY MENTOR PURSUANT HERETO OR ITT
connection with the negotiation, execution or performance of this Agreement
contains or will contain any untrue statement of a MATERIAL FACT OR OMITS OR
WILL OMIT TO STATE ANY FACT necessary to make any statement herein or therein
not materially misleading or necessary to a complete and correct presentation
ofall material aspects of the Assets BEING TRANSFERRED BY MENTOR, AND/OR THE
STATUS OF THE MENTOR SHAREHOLDERS.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PSM
PSM hereby represents and warrants as follows:
3.1 ORGANIZATION AND GOOD STANDING. PSM IS A CORPORATION DULY
ORGANIZED, VALIDLY existing and in GOOD STANDING UNDER THE LAWS OF THE STATE OF
NEVADA. IT HAS THE CORPORATE POWER TO own its own property and to CARRY ON ITS
BUSINESS AS NOW BEING CONDUCTED AND IS DULY QUALIFIED TO DO BUSINESS in any
jurisdiction where so REQUIRED EXCEPT WHERE THE FAILURE TO SO QUALIFY WOULD HAVE
NO MATERIAL ADVERSE EFFECT ON ITS BUSINESS.
3.2 CORPORATE AUTHORITY. PSM HAS THE CORPORATE POWER TO ENTER INTO
THIS AGREEMENT AND to perform ITS OBLIGATIONS HEREUNDER. THE EXECUTION AND
DELIVERY OF THIS AGREEMENT AND THE CONSUMMATION OF THE transactions CONTEMPLATED
HEREBY HAS BEEN, ORWILL BE PRIOR TO THE CLOSING DATE, DULY AUTHORIZED BY THE
BOARD OF DIRECTORS OF PSM AND A MAJORITY OF THE SHAREHOLDERS AS REQUIRED BY
NEVADA LAW. THE EXECUTION AND performance of this Agreement will not constitute
a material breach of any agreement, indenture, mortgage, license or other
instrument or document to which PSM is
<PAGE>
a party and. will not violate any judgment, decree, order, writ, rule, statute,
or regulation applicable to PSM or its properties. The execution and performance
of this Agreement will not violate or conflict with any provision of the
Articles of Incorporation or By-Laws of PSM.
3.3 THE PSM SHARES. AT THE CLOSING, THE PSM SHARES TO BE ISSUED AND
DELIVERED TO THE SHAREHOLDERS HEREUNDER WILL WHEN SO ISSUED AND DELIVERED,
CONSTITUTE VALID AND LEGALLY ISSUED SHARES OF PSM COMMON STOCK, FULLY PAID AND
NONASSESSABLE, HAVING THE PREFERENTIAL RIGHTS SET FORTH IN SECTION 2.10 ABOVE.
3.4 FINANCIAL STATEMENT: BOOKS AND RECORDS. FILED WITH THE SEC ARE THE
AUDITED FINANCIAL statements (balance sheet, income statement and Notes) of PSM
for the period ended August 31, 1999. The Financial Statements FAIRLY REPRESENT
THE FINANCIAL POSITION OF PSM AS AT SUCH DATE AND the results of their
operations for the periods then ended. The Financial Statements were prepared in
accordance with generally accepted accounting PRINCIPLES APPLIED ON A CONSISTENT
BASIS WITH PRIOR periods except as otherwise stated therein. The books of
ACCOUNT AND OTHER FINANCIAL RECORDS OF PSM ARE IN ALL RESPECTS COMPLETE AND
CORRECT IN ALL MATERIAL RESPECTS and ARE MAINTAINED IN ACCORDANCE WITH GOOD
BUSINESS AND ACCOUNTING PRACTICES.
3.5 NO MATERIAL ADVERSE CHANGES.
------------------- -------
EXCEPT AS DESCRIBED ON SCHEDULE 3.5, since August 31, 1999, there has
not been:
(i) any material adverse changes inthe financial
position of PSM except CHANGES ARISING IN THE ORDINARY COURSE
OF BUSINESS, WHICH CHANGES will in no event materially AND
ADVERSELY AFFECT THE FINANCIAL POSITION OF PSM.
(ii) any damage, destruction or loss materially
affecting the assets, prospective business, operations or
condition (financial or otherwise) of PSM whether or not
covered by insurance;
(iii) any declaration setting aside or payment of any
dividend or distribution with respect to any redemption or
repurchase ofPSM capital stock, other than as agreed upon
among the parties;
(iv) any sale of an asset, or any mortgage pledge by
PSM of any properties or assets; or
(V) ADOPTION OR MODIFICATION OF ANY PENSION, PROFIT
SHARING, RETIREMENT, stock bonus, stock option or similar plan
or arrangement.
(vi) except in the ordinary course of business,
incurred or assumed any indebtedness or liability, whether or
not currently due and payable;
<PAGE>
(vii) any loan or advance to any shareholder,
officer, director, employee, consultant, agent or other
representative or made any other loan or advance otherwise
than in the ordinary course of business;
(viii) any material increase in the annual level of
compensation of any executive employee of PSM;
(ix) except in the ordinary course of business,
entered into or modified any CONTRACT, AGREEMENT OR
TRANSACTION;
(X) ISSUED ANY EQUITY SECURITIES OR RIGHTS TO ACQUIRE
EQUITY SECURITIES, OTHER THAN AS set forth in Schedule 3.5.
3.6 TAXES. PSM HAS FILED ANY TAX, GOVERNMENTAL AND/OR RELATED FORMS AND
REPORTS (OR extensions THEREOF) DUE OR REQUIRED TO BE FILED. PSM'S ACCOUNTANTS
ARE IN THE PROCESS OF FILING PSM'S TAX RETURNS. TO THE best of managements'
knowledge, PSM's tax returns will reflect losses for such periods and any taxes
due as a RESULT OF SUCH RETURNS WILL NOT HAVE A MATERIAL ADVERSE EFFECT ON PSM.
3.7 COMPLIANCE WITH LAWS. EXCEPT AS DESCRIBED ON SCHEDULE 3.7, PSM has
complied with all federal, STATE, COUNTY AND LOCAL LAWS, ORDINANCES,
REGULATIONS, INSPECTIONS, ORDERS, JUDGMENTS, INJUNCTIONS, AWARDS OR DECREES
APPLICABLE TO IT OR ITS BUSINESS, WHICH, IF NOT COMPLIED WITH, WOULD MATERIALLY
AND ADVERSELY AFFECT THE BUSINESS OF PSM.
3.8 ACTIONS AND PROCEEDINGS. PSM IS NOT A PARTY TO ANY MATERIAL PENDING
LITIGATION OR, TO ITS KNOWLEDGE, ANY GOVERNMENTAL PROCEEDINGS ARE THREATENED
AGAINST PSM.
3.9 CAPITALIZATION. AS OF THE CLOSING DATE, THERE ARE APPROXIMATELY 46
SHAREHOLDERS OF record that are the owners of 4,500,000 shares of PSM Common
Stock, none of which owns in excess of 5% of the issued and OUTSTANDING SHARES,
EXCEPT AS MAY BE SET FORTH IN PSM'S PERIODIC REPORTS FILED with the SEC. There
are no OUTSTANDING WARRANTS, ISSUED STOCK OPTIONS, STOCK RIGHTS OR OTHER
COMMITMENTS OF ANY CHARACTER RELATING TO THE ISSUED OR UNISSUED SHARES OF EITHER
COMMON STOCK OR PREFERRED STOCK, IF ANY, OF PSM.
3.10 ACCESS TO RECORDS. THE CORPORATE FINANCIAL RECORDS, MINUTE BOOKS,
AND OTHER DOCUMENTS AND RECORDS OF PSM HAVE BEEN MADE AVAILABLE TO MENTOR PRIOR
TO THE CLOSING HEREOF.
3.11 NO BREACH. THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS
AGREEMENT AND THE CONSUMMATION OF THE transactions contemplated hereby will not:
(I) VIOLATE ANY PROVISION OF THE ARTICLES OF INCORPORATION OR
BY-LAWS OF NM;
<PAGE>
(ii) violate, conflict with or result in the breach of any of
the material terms of, result in a material modification of, otherwise
give any other contracting party the right to terminate, or constitute
(or with notice or lapse of time or both constitute) a default under,
any contact or other agreement to which PSM is a party or by or to
which it or any of its assets or properties may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree
of any court, arbitrator or governmental or regulatory body against, or
binding upon, PSM or upon the securities, properties or business to
PSM; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions contemplated herein, which
violation could have a material adverse effect on the business or
operations of PSM.
3.12 BROKERS OR FINDERS. No broker's or finder's fee will be payable by
PSM in connection with the transactions contemplated by this Agreement, nor will
any such fee be incurred as a result of any actions of PSM.
3.13 CORPORATE AUTHORITY. PSM has the corporate power to enter into
this Agreement and to perform its respective obligations hereunder. The
execution and delivery of this Agreement and the consummation of the transaction
contemplated hereby have been duly authorized by the Board of Directors and a
majority of the Shareholders of PSM. The execution and performance of this
Agreement will not constitute a material breach of any agreement, indenture,
mortgage, license or other instrument or document to which PSM is a party and
will not violate any judgment, decree, order, writ, rule, statute, or regulation
applicable to PSM or its properties. The execution and performance of this
Agreement will not violate or conflict with any provision of the Certificate of
Incorporation or by-laws of PSM.
3.14 FULL DISCLOSURE. No representation or warranty by PSM in this
Agreement or in any document or schedule to be delivered by them pursuant
hereto, and no written statement, certificate or instrument furnished or to be
furnished by PSM pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary
to make any statement herein or therein not materially misleading or necessary
to complete and correct presentation of all material aspects of the business of
PSM.
3.15 REPORTIPG_COMPANY STATUS. PSM is a reporting company under the
auspices of Section 12(g) of the Securities Act of 1933, and may be identified
by its Corporate Identification Code ("CIK") number of 0001096298 for locating
its filings on the Electronic Data Gathering and Retrieval system ("EDGAR")
maintained by the United States Securities and Exchange Commission ("SEC").
<PAGE>
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO THE OBLJGATION OF MEIRROR AND THE MAJORITY
SHAREHOLDERS. All OBLIGATIONS OF MENTOR and the Majority Shareholders under this
Agreement are subject to the fiulfillment, prior to or as of the Closing Date,
as indicated below, of each of the following conditions:
(a) The representations and warranties by or on
behalf of PSM contained in this Agreement or in any
certificate or document delivered pursuant to the provisions
hereof shall be true in all material respects at and as of
Closing Date as though such representations and warranties
were made at and as of such time.
(b) PSM shall have performed and complied in all
material respects, with all covenants, agreements, and
conditions set forth in, and shall have executed and delivered
all documents required by this Agreement to be performed or
complied with or executed and delivered by them prior to or at
the Closing.
(c) On or before the Closing, the Board of Directors
and a majority of the shareholders of PSM shall have approved,
in accordance with Nevada law, the execution, delivery and
performance of this Agreement and the consummation of the
transaction contemplated herein and authorized all of the
necessary and proper actions to enable PSM to comply with the
terms of the Agreement.
(d) PSM shall have sufficient shares of PSM Common
Stock authorized but unissued to complete the Exchange.
(e) All instruments and documents delivered to MENTOR
and the Shareholders pursuant to provisions hereof shall be
reasonably satisfactory to legal counsel for MEN'rOR.
4.2 CONDITIONL PRECEDENT TU THE OBLIGATIONS OF PSM AND PSM
SHAREHOLDERS. All obligations of PSM under this Agreement are subject to the
fulfillment, prior to or at Closing, of each of the following conditions:
(a) The representations and warranties by MErcroa and
its Majority Shareholders, contained in this Agreement or in
any certificate or document delivered pursuant to the
provisions hereof shall be true in all material respects at
and as of the Closing as though such representations and
warranties were made at and as of such time;
(B) MENTOR and its Shareholders shall have performed
and complied with, in all material respects, with all
covenants, agreements, and conditions set forth in, and shall
have executed and delivered all documents required by this
Agreement
<PAGE>
to be performed or complied or executed and delivered by them
prior to or at the Closing;
SECTION 5. COVENANTS
5.1 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the Closing
Date, the parties acknowledge that they have been entitled, through their
employees and representatives, to make such investigation of the assets,
properties, business and operations, books, records and financial condition of
the other as they each may reasonably require. No investigations, by a party
hereto shall, however, diminish or waive any of the representations, warranties,
covenants or agreements of the party under this Agreement.
5.2 FURTHER ASSUIANCES. The parties shall execute such documents and
other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. Each such party shall use its best efforts to fulfill or obtain the
fulfillment of the conditions to the Closing, including, without limitation, the
execution and delivery of any documents or other papers, the execution and
delivery of which are necessary or appropriate to the Closing.
5.3 CONFIDENTIALITY~, In the event the transactions contemplated by
this Agreement are not CONSUMMATED, PSM, MENTOR and the Shareholders agree to
keep confidential any information disclosed to each other in connection
therewith for a period of three (3) years from the date hereof provided,
however, such obligation shall not apply to information which:
(i) at the time of the disclosure was public knowledge;
(ii) after the time of disclosure becomes public knowledge
(except due to the action of the receiving party);
(iii) the receiving party had within its possession at the
time of disclosure; or
(iv) is ordered disclosed by a Court of proper jurisdiction.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Notwithstanding any right of either party to investigate the affairs of
the other party and its Shareholders, each party has the right to rely filly
upon representations, warranties, covenants and agreements of the other party
and its Shareholders contained in this Agreement or in any document delivered to
one by the other or any of their representatives, in connection with the
transactions contemplated by this Agreement. All such representations,
warranties, covenants and agreements
<PAGE>
shall survice the execution and delivery hereof and the closing hereunder for
one year following the Closing.
SECTION 7. INDEMNIFICATION
For a period of three (3) years from the Closing, MENTOR's Majority
Shareholders jointly and severally agree to indemnify and hold harmless PSM its
officers, directors and principal shareholders, and PSM agrees to indemnify and
hold harmless the MENTOR Shareholders, at all times after the date of this
Agreement against and in respect of any liability, damage, or deficiency, all
actions, suits, proceedings, demands, assessments, judgments, costs and
expenses, including attorneys' fees, incident to any of the foregoing, resulting
from any material misrepresentation made by any indemnifying party to an
indemnified party, an indemnifying party's breach of a covenant or warranty or
an indemnifying party's nonThlfillment of any agreement hereunder, or from any
material misrepresentation or omission from any certificate furnished or to be
furnished hereunder.
If the indemnified party receives written notice of the commencement of
any legal action, suit or proceeding with respect to which the indemnifying
party is or may be obligated to provide indemnification pursuant to this
Section, the indemnified party shall, within 30 days of the receipt of such
written notice, give the indemnifying party written notice thereof (a "Claim
Notice"). Failure to give such Claim Notice within such 30 day period shall not
constitute a waiver by the indemnified party or its rights to indemnity
hereunder with respect to such action, suit or proceeding unless the defense
thereof is prejudiced thereby. Upon receipt by the indemnifying party of a Claim
Notice from the indemnified party with respect to any claim for indemnification
which is based upon a claim made by a third party ("Third Party Claim), the
indemnifying party may assume the defense of the Third Party Claim with counsel
of its own choosing, as described below. The indemnified party shall cooperate
in the defense of the Third Party Claim and shall furnish such records,
information and testimony and attend all such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably required in
connection therewith. The indemnified party shall have the right to employ its
own counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of the indemnified party unless the indemnifying party shall
not have with reasonable promptness employed counsel to assume the defense of
the Third Party Claim, in which event such fees and expenses shall be borne
solely by the indemnifying party. The indemnifying party shall not satisfy pr
settle any Third Party Claim for which indemnification has been sought and is
available hereunder, without the prior written consent of the indemnified party,
which consent shall not be delayed or which shall not be required if the
indemnified party is granted a release in connection therewith. If the
indemnifying party shall fail with reasonable promptness to defend such Third
Party Claim, the indemnified party may defend, satisfy or settle the Third Party
Claim at the expense of the indemnifying party and the indemnifying party shall
pay to the indemnified party the amount of such Loss within ten days after
written demand thereof The indemnification provisions hereof shall survive the
termination of this Agreement.
<PAGE>
SECTION 8. DOCUMENTSAT CLOSING AND THE CLOSING
8.1 DOCUMENTS AT CLOSING. AT the Closing, the following transactions
shall occur, all of such transactions being deemed to occur simultaneously:
(A) MENTOR WILL DELIVER, OR WILL CAUSE TO BE DELIVERED,
TO PSM the following:
(i) a certificate executed by the President and
Secretary of MENTOR to the effect that all representations and
warranties made by MENTOR under this Agreement are true and
correct as of the Closing, the same as though originally given
to PSM on said date;
(ii) evidence from the Country of Barbados dated at
or about the Closing to the effect that MENTOR is in good
standing under the laws of said Country;
(III) MENTOR and its Shareholders shall deliver an
opinion of its legal counsel to PSM to the effect that:
(a) MENTOR is a corporation validly existing
and in good standing under the laws of the Barbados
is duly qualified to do business in any jurisdiction
where so required except where the failure to so
qualify would have no material adverse impact on the
company;
(B) MENTOR has the corporate power to carry
on its business as now being conducted; and
(c) this Agreement has been duly authorized,
executed and delivered by MENTOR.
(iv) instruments of title representing those Assets
of MENTOR to be exchanged for PSM Shares will be delivered,
along with duly executed Bills of Sale or other instruments of
transfer (such as sub-licensing agreements) transferring such
Assets to PSM.
(v) all other items, the delivery of which is a
condition precedent to the OBLIGATIONS OF PSM, as set forth in
Section 4.
(B) PSM WILL DELIVER OR CAUSE TO BE DELIVERED TO MENTOR
AND THE MENTOR Shareholders:
(I) A CERTIFICATE FROM PSM EXECUTED BY THE PRESIDENT
OR SECRETARY OF PSM, to the effect that all representations
and warranties of PSM made under this Agreement are true and
correct as of the Closing, the saute as though originally
given
<PAGE>
TO MENTOR on said date;
(ii) certified copies of resolutions by PSM's Board
of Directors authorizing this TRANSACTION; AND AN OPINION OF
PSM COUNSEL AS DESCRIBED IN SECTION 4 above;
(iii) evidence from the Nevada Secretary of State
dated at or about the Closing Date that FSM is in good
standing under the laws of said State;
(iv) an opinion of counsel to the effect that:
(I) PSM is a corporation validly
existing and in good standing under
the laws of the State of Nevada;
(2) This Agreement has been duly
authorized executed and delivered
by PSM and is a valid and binding
obligation of PSM enforceable in
accordance with its terms;
(3) PSM, through its Board of Directors
and its shareholders, has taken all
corporate action necessary for
performance under this Agreement;
(4) The documents executed and
delivered to MErcroR and the MENTOR
Shareholders hereunder are valid
and binding in accordance with
their terms to the shares of PSM
Shares to be issued pursuant to
Section 1.1 hereof, and such Shares
will be duly and validly issued,
fttlly paid and non-assessable; and
(5) PSM has the corporate power to
execute the Agreement, deliver the
Shares and perform under this
Agreement.
(v) consent of Shirley Bethurum, sole director,
designating and appointing new directors and officers: (James
N. Rodgers, PresidentiDirector, Edwin W. Austin,
Secretary/Director and David C. Smith, Director);
(vi) resignation of Shirley Bethurum as an officer
and director;
(vii) all other items, the delivery of which is a
condition precedent to the obligations of MENTOR, as set forth
in Section 4 hereof.
8.2 THA CLOSING. The Closing shall take place at the time or place as
may be agreed upon by the parties hereto. At the Closing, the parties shall
provide each other with such documents as may be necessary.
<PAGE>
SECTION 9. MISCELLANEOUS
9. 1 WAIVERS. The waiver of a breach of this Agreement or the failure
of any party hereto to exercise any right under this Agreement shall in no way
constitute waiver as to future breach whether similar or dissimilar in nature or
as to the exercise of any further right under this Agreement.
9.2 AMENDMENT. This Agreement may be amended or modified only by an
instrument of equal formality signed by the parties or the duly authorized
representatives of the respective parties.
9.3 ASSIGNMENT. This Agreement is not assignable except by operation of
law.
9.4 NOTICE. Until otherwise specified in writing, the mailing addresses
and fax numbers of the parties of this Agreement shall be as follows:
To: PSM:
Shirley Bethurum
11300 W. Olympic Boulevard, Suite 800
Los Angeles, California 90064
TO: MENTOR:
James N. Rodgers
Suite 3, 765 Marlee Avenue
Toronto, Ontario, Canada M6B 3J8
Any notice or statement given under this Agreement shall be deemed to have been
given if sent by registered mail addressed to the other party at the address
indicated above or at such other address which shall have been furnished in
writing to the addressor.
9.5 (LOVERNING LAW. This Agreement shall be construed, and the legal
relations be the parties determined, in accordance with the laws of the State of
Nevada, thereby precluding any choice of law rules which may direct the
application of the laws of any other jurisdiction.
9.6 PUBLICITY. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued by either
party hereto at any time from the signing hereof without advance approval in
writing of the form and substance by the other party.
9.7 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules to be attached hereto) and the collateral agreements executed in
connection with the consummation of the transactions contemplated herein contain
the entire agreement among the parties with respect to the
<PAGE>
hereof without advance approval in writing of the form arid substance by the
other party.
9.7 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Scbedules to be attached hereto) AND THE COLLATERAL AGREEMENTS EXECUTED IN
CONNECTION with the consu.rnmation of the transactions contemplated BERETH
CONTAIN THE ENTIIE AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE EXCHANGE OF
THE ASSETS AND ISSUANCE OF THE PSM Shares and relaxed traiiactions, and
supersede all prior agrveznents, written or oral, with respect.thereto.
92 HEADINGS The headings in this A&eement axe for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Awwnent
9.9 SEVERABILITY OF PROVISIONS, THE INVALIDITY OR WIENFORCEABILITY OF
ANY TERM, PHRASE, clause, paragraph, restriction, covenant, agreement or
provision of this Agreement shall in no way affect the validity or ENFORCEMENT
OF ANY OTHER PROVISION or any part thereof.
9.10 COUNTERRARTS THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED, SHALL CONSTITUTE AN OZIGINAL COPY
HEMOF, BUT ALL OF WHICH TOGETHER SHALL consider but one ad the same document.
9.11 BINDING EFFECT This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
adrthnistraxors, executors, successors and assigns.
9.12 TAX TREATMENT PSM, Mentor and the Majority Shareholders
acknowledge that they each have been represented by their o~t tax advisors in
connection with this transaction; that none of them has made a REPRESENTATION OR
WANANTY TO ANY OF THE OTHER PARTIES WITH RESPECT TO the tax trenrncct accorded
this transaction, or the effect iSividually or ccrporattly on any party under
the applicable tax laws, regu.latio~, or INTNPRETATIONC AND THAT NO OPINION
OICCUNSEL OR PRIVATE revenue Sing has been obtained with respect to the effects
of this transaction under the Code.
9.13 PRESS RELEASES. The parties will mutually agree as to the wording
and timing of any thfonnational releases concerning this tansaction prior to and
through Closing.
IN WITNESS WHEREOF, theparties have executed this Agreement on the date
first above written.
PSM CORP. (NEVADA)
a Neva corporation
BY:
-----------------------
Shirley Bethrum,
President
<PAGE>
MENTOR ON CALL, INC.
a Barbadian International Business Corporation
By: ____________________
James N. Rodgers
Managing Director
SHAREHOLDER SIGNATURES ON NEXT PAGE
<PAGE>
"MAJORITY SHAREHOLDERS:"
James N. Rodgers (25%)
EDWTN W. Austin (25%)
John J. Pritchard (25%)
JASON R. FIGUEROA (25%)
TOTAL APPROVING AGREEMENT: 100.0%
<PAGE>
EXHIBITS
A Description of the MENTOR Assets being transferred in exchange for the Shares
B List of MENTOR shareholders (See table above) Total Number: 4
SCHEDULES
MENTOR SCHEDULES
2.11 MENTOR Books and Records
2.15 MENTOR Significant contracts:
2.19 List of exceptions to Tangible Assets
PSM SCHEDULES
3.4 PSM Financial Statements
3.5 LIST OF material adverse changes
3.7 Compliance with Laws
<PAGE>
EXHIBIT "A"
DESCRIPTION OF MENTOR ASSETS BEING TRANSFERRED
IN EXCHANGE FOR THE SHARES
<PAGE>
EXHIBIT "B"
LIST OF MENTOR SHAREHOLDERS
- -------------------------------------------------------------------------------
NAME OF SHAREHOLDER OF APPROXIMATE PERCENTAGE NUMBER OF SHARES OF
MENTOR OF HOLDING MENTOR COMMON STOCK
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JAINESN. RODGERS 25% 25
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
EDWINW. AUSTIN 25% 25
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JOHN J. PRITCHARD 25% 25
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JASON R. FIGUEROA 25% 25
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL:
- -------------------------------------------------------------------------------
NOTE: SHARES OF PSM TO BE ISSUED WILL BE IN THE NAME OF "MENTOR ON CALL, INC.
", A BARBADIAN INTERNATIONAL BUSINESS CORPORATION.
UNANIMOUS SHAREHOLDERS AGREEMENT
Between:
JAMES N. RODGERS
of the City of Vancouver,
Province of British Columbia,
Canada
(hereinafter referred to as "Rodgers")
OF THE FIRST PART,
And
EDWIN W. AUSTIN
of the City of Toronto,
Province of Ontario,
Canada
(hereinafter referred to as "Austin")
OF THE SECOND PART,
And
JOHN J. PRITCHARD
of the City of Toronto,
Province of Ontario,
Canada
(hereinafter referred to as "Pritchard")
OF THE THIRD PART,
And
JASON 14. FIGUEROA
of the City of Toronto,
Province of Ontario,
Canada
(hereinafter referred to as "Figueroa")
OF THE FOURTH PART,
And
MENTOR ON CALL, INC.
A corporation existing under the laws of Nevada, U.S.A.
(hereinafter referred to as "Mentor")
OF THE FIFTH PART,
<PAGE>
And
MENTOR ON CALL HOLDINGS, INC.
A CORPORATION TO BE INCORPORATED UNDER THE LAWS OF BARBADOS, W.I.
(hereinafter referred to as "Holdings")
OF THE SIXTH PART.
RECITALS
WHEREAS Rodgers, Austin, Pritchard and Figueroa (or nominees) own in
equal amounts as the registered and beneficial owners all of the issued and
outstanding and authorized shares of Holdings and all of the restricted shares
of Mentor;
AND WHEREAS Rodgers, Austin, Pritchard, Figueroa, Mentor and Holdings
wish to establish their respective rights and obligations in respect of the
shares of Holdings and Mentor now or hereafter owned by them, respectively, in
respect of the management and control of each of Holdings and Mentor and in
respect of the other matters set forth in this Agreement;
AND Wi-IEREAS it is the intention of each of the parties that this
agreement constitute a unanimous shareholder agreement with respect to each of
Holdings and Mentor.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
respective covenants and agreements of the parties contained herein and for
other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged by each of the parties) it is hereby agreed as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1. I Definitions
Where used in this Agreement, unless there is something in the context
or the subject matter inconsistent therewith, the following terms shall have the
following meanings, respectively:
(a) "Agreement" means this agreement and any instrument supplemental
hereto and the expressions "Article", "section", "subsection" and "clause"
followed by a number and/or a letter mean and refer to the specified Article,
section, subsection or clause of this Agreement;
(b) "Eligible Transferee" means, in respect of any particular
Shareholder:
(i) a corporation of which such Shareholder is the sole
registered and beneficial
<PAGE>
shareholder;
(ii) a trust of which such Shareholder is the sole
beneficiary; and
(iii) if the Shareholder is a corporation, any person who is
the sole registered and beneficial shareholder of such Shareholder;
(c) "Holdings Shares" means all of the authorized capital of Holdings
as constituted at the date hereof, any other securities into which these shares
may be converted, exchanged, reclassified, redesignated, subdivided,
consolidated or otherwise changed from time to time;
(d) "Messrs. Rodgers, Austin, Pritchard and Figueroa Employment
Contracts" means the terms and conditions of employment between Mentor and
Rodgers, Austin, Pritchard and Figueroa dated the date hereof and attached as
Schedule A;
(e) "Permanent Incapacity" means, with respect to any person, the
condition that will be deemed to exist where:
(i) such person has been declared bankrupt by a court of final and
competent jurisdiction;
(ii) such person has made an assignment for the benefit of creditors;
(iii) such person has been declared by a court of competent
jurisdiction to be mentally incompetent and such declaration has not, at the
relevant time, been revoked;
(iv) such person becomes unable, by reason of illness, disease, mental
or physical disability or incapacity or otherwise, to perform, his duties for
Mentor or Holdings:
(A) for a period of 180 consecutive days; or
(B) FOR 270 DAYS IN THE AGGREGATE DURING ANY PERIOD OF 365
consecutive days;
provided that in the event a qualified medical doctor certifies that the
person's illness, disease, disability or incapacity is not permanent but merely
temporary and that the person shall be fully recovered and able to perform the
duties of a chief executive officer of a distance learning company within 180
days of the date of the certificate, then such illness, disease, disability or
incapacity shall not be deemed to constitute "Permanent Incapacity";
(f) "person" includes an individual, a firm, a corporation, a
syndicate, a partnership, a trust, an association, a joint venture, an
unincorporated organization and every other legal or business entity whatsoever;
(g) "Related Party" means, in relation to any Shareholder or other
person (the "Subject
<PAGE>
Party"), any person who is:
(i) a corporation of which the Subject Party beneficially
owns, directly or indirectly, voting securities carrying more than 10%
of the voting rights attached to all voting securities of the
corporation for the time being outstanding;
(ii) an affiliate of the Subject Party;
(iii) a partner of the Subject Party;
(iv) a trust or estate in which the Subject Party has a
substantial beneficial interest or as to which the Subject Party serves
as trustee or in a similar capacity;
(v) a relative of the Subject Party;
(vi) a person of the opposite sex to whom the Subject Party is
married or with whom the Subject Party is living in a conjugal
relationship outside marriage;
(vii) a relative of a person mentioned in clause (vi) who has
the same home as the Subject Party; or
(viii) a current or former director, officer, shareholder or
employee of any corporation or business in which the Subject Party has
or had substantial beneficial interest;
(h) "shareholders" shall mean Rodgers, Austin, Pritchard and Figueroa;
(i) "transfer" of a Share includes any sale, exchange, transfer,
assignment, gift, pledge, encumbrance, hypothecation, alienation or other
transaction, whether voluntary, involuntary or by operation of law, by which the
legal or beneficial ownership of, or any security interest or other interest in
the Share, passes from one person to another, or to the same person in a
different capacity, whether or not for value, and any change of control of the
legal or beneficial owner of the Share or any person that controls, directly or
indirectly, in any manner whatsoever, such legal or beneficial owner of the
Share, other than in involuntary change of control resulting from the
tansmission of securities from a deceased or incompetent Shareholder to his
estate or legal personal representative for so long as the securities continue
to be held by the estate or such legal personal representative, and "to
transfer", "transferred" and similar expressions shall have corresponding
meanings;
(j) "vend agreement" means the asset sale contract whereby Pritchard
and Figueroa transfer all title and right to the distance learning system
including source code, functional specifications, drawings, prototype,
copyright, patent rights and rights of authorship in consideration of restricted
shares in Mentor as enunciated in this vend agreement which is attached as a
Schedule B and as defined in article 2.7.
<PAGE>
1.2 Schedules
Schedule A - Employment Agreements
Schedule B - Vend Agreement
Schedule C - Escrow Agreement
Schedule D - Life Insurance Policies
1.3 Gender/Numbers
Words importing the singular number only shall include the plural and
vice versa and words importing the use of any gender shall include both genders.
1.4 Headings
The Article and section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
1.5 Proper Law
This Agreement and all documents ancillary hereto shall be governed by
and interpreted in accordance with the laws of the Province of Ontario and the
federal laws of Canada applicable therein.
1.6 Business Days
If any act is required hereunder to be done, any notice is required
hereunder to be given or any period of time is to expire hereunder on any day
that is not a Business Day, such act shall be required to be done or notice
shall be required to be given or time shall expire on the next succeeding
Business Day.
1.7 Reclassification of Shares
The provision of this Agreement shall apply, mutatis mutandis, to any
shares or securities of any nature into which the Preference Rights of Mentor or
the common shares of Holdings or any of them may be converted, exchanged,
reclassified, redivided, redesignated, subdivided or consolidated, to any shares
or securities of any nature that are received by a Shareholder as a stock
dividend or distribution payable in shares, securities, warrants, rights or
options of any nature of Mentor or Holdings or any of the above received on an
amalgamation, arrangement, consolidation or merger, statutory or otherwise.
<PAGE>
ARTICLE II
DIRECTORS, OFFICERS AND ONGOING AFFAIRS OF THE COMPANIES
2.1 Agreement to Act
Each of the Shareholders, covenant and agree to execute and deliver, or
cause to be executed and delivered, all such instruments and other documents,
and to exercise or cause to be exercised their influence and any and all voting
rights attaching to the Shares held by each of them, respectively, from time to
time and to do or cause to be done all such other acts and things in order that
all provisions of this Agreement, shall be fully and effectively carried out,
implemented and given effect to in accordance with the terms hereof, including,
without limitation, consenting to, approving, or other wise giving effect to all
such changes to the articles, by-laws, resolutions and other documents governing
the Companies as may be necessary or desirable to accurately reflect and give
effect to the provisions of this Agreement.
2.2 Special Approvals
In addition to any other approvals that may be required at law or
pursuant to the articles, bylaws or resolutions of Mentor or Holdings, unless
otherwise expressly agreed in writing by all shareholders, neither Mentor or
Holdings shall take any of the following actions without the prior written
consent of all shareholders hereto:
(a) the issuance of any shares in the capital of Mentor or Holdings or
any securities, warrants, options, or rights convertible into, exchangeable for,
or carrying the right to subscribe for, shares in the capital of Mentor or
Holdings;
(b) the redemption or purchase for cancellation of any shares in the
capital of Mentor or Holdings, other than any purchase of Shares in accordance
with this Agreement;
(c) the transfer by Mentor or Holdings of any right, title or interest
it may now or hereafter have in or to any shares in the capital of any other
company;
(d) the conversion, exchange, reclassification, redesignation,
subdivision, consolidation or other change of or to any shares in the capital of
Mentor or Holdings;
(e) the amalgamation, continuance, merger, consolidation or
reorganization of Mentor or Holdings, or the approval or effecting of any plan
of arrangement, in each case, whether statutory or otherwise;
(f) in the case of Holdings, the acquisition by Holdings in any manner
of any assets other
<PAGE>
than its Mentor Preference Rights or converted shares or the incurring by
Holdings of any liabilities, whether or not contingent or of any other nature,
other than any liabilities for taxes or governmental charges or for legal,
accounting or other professional services that may be incurred in the ordinary
course of holding the Mentor Preference Rights or converted shares;
(g) the winding-up dissolution of Holdings or Mentor;
(h) the entering into by Mentor or Holdings of any contract or
transaction, directly or indirectly, with a Related Party of any Shareholder or
a Related Party of any person who controls, directly or indirectly, any
Shareholder;
(i) the amendment of Messrs. Rodgers, Austin, Pritchard or Figueroa's
Employment Contract;
U) except as otherwise provided in the Agreement and except in the case
of termination for just cause, the termination of the employment of Messrs.
Rodgers, Austin, Pritchard or Figueroa;
(k) any amendment to the articles or by-laws of Mentor or Holdings.
2.3 Board of Directors
As soon as possible after the execution of this Agreement, the
Shareholders shall elect Rodgers and Austin as Directors of Mentor and Holdings.
2.4 Officers
Until changed by vote of the Board of Directors, the officers of Mentor
shall be:
NAME OFFICE OR OFFICES TO BE HELD
---- ----------------------------
James N. Rodgers Chief Executive Officer and President
Edwin W. Austin Chief Operating & Chief Financial Officer
John J. Pritchard Senior Vice President Products and Services
Jason R. Figueroa Vice President Information Technology
2.5 Agreement Binds Mentor and Holdings
Mentor and Holdings, by their execution hereof, acknowledge that they
have actual notice of the terms of this Agreement, consents hereto and hereby
covenant with each of the Shareholders
<PAGE>
that they will at all times during the term hereof:
(a) give or cause to be given such notices, execute or cause
to be executed such deeds, transfers and documents as may from time to
time be necessary or conducive to the carrying out of the terms and
intent hereof;
(b) do or cause to b done all such acts, matters and things as
may from time to time be necessary or conducive to the carrying out of
the terms and intent hereof; and
(c) take no action that would constitute a contravention of
any of the terms and provisions thereof
2.6 Employment Contracts
Messrs. Rodgers, Austin, Pritchard and Figueroa Employment Contracts
are attached as Schedule A and contain the following terms and conditions,
hereby agreed to by Mentor:
NAME ANNUAL REMUNERATION DEFERRED AMOUNT TO YEAR 2
---- ------------------- -------------------------
Rodgers U.S. $250,000 U.S. $75,000
Austin U.S. $180,000 U.S. $60,000
Pritchard U.S. $120,000 U.S. $25,000
Figueroa U.S. $100,000 U.S. $15,000
Deferred salaries vest when Mentor retains earnings of U.S. $750,000 in
one quarter and are then payable in equal monthly amounts over the ensuing six
month period.
Benefits are in a package valued at a minimum often per cent of salary
and a maximum of fifteen per cent of salary. Fully paid vacation of four weeks
per annum for each of Rodgers, Austin, Pritchard and Figueroa.
Automobile allowance available when Mentor is earning a profit of a
minimum of U.S. $750,000 in any one quarter. Lease allowance will be as follows:
NAME ALLOWANCE
---- ---------
RODGERS U.S. $450 per month
Austin U.S. $375 per month
<PAGE>
Pritchard U.S. $300 per month
Figueroa U.S. $300 per month
A Project Completion Bonus of US $125,000 for each of Rodgers, Austin,
Pritchard and Figueroa is available and payable on completion and acceptance of
the Learning Management System by the Chief Executive Officer of Mentor and by
outside clients and conditional upon receipt of a minimum of U.S. $1,500,000
from licences.
Each Officer will be granted stock options of 250,000 options to each
with a strike price of U.S. $2 exercisable for a period of five years upon
payment of the project completion bonus.
Notice period shall be, other than for cause, six months from month 7
to 12 and 12 months from month 13 and 18 months from month 25. Minimum term of
contract is one year.
2.7 Vend Agreement
The vend agreements attached as Schedule B-I and B-2 enunciate that
Learning Management Corporation and Figueroa shall assign to Mentor all rights
and ownership to a web enabled Learning Management System, created by Pritchard
and Figueroa, including source code, schematics, functional specifications,
prototype, copyright, patent rights and any rights TO AUTHORSHIP IN
CONSIDERATION OF THEIR 25% undiluted ownership each in Holdings.
Pursuant to this agreement the interest of Pritchard and Figueroa in
Holdings shall not vest until all deliverables are presented and accepted after
successful third party adjudication as follows: Functional Specifications,
Functional Prototype, Proof of Concept, Detailed Design, Development, User
Acceptance, Testing, Implementation plus full User and Technical Documentation
and Source Code.
Pursuant to this agreement the interest of Rodgers and Austin vest
pursuant to past services in creating Mentor On Call, Inc. and its public
market, price per share and financing abilities.
2.8 Assets of Holdings
The sole assets of Holdings shall be the nine million, three hundred
and fifty thousand restricted shares of Mentor.
The assets shall be allocated equally to each shareholder of Holdings
when fully vested pursuant to article 2.7.
<PAGE>
ARTICLE 111
RESTRICTIONS ON TRANSFER
3.1 Restrictions on Transfer
Except as specifically provided in this Agreement, no Shareholder shall
transfer any of its right, title or interest in or to any shares of Holdings
owned of record or beneficially by him without the express prior written consent
of all Shareholders first being obtained.
3.2 Transfers to Eligible Transferees
Notwithstanding the provisions of section 3.1 a Holdings shareholder
may at any time or from time to time transfer all of its Holdings shares to an
Eligible Transferee of such shareholder provided that, at or prior to the time
of such transfer:
(a) such Eligible Transferee shall agree with the other parties hereto,
by an agreement in writing in form and substance satisfactory to the other
shareholders, acting reasonably, to be bound by the terms hereof as if such
Eligible Transferee has entered into this Agreement in the place and stead of
the transferring shareholder and to remain an Eligible Transferee of the selling
shareholder as long as such Eligible Transferee is the registered or beneficial
owner of any Holding shares; and
(b) the other shareholders receive evidence satisfactory to them,
acting reasonably, that such Eligible Transferee is an Eligible Transferee of
the selling shareholder and that the agreement referred to in subsection 3.2 (a)
above is a legal, valid and binding obligation of the Eligible Transferee.
The transferring shareholder shall at all times after the transfer of
Holdings shares to the Eligible Transferee be jointly and severally liable with
such Eligible Transferee for the observance and performance of the covenants and
obligations of the Eligible Transferee under this Agreement, and shall cause the
Eligible Transferee to remain an Eligible Transferee of the transferring
shareholder so long as the Eligible Transferee shall have any registered or
beneficial interest in any Holdings shares and the transferring shareholder
shall indemnify the other parties hereto against any loss, damage or expense
incurred as a result of the failure by the Eligible Transferee to comply with
the provisions of this Agreement.
3.3 Legend
All certificates of Holdings shall bear the following legend:
"The shares represented by this certificate are subject to the
provisions of a unanimous shareholder agreement MADE AS OF THE 18TH day of
January, 2000 which contains restrictions on the right to transfer, pledge, vote
and otherwise deal with such shares, a copy of which agreement is
<PAGE>
available for inspection from the Secretary of the Company. Notice of such
restrictions and the other provisions of such agreement is hereby given."
3.4 Companies to Enforce
None of the Companies shall accept for registration in its relevant
books of record any transfer of shares not made in accordance with the
provisions of this Agreement.
3.5 Certain Transfers Ineffective
Any transfer of shares attempted to be made other than in accordance
with the provisions of this agreement shall be void and of no effect.
3.6 Pledge of Shares
A Holdings shareholder may pledge the Holdings shares owned by him to
secure financing to be used to exercise a right under this Agreement to acquire
all of the Holdings shares owned by another shareholder, so long as such pledge
takes effect immediately prior to, and conditional upon, or contemporaneously
with, the consummation of such acquisition.
ARTICLE IV
RIGHTS OF FIRST REFUSAL
4.1 Delivery of Sale Notice
In the event that any Holdings shareholder (the "Offeror") desires to
transfer all but not less than all the Holdings shares owned by him, the Offeror
shall first deliver a notice in writing (a "Sale Notice") to the other
shareholders (the "Offerees") whereby the Offeror offers to sell all such
Holdings shares (the "Offered Shares") to the Offerees for the respective price
per Holdings share, payable in cash on closing, set out in the Sale Notice and
on and subject to the other terms and conditions therein set out. The Offerees
shall have the right, exercisable by giving notice (an "Acceptance Notice") to
the Offeror within fifteen Business Days after its receipt of a Sale Notice (the
"Acceptance Period") to purchase all, but not less than all, of the Offered
Shares offered to it in accordance with the Sale Terms. In the event that no
Acceptance Notice is received from an Offeree within the Acceptance Period, the
offer to such Offerees shall be deemed to have been refused.
4.2 Sales Notices Irrevocable
The delivery by an Offeror of a Sales Notice shall be irrevocable and,
upon delivery by an Offeree of an Acceptance Notice, the Offeror shall be bound
to sell, and the Offeree shall be bound to purchase, the relevant Offered Shares
in accordance with the Sale Terms.
<PAGE>
4.3 Sales to Third Parties
If, following the completion of the procedure stipulated in section
4.1, the Offered Shares remain unaccepted by the Offeree, the Offeror may sell
the Offered Shares to any person (a "Third Party") at a price not less than the
price set forth in the Sale Notice and on terms no more favourable to the Third
Party than the Sale Terms. If no such sale is completed by the Offeror within 90
days following the expiration of the 15 Business Day period referred to in
section 4.1, the Offeror shall be required, before transferring any Holding
shares, again to offer such shares in the manner provided in section 4.1 and
such process shall be repeated so often as any party to this Agreement desires
to transfer any Holdings shares.
4.4 Tag-Along Rights
In the event that an Offeror proposes to sell the Offered Shares to a
Third Party pursuant to section 4.3, the Offeror shall, within 60 days following
the expiry of the 15 Business Day Period referred to in section 4.1, give
written notice (the "Tag-Along Notice") of the identity of the Third Party and
the price and other material terms of the transaction which shall be consistent
with the requirements of section 4.3, to the Offeree (a "Declining Offeree")
that elected not to exercise its right to purchase such Offered Shares. The
Declining Offeree may, not later than five Business Days after receipt of the
Tag-Along Notice, deliver the Offeror a notice in writing invoking the provision
of this section 4.4 (a "Tag-Along Demand"). The delivery by the Declining
Offeree of a Tag-Along Demand shall be irrevocable and shall bind Declining
Offeree to sell all but not less than all of the Holdings shares (the "Tagging
Shares") owned by the Declining Offeree, in accordance with the provisions of
this section 4.4. If the Declining Offeree delivers a Tag-Along Demand, then,
before completing any sale, the Offeror shall cause the Third Party to deliver
to the Declining Offeree a bona fide offer in writing (the "Tag-Along Offer") to
purchase from such Declining Offeree the Tagging Shares. The Tag-Along Offer
will be binding upon the Third Party and shall contain only such terms and
conditions as are identical to those upon which the Offeror proposes to sell to
the Third Party the Offered Share pursuant to section 4.3, provided that the
offer price per Holdings share, which shall be specified in the Tag Along Offer,
shall be the same consideration as, or the cash equivalent of; the consideration
per Holding share at which the Offeror proposes to sell to the Third Party the
Offered Shares pursuant to section 4.3. The closing date and other closing
arrangements for the purchase and sale transaction between the Declining Offeree
and the Third Party shall be specified in the Tag-Along Offer and shall be the
same, mutatis mutandis, as those specified between the Third Party and the
Offeror.
4.5 Drag-Along Rights
In the event that an Offeror proposes to sell the Offered Shares to a
Third Party pursuant to section 4.3, the Offeror may, by written notice
delivered within 60 days following the expiry of the 15 Business Day period
referred to in section 4.1 to the Declining Offeree, accompanied by an
irrevocable offer (the "Drag-Along Offer") from the Third Party to the Declining
Offeree to purchase, for a consideration that is the same as, or the cash
equivalent of; the consideration per
<PAGE>
Holdings share at which the Offeror proposes to sell its Holdings shares owned
by such Declining Offeree (the "Dragged Shares") requiring the Declining Offeree
to sell to the Third Party all such Dragged Shares at the price specified in the
Drag-Along Offer. The delivery by the Offeror of an irrevocable Drag-Along Offer
shall bind the Declining Offeree to sell the Dragged Shares. The date on which
the sale is to close and the other closing arrangements (which shall be the
same, mutatis mutandis, as those for the purchase and sale between the Third
Party and the Offeror) shall be as specified in the Drag-Along Offer. Except as
specifically provided for above, the Drag-Along Offer shall contain only such
terms and conditions, if any, as are identical to those pursuant to whiche th
Offeror proposes to sell to the Third Party the offered Shares.
ARTICLE V
SHOT GUN BUY-SELL ARRANGEMENTS
5.1 Delivery of Initiating Notice
Any Holdings shareholder may at any time give notice in writing (the
"Initiating Notice") to the other Holdings shareholders (the "Notified Party")
specifying a price per Holdings share (the "Designated Price") at which the
Initiating Party would be willing to either:
(a) sell to the Notified Party all but not less than all the Holdings
shares beneficially owned at the time by the Initiating Party; or
(b) purchase all but not less than all the Holdings shares beneficially
owned at that time by the Notified Party.
5.2 Election of Notified Party
Within 20 Business Days after receipt by the Notified Party of an
Initiating Notice, such Notified Party shall, by notice in writing (a
"Responding Notice") to the Initiating Party, elect to either:
(a) sell to the Initiating Party at the Designated Price all but not
less than all the Holdings shares beneficially owned at that time by the
Notified Party; or
(b) purchase from the Initiating Party, at the Designated Price, all bu
not less than all the Holdings shares beneficially owned at that time by the
Initiating Party.
5.3 Notices Binding
IF A NOTIFIED PARTY ELECTS AS DESCRIBED IN SUBSECTION 5.2 (A), THE
INITIATING PARTY SHALL thereupon be conclusively deemed to have made an offer to
purchase all the Holdings shares
<PAGE>
beneficially owned at that time by the Notified party at the Designated Price,
and the Notified party shall be conclusively deemed to have accepted such offer.
If a Notified Party does not deliver a Responding Notice within 20 Business Days
after delivery of the Initiating Notice, the Notified Party shall be deemed to
have elected to sell to the Initiating Party all but not less than all the
Holdings shares beneficially owned at that time by the Notified Party at the
Designated Price, and the Initiating party and the Notified Party shall be bound
by the agreement resulting from such DEEMED ELECTION. IF NOTIFIED PARTY ELECTS
AS DESCRIBED IN SUBSECTION 5.3 (b), the Notified Party shall thereupon be
conclusively deemed to have made an offer to purchase all the Holdings shares
beneficially owned at that time by the Initiating Party at the Designated Price,
and the Initiating Party shall be conclusively deemed to have accepted such
offer.
5.4 Participation in Subsequent Transactions
A party (a "Selling Shareholder") whose shares ("Subject Shares") are
acquired by another party hereto (a "Purchasing Shareholder") pursuant to the
rights conferred by this Article V shall, in the event of a subsequent transfer
(a "Subsequent Transfer") to an arm's length third party (a "Subsequent
Transferee") by the Purchasing Shareholder of the Subject Shares in the
circumstances described below, be entitled to a portion of the difference
between the price paid by the Purchasing Shareholder to the Selling Shareholder
for the Subject Shares and the proceeds received by the Purchasing shareholder
from the Subsequent Transferee on the Subsequent Transfer, in accordance with
the following:
(a) if an agreement (whether oral or in writing) between, inter alia,
the Purchasing Shareholder and the Subsequent Transferee (or any person acting
on behalf of or for the benefit of the Subsequent Transferee) providing for the
Subsequent Transfer is entered into prior to or within two months following the
closing of the purchase by the purchasing Shareholder from the Selling
Shareholder of the Subject Shares, seventy per cent;
(b) Two to four months, sixty per cent;
(c) Four to six months; fifty per cent.
ARTICLE VI
CALL RIGHTS ARISING ON DEATH OR PERMANENT INCAPACITY
6.1 Death or Permanent Incapacity
In the event of the death or Permanent Incapacity of a shareholder, the
other shareholders shall have the right but not the obligation, exercisable at
any time during the period of six months following the date on which the
shareholder dies or suffers Permanent Incapacity, to purchase all the Holdings
shares owned, directly or indirectly, by that shareholder or over which that
shareholder
<PAGE>
exercises control or direction, by the delivery of notice to that shareholder or
to his estate within a six month period from such occurence, for a purchase
price equal to the fair market value as determined by an independent valuator
agreeable to all parties whose determination shall be binding.
6.2 Presumption of Death
In the event that a shareholder becomes missing for a period of six
months, that shareholder shall be conclusively deemed to be dead for the
purposes of this Agreement.
6.3 Appointment of Personal Represe~itatives
If a shareholder should die and no executor or administrator is
appointed for the estate of that shareholder within 90 days after the date of
death then Holdings shall be considered a creditor of the estate of the deceased
shareholder with all of the rights conferred upon a creditor of a decedent by
the place of his domicile, inchiding the right to cause an executor or
administrator to be appointed.
6.4 Life Insurance
Holdings shall take out Life Insurance on each shareholder with
proceeds payable to the Estate of a Deceased shareholder where a purchase is not
elected pursuant to section 6.1 above. The face value of the policy shall be set
in an amount deemed appropriate by the shareholders, reviewed annually. Policies
attached as Schedule D hereto. If election 6.1 utilized, proceeds as key-man.
ARTICLE VII
DEPOSIT OF SHARE CERTIFICATES
7.1 Shares to be Deposited into Escro'w
All share certificates of Holdings and common shares of Mentor shall be
delivered to an Escrow Holder acceptable to all sharehol~Jers and appointed
pursuant to an Escrow Agreement attached hereto as Schedule C whereby sai~d
Escrow Holder releases securities only on the basis of this Agreement, or on
sale of the common shares of Mentor, when directed by all the shareholders,
releases funds on a pro rata basis to the shareholders of Holdings.
ARTICLE VIFI
MISCELLANEOUS
8.1 Unanimous Shareholder Agreement
<PAGE>
Each of the parties hereby acknowledges and agrees that this Agreement
is intended to operate and be construed as a unanimous shareholder agreement
within the meaning of the Ontario Business Corporations Act.
8.2 Acknowledgment by Companies
Each of the Companies by its execution hereof acknowledges that it has
actual notice of the terms of this Agreement, consents to this Agreement and
covenant with each of the other parties that it will at all times during the
continuance of this Agreement have or cause to be given such notices, execute or
cause to be executed such deeds, transfers and documents and cause to be done
all such acts, matters and things as may from time to times be necessary or
conducive to the canying out of the terms and intent of this Agreement.
8.3 Notices
(Put in full addresses, facsimiles, telephone numbers, E-Mails of all
parties)
8.4 Entire Agreement
This Agreement and the other documents herein referred to constitute
the entire agreement between the parties pertaining to the subject matter hereof
and supersede all prior agreements between or among the parties hereto with
respect to their respective rights and obligations in respect of the shares and
management and operation of Holdings and Mentor.
8.5 Accounting Terms
Unless otherwise defined or the context otherwise requires, all
accounting and financial terms used in this AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING principles.
<PAGE>
8.6 Governing Law
This Agreement shall be construed in accordance with the laws of the
Province of Ontario and the laws of Canada applicable therein and each of the
parties hereby irrevocably attorns to the non-exclusive jurisdiction of the
court os such province.
8.7 Rules of Interpretation
Words importing the singular number shall include the plural and vice
versa and words importing the use of any gender shall include all gender.
Headings used in this Agreement are for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose including, without
limitation, its interpretation. Expressions such as "hereof', "hereunder" and
"hereby" shall be construed as referring to the entire Agreement and not only to
the particular Article, section, subsection or clause in which they appear. In
determining beneficial ownership by a person such person shall be considered as
having a beneficial ownership interest in the assets of any company controlled,
directly or indirectly, by such person.
8.8 Successor and Assigns
Except as otherwise provided herein, neither this Agreement nor any of
the rights of any Holdings shareholder hereunder may be assigned without the
prior written consent of the other Holdings shareholder. Except as may otherwise
be provided herein, all of the terms and provisions of this agreement shall be
binding upon and shall enure to the benefit of the parties hereto and their
respective heirs, executors, administrator, other personal representatives,
successors and permitted assigns.
8.8 Severability
The invalidity or unenforceability of any provision or part of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision or part thereof; and any such invalid or unenforceable
provision or part thereof shall be deemed to be separate, severable and
distinct, and no provision or part thereof shall be deemed dependent upon any
other provision or part thereof unless expressly provided for herein.
8.9 Counterparts
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of which when
taken together shall constitute on and the same agreement. Facsimile signature
are valid and binding.
<PAGE>
IN WITNESS WHEREOF THIS AGREEMENT HAS BEEN EXECUTED BY THE PARTIES ON THE 18TH
DAY OF JANUARY, 2000.
SIGNED, SEALED AND DELIVERED
BY:
James N. Rodgers EDWIN W. AUSTIN
Janh J. Pritchard JASON R. FIGUEROA
THE CORPORATE SEAL OF MENTOR ON CALL, INC.
was attached and signed by a duly authorized officer of same:
TILE CORPORATE SEAL OF MENTOR ON CALL HOLDINGS, INC.
was attached and signed by a duly authorized officer of same:
EXECUTIVE EMPLOYMENT CONTRACT
Schedule A-I to Shareholders Agreement
THIS AGREEMENT MADE as of the 18th day of January, 2000.
Among:
MENTOR ON CALL, INC.
a corporation incorporated under
the laws of Nevada, U.S.A.
(hereinafter referred to as the "Corporation")
OF THE FIRST PART,
- and -
JAMES N. RODGERS
of the City of Vancouver
Province of British Columbia
Canada
(hereinafter referred to as the "Executive")
OF THE SECOND PART.
Whereas the Corporation wishes to retain the services of the Executive
to provide the services hereinafter described during the term hereinafter set
out;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
mutual covenants and agreements herein contained and for other good and valuable
consideration, the parties agree as follows:
1. TERM
The Corporation shall employ the Executive for a period of five years
from January I 8,2000 up to and including January 18, 2005, unless such
employment shall be terminated earlier as hereinafter provided. Upon the expiry
of the term of this agreement on January 18, 2005, and on each anniversary of
such date falling thereafter, the term of this agreement shall automatically be
extended for on additional year on the same terms and conditions unless, not
less than six months prior to any such anniversary, either the Executive or the
Corporation shall have given written notice to the other that it does not wish
to further extend this agreement.
<PAGE>
2. DUTIES
The Executive shall serve the Corporation and any subsidiaries of the
Corporation in such capacity or capacities and shall perform such duties and
exercise such power pertaining to the management and operation of the
Corporation as may be determined form time to time by the board of directors of
the Corporation consistent with the office of the Executive. Without limitation
of the foregoing, the Executive shall occupy the office of Chief Executive
Officer of the Corporation. The Executive shall:
(a) devote his full time and attention and his best efforts during
normal business hours to the business and affairs of the Corporation;
(b) perform those duties that may reasonably be assigned to the
Executive diligently and faithfully to the best of the Executive's abilities and
in the best interests of the Corporation; and
(c) use his best efforts to promote the interests and goodwill of the
Corporation.
3. REPORTING PROCEDURES
The Executive shall report to the Board of Directors. The Executive
shall report fully on the management, operations and business affairs of the
Corporation and advise to the best of his ability and in accordance with
reasonable business standards on business matters that may arise from time to
time during the term of this agreement.
4. REMUNERATION
(a) The annual base salary payable to the Executive for his services
hereunder for the first year of the term of his agreement shall by U.S. $250,000
with U.S. $75,000 of this amount deferred until the Corporation retains earnings
of U.S. $750,000 in one quarter as determined in the sole discretion of the
Chief Financial Officer. At that time the deferred salary vests in the Executive
and is then due and payable in equal monthly increments over the ensuing six
months in addition to the monthly salary. The annual base salary payable to the
Executive for his services hereunder for each successive year of the term of
this agreement, exclusive of bonuses, benefits and other compensation, shall
increase by eight per cent of the annual base salary for the immediately
preceding year. The annual base salary payable to the Executive pursuant to the
provisions of this section 4 shall be payable in equal monthly instalments in
arrears on the first of each month or in such other manner as may be mutually
agreed upon, less, in any case, any deductions or withholdings required by law.
(b) The Corporation shall provide the Executive with employee benefits
comparable to those provided by the Corporation from time to time to other
senior executive of the Corporation to a maximum value of fifteen per cent of
Executive's salary with a floor often per cent of salary and shall permit the
Executive to participate in any share option plan, share purchase plan,
retirement
<PAGE>
plan or similar plan offered by the Corporation from time to time to its senior
executives in the manner and to the extent authorized by the board of directors
of the Corporation.
5. PERFORMANCE BONUS
In addition to the Executive's annual base salary, the Executive shall
participate in the Corporation's executive bonus plan whereby upon completion of
the Learning Management System to the satisfaction of the Chief Executive
Officer utilizing third party and independent evaluators and conditional upon
receipt of a minimum of U.S. $1,500,000 from System Licenses, a Project
Completion Bonus of U.S. $125,000 will be immediately payable to the Executive.
6. STOCK OPTIONS
The Executive is entitled to Stock Options in the Corporation in the
amount of 250,000 no par value common shares at a strike price of U.S. $2.00 per
share exercisable for a period of five years from issuance of the performance
bonus ITEMIZED IN ARTICLE 5 above.
7. NO FURTHER SALARY OR BONUS ADJUSTMENTS
Other than as herein provided, there shall be no cost-of-living
increase or merit increase in the annual base salary or the executive bonus
unless agreed to in writing by the Corporation.
8. VACATION
The Executive shall be entitled to four weeks' paid vacation per fiscal
year of the Corporation at a time approved in advance by the Chief Operating
Officer, which approval shall not be unreasonably withheld but shall take into
account the staffing requirements of the Corporation and the need for the timely
performance of the Executive's responsibilities. In the event that the Executive
decides not to take all the vacation to which he is entitled in any fiscal year,
the Executive shall be entitled to take up to one week of such vacation in the
next following fiscal year at a time approved in advance by the Chief Operating
Officer.
9. AUTOMOBILE
The Executive shall be supplied with an allowance of U.S.$450 per month
when the Corporation is earning a profit of a minimum of U.S. $750,000 in any
quarter, as determined in the sole discretion of the Chief Financial Officer,
towards a leased car selected by the Corporation to be used by him for the
Corporation's business.
<PAGE>
10. EXPENSES
The Executive shall be reimbursed for all reasonable travel and other
out-of-pocket expenses actually and properly incurred by the Executive from time
to time in connection with canying out his duties hereunder. For all such
expenses the Executive shall furnish to the Corporation original of all invoices
or statements in respect of which the Executive seeks reimbursement.
11. TERMINATION
(a) For Cause
The Corporation may terminate the employment of the Executive without
notice or any payment in lieu of notice for cause which, without limiting the
generality of the foregoing, shall include:
(i) if there is a repeated and demonstrated failure on the
part of the Executive to perform the material duties of the Executive's
position in a competent manner and where the Executive fails to
substantially remedy the failure within a reasonable period of time
after receiving written notice of such failure from the Corporation;
(ii)if the Executive is convicted of a criminal offence
involving fraud or dishonesty;
(iii) if the Executive or any member of his family makes any
personal profit arising out of or in connection with a transaction to
which the Corporation is a party or with which it is associated without
making disclosure to and obtaining the prior written consent of the
Corporation;
(iv) if the Executive fails to honour his fiduciary duties to
the Corporation, including the duty to act in the best interests of the
Corporation; or
(v) if the Executive disobeys reasonable instructions given in
the course of employment by the Chief Operating Officer or the board of
directors of the Corporation that are not inconsistent with the
Executive's management position and not remedied by the Executive
within a reasonable period of time after receiving written notice of
such disobedience.
(B) For Disability/Death
This agreement may be immediately terminated by the Corporation by
notice to the Executive if the Executive becomes permanently disabled. The
Executive shall be deemed to have become permanently disabled as defined in the
Shareholders Agreement to which this Executive Employment Agreement is attached
as Schedule A.
This agreement shall terminate without notice upon the death of the
Executive.
<PAGE>
12. SEVERANCE PAYMENTS
(a) Upon termination of the Executive's employment: (i) for cause; (ii)
by the voluntary termination of employment of the Executive; or (iii) by the
non-renewal of this Agreement, the Executive shall not be entitled to any
severance payment other than compensation earned by the Executive before the
date of termination calculated pro rata up to and including the date of
termination calculated pro rata up to and including the date of termination,
together with any AMOUNT TO WHICH THE EXECUTIVE IS ENTITLED UNDER THE EMPLOYMENT
STANDARDS ACT (Ontario), as amended and in force from time to time.
(b) If the Executive's employment is terminated for any other reason
other than the reasons set forth in subsection 12(a), the Executive shall be
entitled to receive the lesser of:
(i) Six months salary if termination occurs from month seven
to 12;
(ii) Twelve months salary if termination occurs in month 13 to
25;
(iii) Eighteen months salary if termination occurs in month 25
to term.
In any event, the compensation under the contract is guaranteed by the
Corporation for one year of salary from the date of execution, if terminated
without cause as enunciated in 12 (a).
13. CONFIDENTIALITY
The Executive acknowledges and agrees that:
(a) in the course of performing his duties and responsibilities as CEO
of the Corporation, he has had and will continue in the future to have access to
and has been and will be entrusted with detailed confidential information and
trade secrets (printed or otherwise) concerning past, present, future and
contemplated products, services, operations and marketing techniques and
procedures of the Corporation and its subsidiaries, including, without
limitation, information relating to addresses, preference, needs and
requirements of past, present and prospective clients, customers, suppliers
(which, for all purposes of this agreement, shall be deemed to include, without
limitation, all old Pathfinder clients,) and employees of the Corporation
(collectively, "Trade Secrets"), the disclosure of any of which to competitors
of the Corporation or to the general public, or the use of same by the Executive
or any competitor of the Corporation or any of its subsidiaries, would be highly
detrimental to the interests of the Corporation;
(b) in the course of performing his duties and responsibilities for the
Corporation, the Executive has been and will continue in the future to be a
representative of the Corporation to its customers, clients and suppliers and as
such has had and will continue in the future to have significant responsibility
for maintaining and enhancing the goodwill of the Corporation with such
customers, clients and suppliers and would not have, except by virtue of his
employment with the
<PAGE>
Corporation, developed a close and direct relationship with the customers,
clients and suppliers of the Corporation;
(c) the Executive, as an officer of the Corporation, owes fiduciary
duties to the Corporation, including the duty to act in the best interests of
the Corporation; and
(d) the right to maintain the confidentiality of the Trade Secrets, the
right to preserve the goodwill of the Corporation and the right to the benefit
of any relationships that have developed between the Executive and the
customers, clients and suppliers of the Corporation by virtue of the Executive's
employment with the Corporation constitute proprietary rights of the
Corporation, which the Corporation is entitled to protect.
In acknowledgment of the matters described above and in consideration
of the payments to be received by the Executive pursuant to this agreement, the
Executive hereby agrees that he will not, for five years from the date hereof;
directly or indirectly disclose to any person or in any way make use of; other
than for the benefit of the Corporation, in any manner, any of the Trade
Secrets, provided that such Trade Secrets shall be deemed not to include
information that is or becomes generally available to the public other than as a
result of disclosure by the Executive.
14. NON-SOLICITATION
The Executive hereby agrees that he will not, during the period
commencing on the date hereof and ending five years following the expiration of
the term of this agreement, be a party to or abet any solicitation of customers,
clients or suppliers of the Corporation or any of its subsidiaries, to transfer
business from the Corporation or any of its subsidiaries to any other person, or
seek in any way to persuade or entice any employee of the Corporation or any of
its subsidiaries to leave that employment or to be a party to or abet any such
action.
15. DISCLOSURE
During the employment period, the Executive shall promptly disclose to
the Chief Operating Officer full information concerning any interest, direct or
indirect, of the Executive (as owner, shareholder, partner, lender or other
investor, director, officer, employee, consultant or otherwise) or any member of
his family in any business that is reasonably known to the Executive to purchase
or otherwise obtain services or products from, or to sell or otherwise provide
services or products to the Corporation or to any of its suppliers or customers.
16. PLACE OF EMPLOYMENT
The Corporation shall not move or otherwise relocate the place of
business at which the Executive reports to work more than 50 kilometres from
downtown Toronto, Ontario, Canada for the term of this contract and then, only
if mutually agreed by both parties hereto, to a mutually agreed upon location
with all expenses paid by the Corporation.
<PAGE>
17, RETURN OF MATERIALS
All files, forms, brochures, books, materials, written correspondence,
memoranda, documents, manuals, computer disks, software products and lists
(including lists of customers, suppliers, products and prices) pertaining to the
business of the Corporation or any of its subsidiaries and associates that may
come into the possession or control of the Executive shall at all times remain
the property of the Corporation or such subsidiary or associate, as the case may
be. On termination of the Executive's employment for any reason, the Executive
agrees to deliver promptly to the Corporation all such property of the
Corporation in the possession of the Executive or directly or indirectly under
the control of the Executive. The Executive agrees not to make for his personal
or business use or that of any other party, reproductions or copies of any such
property or other property of the Corporation.
18 GOVERNING LAW
This agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario.
19. SEVERABILITY
If any provision of this agreement, including the breadth or scope of
such provision, shall be held by any court of competent jurisdiction to be
invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining provisions, or part thereof; of this agreement and such remaining
provisions, or part thereof; shall remain enforceable and binding.
20. ENFORCEABILITY
The Executive hereby confirms and agrees that the covenants and
restrictions pertaining to the Executive contained in this agreement, including,
without limitation, those contained in sections 13 and 14 hereof; are reasonable
and valid and hereby further acknowledges and agrees that the Corporation would
suffer irreparable injury in the event of any breach by the Executive of his
obligations under any such covenant or restriction. Accordingly, the Executive
hereby acknowledges and agrees that damages would be an inadequate remedy at law
in connection with any such breach and the Corporation shall therefore be
entitled in lieu of any action for damages, temporary and permanent injunctive
relief enjoining and restraining the Executive from any such breach.
21. NO ASSIGNMENT
The Executive may not assign, pledge or encumber the Executive's
interest in this agreement nor assign any of the rights or duties of the
Executive under this agreement without the prior written consent of the
Corporation.
<PAGE>
22. LEGAL ADVICE
The Executive hereby represents and warrants to the Corporation and
acknowledges and agrees that he had the opportunity to seek and was not
prevented nor discouraged by the Corporation from seeking independent legal
advice prior to the execution and delivery of this agreement and that, in the
event that he did not avail himself of that opportunity prior to signing this
agreement, he did so voluntarily without any undue pressure and agrees that his
failure to obtain independent legal advice shall not be used by him as a defense
to the enforcement of his obligations under this agreement.
23 NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and either delivered by hand or mailed by prepaid
registered mail. If there is a general discontinuance of postal service due to
strike, lock-out or otherwise, a notice sent by prepaid registered mail shall be
deemed to have been received three business days after the resumption of postal
service. Notice shall be addressed as follows:
(a) If to the Corporation:
40 King St. West, Suite 4900, Toronto, Ontario, Canada, M5H 4A2
(b) If to the Executive:
#3 - 21965 49TH Ave., Langley, B.C., Canada V3A 8J7
<PAGE>
IN WITNESS WHEREOF THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT AS
OF THE DATE first above written.
SIGNED, SEALED AND DELWERED
by a duly authorized officer of Mentor On Call, Inc.
C/S
SIGNED, SEALED AND DELIVERED
by James N. Rodgers and duly witnessed by:
Witness
Address
EXECUTIVE EMPLOYMENT CONTRACT
Schedule A-2 to Shareholders Agreement
THIS AGREEMENT MADE AS OF THE ~ ~ DAY OF JANUARY, 2000..
Among:
MENTOR ON CALL, INC.
a corporation incorporated under
the laws of Nevada, U.S.A.
(hereinafter referred to as the "Corporation")
OF THE FIRST PART,
- and -
EDWIN W. AUSTIN
of the City of Toronto
Province of Ontario
Canada
(hereinafter referred to as the "Executive")
OF THE SECOND PART.
Whereas the Corporation wishes to retain the services of the Executive
to provide the services hereinafter described during the term hereinafter set
out;
NOW THEREFORE THIS AGREEMENT WiTNESSES that in consideration of the
mutual covenants and agreements herein contained and for other good and valuable
consideration, the parties agree as follows:
1. TERM
The Corporation shall employ the Executive for a period of five years
fromjANUARY 18, 2000 to and including January 18, 2005, unless such employment
shall be terminated earlier as hereinafter provided. Upon the expiry of the term
of this agreement on January 18, 2005, and on each anniversary of such date
falling thereafter, the term of this agreement shall automatically be extended
for on additional year on the same terms and conditions unless, not less than
six months prior to any such anniversary, either the Executive or the
Corporation shall have given written notice to the other that it does not wish
to further extend this agreement.
<PAGE>
2. DUTIES
The Executive shall serve the Corporation and any subsidiaries of the
Corporation in such capacity or capacities and shall perform such duties and
exercise such power pertaining to the management and operation of the
Corporation as may be determined form time to time by the board of directors of
the Corporation consistent with the office of the Executive. Without limitation
of the foregoing, the Executive shall occupy the office of Chief Operating
Officer and Chief Financial Officer of the Corporation. The Executive shall:
(a) devote his full time and attention and his best efforts during
normal business hours to the business and affairs of the Corporation;
(b) perform those duties that may reasonably be assigned to the
Executive diligently and faithfully to the best of the Executive's abilities and
in the best interests of the Corporation; and
(c) use his best efforts to promote the interests and goodwill of the
Corporation.
3. REPORTING PROCEDURES
The Executive shall report to the person holding the office of Chief
Executive Officer. The Executive shall report fully on the management,
operations and business affairs of the Corporation and advise to the best of his
ability and in accordance with reasonable business standards on business matters
that may arise from time to time during the term of this agreement.
4. REMUNERATION
(a) The annual base salary payable to the Executive for his services
hereunder for the first year of the term of his agreement shall by U.S. $180,000
with U.S. $60,000 of this amount deferred until the Corporation retains earnings
of U.S. $750,000 in one quarter as determined in the sole discretion of the
Chief Executive Officer. At that time the deferred salary vests in the Executive
and is then due and payable in equal monthly increments over the ensuing six
months in addition to the monthly salary. The annual base salary payable to the
Executive for his services hereunder for each successive year of the term of
this agreement, exclusive of bonuses, benefits and other compensation, shall
increase by eight per cent of the annual base salary for the immediately
preceding year. The annual base salary payable to the Executive pursuant to the
provisions of this section 4 shall be payable in equal monthly instalments in
arrears on the first of each month or in such other manner as may be mutually
agreed upon, less, in any case, any deductions or withholdings required by law.
(b) The Corporation shall provide the Executive with employee benefits
comparable to those provided by the Corporation from time to time to other
senior executive of the Corporation to a maximum value of fifteen per cent of
Executive's salary with a floor often per cent of salary and shall permit the
Executive to participate in any share option plan, share purchase plan,
retirement
<PAGE>
plan or similar plan offered by the Corporation from time to time to its senior
executives in the manner and to the extent authorized by the board of directors
of the Corporation.
5. PERFORMANCE BONUS
In addition to the Executive's annual base salary, the Executive shall
participate in the Corporation's executive bonus plan whereby upon completion of
the Learning Management System to the satisfaction of the Chief Executive
Officer utilizing third party and independent evaluators and conditional upon
receipt of a minimum of U.S. $1,500,000 from System Licenses, a Project
Completion Bonus of U.S. $125,000 will be immediately payable to the Executive.
6. STOCK OPTIONS
The Executive is entitled to Stock Options in the Corporation in the
amount of 250,000 no par value common shares at a strike price of U.S. $2.00 per
share exercisable for a period of five years from issuance of the performance
bonus ENUNCIATED IN ARTICLE 5 above.
7. NO FURTHER SALARY OR BONUS ADJUSTMENTS
Other than as herein provided, there shall be no cost-of-living
increase or merit increase in the annual base salary or the executive bonus
unless agreed to in writing by the Corporation.
8. VACATION
The Executive shall be entitled to four weeks' paid vacation per fiscal
year of the Corporation at a time approved in advance by the Chief Executive
Officer, which approval shall not be unreasonably withheld but shall take into
account the staffing requirements of the Corporation and the need for the timely
performance of the Executive's responsibilities. In the event that the Executive
decides not to take all the vacation to which he is entitled in any fiscal year,
the Executive shall be entitled to take up to one week of such vacation in the
next following fiscal year at a time approved in advance by the Chief Operating
Officer.
9. AUTOMOBILE
The Executive shall be supplied with an allowance of U.S.$375 per month
when the Corporation is earning a profit of a minimum of U.S. $750,000 in any
quarter, as determined in the sole discretion of the Chief Financial Officer,
towards a leased car selected by the Corporation to be used by him for the
Corporation's business.
<PAGE>
10. EXPENSES
The Executive shall be reimbursed for all reasonable travel and other
out-of-pocket expenses actually and properly incurred by the Executive from time
to time in connection with carrying out his duties hereunder. For all such
expenses the Executive shall furnish to the Corporation original of all invoices
or statements in respect of which the Executive seeks reimbursement.
11. TERMINATION
(a) For Cause
The Corporation may terminate the employment of the Executive without
notice or any payment in lieu of notice for cause which, without limiting the
generality of the foregoing, shall include:
(i) if there is a repeated and demonstrated failure on the
part of the Executive to perform the material duties of the Executive's
position in a competent manner and where the Executive fails to
substantially remedy the failure within a reasonable period of time
after receiving written notice of such failure from the Corporation;
(ii)if the Executive is convicted of a criminal offence
involving fraud or dishonesty;
(iii) if the Executive or any member of his family makes any
personal profit arising out of or in connection with a transaction to
which the Corporation is a party or with which it is associated without
making disclosure to and obtaining the prior written consent of the
Corporation;
(iv) if the Executive fails to honour his fiduciary duties to
the Corporation, including the duty to act in the best interests of the
Corporation; or
(v) if the Executive disobeys reasonable instructions given in
the course of employment by the Chief Operating Officer or the board of
directors of the Corporation that are not inconsistent with the
Executive's management position and not remedied by the Executive
within a reasonable period of time after receiving written notice of
such disobedience.
(B) For Disability/Death
This agreement may be immediately terminated by the Corporation by
notice to the Executive if the Executive becomes permanently disabled. The
Executive shall be deemed to have become permanently disabled as defined in the
Shareholders Agreement to which this Executive Employment Agreement is attached
as Schedule A.
This agreement shall terminate without notice upon the death of the
Executive.
<PAGE>
12. SEVERANCE PAYMENTS
(a) Upon termination of the Executive's employment: (i) for cause; (ii)
by the voluntary termination of employment of the Executive; or (iii) by the
non-renewal of this Agreement, the Executive shall not be entitled to any
severance payment other than compensation earned by the Executive before the
date of termination calculated pro rata up to and including the date of
termination calculated pro rata up to and including the date of termination,
together with any AMOUNT TO WHICH THE EXECUTIVE IS ENTITLED UNDER THE EMPLOYMENT
STANDARDS ACT (Ontario), as amended and in force from time to time,
(b) If the Executive's employment is terminated for any other reason
other than the reasons set forth in subsection 12(a), the Executive shall be
entitled to receive the lesser of:
(i) Six months salary if termination occurs from month seven
to 12;
(ii) Twelve months salary if termination occurs in month 13 to
25;
(iii) Eighteen months salary if termination occurs in month 25
to term.
In any event, the compensation under the contract is guaranteed by the
Corporation for one year of salary from the date of execution, if terminated
without cause as enunciated in 12 (a).
13. CONFIDENTIALITY
The Executive acknowledges and agrees that:
(a) in the course of performing his duties and responsibilities as COO
and CFO of the Corporation, he has had and will continue in the future to have
access to and has been and will be entrusted with detailed confidential
information and trade secrets (printed or otherwise) concerning past, present,
future and contemplated products, services, operations and marketing techniques
and procedures of the Corporation and its subsidiaries, including, without
limitation, information relating to addresses, preference, needs and
requirements of past, present and prospective clients, customers, suppliers
(which, for all purposes of this agreement, shall be deemed to include, without
limitation, all old Pathfinder clients,) and employees of the Corporation
(collectively, "Trade Secrets"), the disclosure of any of which to competitors
of the Corporation or to the general public, or the use of same by the Executive
or any competitor of the Corporation or any of its subsidiaries, would be highly
detrimental to the interests of the Corporation;
(b) in the course of performing his duties and responsibilities for the
Corporation, the Executive has been and will continue in the future to be a
representative of the Corporation to its customers, clients and suppliers and as
such has had and will continue in the future to have significant responsibility
for maintaining and enhancing the goodwill of the Corporation with such
customers, clients and suppliers and would not have, except by virtue of his
employment with the
<PAGE>
Corporation, developed a close and direct relationship with the customers,
clients and suppliers of the Corporation;
(c) the Executive, as an officer of the Corporation, owes fiduciary
duties to the Corporation, including the duty to act in the best interests of
the Corporation; and
(d) the right to maintain the confidentiality of the Trade Secrets, the
right to preserve the goodwill of the Corporation and the right to the benefit
of any relationships that have developed between the Executive and the
customers, clients and suppliers of the Corporation by virtue of the Executive's
employment with the Corporation constitute proprietary rights of the
Corporation, which the Corporation is entitled to protect.
In acknowledgment of the matters described above and in consideration
of the payments to be received by the Executive pursuant to this agreement, the
Executive hereby agrees that he will not, for five years from the date hereof;
directly or indirectly disclose to any person or in any way make use of; other
than for the benefit of the Corporation, in any manner, any of the Trade
Secrets, provided that such Trade Secrets shall be deemed not to include
information that is or becomes generally available to the public other than as a
result of disclosure by the Executive.
14. NON-SOLICITATION
The Executive hereby agrees that he will not, during the period
commencing on the date hereof and ending five years following the expiration of
the term of this agreement, be a party to or abet any solicitation of customers,
clients or suppliers of the Corporation or any of its subsidiaries, to transfer
business from the Corporation or any of its subsidiaries to any other person, or
seek in any way to persuade or entice any employee of the Corporation or any of
its subsidiaries to leave that employment or to be a party to or abet any such
action.
15. DISCLOSURE
During the employment period, the Executive shall promptly disclose to
the Chief Executive Officer full information concerning any interest, direct or
indirect, of the Executive (as owner, shareholder, partner, lender or other
investor, director, officer, employee, consultant or otherwise) or any member of
his family in any business that is reasonably known to the Executive to purchase
or otherwise obtain services or products from, or to sell or otherwise provide
services or products to the Corporation or to any of its suppliers or customers.
16. PLACE OF EMPLOYMENT
The Corporation shall not move or otherwise relocate the place of
business at which the Executive reports to work more than 50 kilometres from
downtown Toronto, Ontario, Canada for the term of this contract and then, only
if mutually agreed by both parties hereto, to a mutually agreed upon location
with all expenses paid by the Corporation.
<PAGE>
17. RETURN OF MATERIALS
All files, forms, brochures, books, materials, written correspondence,
memoranda, documents, manuals, computer disks, software products and lists
(including lists of customers, suppliers, products and prices) pertaining to the
business of the Corporation or any of its subsidiaries and associates that may
come into the possession or control of the Executive shall at all times remain
the property of the Corporation or such subsidiary or associate, as the case may
be. On termination of the Executive's employment for any reason, the Executive
agrees to deliver promptly to the Corporation all such property of the
Corporation in the possession of the Executive or directly or indirectly under
the control of the Executive. The Executive agrees not to make for his personal
or business use or that of any other party, reproductions or copies of any such
property or other property of the Corporation.
18 GOVERNING LAW
This agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario.
19. SEVERABILITY
If any provision of this agreement, including the breadth or scope of
such provision, shall be held by any court of competent jurisdiction to be
invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining provisions, or part thereof; of this agreement and such remaining
provisions, or part thereof; shall remain enforceable and binding.
20. ENFORCEABILITY
The Executive hereby confirms and agrees that the covenants and
restrictions pertaining to the Executive contained in this agreement, including,
without limitation, those contained in sections 13 and 14 hereof; are reasonable
and valid and hereby further acknowledges and agrees that the Corporation would
suffer irreparable injury in the event of any breach by the Executive of his
obligations under any such covenant or restriction. Accordingly, the Executive
hereby acknowledges and agrees that damages would be an inadequate remedy at law
in connection with any such breach and the Corporation shall therefore be
entitled in lieu of any action for damages, temporary and permanent injunctive
relief enjoining and restraining the Executive from any such breach.
21. NO ASSIGNMENT
The Executive may not assign, pledge or encumber the Executive's
interest in this agreement nor assign any of the rights or duties of the
Executive under this agreement without the prior written consent of the
Corporation.
<PAGE>
22. LEGAL ADVICE
The Executive hereby represents and warrants to the Corporation and
acknowledges and agrees that he had the opportunity to seek and was not
prevented nor discouraged by the Corporation from seeking independent legal
advice prior to the execution and delivery of this agreement and that, in the
event that he did not avail himself of that opportunity prior to signing this
agreement, he did so voluntarily without any undue pressure and agrees that his
failure to obtain independent legal advice shall not be used by him as a defense
to the enforcement of his obligations under this agreement.
23 NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and either delivered by hand or mailed by prepaid
registered mail. If there is a general discontinuance of postal service due to
strike, lock-out or otherwise, a notice sent by prepaid registered mail shall be
deemed to have been received three business days after the resumption of postal
service. Notice shall be addressed as follows:
(a) If to the Corporation:
40 King Street Est, Suite 4900, Toronto, Ontario, Canada, M5H 4A2
(b) If to the Executive:
#3 - 765 Marlee Avenue, Toronto, Ontario, Canada, M6B 3J8
<PAGE>
IN WITNESS WHEREOF THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT AS
OF THE DATE first above written.
SIGNED, SEALED AND DELIVERED
by a duly authorized officer of Mentor On Call, Inc.
C/S
SIGNED, SEALED AND DELIVERED
by Edwin W. Austin and duly witnessed by:
Witness
Address
EXECUTIVE EMPLOYMENT CONTRACT
Schedule A-3 to Shareholders Agreement
THIS AGREEMENT MADE AS OF THE l8tI~ day of January, 2000.
Among:
MENTOR ON CALL, INC.
A CORPORATION INCORPORATED UNDER
the laws of Nevada, U.S.A.
(hereinafter referred to as the "Corporation")
OF THE FIRST PART,
- and -
JOHN J. PRITCHARD
of the City of Toronto
Province of Ontario
Canada
(hereinafter referred to as the "Executive")
OF THE SECOND PART.
Whereas the Corporation wishes to retain the services of the Executive
to provide the services hereinafter described during the term hereinafter set
out;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT IN CONSIDERATION OF THE
mutual covenants and agreements herein contained and for other good and valuable
consideration, thc parties agree as follows:
I. TERM
The Corporation shall employ the Executive for a period of five years
from March 15,2000 or a latter date chosen BY THE CHIEF OPERATING OFFICER, UP TO
AND INCLUDING MARCH 15, 2005, unless such employment shall be terminated earlier
as HEREINAFTER PROVIDED. UPON THE EXPIRY OF THE TERM OF THIS AGREEMENT ON MARCH
15, 2005, and on each anniversary of such date falling thereafter, the term of
this agreement shall automatically be extended for on additional year on the
same terms and conditions unless, not less than six months prior to any such
anniversary, either the Executive or the Corporation shall have given written
notice to the other that it does not wish to further extend this agreement.
<PAGE>
2. DUTIES
The Executive shall serve the Corporation and any subsidiaries of the
Corporation in such capacity or capacities and shall perform such duties and
exercise such power pertaining to the management and operation of the
Corporation as may be determined form time to time by the board of directors of
the Corporation consistent with the office of the Executive. Without limitation
of the foregoing, the Executive shall occupy the office of Senior Vice-President
Products and Services of the Corporation. The Executive shall:
(a) devote his full time and attention and his best efforts during
normal business hours to the business and affairs of the Corporation;
(b) perform those duties that may reasonably be assigned to the
Executive diligently and faithfully to the best of the Executive's abilities and
in the best interests of the Corporation; and
(c) use his best efforts to promote the interests and goodwill of the
Corporation.
3. REPORTING PROCEDURES
The Executive shall report to the person holding the office of Chief
Operating Officer. The Executive shall report fully on the management,
operations and business affairs of the Corporation and advise to the best of his
ability and in accordance with reasonable business standards on business matters
that may arise from time to time during the term of this agreement.
4. REMUNERATION
(a) The annual base salary payable to the Executive for his services
hereunder for the first year of the term of his agreement shall by U.S. $120,000
with U.S. $25,000 of this amount deferred until the Corporation retains earnings
of U.S. $750,000 in one quarter as determined in the sole discretion of the
Chief Financial Officer. At that time the deferred salary vests in the Executive
and is then due and payable in equal monthly increments over the ensuing six
months in addition to the monthly salary. The annual base salary payable to the
Executive for his services hereunder for each successive year of the term of
this agreement, exclusive of bonuses, benefits and other compensation, shall
increase by eight per cent of the annual base salary for the immediately
preceding year. The annual base salary payable to the Executive pursuant to the
provisions of this section 4 shall be payable in equal monthly instalments in
arrears on the first of each month or in such other manner as may be mutually
agreed upon, less, in any case, any deductions or withholdings required by law.
(b) The Corporation shall provide the Executive with employee benefits
comparable to those provided by the Corporation from time to time to other
senior executive of the Corporation to a maximum value of fifteen per cent of
Executive's salary with a floor often per cent of salary and shall permit the
Executive to participate in any share option plan, share purchase plan,
retirement
<PAGE>
plan or similar plan offered by the Corporation from time to time to its senior
executives in the manner and to the extent authorized by the board of directors
of the Corporation.
5. PERFORMANCE BONUS
In addition to the Executive's annual base salary, the Executive shall
participate in the Corporation's executive bonus plan whereby upon completion of
the Learning Management System to the satisfaction of the Chief Operating
Officer UTILIZING THIRD PARTY AND INDEPENDENT EVALUATORS and conditional upon
receipt of a minimum of U.S. $1,500,000 from System Licenses, a Project
Completion Bonus of U.S. $125,000 will be immediately payable to the Executive.
6. STOCK OPTIONS
The Executive is entitled to Stock Options in the Corporation in the
amount of 250,000 no par value common shares at a strike price of U.S. $2.00 per
share exercisable for a period of five years from payment of the performance
bonus ENUNCIATED IN ARTICLE 5 above.
7. NO FURTHER SALARY OR BONUS ADJUSTMENTS
Other than as herein provided, there shall be no cost-of-living
increase or merit increase in the annual base salary or the executive bonus
unless agreed to in writing by the Corporation.
8. VACATION
The Executive shall be entitled to four weeks' paid vacation per fiscal
year of the Corporation at a time approved in advance by the Chief Operating
Officer, which approval shall not be unreasonably withheld but shall take into
account the staffing requirements of the Corporation and the need for the timely
performance of the Executive's responsibilities. In the event that the Executive
decides not to take all the vacation to which he is entitled in any fiscal year,
the Executive shall be entitled to take up to one week of such vacation in the
next following fiscal year at a time approved in advance by the Chief Operating
Officer.
9. AUTOMOBILE
The Executive shall be supplied with an allowance of U.S.$300 per month
when the Corporation is earning a profit of a minimum of U.S. $750,000 in any
quarter, as determined in the sole discretion of the Chief Financial Officer,
towards a leased car selected by the Corporation to be used by him for the
Corporation's business.
<PAGE>
10. EXPENSES
The Executive shall be reimbursed for all reasonable travel and other
out-of-pocket expenses actually and properly incurred by the Executive from time
to time in connection with carrying out his duties hereunder. For all such
expenses the Executive shall furnish to the Corporation original of all invoices
or statements in respect of which the Executive seeks reimbursement.
11. TERMINATION
(a) For Cause
The Corporation may terminate the employment of the Executive without
notice or any payment in lieu of notice for cause which, without limiting the
generality of the foregoing, shall include:
(i) if there is a repeated and demonstrated failure on the
part of the Executive to perform the material duties of the Executive's
position in a competent manner and where the Executive fails to
substantially remedy the failure within a reasonable period of time
after receiving written notice of such failure from the Corporation;
(ii)if the Executive is convicted of a criminal offence
involving fraud or dishonesty;
(iii) if the Executive or any member of his family makes any
personal profit arising out of or in connection with a transaction to
which the Corporation is a party or with which it is associated without
making disclosure to and obtaining the prior written consent of the
Corporation;
(iv) if the Executive fails to honour his fiduciary duties to
the Corporation, including the duty to act in the best interests of the
Corporation; or
(v) if the Executive disobeys reasonable instructions given in
the course of employment by the Chief Operating Officer or the board of
directors of the Corporation that are not inconsistent with the
Executive's management position and not remedied by the Executive
within a reasonable period of time after receiving written notice of
such disobedience.
(B) For Disability/Death
This agreement may be immediately terminated by the Corporation by
notice to the Executive if the Executive becomes permanently disabled. The
Executive shall be deemed to have become permanently disabled as defined in the
Shareholders Agreement to which this Executive Employment Agreement is attached
as Schedule A.
This agreement shall terminate without notice upon the death of the
Executive.
<PAGE>
12. SEVERANCE PAYMENTS
(a) Upon termination of the Executive's employment: (i) for cause; (ii)
by the voluntary termination of employment of the Executive; or (iii) by the
non-renewal of this Agreement, the Executive shall not be entitled to any
severance payment other than compensation earned by the Executive before the
date of termination calculated pro rata up to and including the date of
termination calculated pro rata up to and including the date of termination,
together with any AMOUNT TO WHICH THE EXECUTIVE IS ENTITLED UNDER THE EMPLOYMENT
STANDARDS ACT (Ontario), as amended and in force from time to time.
(b) If the Executive's employment is terminated for any other reason
other than the reasons set forth in subsection 12(a), the Executive shall be
entitled to receive the lesser of:
(i) Twelve months salary if termination occurs at any time in
the first two years of the contract;
(ii) Eighteen months salary if termination occurs in month 25
to term.
13. CONFIDENTIALITY
The Executive acknowledges and agrees that:
(a) in the course of performing his duties and responsibilities as Vice
President Systems of the Corporation, he has had and will continue in the future
to have access to and has been and will be entrusted with detailed confidential
information and trade secrets (printed or otherwise) concerning past, present,
future and contemplated products, services, operations and marketing techniques
and procedures of the Corporation and its subsidiaries, including, without
limitation, information relating to addresses, preference, needs and
requirements of past, present and prospective clients, customers, suppliers
(which, for all purposes of this agreement, shall be deemed to include, without
limitation, all old Pathfinder clients,) and employees of the Corporation
(collectively, "Trade Secrets"), the disclosure of any of which to competitors
of the Corporation or to the general public, or the use of same by the Executive
or any competitor of the Corporation or any of its subsidiaries, would be highly
detrimental to the interests of the Corporation;
(b) in the course of performing his duties and responsibilities for the
Corporation, the Executive has been and will continue in the future to be a
representative of the Corporation to its customers, clients and suppliers and as
such has had and will continue in the future to have significant responsibility
for maintaining and enhancing the goodwill of the Corporation with such
customers, clients and suppliers and would not have, except by virtue of his
employment with the Corporation, developed a close and direct relationship with
the customers, clients and suppliers of the Corporation;
<PAGE>
(c) the Executive, as an officer of the Corporation, owes fiduciary
duties to the Corporation, including the duty to act in the best interests of
the Corporation; and
(d) the right to maintain the confidentiality of the Trade Secrets, the
right to preserve the goodwill of the Corporation and the right to the benefit
of any relationships that have developed between the Executive and the
customers, clients and suppliers of the Corporation by virtue of the Executive's
employment with the Corporation constitute proprietary rights of the
Corporation, which the Corporation is entitled to protect.
In acknowledgment of the matters described above and in consideration
of the payments to be received by the Executive pursuant to this agreement, the
Executive hereby agrees that he will not, for five years from the date hereof;
directly or indirectly disclose to any person or in any way make use of; other
than for the benefit of the Corporation, in any manner, any of the Trade
Secrets, provided that such Trade Secrets shall be deemed not to include
information that is or becomes generally available to the public other than as a
result of disclosure by the Executive.
14. NON-SOLICITATION
The Executive hereby agrees that he will not, during the period
commencing on the date hereof and ending five years following the expiration of
the term of this agreement, be a party to or abet any solicitation of customers,
clients or suppliers of the Corporation or any of its subsidiaries, to transfer
business from the Corporation or any of its subsidiaries to any other person, or
seek in any way to persuade or entice any employee of the Corporation or any of
its subsidiaries to leave that employment or to be a party to or abet any such
action.
15. DISCLOSURE
During the employment period, the Executive shall promptly disclose to
the Chief Operating Officer full information concerning any interest, direct or
indirect, of the Executive (as owner, shareholder, partner, lender or other
investor, director, officer, employee, consultant or otherwise) or any member of
his family in any business that is reasonably known to the Executive to purchase
or otherwise obtain services or products from, or to sell or otherwise provide
services or products to the Corporation or to any of its suppliers or customers.
16. PLACE OF EMPLOYMENT
The Corporation shall not move or otherwise relocate the place of
business at which the Executive reports to work more than 50 kilometres from
downtown Toronto, Ontario, Canada for the term of this contract.
<PAGE>
17. RETURN OF MATERIALS
All files, forms, brochures, books, materials, written correspondence,
memoranda, documents, manuals, computer disks, software products and lists
(including lists of customers, suppliers, products and prices) pertaining to the
business of the Corporation or any of its subsidiaries and associates that may
come into the possession or control of the Executive shall at all times remain
the property of the Corporation or such subsidiary or associate, as the case may
be. On termination of the Executive's employment for any reason, the Executive
agrees to deliver promptly to the Corporation all such property of the
Corporation in the possession of the Executive or directly or indirectly under
the control of the Executive. The Executive agrees not to make for his personal
or business use or that of any other party, reproductions or copies of any such
property or other property of the Corporation.
18 GOVERNING LAW
This agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario.
19. SEVERABILITY
If any provision of this agreement, including the breadth or scope of
such provision, shall be held by any court of competent jurisdiction to be
invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining provisions, or part thereof; of this agreement and such remaining
provisions, or part thereof; shall remain enforceable and binding.
20. ENFORCEABILITY
The Executive hereby confirms and agrees that the covenants and
restrictions pertaining to the Executive contained in this agreement, including,
without limitation, those contained in sections 13 and 14 hereof; are reasonable
and valid and hereby further acknowledges and agrees that the Corporation would
suffer irreparable injury in the event of any breach by the Executive of his
obligations under any such covenant or restriction. Accordingly, the Executive
hereby acknowledges and agrees that damages would be an inadequate remedy at law
in connection with any such breach and the Corporation shall therefore be
entitled in lieu of any action for damages, temporary and permanent injunctive
relief enjoining and restraining the Executive from any such breach.
21. NO ASSIGNMENT
The Executive may not assign, pledge or encumber the Executive's
interest in this agreement
<PAGE>
nor assign any of the rights or duties of the Executive under this agreement
without the prior written consent of the Corporation.
22. LEGAL ADVICE
The Executive hereby represents and warrants to the Corporation and
acknowledges and agrees that he had the opportunity to seek and was not
prevented nor discouraged by the Corporation from seeking independent legal
advice prior to the execution and delivery of this agreement and that, in the
event that he did not avail himself of that opportunity prior to signing this
agreement, he did so voluntarily without any undue pressure and agrees that his
failure to obtain independent legal advice shall not be used by him as a defense
to the enforcement of his obligations under this agreement.
23 NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and either delivered by hand or mailed by prepaid
registered mail. If there is a general discontinuance of postal service due to
strike, lock-out or otherwise, a notice sent by prepaid registered mail shall be
deemed to have been received three business days after the resumption of postal
service. Notice shall be addressed as follows:
(a) If to the Corporation:
40 King Street West, Suite 4900, Toronto, Ontario, Canada M5H 4A2
(b) If to the Executive:
(Address)
<PAGE>
IN WITNESS WHEREOF THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT AS
OF THE date first above written.
SIGNED, SEALED AND DELIVERED
by a duly authorized officer of Mentor On Call, Inc.
C/S
SIGNED, SEALED AND DELIVERED
by John J. Pritchard and duly witnessed by:
Witness
Address
Schedule A-4 to Shareholders Agreement
EXECUTIVE EMPLOYMENT CONTRACT
THIS AGREEMENT MADE AS OF THE 18TH DAY OF JANUARY, 2000.
Among:
MENTOR ON CALL, INC.
a corporation incorporated under
the laws of Nevada , U.S.A.
(hereinafter referred to as the "Corporation")
OF THE FIRST PART,
- and -
JASON 14. FIGUEROA
of the City of Toronto
Province of Ontario
Canada
(hereinafter referred to as the "Executive")
OF THE SECOND PART.
Whereas the Corporation wishes to retain the services of the Executive
to provide the services hereinafter described during the term hereinafter set
out;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT IN CONSIDERATION OF THE
mutual covenants and agreements herein contained and for other good and valuable
consideration, the parties agree as follows:
1. TERM
The Corporation shall employ the Executive for a period of five years
from February 1, 2000 to and including FEBRUARY 5,2005, unless such employment
shall be terminated earlier as hereinafter provided, Upon the expiry of the term
OF THIS AGREEMENT ON FEBRUARY 5, 2005, and on each anniversary of such date
falling thereafter, the term of this agreement shall automatically be extended
for on additional year on the same terms and conditions unless, not less than
six months prior to any such anniversary, either the Executive or the
Corporation shall have given written notice to the other that it does not wish
to further extend this agreement.
<PAGE>
2. DUTIES
The Executive shall serve the Corporation and any subsidiaries of the
Corporation in such capacity or capacities and shall perform such duties and
exercise such power pertaining to the management and operation of the
Corporation as may be determined form time to time by the board of directors of
the Corporation consistent with the office of the Executive. Without limitation
of the foregoing, the Executive shall occupy the office of Vice-President
Information Technology of the Corporation. The Executive shall:
(a) devote his full time and attention and his best efforts during
normal business hours to the business and affairs of the Corporation;
(b) perform those duties that may reasonably be assigned to the
Executive diligently and faithfully to the best of the Executive's abilities and
in the best interests of the Corporation; and
(c) use his best efforts to promote the interests and goodwill of the
Corporation.
3. REPORTING PROCEDURES
The Executive shall report to the person holding the office of Chief
Operating Officer. The Executive shall report fully on the management,
operations and business affairs of the Corporation and advise to the best of his
ability and in accordance with reasonable business standards on business matters
that may arise from time to time during the term of this agreement.
4. REMUNERATION
(a) The annual base salary payable to the Executive for his services
hereunder for the first year of the term of his agreement shall by U.S. $100,000
with U.S. $15,000 of this amount deferred until the Corporation retains earnings
of U.S. $750,000 in one quarter as determined in the sole discretion of the
Chief Financial Officer. At that time the deferred salary vests in the Executive
and is then due and payable in equal monthly increments over the ensuing six
months in addition to the monthly salary. The annual base salary payable to the
Executive for his services hereunder for each successive year of the term of
this agreement, exclusive of bonuses, benefits and other compensation, shall
increase by eight per cent of the annual base salary for the immediately
preceding year. The annual base salary payable to the Executive pursuant to the
provisions of this section 4 shall be payable in equal monthly instalments in
arrears on the first of each month or in such other manner as may be mutually
agreed upon, less, in any case, any deductions or withholdings required by law.
(b) The Corporation shall provide the Executive with employee benefits
comparable to those provided by the Corporation from time to time to other
senior executive of the Corporation to a maximum value of fifteen per cent of
Executive's salary with a floor often per cent of salary and shall permit the
Executive to participate in any share option plan, share purchase plan,
retirement plan or similar plan offered by the Corporation from time to time to
its senior executives in the manner and to the extent authorized by the board of
directors of the Corporation.
<PAGE>
5. PERFORMANCE BONUS
In addition to the Executive's annual base salary, the Executive shall
participate in the Corporation's executive bonus plan whereby upon completion of
the Leaning Management System to the satisfaction of the Chief Operating Officer
utilizing third party and independent evaluators and conditional upon receipt of
a minimum of U.S. $1,500,000 from System Licenses, a Project Completion Bonus of
U.S. $125,000 will be immediately payable to the Executive.
6. STOCK OPTIONS
The Executive is entitled to Stock Options in the Corporation in the
amount of 250,000 no par value common shares at a strike price of U.S. $2.00 per
share exercisable for a period of five years from payment of the performance
bonus ENUNCIATED IN ARTICLE 5 herein.
7. NO FURTHER SALARY OR BONUS ADJUSTMENTS
Other than as herein provided, there shall be no cost-of-living
increase or merit increase in the annual base salary or the executive bonus
unless agreed to in writing by the Corporation.
8. VACATION
The Executive shall be entitled to four weeks' paid vacation per fiscal
year of the Corporation at a time approved in advance by the Chief Operating
Officer, which approval shall not be unreasonably withheld but shall take into
account the staffing requirements of the Corporation and the need for the timely
performance of the Executive's responsibilities. In the event that the Executive
decides not to take all the vacation to which he is entitled in any fiscal year,
the Executive shall be entitled to take up to one week of such vacation in the
next following fiscal year at a time approved in advance by the Chief Operating
Officer.
9. AUTOMOBILE
The Executive shall be supplied with an allowance of U.S.$300 per month
when the Corporation is earning a profit of a minimum of U.S. $750,000 in any
quarter, as determined in the sole discretion of the Chief Financial Officer,
towards a leased car selected by the Corporation to be used by him for the
Corporation's business.
10. EXPENSES
The Executive shall be reimbursed for all reasonable travel and other
out-of-pocket expenses actually and properly incurred by th~ Executive from time
to time in connection with carrying out his duties hereunder. For all such
expenses the Executive shall furnish to the Corporation original of all invoices
or statements in respect of which the Executive seeks reimbursement.
<PAGE>
11. TERMINATION
(a) For Cause
The Corporation may terminate the employment of the Executive without
notice or any payment in lieu of notice for cause which, without limiting the
generality of the foregoing, shall include:
(i) if there is a repeated and demonstrated failure on the
part of the Executive to perform the material duties of the Executive's
position in a competent manner and where the Executive fails to
substantially remedy the failure within a reasonable period of time
after receiving written notice of such failure from the Corporation;
(ii) if the Executive is convicted of a criminal offence
involving fraud or dishonesty;
(iii) if the Executive or any member of his family makes any
personal profit arising out of or in connection with a transaction to
which the Corporation is a party or with which it is associated without
making disclosure to and obtaining the prior written consent of the
Corporation;
(iv) if the Executive fails to honour his fiduciary duties to
the Corporation, including the duty to act in the best interests of the
Corporation; or
(v) if the Executive disobeys reasonable instructions given in
the course of employment by the Chief Operating Officer or the board of
directors of the Corporation that are not inconsistent with the
Executive's management position and not remedied by the Executive
within a reasonable period of time after receiving written notice of
such disobedience.
(B) For Disability/Death
This agreement may be immediately terminated by the Corporation by
notice to the Executive if the Executive becomes permanently disabled. The
Executive shall be deemed to have become permanently disabled as defined in the
Shareholders Agreement to which this Executive Employment Agreement is attached
as Schedule A.
This agreement shall terminate without notice upon the death of the
Executive.
12. SEVERANCE PAYMENTS
(a) Upon termination of the Executive's employment: (i) for cause; (ii)
by the voluntary termination of employment of the Executive; or (iii) by the
non-renewal of this Agreement, the Executive shall not be entitled to any
severance payment other than compensation earned by the Executive before the
date of termination calculated pro rata up to and including the date of
termination calculated pro rata up to and including the date of termination,
together with any AMOUNT TO WHICH THE EXECUTIVE IS ENTITLED UNDER THE EMPLOYMENT
STANDARDS ACT (Ontario), as amended and in force from time to time.
<PAGE>
(b) If the Executive's employment is terminated for any other reason
other than the reasons set forth in subsection 12(a), the Executive shall be
entitled to receive the lesser of:
(i) Twelve months salary if termination occurs at any time in
the first two years of the contract;
(ii) Eighteen months salary if termination occurs in month 25
to term.
13. CONFIDENTIALITY
The Executive acknowledges and agrees that:
(a) in the course of performing his duties and responsibilities as Vice
President Systems of the Corporation, he has had and will continue in the future
to have access to and has been and will be entrusted with detailed confidential
information and trade secrets (printed or otherwise) concerning past, present,
future and contemplated products, services, operations and marketing techniques
and procedures of the Corporation and its subsidiaries, including, without
limitation, information relating to addresses, preference, needs and
requirements of past, present and prospective clients, customers, suppliers
(which, for all purposes of this agreement, shall be deemed to include, without
limitation, all old Pathfinder clients,) and employees of the Corporation
(collectively, "Trade Secrets"), the disclosure of any of which to competitors
of the Corporation or to the general public, or the use of same by the Executive
or any competitor of the Corporation or any of its subsidiaries, would be highly
detrimental to the interests of the Corporation;
(b) in the course of performing his duties and responsibilities for the
Corporation, the Executive has been and will continue in the future to be a
representative of the Corporation to its customers, clients and suppliers and as
such has had and will continue in the future to have significant responsibility
for maintaining and enhancing the goodwill of the Corporation with such
customers, clients and suppliers and would not have, except by virtue of his
employment with the Corporation, developed a close and direct relationship with
the customers, clients and suppliers of the Corporation;
(c) the Executive, as an officer of the Corporation, owes fiduciary
duties to the Corporation, including the duty to act in the best interests of
the Corporation; and
(d) the right to maintain the confidentiality of the Trade Secrets, the
right to preserve the goodwill of the Corporation and the right to the benefit
of any relationships that have developed between the Executive and the
customers, clients and suppliers of the Corporation by virtue of the Executive's
employment with the Corporation constitute proprietary rights of the
Corporation, which the Corporation is entitled to protect.
In acknowledgment of the matters described above and in consideration
of the payments to
<PAGE>
be received by the Executive pursuant to this agreement, the Executive hereby
agrees that he will not, for five years from the date hereof; directly or
indirectly disclose to any person or in any way make use of; other than for the
benefit of the Corporation, in any manner, any of the Trade Secrets, provided
that such Trade Secrets shall be deemed not to include information that is or
becomes generally available to the public other than as a result of disclosure
by the Executive.
14. NON-SOLICITATION
The Executive hereby agrees that he will not, during the period
commencing on the date hereof and ending five years following the expiration of
the term of this agreement, be a party to or abet any solicitation of customers,
clients or suppliers of the Corporation or any of its subsidiaries, to transfer
business from the Corporation or any of its subsidiaries to any other person, or
seek in any way to persuade or entice any employee of the Corporation or any of
its subsidiaries to leave that employment or to be a party to or abet any such
action.
15. DISCLOSURE
During the employment period, the Executive shall promptly disclose to
the Chief Operating Officer full information concerning any interest, direct or
indirect, of the Executive (as owner, shareholder, partner, lender or other
investor, director, officer, employee, consultant or otherwise) or any member of
his family in any business that is reasonably known to the Executive to purchase
or otherwise obtain services or products from, or to sell or otherwise PROVIDE
SERVICES OR PRODUCTS TO THE CORPORATION OR TO ANY OF ITS SUPPLIERS OR CUSTOMERS.
16. PLACE OF EMPLOYMENT
The Corporation shall not move or otherwise relocate the place of
business at which the Executive reports to work more than 50 kilometers from
downtown Toronto, Ontario for the term of this contract and then only if
mutually agreed by both parties hereto with all expenses paid by the
Corporation.
17. RETURN OF MATERIALS
All files, forms, brochures, books, materials, written correspondence,
memoranda, documents, manuals, computer disks, software products and lists
(including lists of customers, suppliers, products and prices) pertaining to the
business of the Corporation or any of its subsidiaries and associates that may
come into the possession or control of the Executive shall at all times remain
the property of the Corporation or such subsidiary or associate, as the case may
be. ON TERMINATION OF THE EXECUTIVE'S EMPLOYMENT FOR ANY REASON, THE EXECUTIVE
AGREES TO DELIVER PROMPTLY TO THE CORPORATION ALL SUCH property of the
Corporation in the possession of the Executive or directly or indirectly under
the control of the Executive. The Executive agrees not to make for his personal
or business use or that of any other party, reproductions or copies of any such
property or other property of the Corporation.
<PAGE>
18 GOVERNING LAW
This agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario.
19. SEVERABILITY
If any provision of this agreement, including the breadth or scope of
such provision, shall be held by any court of competent jurisdiction to be
invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining provisions, or part thereof; of this agreement and such remaining
provisions, or part thereof; shall remain enforceable and binding.
20. ENFORCEABILITY
The Executive hereby confirms and agrees that the covenants and
restrictions pertaining to the Executive contained in this agreement, including,
without limitation, those contained in sections 13 and 14 hereof; are reasonable
and valid and hereby further acknowledges and agrees that the Corporation would
suffer irreparable injury in the event of any breach by the Executive of his
obligations under any such covenant or restriction. Accordingly, the Executive
hereby acknowledges and agrees that damages would be an inadequate remedy at law
in connection with any such breach and the Corporation shall therefore be
entitled in lieu of any action for damages, temporary and permanent injunctive
relief enjoining and restraining the Executive from any such breach.
21. NO ASSIGNMENT
The Executive may not assign, pledge or encumber the Executive's
interest in this agreement nor assign any of the rights or duties of the
Executive under this agreement without the prior written consent of the
Corporation.
22. LEGAL ADVICE
The Executive hereby represents and warrants to the Corporation and
acknowledges and agrees that he had the opportunity to seek and was not
prevented nor discouraged by the Corporation from seeking independent legal
advice prior to the execution and delivery of this agreement and that, in the
event that he did not avail himself of that opportunity prior to signing this
agreement, he did so voluntarily without any undue pressure and agrees that his
failure to obtain independent legal advice shall not be used by him as a defense
to the enforcement of his obligations under this agreement.
23 NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and either delivered by hand or mailed by prepaid
registered mail. If there is a general discontinuance of postal service due to
strike, lock-out or otherwise, a notice sent by prepaid
<PAGE>
registered mail shall be deemed to have been received three business days after
the resumption of postal service. Notice shall be addressed as follows:
(a) If to the Corporation:
40 King St. West, Suite 4900, Toronto, Ontario, Canada, MSH 4A2
(B) IF TO THE EXECUTIVE:
(ADDRESS),
IN WITNESS WHEREOF THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT AS
OF THE DATE first above written.
SIGNED, SEALED AND DELIVERED
by a duly authorized officer of Mentor On Call, Inc.
C/S
SIGNED, SEALED AND DELIVERED
by Jason R. Figueroa and duly witnessed by:
Witness
Address
ESCROW AGREEMENT
Schedule C to Shareholders Agreement
Between:
JAMES N. RODGERS
of the City of Vancouver,
Province of British Columbia,
Canada
(hereinafter referred to as "Rodgers")
OF THE FIRST PART,
And
EDWIN W. AUSTIN
of the City of Toronto,
Province of Ontario,
Canada
(hereinafter referred to as "Austin")
OF THE SECOND PART,
And
JOHN J. PRITCHARD
of the City of Toronto, Province of Ontario,
Canada
(hereinafter referred to as "Pritchard")
OF THE THIRD PART,
And
JASON 14. FIGUEROA
of the City of Toronto, Province of Ontario,
Canada
(hereinafter referred to as "Figueroa")
OF THE FOURTH PART,
<PAGE>
And
MENTOR ON CALL, INC.
A corporation existing under the laws of Nevada, U.S.A.
(hereinafter referred to as "Mentor")
OF THE FIFTH PART,
And
MENTOR OF CALLHOLDINGS, INC.
An I. .B.C. under the laws of Barbados, W.I.
(hereinafter referred to as "Holdings or Corporation")
OF THE SIXTH PART.
And
___________TRUST CORPORATION
A corporation incorporated pursuant to the laws of Canada
(hereinafter referred to as "Depositary")
OF THE SEVENTH PART
RECITALS
WHEREAS THE AUTHORIZED CAPITAL OF MENTOR CONSISTS OF 100,000,000 COMMON
SHARES OF which 4,500,000 free trading common shares are issued and outstanding;
AND WHEREAS HOLDINGS WILL BE THE REGISTERED OWNER OF 9,350,000
RESTRICTED SHARES;
AND WHEREAS RODGERS, AUSTIN, PRITCHARD AND FIGUEROA (OR NOMINEES) own
in equal amounts as the registered and beneficial owners all of the issued and
outstanding and authorized shares of Holdings;
AND WHEREAS RODGERS, AUSTIN, PRITCHARD, FIGUEROA, MENTOR AND HOLDINGS
WISH TO deposit these shares in escrow with a suitable Trust Company in Canada
who will attorn to the provisions of this Agreement which is attached as
Schedule C to a Shareholders Agreement amongst the same six parts outlined
herein, in respect of other matters set forth in this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT IN CONSIDERATION OF THE
respective covenants and agreements of the parties contained herein and for
other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged by each of the parties) it is hereby agreed as follows:
<PAGE>
1. DEFINIT1ONS
In this Agreement, unless there is something in the context
inconsistent therewith, terms used herein and not defined herein shall have the
meanings respectively ascribed to them in the Unanimous Shareholder Agreement.
2. SHARES TO BE DEPOSITED WITH THE DEPOSITARY
All share certificates representing Shares shall be delivered to the
Depositary and shall be held by the Depositary to be dealt with in accordance
with the terms hereof and in accordance with the relevant provisions of the
Unanimous Shareholder Agreement.
3. ISSUANCE OF DEPOSIT RECEIPTS
The Depositary will issue in the name of and deliver to each
Shareholder who deposits with the Depositary a certificate or certificates
representing Shares a receipt (the "Deposit Receipt") in a valid and legally
binding form.
4. TRANSFER OF SHARES
Deposit Receipts shall not be transferrable. In the event of a transfer
of Shares that has been made in accordance with the provisions of the Unanimous
Shareholder Agreement, upon delivery to the Depositary of:
(a) the relevant Deposit Receipt; and
(b) written evidence satisfactory to the Depositary that the transfer
of Shares has been made in accordance with the provisions of the Unanimous
Shareholder Agreement,
the certificate representing such Shares shall be returned by the Depositary to
the relevant Company for cancellation and the relevant Company shall cancel such
Share certificate and issue in the name of the transferee a new Share
certificate evidencing the transferred Shares, which Share certificate shall be
delivered by such Company to the Depositary to be dealt with in accordance with
the terms of this Agreement and the relevant provisions of the Unanimous
Shareholder Agreement. Upon receipt by the Depositary of such new Share
certificate, it shall issue in the name of and deliver to such transferee a
Deposit Receipt evidencing such transferee's rights to the deposited Share
certificate, subject to the terms of this Agreement and the Unanimous
Shareholder Agreement.
5. REGISTER OF HOLDERS OF DEPOSIT RECEIPTS
The Depositary shall at all times treat and consider the registered
holder of a Deposit Receipt
<PAGE>
on the books of the Depositary as the holder thereof for all purposes. The
Depositary shall keep at its principal office in the City of Toronto a register
of the names and addresses of the holders of all Deposit Receipts issued.
The Depositary shall at all times ensure that the aggregate number of
Shares of any Company represented by Share certificates held by it hereunder is
equivalent to the aggregate number of Shares of such Company represented by the
outstanding Deposit Receipts with respect to Shares of such Company issued by
the Depositary.
6. RIGHT TO RECEIVE SHARES
On the termination of the Unanimous Shareholder Agreement, each Deposit
Receipt shall entitle the registered holder thereof, or his executors,
administrators, legal personal representatives or successors, or his or their
attorney duly appointed by an instrument in writing in form and execution
satisfactory to the Depositary, as the case maybe, to certificates representing
the number of Shares represented thereby on surrender of such Deposit Receipt,
duly endorsed with signature guaranteed by a Canadian chartered bank, at the
principal office of the Depositary in the City of Toronto.
7. RELEASE OF SHARES AND PROCEEDS OF SALE
Each party agrees that, except as otherwise expressly provided herein,
the Shares represented by certificates deposited with the Depositary in
accordance with the terms hereof shall not be released by the Depositary except
on termination of the Unanimous Shareholder Agreement and that each such party
will not request nor be entitled to the release of certificates except on such
basis.
However, by Unanimous Instruction of All Shareholders, in writing, (the
"Instructions")with signatures guaranteed by a Canadian chartered bank, the
Preference Rights after conversion to Common Shares of Mentor may be sold, in
amounts and at prices, as directed in writing by said Instructions with proceeds
of sale deposited in the account of Holdings, with banking co-ordinates as
directed by the Instructions.
8. ACCEPTANCE OF TRUSTS
The Depositary hereby accepts the trust imposed upon it hereunder and
acknowledges, declares and confirms that:
(a) it will hold the certificates representing Shares subject to the
provisions hereof;
(b) it does not and will not have any beneficial interest in the Shares
in respect of which certificates have been delivered to it pursuant to this
Agreement; and
(c) beneficial ownership of the Shares of each Company and all other
rights of
<PAGE>
ownership with respect thereto shall remain with the Shareholders of such
Company.
9. COMPENSATION
The Depositary shall be reimbursed by the Corporation for its
reasonable disbursements incurred in carrying out its obligations under this
Agreement and, in addition, shall be paid a fee by the Corporation in such
amount as may be agreed upon from time to time by the Depositary and the
Corporation. The Depositary shall be entitled from time to time to consult legal
counsel in connection with its obligations hereunder and the Depositary shall be
entitled to be reimbursed by the Corporation for the reasonable disbursements
incurred and reasonable fees charged by such counsel.
10. INDEMNITY
Except as hereinafter provided, the Corporation agrees to indemnify and
save the Depositary harmless from and against any and all claims, demands,
actions, causes of action and liabilities that may be made or commenced against
or incurred by the Depositary and that arise directly from the performance of
its obligations hereunder (except such as arise from negligence or a breach of
any duty of the Depositary). The indemnity provided in this section shall not
apply unless:
(a) as soon as is practicable after the Depositary has received notice
of any such claim, demand, action, cause of action or liability, the Depositary
gives notice thereof to each of the persons who is registered at that time as a
holder of Deposit Receipts of the register maintained by the Depositary
hereunder;
(b) the Depositary authorizes the Corporation to settle, compromise or
defend such claim, demand, action, cause of action or liability as the
Corporation, in its sole discretion, considers advisable without any
interference or prejudicial action by the Depositary; and
(c) in connection with any such settlement, compromise or defense, the
Depositary cooperates fully with the Corporation.
The Depositary shall be deemed to have received notice of a demand,
claim or proceeding when the Manager, Corporate Trust Department, of the
Depositary is notified thereof.
11. DEPOSITARY' S RESIGNATION OR REMOVAL
The Depositary may resign and discharge itself from the obligations
assumed by it hereunder by giving three months' notice in writing thereof to
each of the persons who is registered at that time as a holder of Deposit
Receipts on the register maintained by the Depositary hereunder. Mentor or
Holdings may remove the Depositary from its position as Depositary hereunder by
giving to the Depositary notice in writing to that effect signed by each of the
persons who is registered at that time as a holder of Deposit Receipt on the
register maintained by the Depositary hereunder, such
<PAGE>
removal to be effective upon the latest of
(A) THE DAY THE NOTICE IS GIVEN;
(b) if so specified in the notice, the date of the appointment of a new
depositary hereunder; and
(c) any other date specified in the notice.
The Depositary hereby agrees to execute all such transfers and other
documents and to do all such other acts and things as may reasonably be
requested by the Corporation in order that a new depositary may be substituted
hereunder for the Depositary. Upon a new depositary acceptable to the
Corporation executing and delivering a counterpart of this Agreement, or
otherwise agreeing to be bound by the provisions hereof; such new depositary
shall be deemed to be the Depositary for all purposes of this Agreement.
12. PROTECTION OF DEPOSITARY
By way of supplement to the provisions of law or of any statute for the
time being in effect, it is agreed that:
(a) the Depositary shall not incur any liability nor responsibility by
reason of any error of law or mistake of fact or by reason of any matter or
thing done or omitted to be done under or in relation to this Agreement unless
such error, mistake, matter or thing constitutes or arises from negligence, lack
of good faith or wilful or wrongful neglect or default on the part of the
Depositary; and
(b) the Depositary may act in good faith on the opinion or advice of
any lawyer, broker or other expert and shall not be responsible for any loss
occasioned by so acting, and shall incur no liability or responsibility for
deciding in good faith not to act upon any such opinion or advice.
13. CHANGE OF DEPOSITED SECURITIIE S
The parties hereto agree that the provisions of this Agreement relating
to the deposited certificates representing Shares shall apply, mutatis mutandis,
to any certificates or other instruments representing shares or securities into
which such Shares may be converted, changed, reclassified, redivided,
redesignated, subdivided or consolidated, or representing any shares or other
securities that are received by the registered holder of such Shares as a stock
dividend or distribution payable in shares or other securities or representing
any shares or other securities of any successor or continuing Company or
corporation that may be received by the registered holder of such Shares on a
reorganization, amalgamation, consolidation or merger, statutory or otherwise.
14. AMENDMENTS
<PAGE>
This Agreement may not be amended except with the approval of all of
the parties hereto from time to time, signified in writing.
15. COUNTERPARTS AND FACSIMILE
This Agreement may be executed in several counterparts, each of which
when executed by any of the parties shall be deemed to be an original, and such
counterparts shall together constitute one and the same instrument.
16. GOVERNING LAW
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE PROVINCE OF ONTARIO, AND EACH PARTY HEREBY IRREVOCABLY ATTORNS TO
THE JURISDICTION OF THE COURTS OF SUCH Province.
17. HEADINGS, SEVERABILITY, SUCCESSORS, NOTICE, NUMBER AND GENDER
AS DEFINED IN THE SHAREHOLDERS AGREEMENT TO WHICH THIS ESCROW AGREEMENT
IS ATTACHED AS Schedule C.
IN WITNESS WHEREOF THIS AGREEMENT HAS BEEN EXECUTED BY THE PARTIES ON THE 18TH
DAY OF JANUARY, 2000.
SIGNED, SEALED AND DELIVERED
BY:
JAMES N. RODGER EDWIN W. AUSTIN
JOH J. PRITCHARD JASON 14. FIGUEROA
<PAGE>
THE CORPORATE SEAL OF MENTOR INTERNET, INC.
was attached and signed by a duly authorized officer of same:
C/S
THE CORPORATE SEAL OF MENTOR HOLDINGS, INC.
was attached and signed by a duly authorized officer of same:
C/S
THE CORPORATE SEAL OF
TRUST COMPANY WAS ATTACHED
and duly signed by a duly authorized officer of same:
C/S
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET OF MENTOR ON CALL, INC. AS OF MARCH 31, 2000 AND THE RELATED
STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE THREE MONTHS THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 128
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 128
<PP&E> 26
<DEPRECIATION> 1
<TOTAL-ASSETS> 158
<CURRENT-LIABILITIES> 585
<BONDS> 0
0
0
<COMMON> 14
<OTHER-SE> (440)
<TOTAL-LIABILITY-AND-EQUITY> 158
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3595
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3595)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3595)
<EPS-BASIC> (.26)
<EPS-DILUTED> (.26)
</TABLE>
