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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
PCSupport.com, Inc.
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(Name of Small Business Issuer in its Charter)
Nevada Application Pending
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(State or other jurisdiction of incorporation or organization)
(I.R.S Employer Identification No.)
Suite 280, 4400 Dominion Street, Burnaby, British Columbia, Canada V5G 4G3
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(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number: (604) 419-4490
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Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered: Each Class is to be Registered:
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Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $0.001
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(Title of Class)
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(Title of Class)
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TABLE OF CONTENTS
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PART I.................................................................. 4
DESCRIPTION OF BUSINESS.............................................. 4
Business Development............................................... 4
Business of the Company............................................ 5
Principal Products and Services and their Markets................. 5
Market Overview................................................... 5
Market Segmentation............................................... 6
Products and Services............................................. 6
Global Replace.................................................... 6
PowerBAK Replace.................................................. 7
Phoenix Program................................................... 7
PC Support Center................................................. 8
Distribution Methods of Services................................... 10
Hardware Vendors.................................................. 10
Resellers......................................................... 10
Internet Portals.................................................. 10
StorageTek........................................................ 10
Direct Sales...................................................... 11
Web Promotion..................................................... 11
Competitive Business Conditions and the Company's Competitive
Position........................................................... 11
Online Backup Providers........................................... 11
Hardware Replacement.............................................. 12
Phoenix........................................................... 12
PC Support Center................................................. 12
Sources of Materials............................................... 14
Patents, Trademarks, Licenses, Franchises, Concessions,
Royalty Agreements, or Labor Contracts........................... 14
Regulation......................................................... 14
Research and Development........................................... 14
Employees and Contractors.......................................... 15
Risk Factors........................................................ 15
PLAN OF OPERATION........................................................ 24
DESCRIPTION OF PROPERTY.................................................. 28
Principal Business Facilities....................................... 28
Investment Policies................................................. 28
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........... 28
Security Ownership of Certain Beneficial Owners..................... 28
Changes In Control.................................................. 29
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS............. 29
Directors and Executive Officers.................................... 29
Significant Employees............................................... 31
Family Relationships................................................ 31
EXECUTIVE COMPENSATION................................................... 31
Persons Covered..................................................... 31
Compensation of Directors........................................... 31
Stock Option Plan................................................... 32
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Options Granted After Most Recently Completed Financial Year......... 32
Employment Contracts................................................. 33
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................... 33
Relationship Between the Company and Certain Directors and Officers.. 33
Management Contracts................................................ 33
Private Placement of Common Shares.................................. 33
Stock Pooling and Escrow Agreement.................................. 34
Transactions Involving Promoters of the Company...................... 34
DESCRIPTION OF SECURITIES............................................... 35
PART II................................................................... 35
MARKET PRICE FOR COMMON EQUITY AND OTHER SHAREHOLDER MATTERS............ 35
Market Information.................................................. 35
Holders............................................................. 36
Dividends........................................................... 36
LEGAL PROCEEDINGS....................................................... 36
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS........................... 36
RECENT SALES OF UNREGISTERED SECURITIES................................. 36
INDEMNIFICATION OF DIRECTORS AND OFFICERS............................... 38
PART F/S FINANCIAL........................................................ 39
PART III.................................................................. 39
INDEX TO EXHIBITS....................................................... 39
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PART I
All statements, other than statements of historical fact, included in this Form
10-SB, including without limitation the statements under "Description of
Business" and "Plan of Operation," are, or may be deemed to be, "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such forward-looking
statements involve assumptions, known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of
PCSupport.com, Inc. (the "Company"), to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements contained in this Form 10-SB. Such potential risks and
uncertainties include, without limitation, competition, economic conditions,
availability of capital, and other risk factors detailed under "Risk Factors"
and elsewhere herein. The forward-looking statements are made as of the date of
this Form 10-SB and the Company assumes no obligation to update these
statements. Therefore, readers are cautioned not to place undue reliance on
these forward-looking statements.
Unless otherwise indicated, all dollar amounts are expressed in U.S. currency
values.
ITEM 1. DESCRIPTION OF BUSINESS
a. BUSINESS DEVELOPMENT
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PCSupport.com, Inc. (the "Company") is a development stage corporation formed
under the laws of the State of Nevada on June 23, 1999 pursuant to the merger
(the "Merger") of PCSupport.com ("PCS") and Reconnaissance Technologies Inc.
("RTI"). PCS was the resulting entity from a prior merger of PCSupport.com and
Mex Trans Seafood Consulting Inc. ("Mex Trans"). Mex Trans was incorporated in
the State of Texas on February 13, 1989 under the name "Mutual Produce, Inc."
and later changed its name to "Mex Trans Seafood Consulting, Inc."
RTI was incorporated in British Columbia, Canada, on December 10, 1997 for the
purpose of engaging in the development and provision of notebook computer
support services to end users through the Internet. Prior to the Merger, PCS
(and its predecessor, Mex Trans) did not have any active business and had only
nominal assets and liabilities and was seeking to acquire a new business. In
early 1999 RTI was seeking further capital to develop its business and to merge
with a public entity to provide liquidity for its shareholders. Management of
RTI and PCS began discussions for a merger of the two companies in March 1999.
In anticipation of the Merger, Mex Trans merged on April 7, 1999 with PCS, a
Nevada corporation incorporated on that date solely for the purpose of
transferring the corporate jurisdiction of Mex Trans to Nevada. In April 1999,
in anticipation of the Merger, PCS completed a private placement of its common
shares that generated gross proceeds of approximately $950,000. The shares to
be issued in and proceeds from this private placement were placed in escrow and
released upon completion of the Merger. See "Recent Sales of Unregistered
Securities" below.
RTI and PCS entered into a formal merger agreement on May 5, 1999, and the
following transactions were carried out to complete the Merger:
1. Each of RTI and PCS obtained shareholder approval for the Merger;
2. PCS underwent a reverse split of its common stock on a 15 old shares
for one new share basis;
3. RTI transferred its governing corporate jurisdiction from British
Columbia to Wyoming; and
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4 RTI merged with PCS.
In the Merger, each shareholder of RTI received one share of the Company's
common stock (the "Common Stock") for each five shares of RTI held. Each
shareholder of PCS received one share of Common Stock for each share of PCS
held. Each holder of outstanding warrants of RTI received one warrant of the
Company for each five warrants of RTI held. (See "Market Price of and Dividend
on the Registrant's Common Equity and Other Shareholder Matters" below for a
description of outstanding warrants.)
b. BUSINESS OF THE COMPANY
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Principal Products and Services and their Markets
Market Overview
Dataquest, a computer research firm, estimates that the number of notebooks sold
annually worldwide will increase from 16.8 million in 1999 to 28.6 million in
2003 (Information Week, June 23, 1999). As notebook technology improves,
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notebooks are replacing desktops as the user's only computer.
Notebook computers are vulnerable to loss and difficult to support. Notebook
theft is increasing: Safeware, a notebook insurance company, estimates that
400,000 notebooks were stolen in 1998 (www.safeware-ins.com/losses98.html).
Further, PC Magazine estimates that, depending on the vendor, between 26% and
45% of notebook computers require repair at least once per year (PC Magazine
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Reader's Survey, June 20, 1999). Notebook users and the companies which employ
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them are vulnerable to loss of company data: Storage Technologies Corp.
estimates that notebooks are only backed up on schedule approximately 4% of the
time. Because notebooks are often used by workers while away from the office
and far from technical help, supporting notebook users presents many challenges
and has led to an emerging notebook service industry.
To the Company's knowledge, there is no effective process by which a notebook
user can recover a notebook and all of his or her data and applications quickly
while mobile. Hardware manufacturers can ship a new replacement notebook, but
without the user's data, software and settings (i.e., full image), the notebook
is not useful. Similarly, an online backup company can ship a CD with the
user's image, but the user must still repair or replace the notebook.
Desktop personal computer users also suffer from poorly performing machines. As
with notebook users, desktop users need to receive technical support in real
time. Currently, many technical help desks are available only during certain
hours, often involve long waits and poor service, and often charge a fee for
service. Many users can access support data bases provided by vendors over the
Internet, although this information is voluminous and often difficult to
navigate.
Both desktop and notebook personal computer ("PC") users also encounter other
problems that impair productivity. PC software has been steadily growing in its
size and capability, and is causing an increasing number of problems. The
software itself contains bugs within the applications. The interaction among
software, hardware, drivers, and operating systems is becoming more complex and
prone to error. As a result, computer crashes can occur, resulting in lost data
and unscheduled downtime.
A related problem is the ineffective use of the computer hard drive. Many
Internet applications typically do not release all of the space taken by
temporary files and caches for general use. Over time, the user has
progressively less hard drive space with which to work. Most users are not
aware that they have a problem, and do not know how to diagnose and correct it.
This is a particularly troublesome problem on notebooks, where hard drive space
is limited. Notebook users are at risk from unexpectedly running out of disk
space and becoming unable to use their notebooks until sufficient disk space is
recovered.
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The Company is developing and implementing a suite of products and services to
address the technical needs of PC users described above.
Market Segmentation
PC users can be segmented into three categories. Users in large corporations
typically have Management Information Systems ("MIS") departments from which to
access technical help. The MIS group sometimes provides a backup system. For
their mobile workers using notebooks, the corporation often maintains an
inventory of loaner units, configured with a standard image, to replace broken
units in an emergency. Restoring the user's data and settings, however, can
take many hours over several days. Even with this level of support, there is
significant loss of productivity from broken, stolen, or poorly performing
notebooks.
PC users in small and medium enterprises ("SME") have all of the same technical
problems, yet generally do not have an MIS department for support.
The third segment, small office - home office ("SOHO") or individual users, are
often completely on their own.
The Company is marketing to these three segments.
Products and Services
The first service, Global Replace, is an Internet-based online backup program
combined with a hardware replacement option. The backup portion is applicable
to both desktop and notebook users. The hardware replacement portion is only
available for notebook users. The second service, called Phoenix, provides a
user purchasing a new notebook with the full image, including all data,
applications, preferences, and settings, pre-loaded onto the new machine. The
third service, applicable to all PC users, is a Web-based support portal called
the PC Support Center. Retail prices for all services described herein may be
adjusted frequently in consideration of competitive forces. There can be no
assurance that pricing at any commercially viable level will be sufficient to
allow the Company to earn a profit.
Global Replace
To provide online backup, the Company in June 1998 entered into a service
supply agreement with StorageTek Canada Inc., a wholly owned subsidiary of
Storage Technology Corp (collectively "StorageTek") of Louisville, Colorado. In
March 1999, StorageTek launched PowerBAK, a secure online data service, to its
U.S. and Canadian customer base. StorageTek intends to penetrate the growing
market for support of mobile workers within its existing corporate client base.
Under the terms of the service supply agreement, StorageTek has licensed the
Company to sell run-time licenses of PowerBAK under its own brand, Global
Replace. Subscribers automatically and transparently connect to StorageTek's
data center online to backup their hard drive. In addition, StorageTek has
given the Company an exclusive opportunity to develop a hardware replacement
business tied to StorageTek's online backup service. StorageTek has agreed not
to enter the replacement business itself, nor to enter into a similar agreement
with any other company for the two-year term of the contract with the Company.
Combining the PowerBAK backup service with a hardware replacement option, the
Company has introduced its own service, Global Replace, for notebook users.
(i) Global Replace Suite
For notebook computer users, Global Replace is a full-service data protection
program. Using StorageTek's online backup technology, Global Replace allows
users to backup their full image - operating systems,
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applications, data, preferences and settings - to a secure data center.
Global Replace allows users to restore data either online or through a CD, and
also provides hardware restoration in the event that the entire notebook is
unusable. If a Global Replace customer suffers a notebook failure or loss of
use (including theft), he calls the Company's help desk. The user's full image
is restored to a notebook at the Company's operations center. After the Company
receives a security deposit, the fully functional notebook is shipped to the
user using an overnight courier company. This notebook is loaned to the user
for up to 10 business days while the original notebook is being repaired or
replaced by the user.
The Company launched the Global Replace service in the second quarter of 1999
but has not yet generated significant orders for this service. Global Replace
comes in two different packages to suit individual needs.
(ii) Global Replace - Basic
This basic package includes only the backup software. It is applicable to both
desktop and notebook users. Users pay for the amount of data stored, as follows:
Backup Volume: Monthly Retail Prices:
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Less than 25 MB total storage free
Less than 100 MB $ 7.95
Less than 200 MB $12.95
Less than 300 MB $17.95
Unlimited / Full Image $19.95
A discount of approximately 15% is available to users who pay for 12
month's service in advance.
The package includes free online data restoration for both desktop and notebook
PCs. For notebooks only, full image restoration is available from CD-ROMs and
replacement notebooks on a per-incident fee.
(iii) Global Replace - Premium
The Premium service, available only to notebook users, is available at an
introductory monthly rate of $44.95 and includes, in addition to the services
provided in the basic package, free hardware restoration with a loaned notebook,
regardless of the number of times a replacement notebook is loaned to the user,
within reason.
PowerBAK Replace
Under the terms of a licensing agreement between the Company and StorageTek,
StorageTek's PowerBak Replace incorporates the Global Replace - Premium package.
All of the fees received by StorageTek for the PowerBak Replace service will be
paid to the Company, less a 25% commission. The Company will provide all of the
hardware replacement services to the customers who purchase the PowerBAK
services.
It is the Company's understanding that StorageTek has begun to market the Global
Replace replacement option as part of its PowerBAK service, but, to the
Company's knowledge, has not generated any sales to date.
Phoenix Program
The need for increased hard drive space and faster microprocessors means
notebook users need to replace their machines frequently as the technology
improves. Upgrading to a new machine can be problematic. Users are required to
identify all of their data and programs. Common operating systems, such as
Windows
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95, 98 and NT usually come installed in the new machine, but software
applications must be re-installed from disks or CDs. In addition, it is
becoming more common for software to be downloaded from the Internet. These
files are numerous and often unrecognizable to the average user. Finding and
transferring them from one machine to another is often troublesome and time-
consuming.
Given the complexities involved in upgrading, the Company believes many users
delay the upgrade to a new machine as long as possible. The Phoenix Program is
intended to alleviate the problems involved with upgrading to a new notebook.
With the Phoenix Program, the user purchases the new notebook and ships it to
the Company. Once the new notebook is delivered to the Company, and the user has
completed a full image backup using the Global Replace software, the Company
loads the user's full image onto the new notebook, and delivers it to the user.
The Company launched the Phoenix service in the third quarter of 1999 but has
not yet generated any orders for this service. The Phoenix service is initially
being provided at $299, FOB plant.
PC Support Center
The Company is developing the PC Support Center for all PC users to provide a
service which will react to technical problems and pro-actively maintain the
user's computer to prevent problems from occurring. The Company intends the PC
Support Center to aggregate various technical solutions, such as updating
operating systems software, applications software and drivers, virus scan,
remote diagnostics and repair of configuration problems, and disk maintenance
among several possible services. Upon a user visiting the site and becoming a
subscriber, the PC Support Center will, at the subscriber's option,
automatically scan the user's computer at each visit to the site to maintain an
up-to-date personal profile of the user's hardware, peripherals, software
applications and settings. The PC Support Center software will, also at the
user's option, automatically diagnose and maintain the hard drive and advise the
user of software updates that are pertinent to the user's configuration. Such
updates will be performed automatically at the user's request. The PC Support
Center will regularly advise subscribers via email to return to the site to
maintain their PC. These maintenance and upgrade services will simplify support
for the user because of regular reminders and automatic maintenance. The PC
Support Center will also include a technical support forum where subscribers can
ask and have answered technical support questions.
Other services, such as purchase of related support products, major software
upgrades, and telephone support for problems in using applications software,
among others, will be premium services, available at the user's request.
Pursuant to an Agreement, dated June 21, 1999, the Company has contracted with
Communicate.com Inc., a strategic Internet solutions development company based
in Vancouver, British Columbia, to develop the PC Support Center Website for the
Company. Communicate.com, Inc. has estimated that the cost to the Company for
the development of the Website will be (Cdn)$262,600 to (Cdn)$303,000. Upon
completion of development, subject to the Company's acceptance, all of the work
prepared for the Company's Website by Communicate.com, Inc. will be the property
of the Company. The Company expects to launch the first version of the PC
Support Center in the fourth quarter of 1999, and to release subsequent versions
with additional functionality throughout the year 2000.
It is the Company's intent to market the PC Support Center to all three market
segments through strategic partnerships with hardware manufacturers and
distributors. The intent is that computers will be shipped from the
manufacturers with a "PC Support Center" icon on the desktop. Once the
customer is connected to the Internet, the customer is prompted to click on the
icon, which then takes him to the PC Support Center. At the site the benefits
are explained and users are encouraged to become subscribers. They are then
taken through a personal profile set up procedure that activates the features of
PC Support Center. The key fundamental technology features, the dynamics of the
site, as well as the email notifications that are sent to
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update the customer on product information, drivers, viruses and industry news
are intended to keep the user returning regularly to the site.
The Company intends to offer partnerships in the PC Support Center initially to
hardware manufacturers, and subsequently, to peripheral manufacturers and
software publishers. Each partner will vend in its own support knowledge base
and in return will have access to all of the other knowledge bases in the PC
Support Center. The Company believes that the partners will benefit from better
support to their customers as follows:
(i) Improved Customer Relationship
By providing a customized, comprehensive, and easy-to-use site at which users'
computers can be easily maintained, and where many problems in using
applications can be more easily solved, fewer problems are likely to occur, and
will be more easily solved. Customers will become more productive in the use of
their computers. Customers will become more likely to recommend the Company to
others and to purchase additional products and services from the vendor.
(ii) Reduced Costs
Since many support problems will now be solved through the PC Support Center,
providers will significantly reduce their internal support costs.
(iii) Tech Support Center Becomes More Productive
The PC Support Center will reduce the involvement of trained technicians in
solving many problems, and reduce the time required to solve problems when their
help is required. The technicians will become more productive.
(iv) Comprehensive Database of Customer Profiles for Marketing Purposes
The PC Support Center will continuously update a database on the subscribers.
This provides an opportunity to research market trends and future product
features.
It is the Company's intent to offer as many services as possible to the
subscribers for free, as this reflects the current competitive environment in
Internet commerce and services. The Company intends to earn revenues in any or
all of the following ways:
(i) Commissioning Fees
The Company may private-label the PC Support Center for its partners so that the
partners can offer the services under the partners' own brand names. The
Company will charge a commissioning fee for such customization.
(ii) Bundling Fees
The Company will negotiate with its hardware vendor partners to include an icon
for the PC Support Center on the desktops of all computers shipped. The Company
intends to earn a bundling fee from each unit shipped.
(iii) Subscription Fees
In lieu of a bundling fee, the Company may negotiate with its hardware vendor
partners and other original
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equipment manufacturer ("OEM") partners who integrate PCs, internet access and
other related services with the PC Support Center, a monthly fee for providing
the PC Support Center to each end-user to whom a PC is shipped.
(iv) Premium Services
Many premium services, such as purchase of related support products, major
software upgrades, and telephone support for problems in using applications
software, will be available for a fee, which the Company will share with its
partners.
(v) Advertising
The PC Support Center will host advertisements from which the Company will earn
fees.
(vi) Sale of Summary Demographics
The PC Support Center will continuously update a data base on its subscribers
documenting many aspects of their computer usage characteristics and personal
demographics. The Company intends to earn revenue from the sale of summary
demographic data that it generates.
As the Company has not yet launched the PC Support Center, there can be no
assurance that the Company will be able to negotiate any agreements that will
generate profits for the Company. Failure to successfully negotiate such
partnerships will have a material adverse impact on the Company's business.
Distribution Methods of Services
The Company intends to employ a distribution strategy that targets the corporate
user, the SME users, and the SOHO users, with the goal of positioning itself as
the leading provider of online computer technical support services.
The Company intends to employ the following methods to distribute its suite of
services:
Hardware Vendors
The Company is negotiating with several large personal computer manufacturers to
bundle the Company's services with the sale of hardware. The Company intends to
expand its sales activities to offer Global Replace, Phoenix, and the PC Support
Center to additional hardware vendors. There can be no guarantee that any
agreements will be reached with any hardware manufacturer.
Resellers
There are several large international resellers and systems integrators of
computer services whose market focus is large corporations. Each has long-
standing relationships with its current client base and is constantly looking
for new products and services. The primary Company products of interest to
resellers are Global Replace and the Phoenix Program.
In September 1999, the Company entered into an agreement with one such systems
integrator, Unisys of Canada Inc. ("Unisys"), an international computer service
company. Pursuant to the terms of the September 1999 agreement, Unisys will
market the Global Replace Suite under its own brand name to Unisys's corporate
customers. Unisys will pay the Company a fee equal to 75% of the fee charged by
Unisys to its customers.
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In October 1999, the Company entered into a letter of intent with Go Figure
Technology, Inc. ("Go Figure") in which the Company agreed to provide a
customized support portal for customers in the Go Figure network and will
receive an upfront payment with each computer shipped. During the next 12
months, Go Figure agreed to use best efforts to ship at least one million PCs
that will provide access to the PC Support Center. While Go Figure has not yet
received firm commitment orders from its clients, it is actively discussing such
orders with several of its clients and anticipates receiving a sufficient level
of orders to generate significant payments to the Company over the next twelve
months.
The Company intends to expand its marketing activities to include other large
international resellers. There can be no guarantee that any further agreements
will be reached with any resellers.
Internet Portals
Internet portals provide information online to a targeted demographic audience,
such as the mobile notebook user. The Company is currently negotiating a letter
of intent with one such portal to provide its PC Support Center services to the
portal's subscribers. There can be no guarantee that any agreements will be
reached with any Internet portal.
StorageTek
The Company has reached an agreement with StorageTek whereby StorageTek will
integrate the Company's hardware replacement service into the PowerBAK online
backup service. StorageTek has branded the replacement service, PowerBAK
Replace, and will provide it as a standard option through its existing sales
channels.
Direct Sales
The Company intends to develop a small direct sales force to market its services
directly to a small number of Fortune 500 companies.
Web Promotion
When the PC Support Center is launched in the fourth quarter of 1999, Global
Replace and the Phoenix Program will be available for purchase on the PC Support
Center Web page. The Company will also promote its services over the Web.
Competitive Business Conditions and the Company's Competitive Position
The Company is a development stage company with no history of earnings. While
some of the Company's services are unique, there are no substantial barriers to
entering into the field of PC services, and the Company expects competition to
intensify. Competitors may be able to provide services similar to the Company's
services more efficiently, and many of the Company's potential competitors have
substantially greater financial, marketing, service, customer support and
research and development resources than the Company. There can be no assurance
that the Company will be able to develop a market for any of its services
against these competitors.
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Online Backup Providers
There are approximately ten established online backup software manufacturers who
market their technology using a variety of channels, including direct sales,
licensing to resellers, and bundling by OEMs and hardware manufacturers. The
most widely used software is from "Backup, Connected Corp (Connected Online
Backup), and Veritas. In 1999, Veritas completed the acquisition of Telebackup.
Telebackup had previously licensed its backup software to StorageTek, which
markets it under its brand-name PowerBAK. StorageTek, in turn, licensed PowerBAK
to the Company, which markets it under its brand name Global Replace. Other on
line backup competitors include Atrieva (FileZonePlus), NovaStor (NovaNet-Web),
Safeguard (Interactive Backup), Stac (Replica), Vytalnet (VytalVault), Sterling
Software, and Divya (BackOnline).
Although each software manufacturer offers a slightly different product, most
include variations of the following features: brief incremental backups after a
longer initial session, DES or password encryption, data compression
technologies, Explorer-type interface for file selection, automatically
scheduled backup sessions, libraries of common applications on the storage
server, retrieval of any version of any file, and a focus on the backup of data
files only. Current trends in the industry indicate that new features will
likely become standard within a short time. These include a full-image backup
of the subscriber's applications and person configurations, as well as a feature
that initiates and runs a backup session automatically when the user connects to
the Internet.
Currently, only Telebackup and its licensees - Veritas and StorageTek (and its
sublicensee, PCSupport.com) - can provide a full image backup, but other
competitors are expected to introduce this important feature in the future.
Current industry standards on the service side are a monthly fee ranging from
$10 to $25 for online backup and restoration, and the opportunity to order a CD
for a per-incident fee of about $40 or $50 when there is need to restore larger
volumes of data. Generally speaking, online backup is offered as a stand alone
service, with no other value-added features. Certain hardware vendors (e.g.
Compaq) and OEMs (e.g. Intel's AnswerExpress) also offer online backup as part
of a suite of services for computer users.
The Company believes that there are currently no other service providers who
offer tiered service packages or temporary laptop replacement programs such as
Global Replace.
Most of the service providers have targeted individuals and SOHO end users.
Only a few possess the scalability and storage space required for accommodating
large corporate customers or offering enterprise-wide solutions. Some of the
software manufacturers (e.g. Connected and Stac) produce intranet based versions
that include dedicated servers and client licenses.
Hardware Replacement
Currently, the Company believes that there are no competitors who offer a
service to replace broken notebooks with another notebook loaded with the user's
full image. Computer repair companies, such as Inacom, can provide a
replacement notebook while the user's notebook is being repaired, but such
replacement notebook will not be loaded with the customer's image. Similarly,
the hardware manufacturers themselves offer warranty programs in which a broken
notebook can be replaced, but such replacement will not be loaded with the
customer's image.
Phoenix
The Company believes that the Phoenix service is unique. The extended warranties
offered by hardware vendors can be considered as partial competitors, but even
though they may reload common applications
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before shipping the unit back to the customer, they are not able to reconstruct
personal settings and configurations or data files. Regular backup is still the
responsibility of the user.
Repair services such as Inacom can repair and quickly return the notebook to its
owner, but cannot install the user's data and personal settings. Notebook
replacement has to be done in conjunction with online backup in order for the
recovery of a full image. Accordingly, the Phoenix program carries a distinct
advantage over depot and manufacturer repair services.
The chief source of competition for the Phoenix program comes from large
corporations that set up in-house solutions through network-based backups and by
carrying an inventory of spare laptops. Such corporations can replace a
notebook quickly with a standard set of applications, but generally are unable
to reconstruct personal settings and configurations or data files.
PC Support Center
There are many sellers of separate computer support and service components. The
Company is the first to integrate several support technologies and implement a
pro-active service such as the PC Support Center which is independent of any
vendor of PCs or software. Macafee.com and Symantec (Norton Web Services) have
introduced support portals, but such competitive portals are closely tied to the
software products marketed by those companies. Competition also exists from
firms that are selling the individual features that will be aggregated to form
the PC Support Center. These companies include support software manufacturers,
utility providers, and hardware vendors.
Support software and services, which will likely be the most significant
component of the PC Support Center, are sold in competition with a number of
companies producing support software that feature extensive knowledge bases and
remote diagnoses and fixes. The prominent competitors in this group include
Motive Communications, Computer Support Technologies, and Support.com. Other
firms include Aveo Inc., Full Circle Software, and INFACT Technologies.
Companies that develop and maintain support knowledge bases include ServiceWare
and KnowledgeBroker.
Significant competition is expected from utilities manufacturers and
distributors. The PC Support Center will include diagnostic, automatic upgrades
and driver updates, disk maintenance, and virus protection software, segments
which are already well-served in the computer services marketplace. Competitors
are found in established brands such as Macafee.com, which recently purchased
Oil Change from Cybermedia, Symantec's Norton Web, ZDNet, and Catch*Up (TM) from
Manageable Software.
Further competition will come from Internet sites offering free software
downloads. Websites such as SoftSeek, ZDNet, and Ziff-Davis continually obtain
and review the latest shareware, publish rankings, and provide free copies for
anyone to use.
The technical support forum part of the PC Support Center will encounter
competition from companies providing online support tips such as Roadnews,
Ojatex, TipWorld, Hardware Central, Experts Exchange, and Newbie-U.
Hardware and software vendors are also potential competitors. Notebook computer
manufacturers such as Compaq and IBM already bundle support services with their
product, as do other large firms in the industry such as Intel and Microsoft.
In the future, the Company intends to add technical helpdesk support to the PC
Support Center. There are many companies offering online helpdesks including
MyHelpDesk, Microsoft, PC Guide, PC Mechanic, and NoWonder.
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Sources of Materials
The only significant materials which the Company requires to carry on its
operations are compact disks (also known as CD's) and notebook computers. CD's
are readily available from a variety of competing distributors. Notebook
computers will initially be leased by the Company, and are also available from a
variety of sources.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements, or
Labor Contracts
The Company does not hold any patents or trademarks, and does not intend to
apply for any patents or trademarks. The Company currently holds the following
domain names: PCSUPPORT.com, GLOBALREPLACE.com, PCREPLACE.com, PDASUPPORT.com,
PCSUPPORTCENTER.com, PCSUPPORTCENTER.net, PCRESTORE.com and RECON-TECH.com.
Domain names are obtained by applying to Network Solutions, Inc., or one of a
small number of other companies competing to register domain names, and paying a
fee to register each unique domain name. While the Company has registered the
foregoing domain names, there can be no assurance that the Company will be able
to maintain these names in the future, or register further domain names, should
the Company so require. The loss of the domain names could result in confusion
for the Company's customers, and a resultant loss of good will. In particular,
the loss of the domain name PCSUPPORT.COM would have a material adverse impact
on the Company's business.
There can be no assurance that third parties will not bring claims of copyright,
patent or trademark infringement against the Company or claim that certain of
the Company's products, technology, processes or features violate the patent
rights or other intellectual property rights of others. There can be no
assurance that third parties will not claim that the Company has misappropriated
their creative ideas or formats or otherwise infringed upon their proprietary
rights. Any claims of infringement, with or without merit, could be time
consuming to defend, result in costly litigation, divert management attention,
or require the Company to enter into costly royalty or licensing arrangements to
enable the Company to use important technologies or methods, any of which could
have a material adverse effect on the Company's business, financial condition or
operating results.
Regulation
The Company is not currently subject to direct regulation by any domestic or
foreign governmental agency, other than regulation applicable to businesses
generally. However, due to the increasing popularity and use of the Internet,
it is possible that a number of laws and regulations may be adopted with respect
to the Internet or covering issues such as user privacy, pricing, content,
copyrights, distribution and characteristics and quality of products and
services. Such new regulations would require the Company to expend significant
resources to understand and comply with such regulations, which may have a
material adverse impact on the Company's business.
The Company does not believe that current regulations governing the Internet and
computer service industry will have a material effect on its current operations.
However, various federal and state agencies may propose new legislation that may
adversely affect the Company's business, financial condition and results of
operations.
Research and Development
From inception until June 30, 1998 and for the year ended June 30, 1999, the
Company and its predecessor, RTI, expended approximately $2,814 and $17,646,
respectively, on the development of its services. The
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Company expects to significantly increase research and development expenditures
during the current fiscal year ending June 30, 2000.
Employees and Contractors
The Company currently has 5 full-time employees, 3 full-time contractors and 1
part-time contractor employed as follows:
Full-Time Part-Time
Employees Contractors Contractors
--------- ----------- -----------
Administration 2 2 1
Research and Development - 1 -
Marketing 1 - -
Technical Support 2 - -
c. RISK FACTORS
------------
The Company's operations and its securities are subject to a number of risks,
including those described below. If any of the following risks actually occur,
the business, financial condition or operating results of the Company and the
trading price or value of its securities could be materially adversely affected.
Limited Operating History
The Company's limited operating history makes it difficult to evaluate its
current business and prospects or to accurately predict its future revenue or
results of operations. The Company's revenue and income potential are unproven,
and its business model is constantly evolving. Because the Internet is
constantly changing, the Company may need to modify its business model to adapt
to these changes. Companies in early stages of development, particularly
companies in new and rapidly evolving Internet industry segments, are generally
more vulnerable to risks, uncertainties, expenses and difficulties than more
established companies.
New and Unproven Business Model
The Company's model for conducting business and generating revenue is new and
unproven. The Company's success will depend primarily on its ability to
generate revenue from multiple sources, including:
. Subscriptions for Services
. Commissions On the Sale of its Own Related Products Through its Web Site
. Commissions On the Sale of Third Parties' Related Products Through its Web
Site
. Advertising
. Customization Fees
. Sale of Summary Demographic Information
As the market for the Company's services is new and evolving, it is difficult to
predict the size of the market, its future rate of growth, if any, or the level
of prices the market will pay for the Company's services. The Company is not
certain that its business model will be successful or that it can generate
revenue growth or be profitable. There can be no assurance that any increase
in marketing and sales efforts will result in a larger market or increase in
market acceptance for the Company's services. If markets for the Company's
services develop more slowly than expected or become saturated with competitors,
or the Company's services do not achieve or sustain market acceptance, the
Company will be unlikely to be able to successfully operate its business.
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History of Operating Losses and Anticipated Losses and Negative Cash Flow
for the Foreseeable Future
To date, the Company has incurred operating losses and negative cash flow. The
Company expects its operating losses and negative cash flow to continue for the
foreseeable future and to increase significantly from current levels as the
Company significantly increases its expenditures for sales and marketing,
content development, and technology and infrastructure development to enhance
its business. With increased on-going operating expenses, the Company will need
to generate significant revenue to achieve profitability. Consequently, it is
possible that the Company may never achieve profitability, and even if it does
achieve profitability, the Company may not sustain or increase profitability on
a quarterly or annual basis in the future. If the Company does not achieve or
sustain profitability in the future, the Company may be unable to continue its
operations.
Immediate Need for Additional Capital
The Company has an immediate need for additional working capital in order to
maintain its current operations and to proceed with its business plan. The
Company does not currently have any commitment from any third party to provide
financing and may be unable to obtain financing on reasonable terms or at all.
Furthermore, if the Company raises additional working capital through equity,
its shareholders will experience dilution. If the Company is unable to raise
additional financing when needed, it may be unable to grow or maintain its then
current level of business operations.
The Company Does Not Have a Fully Functioning Web Site
The Company's business plan is dependent upon its ability to develop and operate
a fully-functional Web site to deliver services and online technical support for
PC users. The Company does not currently operate such a fully functional Web
site. The Company's Web site is currently limited to corporate and marketing
information. No assurance can be given that the Company will be able to
complete the development of its Web site. If the Company is able to complete
this development, no assurance can be given that the Web site will function in
the manner described in this registration statement, or that its function will
be attractive to prospective customers.
Reliance on Agreement with StorageTek
At present, a significant portion of the Company's operations are dependent upon
StorageTek, an unrelated third party. Pursuant to a service supply agreement,
StorageTek provides the Company with the online backup portion of the Company's
operations through access to StorageTek's existing operations and facilities.
StorageTek has also agreed not to compete with the Company or to supply any
direct competitor during the term of the service supply agreement. StorageTek
licenses the core backup technology from another unrelated third party,
Telebackup Systems Inc. ("Telebackup"). At the present time, the Company does
not intend to develop or operate its own online backup service, nor does it have
an agreement with another party to provide a similar service. Accordingly, the
successful and continued operation of the service supply arrangement with
StorageTek (which, in turn, is dependent upon the licensing agreement between
StorageTek and Telebackup), including the covenant by StorageTek not to compete
with the Company or supply any direct competitor, is essential to the operations
of the Company. The term of the Company's service supply agreement with
StorageTek ends in June 2000. There can be no assurance that the parties will
agree to extend or renew the service supply agreement. Any difficulties with,
failure to extend or renew, or termination of, the existing arrangements with
StorageTek would materially adversely affect the Company's business, financial
condition and operating results.
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Dependence on Other Outside Agents and Distributors
The Company's success will also depend, to a significant extent, upon the
ability to develop strategic alliances and a timely and multi-channel
distribution system based on independent third parties and distributors.
Furthermore, the initial market penetration for the Company's products and
services will depend heavily on the sales agents of third parties and the
quality of their relationships with their current and future customers. There
can be no assurance that such alliances will develop or that they will prove
successful over the course of the Company's future operations.
Control of Rapid Growth
The Company expects to significantly expand operations to address potential
growth in its customer bases, the breadth of its service offerings, and other
opportunities. The Company expects that this expansion will strain its
management, operations, systems and financial resources. To manage its recent
growth and any future growth of its operations and personnel, the Company must
improve and effectively utilize its existing operational, management, marketing
and financial systems and successfully recruit, hire, train and manage personnel
and maintain close coordination among its technical, finance, marketing, sales
and production staffs. The Company will need to hire additional personnel in
all areas during 2000. In addition, the Company may also need to increase the
capacity of its software, hardware and telecommunications systems on short
notice, and will need to manage an increasing number of complex relationships
with users, strategic partners, advertisers and other third parties. The
failure to manage this growth could disrupt the Company's operations and
ultimately prevent the Company from generating the revenue it expects.
The Company has not yet deployed its services on a mass basis, and has not yet
tested its ability to provide its services on a mass basis. There can be no
assurance that the software platforms upon which the Company's services operate
will be able to handle the volume of information necessary to meet the Company's
operating requirements. The failure of those software platforms to handle the
necessary volume of information would seriously affect the Company's business
and results of operations.
Dependence On Key Personnel
The future success of the Company depends to a significant extent on the
continued services of senior management, including Michael McLean, Steven
Macbeth, David Rowat, and Clifford Rowlands. The Company has consulting
contracts with companies owned by Messrs. McLean, Macbeth and Rowat pursuant to
which such companies have agreed to make these individuals available to the
Company on a full-time basis. However, these consulting agreements may be
terminated upon 60 days notice in the case of Messrs. McLean and Macbeth, and
immediately upon notice in the case of Mr. Rowat. The Company has an employment
contract with Mr. Rowlands, but this contract does not require him to remain
with the Company for any particular period of time. The loss of any of these
senior managers would likely have an adverse effect on the Company's business.
Competition for personnel throughout the industry is intense and the Company may
be unable to retain its current key employees or attract, integrate or retain
other highly qualified employees in the future. If the Company does not succeed
in attracting new personnel or retaining and motivating its current personnel,
its business could be materially adversely affected.
The Market is Highly Competitive and the Company May Not Be Able to Compete
Successfully Against Its Current and Future Competitors
The market for PC support services through the Internet is a new and highly
competitive market which is subject to rapid change. The Company expects
competition in the market to increase because there are few barriers to entry.
The Company faces competitive pressures from numerous actual and potential
competitors.
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Competition is likely to increase significantly as new companies enter the
market and current competitors expand their services. Many of the Company's
current and potential competitors have substantial competitive advantages,
including:
. longer operating histories
. significantly greater financial, technical and marketing
resources
. greater brand name recognition
. larger existing customer bases
These competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements and devote greater resources
to develop, promote and sell their products or services. Services offered by
existing and potential competitors may be perceived by users or advertisers as
being superior to the Company's. In addition, increased competition could result
in reduced subscriber fees, advertising rates and margins and loss of market
share, any of which could harm the Company's business.
Brand Recognition
To attract users the Company must develop a brand identity and increase public
awareness of its Web site and the services it offers. To increase brand
awareness, traffic and revenue, the Company intends, to the extent it has
adequate financial and other resources to do so, to substantially increase its
offline and online advertising and promotional efforts. The Company's marketing
activities may, however, not result in increased revenue and, even if they do,
any increased revenue may not offset the expenses incurred in building brand
recognition. Moreover, despite these efforts the Company may be unable to
increase public awareness of its brands, which would have an adverse effect on
the results of operations of the Company.
Technological Change
The technical features of StorageTek's PowerBak online backup software, the
development of which the Company does not control, will in large part determine
the speed and accuracy, and hence marketability, of the Company's online backup
service. There can be no assurance that current competitors or new market
entrants will not succeed in developing and introducing new or enhanced backup
systems having technologies and features superior to, or more effective than,
any technologies which have been or are being developed by the Company,
StorageTek or Telebackup, rendering the Company's products and services obsolete
or less marketable.
The market for Internet products and services is characterized by rapid change,
evolving industry standards and frequent introductions of new technological
developments. These new standards and developments could make the Company's
existing or future products or services obsolete. Keeping pace with
introduction of new standards and technological developments could result in
significant additional costs or prove difficult or impossible. The failure to
keep pace with these changes and to continue to enhance and improve the
responsiveness, functionality and features of the Company's services could harm
the Company's ability to attract and retain users. Among other things, the
Company may need to enhance its existing services or license or develop new
services or technologies.
In addition, personal computers, operating systems software, and applications
software are constantly improving. Computer manufacturers and software
developers may develop more robust technologies for their products which could
render the Company's services obsolete or reduce the demand for the Company's
services below the level required to profitably support the Company's service.
Accordingly, the ability of the Company to compete will be dependent on the
timely enhancement of its existing products as well as the development of future
products. There can be no assurance that StorageTek or Telebackup, and hence
the Company, will be able to keep pace with technological developments, or that
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<PAGE>
its products will not become obsolete. Technological obsolescence of the
existing PowerBak technology remains a possibility, which would have a material
adverse affect on the Company's operations.
Intellectual Property Protection
The Company may be unable to acquire or maintain Web domain names in the United
States and other countries in which the Company may conduct business. The
Company currently holds various relevant domain names, including PCSUPPORT.com,
GLOBALREPLACE.com, PCREPLACE.com, PDASUPPORT.com, PCSUPPORTCENTER.com,
PCSUPPORTCENTER.net, PCRESTORE.com, and RECON-TECH.com. The acquisition and
maintenance of domain names generally is regulated by governmental agencies and
their designees and is subject to change. The relationship between regulations
governing domain names and laws protecting trademarks and similar proprietary
rights is unclear. Therefore, the Company could be unable to prevent third
parties from acquiring or using domain names that infringe or otherwise decrease
the value of its brand name and other proprietary rights.
Also, third parties may assert trademark, copyright, patent and other types of
infringement or unfair competition claims against the Company. If forced to
defend against any such claims, whether they are with or without merit or are
determined in the Company's favor, then the Company may face costly litigation,
diversion of technical and management personnel, or product shipment delays. As
a result of such a dispute, the Company may have to develop non-infringing
technology or enter into royalty or licensing agreements. Such royalty or
licensing agreements, if required, may be unavailable on terms acceptable to the
Company, or at all. If there is a successful claim of product infringement
against the Company and the Company is unable to develop non-infringing
technology or license the infringed or similar technology on a timely basis, it
could harm business.
The Company's success will depend in part on StorageTek's and Telebackup's
ability to obtain and enforce intellectual property protection for their back-up
technology in the United States, Canada and other countries. In addition, the
Company relies on other third parties to provide services enabling its
operations. The Company could become subject to infringement actions by third
parties based upon the use of intellectual property provided by third-party
providers. It is also possible that the Company could become subject to
infringement actions based upon the content licensed from third parties. Any
such claims or disputes could subject the Company to costly litigation and the
diversion of its financial resources and technical and management personnel.
Further, if efforts to enforce the Company's intellectual property rights are
unsuccessful or if claims by third parties against the Company are successful,
the Company may be required to pay financial damages or alter its business
practices.
The Company relies on confidentiality, non-disclosure and non-competition
arrangements with its employees, representatives and other entities engaged in
joint product or business development with the Company, and expects to continue
to enter into such agreements with such persons. There can be no assurance that
these agreements will provide meaningful protection to the Company. There can
be no assurance that other companies will not acquire and use information which
the Company considers to be proprietary.
Year 2000 Risks
The risks posed by Year 2000 issues could adversely affect the Company's
business in a number of ways. Although the Company believes that its internal
systems are Year 2000 compliant, the Company relies on a number of third parties
(in particular, StorageTek) to support and operate its Web site and provide its
services. In addition, the Company's strategic partners depend on their own
information technology systems and on the systems of their vendors. Failures or
interruptions of the Company's systems or those of third
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parties because of Year 2000 problems could seriously damage the Company's
business and the Company's relationships with its content, distribution and
technology providers, advertisers and subscribers. Failures, interruptions or
other service problems due to Year 2000 could result in lost revenue, increased
operating costs and loss of significant user traffic. Governmental agencies,
public utilities, Internet service providers and others that the Company relies
upon on or that its customers rely on and which the Company does not control may
not be Year 2000 compliant. This could result in systemic failures beyond the
Company's control, such as a prolonged Internet, telecommunications or
electrical failure, and prevent the Company from providing its services. See
"Plan of Operation --Year 2000 Compliance."
System Disruptions
The Company's ability to attract and retain subscribers depends on the
performance, reliability and availability of its services and network
infrastructure. The Company may experience periodic service interruptions
caused by temporary problems in the Company's own systems or software or in the
systems or software of third parties upon whom the Company relies on to provide
service or support. The maintenance and operation of the Company's back-up
service is dependent upon StorageTek. Fire, floods, earthquakes, power loss,
telecommunications failures, break-ins and similar events could damage these
systems and interrupt the Company's services. Computer viruses, electronic
break-ins or other similar disruptive events also could disrupt the Company's
services. System disruptions could result in the unavailability or slower
response times of the Company's Web site, which would lower the quality of
customers' experience. Service disruptions could adversely affect the Company's
revenue and, if they were prolonged, would seriously harm the Company's business
and reputation. The Company does not carry business interruption insurance to
compensate for losses that may occur as a result of these interruptions. In
addition, under the Company's service supply agreement with StorageTek,
StorageTek is not liable for any consequential damage or loss it may cause to
the Company's business due to the failure of any of StorageTek's systems, and,
accordingly, the Company will be unable to seek reimbursement from StorageTek
for any such damage or loss. In addition, the Company's customers will be
dependent on Internet service providers and other Web site operators for access
to the Company's Web site. These providers and operators have experienced
significant outages in the past, and could experience outages, delays and other
difficulties due to system failures unrelated to the Company's systems.
Moreover, the Internet network infrastructure may not be able to support
continued growth. Any of these problems could adversely affect the Company's
business.
Failure of Online Security Measures
The Company's relationship with its customers would be adversely affected if the
security measures that the Company uses to protect their personal information
are ineffective. The Company cannot predict whether events or developments will
result in a compromise or breach of the technology the Company uses to protect a
customer's personal information.
The infrastructure relating to the Company's services is vulnerable to
unauthorized access, physical or electronic computer break-ins, computer viruses
and other disruptive problems. Internet service providers have experienced, and
may continue to experience, interruptions in service as a result of the
accidental or intentional actions of Internet users, current and former
employees and others. Anyone who is able to circumvent the Company's security
measures could misappropriate proprietary information or cause interruptions in
the Company's operations. Security breaches relating to the Company's
activities or the activities of third-party contractors that involve the storage
and transmission of proprietary information could damage the reputation of the
Company and the Company's relationship with its subscribers and strategic
partners. The Company could be liable to its subscribers for the damages caused
by such breaches or it could incur substantial costs as a result of defending
claims for those damages. The Company may need to expend significant capital
and other resources to protect against such security breaches or to address
problems caused
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by such breaches. Security measures taken by the Company may not prevent
disruptions or security breaches.
Development and Maintenance of the Internet and the Availability of
Increased Bandwidth to Users
The success of the Company's business will rely on the continued improvement of
the Internet as a convenient means of consumer interaction and commerce. The
Company's business will depend on the ability of its customers to use its Web
site without significant delays or aggravation that may be associated with
decreased availability of Internet bandwidth and access to the Company's Web
site. This will depend upon the maintenance of a reliable network with the
necessary speed, data capacity and security, as well as timely development of
complementary products, such as high speed modems, for providing reliable
Internet access and services. The failure of the Internet to achieve these goals
may reduce the Company's ability to generate significant revenue.
The Company's penetration of a broader consumer market will depend, in part, on
continued proliferation of high speed Internet access. The Internet has
experienced, and is likely to continue to experience, significant growth in the
numbers of users and amount of traffic. As the Internet continues to experience
increased numbers of users, increased frequency of use and increased bandwidth
requirements, the Internet infrastructure may be unable to support the demands
placed on it. In addition, increased users or bandwidth requirements may harm
the performance of the Internet. The Internet has experienced a variety of
outages and other delays and it could face outages and delays in the future.
These outages and delays could reduce the level of Internet usage as well as the
level of traffic, and could result in the Internet becoming an inconvenient or
uneconomical source of products and services which would cause its revenue to
decrease. The infrastructure and complementary products or services necessary
to make the Internet a viable commercial marketplace for the long term may not
be developed successfully or in a timely manner. Even if these products or
services are developed, the Internet may not become a viable commercial
marketplace for the products or services that the Company offers.
The Company May Need to Change the Manner in Which it Conducts its Business
if Government Regulation Increases or Changes
There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. Laws and regulations may be adopted
in the future, however, that address issues such as user privacy, pricing,
taxation, content, copyrights, distribution, security, and the quality of
products and services. For example, the Telecommunications Act of 1996 sought
to prohibit transmitting certain types of information and content over the Web.
Several telecommunications companies have petitioned the Federal Communications
Commission to regulate Internet service providers and online services providers
in a manner similar to long distance telephone carriers and to impose access
fees on these companies. Any imposition of access fees could increase the cost
of transmitting data over the Internet. In addition, the growth and development
of the market for online commerce may lead to more stringent consumer protection
laws, both in the United States and abroad, that may impose additional burdens
on the Company. The United States Congress recently enacted Internet laws
regarding children's privacy, copyrights, taxation and the transmission of
sexually explicit material. The law of the Internet, however, remains largely
unsettled, even in areas where there has been some legislative action.
Moreover, it may take years to determine the extent to which existing laws
relating to issues such as property ownership, libel and personal privacy are
applicable to the Web. Any new, or modifications to existing, laws or
regulations relating to the Web could adversely affect the Company's business.
If one or more states or any foreign country successfully asserts that the
Company should collect sales or other taxes on the provision of its services,
the Company's net sales and results of operations could be harmed. The Company
does not currently collect sales or other similar taxes the provision of its
services in any state. However, one or more states may seek to impose sales tax
collection obligations on companies
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which engage in or facilitate the provision of services on the Internet. A
number of proposals have been made at the state and local level that would
impose additional taxes on the sale of products and services through the
Internet. Such proposals, if adopted, could substantially impair the growth of
electronic commerce and could adversely affect the Company's opportunity to
derive financial benefit from the provision of its services. Moreover, if any
state or foreign country were to successfully assert that the Company should
collect sales or other taxes on the provision of its services, the Company's
results of operations could be adversely affected.
Legislation limiting the ability of the states to impose taxes on Internet-based
transactions has been enacted by Congress. However, this legislation, known as
the Internet Tax Freedom Act of 1998, imposes only a three-year moratorium
ending on October 21, 2001 on state and local taxes on electronic commerce where
such taxes are discriminatory and on Internet access unless such taxes were
generally imposed and actually enforced before October 1, 1998. Failure to renew
this legislation would allow various states to impose taxes on Internet-based
commerce.
Operating Results May Prove Unpredictable, and May Fluctuate Significantly
The Company's operating results are likely to fluctuate significantly in the
future due to a variety of factors, many of which are outside of the Company's
control. Because the Company's operating results may be volatile and difficult
to predict, in the future the operating results may fall below the expectations
of securities analysts and investors. In this event, the trading price of the
Common Stock may fall significantly. Factors that may cause operating results to
fluctuate significantly include the following:
. fluctuations in the levels of user visits to the Company's Web site
and the amount of time that users spend on the Web site
. new Web sites, services or products introduced by the Company or by
its competitors
. the timing and uncertainty of advertising sales cycles and seasonal
declines in advertising sales
. general economic conditions, as well as economic conditions specific
to users of the Company's services
Common Stock Price May Be Volatile
The market prices of securities of Internet and technology companies are
extremely volatile and sometimes reach unsustainable levels that bear no
relationship to the past or present operating performance of such companies.
Factors that may contribute to the volatility of the trading price of the Common
Stock include, among others:
. the Company's quarterly results of operations
. the variance between the Company's actual quarterly results of
operations and predictions by stock analysts
. financial predictions and recommendations by stock analysts concerning
Internet companies and companies competing in the Company's market in
general, and concerning the Company in particular
. public announcements of technical innovations relating to the
Company's business, new
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new products or services by the Company or its competitors,
or acquisitions or strategic alliances by the Company or its
competitors
. public reports concerning the Company's services or those of its
competitors
. the operating and stock price performance of other companies that
investors or stock analysts may deem comparable to the Company
In addition to the foregoing factors, the trading prices for equity securities
in the stock market in general, and of Internet-related companies in particular,
have been subject to wide fluctuations that may be unrelated to the operating
performance of the particular company affected by such fluctuations.
Consequently, broad market fluctuations may have an adverse effect on the
trading price of the Common Stock, regardless of the Company's results of
operations.
Limited Market for the Common Stock
Although the Common Stock is quoted on the OTC Electronic Bulletin Board, there
is only a limited market for the Common Stock, and there can be no assurance
that this market will be maintained or broadened. The market price for shares
of Common Stock is likely to be very volatile, and numerous factors beyond the
Company's control may have a significant effect. On January 4, 1999, the
Securities and Exchange Commission approved NASD rule amendments requiring
companies to report their current financial information to the Securities and
Exchange Commission as a condition to continuing to have their securities quoted
on the OTC Electronic Bulletin Board. By registering under the Securities
Exchange Act of 1934 by no later than February 2000, the Company will be
eligible to retain its quotation on the OTC Electronic Bulletin Board. However,
in the event that the Company does not meet the February 2000 registration
deadline, or thereafter loses the status of a "reporting issuer," any future
quotation of the Common Stock on the OTC Electronic Bulletin Board will be
jeopardized.
Substantial Sales of Common Stock Could Cause Stock Price to Fall
As of October 4, 1999, the Company had outstanding 6,073,969 shares of Common
Stock of which approximately 2,463,955 shares were "restricted securities" (as
that term is defined under Rule 144 promulgated under the Securities Act of
1933). These restricted shares are eligible for sale under Rule 144 at various
times. No prediction can be made as to the effect, if any, that sales of shares
of Common Stock or the availability of such shares for sale will have on the
market prices prevailing from time to time. Nevertheless, the possibility that
substantial amounts of Common Stock may be sold in the public market may
adversely affect prevailing market prices for the Common Stock and could impair
the Company's ability to raise capital through the sale of its equity
securities.
No Dividends
The payment of dividends on the shares of the Company is within the discretion
of the Board of Directors and will depend upon the Company's future earnings,
its capital requirements, its financial condition, and other relevant factors.
The Company does not currently intend to declare any dividends on its Shares for
the foreseeable future.
The Common Stock May Be Deemed "Penny Stock" and Therefore Subject to
Special Requirements
The Company's Common Stock may be deemed to be a "penny stock" as that term is
defined in Rule 3a51-1 of the Securities and Exchange Commission. Penny stocks
are stocks (i) with a price of less than five dollars per share; (ii) that are
not traded on a "recognized" national exchange; (iii) whose prices are not
quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must still
meet requirement (i) above);
23
<PAGE>
or (iv) in issuers with net tangible assets less than $2,000,000 (if the issuer
has been in continuous operation for at least three years) or $5,000,000 (if in
continuous operation for less than three years), or with average revenues of
less than $6,000,000 for the last three years.
Section 15(g) of the Securities Exchange Act of 1934, and Rule 15g-2 of the
Securities and Exchange Commission, require broker-dealers dealing in penny
stocks to provide potential investors with a document disclosing the risks of
penny stocks and to obtain a manually signed and dated written receipt of the
document before effecting any transaction in a penny stock for the investor's
account. Moreover, Rule 15g-9 of the Securities and Exchange Commission
requires broker-dealers in penny stocks to approve the account of any investor
for transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker-dealer to (i) obtain from the investor
information concerning his or her financial situation, investment experience and
investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the
investor has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the investor
with a written statement setting forth the basis on which the broker-dealer made
the determination in (ii) above; and (iv) receive a signed and dated copy of
such statement from the investor, confirming that it accurately reflects the
investor's financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for investors in
the Common Stock to resell their shares to third parties or to otherwise dispose
of them.
Executive Officers, Directors and Major Stockholders Exercise Significant
Control
As of October 4, 1999, the executive officers, Directors and holders of 5% or
more of the outstanding Common Stock together beneficially owned approximately
35.5% of the outstanding Common Stock. These stockholders are able to
significantly influence all matters requiring approval by stockholders,
including the election of Directors and the approval of significant corporate
transactions. This concentration of ownership may also have the effect of
delaying, deterring or preventing a change in control and may make some
transactions more difficult or impossible to complete without the support of
these stockholders.
Exchange Rate Risk
The Company expects a substantial portion of its revenues to be based on sales
and services rendered to customers in the United States, while a significant
amount of its operating expenses will be incurred in Canada. As a result, the
financial performance of the Company will be affected by fluctuations in the
value of the U.S. dollar to the Canadian dollar. At the present time, the
Company has no plan or policy to utilize forward contracts or currency options
to minimize this exposure, and even if these measures are implemented there can
be no assurance that such arrangements will be available, be cost effective or
be able to fully offset such future currency risks.
ITEM 2. PLAN OF OPERATION
The following describes in general terms the Company's plan of operation and
development strategy for the next twelve-month period (the "Next Year"). During
the Next Year, the primary focus of the Company will be to expand marketing
efforts for its services, continue the development of the PC Support Center, and
to develop and/or contract to provide the infrastructure necessary to deliver
its services to its subscribers and customers.
a. CURRENT SERVICES
----------------
The Company currently offers two services and plans to launch a third service in
the fourth quarter of 1999. Global Replace combines an on-line backup service
for notebook and desktop computers with three methods
24
<PAGE>
of restoring data in the event of a PC failure. Phoenix allows a notebook user
to transfer a full-image of all data, applications, preferences and settings to
a new notebook. The Company currently offers Global Replace and Phoenix. PC
Support Center is a Web-based support portal for PCs which aggregates a number
of support technologies, including software and driver updates, diagnosis and
correction of configuration errors, virus scan, and others. The Company plans to
launch the first version of PC Support Center in the fourth quarter of 1999. See
"Description of Business - Business of the Company - Products and Services."
b. CASH FLOW REQUIREMENTS
----------------------
The Company does not have sufficient working capital to sustain its operations
and will need to secure additional working capital during the Next Year through
the sale of its capital stock, the issuance of debt or other financial
instruments, or strategic partnerships or licensing arrangements with potential
customers and suppliers. There can be no assurance that any such financings,
partnerships or licensing arrangements will be negotiated on terms favorable to
the Company's shareholders or on any terms at all. Failure to secure such
financings, partnerships or licensing arrangements in the near future will have
a material adverse impact on the Company's business, which could include a
reduction in the scope of or discontinuation of the Company's operations.
c. SALES AND MARKETING
-------------------
The Company plans to increase marketing efforts for its services through direct
and indirect channels, including the following:
PC Manufacturers. The Company is negotiating with several of the world's
largest PC manufacturers to market the Company's services to the
manufacturers' customers, and the Company plans to expand its marketing
efforts to other top PC manufacturers during the Next Year. No agreements
have yet been reached with any PC manufacturer, and there can be no
assurance that any such agreements can be reached on terms favorable to the
Company or at all.
OEMS. The Company is negotiating with companies which integrate PCs with
internet access and other related services and sell them to end-users via a
monthly payment schedule over a number of years, typically three, to
include the Company's services. In October 1999, the Company entered into
a letter of intent with Go Figure Technology, Inc. ("Go Figure") in which
the Company agreed to provide a customized support portal for customers in
the Go Figure network and will receive an upfront payment with each
computer shipped. During the next Year, Go Figure agreed to use best
efforts to ship at least one million PCs that will provide access to the PC
Support Center. While Go Figure has not yet received firm commitment orders
from its clients, it is actively discussing such orders with several of its
clients and anticipates receiving a sufficient level of orders to generate
significant payments to the Company over the Next Year.
Computer Service Companies. There are several international companies which
provide a comprehensive range of computer services that permit large
corporations to out-source some or all of their PC support requirements.
The Company's services complement and extend the range of such support
services. In September 1999 the Company entered into an agreement with
Unisys, an international computer service company, to private label Global
Replace under the Unisys brand name for resale to Unisys' corporate
customers. The Company intends to market its services to other
international service companies during the Next Year, although there can be
no assurance that the Company will be able to negotiate any agreements with
computer service companies.
StorageTek. In 1998, the Company entered into a contract with StorageTek
in which the Company licensed StorageTek's backup storage software, which
the Company markets under the name Global Replace. "See Description of
Business - Business of the Company - Distribution Methods of
25
<PAGE>
Services" and "Products and Services-Global Replace." StorageTek also
agreed to market the Company's hardware replacement services in conjunction
with its own backup software. In the fiscal year ending June 30, 1999,
StorageTek did not secure any orders for the Company's services, and no
orders have been secured to date during the current fiscal year. During the
Next Year, the Company intends to expand its training and co-selling
activities with StorageTek.
Web Portals. The Company is negotiating with one company which is
developing a Web site or portal specifically targeting the mobile PC user.
The Company is negotiating to provide the support services which will be a
prominent feature of the portal. However, there can be no assurance that
an agreement will be reached with this company or any other Web portal
company.
Direct Sales. The Company is marketing to a small number of large and small
corporations on a direct basis. Although no contracts have been secured to
date, the Company intends to expand its direct marketing efforts to a
select number of large corporations in the United States as well as to
corporations in the local Vancouver area. There can be no assurance that
any contracts will be reached with any company on a direct basis.
d. RESEARCH AND DEVELOPMENT
------------------------
The primary research and development effort over the next YEAR will be to
complete development of the first version of the PC Support Center, which the
Company plans to launch in the fourth quarter of 1999. The Company intends to
continue to add features to its PC Support Center and to release subsequent
versions during the year. Due to the constantly evolving nature of the Internet
and related technologies, the Company will continuously monitor changes in PC
support technologies and Internet-based support offerings with the goal of
adding additional functionality in new releases of the PC Support Center. See
"Description of Business - Business of the Company - Products and Services - PC
Support Center."
The following table summarizes the expected release schedule for the PC Support
Center:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Date Version Functionality Added
------------------------------------------------------------------------
<S> <C> <C>
Q4 1.0 Software updates, disk preventative maintenance,
1999 technical support forums, email notification of
driver and other recommended updates, ombudsman,
interface to PC manufacturers, free and premium
online backup.
------------------------------------------------------------------------
Q1 1.5 Virus scan, remote diagnosis and repair of
2000 configuration problems, live Internet support, PC
performance enhancement, education center.
------------------------------------------------------------------------
Q2 - Q4 2.0 Enhanced platform maintenance, asset-tracking,
extended warranty, anti-theft deterrent, theft and
damage insurance, repair co-ordination.
------------------------------------------------------------------------
</TABLE>
e. OPERATIONS
----------
To support the Global Replace program, the Company will expand its capability to
restore full image backups onto replacement notebooks. During the Next Year, the
Company plans to develop infrastructure internally to provide the capacity to
restore three to five notebooks per working day. It also plans to contract with
a company in the Vancouver area to provide an additional capacity of a maximum
of five restorations per working day. To increase capacity beyond this level to
meet future demand, the Company will make a
26
<PAGE>
decision to build additional infrastructure internally, or to contract the
restoration process to an external computer services firm. The Company
anticipates that it will make this decision during the Next Year.
f. EMPLOYEES
---------
During the Next Year, the Company plans to hire additional technical,
operations, sales and marketing, and administrative staff as required to expand
its service offerings, sales and marketing efforts, and to maintain service
levels to its then existing and new subscribers. The number and skill sets of
individual employees will be primarily dependent on the relative rates of growth
of the Company's different services, and the extent to which sales and
marketing, operations, and development are executed internally or contracted to
outside parties. Subject to the availability of sufficient working capital and
assuming significant customer acceptance of the Company's products, the Company
currently plans to increase staffing to approximately 60 people during the Next
Year, although there can be no assurance that such hiring will take place or
will be adequate to execute the growth plans as described herein.
g. YEAR 2000 COMPLIANCE
--------------------
Review of Year 2000 Readiness
The Company has reviewed the Year 2000 readiness of its systems and believes
that the Year 2000 problem will not have a significant impact on the Company.
This review was divided in four phases -- Planning and Awareness, Inventory,
Assessment and Renovate. Each of these phases was completed in the fourth
quarter of the fiscal year ended June 30, 1999.
In the Planning and Awareness phase, the Company identified and assessed its
overall Year 2000 risks. Based on (i) the limited scope of the Company's
current operations, and (ii) the fact that virtually all of the software
utilized by the Company internally was purchased in or after June 1999, the
Company concluded that its overall Year 2000 risks were minimal.
In the Inventory phase, the Company identified significant systems to be
assessed and significant suppliers. The only supplier that the Company
identified as significant was StorageTek. The Company also identified the
services provided by StorageTek as the Company's only significant system to be
assessed.
In the Assessment phase, the Company reviewed publicly available information
regarding StorageTek's Year 2000 readiness (in particular, statements made by
StorageTek in its filings with the Securities and Exchange Commission). This
information included representations by StorageTek to the effect that it had
conducted substantial Year 2000 remediation efforts and had evaluated all of its
currently offered products and software and believed that they were Year 2000
compliant. Based on this information, the Company concluded that it was not
necessary to renovate any of its systems, and that, therefore, a Renovate phase
was unnecessary.
Costs
Costs incurred to insure that the Company's systems are Year 2000 compliant have
to date not been, and are not expected to be, material to the Company's results
of operations, financial position or cash flows, since virtually all of the
Company's internal software was recently purchased and in light of the limited
scope of the Company's current operations.
Risks and Contingencies
The ability of suppliers (particularly StorageTek) and customers with which the
Company transacts business to timely convert their systems to be Year 2000
compliant is uncertain. Further, disruptions in the economy
27
<PAGE>
generally resulting from Year 2000 issues are unpredictable. Such failures
could materially and adversely affect the Company's results of operations,
liquidity and financial position.
ITEM 3. DESCRIPTION OF PROPERTY
a. PRINCIPAL BUSINESS FACILITIES
-----------------------------
The Company maintains its principal place of business at Suite 280, 4400
Dominion Street, Burnaby, British Columbia, Canada V5G 4G3, which consists of
approximately 7,347 square feet which the Company currently sub-leases for
(Cdn)$5.00 per square foot per year, plus operating costs of approximately
(Cdn)$10.00 per square foot per year. 2,800 square feet of this space is rented
free of charge in the first year, which ends on June 1, 2000. The sub-lease
expires on November 29, 2002 and the price per square foot per year increases in
the second year to (Cdn)$6.00, and to (Cdn)$6.50 in the third year. All of the
Company's operations, sales, services and administrations are conducted from
these offices. The Company expects that the space provided by these offices
will be sufficient to meet the Company's requirements for the next twelve
months.
b. INVESTMENT POLICIES
-------------------
The Company does not currently have any policies regarding the acquisition or
sale of assets primarily for possible capital gain or for income. The Company
does not presently hold any investments or interests in real estate mortgages or
securities of or interests in persons primarily engaged in real estate
activities.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
a. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
-----------------------------------------------
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of October 4, 1999, by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's outstanding voting securities; (ii) each of the Company's Directors;
(iii) the Company's Chief Executive Officer; and (iv) all executive officers and
Directors of the Company as a group:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Amount of Common Approximate Percent
Stock & Nature of of Ownership of
Name & Address/(1)/ Beneficial Ownership/(2)/ Common Stock
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Advanced Financial Services Inc./(3)/ 596,029/(4)/ 9.67%
- --------------------------------------------------------------------------------------------------------
The Dromond Technologies Group, Inc./(5)/ 553,440 8.98%
- --------------------------------------------------------------------------------------------------------
Michael G. McLean 924,273/(6)/ 15.00%
- --------------------------------------------------------------------------------------------------------
Steven W. Macbeth 924,273/(6)/ 15.00%
- --------------------------------------------------------------------------------------------------------
David W. Rowat 245,833/(7)/ 3.99%
- --------------------------------------------------------------------------------------------------------
W. Benjamin Catalano 27,500/(8)/ 0.45%
- --------------------------------------------------------------------------------------------------------
Clifford Rowlands 20,833/(9)/ 0.34%
- --------------------------------------------------------------------------------------------------------
All executive officers and Directors as a group
(5 persons) 1,589,273/(10)/ 25.79%
- --------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
(1) Unless otherwise indicated, the address of each person is c/o the Company
at Suite 280, 4400 Dominion Street, Burnaby, British Columbia, Canada V5G
4G3.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options, warrants or convertible securities that are currently
exercisable, or exercisable within 60 days of October 4, 1999, are deemed
outstanding for computing the percentage of the person holding such
options, warrants or convertible securities but are not deemed outstanding
for computing the percentage of any other person. Except as indicated by
footnote and subject to community property laws where applicable, the
persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
(3) Advanced Financial Services Inc. is located at P.O. Box 3340 Road Town,
Tortola, British Virgin Islands.
(4) Includes 20,000 shares of Common Stock issuable pursuant to warrants that
are currently exercisable, or exercisable within 60 days of October 4,
1999.
(5) The Dromond Technologies Group, Inc. ("Dromond") is located at Suite 305,
2692 Clearbrook Road, Abbotsford, British Columbia, Canada V2T 2Y8. Dromond
is owned 50% by Michael McLean and 50% by Steven Macbeth.
(6) Includes the 553,440 shares of Common Stock owned by Dromond, as to which
Messrs. McLean and Macbeth have shared voting and investment power. Also
includes 8,333 shares of Common Stock issuable pursuant to options that are
currently exercisable, or exercisable within 60 days of October 4, 1999.
(7) Includes 45,833 shares of Common Stock issuable pursuant to options that
are currently exercisable, or exercisable within 60 days of October 4,
1999.
(8) Includes 5,000 shares of Common Stock issuable pursuant to options that are
currently exercisable, or exercisable within 60 days of October 4, 1999.
(9) Includes 20,833 shares of Common Stock issuable pursuant to options that
are currently exercisable, or are exercisable within 60 days of October 4,
1999.
(10) Includes 83,333 shares of Common Stock issuable pursuant to options that
are currently exercisable, or exercisable within 60 days of October 4,
1999. Also includes the 553,440 shares of Common Stock owned by Dromond,
as to which Messrs. McLean and Macbeth have shared voting and investment
power.
b. CHANGES IN CONTROL
------------------
There are no arrangements of which the Company is aware that could result in a
change of control of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
a. DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------
Each Director of the Company will hold office until the later of (a) the next
annual meeting of shareholders (at which time such Director will be eligible for
re-election by the shareholders), or (b) until his successor shall have been
duly elected and qualified.
Michael G. McLean, age 38, is the President and CEO and a Director of the
Company, and was President of RTI from December 1997 until the Merger. Mr.
McLean has over 12 years experience with technology organizations and has a
broad base of technical and marketing experience. Most
29
<PAGE>
recently, from March 1997 to June 1997, he was Product Development Manager at
Riptide Technologies, a software development company that focuses on providing
products and services to the lottery industry, where he was charged with
creating the infrastructure for a successful product development group. Prior to
that, from May 1996 to December 1996, he was General Manager of a business unit
at Simba Technologies, a software development and marketing company, managing a
staff of 17 responsible for product development, product marketing, customer
support and professional services.
At HealthVISION Corporation, a software company serving the health care
industry, from 1993 - 1996, Mr. McLean developed and managed a strategic
partnership to allow HealthVISION to private label the partner's software. He
also managed several other reseller partnerships. Subsequently, also at
HealthVISION, he was a senior Software Development Manager managing 35 technical
and user support staff across 3 product lines. Before starting his career in
technology, Mr. McLean founded a construction company and grew it to 35
employees.
Mr. McLean served as a director of RTI from December 1997 until the Merger, and
has been a Director of the Company since the Merger.
Steven W. Macbeth, age 30, is the Chief Technology Officer, Secretary/Treasurer
and a Director of the Company. Mr. Macbeth was Chief Executive Officer of RTI
from December 1997 until the Merger. Mr. Macbeth has over 13 years executive and
project management experience in technology companies. Most recently, he co-
founded and served as Director, Product Development from June 1996 to June 1997
at Riptide Technologies, a software development company that focuses on
providing products and services to the lottery industry. In that position, he
managed three development projects and project teams of up to 25 employees.
Mr. Macbeth served as director of RTI from December 1997 until the Merger, and
has been a Director of the Company since the Merger.
Prior to Riptide, Mr. Macbeth served as Technical Project Manager at MPR Teltech
from August 1995 to May 1996, and as Software Development Manager at
HealthVISION Corporation from May 1994 to July 1995.
W. Benjamin Catalano, age 35, has been a Director of the Company since June
1999. Mr. Catalano has, since 1986, been self employed in personal business
ownership as well as participating as a licensed professional in the investment
brokerage and real estate industries. Mr. Catalano is currently Vice President
of Corporate Affairs and a Director of Themescapes, Inc., a technology company
developing three-dimensional acoustic products.
Mr. Catalano was appointed a Director of the Company concurrently with the
Merger.
David W. Rowat, age 44, is the Vice President, Finance and Business Development
for the Company. Mr. Rowat held the same position with RTI from April 1, 1999
until the Merger. He is a Professional Engineer, earned his MBA from Harvard
University in 1986 and has a broad operational background with a specialty in
public and private finance, strategic partnering, and mergers and acquisitions
for early stage technology companies. He served as Vice-President of Sales,
Development and Finance at various times for Nexus Engineering from August 1986
to January 1992, a technology company developing cable television headend
products, Vice President and Chief Financial Officer for Xillix Technologies
from June 1993 to January 1995, a technology company developing medical imaging
products, and Chief Executive Officer of Merit Technologies from January 1995 to
April 1995, a manufacturer of point-of-sale terminals. From October 1995 to
present, Mr. Rowat has been the president of Strategic Catalysts Inc., a
consulting company he founded to serve the technology industry.
30
<PAGE>
Clifford Rowlands, age 45, was appointed Vice President, Sales and Marketing of
the Company in June, 1999, and has more than 18 years experience in the North
American information technology industry. From February 1997 to June 1996, Mr.
Rowlands owned and operated a consulting company serving primarily British
Columbia's high tech industry.
Mr. Rowlands previously held the position of National Director of Sales and
Marketing for NEC Technologies Canada, a wholly owned subsidiary of NEC
Corporation of Japan. During his career with NEC (from March 1988 to February
1997), Mr. Rowlands developed sales and marketing strategies for new ventures
within NEC, and was responsible for business units in Canada and the U.S. Mr.
Rowlands' business unit grew from $35 million to $600 million in revenue during
his tenure at NEC.
b. SIGNIFICANT EMPLOYEES
---------------------
There are no significant employees who are not described as executive officers
above.
c. FAMILY RELATIONSHIPS
--------------------
There are no family relationships among Directors, executive officers or any
nominees to these positions.
ITEM 6. EXECUTIVE COMPENSATION
a. PERSONS COVERED
---------------
The following table sets forth the compensation for the fiscal years ended June
30, 1998 and 1999 paid by the Company to its Chief Executive Officer. No other
officer received a combined salary and bonus in excess of $100,000 during the
last fiscal year. As the Company completed the Merger on June 23, 1999, the
information provided in the table includes information for the Company's
predecessor, RTI, for the period December 10, 1997 to June 23, 1999.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Annual Annual All Other
Name & Principal Position Year/(1)/ Salary Bonus Compensation
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael G. McLean 1999 $41,741/(2)/ $ -0- $211,440/(3)/
- -----------------------------------------------------------------------------------
CEO & President 1998 $23,792/(2)/ $ -0- $ -0-
- -----------------------------------------------------------------------------------
</TABLE>
(1) For the twelve months ended June 30, 1999 ("fiscal 1999") and the period
from December 10, 1997 to June 30, 1998 ("fiscal 1998").
(2) Includes fees paid to ST Technologies Inc., a company of which Mr. McLean
is the sole owner, amounting to $2,680 for fiscal 1999 and $9,695 for
fiscal 1998. Also includes Mr. McLean's share of consulting fees paid by
the Company to Dromond, of which Mr. McLean owns 50%, amounting to $39,061
for fiscal 1999 and $14,097 for fiscal 1998. See "Certain Relationships and
Related Transactions."
(3) Includes the difference between the price paid by Mr. McLean in April, 1999
for shares of common stock of PCS and the then market price of these
shares. See "Certain Relationships and Related Transactions." Also includes
$26,565 in Common Stock, representing Mr. McLean's 50% share of 317,199
shares of common stock in RTI issued on January 6, 1999 for services
rendered to RTI.
b. COMPENSATION OF DIRECTORS
-------------------------
There are no standard arrangements by which Directors of the Company are
compensated for their services
31
<PAGE>
as Directors, except for the grant of stock options, and none of the Directors
received compensation for their services as Directors during the most recently
completed financial year. Certain of the Directors of the Company are
compensated for their services as consultants to the Company. See "Certain
Relationships and Related Transactions - Management Contracts."
c. STOCK OPTION PLAN
-----------------
The Company adopted a stock option plan on July 2, 1999 (the "Plan"). The Plan
authorizes the grant of stock options to Directors, officers, consultants and
employees of the Company. Under the terms of the Plan, at no time may the number
of shares subject to options result in:
1. the number of shares reserved for issuance pursuant to stock options
granted to insiders exceeding 15% of the issued and outstanding shares
of the Company;
2. this issuance to insiders, within a one year period, of a number of
shares exceeding 15% of the issued and outstanding shares of Common
Stock; or
3. the issuance to any one individual, within a one year period, of a
number of shares exceeding 15% of the issued and outstanding shares of
the Company.
The Plan provides that the exercise price of options granted under the Plan
shall be (a) if the Common Stock is listed on a public stock exchange, the
average market price for the twenty trading days immediately prior to the date
of grant; or (b) if the Common Stock is not listed on a public stock exchange,
the fair value of the Common Stock of the Company, as determined by the Board of
Directors. The term of any option may not exceed five years from the date of
grant. In certain cases, a change of control of the Company would accelerate the
exercisability of options granted under the Plan.
The Plan provides that the options vest monthly over a certain number of years,
typically three. If the person to whom options were granted leaves the
employment or directorship of the Company before the options have vested, then
the unvested portion will be forfeited. Such person also must exercise the
vested options within 30 days of leaving the Company, or else such vested
options will be forfeited.
d. OPTIONS GRANTED AFTER MOST RECENTLY COMPLETED FISCAL YEAR
------------------------------------------------------------
In July 1999 the Company approved the granting of the following options to
purchase shares of Common Stock at a price of $1.00 per share to Directors and
officers, with the options vesting monthly over a three-year period following
the date of grant:
--------------------------------------------------------------
Number of Shares
Name Under Options
--------------------------------------------------------------
Michael G. McLean 50,000
--------------------------------------------------------------
Steven W. Macbeth 50,000
--------------------------------------------------------------
David W. Rowat 150,000
--------------------------------------------------------------
Clifford Rowlands 150,000
--------------------------------------------------------------
Ben Catalano 30,000
--------------------------------------------------------------
32
<PAGE>
e. EMPLOYMENT CONTRACTS
--------------------
Pursuant to an agreement dated June 9, 1999 between the Company and Clifford
Rowlands, Mr. Rowlands has been employed by the Company as Vice President, Sales
and Marketing. Mr. Rowlands is paid $8,300 per month. Mr. Rowlands' contract
does not require him to remain with the Company for any particular period of
time.
With the exception of Mr. Rowlands, the Company currently does not have any
employment contracts with its executive officers. The Company has entered into
consulting agreements with companies owned by each of its other executive
officers. See "Certain Relationships and Related Transactions."
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
a. RELATIONSHIP BETWEEN THE COMPANY AND CERTAIN DIRECTORS AND OFFICERS
-------------------------------------------------------------------
Management Contracts
Pursuant to an agreement dated as of June 23, 1999 between the Company and
Dromond, a company controlled by Michael McLean and Steve Macbeth, Dromond
agreed to provide management services to the Company. The agreement's initial
term ends on December 31, 1999. The agreement is automatically renewed for
successive twelve-month periods, unless otherwise terminated in accordance with
its terms. The agreement may be terminated by Dromond at any time upon sixty
days written notice. Under the agreement, the Company pays Dromond a fee of
(Cdn)$16,600 per month. The fee payable is subject to periodic review by the
Board of Directors and may be increased or decreased by agreement between the
parties. Performance based shares and/or incentive stock options may be granted
at the discretion of the Board of Directors, to the principals of Dromond,
Messrs. McLean and Macbeth, based upon the achievement of performance
milestones.
Pursuant to an agreement dated as of April 1, 1999 between RTI and Strategic
Catalysts Inc. ("SCI"), a company controlled by David Rowat, RTI retained SCI to
assist in the advancement of RTI's business plan. Pursuant to this agreement,
SCI was paid (Cdn)$5,000 per month until June 1, 1999, and is now paid
(Cdn)$8,300 per month. SCI may terminate this agreement at any time. The
rights and obligations under this agreement have been assumed by the Company, as
the successor of RTI.
Pursuant to an agreement dated June 9, 1999 between the Company and Clifford
Rowlands, Mr. Rowlands has been employed by the Company as Vice President, Sales
and Marketing. Mr. Rowlands is paid $8,300 per month.
Private Placement of Common Shares
The following current and former Directors and officers of the Company
participated in a private placement of common stock of PCS completed in April
1999 at a price of $0.01 per share as set forth below. This private placement
was conducted before the completion of the Merger of PCS and RTI (with issuance
of the securities in this offering being subject to completion of the Merger),
at a time when the Directors and officers above were not directors and officers
of PCS, but were directors and officers of RTI. A total of 3,222,255 shares
were sold in the private placement at an average price of $0.295.
33
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Name of Director or Officer Number of PCS Shares Acquired
---------------------------------------------------------------------------
<S> <C>
Michael G. McLean 362,500
---------------------------------------------------------------------------
Steven W. Macbeth 362,500
---------------------------------------------------------------------------
Alan Ackerman/(1)/ 275,000
---------------------------------------------------------------------------
David W. Rowat 200,000
---------------------------------------------------------------------------
Gary Yurkovich/(2)/ 300,000
---------------------------------------------------------------------------
</TABLE>
(1) Alan Ackerman resigned as a director on June 23, 1999.
(2) Mr. Yurkovich's employment with the Company ended on June 28, 1999, and the
Company repurchased 285,000 of these shares for $0.01 per share.
Stock Pooling and Escrow Agreement
Pursuant to a Stock Pooling and Escrow Agreement dated July 31, 1999 ("Pooling
Agreement"), Michael G. McLean, Steven W. Macbeth, David W. Rowat, Clifford
Rowlands, Alan Ackerman, Dromond and Advanced have agreed with the Company to
pool an aggregate of 2,179,429 shares of Common Stock and options and warrants
to purchase 286,666 shares of Common Stock. These securities may not be sold or
transferred until they are released from pool. If Michael G. McLean, Steven W.
Macbeth, or David W. Rowat cease to participate on a full-time basis in the
business of the Company, the Company has the option to repurchase certain of
their shares at a price of $0.01 per share. Such right of repurchase lapses as
to a certain number of shares each month depending upon the individual, and
lapses completely on January 1, 2002.
The shares, options and warrants will be released from pool in accordance with
the following schedule:
<TABLE>
<CAPTION>
May 25, 2000 November 25, 2000 May 25, 2001
<S> <C> <C> <C>
Shares 600,000 850,000 729,429
Options 133,333 66,667 66,666
Warrants 20,000
</TABLE>
b. TRANSACTIONS INVOLVING PROMOTERS OF THE COMPANY
-----------------------------------------------
As the founding shareholders of RTI, Dromond and Advanced were the original
promoters of the Company. Advanced initially acquired 2,550,000 common shares of
RTI at a price of (Cdn)$0.039 per share. Dromond was initially issued 2,450,000
common shares of RTI, at a price of (Cdn)$0.01 per share, in consideration for
services rendered by Dromond in connection with the establishment of the
business of RTI. Advanced also provided RTI with a non-interest bearing loan
facility. An aggregate of (Cdn)$161,002 was drawn against such loan and such
loan was converted to 330,145 common shares of RTI at the rate of one common
share for each (Cdn)$0.49 principal amount of such loan. In addition, Advanced
provided a bridge loan facility to RTI in the amount of (Cdn)$50,000. The bridge
loan was repaid in full from the proceeds of a private placement completed by
RTI in January 26, 1999. See Part II, Item 4, "Recent Sales of Unregistered
Securities." In consideration for making such bridge loan, Advanced received
warrants to purchase 100,000 common shares of RTI for a period of one year
expiring January 26, 2000, at a price of (Cdn)$0.25 per share. Additionally,
Dromond was issued 317,199 common shares of RTI in consideration for services
rendered by Dromond in connection with the establishment of the business of the
Company.
34
<PAGE>
All of the shares issued by RTI to Dromond and Advanced were exchanged for
shares of Common Stock of the Company in connection with the Merger on the basis
of five RTI shares for each share of the Company. The warrants held by Advanced
were exchanged for warrants to purchase 20,000 shares of Common Stock of the
Company at a price of $0.84 per share, exercisable until January 26, 2000. Any
shares issued upon exercise will be subject to the pooling arrangements set
forth in "Certain Relationships and Related Transactions - Stock Pooling and
Escrow Agreement."
ITEM 8. DESCRIPTION OF SECURITIES
The total authorized share capital stock of the Company consists of 100,000,000
non-assessable shares of Common Stock with a par value of $0.001 per share. As
of October 4, 1999, there were 6,073,969 shares of Common Stock issued and
outstanding. Each holder of Common Stock is entitled to one vote for each share
held. The Common Stock ranks equally in all respects. The holders of Common
Stock are entitled to attend and vote at all meetings of shareholders of the
Company on the basis of one vote for each share of Common Stock held by them.
The holders of Common Stock are also entitled to receive dividends if, as and
when declared by the Board of Directors of the Company on the Common Stock and
to receive the remaining property of the Company upon liquidation, dissolution
or winding-up.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
a. MARKET INFORMATION
------------------
Shares of the Company's Common Stock are traded on the OTC Electronic Bulletin
Board under the symbol "PCSP." From August 18, 1998 until the Merger, the
common stock of PCS traded on the OTC Electronic Bulletin Board under the symbol
"MXTS," reflecting the previous name of PCS as Mex Trans Seafood Consulting Inc.
The Common Stock of the Company began trading on the OTC Electronic Bulletin
Board on June 24, 1999 under the symbol "PCSP." The following table sets forth
the high and low bid prices for the Company's Common Stock for the quarters
indicated. The information has been adjusted for all periods presented to
reflect the reverse stock split of the Common Stock which occurred in connection
with the Merger.
<TABLE>
<CAPTION>
Quarter
Ended High Low
<S> <C> <C>
December 31, 1998 1.88 1.70
March 31, 1999 2.50 1.56
June 30, 1999 2.00 0.78
September 30, 1999 2.00 0.69
</TABLE>
Quotations posted on the OTC Electronic Bulletin Board reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not necessarily
reflect actual transactions.
The Company currently has warrants outstanding to purchase an aggregate of
227,038 shares of common stock at a price per share of $1.34. The warrants are
each exercisable to acquire one share of Common Stock for a period expiring
three months after the completion of an initial public offering of the Company's
Common Stock, at a price of $1.34 per share. If, at any time prior to the
expiration of these warrants, the Company completes a financing for gross
proceeds of more than (Cdn)$400,000 and issues shares of Common Stock at a price
which is higher than the exercise price of these warrants, the warrant holders
have
35
<PAGE>
ten days to exercise the warrants, after which the exercise price is increased
to the price at which the securities were sold. See "Recent Sales of
Unregistered Securities" below.
The Company also has warrants outstanding to purchase 20,000 shares of Common
Stock at $0.84 per share, exercisable on or before January 26, 2000.
As at September 24, 1999, an aggregate of 247,038 shares of Common Stock were
issuable upon exercise of outstanding warrants and 522,750 shares of Common
Stock were issuable upon exercise of outstanding stock options.
b. HOLDERS
-------
As of October 4, 1999, the Company had 157 shareholders of record of Common
Stock.
c. DIVIDENDS
---------
The Company has not, to date, paid any dividends on its Common Stock. The
payment of dividends on the Common Stock is within the discretion of the Board
of Directors and will depend upon the Company's future earnings, its capital
requirements, its financial condition, and other relevant factors. The Company
does not currently intend to declare any dividends on its Common Stock for the
foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
None.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
On July 15, 1999, the Company engaged KPMG LLP, Richmond, British Columbia,
Canada, as its principal accountant to audit the Company's financial statements.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
a. On February 17, 1997, PCS (then Mex Trans) issued 9,104,100 shares of
common stock for aggregate gross proceeds of $89,381 to 17 investors. This
offering was made without registration under the Securities Act of 1933, as
amended (the "Act") in reliance upon the exemptions from registration
afforded by sections 4(2) and 3(b) of the Act and Rule 504 of Regulation D
promulgated thereunder.
b. On January 31, 1999, PCS (then Mex Trans) issued 580,000 shares of common
stock at a deemed aggregate price of $49,000, for services rendered by a
former director of PCS. This offering was made without registration under
the Act in reliance upon the exemptions from registration afforded by
Sections 4(2) and 3(b) of the Act and Rule 504 of Regulation D promulgated
thereunder.
c. On April 7, 1999, PCS issued an aggregate of 3,222,255 shares of common
stock for aggregate proceeds of $951,000 to 140 investors. This placement
was completed in connection with the Merger, and the purchasers included
certain directors and officers of RTI. This offering was made without
registration under the Act in reliance upon the exemptions from
registration afforded by Sections 4(2) and 3(b) of the Act and Rule 504 of
Regulation D promulgated thereunder.
36
<PAGE>
The shares of common stock set forth above in (a), (b), and (c) were subject to
a one-for-fifteen reverse split in connection with the Merger.
d. On June 23, 1999, the Company issued 1,474,155 shares of Common Stock to
the former shareholders of RTI (50 Canadian residents and one U.S.
resident) and 311,838 warrants to purchase an aggregate of 311,838 shares
of Common Stock to the former warrant holders of RTI (44 Canadian residents
and one U.S. resident), in connection with the Merger. Of the warrants,
20,000 are exercisable to acquire one share of common stock each until
January 26, 2000, at a price of $0.84 per share. The remaining 291,838
warrants are each exercisable to acquire one share of Common Stock for a
period expiring three months after the completion of an initial public
offering of the Company's Common Stock, at a price of $1.34 per share. If,
at any time prior to the expiration of these warrants, the Company
completes a financing for gross proceeds of more than (Cdn)$400,000 and
issues shares of Common Stock, at a price which is higher than the exercise
price of these warrants, the warrant holders have ten days to exercise the
warrants, after which the exercise price is increased to the price at which
the securities were sold. The shares and warrants issued to the former RTI
shareholders were issued without registration under the Act, in reliance on
the exemptions from registration contained in Regulation S and Section 4(2)
of the Act due to the foreign nationality of the investors (except for one
accredited U.S. investor), in exchange for an aggregate of 7,370,775 shares
of the common stock of RTI, and 1,559,190 warrants of RTI.
The shares and warrants of RTI were originally issued as follows (without
adjustment for the one-for-five exchange ratio in the subsequent Merger):
(1) On December 10, 1997, RTI issued 1,000 shares of Common Stock to
Dromond, in connection with the incorporation of RTI. These shares
were issued pursuant to the exemption from registration contained in
Regulation S under the Act due to the foreign nationality of the
investor and RTI.
(2) On January 6, 1999, RTI issued an aggregate of 4,999,000 common shares
to Dromond and Advanced for aggregate gross proceeds of (Cdn)$110,000.
These shares were issued pursuant to Regulation S under the Act due to
the foreign nationality of the investors and RTI.
(3) On January 16, 1999, 317,199 common shares of RTI were issued to
Dromond for services rendered having an aggregate value of
(Cdn)$79,299.75. These shares were issued pursuant to Regulation S
under the Act due to the foreign nationality of the investor and RTI.
(4) On January 6, 1999, RTI issued an aggregate of 330,145 common shares
to Advanced for aggregate proceeds of (Cdn)$161,002. These shares
were issued pursuant to Regulation S under the Act due to the foreign
nationality of the investor and RTI.
(5) Between January 26, 1999 and February 18, 1999, RTI issued an
aggregate of 1,459,189 units, each unit consisting of one (1) common
share and one (1) common share purchase warrant, to 45 investors, for
aggregate proceeds of (Cdn)$364,797.25. Each warrant entitled the
holder to acquire a further common share of RTI for a period expiring
three (3) months after the completion of an initial public offering of
RTI's common shares, at a price of (Cdn)$0.25, if exercise on or
before July 18, 1999, and thereafter at a price of (Cdn)$0.40 per
share. If RTI completed a second financing for proceeds of
(Cdn)$400,000 before the expiration of the warrants in which the
common shares of RTI were sold at a price greater than the exercise
price of the warrants, the warrant holders had ten (10) days to
exercise the warrants, after which the exercise price increased to the
price at which the shares were sold in the financing. RTI paid
finders' fees of: (i) 22,480 common shares and (Cdn)$5,620 to
37
<PAGE>
Odlum Brown Ltd., of 1800, 609 Granville Street, Vancouver, British
Columbia; and (ii) 21,760 common shares and (Cdn)$5,440 to Wolverton
Securities Inc., of 17/th/ Floor, 777 Dunsmuir Street, Vancouver,
British Columbia for services provided, in connection with locating
investors for RTI. Odlum Brown Ltd. and Wolverton Securities Inc. are
securities dealers based in Vancouver, B.C. These shares were issued
pursuant to Regulation S and Section 4(2) of the Act due to the
foreign nationality of the investors (except for one accredited U.S.
investor).
(6) On January 26, 1999, RTI issued 150,000 common shares to a consulting
firm in connection with the provision of corporate finance advice
which culminated in the completion of the financing described in
paragraph (5) above. On May 19,1999, RTI issued 30,000 common shares
to the same firm in connection with the provision of further financial
advice. These shares were issued pursuant to Regulation S under the
Act due to the foreign nationality of the investor and RTI.
(7) On January 26, 1999, RTI issued 100,000 warrants to Advanced in
consideration for the non-interest bearing credit facility in the
amount of (Cdn)$50,000 provided by Advanced to RTI until completion of
the financing set out in paragraph (5) above. Each warrant entitled
Advanced to acquire one common share of RTI for a period of one year
expiring January 26, 2000, at a price of (Cdn)$0.25 per share. These
securities were issued pursuant to Regulation S under the Act due to
the foreign nationality of the investor and RTI.
(8) On January 26, 1999, RTI issued an aggregate of 40,000 common shares
to the law firm of Anfield, Sujir, Kennedy, and Durno in consideration
of legal advice which culminated in the completion of the financing
described in paragraph (5) above. These shares were issued pursuant
to Regulation S under the Act due to the foreign nationality of the
investor and RTI.
e. On August 11, 1999, the Company issued 64,800 common shares to 14 investors
upon the exercise of 64,800 warrants, for aggregate gross proceeds of
$81,000. These shares were issued pursuant to Regulation S under the Act
due to the foreign nationality of the investors.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's By-Laws provide that no officer or Director shall be personally
liable for any obligations of the Company or for any duties or obligations
arising out of any acts or conduct of said officer or Director performed for or
on behalf of the Company. The Company indemnifies and hold harmless each person
who serves at any time as a Director or officer of the Company, and his heirs
and administrators, from and against any and all claims, judgments and
liabilities to which such person shall become subject by reason of his having
been a Director or officer of the Company, or by reason of any action alleged to
have been taken or omitted to have been taken by him as such Director or
officer, and shall reimburse such person for all legal and other expenses
reasonably incurred by him in connection with any such claim or liability. The
company also has the power to defend such person from all suits or claims in
accord with the Nevada General Corporation Law. However, no such person shall be
indemnified against, or be reimbursed for, any expense incurred in connection
with any claim or liability arising out of his own negligence or willful
misconduct. The rights accruing to any person under the Company's By-laws do not
exclude any other right to which he may lawfully be entitled, and the Company
may indemnify or reimburse such person in any proper case, even though not
specifically provided for by the by-laws. The Company, its Directors, officers,
employees and agents shall be fully protected in taking any action or making any
payment, or in refusing so to do, in reliance upon the advice of counsel.
Insurance. The Company may purchase and maintain insurance on behalf of any
person who is or was a Director, officer or employee of the Company, or is or
was serving at the request of the Company as a Director, officer, employee or
agent of another Company, partnership, joint venture, trust or other enterprise
against liability asserted against him and incurred by him in any such capacity,
or arising out of his status as such, whether or not the Company would have the
power to indemnify him against liability under the provisions of this section.
The Company currently does not maintain any such insurance.
Settlement by the Company. The right of any person to be indemnified is subject
always to the right of the Company by its Board of Directors, in lieu of such
indemnity, to settle any such claim, action, suit or proceeding at the expense
of the Company by the payment of the amount of such settlement and the costs and
expenses incurred in connection therewith.
38
<PAGE>
PART F/S FINANCIAL
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
PCsupport.com, Inc.
We have audited the consolidated balance sheets of PCsupport.com, Inc. and
subsidiary (a Development Stage Enterprise) as of June 30, 1999 and 1998 and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for the year ended June 30, 1999, the period from December 19,
1997 (inception) to June 30, 1998 and for the period from December 19,1997
(inception) to June 30, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of PCsupport.com, Inc. and subsidiary
(a Development Stage Enterprise) as of June 30, 1999 and 1998, and the results
of their operations and their cash flows for the year ended June 30, 1999, the
period from December 19, 1997 (inception) to June 30, 1998 and for the period
from December 19, 1997 (inception) to June 30, 1999, in conformity with United
States generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in note 1 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and negative cash flows from operations that raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
Chartered Accountants
Vancouver, Canada
August 20, 1999
39
<PAGE>
PCSUPPORT.COM, INC. and subsidiary
(A Development Stage Enterprise)
Consolidated Balance Sheets
(Expressed in U.S. Dollars)
June 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 795,809 $ -
Accounts receivable 14,728 -
Prepaid expenses 33,950 -
Other current assets 49,256 242
---------- ---------
Total current assets 893,743 242
Property and equipment (note 4) 11,210 2,702
Intangible asset (note 5) 2,697 -
---------- ---------
$ 907,650 $ 2,944
========== =========
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued liabilities $ 68,266 $ 3,710
Convertible debt (note 6(a)) - 47,729
---------- ---------
Total current liabilities 68,266 51,439
Stockholders' equity (deficit) (note 6):
Common stock, $0.0001 par value, authorized 100,000,000 shares;
issued 6,007,169 shares in 1999 and 1,000,000
shares in 1998 600 100
Additional paid-in capital 1,987,218 133,699
Deferred stock compensation (198,909) -
Deficit accumulated during the development stage (949,496) (182,294)
Treasury stock, 285,000 shares in 1999, at cost (29) -
---------- ---------
Total stockholders' equity (deficit) 839,384 (48,495)
---------- ---------
Commitments and contingencies (note 7)
Subsequent events (note 12)
$ 907,650 $ 2,944
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
40
<PAGE>
PCSUPPORT.COM, INC. and subsidiary
(A Development Stage Enterprise)
Consolidated Statements of Operations
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
Period from Period from
December 19, December 19,
1997 1997
Year ended (inception) to (inception) to
June 30, 1999 June 30, 1998 June 30, 1999
-------------- --------------- ---------------
<S> <C> <C> <C>
Revenue $ 99 $ - $ 99
Cost of services 86 - 86
---------- --------- ---------
Gross profit 13 - 13
---------- --------- ---------
Operating expenses:
Research and development 17,646 2,814 20,460
Marketing and promotion 477,103 120,918 598,021
General and administrative 265,953 58,562 324,515
---------- --------- ---------
760,702 182,294 942,996
---------- --------- ---------
Loss from operations (760,689) (182,294) (942,983)
Interest expense, net 6,513 - 6,513
---------- --------- ---------
Loss for the period $ (767,202) $(182,294) $(949,496)
========== ========= =========
Net loss per common share, basic and diluted $ (.46) $ (.22)
========== =========
Weighted average common shares outstanding,
basic and diluted 1,659,455 857,171
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
41
<PAGE>
PCSUPPORT.COM, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Consolidated Statements of Stockholders' Equity (Deficit)
(Expressed in U.S. Dollars)
Year ended June 30, 1999
Period from December 19, 1997 (inception) to June 30, 1998
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional Deferred During
Common Shares Paid-in Stock Development
--------------------
Shares Amount Capital Compensation Stage
------ ------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, December 19, 1997 (inception) 200 $ - $ - $ - $ -
Issuance of common stock for services
in January, valued at $.13 per share 489,800 49 65,598 - -
Sale of common stock in January, $.13 per share 510,000 51 68,101 - -
Net loss - - - - (182,294)
--------- ---- ---------- --------- ---------
Balance, June 30, 1998 1,000,000 100 133,699 - (182,294)
Fair value of common stock purchase warrants
granted to creditor - - 8,407 - -
Sale of common stock in January, approximately
$.85 per share, net of issuance costs of $131,708 291,838 29 116,325 - -
Issuance of common stock for services in January,
valued at approximately $.85 per share 52,848 5 45,149 - -
Conversion of note payable to common stock
(note 6(a)) 66,029 7 110,036 - -
Issuance of common stock for services in February 63,440 6 53,918 - -
Issuance of common stock for services in
April 1,500,000 150 631,055 (244,156) -
Amortization of deferred stock compensation - - - 45,247 -
Issuance of common stock for acquisition in June,
net of acquisition costs of $46,753 (note 3) 3,033,014 303 888,629 - -
Treasury stock repurchased by Company in June,
at cost - - - - -
Net loss - - - - (767,202)
--------- ---- ---------- --------- ---------
Balance, June 30, 1999 6,007,169 $600 $1,987,218 $(198,909) $(949,496)
========= ==== ========== ========= =========
<CAPTION>
Total
Treasury Stock Stockholders'
-----------------
Shares Amount Equity (Deficit)
------ ------ ----------------
<S> <C> <C> <C>
Balance, December 19, 1997 (inception) - $ - $ -
Issuance of common stock for services
in January, valued at $.13 per share - - 65,647
Sale of common stock in January, $.13 per share - - 68,152
Net loss - - (182,294)
-------- ----- ---------
Balance, June 30, 1998 - - (48,495)
Fair value of common stock purchase warrants
granted to creditor - - 8,407
Sale of common stock in January, approximately
$.85 per share, net of issuance costs of $131,708 - - 116,354
Issuance of common stock for services in January,
valued at approximately $.85 per share - - 45,154
Conversion of note payable to common stock
(note 6(a)) - - 110,043
Issuance of common stock for services in February - - 53,924
Issuance of common stock for services in
April - - 387,049
Amortization of deferred stock compensation - - 45,247
Issuance of common stock for acquisition in June,
net of acquisition costs of $46,753 (note 3) - - 888,932
Treasury stock repurchased by Company in June,
at cost (285,000) (29) (29)
Net loss - - (767,202)
-------- ---- ---------
Balance, June 30, 1999 (285,000) $(29) $(839,384)
======== ==== =========
</TABLE>
See accompanying notes to consolidated financial statements.
42
<PAGE>
PCSUPPORT.COM, INC. and subsidiary
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
Period from Period from
December 19, December 19,
1997 1997
Year ended (inception) to (inception) to
June 30, 1999 June 30, 1998 June 30, 1999
------------- -------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Loss for the period $ (767,202) $(182,294) $ (949,496)
Items not affecting cash:
Depreciation and amortization 5,336 620 5,956
Common stock issued in exchange
for services 486,191 65,647 551,838
Discount on notes payable 8,407 - 8,407
Changes in operating assets and liabilities:
Accounts receivable (14,728) - (14,728)
Prepaid expenses (33,950) - (33,950)
Other current assets (49,014) (242) (49,256)
Accounts payable and accrued liabilities 64,556 3,710 68,266
---------- --------- ----------
Net cash used in operating activities (300,404) (112,559) (412,963)
---------- --------- ----------
Cash flows from investing activities:
Purchase of property and equipment (13,055) (3,322) (16,377)
Purchase of intangible asset (3,486) - (3,486)
---------- --------- ----------
Net cash used in investing activities (16,541) (3,322) (19,863)
---------- --------- ----------
Cash flows from financing activities:
Proceeds from issuance of notes payable 62,314 47,729 110,043
Proceeds from issuance of bridge loan 17,088 - 17,088
Repayment of bridge loan (17,088) - (17,088)
Cash acquired in acquisition 888,932 - 888,932
Net proceeds from sale of common stock 161,508 68,152 229,660
---------- --------- ----------
Net cash provided by financing activities 1,112,754 115,881 1,228,635
---------- --------- ----------
Net increase in cash and cash equivalents 795,809 - 795,809
Cash and cash equivalents at beginning of period - - -
---------- --------- ----------
Cash and cash equivalents at end of period $ 795,809 $ - $ 795,809
========== ========= ==========
Supplemental disclosure of non-cash financing activities:
Notes payable converted into common stock $ 110,043 $ - $ 110,043
Deferred stock compensation 198,909 - 198,909
Discount on notes payable 8,407 - 8,407
Common stock issued for services 486,191 65,647 551,838
Treasury stock acquired 29 - 29
Income taxes paid - - -
</TABLE>
See accompanying notes to consolidated financial statements.
43
<PAGE>
PCSUPPORT.COM, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year ended June 30, 1999
Period from December 19, 1997 (inception) to June 30, 1998
- --------------------------------------------------------------------------------
1. Nature of development stage activities:
Mex-Trans Seafood Consulting, Inc. was incorporated in Texas on February 13,
1989 and was a holding company prior to its merger with Reconnaissance
Technologies Inc. ("Reconnaissance"). In anticipation of this merger, a
shell company was incorporated in Nevada in April, 1999 and Mex-Trans
Seafood Consulting, Inc. was merged into it, with PCsupport.com, Inc.
("PCS"), as the surviving company. PCS has no substantive operations. In
June 1999, PCS merged with Reconnaissance, with PCsupport.com, Inc. (the
"Company") being the surviving corporation (note 2(a)). The Company is
currently in the business of developing and commercializing support services
for the personal computer market. The Company believes that its first
commercial applications will be providing daily secured backup of personal
computer hard-drives over the Internet, overnight laptop replacements and an
aggregation of web-based computer support services.
These consolidated financial statements have been prepared on a going
concern basis in accordance with United States generally accepted accounting
principles. The going concern basis of presentation assumes the Company will
continue in operation for the foreseeable future and will be able to realize
its assets and discharge its liabilities and commitments in the normal
course of business. Certain conditions, discussed below, currently exist
which raise substantial doubt upon the validity of this assumption. The
financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
The Company's future operations are dependent upon the market's acceptance
of its services and the Company's ability to secure cost effective third
party license service supply agreements. There can be no assurance that the
Company's services will be able to secure market acceptance or that cost
effective license and service supply agreements will exist or continue to
exist. As of June 30, 1999, the Company is considered to be in the
development stage as the Company has not generated significant revenues, is
continuing to develop its business, and has experienced negative cash flow
from operations. Operations have primarily been financed through the
issuance of common stock. The Company does not have sufficient working
capital to sustain operations until the end of the year ended June 30, 2000.
Additional debt or equity financing will be required and may not be
available or may not be available on reasonable terms.
2. Significant accounting policies:
(a) Reverse take-over and basis of presentation:
On June 23, 1999, PCS merged with Reconnaissance, with Reconnaissance's
stockholders receiving the largest number of shares and control of the
Company, PCSupport.Com, Inc. Accordingly, Reconnaissance is deemed the
accounting acquiror for financial statement purposes.
44
<PAGE>
PCSUPPORT.COM, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 2
(Expressed in U.S. Dollars)
Year ended June 30, 1999
Period from December 19, 1997 (inception) to June 30, 1998
- --------------------------------------------------------------------------------
2. Significant accounting policies (continued):
(a) Reverse take-over and basis of presentation (continued):
The acquisition is accounted for as a reverse take-over using the
purchase method. The Company's historical financial statements reflect
the financial position, results of operations and cash flows of
Reconnaissance from the date of its incorporation on December 19, 1997
under the Company Act (British Columbia). On June 20, 1999,
Reconnaissance continued its incorporation into Wyoming. The historical
stockholders' equity gives effect to the shares issued to the
stockholders of Reconnaissance. The results of operations of PCS are
included from the date of acquisition, June 23, 1999.
(b) Basis of consolidation:
These consolidated financial statements have been prepared using
generally accepted accounting principles in the United States. The
financial statements include the accounts of the Company's wholly-owned
subsidiary, Reconnaissance International Ltd. All significant
intercompany balances and transactions have been eliminated in the
consolidated financial statements.
(c) Use of estimates:
The preparation of consolidated financial statements in accordance with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and reported revenues
and expenses for the reporting periods. Actual results may
significantly differ from these estimates.
(d) Contract revenue recognition:
Earned revenue from support service contracts is recognized on the
percentage-of-completion method of accounting. Contract revenues earned
are recorded using the percentage of contract costs incurred to date to
total estimated contract costs.
Anticipated losses on contracts are charged to earnings as soon as such
losses can be estimated. Changes in estimated profits on contracts are
recognized during the period in which the change in estimate is known.
45
<PAGE>
PCSUPPORT.COM, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 3
(Expressed in U.S. Dollars)
Year ended June 30, 1999
Period from December 19, 1997 (inception) to June 30, 1998
- --------------------------------------------------------------------------------
2. Significant accounting policies (continued):
(e) Foreign currency:
The functional currency of the Company and its subsidiary is the United
States dollar. Transactions in foreign currencies are translated to
United States dollars at the rates in effect on the transaction date.
Exchange gains or losses arising on translation or settlement of
foreign currency denominated monetary items are included in the
consolidated statement of operations.
(f) Cash and cash equivalents:
The Company considers all short-term investments with a maturity date
at purchase of three months or less to be cash equivalents.
(g) Property and equipment:
Property and equipment are stated at cost and are depreciated using the
straight-line method over their estimated useful lives ranging from two
to seven years.
(h) Major customers:
All of the Company's revenues were from one Canadian customer for the
year ended June 30, 1999.
(i) Income taxes:
The Company follows the asset and liability method of accounting for
income taxes. Under this method, current taxes are recognized for the
estimated income taxes payable for the current period.
Deferred income taxes are provided based on the estimated future tax
effects of temporary differences between financial statement carrying
amounts of assets and liabilities and their respective tax bases as
well as the benefit of losses available to be carried forward to future
years for tax purposes.
Deferred tax assets and liabilities are measured using enacted tax
rates that are expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in operations in the period that includes
the substantive enactment date. A valuation allowance is recorded for
deferred tax assets when it is more likely than not that such deferred
tax assets will not be realized.
46
<PAGE>
PCSUPPORT.COM, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 4
(Expressed in U.S. Dollars)
Year ended June 30, 1999
Period from December 19, 1997 (inception) to June 30, 1998
- --------------------------------------------------------------------------------
2. Significant accounting policies (continued):
(j) Research and development:
Research and development costs are expensed when incurred.
(k) Net loss per share:
Basic earnings per share is computed using the weighted average number
of common stock outstanding during the periods. Diluted loss per share
is computed using the weighted average number of common and
potentially dilutive common stock outstanding during the period. As
the Company has a net loss in each of the periods presented, basic and
diluted net loss per share is the same.
Excluded from the computation of diluted loss per share for the year
ended June 30, 1999 are warrants to purchase 311,838 shares of common
stock because their effects would be anti-dilutive. Also excluded from
the computation of diluted earnings per share for the period from
December 19, 1997 (inception) to June 30, 1998 are 40,528 shares of
potential common stock resulting from the assumed conversion of the
convertible notes payable because their effects would be anti-
dilutive.
(l) Stock-based compensation:
The Company accounts for its stock-based compensation arrangement in
accordance with provisions of Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense under fixed plans would
be recorded on the date of grant only if the fair value of the
underlying stock at the date of grant exceeded the exercise price. The
Company recognizes compensation expense for stock options, common
stock and other equity instruments issued to non-employees for
services received based upon the fair value of the services or equity
instruments issued, whichever is more reliably determined. This
information is presented in note 6(b)(ii).
SFAS No. 123, Accounting for Stock Based Compensation, required
entities that continue to apply the provision of APB Opinion No. 25
for transactions with employees to provide pro forma net income and
pro forma earnings per share disclosures for employee stock option
grants made in 1995 and future years as if the fair-value-based method
defined in SFAS No. 123 had been applied to these transactions.
47
<PAGE>
PCSUPPORT.COM, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 5
(Expressed in U.S. Dollars)
Year ended June 30, 1999
Period from December 19, 1997 (inception) to June 30, 1998
- --------------------------------------------------------------------------------
3. Acquisitions:
In June, 1999, PCS merged with Reconnaissance. The acquisition was a
reverse take-over with Reconnaissance being the deemed accounting acquiror
for financial statements purposes.
The acquisition was recorded using the purchase method. Net assets acquired
through the issuance of common stock consisted of cash and cash equivalents
with a fair value of $935,685. Cash and cash equivalents held by PCS were
obtained through a private placement which was contingent on this
acquisition being completed. Acquisition related costs of $46,753 were
incurred and were recorded as a decrease in the acquisition amount carried
in stockholders' equity.
The following table reflects unaudited proforma information which combines
the operations PCS and Reconnaissance for the year ended June 30, 1999 and
the period from December 19, 1997 (inception) to June 30, 1998 as if the
acquisition of PCS had taken place at the beginning of the period. There
were no proforma adjustments required in combining this information of
these two entities. This proforma information does not reflect any non-
recurring charges or credits directly attributable to the transaction. This
proforma information does not purport to be indicative of the revenues and
net loss that could have resulted had the acquisition been in effect for
the period presented and is not intended to be a projection of future
results or trends.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Period from
December 19,
1997
Year ended (inception) to
June 30, June 30,
1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Revenue $ 99 $ -
Cost of service 86 -
- -------------------------------------------------------------------------------
Gross profit 13 -
Expenses
Research and development 17,646 2,814
Marketing and promotion 477,103 120,918
General and administrative 317,685 63,562
Interest, net 6,513 -
- -------------------------------------------------------------------------------
Net loss for the period $ (818,947) $ (187,294)
- -------------------------------------------------------------------------------
Net loss per share $ (0.14) $ (0.04)
- -------------------------------------------------------------------------------
</TABLE>
48
<PAGE>
PCSUPPORT.COM, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 6
(Expressed in U.S. Dollars)
Year ended June 30, 1999
Period from December 19, 1997 (inception) to June 30, 1998
- --------------------------------------------------------------------------------
4. Property and equipment:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
June 30,
------------------
1999 1998
------- ------
<S> <C> <C>
Computer equipment $14,173 $2,295
Furniture and office equipment 1,584 1,027
------- ------
15,757 3,322
Less accumulated depreciation 4,547 620
------- ------
$11,210 $2,702
======= ======
</TABLE>
5. Intangible asset:
Intangible assets includes the cost of acquiring the Company's World Wide Web
domain name and is amortized straight line over a three year period.
6. Stockholders' equity:
(a) Convertible notes payable:
The Company had outstanding a $47,729 convertible note payable to a
shareholder at June 30, 1998 and was advanced an additional $62,314
between July, 1998 and February, 1999. The notes were non-interest
bearing and were converted into 66,029 shares of common stock in
February, 1999.
(b) Stock options, stock-based compensation and share-purchase warrants:
i) Stock options
In 1999, the Company adopted a fixed stock option plan that provides
for the issuance of incentive and non-qualified stock options to
officers, directors, employees, and consultants to acquire shares of
the Company's common stock.
The Board of Directors determines the terms of the options granted,
including the number of options granted, the exercise price and the
vesting schedule. The exercise price for qualified incentive stock
options shall not be less than the fair market value of the
underlying stock at the date of grant, and have terms no longer than
five years from the date of grant. As of June 30, 1999, no options
have been granted under the plan.
49
<PAGE>
PCSUPPORT.COM, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 7
(Expressed in U.S. Dollars)
Year ended June 30, 1999
Period from December 19, 1997 (inception) to June 30, 1998
- --------------------------------------------------------------------------------
6. Stockholders' equity (continued):
(b) Stock options, stock-based compensation and share-purchase warrants
(continued):
ii) Stock-based compensation
In January, 1998, the Company recorded non-cash compensation
expense of $65,647 related to the sale of 489,800 common shares at
$.01 per share to certain stockholders and officers of the Company.
The fair value of the common shares was estimated at $.13 per share
at the time of the transaction.
In January, 1999, the Company recorded non-cash interest expense of
$8,407 related to the issuance of warrants to purchase 20,000
shares of common stock. The warrants are exerciseable immediately
at an exercise price of $.85 per share and expire in January, 2002.
The fair value of the warrants granted is estimated using the
Black-Scholes option pricing model with the following assumptions:
Expected volatility of 70%, risk-free interest rate of 4.8%,
expected life of 3 years, and a 0% dividend yield.
In January, 1999, the Company issued 52,848 shares of common stock
in exchange for services relating to share issuance. The fair value
of these services was estimated based upon the estimated fair value
of the shares at $.85 per share or $45,154. The costs were deducted
from the additional paid-in capital from the sale of common stock
in January, 1999.
In February, 1999, the Company recorded non-cash compensation
expense of $53,924 related to the issuance of 63,440 shares of
common stock to certain stockholders and officers of the Company.
The fair value of the shares was estimated at $.85 per share at the
time of the transaction.
In April, 1999, the Company recorded non-cash compensation expense
and deferred compensation expense of $631,800 related to the
issuance of 1,500,000 shares of common stock at no cost certain
officers and stockholders. The value of the shares was estimated at
$.52 per share. A certain portion of these shares are subject to
vesting over a period of time. Compensation expense relating to
these shares were recorded as deferred stock compensation to be
amortized over their respective vesting periods. In June, 1999, the
Company repurchased 285,000 common shares at $0.0001 per share and
recorded the transaction as shares held in treasury as of June 30,
1999.
Pursuant to an agreement dated July 31, 1999, the Company has the
option to re-purchase certain shares held by executive officers if
their employment ceases with the Company prior to January 1, 2002
at a price of $0.01 per share.
50
<PAGE>
PCSUPPORT.COM, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 8
(Expressed in U.S. Dollars)
Year ended June 30, 1999
Period from December 19, 1997 (inception) to June 30, 1998
- --------------------------------------------------------------------------------
6. Stockholders' equity (continued):
iii) Share purchase warrants:
<TABLE>
<CAPTION> Outstanding warrants
----------------------------
Expiry dates Exercise price per share June 30, 1999 June 30, 1998
------------ ----------------------- ----------------------------
<S> <C> <C> <C>
January, 2004 (6ii) $ 0.85 20,000 -
various (a) $ 0.85 291,838 -
------- -------------
311,838 -
======= =============
</TABLE>
(a) Between January 26, 1999 and February 18, 1999, the Company
issued warrants which are exercisable at $0.85 per share for
a period expiring three months after the completion of an
initial public offering by the Company of its common shares
at a price per share of $0.85 prior to July 18, 1999 and
$1.43 per share thereafter. If the Company completes a
financing of common shares for gross proceeds in excess of
$400,000 Cdn. prior to the expiry of the warrants and the
common shares are sold in excess of the exercise price, the
warrant exercise price will increase to the offering price
per share if the warrants are exercised within 10 days.
(c) Reverse stock split:
In June 1999, the Company authorized a 1-for-5 reverse stock split of
the Company's common stock. All share and per share information has
been adjusted for all periods presented to reflect the reverse stock
split.
7. Operating leases:
The Company leases office facilities in British Columbia under an operating
lease agreement that expires November, 2002. Rent under the agreement
increases 20% and 8.3% after the first and second years, respectively.
Minimum lease payments under operating leases are as follows:
2000 $178,278
2001 351,732
2002 381,039
2003 158,766
Rent expense totalled $9,587 and $7,273 for the year ended June 30, 1999 and
the period from December 19, 1997 (inception) to June 30, 1998,
respectively.
51
<PAGE>
PCSUPPORT.COM, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 9
(Expressed in U.S. Dollars)
Year ended June 30, 1999
Period from December 19, 1997 (inception) to June 30, 1998
- --------------------------------------------------------------------------------
8. Deferred tax assets and liabilities:
<TABLE>
<CAPTION>
June 30,
------------------------
1999 1998
--------- --------
<S> <C> <C>
Deferred tax assets:
Operating loss carry forward $ 228,000 $ 56,000
Share issue costs and other 46,500 300
--------- --------
Total deferred tax assets before valuation allowance 274,500 56,300
Valuation allowance (274,500) (56,300)
--------- --------
Net deferred tax assets $ - $ -
========= ========
</TABLE>
Management believes that it is not more likely than not that it will create
sufficient taxable income sufficient to realize its deferred tax assets. It
is reasonably possible these estimates could change due to future income and
the timing and manner of the reversal of deferred tax liabilities. Due to
its losses, the Company has no income tax expense.
The Company has operating loss carryforwards for income tax purposes at June
30, 1999 of approximately $530,000 (1998 - $123,000). Operating losses begin
to expire in fiscal year 2002.
9. Financial instruments:
(a) Fair values:
The Company regularly invests funds in excess of its immediate needs in
money market accounts. The fair value of cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities
approximates their financial statement carrying amounts due to the
short-term maturities of these instruments. The carrying amount of notes
payable approximates fair value since they have a short-term to
maturity.
(b) Foreign currency risk:
The Company operates internationally which gives rise to the risk that
cash flows may be adversely impacted by exchange rate fluctuations.
52
<PAGE>
PCSUPPORT.COM, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 10
(Expressed in U.S. Dollars)
Year ended June 30, 1999
Period from December 19, 1997 (inception) to June 30, 1998
- --------------------------------------------------------------------------------
10. Related party transactions:
In December, 1997, the Company entered into a contract with stockholders to
provide the duties of President and of Chief Technical Officer. The contract
expires in November 1999, with a twelve month renewal option. The Company
incurred cash compensation expense of $88,204 and $41,564 and non-cash
compensation expense of $302,548 and $58,776 during the year ended June 30,
1999, and the period from December 19, 1997 (inception), to June 30, 1998,
respectively.
In 1999, the Company has entered into a contract with a consulting company
owned by a stockholder to provide the duties of Chief Financial Officer. The
Company incurred cash compensation expense of $19,686 and non-cash
compensation expense of $32,987 during the year ended June 30, 1999.
11. Uncertainty due to the Year 2000 Issue:
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could affect an entity's
ability to conduct normal business operations. The Company is currently
working on their Year 2000 preparations. However, it is not possible to be
certain that all aspects of the Year 2000 Issue affecting the entity,
including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
12. Subsequent events
Subsequent to year-end, the Company granted 430,750 stock options to
officers, directors and employees with an exercise price of $1.0 per share.
53
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
2.1 Articles of Incorporation of the Company dated as of
April 5, 1999.
2.2 Articles/Certificate of Merger of the Company dated as
of April 5, 1999.
2.3 Certificate of Correction of the Company dated as of
June 2, 1999.
2.4 Articles of Merger of the Company dated as of June 21,
1999.
2.5 Bylaws of the Company.
3.1 Form of Warrant issued to former RTI warrantholders in
connection with the Merger.
3.2 Form of Warrant issued to Advanced in connection with
the Merger.
5.1 Plan of Reorganization and Merger dated as of May 5,
1999 between the Company and RTI.
5.2 Contract for Services dated as of June 23, 1999 between
the Company and The Dromond Techonologies Group.
5.3 Consulting Contract dated as of April 1, 1999 between
RTI and Strategic Catalysts Inc.
5.4 Employment and Consulting Contract dated as of July 9,
1999 between the Company and Clifford Rowlands.
5.5 Service Supply Agreement dated as of June 8, 1998
between RTI and StorageTek Canada Inc.
5.6 Service Contract dated as of April 1, 1999 between the
Company and Unisys of Canada Inc.
5.7 Letter of Intent dated as of October 6, 1999 between
the Company and Go Figure Technology Inc.
54
<PAGE>
5.8 Agreement dated as of June 21, 1999 between the Company
and Communicate.com Inc.
5.9 Directors, Officers and Employee Stock Option Plan
approved on July 2, 1999.
5.10 Stock Option Agreement dated as of June 28, 1999
between the Company and Michael McLean.
5.11 Stock Option Agreement dated as of June 28, 1999
between the Company and Steve Macbeth.
5.12 Stock Option Agreement dated as of June 28, 1999
between the Company and David Rowat.
5.13 Stock Option Agreement dated as of June 15, 1999
between the Company and Clifford Rowlands.
5.14 Stock Option Agreement dated as of June 28, 1999
between the Company and Benjamin Catalano.
5.15 Stock Pooling and Escrow Agreement dated as of July 31,
1999 among the Company, Advanced Financial Services
Inc., Alan Ackerman, David Rowat, Clifford Rowlands,
Michael McLean, Steve Macbeth, The Dromond Group Ltd.,
and Owen, Bird.
5.16 Offer to Sub-Lease dated as of April 22, 1999 among
Electronic Arts (Canada), Inc., RTI, and Beutel Goodman
Real Estate Group.
5.17 Lease dated as of March, 26, 1992 between The Canada
Life Assurance Company and Osiware Inc.
5.18 Assignment Agreement dated as of July 29, 1997 among
Infonet Software Solutions Inc., Electronic Arts
(Canada), Inc., and 547495 Ontario Limited.
5.19 Consulting Agreement dated as of September 1, 1999
between the Company and Irwin Olian.
5.20 Consulting Contract dated as of August 6, 1999 between
the Company and M.A. Levy & Assoc.
5.21 Consulting Agreement dated as of June 1, 1998 between
RTI and Rick Mark & Associates.
5.22 First Amendment to Consulting Agreement dated as of
January 25, 1999 between RTI and Rick Mark &
Associates.
5.23 Mutual Release dated as of May 19, 1999 between RTI and
Rick Mark & Associates.
5.24 Letter dated as of May 20, 1999 from RTI to Rick Mark &
Associates giving notice of termination.
55
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
PCSupport.com, Inc.
- --------------------------------------------------------------------------------
(Registrant)
Date: October 14, 1999
By: /s/ Michael G. McLean
___________________________________________
Michael G. McLean
President and Chief Executive Officer
56
<PAGE>
EXHIBIT 2.1
ARTICLES OF INCORPORATION
OF
PCSupport.com, Inc.
Article I. The name of the Corporation is PCSupport.com, Inc.
Article II. Its principal office in the State of Nevada is 774 Mays Blvd.
#10, Incline Village NV 89452. The initial resident agent for services of
process at that address is N&R Ltd. Group, Inc.
Article III. The purposes for which the corporation is organized are to
engage in any activity or business not in conflict with the laws of the State of
Nevada or of the United States of America. The period of existence of the
corporation shall be perpetual.
Article IV. The corporation shall have authority to issue an aggregate of
Fifty-two Million (52,000,000) shares of par value one mil ($0.001) per share,
for a total capitalization of Fifty-Two Thousand ($52,000.00). The Board of
Directors shall be vested with discretion to issue and allocate these shares
among the following two classes, within the following stated limitations: Class
A, Common Equity Voting Stock (hereafter to be called "Common Stock"), not to
exceed 50,000,000 shares; Class B, Special Non-Equity Voting Stock, Convertible
to Common Stock, ("Special Voting Stock") not to exceed 2,000,000 shares; and no
other class or classes of stock. The corporation's capital stock may be sold
from time to time for such consideration as may be fixed by the Board of
Directors, provided that no consideration so fixed shall be less than par value.
Article V. The name and address of the Incorporator of the corporation is
WILLIAM STOCKER, Attorney at Law, 34700 Pacific Coast Highway, Suite 303,
Capistrano Beach CA 92624, PHONE (949) 248-9561. FAX (949) 248-1688. The
affairs of the corporation shall be governed by a Board of Directors of not less
than one (1) nor more than seven (7) persons. The Initial Director of the
corporation, whose name and address is KIRT W. JAMES, 34700 Pacific Coast
Highway, Suite #303, Capistrano Beach CA 92624, to serve until the next regular
meeting of shareholders or until their successors are elected.
Article VI. No shareholder shall be entitled to any preemptive or
preferential rights to subscribe to any unissued stock or any other securities
which the corporation may now or hereafter be authorized to issue, nor shall any
shareholder possess cumulative voting rights at any
<PAGE>
shareholders meeting, for the purpose of electing Directors, or otherwise.
Article VII. The affairs of the corporation shall be governed by a Board
of Directors of not less than one (1) nor more than seven (7) persons. The
Initial Director of the corporation, whose name and address is KIRT W. JAMES,
34700 Pacific Coast Highway. Suite #303, Capistrano Beach CA 92624, to serve
until the next regular meeting of shareholders or until their successors are
elected.
Article VIII. The Capital Stock, after the amount of the subscription
price or par value, shall not be subject to assessment to pay the debts of the
corporation, and no stock issued, as paid up, shall ever be assessable or
assessed.
Article IX. The initial By-laws of the corporation shall be adopted by its
Board of Directors. The power to alter, amend or repeal the By-laws, or adopt
new By-laws, shall be vested in the Board of Directors, except as otherwise may
be specifically provided in the By-laws.
Article X. The Capital Stock, after the amount of the subscription price
or par value, shall not be subject to assessment to pay the debts of the
corporation, and no stock issued, as paid up, shall ever be assessable or
assessed.
I THE UNDERSTAND, being the Incorporator hereinabove named for the purpose
of forming a corporation pursuant the General Corporation Law of the State of
Nevada, do make and file these Articles of Incorporation, hereby declaring and
certifying that the facts herein stated are true, and accordingly have set my
hand hereunto this Day.
Dated: April 5, 1999 /s/William Stocker
------------------
William Stocker
Attorney at Law
Incorporation
<PAGE>
EXHIBIT 2.2
ARTICLES/ CERTIFICATE OF MERGER
BY WHICH
Mex Trans Seafood Consulting, Inc.
(a Texas corporation)
shall merge with and into
PCSupport.com, Inc.
(a Nevada corporation)
First, the PLAN OF REORGANIZATION AND MERGER FOR CHANGE OF SITUS:
1. That certain PLAN OF REORGANIZATION AND MERGER FOR CHANGE OF SITUS, dated
April 5, 1999, is attached hereto and incorporated herein by this reference as
though fully set forth herein.
Second, information re Shareholder Action:
2. Shareholder Action is not required, for the reason that the former
shareholders and the resulting shareholders are the same without dilution or
change, and that the exchange of shares is in effect merely an exchange of
situs. (Nevada: NRS 78.454)(Texas: TxBusCop Act Art 5.03).
Third, Corporate Authority:
3. The PLAN OF REORGANIZATION AND MERGER FOR CHANGE OF situs and the
performance of the terms of the PLAN OF REORGANIZATION AND MERGER FOR CHANGE OF
SITUS, by the each and all of the parties and entities mentioned in the PLAN OF
REORGANIZATION AND MERGER FOR CHANGE OF SITUS were duly authorized by all action
required by the laws under which each was incorporated or organized and by its
constituent documents, to which representation each of the undersigned duly
certifies and attests.
Fourth, Significant Provisions:
4. The Texas Corporation declared a 15 to 1 Reverse Split of its common stock,
19,594,100 shares (pre-split) and 1,310,758 (post-reverse split of this day)
immediately preceding this merger and change of situs. Accordingly, the
conversion of shares shall be made in post-reverse split numbers and amounts:
Fifth, Effective Date:
5. The exchange shall become effective at the earliest date provided or
allowed by law, and not later than certification by each applicable State
Official of that this document has been accepted for filing and filed.
<PAGE>
Sixth Signing:
6. These Articles of Merger and Exchange are signed by the duly authorized
Officers of the each applicable entity as follows:
Mex Trans Seafood PCSupport.com, Inc.
Consulting, Inc. (a Nevada corporation)
(a Texas corporation)
by by
/s/ Kirt W. James /s/ Kirt W. James
- ----------------- -----------------
Kirt W. James Kirt W. James
President, Director President, Director
/s/ Kirt W. James /s/ Kirt W. James
- ----------------- -----------------
Kirt W. James Kirt W. James
Secretary, Director Secretary, Director
<PAGE>
ARTICLES/CERTIFICATE OF MERGER
Mex Trans Seafood Consulting, Inc.
PCSupport.com, Inc.
Attachment
Plan of Reorganization and Merger
<PAGE>
PLAN OF REORGANIZATION AND MERGER
FOR CHANGE OF SITUS
by which
Mex Trans Seafood Consulting, Inc.
(a Texas corporation)
will merge with and into
PCSupport.com, Inc.
(a Nevada corporation)
for the purpose of changing the place of incorporation
This Plan of Reorganization is made effective and dated this day of April
5, 1999, by and between the above referenced corporations, sometimes referred to
herein as "the Public Company" and "the Private Company", respectively.
1. RECITALS
A. The Parties to this Agreement
1. MEX TRANS SEAFOOD CONSULTING, INC. ("the Public Company") is a Texas
Corporation.
2. PCSupport.com ("the Private Company") is a Nevada Corporation, having
been created (or to be created) on behalf of Mex Trans Seafood Consulting, Inc.
for the purpose of changing the place of incorporation from Texas to Nevada.
B. The Capital of the Parties:
1. THE CAPITAL OF THE PUBLIC COMPANY consists of 100,000,000 shares of
common voting stock of $0.0001 par value authorized, of which 19,594,100 shares
(pre-split) and 1,310,758 (post-reverse split of this day) of common stock are
issued and outstanding.
2. THE CAPITAL OF THE PRIVATE COMPANY consists of 5,000,000 shares of
common voting stock, and 2,000,000 shares of convertible special voting stock,
both of $0.001 par value authorized, of which no shares have been or are issued
or outstanding.
C. The Decision to Reorganize to Change Situs: The Parties have resolved,
accordingly, to merge and relocated the place of incorporation, by means of the
following reorganization, by which the Public Texas Company will merge with and
into the Private Company and thereby move to Nevada.
II. PLAN OF REORGANIZATION
A. Change of Situs: The Public Company (Texas) and the Private Company
(Nevada) are hereby reorganized for the sole and singular purpose of changing
the place of incorporation of Mex Trans Seafood Consulting, Inc.; such that
immediately following the Reorganization the Texas Public Company will move to
Nevada.
<PAGE>
1. The Public Company: Mex Trans Seafood Consulting, Inc. of Texas will
merge with and into and thereafter be PCSupport.com, Inc. of Nevada. The Public
Company will retain its corporate personality and status, and will continue its
corporate existence uninterrupted, in and through, and only in and through the
Nevada Corporation.
2. CONVERSION OF OUTSTANDING SHARES: Forthwith upon the effective date
hereof, each and every one share of stock of the Public Texas Company shall be
converted to one share of the Nevada Company. Any such holders of shares may
surrender them to the transfer agent for common stock of the Public Texas
Company, which transfer agent shall remain and continue as transfer agent for
the Nevada Company.
3. EFFECTIVE DATE: This Plan of Reorganization shall become effective
immediately upon approval and adoption by Corporate parties hereto, in the
manner provided by the law of its place of incorporation and its constituent
corporate documents, the time of such effectiveness being called the effective
date hereof.
4. SURVIVING CORPORATIONS: The Nevada Company shall survive the
Reorganization after Reorganization, with the operational history of the Texas
Company before the Reorganization, and with the management, duties and
relationships to its shareholders unchanged by the Reorganization and with all
of its property and with its shareholder list unchanged.
5. FURTHER ASSURANCE, GOOD FAITH AND FAIR DEALING: the Directors of each
Company shall and will execute and deliver any and all necessary documents,
acknowledgments and assurances and do all things proper to confirm or
acknowledge any and all rights, titles and interests created or confirmed
herein; and both companies covenant hereby to deal fairly and good faith with
each other and each others shareholders.
THIS REORGANIZATION AGREEMENT is executed on behalf of each Company by its
duly authorized representatives, and attested to, pursuant to the laws of its
respective place of incorporation and in accordance with its constituent
documents.
Mex Trans Seafood PCSupport.com, Inc.
Consulting, Inc. (a Nevada corporation)
(a Texas corporation)
by by
/s/ Kirt W. James /s/ Kirt W. James
- ----------------- -----------------
Kirt W. James Kirt W. James
President, Director President, Director
/s/ Kirt W. James /s/ Kirt W. James
- ----------------- -----------------
Kirt W. James Kirt W. James
Secretary, Director Secretary, Director
<PAGE>
EXHIBIT 2.3
STATE OF NEVADA Telephone 702.687.5203
OFFICE OF THE SECRETARY OF STATE Fax 702.687.3471
101 N. CARSON ST., STE. 3
CARSON CITY, NEVADA 89701-4786 Filing Fee: $
Certificate of Correction
-------------------------
(Pursuant to NRS 78.0295)
-Remit in Duplicate-
1. The name of the corporation for which correction is being made:
PCSupport.com, Inc.
2. Description of the original document for correction is being made:
Articles of Incorporation
3. Filing date of the original document:
April 7, 1999
4. Description of the incorrect statement and the reason it is incorrect or
the manner in which the execution or other formal authentication was
defective.
Article IV, as now written, states: The corporation shall have authority to
issue an aggregate of Fifty-two Million (52,000,000) shares of par value
one mil ($0.001) per share, for a total capitalization of Fifty-Two
Thousand ($52,000.00). The Board of Directors shall be vested with
discretion to issue and allocate these shares among the following two
classes, within the following sated limitations: Class A, Common Equity
Voting Stock (hereafter to be called "Common Stock"), not to exceed
50,000,000 shares; Class B, Special Non-Equity Voting Stock, Convertible to
Common Stock, ("Special Voting Stock") not to exceed 2,000,000 shares; and
no other class or classes of stock. The corporation's capital stock may be
sold from time to time for such consideration as may be fixed by the Board
of Directors, provided that no consideration so fixed shall be less than
par value.
This paragraph was mistakenly cut and pasted from Articles of another
corporation. The mistake occurred in word processing and was only recently
noticed.
1
<PAGE>
5. Correction of the incorrect statement of defective execution or
authentication:
Article IV, as corrected shall state: The corporation shall have authority
to issue an aggregate of One-Hundred Million (100,000,000) shares of par
value one mil ($0.001) per share, for a total capitalization of Fifty-Two
Thousand ($100,000.00); in a single class, namely, Class A. Common Equity
Voting Stock (hereafter to be called "Common Stock") and no other class or
classes of stock. The corporation's capital stock may be sold from time to
time for such consideration as may be fixed by the Board of Directors,
provided that no consideration so fixed shall be less than par value.
6. Signature:
/s/ Kirt W. James
- ---------------------------------
Signature of Corporate Officer Title of Officer Date
Kirt W. James President June 2, 1999
2
<PAGE>
EXHIBIT 2.4
ARTICLES OF MERGER
BY WHICH
Reconnaissance Technologies, Inc.
(a Wyoming corporation)
shall merge into and become
PCSupport.com, Inc.
(a Nevada corporation)
First, the Plan of Reorganization and Acquisition:
1. That certain PLAN OF REORGANIZATION AND MERGER, dated May 5, 1999 is
attached hereto and incorporated herein by this reference as though fully set
forth herein.
Second, information re Shareholder Action:
2. The Plan was adopted by the Board of Directors of RECONNAISSANCE
TECHNOLOGIES, INC., originally a British Columbia, Canada corporation, having
moved to Wyoming and become the present Wyoming corporation on June 13, 1999,
following Shareholder approval, by requisite consent at a Meeting of
Shareholders of record; the Plan was also adopted by the Board of Directors of
the Nevada corporation following approval by a majority of all shareholders
entitled to vote at a special meeting of shareholders; and by both in accordance
with the laws of their respective jurisdictions and constituent documents.
Third, Corporate Authority:
3. The PLAN OF REORGANIZATION AND MERGER and the performance of the terms of
the PLAN OF REORGANIZATION AND MERGER, by the each and all of the parties and
entities mentioned in the PLAN OF REORGANIZATION AND MERGER were duly authorized
by all action required by the laws under which each was incorporated or
organized and by its constituent documents, to which representation each of the
undersigned duly certifies and attests.
Fourth, Effective Date:
4. The Merger shall become effective at the earliest date provided or allowed
by law, and not later than certification by each applicable State Official of
that this document has been accepted for filing and filed.
<PAGE>
Fifth, Signing:
5. These Articles of Merger are signed by the duly authorized Officers of the
each applicable entity as follows:
Reconnaissance Technologies, Inc., PCSupport.com, Inc.
(a Wyoming Corporation) (a Nevada corporation)
by by
/s/ Michael G. McLean /s/ Kirt W. James
- --------------------- -----------------
Michael G. McLean Kirt W. James
President, Director President, Director
/s/ Steven W. Macbeth /s/ Kirt W. James
- --------------------- -----------------
Steven W. Macbeth Kirt W. James
Secretary, Director Secretary, Director
Executed by Michael G. McLean
and Steven W. Macbeth before
me on the 18th day of June, 1999
/s/ Cory Kent
- -------------
Cory Kent - Notary Public
Cory H. Kent
Barrister & Soliciter
1600 Stock Exchange Tower
609 Granville Street
P.O. Box 10068, Pacific Centre
Vancouver, B.C., V7Y JC3
<PAGE>
ARTICLES OF MERGER Page 3
Reconnaissance Technologies, Inc. and
PCSupport.com, Inc.
PLAN ATTACHED
<PAGE>
EXHIBIT 2.5
By-Laws
OF
PCsupport.com, Inc.
A NEVADA CORPORATION
Article I
Corporate Offices
The principal office of the corporation in the State of Nevada shall be
located at 774 Mays Blvd. Suite 10, Incline Village NV 89451. The corporation
may have such other offices, either within or without the State of incorporation
as the board of directors may designate or as the business of the corporation
may from time to time require.
Article II
Shareholders' Meetings
Section 1. Place of Meetings
The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate any
place, either within or without the State unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
Section 2. Annual Meetings
The time and date for the annual meeting of the shareholders shall be set
by the Board of Directors of the Corporation, at which time the shareholders
shall elect a Board of Directors and transact any other proper business. Unless
the Board of Directors shall determine otherwise, the annual meeting of the
shareholders shall be held on the second Monday of March in each year, if not a
holiday, at Ten o'clock A.M., at which time the shareholders shall elect a Board
of Directors and transact any other proper business. If this date falls on a
holiday, then the meeting shall be held on the following business day at the
same hour.
Section 3. Special Meetings
Special meetings of the shareholders may be called by the President, the
Board of Directors, by
<PAGE>
the holders of at least ten percent of all the shares entitled to vote at the
proposed special meeting, or such other person or persons as may be authorized
in the Articles of Incorporation.
Section 4. Notices of Meetings
Written or printed notice stating the place, day and hour of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) days nor more than
sixty (60) days before the date of the meeting, either personally or by mail, by
the direction of the president, or secretary, or the officer or persons calling
the meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the stockholder at his address
as it appears on the stock transfer books of the corporation, with postage
thereon prepaid.
Section 5. Closing of Transfer Books or Fixing Record Date.
(a) For the purpose of determining stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof, or
stockholders entitled to receive payment of any dividend, or in order to make a
determination of stockholders for any other proper purpose, the directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case twenty (20) days. If the stock
transfer books be closed for the purpose of determining stockholders entitled to
notice or to vote at a meeting of stockholders, such books shall be closed for
at least twenty (20) days immediately preceding such meeting.
(b) In lieu of closing the stock transfer books, the directors may
prescribe a day not more than sixty (60) days before the holding of any such
meeting as the day as of which stockholders entitled to notice of and to vote at
such meeting must be determined. Only stockholders of record on that day are
entitled to notice or to vote at such meeting
(c) The directors may adopt a resolution prescribing a date upon which the
stockholders of record are entitled to give written consent to actions in lieu
of meeting. The date prescribed by the directors may not precede nor be
more than ten (10) days after the date the resolution is adopted by directors.
(d) The Board of Directors may fix a record date, which shall not precede
the date upon which the resolution fixing the record date is adopted for
shareholders entitled to receive payment of any dividend or other distribution
or allotment of any rights of shareholders entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action.
(e) A determination of shareholders entitled to notice of or to vote at a
shareholders' meeting is effective for any adjournment of the meeting unless the
Board of Directors fixes a new record date for the adjourned meeting.
Section 6. Voting List.
The officer or agent having charge of the stock transfer books for the
shares of the corporation shall make, at least ten (10) days before each meeting
of stockholders, a complete list of stockholders
<PAGE>
PCsupport.com, Inc.
BY-LAWS page 3
entitled to vote at such meeting, or any adjournment thereof, arranged in
alphabetical order, with the address of and number of shares held by each, which
list, for a period of ten (10) days prior to such meeting, shall be kept on file
at the principal office of the corporation and shall be subject to inspection by
any stockholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any stockholder during the whole time of the meeting. The
original stock transfer book shall be prima facie evidence as to who are the
stockholders entitled to examine such list or transfer books or to vote at the
meeting of stockholders.
Section 7. Quorum.
At any meeting of stockholders, a majority of fifty percent plus one vote,
of the outstanding shares of the corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of stockholders. If
less than said number of the outstanding shares are represented at a meeting, a
majority of the outstanding shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting originally notified. The stockholders present at
a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
Section 8. Proxies.
At all meetings of the stockholders, a stockholder may vote by proxy
executed in writing by the stockholder or by his duly authorized attorney in
fact. Such proxy shall be filed with the secretary of the corporation before or
at the time of the meeting. Such proxies may be deposited by electronic
transmission.
Section 9. Voting.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled to
vote held by such shareholder. Upon the demand of any stockholder, the vote for
directors and upon any question before the meeting shall be by ballot. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of Nevada.
Section 10. Order of Business.
The order of business at all meetings of the stockholders, shall be as
follows:
a. Roll Call.
b. Proof of notice of meeting or waiver of notice.
<PAGE>
PCsupport.com, Inc.
BY-LAWS page 4
c. Reading of minutes of preceding meeting.
d. Reports of Officers.
e. Reports of Committees.
f. Election of Directors.
g. Unfinished Business.
h. New Business.
Section 11. Informal Action by Stockholders.
Unless otherwise provided by law, any action required to be taken, or any
other action which may be taken, at a meeting of the stockholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the stockholders entitled to vote with respect to the
subject matter thereof. Unless otherwise provided by law, any action required to
be taken, or any other action which may be taken, at a meeting of the
stockholders, may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by a Majority of all of the
stockholders entitled to vote with respect to the subject matter thereof at any
regular meeting called on notice, and if written notice to all shareholders is
promptly given of all action so taken.
Section 12. Books and Records.
The Books, Accounts, and Records of the corporation, except as may be
otherwise required by the laws of the State of Nevada, may be kept outside of
the State of Nevada, at such place or places as the Board of Directors may from
time to time appoint. The Board of Directors shall determine whether and to what
extent the accounts and the books of the corporation, or any of them, other than
the stock ledgers, shall be open to the inspection of the stockholders, and no
stockholder shall have any right to inspect any account or book or document of
this Corporation, except as conferred by law or by resolution of the
stockholders or directors. In the event such right of inspection is granted to
the Stockholder(s) all fees associated with such inspection shall be the sole
expense of the Stockholder(s) demanding the inspection. No book, account, or
record of the Corporation may be inspected without the legal counsel and the
accountants of the Corporation being present. The fees charged by legal counsel
and accountants to attend such inspections shall be paid for by the Stockholder
demanding the inspection.
Article III
Board of Directors
Section 1. General Powers.
The business and affairs of the corporation shall be managed by its board
of directors. The
<PAGE>
PCsupport.com, Inc.
BY-LAWS page 5
directors shall in all cases act as a board, and they may adopt such rules and
regulations for the conduct of their meetings and the management of the
corporation, as they may deem proper, not inconsistent with these by-laws and
the laws of this State.
Section 2. Number, Tenure, and Qualifications.
The number of directors of the corporation shall be a minimum of one (1)
and a maximum of seven (7), or such other number as may be provided in the
Articles of Incorporation, or amendment thereof . Each director shall hold
office until the next annual meeting of stockholders and until his successor
shall have been elected and qualified.
Section 3. Regular Meetings.
A regular meeting of the directors, shall be held without other notice than
this by-law immediately after, and at the same place as, the annual meeting of
stockholders. The directors may provide, by resolution, the time and place for
holding of additional regular meetings without other notice than such
resolution.
Section 4. Special Meetings.
Special meetings of the directors may be called by or at the request of the
president or any two directors. The person or persons authorized to call special
meetings of the directors may fix the place for holding any special meeting of
the directors called by them.
Section 5. Notice.
Notice of any special meeting shall be given at least one day previously
thereto by written notice delivered personally, or by telegram or mailed to each
director at his business address. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
Section 6. Quorum.
At any meeting of the directors fifty (50) percent shall constitute a
quorum for the transaction of business, but if less than said number is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice.
Section 7. Manner of Acting.
The act of the majority of the directors present at a meeting at which a
quorum is present shall
<PAGE>
PCsupport.com, Inc.
BY-LAWS page 6
be the act of the directors.
Section 8. Newly Created Directorships and Vacancies.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of the majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled by
vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the unexpired
term of his predecessor.
Section 9. Removal of Directors.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
Section 10. Resignation.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
or such officer, and the acceptance of the resignation shall not be necessary to
make it effective.
Section 11. Compensation.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance at
each regular or special meeting of the board may be authorized. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 12. Executive and Other Committees.
The board, by resolution, may designate from among its members an executive
committee and other committees, each consisting of one (1) or more directors.
Each such committee shall serve at the pleasure of the board.
Article IV
Officers
Section 1. Number.
<PAGE>
PCsupport.com, Inc.
BY-LAWS page 7
The officers of the corporation shall be the president, a secretary and a
treasurer, each of whom shall be elected by the directors. Such other officers
and assistant officers as may be deemed necessary may be elected or appointed by
the directors.
Section 2. Election and Term of Office.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided. In the event that no election of officers be held by the directors at
that time, the existing officers shall be deemed to have been confirmed in
office by the directors.
Section 3. Removal.
Any officer or agent elected or appointed by the directors may be removed
by the directors whenever in their judgement the best interest of the
corporation would be served thereby, but such removal shall be without prejudice
to contract rights, if any, of the person so removed.
Section 4. Vacancies.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
Section 5. President.
The president shall be the principal executive officer of the corporation
and, subject to the control of the directors, shall in general supervise and
control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the stockholders and of the directors. He
may sign, with the secretary or any other proper officer of the corporation
thereunto authorized by the directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the directors have authorized to be executed, except in cases where the
directors or by these by-laws to some other officer or agent of the corporation,
or shall be required by law to be otherwise signed or executed; and in general
shall perform all duties incident to the office of president and such other
duties as may be prescribed by the directors from time to time.
Section 6. Chairman of the Board.
In the absence of the president or in the event of his death, inability or
refusal to act, the chairman of the board of directors shall perform the duties
of the president, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the president. The chairman of the board of
directors shall perform such other duties as from time to time may be assigned
to him by
<PAGE>
PCsupport.com, Inc.
BY-LAWS page 8
the directors.
Section 7. Secretary.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that all
notices are duly given in accordance with the provisions of these by-laws or as
required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform all
the duties incident to the office of secretary and such other duties as from
time to time may be assigned to him by the president or by the directors.
Section 8. Treasurer.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
Section 9. Salaries.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of fact that he is also a director of the corporation Shares of Stock.
Section 10. Certificate of Stock.
(a) The shares of the Corporation shall be represented by certificates or shall
be uncertificated shares.
(b) Certificated shares of the Corporation shall be signed, (either manually or
by facsimile), by officers or agents designated by the Corporation for such
purposes, and shall certify the number of shares owned by him in the
Corporation. Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and by a registrar, then a
facsimile of the signatures of the officers or agents, the transfer agent or
transfer clerk or the registrar of the Corporation may be printed or
lithographed upon the certificate in lieu of the actual signatures. If the
Corporation uses facsimile signatures of its officers and agents on its stock
certificates, it cannot act as registrar of its own stock, but its transfer
agent and registrar may be identical if the institution acting in those dual
capacities countersigns or otherwise authenticates any stock certificates in
both
<PAGE>
PCsupport.com, Inc.
BY-LAWS page 9
capacities. If any officer who has signed or whose facsimile signature has been
placed upon such certificate, shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer at the date of its issue.
(c) If the Corporation issues uncertificated shares as provided for in these
Bylaws, within a reasonable time after the issuance or transfer of such
uncertificated shares, and at least annually thereafter, the Corporation shall
send the shareholder a written statement certifying the number of shares owned
by such shareholder in the Corporation.
(d) Except as otherwise provided by law, the rights and obligations of the
holders of uncertificated shares and the rights and obligations of the holders
of certificates representing shares of the same class and series shall be
identical.
Section 11. Lost or Destroyed Certificates.
The Board of Directors may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed if the owner: (a) so
requests before the Corporation has notice that the shares have been acquired by
a bona fide purchaser, (b) files with the Corporation a sufficient indemnity
bond; and (c) satisfies such other requirements, including evidence of such
loss, theft or destruction, as may be imposed by the Corporation.
Section 12. Transfers of Shares
(a) Transfers or registration of transfers of shares of the Corporation
shall be made on the stock transfer books of the Corporation by the registered
holder thereof, or by his attorney duly authorized by a written power of
attorney; and in the case of shares represented by certificates, only after the
surrender to the Corporation of the certificates representing such shares with
such shares properly endorsed, with such evidence of the authenticity of such
endorsement, transfer, authorization and other matters as the Corporation may
reasonably require, and the payment of all stock transfer taxes due thereon.
(b) The Corporation shall be entitled to treat the holder of record of any
share or shares as the absolute owner thereof for all purposed and, accordingly,
shall not be bound to recognize any legal, equitable or other claim to, or
interest in, such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section 13. Fractions of Share/Scrip
The Board of Directors may authorize the issuance of certificates or
payment of money for fractions of a share, either represented by a certificate
or uncertificated, which shall entitle the holder to exercise voting rights,
receive dividends and participate in any assets of the Corporation in the
<PAGE>
PCsupport.com, Inc.
BY-LAWS page 10
event of liquidation, in proportion to the fractional holdings; or it may
authorize the payment in case of the fair value of fractions of a share as of
the time when those entitled to receive such fractions are determined; or it may
authorize the issuance, subject to such conditions as may be permitted by law,
of scrip in registered or bearer form over the manual or facsimile signature or
an officer or agent of the Corporation or its agent for that purpose,
exchangeable as therein provided for full shares, but such scrip shall not
entitle the holder to any rights of shareholder, except as therein provided. The
scrip may contain any provisions or conditions that the Corporation deems
advisable. If a scrip ceases to be exchangeable for full share certificates, the
shares that would otherwise have been issuable as provided on the scrip are
deemed to be treasury shares unless the scrip contains other provisions for
their disposition.
Article V
Contracts, Loans, Checks and Deposits
Section 1. Contracts.
The directors may authorize any officer or officers, agent or agents to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authority may be general or confined to
specific instances.
Section 2. Loans.
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the directors. Such authority may be general or confined to specific instances.
Section 3. Checks, Drafts, etc.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation, shall be signed
by such officer or officers, agent or agents of the corporation and in such
manner as shall from time to time be determined by resolution of the directors.
Section 4. Deposits.
All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies or
other depositories as the directors may select.
Article VI
Fiscal Year
<PAGE>
PCsupport.com, Inc.
BY-LAWS page 11
The fiscal year of the corporation shall begin on the 1st day of January in
each year, or on such other day as the Board of Directors shall fix.
Article VII
Dividends
Dividends may be declared and paid out of any funds available therefor, as
often, in such amounts, and at such time or times as the Board of Directors may
determine and shares may be issued pro rata and without consideration to the
Corporation's shareholders or to the shareholder of one or more classes or
series. Shares of one class or series may not be issued as a share dividend to
shareholders of another class or series unless: (i) so authorized by the
Articles of Incorporation; (ii) a majority of the shareholders of the class or
series to be issued approve the issue; or (iii) there are not outstanding shares
of the class or series of shares that are authorized to be issued.
Article VIII
Seal
The directors may provide a corporate seal which shall have inscribed
thereon the name of the corporation, the state of incorporation, year of
incorporation and the words, "Corporate Seal".
Article IX
Waiver of Notice
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
Article X
Interested Directors
No contract or transaction shall be void or voidable if such contract or
transaction is between the corporation and one or more of its Directors or
Officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of its Directors or
Officers, are directors or officers, or have a financial interest, when such
Director or Officer is present at or participates in the meeting of the Board,
or the committee of the shareholders which authorizes the contract or
transaction or his, her or their votes are counted for such purpose, if (a) the
material facts as to his, her or their relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee and are noted in
<PAGE>
PCsupport.com, Inc.
BY-LAWS page 12
the minutes of such meeting, and the Board or committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority of the
disinterested Directors, even though the disinterested Directors be less than a
quorum; or (b) the material facts as to his, her or their relationship or
relationships or interest or interests and as to the contract or transaction are
disclosed or are known to the shareholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by both of the
shareholders; or (c) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee of the shareholders; or (d) the fact of the common
directorship, office of financial interest is not disclosed or known to the
Director of Officer at the time the transaction is brought before the Board of
Directors of the Corporation for such action. Such interested Directors may be
counted when determining the presence of a quorum at the Board of Directors' or
committee meeting authorizing the contract or transaction.
Article XI
Amendments
These by-laws may be altered, amended or repealed and new by-laws may be
adopted in the same manner as their adoption, by the Board of Directors if so
adopted; by a vote of the stockholders representing a majority of all the shares
issued and outstanding, if so adopted or adopted by the Board of Directors; or,
in any case, at any annual stockholders' meeting or at any special stockholders'
meeting when the proposed amendment has been set out in the notice of such
meeting.
Article XII
Indemnification
(a) Indemnification. No officer or Director shall be personally liable for
any obligations of the corporation or for any duties or obligations arising out
of any acts or conduct of said officer or Director performed for or on behalf of
the corporation The corporation shall and does hereby indemnify and hold
harmless each person and his heirs and administrators who shall serve at any
time hereafter as a Director of officer of the corporation from and against any
and all claims, judgments and liabilities which such persons shall become
subject by reason of his having heretofore or hereafter been a Director or
officer of the corporation, or by reason of any action alleged to have been
heretofore or hereafter taken or omitted to have been taken by him as such
Director or officer, and shall reimburse such person for al legal and other
expenses reasonably incurred by him in connection with any such claim or
liability, including power to defend such person from all suits or claims as
provided for under the provisions of the Nevada Uniform Commercial Code and or
Nevada Corporate Law: provided, however, that no such person shall be
indemnified against, or be reimbursed for, any expense incurred in connection
with any claim or liability arising out of his own negligence or willful
misconduct. The rights accruing to any person under the foregoing provisions of
this section shall not exclude any other right to which he may lawfully be
entitled, nor shall anything herein contained restrict the right of the
corporation to indemnify or reimburse such person in any proper case, even
though not specifically herein provided for. The corporation, its directors,
<PAGE>
PCsupport.com, Inc.
BY-LAWS page 13
officers, employees and agents shall be fully protected in taking any action or
making any payment, or in refusing so to do in reliance upon the advice of
counsel.
(b) Other Indemnification. The indemnification herein provided shall not
be deemed exclusive of any other rights to those seeking indemnification may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be director, officer, agent or employee, and shall
inure to the benefit of the heirs, executors and administrators of such person.
(c) Insurance. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer or employee of the
corporation, or is or was servicing at the request of the corporation as a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
liability under the provisions of this section.
(d) Settlement by the Corporation. The right of any person to be
indemnified shall be subject always to the right of the corporation by its Board
of Directors, in lieu of such indemnity, to settle any such claim, action, suit
or proceeding at the expense of the corporation by the payment of the amount of
such settlement and the costs and expenses incurred in connection therewith.
<PAGE>
PCsupport.com, Inc.
BY-LAWS page 14
CERTIFICATION
The Secretary of the Corporation hereby certifies that the foregoing is a
true and correct copy of the By-Laws of the Corporation named in the title
thereto and that such By-Laws were duly adopted by the Board of Directors of
said Corporation on the date set forth below.
Executed, this day of April 28, 1999.
Kirt W. James
Secretary
<PAGE>
EXHIBIT 3.1
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND ARE "RESTRICTED SECURITIES" AS THAT
TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
THE SATISFACTION OF THE COMPANY.
THE WARRANTS REPRESENTED HEREBY WILL BE VOID AND OF NO VALUE UNLESS EXERCISED
WITHIN THE TIME LIMIT PROVIDED
NON TRANSFERRABLE WARRANTS TO PURCHASE
COMMON SHARES OF PCSUPPORT.COM, INC.
Warrant Certificate No. A. Right to Purchase
. Common Shares
THIS CERTIFIES that, for value received, [name of warrantholder] of
[address of warrantholder] (the "Holder"), is the registered holder of a total
of [number of warrants] warrants (the "Warrants") of PCSupport.com, Inc. (the
"Company"). Each Warrant shall entitle the Holder to acquire one common share
(the "Share", and collectively the "Shares") of the Company for a period
expiring on the day (the "Expiry Date") which is three months after the
completion of an initial public offering (an "IPO") of the common shares of the
Company (the "Term") for a price (the "Exercise Price"), subject to adjustment
as hereinafter provided, of (US)$0.84 per share, if exercised on or before 4:00
p.m. (Vancouver time) on July 18/th/, 1999, and thereafter at a price of
(US)$1.34 per share if exercised on or before 4:00 p.m. (Vancouver time) on the
Expiry Date. The number of Shares which the Holder is entitled to acquire upon
exercise of the Warrants and the Exercise Price are subject to adjustment as
hereinafter provided.
1. Adjustment of Exercise Price
In the event that the Company completes an additional equity financing
which results in aggregate gross proceeds to the Company of more than
(Cdn)$400,000 (the "Secondary Financing"), before the Expiry Date, in which
Secondary Financing common shares of the Company, or equity securities which are
convertible into common shares of the Company, are sold at a price that is
greater than the Exercise Price, the Exercise Price will be increased, on the
day the Secondary Financing is completed, to equal the purchase price of the
common shares associated with the Secondary Financing. If the Company
undertakes an IPO and its common shares are listed or quoted on a recognized
stock exchange or stock market in North America, the Exercise Price will be
adjusted to the price at which the common shares of the Company are offered to
the public under such IPO. The Exercise Price, and the extension of the Term
for a period of three months past the date of an IPO, are subject to the
approval of the applicable regulatory authorities, and such terms may be
unilaterally amended by the Company if the Company is required to do so by the
applicable regulatory authorities.
<PAGE>
2. Exercise of Warrants
(a) Election to Purchase. The rights evidenced by this certificate may be
exercised by the Holder in whole or in part and in accordance with the
provisions hereof by delivery of an Election to Purchase in
substantially the form attached hereto as Schedule "A", properly
completed and executed, together with payment of the Exercise Price
for the number of Shares specified in the Election to Purchase, at
Suite 1600, 609 Granville Street, P.O. Box 10068, Pacific Centre,
Vancouver, British Columbia, V7Y 1C3 or such other address in Canada
as the Holder may be notified in writing by the Company. In the event
that the rights evidenced by this certificate are exercised in part,
the Company shall, contemporaneously with the issuance of the Shares
so exercised, cause to be issued to the Holder a Warrant Certificate,
dated as of the date hereof, on identical terms in respect of that
number of Warrants in respect of which the Holder has not exercised
the rights evidenced by this certificate.
(b) Exercise. The Company shall, on the date it receives a duly executed
Election to Purchase and the Exercise Price for the number of Shares
specified in the Election to Purchase (the "Exercise Date"), issue
that number of Shares specified in the Election to Purchase and all
such Shares shall be issued as fully paid and non-assessable common
shares in the capital of the Company.
(c) Share Certificates. As promptly as practicable after the Exercise
Date and, in any event, within five (5) business days of receipt of
the Election to Purchase, the Company shall issue and deliver to the
Holder, registered in such name or names as the Holder may direct or
if no such direction has been given, in the name of the Holder,
certificates for the number of Shares specified in the Election to
Purchase. To the extent permitted by law, such exercise shall be
deemed to have been effected as of the close of business on the
Exercise Date, and at such time the rights of the Holder with respect
to the number of Warrants which have been exercised as such shall
cease, and the person or persons in whose name or names any
certificate or certificates for Shares shall then be issuable upon
such exercise shall be deemed to have become the holder or holders of
record of the Shares represented thereby. Certificates evidencing the
Shares shall bear such restrictive legend, if any, as may be required
pursuant to applicable securities laws.
(d) Fractional Shares and Warrants. No fractional Shares shall be issued
upon exercise of any Warrants and no payments or adjustment shall be
made upon any exercise on account of any cash dividends on the Shares
issued upon such exercise. If any fractional interest in a Share
would, except for the provisions of the first sentence of this Section
2(d), be deliverable upon the exercise of a Warrant, the Company
shall, in lieu of delivering the fractional share therefor, pay to the
Holder an amount in cash equal to the Fair Market Value (as
hereinafter defined) of such fractional interest.
(e) Corporate Changes
(i) Subject to subsection 2(e)(ii) hereof, if the Company shall be a
party to any reorganization, merger, dissolution or sale of all
or substantially all of its assets, whether or not the Company is
the surviving entity, the number of Shares issuable upon exercise
of the Warrants evidenced by this certificate shall be adjusted
so as to apply to the securities to which the holder of that
number of Shares of the Company subject to the unexercised
Warrants would have been entitled by reason of such
reorganization, merger, dissolution or sale of all or
substantially all of its assets (the "Event") if the Warrants
were exercised and the Shares issued immediately prior to
<PAGE>
such Event, and the Exercise Price shall be adjusted to be the
amount determined by multiplying the Exercise Price in effect
immediately prior to the Event by the number of Shares subject to
the unexercised Warrants immediately prior to the Event, and
dividing the product thereof by the number of securities to which
the holder of that number of Shares subject to the unexercised
Warrants would have been entitled to by reason of such Event.
(ii) If, following an Event, the Company is unable to deliver
securities to the Holder pursuant to the proper exercise of a
Warrant, the Company may satisfy such obligations to the Holder
hereunder by paying to the Holder in cash the difference between
the Exercise Price of all unexercised Warrants granted hereunder
and the Fair Market Value of the securities to which the Holder
would be entitled to upon exercise of all unexercised Warrants.
Adjustments under this subsection (e) or (subject to subsection
(n)) any determinations as to the Fair Market Value of any
securities shall be made by the board of directors of the
Company, or any committee thereof specifically designated by the
board of directors to be responsible therefor, and any reasonable
determination made by such board or committee thereof shall be
binding and conclusive, subject only to any disputes being
resolved by the Company's auditors, whose determination shall be
binding and conclusive.
(f) Subdivision or Consolidation of Shares
(i) In the event the Company shall subdivide its outstanding common
shares into a greater number of shares, the Exercise Price in
effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding
common shares of the Company shall be consolidated into a smaller
number of shares or warrants, the Exercise Price in effect
immediately prior to such consolidation shall be proportionately
increased.
(ii) Upon each adjustment of the Exercise Price as provided herein,
the Holder shall thereafter be entitled to acquire, at the
Exercise Price resulting from such adjustment, the number of
Shares (calculated to the nearest tenth of a Share) obtained by
multiplying the Exercise Price in effect immediately prior to
such adjustment by the number of Shares which may be acquired
hereunder immediately prior to such adjustment and dividing the
product thereof by the Exercise Price resulting from such
adjustment.
(g) Change or Reclassification of Shares. In the event the Company shall
change or reclassify its outstanding common shares into a different
class of securities, the rights to acquire Shares evidenced by the
Warrants shall be adjusted as follows so as to apply to the successor
class of securities:
(i) the number of the successor class of securities which the Holder
shall be entitled to acquire shall be that number of the
successor class of securities which a holder of that number of
Shares subject to the unexercised Warrants immediately prior to
the change or reclassification would have been entitled to by
reason of such change or reclassification; and
(ii) the Exercise Price shall be determined by multiplying the
Exercise Price in effect immediately prior to the change or
reclassification by the number of Shares subject
<PAGE>
to the unexercised Warrants immediately prior to the change or
reclassification, and dividing the product thereof by the number
of securities determined in paragraph 2(g)(i) hereof.
(h) Offering to Shareholders. If and whenever at any time prior to 4:00
p.m. on the Expiry Date, the Company shall fix a record date or if a
date of entitlement to receive is otherwise established (any such date
being hereinafter referred to in this Subsection 2(h) as the "record
date") for the issuance of rights or warrants to all or substantially
all the holders of the outstanding common shares of the Company
entitling them, to subscribe for or purchase common shares of the
Company or securities convertible into or exchangeable for common
shares at a price per share or, as the case may be, having a
conversion or exchange price per share less than 95% of the Fair
Market Value (as hereinafter defined) on such record date, the
Exercise Price shall be adjusted immediately after such record date so
that it shall equal the price determined by multiplying the Exercise
Price in effect on such record date by a fraction, of which the
numerator shall be the total number of common shares outstanding on
such record date plus a number equal to the number arrived at by
dividing the aggregate subscription or purchase price of the total
number of additional common shares offered for subscription or
purchase or, as the case may be, the aggregate conversion or exchange
price of the convertible or exchangeable securities so offered by such
Fair Market Value, and of which the denominator shall be the total
number of common shares outstanding on such record date plus the total
number of additional common shares so offered (or into which the
convertible or exchangeable securities so offered are convertible or
exchangeable); common shares owned by or held for the account of the
Company or any subsidiary of the Company shall be deemed not to be
outstanding for the purpose of any such computation; such adjustment
shall be made successively whenever such a record date is fixed; to
the extent that any rights or warrants are not so issued or any such
rights or warrants are not exercised prior to the expiration thereof,
the Exercise Price shall then be readjusted to the Exercise Price
which would then be in effect if such record date had not been fixed
or to the Exercise Price which would then be in effect based upon the
number of common shares or conversion or exchange rights contained in
convertible or exchangeable securities actually issued upon the
exercise of such rights or warrants, as the case may be.
(i) Carry Over of Adjustments. No adjustment of the Exercise Price shall
be made if the amount of such adjustment shall be less than 1% of the
Exercise Price in effect immediately prior to the event giving rise to
the adjustment, provided, however, in such case any adjustment that
would otherwise be required then to be made shall be carried forward
and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward,
shall amount to at least 1% of the Exercise Price.
(j) Notice of Adjustment. Upon any adjustment of the number of Shares and
upon any adjustment of the Exercise Price, then and in each such case
the Company shall give written notice thereof to the Holder, which
notice shall state the Exercise Price and the number of Shares or
other securities subject to the unexercised Warrants resulting from
such adjustment, and shall set forth in reasonable detail the method
of calculation and the facts upon which such calculation is based.
Upon the request of the Holder there shall be transmitted promptly to
the Holder a statement of the firm of independent chartered
accountants retained to audit the financial statements of the Company
to the effect that such firm concurs in the Company's calculation of
the change.
<PAGE>
(k) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon its common shares
payable in Shares;
(ii) the Company shall offer for subscription pro rata to the holders
of its common shares any additional shares of any class or other
rights;
(iii) there shall be any capital reorganization or reclassification
of the capital stock of the Company, or consolidation,
amalgamation or merger of the Company with, or sale of all or
substantially all of its assets to, another Company; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in any one or more of such cases, the Company shall give to the
Holder (A) at least 10 days' prior written notice of the date on which
a record shall be taken for such dividend, distribution or
subscription rights or for determining rights to vote in respect of
any such reorganization, reclassification, consolidation, merger,
amalgamation, sale, dissolution, liquidation or winding-up and (B) in
the case of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up, at least 10
days' prior written notice of the date when the same shall take place.
Such notice in accordance with the foregoing clause (A) shall also
specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of common shares
shall be entitled thereto, and such notice in accordance with the
foregoing clause (B) shall also specify the date on which the holders
of common shares shall be entitled to exchange their common shares for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, amalgamation, sale,
dissolution, liquidation, or winding-up, as the case may be.
(l) Shares to be Reserved. The Company will at all times keep available,
and reserve if necessary under Canadian law, out of its authorized
common shares, solely for the purpose of issue upon the exercise of
the Warrants, such number of Shares as shall then be issuable upon the
exercise of the Warrants. The Company covenants and agrees that all
Shares which shall be so issuable upon due exercise of the Warrants in
accordance with their terms will, upon issuance, be duly authorized
and issued as fully paid and non-assessable. The Company will use its
reasonable best efforts to ensure that all such Shares may be so
issued without violation of any applicable requirements of any
exchange upon which the common shares of the Company may be listed or
in respect of which the common shares are qualified for unlisted
trading privileges. The Company will use its reasonable best efforts
to ensure that all such Shares may be so issued without violation of
any applicable law.
(m) Issue Tax. The issuance of certificates for Shares upon the exercise
of Warrants shall be made without charge to the Holder for any
issuance tax in respect thereto, provided that the Company shall not
be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a
name other than that of the Holder.
(n) Fair Market Value. For the purposes of any computation hereunder, the
"Fair Market Value" at any date shall be the average closing price per
share for the common shares of the Company for the 10 consecutive
trading days immediately before such date on such principal stock
exchange or over-the-counter market as the common shares may then be
listed or quoted (as the case may be), or, if the shares in respect of
which a determination of Fair Market
<PAGE>
Value is being made are not listed on any stock exchange or quoted for
trading by a recognized over-the-counter market, the Fair Market Value
shall be determined by the Board of Directors of the Company, which
determination shall be conclusive.
3. Replacement
Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant Certificate and, if requested
by the Company, upon delivery of a bond of indemnity satisfactory to the Company
(or, in the case of mutilation, upon surrender of this Warrant Certificate), the
Company will issue to the Holder a replacement certificate (containing the same
terms and conditions as this Warrant Certificate).
4. Expiry Period
The Warrants shall expire and all rights to purchase Shares hereunder
shall cease and become null and void at 4:00 p.m. (Vancouver time) on the Expiry
Date. The Warrants may not be exercised during a period commencing upon the
closing of the Company's IPO and expiring on the 11th day thereafter.
5. Governing Law
The laws of the Province of British Columbia and the laws of Canada
applicable therein shall govern the Warrant.
6. Successors
This Warrant Certificate shall ensure to the benefit of and shall be
binding upon the Holder and the Company and their respective successors.
IN WITNESS WHEREOF the Company has caused this Warrant Certificate to
be signed by its duly authorized officers and its corporate seal hereto affixed.
DATED as of the ________ day of_________, 1999.
PCSupport.com, Inc.
Per:
______________________________
Authorized Signatory
Warrant Certificate No. A.
<PAGE>
Schedule "A"
Election to Purchase
The undersigned hereby irrevocably elects to exercise the number of Warrants of
PCSupport.com, Inc. set out below for the number of Shares (or other property or
securities subject therefor) as set forth below:
(a) Number of Warrants to be Exercised:
____________________________________
(b) Number of Shares:
____________________________________
(c) Exercise Price per Share:
____________________________________
(d) Aggregate Purchase Price [(b) multiplied by (c)]
___________________________
and hereby tenders a certified cheque, bank draft or cash for such aggregate
purchase price, and directs such Shares to be registered and a certificate
therefor to be issued as directed below.
DATED this ________ day of ____________,199__.
WITNESS
}
Name }
}
}
Address }
}
}
} [name of warrantholder]
}
}
Occupation }
Direction as to Registration
Name of Registered Holder:
________________________________________________
Address of Registered Holder:
________________________________________________
------------------------------------------------
------------------------------------------------
<PAGE>
EXHIBIT 3.2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND ARE "RESTRICTED SECURITIES" AS THAT
TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
THE SATISFACTION OF THE COMPANY.
THE WARRANTS REPRESENTED HEREBY WILL BE VOID AND OF NO VALUE UNLESS EXERCISED
WITHIN THE TIME LIMIT PROVIDED
NON TRANSFERRABLE WARRANTS TO PURCHASE
COMMON SHARES OF PCSUPPORT.COM, INC.
Warrant Certificate No. A. Right to Purchase
. Common Shares
THIS CERTIFIES that, for value received,[name of warrantholder] of
[address of warrantholder] (the "Holder"), is the registered holder of a total
of [number of warrants] warrants (the "Warrants") of PCSupport.com, Inc. (the
"Company"). Each Warrant shall entitle the holder, subject to the terms and
conditions herein, to acquire one share (the "Share", and collectively the
"Shares") of the Company on payment of (US)$0.84 per share (the "Exercise
Price") at any time on or before the earlier of 4:30 p.m. (Vancouver time) on
January 26, 2000, and the day prior to the day upon which a receipt is issued
for a final prospectus filed in connection with an initial public offering of
the Company's securities (the "Expiry Date"). The number of shares which the
Holder is entitled to acquire upon exercise of the Warrants and the Exercise
Price are subject to adjustment as hereinafter provided.
1. Exercise of Warrants
(a) Election to Purchase. The rights evidenced by this certificate may
be exercised by the Holder in whole or in part and in accordance
with the provisions hereof by delivery of an Election to Purchase in
substantially the form attached hereto as Schedule "A", properly
completed and executed, together with payment of the Exercise Price
for the number of Shares specified in the Election to Purchase at
Suite 1600, 609 Granville Street, P.O. Box 10068, Pacific Centre,
Vancouver, British Columbia, V7Y 1C3 or such other address in Canada
as may be notified in writing by the Company. In the event that the
rights evidenced by this certificate are exercised in part, the
Company shall, contemporaneously with the issuance of the Shares so
exercised, cause to be issued to the Holder a Warrant Certificate,
dated as of the date hereof, on identical terms in respect of that
number of Warrants in respect of which the Holder has not exercised
the rights evidenced by this certificate.
(b) Exercise. The Company shall, on the date it receives a duly executed
Election to Purchase and the Exercise Price for the number of Shares
specified in the Election to Purchase (the "Exercise Date"), issue
that number of Shares specified in the Election to Purchase and all
Shares shall be issued as fully paid and non-assessable common
shares in the capital of the Company.
(c) Share Certificates. As promptly as practicable after the Exercise
Date and, in any event, within five (5) business days of receipt of
the Election to Purchase, the Company shall issue
<PAGE>
-2-
and deliver to the Holder, registered in such name or names as the
Holder may direct or if no such direction has been given, in the
name of the Holder, certificates for the number of Shares specified
in the Election to Purchase. To the extent permitted by law, such
exercise shall be deemed to have been effected as of the close of
business on the Exercise Date, and at such time the rights of the
Holder with respect to the number of Warrants which have been
exercised as such shall cease, and the person or persons in whose
name or names any certificate or certificates for Shares shall then
be issuable upon such exercise shall be deemed to have become the
holder or holders of record of the Shares represented thereby.
Certificates evidencing the Shares shall bear such restrictive
legend, if any, as may be required pursuant to applicable securities
laws.
(d) Fractional Shares and Warrants. No fractional Shares shall be issued
upon exercise of any Warrants and no payments or adjustment shall be
made upon any exercise on account of any cash dividends on the
Shares issued upon such exercise. If any fractional interest in a
Share would, except for the provisions of the first sentence of this
Section 1(d), be deliverable upon the exercise of a Warrant, the
Company shall, in lieu of delivering the fractional share therefor,
pay to the Holder an amount in cash equal to the Fair Market Value
(as hereinafter defined) of such fractional interest.
(e) Corporate Changes
(i) Subject to paragraph 1(e)(ii) hereof, if the Company shall be a
party to any reorganization, merger, dissolution or sale of all
or substantially all of its assets, whether or not the Company
is the surviving entity, the number of Shares issuable upon
exercise of the Warrants evidenced by this certificate shall be
adjusted so as to apply to the securities to which the holder
of that number of Shares of the Company subject to the
unexercised Warrants would have been entitled by reason of such
reorganization, merger, dissolution or sale of all or
substantially all of its assets (the "Event") if the Warrants
were exercised and the Shares issued immediately prior to such
Event, and the Exercise Price shall be adjusted to be the
amount determined by multiplying the Exercise Price in effect
immediately prior to the Event by the number of Shares subject
to the unexercised Warrants immediately prior to the Event, and
dividing the product thereof by the number of securities to
which the holder of that number of Shares subject to the
unexercised Warrants would have been entitled to by reason of
such Event.
(ii) If, following an Event, the Company is unable to deliver
securities to the Holder pursuant to the proper exercise of a
Warrant, the Company may satisfy such obligations to the Holder
hereunder by paying to the Holder in cash the difference
between the Exercise Price of all unexercised Warrants granted
hereunder and the Fair Market Value of the securities to which
the Holder would be entitled to upon exercise of all
unexercised Warrants. Adjustments under this subparagraph (e)
or (subject to subparagraph (o)) any determinations as to the
Fair Market Value of any securities shall be made by the board
of directors of the Company, or any committee thereof
specifically designated by the board of directors to be
responsible therefor, and any reasonable determination made by
such board or committee thereof shall be binding and
conclusive, subject only to any disputes being resolved by the
Company's auditors, whose determination shall be binding and
conclusive.
(f) Subdivision or Consolidation of Shares
(i) In the event the Company shall subdivide its outstanding common
shares into a
<PAGE>
-3-
greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately
reduced, and conversely, in case the outstanding common shares
of the Company shall be consolidated into a smaller number of
shares or warrants, the Exercise Price in effect immediately
prior to such consolidation shall be proportionately increased.
(ii) Upon each adjustment of the Exercise Price as provided herein,
the Holder shall thereafter be entitled to acquire, at the
Exercise Price resulting from such adjustment, the number of
Shares (calculated to the nearest tenth of a Share) obtained by
multiplying the Exercise price in effect immediately prior to
such adjustment by the number of Shares which may be acquired
hereunder immediately prior to such adjustment and dividing the
product thereof by the Exercise Price resulting from such
adjustment.
(g) Change or Reclassification of Shares. In the event the Company shall
change or reclassify its outstanding common shares into a different
class of securities, the rights to acquire Shares evidenced by the
Warrants shall be adjusted as follows so as to apply to the
successor class of securities:
(i) the number of the successor class of securities which the
Holder shall be entitled to acquire shall be that number of the
successor class of securities which a holder of that number of
Shares subject to the unexercised Warrants immediately prior to
the change or reclassification would have been entitled to by
reason of such change or reclassification; and
(ii) the Exercise Price shall be determined by multiplying the
Exercise Price in effect immediately prior to the change or
reclassification by the number of Shares) subject to the
unexercised Warrants immediately prior to the change or
reclassification, and dividing the product thereof by the
number of securities determined in paragraph 1(g)(i) hereof.
(h) Offering to Shareholders. If and whenever at any time prior to the
Time of Expiry, the Company shall fix a record date or if a date of
entitlement to receive is otherwise established (any such date being
hereinafter referred to in this Subsection 1(h) as the "record
date") for the issuance of rights or warrants to all or
substantially all the holders or the outstanding common shares of
the Company entitling them, for a period expiring not more than 45
days after such record date, to subscribe for or purchase common
shares of the Company or securities convertible into or exchangeable
for common shares at a price per share or, as the case may be,
having a conversion or exchange price per share less than 95% of the
Fair Market Value (as hereinafter defined) on such record date, the
Exercise Price shall be adjusted immediately after such record date
so that it shall equal the price determined by multiplying the
Exercise Price in effect on such record date by a fraction, of which
the numerator shall be the total number of common shares outstanding
on such record date plus a number equal to the number arrived at by
dividing the aggregate subscription or purchase price of the total
number of additional common shares offered for subscription or
purchase or, as the case may be, the aggregate conversion or
exchange price of the convertible or exchangeable securities so
offered by such Fair Market Value, and of which the denominator
shall be the total number of common shares outstanding on such
record date plus the total number of additional common shares so
offered (or into which the convertible or exchangeable securities so
offered are convertible or exchangeable); common shares owned by or
held for the account of the Company or any subsidiary of the Company
shall be deemed not to be outstanding for the purpose of any such
computation; such adjustment shall be made successively whenever
such a record date is fixed; to the extent
<PAGE>
-4-
that any rights or warrants are not so issued or any such rights or
warrants are not exercised prior to the expiration thereof, the
Exercise Price shall then be readjusted to the Exercise Price which
would then be in effect if such record date had not been fixed or to
the Exercise Price which would then be in effect based upon the
number of common shares or conversion or exchange rights contained
in convertible or exchangeable securities actually issued upon the
exercise of such rights or warrants, as the case may be.
(i) Carry Over of Adjustments. No adjustment of the Exercise Price shall
be made if the amount of such adjustment shall be less than 1% of
the Exercise Price in effect immediately prior to the event giving
rise to the adjustment, provided, however, in such case any
adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with
the next subsequent adjustment which, together with any adjustment
so carried forward, shall amount to at least 1% of the Exercise
Price.
(j) Notice of Adjustment. Upon any adjustment of the number of Shares
and upon any adjustment of the Exercise Price, then and in each such
case the Company shall give written notice thereof to the Holder,
which notice shall state the Exercise Price and the number of Shares
or other securities subject to the unexercised Warrants resulting
from such adjustment, and shall set forth in reasonable detail the
method of calculation and the facts upon which such calculation is
based. Upon the request of the Holder there shall be transmitted
promptly to the Holder a statement of the firm of independent
chartered accountants retained to audit the financial statements of
the Company to the effect that such firm concurs in the Company's
calculation of the change.
(k) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon its common shares
payable in Shares;
(ii) the Company shall offer for subscription pro rata to the
holders of its common shares any additional shares of any
class or other rights;
(iii) there shall be any capital reorganization or reclassification
of the capital stock of the Company, or consolidation,
amalgamation or merger of the Company with, or sale of all or
substantially all of its assets to, another Company; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in any one or more of such cases, the Company shall give to
the Holder (A) at least 10 days' prior written notice of the date on
which a record shall be taken for such dividend, distribution or
subscription rights or for determining rights to vote in respect of
any such reorganization, reclassification, consolidation, merger,
amalgamation, sale, dissolution, liquidation or winding-up and (B)
in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up,
at least 10 days' prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing
clause (A) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders
of common shares shall be entitled thereto, and such notice in
accordance with the foregoing clause (B) shall also specify the date
on which the holders of common shares shall be entitled to exchange
their common shares for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger,
amalgamation, sale, dissolution, liquidation, or winding-up, as the
case may be.
<PAGE>
-5-
(l) Shares to be Reserved. The Company will at all times keep available,
and reserve if necessary under Canadian law, out of its authorized
common shares, solely for the purpose of issue upon the exercise of
the Warrants, such number of Shares as shall then be issuable upon
the exercise of the Warrants. The Company covenants and agrees that
all Shares which shall be so issuable upon due exercise of the
Warrants in accordance with their terms will, upon issuance, be duly
authorized and issued as fully paid and non-assessable. The Company
will use its reasonable best efforts to ensure that all such Shares
may be so issued without violation of any applicable requirements of
any exchange upon which the common shares of the Company may be
listed or in respect of which the common shares are qualified for
unlisted trading privileges. The Company will use its reasonable
best efforts to ensure that all such Shares may be so issued without
violation of any applicable law.
(m) Issue Tax. The issuance of certificates for Shares upon the exercise
of Warrants shall be made without charge to the Holder for any
issuance tax in respect thereto, provided that the Company shall not
be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in
a name other than that of the Holder.
(n) Fair Market Value. For the purposes of any computation hereunder,
the "Fair Market Value" at any date shall be the average closing
price per share for the common shares of the Company for the 10
consecutive trading days immediately before such date on such
principal stock exchange or over-the-counter market as the common
shares may then be listed or quoted (as the case may be), or, if the
shares in respect of which a determination of Fair Market Value is
being made are not listed on any stock exchange or quoted for
trading by a recognized over-the-counter market, the Fair Market
Value shall be determined by the Board of Directors of the Company,
which determination shall be conclusive.
2. Replacement
Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant Certificate and, if requested
by the Company, upon delivery of a bond of indemnity satisfactory to the Company
(or, in the case of mutilation, upon surrender of this Warrant Certificate), the
Company will issue to the Holder a replacement certificate (containing the same
terms and conditions as this Warrant Certificate).
3. Expiry Date
The Warrants shall expire and all rights to purchase Shares
hereunder shall cease and become null and void at 4:30 p.m. (Vancouver time) on
the Expiry Date.
4. Covenant
So long as any Warrants remain outstanding the Company covenants
that it shall do or cause to be done all things necessary to maintain its status
as a reporting issuer not in default in the Province of British Columbia.
5. Governing Law
The laws of the Province of British Columbia and the laws of Canada
applicable therein shall govern the Warrant.
<PAGE>
-6-
6. Successors
This Warrant Certificate shall enure to the benefit of and shall be
binding upon the Holder and the Company and their respective successors.
IN WITNESS WHEREOF the Company has caused this Warrant Certificate
to be signed by its duly authorized officers and its corporate seal hereto
affixed.
DATED as of the ________________ day of________________________, 1999.
PCSupport.com, Inc.
Per:
----------------------
Authorized Signatory
Warrant Certificate No. A.
<PAGE>
Schedule "A"
Election to Purchase
The undersigned hereby irrevocably elects to exercise the number of Warrants of
PCSupport.com, Inc. set out below for the number of Shares (or other property or
securities subject therefor) as set forth below:
(a) Number of Warrants to be Exercised:
__________________________
(b) Number of Shares:
__________________________
(c) Exercise Price per Share:
__________________________
(d) Aggregate Purchase Price [(b) multiplied by (c)]
__________________________
and hereby tenders a certified cheque, bank draft or cash for such aggregate
purchase price, and directs such Shares to be registered and a certificate
therefor to be issued as directed below.
DATED this _______________ day of ________________________,199___.
[name of warrantholder]
Per:
_______________________________________
Direction as to Registration
Name of Registered Holder:
_________________________________________________
Address of Registered Holder:
_________________________________________________
_________________________________________________
_________________________________________________
<PAGE>
EXHIBIT 5.1
Plan of Reorganization and Merger
BY WHICH
PCsupport.com, Inc.
(A NEVADA CORPORATION)
SHALL MERGE WITH
Reconnaissance Technologies Inc.
(A WYOMING CORPORATION)
This Plan of Reorganization and Merger is made and dated this day of May 5,
1999 by and between the above referenced corporations, and shall become
effective on "the Effective Date" as defined herein.
I. Recitals
A. The Parties to this Plan
1. PCsupport.com, Inc. ("PCS"), the Public Nevada Company, is the
successor to Mex Trans Seafood Consulting, Inc. ("MXT"), a former Texas
Corporation. MXT duly merged with and into PCS, without change of equity or
management, changing only its name and place of incorporation from Texas to
Nevada.
2. Reconnaissance Technologies, Inc. ("RTI"), the Private Company, is a
British Columbia Corporation, which will continue its corporate existence,
become and be a Wyoming Corporation before and at the time of merger
B. The Capital of the Parties:
1. The Capital of PCS consists of 100,000,000 shares of common voting
stock of $.0001 par value authorized, of which 19,594,100 (pre-split) and
1,310,758 shares (post-reverse split) are issued and outstanding. The
effectuation of the 15 to 1 Reverse Split is a condition precedent to the
Merger.
2. The Capital of RTI consists of 100,000,000 shares of common voting
stock of no par value authorized, of which 7,340,773 shares are issued and
outstanding. There are also 1,589,189 warrants issued to acquire additional
shares of common stock. The relative numbers of shares and warrants may be
adjusted before Closing, to reflect exercise of warrants, if any.
3. Each Corporation hereby represents and warrants that the Recitals of
this Section B of Part I, are true, correct and accurate.
C. The Background for the Acquisition: PCS desires to acquire RTI and the
shareholders of RTI wishes to be merged into a public company. The parties
desire that the transaction be accomplished by the merger of RTI with and into
PCS.
<PAGE>
Plan of Reorganization and Merger
PCS/RTI
May 5, 1999 Page 2
II. Conditions Precedent to Reorganization
A. The Boards of Directors of both Corporations respectively shall have
determined that it is advisable and in the best interests of each of them and
both of them to proceed with the acquisition by the Public Corporation, in
accordance with IRS (S)(S) 361(a) and 368(a). These U.S. tax provisions provide
that no gain or loss be recognized from a statutory merger of two corporations.
B. The Shareholders of PCS, shall have approved the acquisition and this
agreement and each shall have been approved and adopted by the Board of
Directors of PCS in a manner consistent with the laws of its Jurisdiction and
its constituent documents.
C. The Shareholders of RTI, shall have approved the acquisition and this
agreement, and each shall have been approved and adopted by the Board of
Directors of RTI in a manner consistent with the laws of its Jurisdiction and
its constituent documents.
D. Effective Date: This Plan of Reorganization shall become effective on
a date designated hereinafter as "the Closing Date"; provided that the following
conditions precedent shall have been met, or waived in writing by the parties:
1. PCS shall have cash on hand, as of Closing, of United States
$960,000.00, less offering expenses of approximately $18,000.00, pursuant
to completed offerings of common stock of PCS, in three stages: (i)
2,093,000 shares at $0.01; (ii) 399,000 shares at $0.50; and (iii) 746,455
shares at $1.00; all amounts in United States Dollars.
2. RTI shall have moved its place of incorporation, and continued its
corporate existence to the State of Wyoming and become a Wyoming
corporation;
3. Each party shall have furnished to the other party all corporate and
financial information which is customary and reasonable, to conduct its
respective due diligence, normal for this kind of transaction. If either
party determines that there is a reason not to complete this Plan of
Reorganization as a result of their due diligence examination, then they
must give written notice to the other party prior to the expiration of the
due diligence examination period. The Due Diligence period, for purposes of
this paragraph, shall expire on a date determined by the parties in
writing, but shall be no later than the Closing Date;
4. On or prior to the Closing, PCS shall have completed the 15 to 1
reverse split of its common stock, such that PCS shall have no more than
4,576,258 (post-reverse) shares of common stock issued and outstanding at
Closing; provided that this figure be subject to upward adjustment for the
provision that no shareholder having less than 100 shares, if
<PAGE>
Plan of Reorganization and Merger
PCS/RTI
May 5, 1999 Page 3
any, shall not be reduced further, and no shareholder having 100 shares or
more shall be reduced below 100 shares.
5. This Plan of Reorganization and Merger shall have been approved by the
holders of more than three-quarters of the common shares of RTI;
6. The rights of all dissenting shareholders, if any, of each party shall
have been satisfied and the Board of Directors of each party shall have
determined to proceed with this Plan of Reorganization and Merger;.
7. All of the terms, covenants and conditions of this Plan of
Reorganization and Merger to be complied with or performed by each party
for Closing shall have been complied with, performed or waived in writing;
and
8. The representations and warranties of the parties, contained in this
Plan of Reorganization and Merger, as herein contemplated, except as
amended, altered or waived by the parties in writing, shall be true and
correct in all material respects at the Closing Date with the same force
and effect as if such representations and warranties are made at and as of
such time; and each party shall provide the other with a corporate
certificate, of a director of each party, dated the Closing Date, to the
effect, that all conditions precedent have been met, and that all
representations and warranties of such party are true and correct as of
that date. The form and substance of each party's certification shall be in
form reasonably satisfactory to the other.
E. Termination. This Plan of Reorganization and Merger may be terminated
at any time prior to closing, whether before or after approval by the
shareholders of RTI; (i) by mutual consent of PCS and RTI; or (ii) by either
party if the other is unable to meet the specific conditions precedent
applicable to its performance within a reasonable time; or (iii) by RTI if
holders of a sufficient number of securities or RTI exercises their dissent
rights such that to complete the transaction herein contemplated would create
undue financial difficulty upon RTI. In the event that termination of this Plan
of Reorganization and Merger by either PCS or RTI, as provided above, this Plan
of Reorganization and Merger shall forthwith become void and there shall be no
liability on the part of either MXT or RTI or their respective officers and
directors.
III. Plan of Reorganization
A. Reorganization and Acquisition: Subject to the terms and conditions of
this Plan of Reorganization and Merger, PCsupport.com, Inc. (Nevada) and
Reconnaissance Technologies Inc. (Wyoming) shall be reorganized, such that PCS
shall merge with Reconnaissance Technologies Inc., and Reconnaissance
Technologies Inc. shall merge with and into PCsupport.com, Inc., and the
separate existence of Reconnaissance Technologies Inc. shall cease, as follows.
<PAGE>
Plan of Reorganization and Merger
PCS/RTI
May 5, 1999 Page 4
B. Conversion of Outstanding Stock: Forthwith upon the the Closing date
hereof, each and every five shares of Reconnaissance Technologies, Inc. shall be
converted into one share of PCsupport.com, Inc., and PCsupport.com, Inc. shall
issue one new investment share (post-reverse) of its common stock to or for the
shareholders of Reconnaissance Technologies, Inc., accordingly. Warrants to
acquire additional shares of RTI shall be deemed warrants to acquire additional
shares of the resulting reorganized public company, and each five RTI warrants
shall be converted into one warrants/option to acquire an additional share of
PCsupport.com, Inc. The list of warrant holders and the number of warrants held
be each warrant holder, and the exercise price of the warrants, are provided and
attached as Exhibit A, hereto and incorporated herein by this reference.
1. Common Stock to be issued for reorganization and acquisition, and common
stock which underlies the warrants, means new investment shares of the
Public Company's Class A Common Equity Voting shares; new investment means
that such shares shall be "Restricted Securities" as defined in Rule
144(a), as promulgated by the Securities and Exchange Commission, of the
United States, pursuant to (S)3(b) of the Securities Act of 1933.
2. Registration Rights there are no existing rights of any existing or
prospective shareholders for Registration of any securities of PCS for
resale or as a class for trading. There are no contractual or other
restrictions upon the rights of the issuer or any person to seek to
register securities for sale, resale or as a class of securities for
trading on NASDAQ or a recognized stock exchange.
C. Surviving Corporation: PCsupport.com, Inc. shall survive the
Reorganization herein contemplated and shall continue to be governed by the laws
of its State of Nevada. The separate existence of Reconnaissance Technologies
Inc. (Wyoming) shall cease, and corporate history and personality of
Reconnaissance Technologies Inc. shall continue through and only through the
corporate existence of PCsupport.com, Inc. (Nevada), the resulting public
corporation.
1. Surviving Articles of Incorporation: the Articles of Incorporation of
PCsupport.com, Inc. shall remain in full force and effect, unchanged.
2. Surviving By-Laws: the By-Laws of PCsupport.com, Inc. shall have been
adopted in form approved by Reconnaissance Technologies Inc., before
Closing, and such By-Laws, as so adopted, shall remain in full force and
effect, unchanged, by this merger.
3. Rights of Dissenting Shareholders: Before Closing, as hereafter
defined, each of the corporations shall be responsible for the rights of
its own dissenting shareholders. RTI shall have the right to terminate this
Plan of Reorganization and Merger if holders of a sufficient number of
securities of RTI exercise their dissent rights such that
<PAGE>
Plan of Reorganization and Merger
PCS/RTI
May 5, 1999 Page 5
to complete the transactions herein contemplated would create undue
financial difficulty upon RTI. Such determination shall be made by the
Board of Directors of RTI, in their sole discretion, acting reasonably.
After Closing, PCsupport.com, Inc. shall be the entity responsible for the
rights of dissenting shareholders, after Closing. Upon merger of the
Wyoming Corporation with the Nevada corporation, the Nevada corporation
shall assume responsibility for the Wyoming Corporation and the Secretary
of State of Nevada shall be appointed as agent for service of process for
the Wyoming Corporation. To whatever extent may be required by the laws of
Wyoming, the Secretary of State of Wyoming shall be appointed as an
alternative or additional agent for service of process with respect to the
Wyoming corporation. The Agent for Mailing Process, if required, following
the merger shall be William Stocker, Special Counsel, 34700 Pacific Coast
Highway, Suite 303, Capistrano Beach CA 92624, until or unless a substitute
agent be duly appointed in his stead.
D. Closing: Subject to the terms and conditions of this Plan of
Reorganization and Merger, on the Closing Date the following events and
transactions ("the Closing") will occur. Such events and transactions will be
deemed to occur in the following order, without any further act or formality on
the part of any the parties hereto and notwithstanding any provisions contained
in or attached to the constituent documents or any outstanding securities of the
parties, but in an orderly and lawful manner and effect:
1. Before Closing: RTI shall merge with and into PCS pursuant to the
Nevada Revised Statutes (the "Nevada Act") and continue as one entity under
the Nevada Act, such that PCS shall be seized of and hold and possess all
of the property, right and interest of RTI and be subject to all the debts,
liabilities and obligations of RTI, and PCS shall continue as the surviving
corporation (for the remainder of this section, referred to as the
"Surviving Corporation"), subject to the following provisions:
(a) The name of the Surviving Corporation shall be "PCsupport.com,
Inc.;
(b) Until changed pursuant to the Nevada Act, the registered agent and
registered office of the Surviving Corporation shall be as stated in
the Articles of Incorporation, and the principal office shall be the
address of the Incorporator as stated therein. The Surviving
Corporation may change its registered agent, office and its principal
executive offices at any time after Closing, in the manner provided in
or consistent with the Nevada Act, and its constituent documents as
then in force.
(c) The Initial Board of Directors of the Surviving Corporation, after
Closing, in contrast to the existing Director or Directors of
PCsupport.com, Inc. before Closing, shall be nominated by RTI and
appointed forthwith upon Closing, by such existing Director or
Directors of PCsupport.com, Inc., to hold office until the first
annual meeting of the shareholders of the Surviving Corporation, or
until their successors are appointed pursuant to the Nevada Act.
<PAGE>
Plan of Reorganization and Merger
PCS/RTI
May 5, 1999 Page 6
(d) Unless the following nominations are changed by RTI in writing,
before Closing, RTI nominates, and the existing Director or Directors
of PCsupport.com, Inc. shall appoint the Initial Directors of the
Surviving Corporation, who will hold office until the first annual
meeting of the shareholders of the Surviving Corporation, or until
their successors are appointed pursuant to the Nevada Act, who shall
be: Mike McLean (Director/President Designate); Steve Macbeth
(Director/Secretary-Treasurer Designate); and Ben Catalano (Director).
2. After Closing: The following events and transactions will occur
immediately or shortly after Closing, and are deemed by the parties to be
an integral part of the Closing process, and material to this agreement:
(a) Subject to the uniform, customary principles, endorsed in the
Nevada Act, to the effect that the governance of the corporation be
vested in the Board of Directors, and the right and duty of the
Surviving Corporation's duly appointed Initial Board of Directors to
make independent judgement as to all matters of corporate governance;
the parties intend that the existing Director or Directors of
PCsupport.com, Inc. shall, forthwith upon Closing prepare such
transitional corporate minutes and documents as are necessary and
reasonably required to complete and effectuate the transition in a
proper and business-like manner; and, unless instructed otherwise in
writing before Closing, or immediately following Closing, by RTI, such
transitional minutes and documents shall be prepared for signature of
the appropriate parties in accordance with the following instructions
of RTI.
(b) The existing Director or Directors of PCsupport.com, Inc. shall,
forthwith upon Closing prepare and provide minutes of the board of
directors following merger which shall provide:
First, for the nomination of RTI directors, the retirement and
resignation of the existing Director or Directors of
PCsupport.com, Inc., and the recital and signature of the duly
appointed directors, to the effect that they shall have accepted
their appointment and taken office immediately;
Second, for the election of new Officers of the Surviving
Corporation, by the newly appointed Directors, as they shall deem
appropriate; unless otherwise instructed by RTI before or
immediately following Closing, the minutes shall provide for the
following officers and offices, such officers of the Surviving
Corporation to hold office until their successors are appointed
pursuant to the Nevada Act: Mike McLean (Director/President
Designate); Steve Macbeth (Director/Secretary-Treasurer
Designate); and Ben Catalano (Director);
<PAGE>
Plan of Reorganization and Merger
PCS/RTI
May 5, 1999 Page 7
Third, for the designation of KPMG as auditors of the
Surviving Corporation (unless otherwise determined by the Board
of Directors of the Surviving Corporation) such appointment to
continue until such time as their successor may be appointed
pursuant to applicable laws; and that the Board of Directors of
the Surviving Corporation may, from time to time, fix the
remuneration of the auditors;
Fourth, for the designation of Madison Stock Transfer Inc.,
unless otherwise determined by the Board of Directors of the
Surviving Corporation, as the Certificate and Transfer Agency of
the Surviving Corporation;
Fifth, that fiscal year-end of the Surviving Corporation shall
be and remain December 31, unless otherwise determined by the
Board of Directors of the Surviving Corporation;
Sixth, that the Officers be empowered and directed to issue to
each holder of record of common shares of RTI will receive one
common share of the Surviving Corporation for each five common
shares of RTI; that holders of warrants or options to acquire
securities of RTI shall receive one PCS warrant for every five
existing RTI warrants, to acquire securities of the Surviving
Corporation as set out on Exhibit A hereto; and that each holder
of record of common shares of PCS (before Closing) will receive
or continue to own one common share of the Surviving Corporation
for each common share of PCS equal to one post-reverse share of
the former Mex Trans Seafood Consulting, Inc.; and further, that
fractional shares will not be issued by the Surviving
Corporation, and any such fractional interest shall not entitle
the owner thereof to vote or to otherwise exercise any rights as
a security holder of the Surviving Corporation.
(c) The existing Director or Directors of PCsupport.com, Inc. shall,
forthwith upon Closing prepare and provide the newly elected officers
with Articles of merger with this plan of reorganization and merger
attached, for execution and notarization by the new President and
Secretary, and will cause the proper filing of such Articles with the
Secretary of State of Nevada. The parties hope that document will be
suitable for filing in Wyoming without change, but should Wyoming
require any different filing or filings, the parties will cooperate in
preparing and filing whatever shall be required to terminate the
separate existence of the RTI in Wyoming.
3. Closing Date: The Reorganization and Merger contemplated by this
Agreement shall close and become effective on a date (the "Closing Date"),
to be determined by the
<PAGE>
Plan of Reorganization and Merger
PCS/RTI
May 5, 1999 Page 8
Boards of Directors of PCS and RTI, in the manner provided by the laws of
places of incorporation and consistent with the constituent corporate
documents of each party, upon the satisfaction or waiver of all of the
conditions precedent hereinbefore or hereinafter after set forth.
E. Mutual Express Covenants:
1. Further Assurances: The Directors of each Corporation shall and will
execute and deliver any and all necessary documents, acknowledgments and
assurances and do all things proper to confirm or acknowledge any and all
rights, titles and interests created or confirmed herein. Specifically, and
without limitation: each party covenants to use all reasonable efforts to
obtain all consents, approvals and waivers, including the approval of its
directors and security holders, that may be necessary or desirable in order
to complete the transactions contemplated herein; take such other measures as
may be appropriate to fulfil its obligations hereunder and to carry out the
transactions contemplated herein; afford to the other parties hereto, and
their financial and legal advisors, reasonable access during normal business
hours, to the management, properties, books, contracts, commitments and
records of such party and to allow the other party hereto and their advisors
to perform an examination of the financial condition, business, affairs,
property and assets of the party and during such period, shall promptly
furnish to the other party hereto, a copy of all information concerning its
business, properties and personnel as the other party hereto may reasonably
request; and use all reasonable efforts to cause each of the conditions
precedent set forth in this Plan of Reorganization and Acquisition to be
completed or complied with on or before Closing, and to complete the actions
following Closing necessary to make the Closing effective.
2. Good Faith and Fair Dealing: Each Corporation covenants hereby to deal
with each other and each others shareholders fairly and in good faith, in
all matters related to this Agreement and the events and transactions
contemplated by it.
3. Executory Period before Closing: Each Corporation agrees with the other
that it will not, during the "executory period" after the making of this
Agreement and until Closing: allot or issue any shares of its capital or
enter into any agreement granting the right, by conversion, exchange or
otherwise, to acquire any of its unissued capital, except as contemplated
herein; declare any dividends; sell all or any part of its assets, or
otherwise enter into any transactions or negotiations which could
reasonably be expected to interfere with or be inconsistent with the
consummation of this Plan of Reorganization and Merger; amend or alter its
constituent documents except as contemplated herein; or engage in any
business, enterprise or activity materially different from that carried on
by it at the date of this Plan of Reorganization and Merger or enter into
any transaction or incur any obligation, expenditure or liability other
than in the ordinary course of business, as presently conducted.
<PAGE>
Plan of Reorganization and Merger
PCS/RTI
May 5, 1999 Page 9
F. General Mutual Representations and Warranties. The purpose and general
import of the Mutual Representations and Warranties, are that each party
has made appropriate full disclosure to the others, that no material
information has been withheld, and that the information exchanged is or
shall be accurate, true and correct. Each Corporation acknowledges and
confirms that it is relying on such representations and warranties in
connection with this plan of reorganization and merger:
1. Organization and Qualification. Each Corporation warrants and
represents that it is duly organized and in good standing, and is duly
qualified to conduct any business it may be conducting, as required by law
or local ordinance.
2. Corporate Authority. Each Corporation warrants and represents that it
has Corporate Authority, under the laws of its jurisdiction and its
constituent documents, to enter into this Agreement and to complete the
transactions contemplated hereby.
3. Ownership of Assets and Property. Each Corporation warrants and
represents that it is duly incorporated and organized and validly
subsisting and in good standing under the laws of its respective
jurisdiction and has the corporate power and authority to own or lease its
assets as now owned or leased and to carry on its business as now carried
on and holds all necessary federal, state and municipal governmental
licenses, permits and authorizations in connection therewith, except for
those where the failure to hold such licenses, permits and authorizations
would not have a material adverse effect on the business, prospects,
property, financial condition or results of its operations. Each
Corporation has lawful title and ownership of its property as reported to
the other, and as disclosed in its financial statements.
4. Current Compliance. To the best of each Corporation's knowledge, it is
in compliance with all applicable governmental laws, by-laws, regulations
and orders material to its corporate existence, operations and properties.
5. Absence of Certain Changes or Events. Each Corporation warrants and
represents that there are and shall be at Closing no material changes of
circumstances or events which have not been fully disclosed to the other
party, and which, if different than previously disclosed in writing shall
have been disclosed in writing as current as is reasonably practicable.
Certain financial statements, have been exchanged between the parties, and
others shall have been exchanged before Closing. All such financial
statements (including the audited financial statements of MXT for the
twelve months ended December 31, 1998) together with the notes thereto
present, and shall present fairly, the financial position of its subject
Corporation as of its respective date, and have been, or shall have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except that the unaudited financial
statements do not contain notes and are subject to year-end adjustments).
To the best of PCS/MXT's knowledge, there have been no changes since
December 31, 1998 in the condition,
<PAGE>
Plan of Reorganization and Merger
PCS/RTI
May 5, 1999 Page 10
financial or otherwise, or in the results of operations of MXT which have
had or may reasonably be expected to have a material adverse effect on the
business, prospects, property, financial condition or results of operations
of MXT. Neither Corporation declared or paid any dividends or otherwise
made any distribution of any kind or nature to any of its shareholders or
has any material liabilities, debts or obligations, whether accrued,
absolute or contingent, which have not been otherwise disclosed, or which
shall not have been disclosed to the other.
6. Litigation and Enforcements. There are no legal, arbitrable,
governmental or other actions, proceedings or investigations pending or
threatened against or otherwise affecting either Corporation or any of its
assets, and to the best of each corporation's knowledge there has been no
event or events which have occurred that could give rise to any such
material action, proceeding or investigation;
7. Absence of Undisclosed Liabilities. Each Corporation warrants and
represents specifically that it has and shall have no material liabilities
which have not been disclosed to the other, in the financial statements or
otherwise in writing, before the merger. "Undisclosed Liabilities", as used
herein, includes without limitation, contingent liabilities of any kind or
sort, including without limitation, employment contracts, and corporate
guaranties;
8. Legal Proceedings. Each Corporation warrants and represents that there
are no legal proceedings, administrative or regulatory proceedings, pending
or suspected, which have not been fully disclosed in writing to the other.
9. No Breach of Other Agreements. Each Corporation warrants and represents
that this Agreement, and the faithful performance of this agreement, will
not cause any breach of any other existing agreement, or any covenant,
consent decree, or undertaking by either, not disclosed to the other.
Neither the execution and delivery of this Plan of Reorganization and
Acquisition, the consummation of the transactions herein contemplated nor
the fulfillment of or compliance with the terms and provisions hereof or
thereof will (i) result in or constitute a material default under, its
articles or by-laws or any material agreement to which its is a party, (ii)
constitute an event which would permit any party to any material agreement
with it, to terminate such agreement or to accelerate the maturity of any
indebtedness of it or other obligation of it, or (iii) result in the
creation or imposition of any encumbrance upon its Shares or any of its
assets.
10. Capital Stock. Each Company warrants and represents that the issued and
outstanding shares and all shares of capital stock of such corporation, is
as detailed herein, that all such shares are in fact issued and
outstanding, duly and validly issued, were issued as and are fully paid and
non-assessable shares, and that, other than as represented in writing,
there are no other securities, options, warrants or rights outstanding, to
acquire further shares of such Corporation, except as mutually disclosed.
<PAGE>
Plan of Reorganization and Merger
PCS/RTI
May 5, 1999 Page 11
(a) The authorized capital of PCS consists of 100,000,000 shares of common
voting stock of $.0001 par value authorized, of which 19,594,100
(pre-split) and 1,310,758 shares (post-reverse split), subject to the
adjustment first mentioned for smaller shareholders, are issued and
outstanding. The effectuation of the 15 to 1 Reverse Split is a condition
precedent to the Merger. PCS shares are validly issued and outstanding as
of all times material hereto as fully paid and non-assessable shares, and
there are no other securities, options, warrants or rights outstanding to
acquire further shares of PCS or of its predecessor MXT.
(b) The Capital of RTI consists of 100,000,000 shares of common voting
stock of no par value authorized, of which 7,340,773 shares are issued and
outstanding. There are also 1,589,189 warrants issued to acquire additional
shares of common stock. The relative numbers of shares and warrants may be
adjusted before Closing, to reflect exercise of warrants, if any. RTI
shares are validly issued and outstanding as of all times material hereto
as fully paid and non-assessable shares, and there are no other securities,
options, warrants or rights outstanding to acquire further shares of RTI or
of its British Columbia predecessor, other than as disclosed herein.
11. Brokers' or Finder's Fees. Each Corporation warrants and represents
that is aware of no claims for brokers' fees, or finders' fees, or other
commissions or fees, by any person not disclosed to the other, which would
become, if valid, an obligation of either company.
12. Tax Returns. PCS warrants and represents that the tax returns of its
predecessor MXT shall be true, accurate and correct.
G. Miscellaneous Provisions
1. At the Closing Date, their shall be no undisclosed changes from that
reflected in the financial and other statements exchanged by the parties.
2. Except as required by law, no party shall provide any information
concerning the Merger or any aspect of the transactions contemplated by this
Agreement to anyone other than their respective officers, employees and
representatives without the prior written consent of the other parties hereto.
The aforesaid obligations shall terminate on the earlier to occur of (a) the
Closing, or (b) the date by which any party is required under its articles or
bylaws or as required by law, to provide specific disclosure of such
transactions to its shareholders, governmental agencies or other third parties.
In the event that the transaction does not close, each party will return all
confidential information furnished in confidence to the other.
3. This Agreement may be executed simultaneously in two or more counterpart
originals. The parties can and may rely upon facsimile signatures as binding
under this Agreement,
<PAGE>
Plan of Reorganization and Merger
PCS/RTI
May 5, 1999 Page 12
however, the parties agree to forward original signatures to the other parties
as soon as practicable after the facsimile signatures have been delivered.
4. The Parties to this agreement have no wish to engage in costly or lengthy
litigation with each other. Accordingly, any and all disputes which the parties
cannot resolve by agreement or mediation, shall be submitted to binding
arbitration under the rules and auspices of the American Arbitration
Association, as a further incentive to avoid disputes, each party shall bear its
own costs, with respect thereto, and with respect to any proceedings in any
court brought to enforce or overturn any arbitration award. This provision is
expressly intended to discourage litigation and to encourage orderly, timely and
economical resolution of any disputes which may occur.
5. If any provision of this Agreement or the application thereof to any person
or situation shall be held invalid or unenforceable, the remainder of the
Agreement and the application of such provision to other persons or situations
shall not be effected thereby but shall continue valid and enforceable to the
fullest extent permitted by law.
6. No waiver by any party of any occurrence or provision hereof shall be
deemed a waiver of any other occurrence or provision.
7. The parties acknowledge that both they and their counsel have reviewed and
revised this agreement and that the normal rule of construction shall not be
applied to cause the resolution of any ambiguities against any party
presumptively. The Agreement shall be governed by and construed in accordance
with the laws of the State of Nevada.
This Plan of Reorganization and Merger is executed on behalf of each
Company by its duly authorized representatives, and attested to, pursuant to the
laws of its respective place of incorporation and in accordance with its
constituent documents.
PCsupport.com, Inc. Reconnaissance Technologies Inc.
(A NEVADA CORPORATION) (A BRITISH COLUMBIA CORPORATION)
formerly which shall become
Mex Trans Seafood Consulting, Inc. and be at Closing
A TEXAS CORPORATION A WYOMING CORPORATION
by by
<PAGE>
EXHIBIT 5.2
-1-
CONTRACT FOR SERVICES
This Agreement made as of this 23rd day of June , 1999.
BETWEEN:
PCsupport.com, INC., a body corporate incorporated under the laws of
the State of Nevada, and having its head office at Vancouver, British
Columbia
(herein called the "Company")
OF THIS FIRST PART
AND:
THE DROMOND TECHNOLOGIES GROUP (as represented by its principals,
Michael McLean and Steve Macbeth), a body corporate incorporated under
the laws of the Province of British Columbia, and having its head
office at Vancouver, British Columbia
(herein called "Dromond")
OF THE SECOND PART
W H E R E A S:
A. The Company is engaged in providing computer support services using the
Internet, and
B. Dromond possesses expertise and experience in the Company's areas of
business.
NOW THEREFORE, in consideration of the premises and the mutual terms, covenants
and conditions hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are acknowledged by the parties, the
parties agree as follows.
ARTICLE 1
TERMS OF ENGAGEMENT
1.1 ENGAGEMENT AND TERM
-------------------
The Company retains the consulting services of Dromond commencing on June 23,
1999. The initial term of this Agreement (the "Initial Term") shall be from June
23, 1999 to December 31, 1999. This Agreement shall be automatically renewed for
successive twelve (12) month periods unless either party notifies the other in
writing no less than ninety (90) days prior to December 31, 1999, in the case of
the Initial Term, or the end of the current twelve (12) month extension period,
of such party's desire to terminate this Agreement.
<PAGE>
-2-
1.2 DUTIES
------
Dromond will serve the Company as an independent consultant and will provide the
mind and management of the Company and perform such further consulting services
as may from time to time be assigned to it by the Board of Directors (the "Board
of Directors") of the Company subject always to the control and direction of the
Board of Directors. Dromond will be responsible for all day to day operations,
including, but not limited to,
(a) the negotiation, execution and implementation of all contracts and
agreements on behalf of the Company;
(b) hiring, supervision and firing of any employee of the Company;
(c) engaging with and coordinating with all legal, accounting and other
professional agents of the Company; and
(d) reporting to the Board of Directors on a regular basis respecting the
Company's affairs.
Dromond agrees that during the term of this Agreement it will assign Michael
McLean ("McLean") and Steve Macbeth ("Macbeth") on a full-time basis to perform
the services contemplated herein. The parties agree that, initially, McLean will
be appointed as President of the Company, and Macbeth as the Secretary of the
Company. Such appointments shall be subject to the discretion of the Board of
Directors, and McLean and/or Macbeth may be assigned additional or alternate
offices or removed from such offices, as the Board of Directors, in its sole
discretion, may determine.
1.3 REMUNERATION
------------
In consideration of the services to be rendered to the Company by Dromond, the
Company will pay to Dromond $16,600 per month plus applicable taxes.
1.4 BONUSES AND OPTIONS
-------------------
Bonuses and stock options shall be granted to Dromond by the Company based upon
the level of performance of Dromond in providing the services outlined above.
Such bonuses and stock option grants will be made in amounts and at times as may
be determined by the Board of Directors in its sole discretion. All grants of
stock options shall be made subject to the Company's stock option plan and
applicable securities legislation. Dromond acknowledges that stock option grants
may be made, at the Company's discretion, directly to McLean and Macbeth, in
their capacity as officers of the Company.
1.5 PERFORMANCE BASED OPTIONS
-------------------------
The Company acknowledges and agrees that Dromond, as an initial founder of the
Company, will be entitled to receive performance based options to be earned out
in the manner provided for under the rules and policies of such stock exchange,
if any, upon which the Company's shares may be listed, and the policies of the
applicable securities regulatory authorities. Dromond acknowledges that such
performance based options may be subject to escrow or pooling agreements and
agrees that it will enter into such agreements where required by the applicable
regulatory authorities or the Company. Such options may be granted directly to
<PAGE>
-3-
McLean and Macbeth instead of to Dromond.
1.6 EXPENSES
--------
The Company will reimburse Dromond for reasonable out-of-pocket expenses
incurred by Dromond in the performance of its duties hereunder.
1.7 CONFIDENTIALITY
---------------
Except as required by law, Dromond will not during the term of this Agreement or
any time thereafter disclose to any person, firm, or corporation other than a
Director or officer of the Company or their respective subsidiaries or
affiliates, any information concerning the confidential affairs of the Company,
whether for his own benefit or to the detriment, or intended or probable
detriment, of the Company. Dromond agrees that it will enter into such
confidentiality and non-competition agreements and it will cause McLean and
Macbeth to enter into such agreements as the Company may reasonably require.
ARTICLE 2
TERMINATION
2.1 TERMINATION BY COMPANY
----------------------
This Agreement may be terminated by the Company by notice in writing to Dromond
at any time during the term hereof, in any of the following events:
(a) for cause, in which event Dromond will be entitled to a seven (7) day
notice or, at the sole discretion of the Company, to be paid the
equivalent termination pay in lieu of such notice; or
(b) if McLean and Macbeth are unable as a result of sickness, accident or
other mental or physical disability to perform his duties hereunder
for a period of more than six (6) consecutive months and, in the
reasonable opinion of the Board of Directors based on medical
evidence, it is unlikely that McLean and Macbeth will be capable of
resuming such duties within the foreseeable future, in which event
Dromond will not be entitled to any notice period,
For the purposes hereof "for cause" will include fraud, misappropriation, theft
or embezzlement of any of the Company's property or any of its subsidiaries'
property, any material breach of the provisions of this Agreement by Dromond,
incompetence, including gross or chronic misconduct or gross or chronic neglect
of duties by Dromond or public conduct of Dromond which causes substantial
detriment to the Company's reputation.
2.2 TERMINATION BY DROMOND
----------------------
This Agreement may be terminated at the option of Dromond upon sixty days
written notice to the Company for any reason whatsoever.
2.3 DEATH
-----
<PAGE>
-4-
For greater certainty, the death of both McLean and Macbeth will automatically
terminate this Agreement as of the date of the later of such deaths.
2.4 OTHER TERMINATION BY COMPANY
----------------------------
This Agreement may be terminated at the option of the Company forthwith upon
written notice to Dromond for any reason whatsoever (other than for those
referred to in Section 2.1) or without reason, provided however that, if this
Agreement is terminated prior to the expiry of the Initial Term, or any
extension thereof pursuant to Section 1.1, the Company forthwith, upon such
written notice, pay to Dromond $60,000, as termination payment and as
consideration for the full release and discharge by Dromond of any rights,
claims, recourse or rights of action which Dromond has or may have against the
Company or any of its subsidiaries in connection with, or in respect of this
Agreement or otherwise, including, without limitation, any salary, bonus, or
remuneration and their benefits arising under this Agreement or otherwise, and
as full and final settlement thereof, whereupon the Company and its subsidiaries
will be provided with a final release and discharge in respect of such rights,
recourse, claims or rights of action.
2.5 EFFECT OF TERMINATION
---------------------
Upon termination of this Agreement except for a termination for cause, Dromond
will be entitled without limitation to all remuneration, rights and privileges
which have accrued to Dromond up to the date of such termination, including
reimbursement for out-of-pocket expenses for which it is entitled to
reimbursement pursuant to Section 1.6.
ARTICLE 3
MISCELLANEOUS
3.1 NOTICE
------
Any notice, direction or other instrument in writing required or permitted to be
given under the terms of this Agreement will be sufficiently given to the party
to whom it is addressed if delivered or forwarded by prepaid mail, cable,
telecopy or telex.
TO THE COMPANY AT: 29th Floor, Three Bentall Centre
595, Burrard Street
P.O. Box 49130, Stn. Bentall Centre
V7X 1J5
TO DROMOND AT: 20658 90A Avenue
Langley, British Columbia
V1M 2N2
or to such other addresses as either party may furnish to the other from time to
time. Every such notice will be deemed to have been received, if mailed, on the
fifth (5th) business day after it was so mailed and otherwise on the day such
notice was delivered, cabled, telecopied or telexed.
3.2 GOVERNING LAW
-------------
<PAGE>
-5-
This Agreement will be governed by and construed in accordance with the laws of
the Province of British Columbia, and each of the parties hereby irrevocably
attorn to the jurisdiction of the courts of the province of British Columbia.
3.3 HEADINGS
--------
The headings employed in this Agreement have been inserted for convenience of
reference only, and will not affect the construction of interpretation of this
Agreement.
3.4 NON-ASSIGNMENT
--------------
This Agreement will not be assignable by either party without the prior written
consent of the other.
3.5 SEVERABILITY
------------
Should any covenant or provision herein be determined to be void or
unenforceable in whole or in part, it will be deemed not to affect or impair the
enforceability or validity of any other covenant or provision hereof, but this
Agreement will so far as is practicable be construed as if such invalid or
unenforceable provision were omitted.
3.6 INDEPENDENT CONTRACTOR
----------------------
The Company and Dromond hereby acknowledge and agree that Dromond is performing
services hereunder as an independent contractor for the Company and that nothing
in this Agreement shall be construed to create a relationship of employer and
employee, principal and agent, partners or joint ventures between the Company
and Dromond. The Company shall not be required to make any deductions from any
payment made to Dromond hereunder, whether for state, federal or foreign income
tax purposes, including but not limited to social security, income tax
withholding, unemployment or disability insurance and other payroll tax
requirement. Dromond will not be entitled to receive any vacation or illness
payments. Dromond agrees that it shall be responsible for any and all other
taxes and other payments due on any payment received by Dromond from the Company
pursuant to the terms of this Agreement. Dromond will indemnify the Company and
hold it harmless from and against all claims, damages, losses and expenses,
including reasonable fees and expenses of attorneys and other professionals,
relating to any obligation imposed by law or regulation on the Company for
income, franchise or employment taxes or payments on any compensation to
Dromond, excluding such payments which are imposed on the Company by law, as the
employer's contribution towards such payments.
The Dromond acknowledges that as an independent contractor the Company will not
be responsible for and will not acquire, for or on behalf of Dromond, or others
for whom Dromond is responsible, insurance of any kind and, as such, Dromond
agrees, to the extent that it deems necessary, to maintain adequate insurance to
protect Dromond (and employees of Consultant) from the following: (a) claims
under worker's compensation and state disability acts; (b) claims for damages
because of bodily injury, sickness, disease or death which arise out of any
negligent act or omission of Dromond; and (c) claims for damages because of
injury to or destruction of tangible or intangible property, including loss of
use resulting therefrom, which arise out of any negligent act or omission of
Dromond. This section shall not preclude the Company from obtaining insurance
for any of its officers.
<PAGE>
-6-
3.7 ARBITRATION
-----------
In the event that any dispute arises among the parties with reference to the
termination of employment of Dromond, and upon which the parties cannot agree,
then such dispute will be referred to a board of three arbitrators in accordance
with the provisions of the Arbitration Act British Columbia or other or similar
legislation in force in the province of British Columbia, from time to time.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed the day
and year first above written.
PCsupport.com, Inc.
Per: /s/ Michael McLean
------------------------------
THE DROMOND TECHNOLOGIES GROUP
Per: /s/ Steve Macbeth
------------------------------
Steve Macbeth
Per: /s/ Michael McLean
------------------------------
Michael McLean
<PAGE>
EXHIBIT 5.3
CONSULTING CONTRACT
BETWEEN
STRATEGIC CATALYSTS INC. ("SCI"), AND
RECONNAISSANCE TECHNOLOGIES INC. ("RTI")
1. Position: SCI will make available its employee, David W. Rowat ("DWR")
for the position of Vice President Finance and Business Development.
2. Reporting: to the President of RTI.
3. Start Date: April 1, 1999.
4. Time Commitment. Full time. RTI will reasonably allow DWR to complete
current assignments on behalf of Strategic Catalysts Inc.
5. Salary: Initially, $5000 per month. Compensation will be increased to
$8300 per month immediately on completing a financing of at least $1
million.
6. Compensation Committee Review. The Board of Directors of RTI will
establish a Compensation Committee. Such Committee will review the
compensation packages for all employees and contractors filling senior
executive positions and will cause such packages, including salary, cash
incentives and performance options, and severance obligations, to be
adjusted to industry standards for the technology industry in the Vancouver
area. Such review will be complete by December 31, 1999, and any such
adjustments will be effective immediately.
7. Timing of Payments.
7.1. Cash Compensation. No later than the last day of each month.
7.2. Cash Incentives. Within 30 days of the completion of the task for
which the incentive is earned.
8. Annual Review. RTI will review SCI's performance and compensation package
no less than annually.
9. Incentive Compensation Plan. RTI will establish an annual Incentive
Compensation Plan ("Plan") for SCI, consisting of cash incentive and
options on common stock of RTI for DWR, on an annual basis beginning in
1999. The Plan will be commensurate with the title, seniority and
performance of SCI, equitable with other senior executives of RTI. The Plan
is subject to the approval of the Compensation Committee. If RTI decides
not to award additional performance options to Mike McLean and Steve
Macbeth due to their positions as Founders of RTI, then the Performance
<PAGE>
Options for DWR will be determined on an equitable basis with the remaining
senior executives of RTI.
10. Accelerated Vesting. If RTI accepts an offer which would effect a change
of control as defined by the Income Tax Act, then all shares and all
options of RTI of any kind which have not vested shall then immediately
vest.
11. Benefits:
11.1 Vacation. Four weeks paid vacation in each calendar year, to be
increased from time to time in accordance with RTI's standard policy.
Unused vacation period can accumulate only until August 31 of the following
year.
11.2 Health and other Benefits. According to such plans in place for all
RTI employees.
12. Severance. If RTI terminates SCI's contract other than for cause,
("Termination"), the following provisions will apply:
12.1 Termination prior to June 30, 1999: no severance payments will be
made.
12.2 Termination during the period from July 1, 1999 to December 31, 2000:
three months severance including salary and performance compensation,
and the continuation of all benefits then in effect, other than long-
term disability, for three months.
12.3 Termination after January 1, 2001: Similarly, three months severance
plus one month for each additional year or partial year of
employment.
12.4. All termination payments will be made in a manner most tax-
efficient for DWR.
12.5 Pursuant to clause 6, the Compensation Committee will recommend
compensation packages for the senior executives. Notwithstanding the
provisions in clauses 15.1 - 15.3, if the Compensation Committee
recommends severance provisions that are more beneficial to DWR in
DWR's sole opinion, then such provisions will apply and clauses
12.1 - 12.3 will be deleted.
13. Non-compete and non-disclosure. DWR agrees to be bound by non-compete and
non-disclosure agreements standard in the industry.
14. Non-assignment. This Contract may not be assigned without the prior
written consent of DWR.
<PAGE>
AGREED:
For SCI: /s/ David W. Rowat
-------------------------------
For RTI: /s/ Mike McLean
-------------------------------
And: /s/ David W. Rowat
-------------------------------
David W. Rowat
/s/ Mike McLean
-------------------------------
Mike McLean
/s/ Steve Macbeth
-------------------------------
Steve Macbeth
Date: _______________________________
<PAGE>
EXHIBIT 5.4
EMPLOYMENT AND CONSULTING CONTRACT
AMONG
CLIFFORD ROWLANDS ("CR"), AND
PCSUPPORT.COM INC. ("PCS")
Whereas:
1. CR is an independent contractor,
2. PCS wishes to engage CR in a consulting assignment for the period June 14,
1999 to August 31, 1999, the successful execution of which will lead to a
full-time employment contract between PCS and CR,
3. CR wishes to earn an equity position in PCS,
Therefore:
This agreement establishes the components of the Consulting Assignment between
PCS and CR and the Employment Contract between PCS and CR.
CONSULTING AGREEMENT
1. Terms of Reference: To advance the business plan of PCS in
general, including the financing of PCS and
the distribution of PCS's products and
services.
2. Start Date: 14 June 1999.
3. Completion Date: 31 August 1999.
4. Time Commitment: Minimum 80%.
5. Compensation Schedule: Minimum $8,000 per month or as agreed by
compensation committee ("Base Amount").
6. Payment Schedule: On the last day of each month. PCS will treat
such payments as employment obligations.
7. Indemnification: PCS agrees to fully indemnify and hold
harmless CR from all damages which may occur
as a result of CR acting on behalf of PCS.
This indemnification will include funding of
all expenses incurred by CR in defending
itself or themselves from actions relating to
this Consulting Agreement.
<PAGE>
EMPLOYMENT CONTRACT
The following sets out the terms under which PCS will offer employment to CR
upon successful completion of the Consulting Assignment with SMI set out above.
1. Position: Vice President
2. Reporting: to the President of PCS.
3. Start Date: September 1, 1999.
4. Time Commitment. Full-time.
5. Salary: Equal to other like members of the PCS management team.
Initially this will be $8,300/month.
6. Compensation Committee Review. The Board of Directors of PCS will establish
a Compensation Committee. Such Committee will review the employment
packages for all senior executives and will cause such employment packages,
including salary, cash incentives and performance options, to be adjusted
to industry standards for the technology industry in the Vancouver area.
Such review will be complete by December 31, 1999.
7. Timing of Payments.
7.1 Salary. No later than the last day of each month.
7.2 Cash Incentives. Within 30 days of the completion of the task
for which the incentive is earned.
8. Annual Review. PCS will review CR's performance and
compensation package no less than annually.
9. Base Equity. 150,000 options. Vested monthly over 36
months starting July 1, 1999. Other details
as per the standard executive PCS Options
agreement.
10. Benefits:
10.1 Vacation. Four weeks paid vacation in each calendar
year, to be increased from time to time in
accordance with PCS's standard policy. Unused
vacation period can accumulate only until
August 31 of the following year.
10.2 Health Benefits. According to such plans in place for all PCS
employees.
<PAGE>
11. Severance. If PCS terminates CR's performance other than for cause
("Termination"), the following provisions will apply:
11.1 Termination prior to December 31, 1999: no severance payments will be
made.
11.2 Termination during the period from January 1, 2000 to December 31,
2000: three months severance including salary and performance
compensation, and the continuation of all benefits then in effect,
other than long-term disability, for three months.
11.3 Termination after January 1, 2001: Similarly, three months severance
plus one month for each additional year or partial year of
employment.
11.4 All termination payments will be made in a manner most tax-efficient
for CR.
11.5 Pursuant to clause 6, the Compensation Committee will recommend
compensation packages for the senior executives. Notwithstanding the
provisions in clauses 15.1-15.3, if the Compensation Committee
recommends severance provisions that are more beneficial to CR in
CR's sole opinion, then such provisions will apply and clauses 15.1-
15.3 will be deleted.
12. Non-compete and non-disclosure. CR agrees to be bound by non-compete and
non-disclosure agreements standard in the industry.
13. Non-assignment. This Contract may not be assigned without the prior written
consent of CR.
AGREED:
________________________
Cliff Rowlands
________________________
Mike McLean
Date: ________________________
<PAGE>
EXHIBIT 5.5
SERVICE SUPPLY AGREEMENT
THIS AGREEMENT entered into as of June 8, 1998 (Effective Date) between
StorageTek Canada, Inc., having its principal place of business at 5580 Explorer
Drive, Suite 300, Mississauga, Ontario and Reconnaissance International Ltd., a
company under the laws of the British Virgin Islands, concerns the provision of
remote data management services by StorageTek to RIL and End-Users.
WITNESSES THAT IN CONSIDERATION of $10 now paid by RIL to StorageTek, the
receipt and sufficiency of which StorageTek hereby acknowledges, the parties
hereby covenants and agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions. In this Agreement the following words and phrases have the
- --- -----------
following meanings:
a) "End-User" means any customer of RIL and RIL's Business who uses the
Services.
b) "RIL" means Reconnaissance International Ltd. and any of its agents or
licensees which sign the Adhesion Agreement set out as Schedule E.
c) "RIL's Business" means the business of providing remote data backup,
data restoration services, and hardware replacement of notebook
computers to End-Users.
d) "Service Fees" means fees payable to StorageTek determined in
accordance with Schedule A to this Agreement, which amounts do not
include any Taxes.
e) "Services" means the supply of remote data management services and the
provision of the StorageTek Software to RIL and End-Users, as more
particularly described in Schedule B to this Agreement.
f) "StorageTek" means StorageTek Canada, Inc.
g) "StorageTek Software" means the software listed and described in
Schedule C to this Agreement.
h) "Taxes" means all federal, provincial or local sales, use, goods and
services or other taxes, customs duties, or similar tariffs and fees
which StorageTek may be required to pay or collect upon the delivery
of the Services, but does not include any income taxes payable by
StorageTek.
1.2 Term. The term of this Agreement shall commence on the Effective Date and
- --- ----
shall expire on the second anniversary of the Effective Data unless
terminated earlier in accordance with Article 4 (Termination) of the
Agreement; provided, however, that the term of this Agreement will
automatically extend for successive twelve-month periods after the second
anniversary of the Effective Date unless either of the parties notifies the
other party in writing at least three months prior to such date, or the end
of any twelve-month extension period, as the case may be, that this
Agreement will not be so extended.
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<PAGE>
1.3 Amendment. No modification, change or amendment to this Agreement, nor any
- --- ---------
waiver of any rights in respect hereto, shall be made by either party
unless agreed to in writing by the other party. The waiver of one breach of
default hereunder shall not constitute the waiver of any subsequent breach
or default.
1.4 Relationship of Parties. The relationship of StorageTek and RIL established
- --- -----------------------
by this Agreement is that of independent contractors, and nothing contained
in this Agreement shall be construed to (a) give either party the power to
direct and control day-to-day activities of the other or (b) constitute the
parties as partners, joint ventures, co-owners or otherwise as participants
in a joint or common undertaking. RIL, its agents and employees are not the
representatives of StorageTek for any purpose except as expressly set forth
in this Agreement, and they have no power or authority as agent, employee
or in any other capacity to represent, act for, bind or otherwise create or
assume any obligation on behalf of StorageTek for any purpose whatsoever.
In all matters relating to this Agreement, neither RIL nor its employees,
or agents are, or shall act as, employees of StorageTek within the meaning
or application of any laws of any country or other jurisdiction covering
unemployment insurance, old-age benefit, social security, workers'
compensation or industrial accidents or under any other laws or regulations
which may impute any obligations or liabilities to StorageTek by reason of
an employment obligation. All financial obligations associated with RIL
business are the sole responsibility of RIL. All collection of invoices or
other Agreements between RIL and its End-Users are RIL exclusive
responsibility and shall have no effect on RIL obligations under this
Agreement. RIL shall be solely responsible for, and shall indemnify and
hold StorageTek harmless from any and all claims by others, costs and
damages (including the attorneys' fees at trial and on appeal) arising out
of the acts of any RIL employees, servants, or agents.
1.5 Entire Agreement. This Agreement constitutes the entire agreement between
- --- ----------------
the parties with respect to the matters addressed herein and supersedes all
prior or contemporaneous understandings or agreements, written or oral,
regarding such subject matter. No amendment to or modification of this
Agreement will be binding unless in writing and signed by a duly authorized
representative of StorageTek and RIL.
1.6 Controlling Law and Severability. This Agreement shall be governed by and
- --- --------------------------------
construed in accordance with the laws of the Province of Ontario. If for
any reason a court of competent jurisdiction finds any provision of this
Agreement or portion thereof, to be unenforceable, that provision of the
Agreement shall be enforced to the maximum extent permissible so as to
effect the intent of the parties, and the remainder of this Agreement shall
continue in full force and effect.
1.7 Force Majeure. Neither party shall be responsible for any failure to
- --- -------------
perform (other than payment obligations) due to unforeseen circumstances or
to causes beyond a party's control, including but not limited to acts of
God, war, riot, embargoes, acts of civil or military authorities, fire,
floods, accidents, strikes, or shortages of transportation, facilities,
fuel, energy, labour or materials. In the event of any such delay,
StorageTek may defer the delivery date of orders for Services for a period
equal to the time of such delay.
1.8 Section Headings. The section headings contained herein are for reference
- --- ----------------
only
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<PAGE>
and shall not be considered substantive parts of this Agreement. The use of
the singular or plural form shall include the other form and the use of the
masculine, feminine or neuter gender shall include the other genders.
1.9 Schedules. The following schedules are attached to and form an integral
- --- ---------
part of this Agreement:
Schedule A Service Fees
Schedule B Services
Schedule C Software
Schedule D End-User License
Schedule E Licensee Adhesion
ARTICLE 2
APPOINTMENT OF STORAGETEK AS SUPPLIER
2.1 Appointment. RIL hereby appoints StorageTek as its non-exclusive supplier
- --- -----------
for the Services and StorageTek covenants to supply the Services and the
StorageTek Software throughout the term of this Agreement, for the purposes
of RIL's business in accordance with this Agreement and all Schedules
attached hereto.
2.2 Non-Competition by StorageTek. StorageTek covenants with RIL that during
- --- -----------------------------
the term of this Agreement StorageTek will not compete, directly or
indirectly, with RIL with respect to RIL's Business as outlined in this
Agreement. StorageTek will not provide the Services to persons with the
expressed intent to compete with RIL with respect to RIL's Business.
StorageTek will notify RIL, in writing, immediately upon learning of any
person whom will be competing with RIL with respect to RIL's Business.
2.3 Service Fees. RIL will pay the Service Fees to StorageTek monthly in
- --- ------------
arrears. RIL shall pay StorageTek for Services in Canadian dollars within
30 days from the date of invoice by StorageTek. StorageTek will provide,
monthly, a master invoice which will include a list of all End-User
accounts for the previous month. RIL will pay all Taxes properly due in
respect of the Services.
2.4 Minimum Annual Service Fee Requirements. RIL will ensure that the total
- --- ---------------------------------------
amount of Service Fees paid to StorageTek during each calendar year is
equal to or exceeds the minimum annual service fee requirement set out in
Schedule A (the "Minimum Annual Service Fee Requirements").
2.5 Late Payment Penalty. If any amount payable or to be remitted with respect
- --- --------------------
to Service Fees is not paid when due, interest shall accrue and be paid on
such amount, calculated for each day from such due date until such amount
is paid in full, at a rate per annum equal to twelve percent (12%). Such
interest shall be paid on demand, both before and after default, demand and
judgement, with interest on overdue interest at the same rate. All
calculations of interest under this Agreement shall be paid daily, based on
monthly compounding, on the basis of a 365 or 366 day year, as applicable.
2.6 Price Protection. As of each anniversary of the Effective Date StorageTek
- --- ----------------
may
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<PAGE>
increase the Service Fees for the following 12 month period provided that
StorageTek will have given RIL:
a) in the event of a proposed increase up to 15% over the level of the
Service Fee for the preceding 12 month period, at least 30 days prior
written notice; and
b) in the event of a proposed increase more than 15% over the level of the
Service Fee for the preceding 12 month period, at least 90 days prior
written notice.
2.7 Provision of Information. StorageTek shall, at its own cost, provide RIL
- --- ------------------------
with (a) information regarding changes and innovations in the performance,
serviceability, use and application of all Services and StorageTek Software
and (b) data, product brochures and manuals in support of the Services and
StorageTek Software.
2.8 Training. StorageTek shall, at its own cost, provide RIL with training in
- --- --------
the use of the Services for that number of persons annually chosen by RIL
and agreed upon in writing by both parties, provided RIL pays all salaries,
travel and other out-of-pocket expenses of RIL personnel taking part in
such training. StorageTek shall make all of its training materials
available to RIL.
2.9 Support by StorageTek. StorageTek shall provide telephone support services
- --- ---------------------
to RIL and End-Users for the Services. StorageTek's support telephone
number will be available 24 hours each day, including weekends and
holidays. StorageTek will respond to RIL and End-Users in accordance with
StorageTek's normal business practices of providing such services to its
customers.
2.10 Response Time. StorageTek will respond within a reasonable time by
- ---- -------------
electronic mail, facsimile or telephone to any question received from RIL
concerning resolution of software problems. If the problem is not resolved
within one business day, StorageTek will confirm escalation of the problem
situation and nominate a contact for RIL at StorageTek.
2.11 Reports. StorageTek will provide RIL with written reports showing:
- ---- -------
a) detailed monthly usage by each End-User;
b) daily exception report indicating those End-Users who have not properly
accessed the Services or for which other discrepancies have been
identified; and
c) a weekly new End-User report indicating each new End-User.
2.12 Association of End-Users with RIL Agents. RIL will notify StorageTek of
- ---- ----------------------------------------
every RIL Agent (as that term is defined in Schedule E) who has primary
responsibility for any End-User and the names of such End-Users. RIL shall
ensure that no RIL Agent or Licensee will provide any of the Services to
End Users until such Agent or Licensee has signed and delivered to
StorageTek an Adhesion Agreement in the form set out as Schedule E.
ARTICLE 3
IP ISSUES, CONFIDENTIALITY AND LIMITATION OF LIABILITY
3.1 License to StorageTek Software. StorageTek hereby grants to RIL a royalty-
- --- ------------------------------
free, non-exclusive, personal, non-transferable, non-assignable, limited
license to reproduce, license, sublicense or otherwise distribute, and have
reproduced,
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<PAGE>
licensed, sublicensed or otherwise distributed, to and by third parties,
object code versions of the StorageTek Software to be used by End-Users in
connection with the Services. RIL agrees to provide the StorageTek Software
to End-Users only in accordance with the End-User License set out as
Schedule D to this Agreement.
3.2 Ownership. Except as expressly licensed to RIL in section 3.1, StorageTek
- --- ---------
retains all right, title and interest in and to the StorageTek Software.
Except as expressly granted in this Agreement, RIL shall have no other
rights in the StorageTek Software and under no circumstances will anything
in this Agreement be construed as granting, by implication, estoppel or
otherwise, a license to any StorageTek technology other than the StorageTek
Software.
3.3 Ownership of StorageTek Software. The StorageTek Software shall be and
- --- --------------------------------
remain the property of StorageTek or third parties from whom StorageTek has
obtained a licensing right. The StorageTek Software constitutes StorageTek
trade secrets and confidential information (hereinafter "Confidential
Information") of StorageTek and its licensors. RIL shall not make
Confidential Information available in any form to any person other than RIL
employees whose job performance requires such access and to End-Users in
strict accord with this Agreement. RIL shall take appropriate action to
protect the confidentiality of and to ensure that any person permitted
access to the Confidential Information does not provide or disclose it to
others. This subsection shall survive the termination of this Agreement.
3.4 No Rights in Marks. Except as otherwise stated in this Agreement, RIL
- --- ------------------
obtains no rights in relation to StorageTek's trademarks and has no right
to sublicense the use or give any third party any consent to use or
register a name or mark. StorageTek obtains no rights in relation to RIL's
Business, name or any of its trademarks and has no right to sublicense the
use or give any third party any consent to use or register a name or mark.
3.5 Right to use Name. RIL and StorageTek shall each be entitled during the
- --- -----------------
Term without charge to use the name and trademarks of the other party in
its advertising, promotions, marketing documents, sales information and
similar materials (in physical or electronic media) for the limited purpose
only of disclosing to the public that StorageTek provides the Services,
provided that each party will advise the other in advance before using any
such name or trademarks and give the other party an opportunity to review
the manner in which they will be used, it being recognized that each party
is entitled to control the manner in which its name and trademarks are
used.
3.6 No Authority. Neither RIL nor StorageTek shall act in any manner that would
- --- ------------
expose the other party to any liability, nor pledge nor purport to pledge
credit of the other party. Neither will, unless agreed to by the other
party, describe itself as associated with the other party in
correspondence, commercial documents and on any name place or sign on its
premises which describes or relates to the Services or RIL's Business.
3.7 Confidentiality. Each party acknowledges that by reason of its relationship
- --- ---------------
with the other under this Agreement it will have access to certain
information and materials concerning the other party and its affiliates and
their business, plans, End-Users and services which are confidential and of
substantial value to each party, and which value would be impaired if such
information were disclosed to
-5-
<PAGE>
third parties. Each party agrees that it shall not disclose or use in any
way for its own account or the account of any third party or disclose to an
employee who has no need to know or any third party any such confidential
information, which is revealed to it by the other party or any of its
subsidiaries. Each party will take every reasonable precaution to protect
the confidentiality of such information. In the event of termination of the
Agreement, there shall be no use or disclosure by either party of any
confidential information of the other or any of its subsidiaries, and the
provisions of this Section shall survive termination or expiration for any
reason.
3.8 Limited Rights. This license does not entitle RIL or any End-User to
- --- --------------
receipt or use of the source code for the StorageTek Software.
3.9 Claims. RIL will notify StorageTek in writing of any claim or proceeding
- --- ------
involving the Services within 10 calendar days after RIL learns of such
claim or proceeding. RIL will report promptly to StorageTek all claimed or
suspected defects in the Services.
3.10 Defense of Claims. StorageTek shall, at its option and expense, defend or
- ---- -----------------
settle any action brought against RIL alleging that any StorageTek Software
infringes a Canadian patent or copyright. StorageTek will pay any costs and
damages finally awarded against RIL that are attributable to such claim,
provided that RIL (a) notifies StorageTek upon discovery of such claim or
action, in writing, (b) provides StorageTek all reasonable information and
assistance to settle or defend the action, and (c) grants StorageTek sole
authority and control of the defence or settlement of the action.
3.11 StorageTek Options. In lieu of the provisions of section 3.10, if an
- ---- ------------------
infringement claim is made, or in StorageTek's opinion is likely to be
made, StorageTek may at its option and expense either (a) replace or modify
the infringing StorageTek Software or other protected intellectual
property, so that it becomes non-infringing or (b) procure for RIL and End-
Users the right to continue using the infringing intellectual property.
3.12 Use With Other Software. StorageTek shall have no liability if the alleged
- ---- -----------------------
infringement is based upon (a) the combination of the StorageTek Software
with any product not furnished by StorageTek to RIL, (b) the modification
of the StorageTek Software other than by StorageTek, (c) the use of the
StorageTek Software as part of any infringing process, or (d) the use of
other than a current unaltered release of the StorageTek Software.
3.13 LIMITATION OF LIABILITY. STORAGETEK'S ENTIRE LIABILITY UNDER THIS
- ---- -----------------------
AGREEMENT SHALL BE LIMITED TO THE "EFFECTIVE LIMIT OF LIABILITY", TOGETHER
WITH RIL'S COSTS IF RIL SHOULD BE REQUIRED TO RESPOND TO ANY ALLEGED CLAIM
OR SUIT. THIS SECTION STATES STORAGETEK'S ENTIRE LIABILITY AND THE SOLE AND
EXCLUSIVE REMEDY OF RIL WITH RESPECT TO ALLEGED INFRINGEMENT BY ANY
SOFTWARE PROVIDED BY STORAGETEK OR ITS LICENSORS.
3.14 Waiver of Claims against Suppliers. Neither StorageTek nor any of its
- ---- ----------------------------------
suppliers including any data centre operators or storage service utility
centre operators is assuming any responsibility or liability under this
Agreement for any damage to or any alteration, loss or destruction of the
information or data of third parties including RIL or the End-Users. RIL
hereby waives and will require that each
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<PAGE>
End-User waive all claims against facility operators or storage service
utility centre operators based on or arising from or in connection with any
of the Services, whether such claims arise by negligence, willful
misconduct or otherwise.
3.15 StorageTek Indemnity. RIL shall indemnify StorageTek (including reasonable
- ---- --------------------
solicitors' fees and costs of litigation at trial and appeal) against and
hold StorageTek harmless from, any and all claims by any other party
resulting from RIL's acts, omissions or misrepresentations.
3.16 Software Representation. StorageTek warrants to RIL that the StorageTek
- ---- -----------------------
Software, when installed in accordance with StorageTek's installation
instructions, will not fail to execute their programming instructions due
to defects in material and workmanship in the media and will substantially
conform to the specifications in the applicable user manual that
accompanies shipment of the StorageTek Software for a period of 90 days
after receipt. StorageTek does not warrant that the StorageTek Software
will meet RIL's requirements or that operation of the StorageTek Software
will be uninterrupted or error free. For all defects reported to StorageTek
within the warranty period, the liability of StorageTek is limited to
responding to RIL software problem reports according to StorageTek's
standard assistance practices. This warranty shall not be valid if the
StorageTek Software has been subjected to abuse, misuse, accident,
alteration, neglect, unauthorized repair, unauthorized installation or
exposed to conditions beyond the manufacturer's environmental, power or
operating constraints.
3.17 NO OTHER WARRANTIES. EXCEPT AS PROVIDED IN THIS SECTION, STORAGETEK MAKES
- ---- -------------------
NO WARRANTIES, EXPRESS OR IMPLIED, TO RIL WITH RESPECT TO THE STORAGETEK
SOFTWARE INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. IN NO EVENT SHALL STORAGETEK BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES OF ANY NATURE, AND
STORAGETEK'S LIABILITY ON ANY CLAIM, WHETHER IN CONTRACT, TORT (INCLUDING
NEGLIGENCE) OR OTHERWISE, FOR ANY LOSS OR DAMAGE ARISING OUT OF, CONNECTED
WITH, OR RESULTING FROM THIS AGREEMENT, SHALL IN NO CASE EXCEED THE
"EFFECTIVE LIMIT OF LIABILITY". STORAGETEK SHALL NOT BE LIABLE TO RIL FOR
DAMAGES OF ANY KIND, INCLUDING INCIDENTAL OR CONSEQUENTIAL DAMAGES, ON
ACCOUNT OF THE TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH THIS
AGREEMENT.
3.18 Effective Limit of Liability. In this Agreement, "Effective Limit of
- ---- ----------------------------
Liability" means with respect to claims arising in each twelve month period
commencing on an anniversary of the Effective Data (each a "Services
Year"), the amount by which: (x) three times the average monthly amount
paid by RIL to StorageTek for Services under this agreement in the prior
Services Year (for the purposes of this Section 3.17, the period commencing
on the Effective Date and ending on the day prior to the first anniversary
of the Effective Date will be deemed to be a prior "Services Year") exceeds
(y) the total of all amounts paid by StorageTek in respect of claims
arising prior to the Services Year.
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<PAGE>
ARTICLE 4
TERMINATION
4.1 Option to Terminate with Cause. Either party to this Agreement shall be
- --- ------------------------------
entitled, at its sole option, to terminate this Agreement by notice in
writing if the other party (the "Breaching Party") commits any material
breach of its obligations under this Agreement which is not remedied within
30 days after written notice has been given to the Breaching Party.
Material breaches shall include, but not be limited to:
a) any act of the Breaching Party that impairs the goodwill associated
with the business of the other party;
b) failure by StorageTek to provide the Services or the StorageTek
Software to RIL or any End-Users;
c) failure by RIL to pay Services Fees when due or to meet its Minimum
Annual Service Fee Requirements; or
d) any breach by the other party of the confidentiality or non-competition
provisions in this Agreement.
e) any supply or use by an RIL Agent or Licensee of the Services without
having signed and delivered to StorageTek an Adhesion Agreement in
the form set out as Schedule E.
4.2 Option to Terminate without Cause. StorageTek shall be entitled, at its
- --- ---------------------------------
sole option, to terminate this Agreement by notice in writing on 60 days
written notice if RIL undergoes material changes in its business.
StorageTek will cooperate fully with RIL and any third party (the
"Successor") that RIL may appoint to replace StorageTek in providing the
Services by uploading all electronic files, End-User information, data and
other material to RIL or the Successor to ensure that the Successor is able
to continue to provide the Services with a minimum of interruption or loss
of files. Material changes in business shall include:
a) a significant change in the business practices, methods and strategy
employed by RIL with specific reference to the Services;
b) use by RIL of a competitor of StorageTek's to provide the Services
without first providing StorageTek an opportunity to meet pricing,
service and quality standards of the competitor and other factors
that RIL may specify as material in the circumstances.
4.3 Other Termination. This Agreement may be terminated by a party immediately
- --- -----------------
if any proceeding in bankruptcy, insolvency, liquidation or other law for
the relief of debtors, including the appointment of any receiver or trustee
or assignment for the benefit of creditors, shall be instituted by or
against the other party, if the other party is liquidated or dissolved, or
if the other party attempts to assign this Agreement or any rights
hereunder without prior written consent of the terminating party. RIL may
at its option terminate this Agreement on 3060 days written notice to
StorageTek if RIL receives notice of a proposed increase in the Service Fee
pursuant to section 2.6.
ARTICLE 5
MISCELLANEOUS PROVISIONS
5.1 Notices. Any notice or report required or permitted by this Agreement shall
- --- -------
be deemed given if delivered personally and signed as being received or if
sent by
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<PAGE>
either party to the other by facsimile, or registered or certified airmail,
postage prepaid, return receipt requested, addressed to the other party at
its principal business address or at such other address as to which such
party shall give notice hereunder. If by registered or certified mail,
delivery shall be deemed effective three days after deposit with postal
authorities.
5.2 StorageTek Address. Notices to StorageTek should be addressed to:
- --- ------------------
Craig L. McLellan
StorageTek Canada Inc.
5580 Explorer Drive, Suite 300
Mississauga, Ontario L4W 4Y1
Telephone: (905) 602-5586
Fax: (905) 602-4259
5.3 RIL Address. Notices to RIL should be addressed to:
- --- -----------
Alan Ackerman
Reconnaissance International Ltd.
Suite C-1, 1500 Hornby Street
Vancouver, B.C. V6Z 2R1
Telephone: (604) 257-3000
Fax: (604) 602-9243
5.4 Assignment and Enurement. Neither party may assign this Agreement nor any
- --- ------------------------
rights hereunder without the prior written consent of the other party
except to any of its associated or affiliated companies. Subject to the
foregoing, this Agreement shall bind and inure to the benefit of the
respective parties hereto and their respective successors, and permitted
assignees.
5.5 Authority to Execute. The individuals executing this Agreement for each
- --- --------------------
party represent and warrant that he or she has been duly authorized to
execute this Agreement on behalf of the party.
IN WITNESS WHERE OF StorageTek and RIL have executed this Agreement as of the
date first above written.
STORAGETEK CANADA INC. RECONNAISSANCE INTERNATIONAL LTD.
Per:__________________ Per:_____________________________
Authorized Signatory Authorized Signatory
-9-
<PAGE>
SCHEDULE A
SERVICE FEES (CANADIAN CURRENCY)
Workstation Back-up Fee Schedule
<TABLE>
<CAPTION>
No. of Monthly End-Users Discount from List Price for
All End-Users
<S> <C>
1 - 1,999 26%
2,000 - 4,999 28%
5,000 - 9,999 31%
10,000 - 20,999 35%
21,000+ 40%
</TABLE>
The current list price for workstation back-up services is $25.00 per
workstation per month.
Server Back-up Fee Schedule
<TABLE>
<CAPTION>
Monthly GBytes Consumed Discount from List Price
<S> <C>
1 - 299 26%
300 - 699 28%
700 - 999 31%
1,000 - 1,999 35%
2,000+ 40%
</TABLE>
The current list price for server back-up services is $35.00 per GByte per
month. A one time deposit of $10,000 shall be paid by RIL. In exchange for this
deposit, StorageTek Canada will provide the above identified services, at no
additional cost, until such time as the then accumulative value of discounted
services provided is equal to the amount of the deposit. If this Agreement is
terminated for any reason before the full amount of the deposit is so applied,
StorageTek will return the balance to RIL without deduction or setoff.
-10-
<PAGE>
SCHEDULE B
DEFINITION OF "SERVICES"
StorageTek will provide to RIL a turnkey solution for remote data backup and
data restoration. This will include software (herein referred to as "StorageTek
Software") for use by RIL's end-users to perform remote data backup. StorageTek
will provide the StorageTek Software to RIL for unlimited, worldwide, royalty
free distribution to End-Users.
In addition to the StorageTek Software, StorageTek will manage a backup data
center where End-Users will connect over the Internet using the StorageTek
Software and store their data. StorageTek will take reasonable precautions to
insure that the data stored at this data center is fully secure and protected
against accidental or intentional loss, damage or corruption. To insure data
reliability and redundancy of service, StorageTek will maintain a minimum of two
data centers; the StorageTek Software will transparently connect to the
appropriate data center.
StorageTek will provide a fully automated mechanism for RIL to create CD-ROM's
of End-Users' backups for the exclusive use of restoring that information on a
replacement notebook or shipping the CD-ROM to the End-Users.
StorageTek will provide 24-hour support to RIL for both the StorageTek Software
and the CD-ROM creation process.
-11-
<PAGE>
SCHEDULE C
DEFINITION OF "SOFTWARE"
The Software provided by StorageTek shall consist of client applications in
binary format for the sole purpose of backing up end-user data files to
authorized StorageTek storage facilities. The client application will be
compatible with Windows '95 and Windows NT. The software does not consist of
source code or other non-binary elements of the client application.
-12-
<PAGE>
SCHEDULE E
ADHESION AGREEMENT
WHEREAS:
The undersigned (the "RIL Agent") will or has been provided access to and use
and benefit of the Services and the StorageTek Software provided by StorageTek
Canada, Inc. ("StorageTek") to Reconnaissance International Ltd. ("RIL")
pursuant to a service supply agreement (the "Service Supply Agreement") dated
________________ between StorageTek and RIL.
The RIL Agent is a party referred to in clause 1.1(b) of the Service Supply
Agreement and has agreed to execute this Agreement and be bound by the terms
thereof.
Any term or phrase with initial capital letters not defined herein shall have
the meaning ascribed to it in the Service Supply Agreement.
NOW THEREFORE for good and adequate consideration, the sufficiency of which is
hereby acknowledged, the RIL Agent hereby covenants with StorageTek as follows:
1) The RIL Agent guarantees that RIL will pay to StorageTek the Service Fees
due from time to time by RIL in respect of all Services and use of the
StorageTek Software for End-Users for which the RIL Agent has primary
responsibility and the RIL Agent will indemnify and save StorageTek harmless
from all losses suffered by StorageTek as a result of non-payment of such
Service Fees by RIL.
2) The RIL Agent will notify StorageTek of every End-User for which the RIL
Agent has primary responsibility.
3) The RIL Agent hereby accepts and agrees to be bound by all limitations and
obligations of RIL under the Service Supply Agreement with respect to the
Services and the StorageTek Software.
4) StorageTek is not required to exhaust its recourse against RIL or others
before being entitled to payment from the RIL Agent under this Adhesion
Agreement.
5) The RIL Agent acknowledges that it has received and reviewed a copy of the
Service Supply Agreement and further acknowledges the provisions of the
Service Supply Agreement.
6) This Adhesion Agreement may not be assigned by the RIL Agent without the
consent of StorageTek and RIL.
7) This Adhesion Agreement shall be governed by and construed and interpreted
in accordance with the laws of the Province of Ontario and the laws of
Canada applicable therein.
8) Notices under the Service Supply Agreement shall be given to the RIL Agent
at the following address and facsimile number:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-13-
<PAGE>
IN WITNESS WHEREOF the RIL Agent has executed this Agreement as of the date
first below written.
TYPE NAME OF RIL AGENT HERE
Per: ________________________________________________
Authorized Signatory
Dated: ________________________________________________
-14-
<PAGE>
EXHIBIT 5.6
PCSUPPORT.COM, INC.
- AND -
UNISYS OF CANADA INC.
SERVICE CONTRACT
April 1, 1999
<PAGE>
SERVICE CONTRACT
THIS AGREEMENT entered into as of Effective Date, as defined below, between
PCsupport.com, Inc. ("PCsupport.com"), having its principal place of business at
Suite 280 - 4400 Dominion St, Burnaby, British Columbia, V5G 4G3, and Unisys of
Canada Inc. ("Reseller"), having its principal place of business at 2001
Sheppard Ave. East, North York Ontario, M2J 4Z7, concerns the distribution of
remote data management services by Reseller in the Territory.
WHEREAS:
A. PCsupport.com is in the business of providing secured backup services for
application software, user data and configuration information for laptop
computers and replacement services in the event of destruction, loss or theft of
laptop computers.
B. Reseller is a information technology company and has customers and
potential customers who are prospective users of the Services.
C. PCsupport.com has agreed to provide the Services to customers of Reseller
in accordance with the terms of this Agreement.
ARTICLE 1
INTERPRETATION
1.1 Definitions. In this Agreement the following words and phrases have the
following meanings:
a) "Effective Date" means April 1, 1999.
b) "End-User" means a person, which term includes a corporation,
partnership or any other recognized legal entity, whose principal
residence or place of business is within Canada and who enters into an
agreement with Reseller for the provision of services including the
Services hereunder.
c) "PCsupport.com" means PCsupport.com, Inc.
d) "PCsupport.com Software" means the object code files of software
provided by PCsupport.com to Reseller from time to time including
software provided by StorageTek for sublicensing to End-Users in
connection with provision of the Services. Please see Schedule B.
<PAGE>
Page 2
e) "PCsupport.com Trademarks" means such trademarks, logos, business
names and other indicators of the source of goods and services
provided by PCsupport.com as PCsupport.com may specify from time to
time including without limitation "pcsupport.com".
f) "Reseller" means Unisys of Canada Inc.
g) "Services" means the supply of remote data management and restoration
services to End-Users, as described in Schedule A.
h) "StorageTek" means StorageTek Canada, Inc.
i) "Service Fees" means the fees payable by Reseller to PCsupport.com
pursuant to this Agreement.
j) "Term" means the term of this Agreement.
1.2 Term. The Term shall commence on the Effective Date and shall expire on the
second anniversary of the Effective Date unless terminated earlier in accordance
with Article 4 (Termination) of this Agreement; provided, however, that the term
of this Agreement will automatically extend for successive twelve-month periods
after the second anniversary of the Effective Date unless either of the parties
notifies the other party in writing at least three months prior to such date, or
the end of any twelve-month extension period, as the case may be, that this
Agreement will not be so extended. The expiration or termination of this
Agreement shall not apply to, or otherwise affect, any obligations of
PCsupport.com pursuant to End-User agreements then in effect, or with respect to
any formal proposals outstanding by Reseller to prospective End-Users for
Services.
1.3 Amendment. No modification, change or amendment to this Agreement, nor any
waiver of any rights in respect hereto, shall be made by either party unless
agreed to in writing by the other party. The waiver of one breach or default
hereunder shall not constitute the waiver of any subsequent breach or default.
1.4 Relationship of the Parties. The relationship of PCsupport.com and Reseller
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (a) give either party the
power to direct and control day-to-day activities of the other or (b) constitute
the parties as partners, joint ventures, co-owners or otherwise as participants
in a joint or common undertaking. Reseller, its agents and employees are not the
representatives of PCsupport.com for any purpose and they have no power or
authority as agent, employee or in any other capacity to represent, act for,
bind or otherwise create or assume any obligation on behalf of PCsupport.com for
any purpose whatsoever. In all
<PAGE>
Page 3
matters relating to this Agreement, neither Reseller nor its employees or agents
are or shall act as employees of PCsupport.com within the meaning or application
of any laws of any country or other jurisdiction covering unemployment
insurance, old-age benefit, social security, workers' compensation or industrial
accidents or under any other laws or regulations which may impute any
obligations or liabilities to PCsupport.com by reason of an employment
obligation.
1.5 Entire Agreement. This Agreement supersedes all previous agreements
relating to the subject matter hereof and sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof and any
written and oral representations, terms and conditions relating thereto,
whenever made, and not incorporated herein shall not be binding on either party.
1.6 Controlling Law and Severability. This Agreement shall be governed by and
construed in accordance with the laws of the Province of British Columbia and
each of the parties hereto irrevocably attorns to the jurisdiction of the courts
of British Columbia. If for any reason a court of competent jurisdiction finds
any provision of this Agreement or portion thereof, to be unenforceable, that
provision of the Agreement shall be enforced to the maximum extent permissible
so as to effect the intent of the parties, and the remainder of this Agreement
shall continue in full force and effect.
1.7 Mediation Of Disputes. The parties shall attempt in good faith to promptly
settle all disputes and controversies which may arise under the contract. If
such good faith efforts to settle, however, do not succeed within 30 days from
when the dispute or controversy first arose, either party may, by notice in
writing to the other party, submit the matter to mediation. Immediately upon
delivery of such notice, the parties will make a reasonable, good faith effort
to identify a mutually acceptable mediator. If they cannot do so within a period
of 10 business days, either party may, by notice in writing to the other party
direct the matter to arbitration pursuant to 1.8 below. Within 10 business days
from appointment of the mediator, or such other period of time as may be agreed-
to with the mediator, the parties will meet with the mediator and attempt, in
good faith, to settle the matter. If they cannot do so within five business days
thereafter, either party may terminate the mediation by notice in writing to the
other party, with a copy to the mediator, and direct the matter to arbitration
pursuant to 1.8 below.
1.8 Arbitration. In accordance with the procedures outlined in section 1.7
above, either party may, by notice in writing, direct any dispute or controversy
under the Agreement to arbitration, The arbitration shall be undertaken before a
panel of three arbitrators. Each party shall select one arbitrator within five
business days of the notice and the arbitrators so chosen will select the third
arbitrator within a further period of 10 business days thereafter. The third
arbitrator will chair the panel. Failing agreement on the selection of the third
arbitrator within said time period, either party may make application to the
applicable court in British Columbia for appointment of the third arbitrator.
Following appointment of the third arbitrator each party
<PAGE>
Page 4
will, forthwith, submit its argument in writing to the arbitration panel and
make oral argument should the arbitration panel so require. The arbitration
panel shall make its decision, and so advise the parties in writing within 60
days following the completion of argument. In so doing, the arbitration panel
shall be restricted to construing the terms of the Agreement. The arbitration
award cannot, under any circumstances, exceed the remedies available under the
Agreement. Each party will bear its own costs of the arbitration proceeding and
share, equally, the costs of the arbitration panel, unless the arbitration panel
in its discretion and pursuant to representations by the parties awards some or
all of the costs of the proceedings to one of the parties. The decision of the
arbitration panel shall be by majority vote and final and binding on both
parties. Any award by the arbitration panel may be filed in court and enforced
as a judgment of the court. Except as otherwise described above, the arbitration
proceedings shall be governed by the then current Commercial Arbitration Act of
British Columbia.
1.9 Recourse to Court. Nothing in Sections 1.7 or 1.8 will preclude a party's
recourse to a court of competent jurisdiction to (a) enforce the terms of an
arbitration award under Section 1.8; (b) seek temporary equitable relief
necessary to protect its interests; or (c) recover specific property, including
an action in replevin.
1.10 Privacy of Proceedings. Neither party nor the arbitrators may disclose the
existence or results of any arbitration hereunder without the prior written
consent of both parties.
1.11 Force Majeure. Neither party shall be responsible for any failure to
perform (other than payment obligations) due to unforeseen circumstances or to
causes beyond a party's control, including but not limited to: acts of God,
civil commotion, sabotage, partial or entire failure of utilities owned and/or
operated by governmental bodies, lockouts, strikes, other labour disturbances
(whether legal or illegal), labor shortages, failure of common or private
carriers to deliver anything within the required time, software viruses, or any
other event or cause, whether similar or dissimilar to the foregoing, beyond the
control of the party. In the event of any such delay, PCsupport.com may defer
the delivery date of orders for Services for a period equal to the time of such
delay.
1.12 Section Headings. The section headings contained herein are for reference
only and shall not be considered substantive parts of this Agreement. The use of
the singular or plural form shall include the other form and the use of the
masculine, feminine or neuter gender shall include the other genders.
1.13 Schedules. The following schedules are attached to and form an integral
part of this Agreement:
Schedule A PCsupport.com's Suggested List Price and Service
Description
<PAGE>
Page 5
Schedule B Global Replace Product Brochure
ARTICLE 2
PROVISION OF SERVICES TO END-USERS
2.1 PCsupport.com to Provide Services. Subject to all the terms hereof,
PCsupport.com hereby agrees to provide the Services to End-Users during the
Term. Nothing in this Agreement shall restrict PCsupport.com from providing the
same or similar services to any other persons at any location. Notwithstanding
the foregoing, Pcsupport.com shall not offer or contract its services to any
party, once advised that such party is currently an End-User or a potential End-
User of Reseller. To qualify as a potential End-User, Reseller must have had
direct contact with such party for purposes of marketing the Services.
2.2 Exclusive Relationship. Reseller hereby agrees that it will use
PCsupport.com exclusively for the provision of Services to all End-Users in the
Territory and that Reseller will not directly or indirectly offer services
similar to or competitive with the Services in or outside of the Territory
during the Term.
2.3 End-User Agreements. Reseller covenants that it will solicit prospective
End-Users by providing them with information regarding the Services. Except only
as PCsupport.com and the Reseller may agree, the scope and content of the
Services in any End-User agreement will comply with the scope and content of the
Services described under this Agreement.
2.4 Technical Expertise. The Parties shall each appoint a contact person within
their respective organizations who will be the single point of contact between
the Reseller and PCsupport.com for technical issues. The contact person must be
conversant with the technical language conventional to the Services, the
PCsupport.com Software and similar computer products.
2.5 End-User Training. Reseller shall conduct training for End-Users when
requested by the End-User based on training materials that has been approved by
PCsupport.com. Training material will be provided by PCsupport.com for the
purpose of training End-Users and internal technical and sales staff. Reseller
shall pay for the cost of modifying any End-User training material for the
purpose of displaying Reseller's branding information.
2.6 Payment Terms. Reseller will pay PCsupport.com the Service Fee equal to 75%
of the PCsupport.com Suggested List Prices for Services as detailed in Appendix
A. Reseller will be solely responsible for all invoicing and collection
functions with End-Users. The Service Fee shall be payable by Reseller in
respect of each End User Agreement on the last business day of each calendar
month commencing in the month in which Services are first provided to the End-
<PAGE>
Page 6
User by PCsupport.com. Reseller may, at the option of PCsupport.com, pay a late
payment fee of 1.5% per month (with an effective rate of 19.6% per annum) on all
outstanding amounts. The amounts payable to PCsupport.com as well as such
payment terms are subject to change by mutual agreement of the Parties.
2.7 Service Information. PCsupport.com shall, at its own cost, provide to
Reseller (i) information regarding changes and innovations in the performance,
serviceability, use and application of all Services; and (ii) data, product
brochures and manuals on the sale and support of the Services.
2.8 Training. PCsupport.com shall, at its own cost, once in each twelve-month
period, or more often as the parties both agree, provide to Reseller training in
the use of the Services for that number of persons annually chosen by Reseller
and agreed upon in writing by both parties, provided that Reseller shall pay all
salaries, travel and other out-of-pocket expenses of Reseller personnel taking
part in such training. PCsupport.com shall make reasonably sufficient quantities
of its training materials available to Reseller for such purpose. PCsupport.com
warrants that such training will be reasonably sufficient for Reseller to market
Services and to train End-Users.
2.9 Marketing Plan. PCsupport.com will provide reasonable assistance to
Reseller from time to time in connection with development of a marketing plan
for the Services. Reseller will develop and implement a marketing plan with
PCsupport.com's reasonable approval no later than November 30, 1999.
2.10 Reseller to Provide Information to PCsupport.com. Reseller will promptly
provide PCsupport.com with all information necessary for PCsupport.com to
provide the Services in accordance with the End-User Agreement and cooperate
with PCsupport.com to ensure that all such information is delivered to
PCsupport.com as directly and as quickly as possible.
2.11 Reports. PCsupport.com will provide Reseller monthly electronic reports
showing:
. Monthly sales volume by Salesperson by product
. Year to date sales volume by Salesperson by product
. Monthly lost customers by Salesperson by product
. Year to date lost customers by Salesperson by product.
PCsupport.com confirms that it will develop and implement an on-line method for
Reseller to obtain such reports on an immediate basis as part of PCsupport.com's
on-line development plan.
<PAGE>
Page 7
Reseller will provide PCsupport.com monthly electronic reports showing:
. Backlog of unfilled customer orders
. Sales pipeline showing customer accounts under active solicitation
including expected number of each PCsupport.com product to be sold,
probability and expected date of close.
2.12 Non-Competition. Reseller agrees that for the duration of this Agreement
and for a period of twelve months following the termination of this Agreement,
it will not negotiate, consider, or enter into any agreement with StorageTek or
any of its affiliates for the provision of Services, or services similar to
Services. Such Non-Competition restriction shall not apply if this Agreement has
been terminated by Unisys for default.
ARTICLE 3
USE OF PCSUPPORT.COM SOFTWARE AND IP RIGHTS
3.1 License. PCsupport.com hereby grants Reseller a non-transferable, non-
exclusive, royalty free, limited license to grant sublicenses to use the
PCsupport.com Software to End-Users. On termination of this Agreement, the right
of Reseller to grant sublicenses to use the PCsupport.com Software and all such
End-User sublicenses of the PCsupport.com Software then outstanding will then
terminate automatically and Reseller will delete all copies of the PCsupport.com
Software from all storage media under Reseller's control. Reseller acknowledges
that neither it nor any End-Users will acquire any ownership rights in the
PCsupport.com Software. Reseller will not and will have no right to use or
permit any person other than End-Users to use the PCsupport.com Software.
Reseller will not reverse engineer, decompile, disassemble or create derivative
works from the PCsupport.com Software nor make any attempt or assist any person
to do so.
3.2 No Rights in Marks. Neither party shall obtain any rights in relation to
the trademarks or trade names of the other party, other than as specifically
provided for in this Agreement.
3.3 Right to Use Name. PCsupport.com and Reseller shall each be entitled during
the Term without charge to use the name and trademarks of the other party in its
advertising, promotions, marketing documents, sales information and similar
materials (in physical or electronic media) for the limited purpose only of
promoting the Services provided that each party will advise the other in advance
before using any such name or trademarks and give the other party a reasonable
opportunity to review the manner in which they will be used, it being recognized
that each party is entitled to control the manner in which its name and
trademark are used.
<PAGE>
Page 8
3.4 No Authority. Neither PCsupport.com nor Reseller shall act in any manner
that would expose the other party to any liability, nor pledge nor purport to
pledge credit of the other party beyond the scope of commitments embodied in
this Agreement. Neither will, unless agreed to by the other party, describe
itself as associated with the other party in correspondence, commercial
documents and on any name place or sign on its premise which describes or
relates to the Services, except as required to execute this Agreement. The
parties will reasonably agree on the content and timely distribution of a news
release announcing the signing of this Agreement.
3.5 Confidentiality. The PCsupport.com Software and all aspects of the means by
and manner in which PCsupport.com provides the Services constitutes trade
secrets and confidential information of PCsupport.com and other owners thereof
(hereinafter "Confidential Information"). Reseller shall not make Confidential
Information available in any form to any person other than Reseller employees
whose job performance requires such access and to End-Users in strict accord
with this Agreement. Reseller shall take appropriate action to protect the
confidentiality of and to ensure that any person permitted access to the
Confidential Information does not provide or disclose it to others. This section
3.5 shall survive the termination of this Agreement.
3.6 Software Representation and Warranty. PCsupport.com warrants to Reseller
that PCsupport.com owns all rights necessary for it to grant the rights in the
Software to Reseller under this Agreement. Pcsupport.com warrants that the
PCsupport.com Software, when installed in accordance with PCsupport.com's
installation instructions, will not fail to execute their programming
instructions due to defects in material and workmanship in the media and will
substantially conform to the specifications in the applicable user manual that
accompanies shipment of the PCsupport.com Software for a period of 90 days after
receipt. PCsupport.com does not warrant that the PCsupport.com Software will
meet End-Users' or Reseller's requirements or that the operation of the
PCsupport.com Software will be uninterrupted or error-free. For all defects
reported to PCsupport.com within the warranty period, the liability of
PCsupport.com is limited to responding to End-User problem reports according to
PCsupport.com's standard assistance practices. This warranty shall not be valid
if the PCsupport.com Software has been altered in any manner whatsoever.
3.7 NO OTHER WARRANTIES. EXCEPT AS PROVIDED IN THIS SECTION, PCSUPPORT.COM
MAKES NO WARRANTIES, EXPRESS OR IMPLIED, TO RESELLER WITH RESPECT TO THE
PCSUPPORT.COM SOFTWARE, OR ANY SOFTWARE LICENSED BY AND SUPPLIED BY
PCSUPPORT.COM, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
<PAGE>
Page 9
ARTICLE 4
INDEMNITY AND LIMITATIONS OF LIABILITY
4.1 Mutual Indemnity. Subject to the limitations Hereunder, each party (the
"Indemnifying Party") agrees to indemnify and save harmless the other party (the
"Indemnified Party") from all third party actions, causes of actions, claims,
costs, expenses or other liabilities arising out of the negligence of the
Indemnifying Party or the Indemnifying Party's breach of this Agreement. Without
limiting the foregoing, Reseller will indemnify PCsupport.com for any costs
including delivery and recovery costs associated with any lost, damaged or
unreturned computers or other hardware provided by PCsupport.com to End-Users.
4.2 PCsupport.com Indemnity. PCsupport.com will promptly investigate and
defend, at its expense, all actions in which Reseller, is made defendant or
claimed potential defendant for any alleged infringement, contributory
infringement, inducement of infringement or unauthorized or unlawful use of any
patent, copyright, trademark, trade secret, mask work, proprietary data or other
information, or claim of right, title or interest by another party in any
Software ("Infringement"). In order to be entitled to the benefit of this
indemnity, Reseller must: (i) provide PCsupport.com with prompt written notice
of all details of the initial claim or lawsuit relating thereto; (ii) permit
PCsupport.com the right to defend, appeal, compromise or settle the claim or
lawsuit in the reasonable judgement of PCsupport.com; and (iii) provide
PCsupport.com with all available information, reasonable assistance, authority
and cooperation to enable PCsupport.com to defend, appeal, compromise or settle
the lawsuit. PCsupport.com will pay and discharge all judgments or decrees
rendered in any such claim or lawsuit against Reseller to the extent that the
PCsupport.com Product is the cause thereof. PCsupport.com may settle any action
on terms and conditions of PCsupport.com's selection, provided they are not in
conflict with the terms of this Agreement and PCsupport.com pays all settlement
amounts. Reseller may participate in any action at its expense, subject to the
additional rights described below. If PCsupport.com fails to promptly
investigate, defend, appeal or settle, then Reseller will, following written
notification to PCsupport.com and the elapse of at least 30 days after such
notice is received by PCsupport.com if during such time PCsupport.com has not
taken reasonable steps to investigate, defend, appeal or settle the matter, have
the right from that time on to have sole control of the defense of such claim or
lawsuit and all negotiations for its settlement or compromise, and PCsupport.com
will pay, as they become due, all costs, expenses, and reasonable attorneys' and
experts' fees incurred by Reseller in undertaking such actions and any judgments
or decrees which may be rendered against or any settlements or compromises that
may be entered into by Reseller relating to a claim indemnified against
hereunder to the extent that the PCsupport.com Software is the cause thereof.
PCsupport.com indemnifies and agrees to hold harmless Reseller from all costs,
expenses, liabilities, damages and attorneys' and experts' fees arising from any
alleged or actual Infringement and will pay all judgments and other amounts
payable on any settlement or compromise arising from all actions involving
Infringement.
<PAGE>
Page 10
4.3 Claims. Reseller and PCsupport.com will notify the other party in writing
of any claim or proceeding arising hereunder within 10 days of learning of such
claim or proceeding. Each Party will promptly report to the other all claimed or
suspected defects in the Services, the PCsupport.com Software or any aspect
thereof.
4.4 Waiver of Claims Against Suppliers. Neither PCsupport.com nor any of its
suppliers including StorageTek or any other data centre operators or storage
service utility centre operators is assuming any responsibility or liability
under this Agreement for any damage to or any alteration, loss or destruction of
the information or data of third parties including Reseller and End-Users.
Reseller hereby waives all claims against facility operators or storage service
utility centre operators based on or arising from or in connection with any of
the Services, whether such claims arise by negligence, willful misconduct or
otherwise.
4.6 LIMITATION OF LIABILITY. Unless further limited elsewhere in this
Agreement, the entire liability of each party to the other and each party's
exclusive remedy for costs, damages or other losses from any cause related to or
arising out of this Agreement, regardless of the form of action, whether in
contract or in tort, shall be restricted to direct damages only and will not
exceed the payments received by Reseller from End-Users.
Further, neither party shall be liable for any incidental, indirect, special or
consequential damages, including but not limited to, loss of use, revenues,
profits or loss of or damage to data from any cause,
This limitation of liability does not apply to any of the indemnification
provisions hereunder.
4.7 Effective Limit of Liability. The Effective Limit of Liability means the
maximum amount of the actual loss for direct damages only for which
PCsupport.com may be liable to Reseller or any End-User, whether or not the loss
or damage results from gross negligence, which shall not exceed an amount equal
to the payments received by Reseller from End-User(s) for the Services. This
limitation applies whether the action or claim is for breach of contract or in
tort (including negligence).
ARTICLE 5
TERMINATION
5.1 Option to Terminate with Cause. Either party to this Agreement shall be
entitled, at its sole option, to terminate this Agreement by notice in writing
if the other party (the "Breaching Party") commits any material breach of its
obligations under this Agreement which is not remedied within 30 days after
written notice itemizing such breach has been given to the Breaching Party. In
the case that the Reseller is the Breaching Party, all outstanding Service
<PAGE>
Page 11
Fees accrued to the date of termination will be paid in full. Material breaches
shall include, but not be limited to:
a) any act of the Breaching Party that materially impairs the goodwill
associated with the business of the other party; or
b) failure by Reseller to pay any Service Fees when due; or
c) any breach by the other party of the confidentiality provisions in
this Agreement; or
d) any material misrepresentation of the features or functions of the
Service to potential or existing End-Users by either Party; or
e) failure by either Party to appoint a qualified technical contact ; or
f) failure by PCsupport.com to provide training reasonably sufficient for
Reseller to market Services and train End-Users.
5.2 Other Termination. This Agreement may be terminated by a party immediately
if any proceeding in bankruptcy, insolvency, liquidation or other law for the
relief of debtors, including the appointment of any receiver or trustee or
assignment for the benefit of creditors, shall be instituted by or against the
other party, if the other party is liquidated or dissolved, or if the other
party attempts to assign this Agreement or any rights hereunder without prior
written consent of the terminating party. If PCsupport.com is the party who
terminates pursuant to this section then all Service Fees shall cease to be
payable as of the time of termination.
5.3 Payment After Termination. In the event that this Agreement is terminated,
other than for cause as outlined in Section 5.1 or Section 5.2, then
PCsupport.com will be entitled to receive Service Fees for all Services provided
as of the date of termination in accordance with the terms hereof.
5.4 Return of Materials and PCsupport.com Software. Upon termination of this
Agreement for any reason whatsoever, Reseller shall return or destroy at
PCsupport.com's option all copies of the PCsupport.com Software in its
possession, all confidential information received from PCsupport.com and all
sales and service data and collateral received from PCsupport.com. Reseller
shall certify such return or destruction.
5.5 Use of Trademarks. Upon expiration of this Agreement, both parties shall
immediately cease to use the name, logos and trademarks of the other party and
shall ensure such cessation of use by all persons claiming to have received the
right to such use.
<PAGE>
Page 12
5.6 Solicitation After Termination. After Termination for cause by
PCsupport.com, PCsupport.com is permitted to approach End-Users to continue
provision of Services, either by PCsupport.com directly or by a third party.
ARTICLE 6
MISCELLANEOUS PROVISIONS
6.1 Notices. Any notice or report required or permitted by this Agreement shall
be deemed given if delivered personally and signed as being received or if sent
by either party to the other by facsimile or registered or certified airmail,
postage prepaid, return receipt requested, addressed to the other party at its
principal business address or at such other address as to which such party shall
give notice hereunder. If by registered or certified mail, delivery shall be
deemed effective three days after deposit with postal authorities.
Notices to Reseller should be addressed to:
Law Department
Unisys of Canada Inc.
2001 Sheppard Ave. East
North York, Ontario
M2J 4Z7
Phone: (416) 495 4589
Fax: (416) 495 4565
Notices to PCsupport.com should be addressed to:
Michael McLean
PCsupport.com, Inc.
Suite 280 - 4400 Dominion St.,
Burnaby, British Columbia
V5G 4G3
Phone: (604) 419 4490
Fax: (604) 419 4494
6.2 Assignment and Enurement. Reseller shall not assign this Agreement nor any
rights hereunder without the prior written consent of PCsupport.com, which
consent PCsupport.com may withhold for any reason or without giving any reason
therefor. PCsupport.com shall be entitled to assign this agreement and its
rights hereunder to any of its associated or affiliated companies. PCsupport.com
shall not assign this Agreement nor any rights hereunder without the prior
written consent of Reseller, which consent shall not be unreasonably withheld.
In
<PAGE>
Page 13
such event, if Reseller fails to give such consent within 30 days notice by
PCsupport.com, PCsupport.com shall be able to terminate this Agreement
immediately. Subject to the foregoing, this Agreement shall bind and inure to
the benefit of the respective parties hereto and their respective successors and
assignees.
6.3 Execute and Delivery. This Agreement may be executed in any number of
counterparts, each of which when delivered shall be deemed to be an original,
but all of which together shall constitute one and the same document, and may be
effectively delivered by facsimile transmission to the telephone number
identified herein or otherwise by any party hereto as a telephone number that
can be used for such purpose.
IN WITNESS WHEREOF the parties have by their respective authorized signatories
executed this Agreement as of the date first above written.
PCSUPPORT.COM, INC. UNISYS OF CANADA INC.
Per:___________________________ Per:___________________________
Authorized Signatory Authorized Signatory
<PAGE>
SCHEDULE A
PCSUPPORT.COM'S SUGGESTED LIST PRICES AND SERVICE DESCRIPTION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
PCsupport.com Suggested List Price
- ----------------------------------------------------------------------------------------------------
Service Offerings ($ Can) ($ US)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Global Replace - Basic
- ----------------------------------------------------------------------------------------------------
Up to 25 MB data storage Free Free
- ----------------------------------------------------------------------------------------------------
Up to 100 MB data storage $ 9.95 $ 7.95
- ----------------------------------------------------------------------------------------------------
Up to 200 MB data storage $ 16.95 $ 12.95
- ----------------------------------------------------------------------------------------------------
Up to 300 MB data storage $ 22.95 $ 17.95
- ----------------------------------------------------------------------------------------------------
Unlimited data storage / Full Image backup $ 24.95 $ 19.95
- ----------------------------------------------------------------------------------------------------
Unlimited Online Data Restore Included Included
- ----------------------------------------------------------------------------------------------------
User Requested partial image CD-ROM (600 MB max) $ 44.95/incident $ 39.95/incident
- ----------------------------------------------------------------------------------------------------
Hardware replacement and full data restoration* $ 999/incident $ 699/incident
- ----------------------------------------------------------------------------------------------------
</TABLE>
* if suitable hardware is available
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
Global Replace - Premium $ 44.95/month $ 56.95/month
- ----------------------------------------------------------------------------------------------------
Unlimited Full Image Data Backup Included Included
- ----------------------------------------------------------------------------------------------------
Unlimited Online Data Restore Included Included
- ----------------------------------------------------------------------------------------------------
User Requested full image CD-ROM $ 74.95/incident $ 94.95/incident
- ----------------------------------------------------------------------------------------------------
Hardware replacement and full data restoration Included** Included**
- ----------------------------------------------------------------------------------------------------
</TABLE>
** a deductible maybe charged for users that request repeated hardware
replacements.
<PAGE>
-15-
DESCRIPTIONS OF SERVICES
Data Storage. This service consists of client software, called Global Replace,
which allows an End-User to backup a subset of his data files using a dial-up or
local area network internet connection to PCsupport.com's secure data centre.
The price of this service varies according to the volume of data stored, as
shown in the table.
Unlimited Full Image Data Backup. This service consists of client software,
called Global Replace, which allows an End-User to create a full-image backup of
his computer data, applications, and configuration using a dial-up or local area
network internet connection to PCsupport.com's secure data centre.
Unlimited Online Data Restore. This service allows an End-User to restore
selected files or directories on-line.
Hardware Replacement. Hardware replacements include computer laptops of equal or
better performance and are provided free on loan for 10 business days, after
which the hardware may be rented for $75.00 per week.
Full Data Restoration. Full data restoration includes all user data,
applications and configuration, exactly as the End User had saved on his
hardware at the time of the last full backup.
User Requested partial image CD ROM. PCsupport.com will courier to the End-User
a CD containing the files which the End-User most recently backed up.
User Requested full image CD ROM. PCsupport.com will courier to the End-User a
CD containing the End-User's most recent full-image backup. The End-User can
then perform a full data restoration on his current or identical laptop.
<PAGE>
-16-
SCHEDULE B
PRODUCT BROCHURE FOR GLOBAL REPLACE
(attached)
<PAGE>
EXHIBIT 5.7
LETTER OF INTENT
Between PCsupport.com, Inc. ("PCsupport.com") A Nevada corporation
and
Go Figure Technology ("GoFigure") a Delaware corporation
06 October 1999
Whereas:
1. GoFigure is an order fulfillment data processing company which links
suppliers with sellers via e-commerce applications, and
2. GoFigure wishes to enhance the value of its services by incorporating
technical support services, and
3. PCsupport.com has developed, and plans to continue to enhance, an online
portal called the PC Support Center, which provides a range of technical
support services for PCs which meet many of the PC support needs of
GoFigure's customers;
4. Both parties agree that the terms contained in this Letter of Intent will
require further definition and are described solely for the purposes of
pursuing mutual business interests as may be subject to the final signing
of a definitive agreement;
Therefore:
A. PC Support Center
1. PCsupport.com will develop for GoFigure's customers branded versions of PC
Support Center ("Branded PC Support Center"). The first such Branded PC
Support Center will be for Direct Web ("Direct Web PC Support Center").
Branded PC Support Center will incorporate functionality of PC Support
Center, and will be customized to support GoFigure's PC products. The
specifications for Release 1.0 and Release 1.5 of Branded PC Support Center
are included in Appendix A.
2. Upon signing each definitive agreement between GoFigure and a customer of
GoFigure, GoFigure will forward to PCsupport.com a Customization Fee for
the development and implementation of a Branded PC Support Center for such
customer which will be an amount less than or equal to the amount in the
GoFigure's customer definitive agreement. Such Customization Fee will be in
the range of $5,000 to $25,000, but may be more depending upon the extent
of customization required. The parties will reasonably agree in advance on
the amount of such Customization Fee. Such Customization Fee will be
returned if GoFigure remits Fees, a defined in section 4 below, for a
minimum of 50,000 units within three months ending the month following
receipt of Customization Fee.
3. The parties will agree upon a development and test schedule for the
customization of Branded PC Support Center. PCsupport.com will develop and
install Release 1.0 of Direct Web PC Support Center within 3 weeks of
receipt of Customization Fee. The same reasonable effort will be given to
all of the upcoming GoFigure Customers.
4. The parties will enter into a definitive reseller agreement reflecting the
following initial revenue components:
<PAGE>
. GoFigure will remit a Fee of $18.00 for each personal computer
shipped by GoFigure that incorporates an icon ("Icon") linking to
Branded PC Support Center. Such Fee provides each original user of
such PC with a 3 year subscription to Branded PC Support Center.
. PCsupport.com will remit to GoFigure 50% of the revenue resulting
from the sale of premium services and additional products for which
an additional fee is received from the customer and for which no
additional cost is incurred by PCsupport.com, for example,
commissions on software upgrades purchased by end-users.
. PCsupport.com will remit to GoFigure 50% of the gross margin
resulting from the sale of premium services and additional products
for which an additional fee is received from the customer and for
which additional costs are incurred, for example, online backup
services purchased by end-users. Gross margin is calculated as the
difference between the revenue received by PCsupport.com from the
customer and the direct costs of providing the service or product.
. GoFigure will use best efforts to ship no less than 1,000,000 (One
Million) PC units incorporating the Icon within 12 months of the
date of this Agreement. Notwithstanding the foregoing, there is no
binding commitment on the part of GoFigure to ship PC units
incorporating the Icon.
5. The parties will reasonably agree on a formula for sharing revenue from
GoFigure's customers following the expiration of the original 3 year end-
user contract.
6. PCsupport.com will continue to develop the technology platform of its own
PC Support Center and to make certain of such improvements available to all
of GoFigure's customer PC Support Centers. The implementation of such
improvements may require the reasonable negotiation of changes to the
revenue components summarized in clause 4 for new shipments.
AGREED:
/s/ Mike McLean /s/ Marc Landry
- ---------------------------- --------------------------
Mike McLean, CEO Marc Landry, CEO
PCsupport.com, Inc. GoFigure Technology
10-6-99
- --------
Date
<PAGE>
APPENDIX A
SPECIFICATIONS OF PC SUPPORT CENTER
Release 1.0 (October 15, 1999)
- ------------------------------
. Software Updates
. Scans hard disk for new versions of software and drivers. User can
download free versions and has the opportunity to purchase latest
versions of commercial software.
. Preventive Maintenance
. Disk is scanned and cleaned to increase performance.
. Technical Support Forums
. Subscriber can ask questions of experts or answer questions for rewards.
. Ombudsman
. Will interface with PC vendors to assist subscribers with support and
product related problems.
. PC Platform Maintenance
. Subscribers receive emails of fixes or driver updates that automatically
update their system.
. Personal Subscriber Profile
. Allows subscriber to register to receive personalized information and
virus updates and keep a personal hardware profile.
. Telephone support
. Link to live support provided by GoFigure partner via telephone.
. Product Sales
. Subscribers will be able to purchase support related products, training
material and hard to find accessories.
. The Backup Center
. Limited free backup services will be offered as well as upgrades to
premium pay per use date backup services.
. Email updates
. Users are sent emails to advise of new virus alerts and newly available
bug fixes.
. Connection Wizard
. Keeps Internet dialler working even when disconnected.
. Support content
. News, surveys, user choice awards, contests.
Release 1.5 (Dec. 1, 1999)
- --------------------------
. Virus Scan
. Online virus scan repair and email updates.
. Remote Diagnostic and Repair
. Self help repair.
. Live Internet Support
. Fast, efficient and effective live support using advanced technology.
. Hardware Upgrades Wizard
. Subscriber profile will allow user to tune system to specific usage
types and recommend upgrades to improve performance.
. Expert Advice
. Suggestions and recommendations by experts.
. Education Center
<PAGE>
. Courses, videos, books and tapes to help subscribers increase their
knowledge about PCs and related topics.
<PAGE>
EXHIBIT 5.8
This Agreement effective the 21st day of June, 1999.
BETWEEN:
COMMUNICATE.COM Inc.
360 - 220 Cambie Street
Vancouver, Canada
V6B 2M9
("COMMUNICATE")
AND:
PCSupport.com, Inc.
1500 Hornby Street, Suite C-1
Vancouver, BC, V6Z 2R1
("PCS")
WHEREAS:
A. COMMUNICATE is a strategic Internet solutions company which provides online
strategic, creative, design, programming and application development
services.
B. PCS wishes to retain the services of COMMUNICATE to design and develop a
World Wide Web Internet Site specifically for PCS at www.pcsupport.com (the
"Site").
C. The parties wish to set out in this agreement (the "Agreement") their
mutual obligations with respect to the design and development of the Site.
<PAGE>
THIS AGREEMENT WITNESSES that, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Incorporation by Reference
1.1 The foregoing recitals and the attached schedules form an integral part of
this Agreement.
2. Obligations of COMMUNICATE
2.1 COMMUNICATE shall design and develop the Site for PCS (the "Project") with
participation by PCS & opportunities for testing, acceptance, modifications
and approvals by PCS at each stage as described in the proposal (as amended
from time to time, the "Proposal") for PCS dated June 7, 1999, and on the
PCS extranet, copies of which are attached hereto and incorporated herein
as Schedule "A," with changes to the specifications, deliverables, timeline
and budget to be mutually agreed upon.
2.2 COMMUNICATE shall deliver each deliverable at the times and in the manner
specified in the Proposal.
2.3 PCS shall have the time allotted in the Proposal, or if no time is
specified, a reasonable period, to inspect and test each deliverable when
received to determine if it conforms to the specifications set forth in the
Proposal. If any deliverable fails to conform to the specifications, PCS
shall give COMMUNICATE notice of the defect and COMMUNICATE shall then have
the time allotted in the Proposal, or if no time is specified, a reasonable
period, to remedy such failure and redeliver to PCS. If COMMUNICATE is
unable to correct the deliverable to conform to the specifications within
three (3) attempts, PCS may terminate this Agreement and receive a refund
of all monies paid for that deliverable.
3. Obligations of PCS
3.1 PCS shall:
(a) supply COMMUNICATE promptly with such information and content as
COMMUNICATE may reasonably require, in a mutually agreed upon
electronic format; and
(b) pay COMMUNICATE in accordance with section 6 herein.
4. Proprietary Rights
4.1 PCS grants to COMMUNICATE the non-exclusive right to produce and reproduce
on and for the Site any material protectable by copyright which PCS
provides to COMMUNICATE solely for the purpose of the Project and to use
any trademarks approved by PCS for use on the Site.
4.2 The parties agree as follows:
(a) as between COMMUNICATE and PCS, PCS shall *own all right title and
interest in and to any materials provided by PCS for incorporation in
the Site, including, but not limited to, text, graphics, or materials
generated in any form or media and any materials derived
<PAGE>
by COMMUNICATE from any materials provided, and owned, by PCS,
including through the conversion of materials to a format ready for
display on the Site (collectively, the "Work"). PCS hereby grants to
COMMUNICATE a non-exclusive, non-transferable, limited license,
revocable at will by PCS, to use the Work under the terms and
conditions of this Agreement solely in connection with the
establishment of the Site;
(b) COMMUNICATE agrees to insert into the Work such copyright, trademark
and other proprietary rights notices as PCS may request from time to
time. In addition, COMMUNICATE agrees that it will do and perform any
acts reasonably necessary or appropriate, including making assignments
and executing and delivering other documents, in order to enable PCS
to register the copyright in the Work and to evidence and enforce any
legal rights PCS may have as the sole and exclusive owner of the Work;
(c) notwithstanding clauses (a) and (b) above, exclusive ownership of the
Work by PCS does not include standard routines, development tools, and
programming techniques commonly employed by programmers, as well as
any underlying software code or computer programs which COMMUNICATE
creates and uses for the purposes of the Project, whether existing
prior to, or developed in connection with, this Agreement
(collectively referred to as the "Tools");
(d) COMMUNICATE hereby grants to PCS a perpetual, non-exclusive, royalty-
free, worldwide, non-transferable license to make use of any and all
such Tools which are incorporated in the Site and which are required
for the operation of the Site. Further, COMMUNICATE hereby grants to
PCS a perpetual, non-exclusive, royalty-free, non-transferable license
to modify or enhance the Tools for the purposes of the foregoing.
COMMUNICATE hereby reserves for itself all rights in and to the Tools
not expressly granted to PCS in the immediately foregoing sentence.
In no event shall PCS use any trademarks or service marks of
COMMUNICATE without COMMUNICATE's prior written consent. Unless
otherwise agreed to in writing by COMMUNICATE, any reproduction,
distribution, selling, disclosing, licensing or sublicensing of all or
any portion of any Tools, or any underlying software code or computer
programs which COMMUNICATE creates and uses to develop the Site, shall
automatically terminate the foregoing license. Nothing in this
paragraph shall affect PCS's ownership of the copyright and other
rights with respect to the Work;
(e) COMMUNICATE waives its rights, if any, under applicable law with
respect to "moral rights" or any similar rights in the Work. In
addition, COMMUNICATE hereby grants to PCS a perpetual, royalty-free,
worldwide, non-transferable right to modify the Work in any manner,
regardless of the effect on the Work, and to display the Work with or
without attribution to COMMUNICATE (except as otherwise agreed in
writing by the parties). Notwithstanding anything in this paragraph,
any alteration of the Site to include any obscene or illegal material
shall automatically terminate the license granted to PCS under
paragraph (d) above;
(f) nothing in this section 4.2 shall grant to PCS any right to sell,
license or disclose all or any portion of any Tools to any person or
party that is not an employee of PCS. For clarification purposes
only, PCS shall not allow a competitor of COMMUNICATE to modify or
enhance the Tools without COMMUNICATE's prior written consent; and
<PAGE>
(g) nothing in this section 4.2 shall grant to PCS any claim to, or
ownership in, any third party material (the "Third Party Material")
used by COMMUNICATE in the Project.
4.3 PCS acknowledges that if it wishes to produce or reproduce Third Party
Material in any media other than the Site, PCS shall be responsible for
negotiating any additional license fees directly with the owner of such
Third Party Material and shall bear any costs for acquiring such rights.
4.4 Subject to section 9.6(b) hereof, COMMUNICATE shall, upon request from PCS
or on the termination of this Agreement, return any Work which,it receives
from or produces for PCS under the terms of this Agreement.
4.5 COMMUNICATE will not sell, license, disclose, or otherwise provide any
unique features of the Site to any direct competitors of PCS whose primary
business is web-based computer maintenance, while COMMUNICATE is doing
ongoing work, including work under this Agreement, for PCS and for a period
of six months thereafter without prior written consent from PCS. This
restriction does not apply to features of the Site which are in the public
domain.
5. Representations, Warranties & Indemnities
5.1 PCS represents and warrants as follows:
(a) PCS is the owner of copyright to material supplied to COMMUNICATE for
use on the Site, or has acquired the necessary permission from the
copyright owner or owners of material of which it is not the owner to
sublicense the rights contemplated herein for use on the Site, and
either owns or has been licensed to use any trademarks supplied to
COMMUNICATE for the purposes contemplated by this Agreement;
(b) to the best of its knowledge, none of the material which it supplies
to COMMUNICATE or the trademarks which it approves for use on the Site
or in Site-related promotions will infringe or breach the proprietary,
statutory or contractual rights of any third party;
(c) to the best of its knowledge, any information which it supplies to
COMMUNICATE for publication on the Site and which purports to be
factual shall be accurate and true in all material respects;
(d) any software which it provides to COMMUNICATE for conversion and use
on the Site shall be free of material defects and have been screened
for viruses by a current, commercially-available anti-virus software
program; and
(e) PCS agrees to indemnify, defend and hold harmless COMMUNICATE, its
directors, officers, employees and agents, and defend any action
brought against same with respect to any claim, demand cause of
action, debt or liability, including reasonable legal fees, to the
extent that such action is based upon a claim that:
(i) if true, would constitute a breach of any of PCS's
representations, warranties or agreements hereunder;
(ii) arises out of the negligence or willful misconduct of PCS; or
(iii) any of the Work to be provided by PCS hereunder or other
material on the Site infringes or violates any rights of third
parties, including, without limitation, rights of
<PAGE>
publicity, rights of privacy, patents, copyrights, trademarks,
trade secrets and/or licenses.
5.2 COMMUNICATE represents and warrants as follows:
(a) COMMUNICATE is a company duly incorporated under the laws of British
Columbia;
(b) COMMUNICATE is the sole owner of copyright to any Work including
material which is not supplied or approved by PCS but which
COMMUNICATE contributes to the design of the Site or otherwise uses on
the Site, or has acquired the necessary permission from the copyright
owner or owners of material of which it is not the owner to produce or
reproduce such material in the design of the Site or otherwise use on
the Site, and either owns or has been licensed to use any trademarks
which are not supplied by PCS but which COMMUNICATE uses on the Site;
(c) to the best of its knowledge, none of the Work including material or
software which is not supplied or approved by PCS but which
COMMUNICATE uses or produces or reproduces in the development or
design of the Site will infringe or breach the intellectual property,
proprietary, statutory or contractual rights of any third party;
(d) to the best of its knowledge, any information which is not supplied by
PCS but which COMMUNICATE uses on the Site and purports to be factual
shall be true and accurate in all material respects;
(e) any software which it provides to PCS for conversion and use on the
Site shall be free of any material defects and have been screened for
viruses by a current, commercially-available anti-virus software
program;
(f) the performance of its services shall be of the highest professional
quality and shall be done in accordance with applicable laws;
(g) the deliverables, including the Work and Tools, shall perform as set
forth in the specifications in the Proposal;
(h) the deliverables, including the Work and Tools, shall record, store,
process and present calendar dates fully in and after January 1, 2000
in the same manner and with the same functionality as before December
31, 1999, that COMMUNICATE has successfully tested each such
deliverable to ensure that its operation will not be affected by
either time or date changes or leap years, and that the *deliverables
will correctly process date-related information and associated date
calculations for dates in the range of calendar years 1990 through
2150;
(i) the deliverables, including the Work and Tools, shall not infringe or
misappropriate any patent, copyright, trademark, trade secrets or
other intellectual property rights of any third party, or violate this
Agreement or applicable law. COMMUNICATE shall defend, indemnify and
hold harmless PCS from all claims, losses, damages, expenses and
liabilities arising from a breach or alleged breach of this subsection
(i); and
<PAGE>
(j) COMMUNICATE agrees to indemnify, defend and hold harmless PCS, its
directors, officers, employees and agents, and defend any action
brought against same with respect to any claim, demand, cause of
action, debt or liability, including reasonable legal fees, to the
extent that such action arises out of the gross negligence or willful
misconduct of COMMUNICATE.
6. Payment
6.1 COMMUNICATE shall invoice PCS for the amount specified in the COMMUNICATE
Proposal as follows:
(a) $50,000 CAD upon signing of this contract; and
(b) the remaining development budget to be invoiced at various stages
based on *deliverables, milestones and budget to be mutually agreed
upon during the initial planning stage and incorporated in the
Proposal.
6.2 PCS agrees that any consents or approvals will not be unreasonably withheld
or delayed. If PCS has not provided its approval or change requests
within two (2) weeks of a request by COMMUNICATE, PCS will be deemed to
have consented.
6.3 All invoices shall be due and payable upon receipt. Interest will accrue
on any unpaid amounts after 30 days at the rate of 2% per month until fully
paid.
7. Limitation of Liability
7.1 COMMUNICATE shall not be responsible to PCS for any damages or losses,
whether direct, indirect or consequential, arising from a disruption,
delay, defect or failure of the server which provides the Internet
connection for the Site.
8. Confidentiality
8.1 "Confidential Information" shall mean any confidential or proprietary
information of either party, whether or not developed by the other,
including but not limited to preexisting or new information relating to all
ideas, designs, methods, discoveries, improvements, products or other
results of consulting services, trade secrets, product data and
specifications, property rights, business affairs, product development,
customer information or employee information. "Confidential Information"
shall not include information available to the public other than through
the wrongful act or neglect of the recipient of that information under this
Agreement, or available to a party from a third party which is not
violating an obligation of confidence.
8.2 Each party acknowledges and agrees that it (and its subcontractor(s), if
any), in performing its obligations under this Agreement, shall have access
to or be directly or indirectly exposed to each other's Confidential
Information. Each party shall hold confidential all Confidential
Information and shall not disclose or use such Confidential Information,
except as required by applicable law, without the express written consent
of the other party. Each party shall use reasonable measures and
reasonable efforts to provide protection for the other party's Confidential
Information, including measures at least as strict as those each party uses
to protect its own Confidential Information. Such measures shall include,
without limitation, requiring employees and
<PAGE>
independent contractors to sign a non-disclosure agreement before obtaining
access to the other party's Confidential Information.
8.3 Each party agrees not to use the other party's Confidential Information
other than to meet its obligations under this Agreement.
9. Termination
9.1 Either party may, at its option, terminate this Agreement, effective
immediately, if the other party materially defaults on its obligations
hereunder and fails to cure such default within fifteen (15) days after
receipt of notice of such default.
9.2 The right to terminate this Agreement in accordance with paragraph 9.1
shall not be an exclusive remedy and either party shall be entitled to
damages arising out of any breach of this Agreement or to any other remedy
available at law or in equity.
9.3 The parties may also terminate this Agreement upon such terms and
conditions as may be mutually agreed upon.
9.4 PCS may terminate this Agreement without cause on thirty (30) days prior
written notice upon payment for all unpaid invoices and uncompensated
expenses through the date of termination. Such payment by PCS to
COMMUNICATE upon termination shall include a prorata payment based on all
work done by COMMUNICATE towards the completion of a milestone but which
milestone is not completed prior to termination.
9.5 Either party may terminate this Agreement upon completion of the initial
planning stage for any reason or no reason, including but not limited to
the parties failure to agree to the specifications, timeline and budget for
the remaining Phases.
9.6 Upon termination:
(a) COMMUNICATE shall cease using any of PCS's trademarks, marketing
materials or stationery;
(b) provided that PCS has paid to COMMUNICATE any amounts owing for
services rendered and disbursements incurred under this Agreement,
COMMUNICATE shall return to PCS within 10 days any PCS products or
materials in COMMUNICATE's possession and delete any electronic copies
of such products or materials from its system except for any
electronic copies of such products or materials which have been
purchased and paid for or properly licensed for COMMUNICATE's account;
(c) COMMUNICATE shall refund to PCS any monies which COMMUNICATE may have
received for work which is not delivered to PCS; and
(d) the rights and licenses granted under this Agreement to PCS shall
survive termination.
10. Limitation of Liability
<PAGE>
10.1 COMMUNICATE shall have no liability under this Agreement or otherwise for
consequential, exemplary, special, incidental, or punitive damages and
COMMUNICATE's liability under this Agreement will be limited to the amount
actually paid to COMMUNICATE by PCS under this Agreement. This limitation
applies to all causes of action in the aggregate, including without
limitation, breach of contract, breach of warranty, negligence, strict
liability, misrepresentations, and other torts.
11. Governing Law
11.1 This Agreement shall be governed by and interpreted in accordance with the
laws of British Columbia and Canada and the parties irrevocably attorn to
the jurisdiction of the courts of British Columbia in respect to any and
all matters arising out of this Agreement.
12. Notices
12.1 Any notices or communications required to be given shall be made in
writing and either delivered to the recipient at the address described on
the first page of this Agreement and sent by telecopier and e-mail as
follows:
If to COMMUNICATE: (604) 687-2192 If to PCS: (604) 257-3004
email: [email protected] email: [email protected]
---------------------
Attention: Bryan Liew Attention: Steve Macbeth
unless otherwise advised in writing by the intended recipient. If notice
is delivered by courier or personal delivery, it shall be deemed to have
been given upon delivery. If notice is sent by telecopier or email, it
shall be deemed to have been given at one business day after the
transmission was sent and receipt confirmed electronically.
13. Miscellaneous
13.1 Time shall be of the essence of this Agreement and no extension or
variation of this Agreement or any obligation hereunder shall operate as a
waiver of this provision.
13.2 The parties agree that this Agreement will be effective following any
change of name of PCs.
13.3 COMMUNICATE shall not have the power to bind PCS nor shall COMMUNICATE
make any such representation and PCS shall not have the power to bind
COMMUNICATE nor shall PCS make any such representation. COMMUNICATE's
relation to PCS shall be that of an independent contractor and not that of
a partner, employee or joint venture.
13.4 The waiver by either party of any breach or failure to enforce any of the
terms and conditions of this Agreement at any time shall not in any way
affect, limit or waive either party's rights thereunder to enforce and
compel full performance with every term and condition of this Agreement.
13.5 This Agreement shall be binding upon and inure to the benefits of the
successors and assigns of the parties. Neither party may assign its rights
or obligations hereunder without the prior consent of the other, except
that the sale of substantially all of the stock or assets of either or the
merger of
<PAGE>
either shall not be deemed an assignment which requires the other's
consent, provided prompt notice of any such sale or merger shall be
given to the other.
13.6 All provisions of this Agreement relating to PCS warranties,
confidentiality, non-disclosure, proprietary rights, limitation of
liability, indemnification obligations and payment obligations shall
survive the termination or expiration of this Agreement.
13.7 The provisions of this Agreement shall be severable. Should any portion
of this Agreement be held void, invalid or inoperative, the remaining
provisions shall not be affected and shall continue in effect provided
that such severance will not materially alter the substance of this
Agreement. All void, invalid or inoperative provisions shall be deemed
modified to the least extent necessary to remedy such provisions
enforceability.
13.8 This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and all prior
agreements or understandings with respect thereto are superseded hereby.
No amendment or modification hereof shall be binding unless in writing
and duly executed by the parties.
13.9 This Agreement may be executed in multiple counterparts, all of which
taken together shall constitute one single Agreement between the
parties.
IN WITNESS WHERE the authorized signatories of the parties have executed this
Agreement as of the day and year first above mentioned.
COMMUNICATE.COM, Inc. PCSupport.com, Inc.
_______________________________ ________________________________
Authorized Signatory Authorized Signatory
<PAGE>
Schedule A
COMMUNICATE.COM PROPOSAL DATED JUNE 7, 1999
-------------------------------------------
and PC SUPPORT PROJECT EXTRANET
-------------------------------
The proposal dated June 7, 1999 is, and is intended to be, general in nature.
COMMUNICATE and PCS will develop more detailed deliverables, specifications,
timelines and budgets, which, upon being agreed to in writing, will
automatically be added to and form a part of this Agreement.
<PAGE>
360-220 Cambia Street
Vancouver, Canada
V6B 2M9
communicate.com
telephone: 604.687.2143
fax: 604.687.2192
www:http://www.communicate.com
CONTRACT ADDENDUM
DATE: July 19, 1999
CLIENT: PCSupport.com
PROJECT CODE: PCS/CENTER
PREPARED By: Theo Wiersma
- --------------------------------------------------------------------------------
ATTN: Steve Macbeth
TOTAL PAGES: 11
This fax transmission should consist of this cover page, an addendum to our
contract agreement, the project plan/timeline, and the feature set v1.1
document. If any of these documents were not received, please call Theo Wiersma
at 587-2142.
Also, here is the breakdown of the current deposit status:
Corporate Website $ 20,000.00
Flow Diagrams $ 5,000.00
Online Marketing of Corporate Site $ 1,500.00
T&M for work on PCSupport Center to date $ 13,664.17
- -------------------------------------------------------------
TOTAL TO DATE $ 40,164.17
Initial deposit $(50,000.00)
Deposit Remaining $ (9,835.83)
Let me know if you require any clarification, otherwise, fax back to my
attention at 687-2192.
Theo Wiersma
Account Executive
<PAGE>
ADDENDUM - JULY 19, 1999.
This is an addendum to the Agreement (as per schedule A) effective June 21, 1999
between Communicate.com and PC Support.
PC Support approves proceeding with the budget below to deliver a PCSupport.com
web site with minimal functionality (see attached Feature Set v1.1 and Project
Plan.mpp). Functional scope decisions that deviate from or expand on this
feature set will be approved on an item by item basis, and Communicate.com will
present budget revisions and other impact statements as and if the scope
increases.
Development will proceed upon delivery of the initial deposit of $60,164($70,00
as per below, minus remaining deposit of $9836). Payment will then continue as
per the payment schedule below, drawing partially from new invoices, and
partially form the deposit.
Budget Breakdown
- ----------------
Low High
Project Management $ 28,600 $ 33,000
Engineering $ 93,600 $108,000
Site design & Development 88,400 $102,000
QA & Development $ 52,000 $ 60,000
Total $262,600 $303,000
Payment Schedule
- ----------------
Project cost Date Invoiced Deposit Paid
Commencement 19/Jul $70,700.00 $ 70,700.00
Deposit
Payment 1 2/Aug $ 45,133.33 $58,916.67 $ 58,916.67
Payment 2 16/Aug $ 45,133.33 $47,133.33 $ 47,133.33
Payment 3 30/Aug $ 45,133.33 $35,350.00 $ 35,350.00
Payment 4 13/Sep $ 45,133.33 $23,566.67 $ 35,350.00
Payment 5 27/Sep $ 45,133.33 $11,783.33 $ 33,350.00
Payment 6 11/Oct $ 57,133.33 $ 0.00 $ 45,350.00
Total $282,800.00 $282,800.00
COMMUNICATE.COM, Inc. PC Support
____________________________ ____________________________
Authorized Signatory Authorized Signatory
Date: July 19, 1999 Date: July 20, 1999
<PAGE>
EXHIBIT 5.9
PCSUPPORT.COM INC.
DIRECTORS, OFFICERS AND EMPLOYEE
STOCK OPTION PLAN
1. ESTABLISHMENT AND PURPOSE
There is hereby established the PCsupport.com Inc. Directors, Officers and
Employee Stock Option Plan (the "Plan"). The purpose of the Plan is to provide a
means whereby PCsupport.com Inc., incorporated under the laws of the state of
Nevada (the "Company"), may, through the grant of options to purchase common
shares of the Company ("Shares") to directors, officers, consultants and full-
time and part-time employees of the Company and to companies providing
management services to the Company, attract and retain persons of ability as
directors, officers, consultants, full-time and part-time employees and
management services companies, and motivate such persons to exert their best
efforts on behalf of the Company and any subsidiary of the Company. Persons
shall be deemed to be "consultants" if they are under contract to perform
services for the Company, but are not employees of the Company. Persons shall be
deemed to be "part-time" employees of the Company if they are hired to work on a
regular basis, averaging less than 40 hours per week for operational staff or
less than 37.5 hours per week for clerical staff; or are hired for a temporary
assignment or for a specific project.
2. NUMBER OF SHARES AVAILABLE UNDER THE PLAN
The Company is hereby authorized to grant share purchase options
("Options") from time to time to directors, officers, consultants and full-time
and part-time employees of the Company or of any Subsidiary thereof to purchase
Shares and such shares are hereby conditionally allotted and shall be reserved
for issue upon exercise of Options, subject to adjustment as provided for in
paragraphs 4(h) and 4(i) and subject further to the limitations as to number and
other provisions herein set forth. If any Option shall terminate, expire or,
with the consent of the optionee, be cancelled as to any shares, a new Option
may thereafter be granted covering such Shares. The number of Shares available
for grant of Options under the Plan, subject to Options and reserved for
issuance pursuant to the Plan or subject to options or reserved for issuance
pursuant to any other employee share purchase or option plan of the Company, or
any proposed share compensation arrangements shall not at any time result in:
a) the number of Shares reserved for issuance pursuant to stock options
granted to insiders exceeding 15% of the outstanding issue;
b) the issuance to insiders, within a one-year period, of a number of
shares exceeding 15% of the outstanding issue; or
<PAGE>
c) the issuance to any individual, within a one-year period, of a number
of shares exceeding 5% of the outstanding issue.
For the purposes of paragraphs 2(b) and 2(c), "outstanding issue" is determined
on the basis of the total number of Shares in the Company that are outstanding
immediately prior to the share issuance in question, excluding shares issued
pursuant to share compensation arrangements over the preceding one-year period.
For the purposes of paragraphs 2(a), 2(b) and 2(c), an entitlement granted prior
to the grantee becoming an insider will be excluded in determining the number of
shares issuable to insiders.
3. ADMINISTRATION
The Plan shall be administered under the supervision of the Board of
Directors of the Company or by a duly appointed executive committee of the Board
of Directors (both of which are referred to herein as the "Board").
Subject to the provisions of the Plan, the Board shall have the power to
(a) determine and designate from time to time those directors, officers,
consultants and full-time and part-time employees of the Company or of any
Subsidiary to whom Options are to be granted and the number of Shares to be
optioned to each of such director, officer, consultant and full-time and part-
time employee; and (b) determine the time or times when, and the manner in
which, each Option shall be exercisable and the duration of the exercise period.
An individual who has been granted an Option may, if he is otherwise
eligible, be granted an additional option or options under the Plan or any other
option or purchase plans of the Company if the Board shall so determine.
The Board may interpret the Plan, prescribe, amend and rescind any rules
and regulations necessary or appropriate for the administration of the Plan, and
make such other determinations and take such other action as it deems necessary
or advisable. Without limiting the generality of the foregoing sentence, the
Board may, in its discretion, treat all or any portion of any period during
which an optionee is on an approved leave of absence from the Company or a
Subsidiary as a period of employment or directorship of such optionee by the
Company or such Subsidiary, as the case may be, for the purpose of accrual of
his rights under his Option. Any interpretation, determination or other action
made or taken by the Board shall be final, binding and conclusive.
4. TERMS AND CONDITIONS
Each Option shall be evidenced by an agreement (a "Stock Option
Agreement"), in form approved by the Board, which shall be subject to the
following express terms and conditions and to such other terms and conditions as
the Board may deem appropriate.
<PAGE>
a) Option Period. Each Option Agreement shall specify the period for
which the Option granted thereunder is exercisable (which in no event
shall exceed five years from the date of grant) and shall provide that
the Option shall expire at the end of such period.
b) Option Price. The option price per Share shall be determined by the
Board at the time any Option is granted, provided:
i) if the Shares are listed for trading on a public stock exchange,
the minimum exercise price per Share shall be the average market
price for the twenty trading days immediately preceding the day
on which the Option is granted; and
ii) if the Shares are not listed for trading on a public stock
exchange, the minimum exercise price per Share shall be the fair
value of the Shares as at the day the Option is granted, as
determined by the Board.
c) Payment of Purchase Price Upon Exercise. The purchase price of the
Shares issued on exercise of an Option shall be paid in cash or
certified cheque to the Company at the time of exercise.
d) Death or Termination of Employment. If:
i) an optionee shall die while (A) an employee of the Company or of
a Subsidiary or a director of the Company, or (B) within 30 days
after termination of his employment with the Company or a
Subsidiary or his directorship in the Company in accordance with
clause (ii), his Option may be exercised, to the extent that the
optionee shall have been entitled to do so at the date of death,
by the person or persons to whom the optionee's rights under the
Option pass by will or applicable law, or if no such person has
such right, by his executors or administrators, at any time, or
from time to time, within one year of the date of death, but in
any event not later than the expiration date specified in
accordance with subparagraph 4(a); and
ii) an optionee's employment by the Company or a Subsidiary or his
directorship in the Company shall terminate for any reason
whosoever, he may exercise his Option, to the extent that he may
be entitled to do so at the date of the termination of his
employment, or directorship, at any time, or from time to time,
within 30 days of the date of termination of his employment, or
directorship, but in any event not later than the expiration date
specified in accordance with subparagraph 4(a).
<PAGE>
e) Non-transferability. No Option shall be transferable other than by
will or by the laws of descent and distribution. During the lifetime
of an optionee, an Option shall be exercisable only by him.
f) Qualification. Each Option shall be subject to the requirement that if
at any time the Board shall determine, in its discretion, that the
registration, qualification or other approval of or in connection with
the Plan or the Shares covered thereby is necessary or desirable under
any provincial, state or federal law, then such Option may not be
exercisable, in whole or in part, unless and until such registration,
qualification or approval shall have been obtained free of any
condition not acceptable to the Board. The optionee shall, to the
extent applicable, cooperate with the Company in relation thereto and
shall have no claim or cause of action against the Company or any of
its officers or directors as a result of any failure by the Company to
take any steps to obtain any such registration, qualification or
approval. The grant of Options and the issuance of Shares under the
Plan shall be carried out in compliance with all applicable statutes,
regulations of governmental authorities and applicable stock
exchanges.
g) Adjustments in Event of Change in Shares. In the event of a change in
the Shares by reason of any stock dividend, recapitalization,
reorganization, merger, consolidation, subdivision, combination,
exchange of shares or any similar change affecting the Shares, the
number and kind of Shares which thereafter may be optioned and sold
under the Plan and the number and kind of Shares subject to option in
outstanding option agreements and the purchase price per Share thereof
shall be appropriately adjusted consistent with such change in such
manner as the Board may deem equitable and prevent substantial
dilution or enlargement of the rights granted to, or available for,
participants in the Plan.
h) Amalgamation or Merger. If the Company amalgamates with any other
company or companies by way of arrangement, sale of its assets and
undertakings or otherwise, the Company shall provide all optionees
with written notice prior to such event indicating whether or not any
Options then outstanding are to be allowed to be carried forward
following such event of amalgamation or merger. If the Company
notifies the optionees that the Options are to be allowed to be
carried forward then each optionee shall have an election:
(A) to carry his Option forward and the number of shares in the
corporation resulting from such amalgamation or merger which
are under Option shall be the number of shares in such
corporation which the optionee would have received if he had
exercised his Option in full prior to the date of such
amalgamation or merger and the purchase price of such
corporation shall be appropriately set; or
<PAGE>
(B) to exercise his Option in full prior to the date of such
amalgamation or merger notwithstanding any provision of the
particular Option agreement entered into by such optionee
relating to the timing of exercise of the shares held under
such Option.
i) Liquidation. In the event the Board shall adopt a plan of complete
liquidation, all Options shall become immediately exercisable in full,
notwithstanding that they were initially granted on an installment
basis.
j) No Rights as Shareholder. No optionee shall have any rights as a
shareholder with respect to any shares subject to his Option prior to
the date of issuance to him of a certificate or certificates for such
Shares.
k) No Rights to Continued Employment. The Plan and any Option granted
under the Plan shall not confer upon any optionee any right with
respect to continuance of employment by the Company or any Subsidiary,
nor shall they interfere in any way with the right of the Company or
any Subsidiary by which an optionee is employed to terminate his
employment at any time in accordance with applicable law.
5. AMENDMENT AND DISCONTINUANCE
The Board may from time to time amend (subject to regulatory approval)
suspend, terminate or discontinue the Plan. Without the written consent of an
optionee, no amendment or suspension of the Plan shall alter or impair any
Option granted to him under the Plan.
6. PROCEEDS FROM SALE OF SHARES
Any cash proceeds from the sale of Shares issued upon exercise of the
Options shall be added to the general funds of the Company and shall thereafter
be used from time to time for such corporate purposes as the Board may
determine.
7. GENDER
Wherever the masculine is used herein it will be deemed to include the
feminine.
This Plan was approved in this form by the Board of Directors of PCSupport.com,
Inc. on July 2, 1999.
<PAGE>
EXHIBIT 5.10
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT made as of the 28th day of June, 1999 between
PCSUPPORT.COM INC., a corporation under the laws of the state of Nevada (herein
called the "Company"), and Mike McLean (herein called the "Optionee").
WITNESSES THAT WHEREAS:
A. The Optionee is a director, officer, consultant or senior full-time or
part-time employee of the Company or of a subsidiary of the Company, or a
company providing management services to the Company.
B. The Company has established a Directors and Senior Management Plan (the
"Plan") for the purpose of motivating directors, officers, consultants,
senior full-time and part-time employees and management services companies
("Qualified Persons") to exert their best efforts on behalf of the Company
and any subsidiary of the Company.
C. The Company has agreed to grant to the Optionee an option to purchase
common shares in the capital of the Company on the terms and subject to
the conditions contained herein.
NOW THEREFORE, in consideration of the sum of $10 paid by the Optionee to
the Company and other valuable consideration, the receipt of which is hereby
acknowledged by the Company, and in consideration of the mutual agreements and
their respective covenants contained herein, the parties hereby agree to the
following terms and the Company grants the following option:
1. OPTION
1.01 The Company hereby grants to the Optionee, upon the terms and subject to
the conditions contained herein and subject to all the terms and provisions of
the Plan, the right (herein called the "Option"), exercisable only during the
period (the "Option Period") provided in paragraph 1.02 hereof, to require the
Company to sell to the Optionee 50,000 common shares (herein called the
"Optioned Shares") in the capital of the Company, at a price (herein called the
"Exercise Price") of $1.00 per share.
1.02 The Option shall be irrevocable until and including 28 June 2004 and
shall, upon the expiration of the Option Period, immediately expire and
terminate and be of no further force or effect whatsoever with respect to those
of the Optioned Shares in respect of which the Option has not by that time been
exercised. The Option shall vest in the Optionee in 36 equal tranches at the
rate of one tranche per month commencing 01 June 1999 and the Optionee shall not
be entitled to exercise the Option in respect of any Optioned Shares except when
and if the aggregate number of Optioned Shares in respect of which the Optionee
has vested rights exceeds the number of Options exercised by the Optionee.
<PAGE>
1.03 If the Optionee ceases during the Option Period to be a Qualified Person,
the Option shall, upon the termination of the Option Period or the date upon
which the Optionee so ceases, whichever is earlier, cease and terminate and be
of no further force or effect whatsoever 30 days after such termination with
respect to those of the Optioned Shares in respect of which the Option has not
by that time been exercised.
1.04 If the Optionee by reason of his death ceases during the Option Period to
be a Qualified Person, the Optionee's executor or other personal representative
shall be entitled during the Option Period or during the period of one year
following the Optionee's death, whichever is the shorter period, to exercise the
Option in the same manner and to the same extent as the Optionee was entitled
immediately prior to the time of his death, following which period the Option
shall immediately cease and terminate and be of no further force and effect
whatsoever with respect to the Optioned Shares in respect of which the Option
has not by that time been exercised.
1.05 The grant of the Option contained herein and every exercise of the Option
and every term of this agreement and every amendment hereto shall be subject to
the requirements and restrictions (if any) and to the approval (if required) of
the appropriate securities and other relevant regulatory authorities. The
Company will exercise its best efforts to obtain all such regulatory,
shareholder and other approvals as may be required in connection with the
granting or exercise of the Option, and the Optionee will cooperate to the
extent reasonably necessary to obtain such approvals.
2. MANNER OF EXERCISE OF OPTION
2.01 Subject to the provisions hereof, the Optionee shall be entitled to
exercise the Option with respect to all or from time to time any part of the
Optioned Shares.
2.02 Subject to the provisions hereof, the Option shall be exercisable in whole
or from time to time in part by the Optionee delivering a notice (a "Notice") in
writing to the Company's registered office. The Notice shall specify the number
of Optioned Shares in respect of which the Option is being exercised at that
time and shall be accompanied by payment, by bank draft or certified cheque, in
full of the Exercise Price for the number of Optioned Shares specified in the
Notice. Subject to the provisions hereof, every such exercise of the Option
shall constitute a binding agreement for the purchase and sale of the Optioned
Shares specified in the Notice. Upon an exercise of the Option as aforesaid, the
Company will, subject to the provisions hereof, forthwith deliver to the
Optionee at the most recent address for the Optionee indicated on the records of
the Company (or as the Optionee shall have otherwise directed in the Notice) a
certificate in the name of the Optionee representing the Optioned Shares
purchased.
2.03 Nothing contained herein or done pursuant hereto shall oblige the Optionee
to purchase or pay for any Optioned Shares except those Optioned Shares in
respect of which the Optionee shall have exercised the Option in the manner
herein provided.
2.04 The Optionee shall have no rights whatsoever as a shareholder of the
Company in respect of any of the Optioned Shares (including without limitation
any right to vote or to
<PAGE>
receive dividends or any other distribution therefrom or thereon) other than the
Optioned Shares in respect of which the Optionee shall have exercised the Option
in the manner provided herein and which shall have accordingly been issued to
the Optionee by the Company.
3. RIGHTS ON CAPITAL REORGANIZATION AND MERGER
3.01 If the number or features of the issued and outstanding common shares (the
"Common Shares") in the capital of the Company are at any time changed by
subdivision, consolidation, redivision, reduction in capital, reclassification,
redesignation, recapitalization or in any other manner whatsoever (such changes
are herein called collectively "Capital Alterations") except by the issuance of
additional shares for bona fide consideration, the Option shall be adjusted as
follows:
a) the number and class of shares in respect of which the Option is
granted shall be adjusted in such a manner as to parallel the change
in the Common Shares (whether in respect of equity entitlement or
voting rights or otherwise) effected by the Capital Alteration; and
b) the Exercise Price for each share (or, where the Capital Alteration
results in the change of the Common Shares to more than one class of
shares, for each optioned group of shares resulting from the change of
each Optioned Share) in respect of which the Option shall operate
shall be increased or decreased proportionally, as the case may
require, so as to reflect the change in the number of shares (or
groups of shares) in respect of which the Option shall operate, so
that the Optionee shall upon an exercise of the Option after the
Capital Alteration be entitled to receive at the same cost the same
number and class of shares as the Optionee would have been entitled as
a result of the Capital Alteration if immediately prior to the Capital
Alteration the Optionee had exercised the Option and was issued the
Optioned Shares in respect of which he exercised the Option. The
adjustments provided for in this paragraph shall be cumulative,
regardless of the number of Capital Alterations which shall occur
during the currency of the Option, and the provisions hereof shall
apply mutatis mutandis to any such successive adjustments.
3.02 If the Company enters into a merger or an amalgamation (collectively, an
"Amalgamation") with another corporation, so that there is a successor or
continuing corporation (herein called collectively the "Successor Company"),
then the Successor Company shall be bound by all the terms of this agreement and
the number and class of shares in respect of which the Option shall operate
shall be adjusted on the same basis as that on which the Common Shares (or other
shares in the capital of the Company in respect of which the Option operates at
the time of the Amalgamation) are exchanged pursuant to the Amalgamation for
shares in the capital of the Successor Company, so that the Optionee shall upon
an exercise of the Option after the Amalgamation be entitled to receive at the
same cost the same number and class of shares in the Capital of the Successor
Corporation as the Optionee would have been entitled under the
<PAGE>
Amalgamation if immediately prior to the Amalgamation the Optionee had exercised
the Option and was issued the Optioned Shares in respect of which he exercised
the Option. The adjustments provided for in this paragraph shall be cumulative,
regardless of the number of Amalgamations which shall occur during the currency
of the Option, and the provisions hereof shall apply mutatis mutandis to any
such successive adjustments.
4. GENERAL
4.01 The Optionee and the Company represent that the Optionee is a Qualified
Person.
4.02 Time shall be of the essence of this agreement.
4.03 This instrument shall be governed by and construed in accordance with the
laws of the Province of British Columbia.
4.04 In this instrument, unless there is something in the subject matter or the
context inconsistent therewith:
a) words importing the singular include the plural and vice versa, words
importing gender include the masculine, feminine and neuter genders
and words importing a person include an individual, a body corporate,
and a partnership, syndicate and any other unincorporated association
of persons;
b) a reference to a paragraph, subparagraph, clause or schedule means
that paragraph, subparagraph or clause in or schedule attached to this
instrument;
c) the words "herein", "hereof", "hereunder", "hereby", "hereto" and
similar expressions refer to this instrument generally and not to any
particular paragraph, subparagraph, clause or other part or division
of this instrument; and
d) the insertion of titles and headings is for convenience of reference
only and shall not affect the interpretation hereof.
<PAGE>
4.05 This instrument shall enure to the benefit of and be binding upon the
Company and its successors and assigns. This agreement shall be binding upon the
Optionee and his heirs executors, administrators, personal legal
representatives, successors and assigns. Except to the extent provided in
paragraph 1.04, this option agreement and the Option are non-assignable and non-
transferable by the Optionee.
IN WITNESS WHEREOF the parties hereto have executed this instrument as of
the date first above written.
PCSUPPORT.COM INC.
Per:
/s/ Mike McLean
- ---------------------------------------
Authorized Signatory
SIGNED, SEALED AND DELIVERED BY )
Mike McLean )
in the presence of )
)
)
David Rowat ) /s/ Mike McLean
- --------------------------------------- ) -----------------------------------
Name ) Mike McLean
)
3569 West 43/rd/, Vancouver, B.C. )
- --------------------------------------- )
Address )
)
Manager )
- --------------------------------------- )
Occupation )
<PAGE>
EXHIBIT 5.11
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT made as of the 28th day of June, 1999 between
PCSUPPORT.COM INC., a corporation under the laws of the state of Nevada (herein
called the "Company"), and Steve Macbeth (herein called the "Optionee").
WITNESSES THAT WHEREAS:
A. The Optionee is a director, officer, consultant or senior full-time or
part-time employee of the Company or of a subsidiary of the Company, or a
company providing management services to the Company.
B. The Company has established a Directors and Senior Management Plan (the
"Plan") for the purpose of motivating directors, officers, consultants,
senior full-time and part-time employees and management services companies
("Qualified Persons") to exert their best efforts on behalf of the Company
and any subsidiary of the Company.
C. The Company has agreed to grant to the Optionee an option to purchase
common shares in the capital of the Company on the terms and subject to
the conditions contained herein.
NOW THEREFORE, in consideration of the sum of $10 paid by the Optionee to
the Company and other valuable consideration, the receipt of which is hereby
acknowledged by the Company, and in consideration of the mutual agreements and
their respective covenants contained herein, the parties hereby agree to the
following terms and the Company grants the following option:
1. OPTION
1.01 The Company hereby grants to the Optionee, upon the terms and subject to
the conditions contained herein and subject to all the terms and provisions of
the Plan, the right (herein called the "Option"), exercisable only during the
period (the "Option Period") provided in paragraph 1.02 hereof, to require the
Company to sell to the Optionee 50,000 common shares (herein called the
"Optioned Shares") in the capital of the Company, at a price (herein called the
"Exercise Price") of $1.00 per share.
1.02 The Option shall be irrevocable until and including 28 June 2004 and
shall, upon the expiration of the Option Period, immediately expire and
terminate and be of no further force or effect whatsoever with respect to those
of the Optioned Shares in respect of which the Option has not by that time been
exercised. The Option shall vest in the Optionee in 36 equal tranches at the
rate of one tranche per month commencing 01 June 1999 and the Optionee shall not
be entitled to exercise the Option in respect of any Optioned Shares except when
and if the aggregate number of Optioned Shares in respect of which the Optionee
has vested rights exceeds the number of Options exercised by the Optionee.
<PAGE>
1.03 If the Optionee ceases during the Option Period to be a Qualified Person,
the Option shall, upon the termination of the Option Period or the date upon
which the Optionee so ceases, whichever is earlier, cease and terminate and be
of no further force or effect whatsoever 30 days after such termination with
respect to those of the Optioned Shares in respect of which the Option has not
by that time been exercised.
1.04 If the Optionee by reason of his death ceases during the Option Period to
be a Qualified Person, the Optionee's executor or other personal representative
shall be entitled during the Option Period or during the period of one year
following the Optionee's death, whichever is the shorter period, to exercise the
Option in the same manner and to the same extent as the Optionee was entitled
immediately prior to the time of his death, following which period the Option
shall immediately cease and terminate and be of no further force and effect
whatsoever with respect to the Optioned Shares in respect of which the Option
has not by that time been exercised.
1.05 The grant of the Option contained herein and every exercise of the Option
and every term of this agreement and every amendment hereto shall be subject to
the requirements and restrictions (if any) and to the approval (if required) of
the appropriate securities and other relevant regulatory authorities. The
Company will exercise its best efforts to obtain all such regulatory,
shareholder and other approvals as may be required in connection with the
granting or exercise of the Option, and the Optionee will cooperate to the
extent reasonably necessary to obtain such approvals.
2. MANNER OF EXERCISE OF OPTION
2.01 Subject to the provisions hereof, the Optionee shall be entitled to
exercise the Option with respect to all or from time to time any part of the
Optioned Shares.
2.02 Subject to the provisions hereof, the Option shall be exercisable in whole
or from time to time in part by the Optionee delivering a notice (a "Notice") in
writing to the Company's registered office. The Notice shall specify the number
of Optioned Shares in respect of which the Option is being exercised at that
time and shall be accompanied by payment, by bank draft or certified cheque, in
full of the Exercise Price for the number of Optioned Shares specified in the
Notice. Subject to the provisions hereof, every such exercise of the Option
shall constitute a binding agreement for the purchase and sale of the Optioned
Shares specified in the Notice. Upon an exercise of the Option as aforesaid, the
Company will, subject to the provisions hereof, forthwith deliver to the
Optionee at the most recent address for the Optionee indicated on the records of
the Company (or as the Optionee shall have otherwise directed in the Notice) a
certificate in the name of the Optionee representing the Optioned Shares
purchased.
2.03 Nothing contained herein or done pursuant hereto shall oblige the Optionee
to purchase or pay for any Optioned Shares except those Optioned Shares in
respect of which the Optionee shall have exercised the Option in the manner
herein provided.
2.04 The Optionee shall have no rights whatsoever as a shareholder of the
Company in respect of any of the Optioned Shares (including without limitation
any right to vote or to
<PAGE>
receive dividends or any other distribution therefrom or thereon) other than the
Optioned Shares in respect of which the Optionee shall have exercised the Option
in the manner provided herein and which shall have accordingly been issued to
the Optionee by the Company.
3. RIGHTS ON CAPITAL REORGANIZATION AND MERGER
3.01 If the number or features of the issued and outstanding common shares (the
"Common Shares") in the capital of the Company are at any time changed by
subdivision, consolidation, redivision, reduction in capital, reclassification,
redesignation, recapitalization or in any other manner whatsoever (such changes
are herein called collectively "Capital Alterations") except by the issuance of
additional shares for bona fide consideration, the Option shall be adjusted as
follows:
a) the number and class of shares in respect of which the Option is
granted shall be adjusted in such a manner as to parallel the change
in the Common Shares (whether in respect of equity entitlement or
voting rights or otherwise) effected by the Capital Alteration; and
b) the Exercise Price for each share (or, where the Capital Alteration
results in the change of the Common Shares to more than one class of
shares, for each optioned group of shares resulting from the change of
each Optioned Share) in respect of which the Option shall operate
shall be increased or decreased proportionally, as the case may
require, so as to reflect the change in the number of shares (or
groups of shares) in respect of which the Option shall operate, so
that the Optionee shall upon an exercise of the Option after the
Capital Alteration be entitled to receive at the same cost the same
number and class of shares as the Optionee would have been entitled as
a result of the Capital Alteration if immediately prior to the Capital
Alteration the Optionee had exercised the Option and was issued the
Optioned Shares in respect of which he exercised the Option. The
adjustments provided for in this paragraph shall be cumulative,
regardless of the number of Capital Alterations which shall occur
during the currency of the Option, and the provisions hereof shall
apply mutatis mutandis to any such successive adjustments.
3.02 If the Company enters into a merger or an amalgamation (collectively, an
"Amalgamation") with another corporation, so that there is a successor or
continuing corporation (herein called collectively the "Successor Company"),
then the Successor Company shall be bound by all the terms of this agreement and
the number and class of shares in respect of which the Option shall operate
shall be adjusted on the same basis as that on which the Common Shares (or other
shares in the capital of the Company in respect of which the Option operates at
the time of the Amalgamation) are exchanged pursuant to the Amalgamation for
shares in the capital of the Successor Company, so that the Optionee shall upon
an exercise of the Option after the Amalgamation be entitled to receive at the
same cost the same number and class of shares in the Capital of the Successor
Corporation as the Optionee would have been entitled under the
<PAGE>
Amalgamation if immediately prior to the Amalgamation the Optionee had exercised
the Option and was issued the Optioned Shares in respect of which he exercised
the Option. The adjustments provided for in this paragraph shall be cumulative,
regardless of the number of Amalgamations which shall occur during the currency
of the Option, and the provisions hereof shall apply mutatis mutandis to any
such successive adjustments.
4. GENERAL
4.01 The Optionee and the Company represent that the Optionee is a Qualified
Person.
4.02 Time shall be of the essence of this agreement.
4.03 This instrument shall be governed by and construed in accordance with the
laws of the Province of British Columbia.
4.04 In this instrument, unless there is something in the subject matter or the
context inconsistent therewith:
a) words importing the singular include the plural and vice versa, words
importing gender include the masculine, feminine and neuter genders
and words importing a person include an individual, a body corporate,
and a partnership, syndicate and any other unincorporated association
of persons;
b) a reference to a paragraph, subparagraph, clause or schedule means
that paragraph, subparagraph or clause in or schedule attached to this
instrument;
c) the words "herein", "hereof", "hereunder", "hereby", "hereto" and
similar expressions refer to this instrument generally and not to any
particular paragraph, subparagraph, clause or other part or division
of this instrument; and
d) the insertion of titles and headings is for convenience of reference
only and shall not affect the interpretation hereof.
<PAGE>
4.05 This instrument shall enure to the benefit of and be binding upon the
Company and its successors and assigns. This agreement shall be binding upon the
Optionee and his heirs executors, administrators, personal legal
representatives, successors and assigns. Except to the extent provided in
paragraph 1.04, this option agreement and the Option are non-assignable and non-
transferable by the Optionee.
IN WITNESS WHEREOF the parties hereto have executed this instrument as of
the date first above written.
PCSUPPORT.COM INC.
Per:
/s/ Mike McLean
- ----------------------------------
Authorized Signatory
SIGNED, SEALED AND DELIVERED BY )
Steve Macbeth )
in the presence of )
)
)
David Rowat ) /s/ Steve Macbeth
- ---------------------------------- ) -----------------------------------
Name ) Steve Macbeth
)
3569 West 43/rd/, Vancouver, B.C. )
- ---------------------------------- )
Address )
)
Manager
- ----------------------------------
Occupation
<PAGE>
EXHIBIT 5.12
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT made as of the 28th day of June, 1999 between
PCSUPPORT.COM INC., a corporation under the laws of the state of Nevada (herein
called the "Company"), and David W. Rowat (herein called the "Optionee").
WITNESSES THAT WHEREAS:
A. The Optionee is a director, officer, consultant or senior full-time or
part-time employee of the Company or of a subsidiary of the Company, or a
company providing management services to the Company.
B. The Company has established a Directors and Senior Management Plan (the
"Plan") for the purpose of motivating directors, officers, consultants,
senior full-time and part-time employees and management services companies
("Qualified Persons") to exert their best efforts on behalf of the Company
and any subsidiary of the Company.
C. The Company has agreed to grant to the Optionee an option to purchase
common shares in the capital of the Company on the terms and subject to the
conditions contained herein.
NOW THEREFORE, in consideration of the sum of $10 paid by the Optionee to
the Company and other valuable consideration, the receipt of which is hereby
acknowledged by the Company, and in consideration of the mutual agreements and
their respective covenants contained herein, the parties hereby agree to the
following terms and the Company grants the following option:
1. OPTION
1.01 The Company hereby grants to the Optionee, upon the terms and subject to
the conditions contained herein and subject to all the terms and provisions of
the Plan, the right (herein called the "Option"), exercisable only during the
period (the "Option Period") provided in paragraph 1.02 hereof, to require the
Company to sell to the Optionee 150,000 common shares (herein called the
"Optioned Shares") in the capital of the Company, at a price (herein called the
"Exercise Price") of $1.00 per share.
1.02 The Option shall be irrevocable until and including 28 June 2004 and
shall, upon the expiration of the Option Period, immediately expire and
terminate and be of no further force or effect whatsoever with respect to those
of the Optioned Shares in respect of which the Option has not by that time been
exercised. The Option shall vest in the Optionee in 36 equal tranches at the
rate of one tranche per month commencing 01 Jan 1999 and the Optionee shall not
be entitled to exercise the Option in respect of any Optioned Shares except when
and if the aggregate number of Optioned Shares in respect of which the Optionee
has vested rights exceeds the number of Options exercised by the Optionee.
<PAGE>
1.03 If the Optionee ceases during the Option Period to be a Qualified Person,
the Option shall, upon the termination of the Option Period or the date upon
which the Optionee so ceases, whichever is earlier, cease and terminate and be
of no further force or effect whatsoever 30 days after such termination with
respect to those of the Optioned Shares in respect of which the Option has not
by that time been exercised.
1.04 If the Optionee by reason of his death ceases during the Option Period to
be a Qualified Person, the Optionee's executor or other personal representative
shall be entitled during the Option Period or during the period of one year
following the Optionee's death, whichever is the shorter period, to exercise the
Option in the same manner and to the same extent as the Optionee was entitled
immediately prior to the time of his death, following which period the Option
shall immediately cease and terminate and be of no further force and effect
whatsoever with respect to the Optioned Shares in respect of which the Option
has not by that time been exercised.
1.05 The grant of the Option contained herein and every exercise of the Option
and every term of this agreement and every amendment hereto shall be subject to
the requirements and restrictions (if any) and to the approval (if required) of
the appropriate securities and other relevant regulatory authorities. The
Company will exercise its best efforts to obtain all such regulatory,
shareholder and other approvals as may be required in connection with the
granting or exercise of the Option, and the Optionee will cooperate to the
extent reasonably necessary to obtain such approvals.
2. MANNER OF EXERCISE OF OPTION
2.01 Subject to the provisions hereof, the Optionee shall be entitled to
exercise the Option with respect to all or from time to time any part of the
Optioned Shares.
2.02 Subject to the provisions hereof, the Option shall be exercisable in whole
or from time to time in part by the Optionee delivering a notice (a "Notice") in
writing to the Company's registered office. The Notice shall specify the number
of Optioned Shares in respect of which the Option is being exercised at that
time and shall be accompanied by payment, by bank draft or certified cheque, in
full of the Exercise Price for the number of Optioned Shares specified in the
Notice. Subject to the provisions hereof, every such exercise of the Option
shall constitute a binding agreement for the purchase and sale of the Optioned
Shares specified in the Notice. Upon an exercise of the Option as aforesaid, the
Company will, subject to the provisions hereof, forthwith deliver to the
Optionee at the most recent address for the Optionee indicated on the records of
the Company (or as the Optionee shall have otherwise directed in the Notice) a
certificate in the name of the Optionee representing the Optioned Shares
purchased.
2.03 Nothing contained herein or done pursuant hereto shall oblige the Optionee
to purchase or pay for any Optioned Shares except those Optioned Shares in
respect of which the Optionee shall have exercised the Option in the manner
herein provided.
2.04 The Optionee shall have no rights whatsoever as a shareholder of the
Company in respect of any of the Optioned Shares (including without limitation
any right to vote or to
<PAGE>
receive dividends or any other distribution therefrom or thereon) other than the
Optioned Shares in respect of which the Optionee shall have exercised the Option
in the manner provided herein and which shall have accordingly been issued to
the Optionee by the Company.
3. RIGHTS ON CAPITAL REORGANIZATION AND MERGER
3.01 If the number or features of the issued and outstanding common shares (the
"Common Shares") in the capital of the Company are at any time changed by
subdivision, consolidation, redivision, reduction in capital, reclassification,
redesignation, recapitalization or in any other manner whatsoever (such changes
are herein called collectively "Capital Alterations") except by the issuance of
additional shares for bona fide consideration, the Option shall be adjusted as
follows:
a) the number and class of shares in respect of which the Option is
granted shall be adjusted in such a manner as to parallel the change
in the Common Shares (whether in respect of equity entitlement or
voting rights or otherwise) effected by the Capital Alteration; and
b) the Exercise Price for each share (or, where the Capital Alteration
results in the change of the Common Shares to more than one class of
shares, for each optioned group of shares resulting from the change of
each Optioned Share) in respect of which the Option shall operate
shall be increased or decreased proportionally, as the case may
require, so as to reflect the change in the number of shares (or
groups of shares) in respect of which the Option shall operate, so
that the Optionee shall upon an exercise of the Option after the
Capital Alteration be entitled to receive at the same cost the same
number and class of shares as the Optionee would have been entitled as
a result of the Capital Alteration if immediately prior to the Capital
Alteration the Optionee had exercised the Option and was issued the
Optioned Shares in respect of which he exercised the Option. The
adjustments provided for in this paragraph shall be cumulative,
regardless of the number of Capital Alterations which shall occur
during the currency of the Option, and the provisions hereof shall
apply mutatis mutandis to any such successive adjustments.
3.02 If the Company enters into a merger or an amalgamation (collectively, an
"Amalgamation") with another corporation, so that there is a successor or
continuing corporation (herein called collectively the "Successor Company"),
then the Successor Company shall be bound by all the terms of this agreement and
the number and class of shares in respect of which the Option shall operate
shall be adjusted on the same basis as that on which the Common Shares (or other
shares in the capital of the Company in respect of which the Option operates at
the time of the Amalgamation) are exchanged pursuant to the Amalgamation for
shares in the capital of the Successor Company, so that the Optionee shall upon
an exercise of the Option after the Amalgamation be entitled to receive at the
same cost the same number and class of shares in the Capital of the Successor
Corporation as the Optionee would have been entitled under the
<PAGE>
Amalgamation if immediately prior to the Amalgamation the Optionee had exercised
the Option and was issued the Optioned Shares in respect of which he exercised
the Option. The adjustments provided for in this paragraph shall be cumulative,
regardless of the number of Amalgamations which shall occur during the currency
of the Option, and the provisions hereof shall apply mutatis mutandis to any
such successive adjustments.
4. GENERAL
4.01 The Optionee and the Company represent that the Optionee is a Qualified
Person.
4.02 Time shall be of the essence of this agreement.
4.03 This instrument shall be governed by and construed in accordance with the
laws of the Province of British Columbia.
4.04 In this instrument, unless there is something in the subject matter or the
context inconsistent therewith:
a) words importing the singular include the plural and vice versa, words
importing gender include the masculine, feminine and neuter genders
and words importing a person include an individual, a body corporate,
and a partnership, syndicate and any other unincorporated association
of persons;
b) a reference to a paragraph, subparagraph, clause or schedule means
that paragraph, subparagraph or clause in or schedule attached to this
instrument;
c) the words "herein", "hereof", "hereunder", "hereby", "hereto" and
similar expressions refer to this instrument generally and not to any
particular paragraph, subparagraph, clause or other part or division
of this instrument; and
d) the insertion of titles and headings is for convenience of reference
only and shall not affect the interpretation hereof.
<PAGE>
4.05 This instrument shall enure to the benefit of and be binding upon the
Company and its successors and assigns. This agreement shall be binding upon the
Optionee and his heirs executors, administrators, personal legal
representatives, successors and assigns. Except to the extent provided in
paragraph 1.04, this option agreement and the Option are non-assignable and non-
transferable by the Optionee.
IN WITNESS WHEREOF the parties hereto have executed this instrument as of
the date first above written.
PCSUPPORT.COM INC.
Per:
/s/ Mike McLean
- --------------------------------------
Authorized Signatory
SIGNED, SEALED AND DELIVERED BY )
David W. Rowat )
in the presence of )
)
)
Steve Macbeth ) /s/ David W. Rowat
- -------------------------------------- ) ------------------------------------
Name ) David W. Rowat
)
203 Turtlehead Road, Belcarra, B.C. )
- -------------------------------------- )
Address )
)
Businessman )
- -------------------------------------- )
Occupation )
<PAGE>
EXHIBIT 5.13
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT made as of the 15th day of June, 1999 between
PCSUPPORT.COM INC., a corporation under the laws of the state of Nevada (herein
called the "Company"), and Cliff Rowlands (herein called the "Optionee").
WITNESSES THAT WHEREAS:
A. The Optionee is a director, officer, consultant or senior full-time or
part-time employee of the Company or of a subsidiary of the Company, or a
company providing management services to the Company.
B. The Company has established a Directors and Senior Management Plan (the
"Plan") for the purpose of motivating directors, officers, consultants,
senior full-time and part-time employees and management services companies
("Qualified Persons") to exert their best efforts on behalf of the Company
and any subsidiary of the Company.
C. The Company has agreed to grant to the Optionee an option to purchase
common shares in the capital of the Company on the terms and subject to
the conditions contained herein.
NOW THEREFORE, in consideration of the sum of $10 paid by the Optionee to
the Company and other valuable consideration, the receipt of which is hereby
acknowledged by the Company, and in consideration of the mutual agreements and
their respective covenants contained herein, the parties hereby agree to the
following terms and the Company grants the following option:
1. OPTION
1.01 The Company hereby grants to the Optionee, upon the terms and subject to
the conditions contained herein and subject to all the terms and provisions of
the Plan, the right (herein called the "Option"), exercisable only during the
period (the "Option Period") provided in paragraph 1.02 hereof, to require the
Company to sell to the Optionee 150,000 common shares (herein called the
"Optioned Shares") in the capital of the Company, at a price (herein called the
"Exercise Price") of $1.00 per share.
1.02 The Option shall be irrevocable until and including 15 June 2004 and
shall, upon the expiration of the Option Period, immediately expire and
terminate and be of no further force or effect whatsoever with respect to those
of the Optioned Shares in respect of which the Option has not by that time been
exercised. The Option shall vest in the Optionee in 36 equal tranches at the
rate of one tranche per month commencing June 15, 1999 and the Optionee shall
not be entitled to exercise the Option in respect of any Optioned Shares except
when and if the aggregate number of Optioned Shares in respect of which the
Optionee has vested rights exceeds the number of Options exercised by the
Optionee.
<PAGE>
1.03 If the Optionee ceases during the Option Period to be a Qualified Person,
the Option shall, upon the termination of the Option Period or the date upon
which the Optionee so ceases, whichever is earlier, cease and terminate and be
of no further force or effect whatsoever 30 days after such termination with
respect to those of the Optioned Shares in respect of which the Option has not
by that time been exercised.
1.04 If the Optionee by reason of his death ceases during the Option Period to
be a Qualified Person, the Optionee's executor or other personal representative
shall be entitled during the Option Period or during the period of one year
following the Optionee's death, whichever is the shorter period, to exercise the
Option in the same manner and to the same extent as the Optionee was entitled
immediately prior to the time of his death, following which period the Option
shall immediately cease and terminate and be of no further force and effect
whatsoever with respect to the Optioned Shares in respect of which the Option
has not by that time been exercised.
1.05 The grant of the Option contained herein and every exercise of the Option
and every term of this agreement and every amendment hereto shall be subject to
the requirements and restrictions (if any) and to the approval (if required) of
the appropriate securities and other relevant regulatory authorities. The
Company will exercise its best efforts to obtain all such regulatory,
shareholder and other approvals as may be required in connection with the
granting or exercise of the Option, and the Optionee will cooperate to the
extent reasonably necessary to obtain such approvals.
2. MANNER OF EXERCISE OF OPTION
2.01 Subject to the provisions hereof, the Optionee shall be entitled to
exercise the Option with respect to all or from time to time any part of the
Optioned Shares.
2.02 Subject to the provisions hereof, the Option shall be exercisable in whole
or from time to time in part by the Optionee delivering a notice (a "Notice") in
writing to the Company's registered office. The Notice shall specify the number
of Optioned Shares in respect of which the Option is being exercised at that
time and shall be accompanied by payment, by bank draft or certified cheque, in
full of the Exercise Price for the number of Optioned Shares specified in the
Notice. Subject to the provisions hereof, every such exercise of the Option
shall constitute a binding agreement for the purchase and sale of the Optioned
Shares specified in the Notice. Upon an exercise of the Option as aforesaid, the
Company will, subject to the provisions hereof, forthwith deliver to the
Optionee at the most recent address for the Optionee indicated on the records of
the Company (or as the Optionee shall have otherwise directed in the Notice) a
certificate in the name of the Optionee representing the Optioned Shares
purchased.
2.03 Nothing contained herein or done pursuant hereto shall oblige the Optionee
to purchase or pay for any Optioned Shares except those Optioned Shares in
respect of which the Optionee shall have exercised the Option in the manner
herein provided.
2.04 The Optionee shall have no rights whatsoever as a shareholder of the
Company in respect of any of the Optioned Shares (including without limitation
any right to vote or to
<PAGE>
receive dividends or any other distribution therefrom or thereon) other than the
Optioned Shares in respect of which the Optionee shall have exercised the Option
in the manner provided herein and which shall have accordingly been issued to
the Optionee by the Company.
3. RIGHTS ON CAPITAL REORGANIZATION AND MERGER
3.01 If the number or features of the issued and outstanding common shares (the
"Common Shares") in the capital of the Company are at any time changed by
subdivision, consolidation, redivision, reduction in capital, reclassification,
redesignation, recapitalization or in any other manner whatsoever (such changes
are herein called collectively "Capital Alterations") except by the issuance of
additional shares for bona fide consideration, the Option shall be adjusted as
follows:
a) the number and class of shares in respect of which the Option is
granted shall be adjusted in such a manner as to parallel the change
in the Common Shares (whether in respect of equity entitlement or
voting rights or otherwise) effected by the Capital Alteration; and
b) the Exercise Price for each share (or, where the Capital Alteration
results in the change of the Common Shares to more than one class of
shares, for each optioned group of shares resulting from the change
of each Optioned Share) in respect of which the Option shall operate
shall be increased or decreased proportionally, as the case may
require, so as to reflect the change in the number of shares (or
groups of shares) in respect of which the Option shall operate, so
that the Optionee shall upon an exercise of the Option after the
Capital Alteration be entitled to receive at the same cost the same
number and class of shares as the Optionee would have been entitled
as a result of the Capital Alteration if immediately prior to the
Capital Alteration the Optionee had exercised the Option and was
issued the Optioned Shares in respect of which he exercised the
Option. The adjustments provided for in this paragraph shall be
cumulative, regardless of the number of Capital Alterations which
shall occur during the currency of the Option, and the provisions
hereof shall apply mutatis mutandis to any such successive
adjustments.
3.02 If the Company enters into a merger or an amalgamation (collectively, an
"Amalgamation") with another corporation, so that there is a successor or
continuing corporation (herein called collectively the "Successor Company"),
then the Successor Company shall be bound by all the terms of this agreement and
the number and class of shares in respect of which the Option shall operate
shall be adjusted on the same basis as that on which the Common Shares (or other
shares in the capital of the Company in respect of which the Option operates at
the time of the Amalgamation) are exchanged pursuant to the Amalgamation for
shares in the capital of the Successor Company, so that the Optionee shall upon
an exercise of the Option after the Amalgamation be entitled to receive at the
same cost the same number and class of shares in the Capital of the Successor
Corporation as the Optionee would have been entitled under the
<PAGE>
Amalgamation if immediately prior to the Amalgamation the Optionee had exercised
the Option and was issued the Optioned Shares in respect of which he exercised
the Option. The adjustments provided for in this paragraph shall be cumulative,
regardless of the number of Amalgamations which shall occur during the currency
of the Option, and the provisions hereof shall apply mutatis mutandis to any
such successive adjustments.
4. GENERAL
4.01 The Optionee and the Company represent that the Optionee is a Qualified
Person.
4.02 Time shall be of the essence of this agreement.
4.03 This instrument shall be governed by and construed in accordance with the
laws of the Province of British Columbia.
4.04 In this instrument, unless there is something in the subject matter or the
context inconsistent therewith:
a) words importing the singular include the plural and vice versa, words
importing gender include the masculine, feminine and neuter genders
and words importing a person include an individual, a body corporate,
and a partnership, syndicate and any other unincorporated association
of persons;
b) a reference to a paragraph, subparagraph, clause or schedule means
that paragraph, subparagraph or clause in or schedule attached to
this instrument;
c) the words "herein", "hereof", "hereunder", "hereby", "hereto" and
similar expressions refer to this instrument generally and not to any
particular paragraph, subparagraph, clause or other part or division
of this instrument; and
d) the insertion of titles and headings is for convenience of reference
only and shall not affect the interpretation hereof.
<PAGE>
4.05 This instrument shall enure to the benefit of and be binding upon the
Company and its successors and assigns. This agreement shall be binding upon the
Optionee and his heirs executors, administrators, personal legal
representatives, successors and assigns. Except to the extent provided in
paragraph 1.04, this option agreement and the Option are non-assignable and non-
transferable by the Optionee.
IN WITNESS WHEREOF the parties hereto have executed this instrument as of
the date first above written.
PCSUPPORT.COM INC.
Per:
/s/ Mike McLean
- --------------------------------------
Authorized Signatory
SIGNED, SEALED AND DELIVERED BY )
Cliff Rowlands )
in the presence of )
)
)
David W. Rowat ) /s/ Cliff Rowlands
- -------------------------------------- ) ---------------------------------
Name ) Cliff Rowlands
)
3569 W 43/rd/, Vancouver, B.C. )
- -------------------------------------- )
Address )
)
Businessman )
- -------------------------------------- )
Occupation
<PAGE>
EXHIBIT 5.14
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT made as of the 28th day of June, 1999 between
PCSUPPORT.COM INC., a corporation under the laws of the state of Nevada (herein
called the "Company"), and Benjamin Catalano (herein called the "Optionee").
WITNESSES THAT WHEREAS:
A. The Optionee is a director, officer, consultant or senior full-time or
part-time employee of the Company or of a subsidiary of the Company, or a
company providing management services to the Company.
B. The Company has established a Directors and Senior Management Plan (the
"Plan") for the purpose of motivating directors, officers, consultants,
senior full-time and part-time employees and management services companies
("Qualified Persons") to exert their best efforts on behalf of the Company
and any subsidiary of the Company.
C. The Company has agreed to grant to the Optionee an option to purchase
common shares in the capital of the Company on the terms and subject to
the conditions contained herein.
NOW THEREFORE, in consideration of the sum of $10 paid by the Optionee to
the Company and other valuable consideration, the receipt of which is hereby
acknowledged by the Company, and in consideration of the mutual agreements and
their respective covenants contained herein, the parties hereby agree to the
following terms and the Company grants the following option:
1. OPTION
1.01 The Company hereby grants to the Optionee, upon the terms and subject to
the conditions contained herein and subject to all the terms and provisions of
the Plan, the right (herein called the "Option"), exercisable only during the
period (the "Option Period") provided in paragraph 1.02 hereof, to require the
Company to sell to the Optionee 30,000 common shares (herein called the
"Optioned Shares") in the capital of the Company, at a price (herein called the
"Exercise Price") of $1.00 per share.
1.02 The Option shall be irrevocable until and including 28 June 2004 and
shall, upon the expiration of the Option Period, immediately expire and
terminate and be of no further force or effect whatsoever with respect to those
of the Optioned Shares in respect of which the Option has not by that time been
exercised. The Option shall vest in the Optionee in 36 equal tranches at the
rate of one tranche per month commencing 01 June 1999 and the Optionee shall not
be entitled to exercise the Option in respect of any Optioned Shares except when
and if the aggregate number of Optioned Shares in respect of which the Optionee
has vested rights exceeds the number of Options exercised by the Optionee.
<PAGE>
1.03 If the Optionee ceases during the Option Period to be a Qualified Person,
the Option shall, upon the termination of the Option Period or the date upon
which the Optionee so ceases, whichever is earlier, cease and terminate and be
of no further force or effect whatsoever 30 days after such termination with
respect to those of the Optioned Shares in respect of which the Option has not
by that time been exercised.
1.04 If the Optionee by reason of his death ceases during the Option Period to
be a Qualified Person, the Optionee's executor or other personal representative
shall be entitled during the Option Period or during the period of one year
following the Optionee's death, whichever is the shorter period, to exercise the
Option in the same manner and to the same extent as the Optionee was entitled
immediately prior to the time of his death, following which period the Option
shall immediately cease and terminate and be of no further force and effect
whatsoever with respect to the Optioned Shares in respect of which the Option
has not by that time been exercised.
1.05 The grant of the Option contained herein and every exercise of the Option
and every term of this agreement and every amendment hereto shall be subject to
the requirements and restrictions (if any) and to the approval (if required) of
the appropriate securities and other relevant regulatory authorities. The
Company will exercise its best efforts to obtain all such regulatory,
shareholder and other approvals as may be required in connection with the
granting or exercise of the Option, and the Optionee will cooperate to the
extent reasonably necessary to obtain such approvals.
2. MANNER OF EXERCISE OF OPTION
2.01 Subject to the provisions hereof, the Optionee shall be entitled to
exercise the Option with respect to all or from time to time any part of the
Optioned Shares.
2.02 Subject to the provisions hereof, the Option shall be exercisable in whole
or from time to time in part by the Optionee delivering a notice (a "Notice") in
writing to the Company's registered office. The Notice shall specify the number
of Optioned Shares in respect of which the Option is being exercised at that
time and shall be accompanied by payment, by bank draft or certified cheque, in
full of the Exercise Price for the number of Optioned Shares specified in the
Notice. Subject to the provisions hereof, every such exercise of the Option
shall constitute a binding agreement for the purchase and sale of the Optioned
Shares specified in the Notice. Upon an exercise of the Option as aforesaid, the
Company will, subject to the provisions hereof, forthwith deliver to the
Optionee at the most recent address for the Optionee indicated on the records of
the Company (or as the Optionee shall have otherwise directed in the Notice) a
certificate in the name of the Optionee representing the Optioned Shares
purchased.
2.03 Nothing contained herein or done pursuant hereto shall oblige the Optionee
to purchase or pay for any Optioned Shares except those Optioned Shares in
respect of which the Optionee shall have exercised the Option in the manner
herein provided.
2.04 The Optionee shall have no rights whatsoever as a shareholder of the
Company in respect of any of the Optioned Shares (including without limitation
any right to vote or to
<PAGE>
receive dividends or any other distribution therefrom or thereon) other than the
Optioned Shares in respect of which the Optionee shall have exercised the Option
in the manner provided herein and which shall have accordingly been issued to
the Optionee by the Company.
3. RIGHTS ON CAPITAL REORGANIZATION AND MERGER
3.01 If the number or features of the issued and outstanding common shares (the
"Common Shares") in the capital of the Company are at any time changed by
subdivision, consolidation, redivision, reduction in capital, reclassification,
redesignation, recapitalization or in any other manner whatsoever (such changes
are herein called collectively "Capital Alterations") except by the issuance of
additional shares for bona fide consideration, the Option shall be adjusted as
follows:
a) the number and class of shares in respect of which the Option is
granted shall be adjusted in such a manner as to parallel the change
in the Common Shares (whether in respect of equity entitlement or
voting rights or otherwise) effected by the Capital Alteration; and
b) the Exercise Price for each share (or, where the Capital Alteration
results in the change of the Common Shares to more than one class of
shares, for each optioned group of shares resulting from the change
of each Optioned Share) in respect of which the Option shall operate
shall be increased or decreased proportionally, as the case may
require, so as to reflect the change in the number of shares (or
groups of shares) in respect of which the Option shall operate, so
that the Optionee shall upon an exercise of the Option after the
Capital Alteration be entitled to receive at the same cost the same
number and class of shares as the Optionee would have been entitled
as a result of the Capital Alteration if immediately prior to the
Capital Alteration the Optionee had exercised the Option and was
issued the Optioned Shares in respect of which he exercised the
Option. The adjustments provided for in this paragraph shall be
cumulative, regardless of the number of Capital Alterations which
shall occur during the currency of the Option, and the provisions
hereof shall apply mutatis mutandis to any such successive
adjustments.
3.02 If the Company enters into a merger or an amalgamation (collectively, an
"Amalgamation") with another corporation, so that there is a successor or
continuing corporation (herein called collectively the "Successor Company"),
then the Successor Company shall be bound by all the terms of this agreement and
the number and class of shares in respect of which the Option shall operate
shall be adjusted on the same basis as that on which the Common Shares (or other
shares in the capital of the Company in respect of which the Option operates at
the time of the Amalgamation) are exchanged pursuant to the Amalgamation for
shares in the capital of the Successor Company, so that the Optionee shall upon
an exercise of the Option after the Amalgamation be entitled to receive at the
same cost the same number and class of shares in the Capital of the Successor
Corporation as the Optionee would have been entitled under the
<PAGE>
Amalgamation if immediately prior to the Amalgamation the Optionee had exercised
the Option and was issued the Optioned Shares in respect of which he exercised
the Option. The adjustments provided for in this paragraph shall be cumulative,
regardless of the number of Amalgamations which shall occur during the currency
of the Option, and the provisions hereof shall apply mutatis mutandis to any
such successive adjustments.
4. GENERAL
4.01 The Optionee and the Company represent that the Optionee is a Qualified
Person.
4.02 Time shall be of the essence of this agreement.
4.03 This instrument shall be governed by and construed in accordance with the
laws of the Province of British Columbia.
4.04 In this instrument, unless there is something in the subject matter or the
context inconsistent therewith:
a) words importing the singular include the plural and vice versa, words
importing gender include the masculine, feminine and neuter genders
and words importing a person include an individual, a body corporate,
and a partnership, syndicate and any other unincorporated association
of persons;
b) a reference to a paragraph, subparagraph, clause or schedule means
that paragraph, subparagraph or clause in or schedule attached to
this instrument;
c) the words "herein", "hereof", "hereunder", "hereby", "hereto" and
similar expressions refer to this instrument generally and not to any
particular paragraph, subparagraph, clause or other part or division
of this instrument; and
d) the insertion of titles and headings is for convenience of reference
only and shall not affect the interpretation hereof.
<PAGE>
4.05 This instrument shall enure to the benefit of and be binding upon the
Company and its successors and assigns. This agreement shall be binding upon the
Optionee and his heirs executors, administrators, personal legal
representatives, successors and assigns. Except to the extent provided in
paragraph 1.04, this option agreement and the Option are non-assignable and non-
transferable by the Optionee.
IN WITNESS WHEREOF the parties hereto have executed this instrument as of
the date first above written.
PCSUPPORT.COM INC.
Per:
/s/ Mike McLean
- ------------------------------------------
Authorized Signatory
SIGNED, SEALED AND DELIVERED BY )
Benjamin Catalano )
in the presence of )
)
)
David Rowat ) /s/ Benjamin Catalano
- ------------------------------------------ ) ----------------------------
Name ) Benjamin Catalano
)
3569 West 43/rd/, Vancouver, B.C. )
- ------------------------------------------ )
Address )
)
Manager )
- ------------------------------------------ )
Occupation )
<PAGE>
EXHIBIT 5.15
STOCK POOLING AND ESCROW AGREEMENT
THIS AGREEMENT made as of the 31/st/ day of July, 1999, among PCSUPPORT.COM
INC., a corporation under the laws of the state of Nevada (herein called the
"Company"), the persons listed on Schedule A attached hereto (herein called the
"Shareholders") and Owen, Bird, (the "Escrow Agent").
WITNESSES THAT WHEREAS:
A. The Shareholders all hold shares and/or options and warrants to purchase
shares in the capital of the Company, as listed on Schedule A attached hereto,
and have agreed with each other and with the Company to enter into this pooling
and escrow agreement to provide for an orderly disposition of such shares,
options and warrants (the "Pooled Securities").
B. David Rowat ("Dave"), Cliff Rowlands, ("Cliff"), Steve Macbeth ("Steve")
and Michael McLean ("Mike") are senior officers and employees of the Company.
C. The Escrow Agent has agreed to hold and deal with the certificates for the
Pooled Securities in accordance with the terms of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein, the parties hereby agree as follows:
1. Incorporation of Schedules. The schedules and all terms, covenants,
agreements and conditions contained therein are hereby incorporated as an
integral part of this Agreement and each of the Shareholders agrees that he will
be bound all the provisions thereof.
2. Appointment of Escrow Agent. The Shareholders and the Company hereby
appoint the Escrow Agent to hold and deal with the certificates for the Pooled
Securities and to act as his attorney and each hereby releases the Escrow Agent
from all claims arising out of any action or inaction of the Escrow Agent
hereunder except in the event of wilful misconduct or fraud.
3. Deposit of Certificates. Each of the Shareholders herewith delivers to the
Escrow Agent and the Escrow Agent hereby acknowledges receipt of:
a) one or more certificates representing in aggregate the number of the
Pooled Securities shown opposite his name on Schedule A attached
hereto; and
b) three executed Gold Medallion stock powers of attorney with signature
guaranteed by a bank or registered dealer,
to be held and dealt with in accordance with the terms of this Agreement.
4. No Transfers or Liens. Each Shareholder covenants with the other
Shareholders and with the Company that, as long as any of his Pooled Securities
are covered by any provision of
<PAGE>
-2-
this Agreement, he will not sell, directly or indirectly, nor grant any security
interest of any nature whatsoever in or transfer any rights whatsoever in any of
such Pooled Securities.
5. Voting and Other Rights. Notwithstanding the deposit of the Pooled
Securities with the Escrow Agent, each Shareholder retains all rights to
dividends, rights on dissolution, statutory rights, voting rights and other
rights associated with the Pooled Securities and all securities into which the
Pooled Securities may be converted or for which they may be exchanged.
6. Reverse Vesting. Dave, Steve and Mike each agree with the other Shareholders
and with the Company that if he ceases to be a full-time employee of the Company
for any reason whatsoever then the Pooled Securities registered in their names
will be subject to re-purchase by the Company at the price of $0.01 per share in
accordance with the procedure set out in Schedule B. In the event that there is
a change of control of the Company as defined in the Income Tax Act of Canada,
then the terms of this Reverse Vesting provision will have no further effect and
the Company will have no further ability to repurchase any of the shares held by
any of the Shareholders.
7. Pooling. The Shareholders agree that, with the exception of any Pooled
Securities re-purchased by the Company in accordance with Schedule B, all the
Pooled Securities will be retained by the Escrow Agent in pool (the "Pool") and
delivered to the Shareholders only in accordance with the procedure set out in
Schedule C.
8. Release From Pool Subject to Reverse Vesting. If a Pooled Security that is
released from the Pool continues to be subject to the provisions of paragraph 6
then the certificate representing it will not be delivered to the Shareholder
who would otherwise be entitled to it but shall be retained by the Escrow Agent
until released in accordance with Schedule B.
9. Sale After Release. Each Shareholder agrees that if he intends to sell any
shares which have been in the Pool after such shares are released from the Pool
and after such shares are no longer subject to the provisions of paragraph 6
then he will:
a) give written notice of his intention to the secretary of the Company and
to each of the other Shareholders (the "Sale Notice"), including the
number of shares he intends to sell and the lowest price at which he is
prepared to sell them;
b) not sell any such shares for at least 10 business days after giving the
Sale Notice;
c) cooperate with the other Shareholders who wish to sell up to the same
number of shares as specified in the Sale Notice at the same time and to
coordinate such sales such that all Shareholders participating in such
sales are able to sell approximately the same number of shares at the
same time without causing a material change in the share price of the
Company; and
d) in the event that a Shareholder, upon receiving a Sale Notice, desires
to sell a number of shares which is greater than that number in the Sale
Notice, such
<PAGE>
-3-
Shareholder will issue a separate sale notice according to the
provisions of this paragraph.
10. The Escrow Agent. The Escrow Agent may at any time deposit all
certificates, stock powers of attorney, notices or other documents held pursuant
to this Agreement ("Documents") into the Supreme Court of British Columbia and
thereafter have no responsibility with respect thereto. The Escrow Agent may
resign its position herein on 30 days notice to the Company and the Escrow Agent
shall deliver all Documents to any replacement escrow agent on written notice
signed by the Company and at least three of the Shareholders provided that the
Escrow Agent shall have a lien on Documents for any unpaid fees or disbursements
reasonably arising in connection with the performance of its duties hereunder.
11. Fees and Indemnity. The Company will pay the reasonable fees and
disbursements of the Escrow Agent in connection with performing its duties and
otherwise arising under this Agreement. The Shareholders and the Company hereby
unconditionally and irrevocably covenant, jointly and severally, to indemnify
the Escrow Agent and save it harmless from all from and against all losses,
suits, claims, damages and expenses arising out of, due to or by reason of or
pursuant to any action or inaction of the Escrow Agent hereunder except in the
event of wilful misconduct or fraud of the Escrow Agent. This indemnity does not
require that the Escrow Agent proceed against or exhaust its remedies against
the Company or any particular Shareholder and shall survive the bankruptcy,
insolvency, dissolution, liquidation or merger of the Company and the
Shareholders or any of them.
12. Notices. To be effective, any notice required or permitted under this
Agreement shall be in writing and delivered, mailed in Canada by first class
pre-paid mail or faxed, as follows:
a) If to the Company:
Suite 280
4400 Dominion St.,
Burnaby, B.C. V5G 4G3
Fax: (604) 419 4494
Attention: President
b) If to a Shareholder:
To the address for the Shareholder as shown on the Register of Members
of the Company
Fax: to such fax number as each Shareholder may provide to the
Company
c) If to the Escrow Agent:
Owen, Bird
Suite 2900 - 595 Burrard St.,
Vancouver, BC
<PAGE>
-4-
Fax: 604 688 2827
Attention: Ian Muirhead
13. Time of the Essence. Time shall be of the essence of this agreement.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of British Columbia and each of the
parties hereby irrevocably attorns to the exclusive jurisdiction of the courts
of the Province of British Columbia.
15. Interpretation. In this instrument, unless there is something in the
subject matter or the context inconsistent therewith:
a) words importing the singular include the plural and vice versa, words
importing gender include the masculine, feminine and neuter genders
and words importing a person include an individual, a body corporate,
and a partnership, syndicate and any other unincorporated association
of persons;
b) a reference to a paragraph, subparagraph, clause or schedule means
that paragraph, subparagraph or clause in or schedule attached to this
instrument;
c) the words "herein", "hereof", "hereunder", "hereby", "hereto" and
similar expressions refer to this instrument generally and not to any
particular paragraph, subparagraph, clause or other part or division
of this instrument; and
d) the insertion of titles and headings is for convenience of reference
only and shall not affect the interpretation hereof.
16. Enurement. This Agreement shall enure to the benefit of and be binding upon
the Shareholders, the Company and the Escrow Agent and their respective personal
representatives, estates, successors and assigns.
17. Further Assurances. Each of the parties hereby covenants to execute all
further and other documents and instruments and to do all further and other
things that may be necessary to implement and carry out the intent of this
Agreement including without limitation additional Gold Medallion stock powers of
attorney with signature guaranteed by a bank or registered dealer as requested
from time to time by the Escrow Agent.
<PAGE>
-5-
18. Amendment. This agreement may be amended only with the unanimous written
consent of the Company, Escrow Agent, and the persons comprising the
Shareholders who remain as employees of the Company.
IN WITNESS WHEREOF the parties hereto have executed this instrument as of
the date first above written.
PCSUPPORT.COM INC.
Per: ______________________________
Authorized Signatory
SIGNED, SEALED AND DELIVERED BY )
STEVE MACBETH in the presence of )
)
)
___________________________________ )
Name ) __________________________________
) STEVE MACBETH
)
___________________________________ )
Address )
)
)
___________________________________ )
Occupation )
)
SIGNED, SEALED AND DELIVERED BY )
MICHAEL MCLEAN in the presence of )
)
)
___________________________________ ) __________________________________
Name ) MICHAEL MCLEAN
)
)
___________________________________ )
Address )
)
)
___________________________________ )
Occupation )
)
<PAGE>
-6-
SIGNED, SEALED AND DELIVERED BY )
CLIFF ROWLANDS in the presence of )
)
)
___________________________________ )
Name ) ___________________________________
) CLIFF ROWLANDS
)
___________________________________ )
Address )
)
)
___________________________________ )
Occupation )
)
SIGNED, SEALED AND DELIVERED BY )
DAVID ROWAT in the presence of )
)
)
___________________________________ )
Name ) ___________________________________
) DAVID ROWAT
)
___________________________________ )
Address )
)
)
___________________________________ )
Occupation )
)
SIGNED, SEALED AND DELIVERED BY )
ALAN ACKERMAN in the presence of )
)
)
___________________________________ )
Name ) ___________________________________
) ALAN ACKERMAN
)
___________________________________ )
Address )
)
)
___________________________________ )
Occupation )
)
<PAGE>
-7-
ADVANCED FINANCIAL SERVICES INC. THE DROMOND GROUP LTD.
Per:_______________________________ Per:______________________________
Authorized Signatory Authorized Signatory
<PAGE>
-8-
SCHEDULE A
SHAREHOLDERS
Name of Shareholder No. of Shares No. of Options and
Warrants
Advanced Financial Services Inc. 576,029 20,000
Alan Ackerman 225,000 0
David Rowat 200,000 100,000
Cliff Rowlands 0 100,000
Michael McLean 312,500 33,333
Steve Macbeth 312,500 33,333
The Dromond Group Ltd. 553,400 0
Totals 2,179,429 286,666
<PAGE>
-9-
SCHEDULE B
REVERSE VESTING PROCEDURE
If Dave, Steve or Mike (any one of which, if applicable, is referred to herein
as the "Departed Employee") ceases to be a senior officer or full-time employee
of the Company for any reason whatsoever then, as of the first day after the
date the Departed Employee's employment ceases ("D"), the Company shall have
automatically be deemed to have purchased and the Departed Employee shall have
automatically be deemed to have sold, as of D and at the price of $0.01 per
share, all his right, title and interest in the number (the "Forfeited Number"
or "FN") of the Pooled Securities determined in accordance with the following
procedures:
1. The maximum that the Forfeited Number can be for a Departed Employee is the
number shown below under the heading No. Shares Subject to Reverse Vesting
("N").
2. If D is earlier than the date shown below under the heading Vesting Start
Date ("VSD") then the FN = N.
3. If D is later than the number of months shown below under the heading
Vesting Period (months) ("m") after VSD then the FN = 0.
4. Otherwise, FN will be determined by the following formula, to the nearest
round number, with the value for D being the number of days after VSD:
FN = N - D/(30*m)* N
No. Shares Vesting
Subject to Reverse Vesting Start Period
Name of Shareholder Vesting Date (months)
David Rowat 150,000 Sep 1, 1999 27
Michael McLean 160,000 May 25, 1999 12
Steve Macbeth 160,000 May 25, 1999 12
5. Each of Dave, Steve and Mike hereby irrevocably appoints the secretary of
the Company as his attorney for the purpose of executing any instruments of
transfer, waivers and other documents required or expedient to transfer FN
shares to the Company if he becomes a Departed Employee.
6. If a certificate held by the Escrow Agent represents both Pooled Securities
which are subject to the reverse vesting procedure set out in this Schedule
B (the "Reverse Vesting Procedure") and Pooled Securities which are not
subject to the Reverse Vesting Procedure then the Escrow Agent will, upon
request from the relevant Shareholder, split
<PAGE>
-10-
such certificate and deliver to the Shareholder certificates for the Pooled
Securities which are not subject to the Reverse Vesting Procedure.
<PAGE>
-11-
SCHEDULE C
POOLING PROCEDURE
The Escrow Agent will release certificates representing the Pooled Securities,
or such of them as remain from time to time after reduction thereof pursuant to
Schedule B, from the Pool to the Shareholders as follows:
<TABLE>
<CAPTION>
Shareholder Shares/ Released on
Options 25-May-00 25-Nov-00 25-May-01
<S> <C> <C> <C> <C>
Alan Ackerman 225,000 50,000 88,889 86,111
Advanced Financial Services 576,029 100,000 177,778 298,251
20,000 20,000
David Rowat 200,000 150,000 50,000 -
100,000 50,000 25,000 25,000
Cliff Rowlands 0 0 0 0
100,000 50,000 25,000 25,000
Steve Macbeth 312,500 100,000 177,778 34,722
33,333 16,667 8,333 8,333
Mike McLean 312,500 100,000 177,778 34,722
33,333 16,667 8,333 8,333
Dromond Technologies 553,400 100,000 177,777 275,623
Total 2,179,429 600,000 850,000 729,429
286,666 153,333 66,667 66,666
</TABLE>
<PAGE>
-12-
If any Pooled Securities that would be released to a Releasee pursuant to this
Schedule C are at the time subject to the reverse vesting procedure in Schedule
B (the "Reverse Vesting Procedure") then the Escrow Agent will not release the
certificates for such Pooled Securities to the Shareholder but will retain them
as long as they continue to be subject to the Reverse Vesting Procedure and
release them from time to time as they cease to be subject to the Reverse
Vesting Procedure.
Advanced Financial Services Inc. and The Dromond Group Ltd. hereby agree with
the procedures described herein and acknowledge that none of the Pooled
Securities will be delivered directly to them.
<PAGE>
EXHIBIT 5.16
OFFER TO SUB-LEASE
SUITE 210 - 4400 DOMINION STREET
BURNABY, BC
(THE "BUILDING")
TO: ELECTRONIC ARTS (CANADA), INC. ("Sub-Landlord")
4330 Sanderson Way
Burnaby, BC
V5G 4X1
WE: RECONNAISSANCE TECHNOLOGIES INC. ("Sub-Tenant")
1500 Hornby Street
Suite C-1
Vancouver, BC
V6Z 2R1
hereby offer to sub-lease from the Sub-Landlord, upon the following terms and
conditions, the premises on the second (2/nd/) floor of the Building, having a
Rentable Area of approximately 7,347 square feet (the "Sub-Lease Premises").
The floor area of the Sub-Lease Premises is as shown outlined in heavy black on
the plan forming Schedule "A" to the Offer to Sub-Lease.
1. TERM
The Term of the Sub-Lease shall be three (3) years and five (5) months and
twenty-nine (29) days commencing on the 1st day of June, 1999 (the
"Commencement Date") and expiring on the 29th day of November, 2002.
2. BASIC RENT
The Basic Rent, plus any applicable Goods and Services Tax, shall be
payable monthly in advance by the Sub-Tenant on the first day of each month
during the Term to the Sub-Landlord. The Basic Rent shall be based on the
Rentable Area of the Sub-Lease Premises and measured in a manner prescribed
by the Lease calculated at the following rates:
Months 1-12 - $5.00 per square foot per annum
Months 13-24 - $6.00 per square foot per annum
Months 25-42 - $6.50 per square foot per annum
3. OPERATING COSTS AND PROPERTY TAXES
The Sub-Tenant's Proportionate Share of Operating Costs and Property Taxes,
currently estimated at $10.00 per square foot for the 1999 fiscal year,
plus Goods and Services Tax, shall be payable as additional rent as per the
terms of the Lease during the Term in addition to the Basic Rent.
4. DEPOSIT
A cheque for $20,635.89 (the "Deposit") payable to the Sub-Landlord's
agent, Colliers Macaulay Nicolls Inc., in trust, shall be tendered upon
acceptance as the Deposit and to be credited in payment firstly towards the
last month's rent and thereafter towards the first rent due, plus any
applicable Goods and Services Tax, and to be returned to the Sub-Tenant if
this Offer is not accepted. In the event the Sub-Tenant defaults under the
terms hereof, the Sub-Landlord may
<PAGE>
terminate this agreement and retain the Deposit on account of damages and
not as a penalty, without prejudice to any other remedy.
5. LEASE
The Sub-Tenant covenants to abide by all the terms of the Sub-Landlord's
Lease (the "Lease") with the exception of the terms set out in this Offer
which differ from the terms of the Lease. The Sub-Tenant acknowledges
having received a copy of the Lease.
6. ACCESS
For the purposes of planning and the construction of its Leasehold
Improvements, the Sub-Tenant shall have access to the Sub-Leased Premises
fifteen (15) days prior to the Commencement Date. During this period, the
Sub-Tenant shall not be obligated to pay any Basic Rent or Additional Rent
but shall abide by all other terms of the Lease.
7. SUB-LANDLORD'S WORK
The Landlord shall, at its cost, steam clean the carpets in the Sublease
Premises and permanently close off the entrance door to the adjacent suite.
8. SUB-LANDLORD TO DETERMINE FINANCIAL STRENGTH OF SUB-TENANT
Acceptance of this Offer by the Sub-Landlord is conditional upon the Sub-
Tenant providing the Sub-Landlord with information respecting the financial
status of the Sub-Tenant as the Sub-Landlord may reasonably require for the
purposes of determining the financial strength of the Sub-Tenant. The Sub-
Tenant shall furnish the Sub-Landlord with such information forthwith upon
acceptance of this Offer. The Sub-Landlord shall have five (5) business
days from the date of provision of the financial information to determine
whether or not the Sub-Tenant is acceptable to the Sub-Landlord. The Sub-
Landlord shall notify the Sub-Tenant within five (5) business days of
receipt of the financial information that the tenancy is acceptable to it,
failing which this Offer shall become null and void and the Deposit shall
be returned to the Sub-Tenant.
9. CONDITIONS PRECEDENT
This Offer and Acceptance is subject to the following Conditions Precedent
being waived at the sole discretion of the Sub-Tenant.
(a) Satisfactory review and acceptance of the Sub-Landlord's existing
Lease document.
(b) Approval of the Offer to Sub-Lease by the Sub-Tenant's Board of
Directors.
If the Sub-Tenant fails to notify the Sub-Landlord in writing that the
Conditions Precedent have been satisfied or waived prior to 5:00 p.m. on
the 27th day of April, 1999 or such other time as may be subsequently
agreed, then this Offer shall become null and void and the Deposit shall be
returned in full to the Tenant forthwith and neither party shall have
further obligation to the other. This clause is for the sole benefit of
the Sub-Tenant.
10. PARKING
The Sub-Landlord shall provide, at the Sub-Tenant's cost, up to fourteen
(14) random parking stalls in the Building at the prevailing market rates
currently $40.00 per stall per month. The Sub-Tenant shall specify the
number of parking stalls it requires prior to the Commencement Date. The
rental rates for stalls is subject to adjustment to comparable parking
rates in the area.
11. FREE BASIC RENT & OPERATING COSTS & PROPERTY TAXES
<PAGE>
The Sub-Tenant shall have a Free Basic Rent and Operating Costs and
Property Taxes period during the first twelve (12) months from the
Commencement Date on 2,800 square feet only of the Sublease Premises.
During this period, the Sub-Tenant shall abide by all other terms of the
Lease.
12. USE
The Sublease Premises shall be used only for the purposes of a general
business office.
13. SOLE AGREEMENT
There are no agreements, covenants, representations, warranties or
conditions in any way relating to the subject matter of this agreement
expressed or implied, collateral or otherwise, except as expressly set
forth herein.
14. TIME OF THE ESSENCE
Time is of the essence of this agreement with respect to the covenants
contained herein.
15. DEFINITIONS
Words defined in the Lease and used herein shall have the same meaning
ascribed to them by the Lease.
16. CONSENT OF LANDLORD
This Offer is subject to the consent of the Landlord in accordance with the
terms of the Lease.
17. OFFER PROVISIONS
All terms of this Offer shall survive the completion of this transaction
and shall not merge. In the event of any conflict between the terms of
this Offer and the terms of the Lease, the terms of this Offer shall
prevail.
18. DISCLOSURE
The Sub-Landlord and the Sub-Tenant acknowledge and agree that:
(i) in accordance with the Code of Ethics of the Canadian Real Estate
Association, Colliers Macaulay Nicolls Inc. (the "Agent") has
disclosed that it is representing the Sub-Landlord and the Sub-Tenant
in the transaction described in this Agreement.
(ii) the Agent, in order to accommodate the transaction described in this
Agreement, was and is entitled to pass any relevant information it
receives from either party or from any other source to either of the
parties as the Agent sees fit, without being in conflict of its
duties to either party; and
(iii) the Sub-Landlord shall pay the commission and compensation due to
the Agent pursuant to the transaction described in this Agreement.
19. ACCEPTANCE
This Offer shall be irrevocable and open for acceptance until 5:00 p.m. on
the 23rd day of April, 1999, after which time if not accepted this Offer
shall be null and void and the Deposit shall be returned in full to the
Sub-Tenant. This Offer may be accepted by signing and returning one
duplicate copy or facsimile of this Offer.
<PAGE>
DATED this 22/nd/ day of April, 1999.
RECONNAISSANCE TECHNOLOGIES INC.
SUB-TENANT
Per: /s/ Mike McLean
-------------------------
Per: _________________________
ACCEPTANCE
The Sub-Landlord hereby accepts the above Offer this _____ day of April, 1999.
ELECTRONIC ARTS (CANADA), INC.
SUB-LANDLORD
Per: _________________________
Per: _________________________
LANDLORD'S CONSENT
The Landlord hereby consents to the attached Offer this _____ day of April,
1999.
BEUTEL GOODMAN REAL ESTATE GROUP
LANDLORD
Per: _________________________
Per: _________________________
<PAGE>
EXHIBIT 5.17
THIS LEASE MADE in triplicate this 26th day of March, 1992
BETWEEN: THE CANADA LIFE ASSURANCE COMPANY,
(hereinafter called the "Landlord")
OF THE FIRST PART
AND: OSIWARE INC
(hereinafter called the "Tenant")
OF THE SECOND PART
WHEREBY the parties agree as follows:
ARTICLE I
INTERPRETATION
1.01 Defined Terms - General
-----------------------
In this lease:
"Building" means that certain building and those certain areas and
improvements and amenities located on the Land.
"Common Areas" means those parts of the Project designated by the Landlord
for common use by the Landlord and the tenants of the Project, including
without limitation, the landscaped portions of the Project, the public
sidewalks and the landscaped portions of the streets adjacent to the
Project,, the Delivery Facilities, and Parking Facilities if any.
"Common Service Areas" means those parts of the Project, whether or not
within the Building, designated by the Landlord which provide services to
the Project.
"Costs of Utilities" means the cost of electricity and other utilities
supplied to tenants of premises in the Building as determined by the
Landlord who in making its determination shall take into account the
readings of any electrical check meters installed by the Tenant.
"Delivery Facilities" means those portions of the Project designated by
the Landlord as facilities for common use by the Landlord and tenants of
the Project for deliveries.
"Expert" means any architect, engineer land surveyor, chartered
accountants or other professional consultant, as the case may be,
appointed by the Landlord and qualified in the opinion of the Landlord to
perform the particular function.
1.
<PAGE>
"Expiration of the Term" means the termination of this Lease by either
effluxion of time or operations of any of its provisions.
"Fixed Rent" means the amount payable under section 3.01 (a).
"Insurance" means coverage with respect to the following risks in the
amounts equal, in the case of the Landlord, to those maintained by prudent
owners of like buildings and in the case of the Tenant, to those
maintained by prudent tenants of like premises:
(a) comprehensive general liability;
(b) all risks coverage;
(c) in the case of the Landlord:
(i) boiler and machinery; and
(ii) loss of rental income by reason of damage; and
(d) in the case of the Tenants legal liability;
and in the case of the Landlord such other coverage as the Landlord may
require to maintain and in the case of the Tenant, such other coverage as
the Landlord may require, in each case having regard to the risks which
are customarily insured against by prudent landlords and tenants of like
premises.
"Landlord's Cost" means with respect to any cost incurred by the Landlord
the actual amount thereof and a fee on account of management and overhead,
said fee to be equal to the amount the Landlord might reasonably pay to a
third party for the administration and management of the Buildings.
"Leasehold Improvements" means the fixtures and improvements made by or on
behalf of the Tenant in the Premises.
"Notice" has the meaning set forth in section 15.04.
"Parking Facility", if any, means those portions of the Project designated
by the Landlord for parking.
"Premises" means the portion of the Building, excluding its exterior
outlined in red on the floor plan attached to, and forming part of, this
Lease.
"Prime" means the rate of interest from time -to time announced by The
Bank of Nova Scotia as its prime rates.
2.
<PAGE>
"Project" means the improvements constructed on the Land including the
Building, the Common Areas (whether on or adjacent to the Land), the
Parking Facility, if any, and any other building.
"Land" means the land as described in Schedule 'A' attached hereto
"Rent" means the amounts payable by the Tenant to the Landlord under this
Lease.
"Term" means the term of this Lease as specified in section 2.03 and any
permitted overholding.
and
"Unavoidable Delay" means any events except financial inability beyond the
control of the party affected thereby which prevents the fulfillment by
such party of any obligation hereunder and not caused by such party and
not avoidable by the exercise of reasonable effort or foresight by such
party.
1.02 Defined Terms - Operating Costs and Taxes
-----------------------------------------
For the purpose of calculating the Proportionate Share of Operating Costs
and Taxes:
"Fiscal Year" means a calendar year provided that the Landlord may by
Notice specify an annual date upon which each subsequent Fiscal Year is to
begin, in which event the Fiscal Year which would otherwise be current
when such annual date first occurs thereafter shall terminate on the
preceding day.
"Operating Costs and Taxes" means for a Fiscal Year the aggregate costs
paid or payable by the Landlord in accordance with generally accepted
accounting principles applied in the real estate management industry on
account of Taxes Insurance and the operation, management, maintenance and
repair of the Building, the Land, the Common Areas and the Common Service
Areas together with a charge the annual cost of which for the purpose of
this Lease shall be deemed to be management fees paid by the Landlord for
the administration and management of the Building and the Land, and, if
the Landlord itself manages the Building and the Land, a fee equal to the
amount the Landlord might reasonably pay to a third party for the
administration and management of the Building and the Land including
(without limiting the generality of the foregoing) the cost amortized at
Prime of all capital improvements made after the Building is substantially
completed and which are required by any competent authority or which have
the effect of reducing the costs which would otherwise be included in
Operating Costs and Taxes, but excluding the following:
(i) costs directly recoverable from tenants or insurers;
3.
<PAGE>
(ii) debt service, depreciation or other costs of a capital nature
and interest on any of the foregoing except as hereinafter
provided;
(iii) costs of procuring any lease; and
(iv) income, corporate and other taxes of a personal nature of the
Landlord to the extent not imposed in lieu of Taxes.
The proportion of operating Costs and Taxes attributable to the Common
Areas and the Common Service Areas shall be allocated equitably by the
Landlord among the tenants and will be based to the extent possible on
their respective aggregate areas of Rental Space in the Building. If at
any time there are unoccupied premises in the Building, the Landlord may
make an equitable adjustment of the amount of Operating Costs and Taxes,
by reason of the fact that unoccupied premises result in lower costs in
order that the tenants of the occupied premises will bear the actual
amount of the Operating Costs and Taxes attributed to their respective
premises.
"Taxes" means all taxes and other charges imposed by any lawful authority
against the Land and any improvements thereon or upon the Landlord in
respect thereof and all costs relating to any appeal thereof and includes
(without limiting the generality of the foregoing) any Rental Taxes.
"Proportionate Share" means the ratio, the numerator of which is the
Rentable Space of the Premises and the denominator of which is the
aggregate Rentable Space of the Building (exclusive of any storage areas).
"Rentable Space" whether in the case of a whole floor of the Building or
in the case of premises comprising part of a floor of the Building shall
be determined by the Landlord's architect or land surveyor according to
the American National Standard for measuring floor area in office
buildings as established by the Builders Owners and Managers Association
International and in effect as of the date of commencement of the Term
"Rental Taxes" means tax or duty imposed upon the Landlord which is
measured or based in whole or in part directly upon the Rent payable under
this Lease or services provided by the Landlord whether existing at the
date hereof imposed by any governmental authority.
1.03 Number, Gender and Joint and Several Liability
----------------------------------------------
The necessary grammatical changes required to make the provisions of this
Lease apply in the plural sense where the Tenant comprises more than one
entity and to corporations, associations, partnerships or individuals,
male or females shall be assumed as though in each case fully expressed.
If the Tenant is more than one person or entity its liability shall be
joint and several. If the Tenant is a
4.
<PAGE>
partnership each person who is or becomes a member of the partnership or
any successor partnership shall be jointly and severally liable,
1.04 Procedure for Approval
----------------------
Any requests for approval shall be requested by Notice and in the absence
of reply given by Notice not later than 15 days after Notice of the
request has been received, or such other period of' time as is otherwise
expressly provided in this Lease the approval shall be deemed to have been
given unless the approval may by the terms of this Lease be withheld in
the discretion of the party whose approval is requested. Each approval
shall be in writing unless by operation of the preceding sentence it is
deemed to have been given. If either party withholds its approval it shall
give Notice of its reason unless the approval may by the terms of this
Lease be withheld in its discretion.
1.05 Divisions
---------
All references in this Lease to articles sections and other subdivisions
are to those in this Lease.
1.06 Entire Agreement
----------------
This Lease and the regulations imposed by the Landlord pursuant to section
14.01 constitute the entire agreement between the Landlord and the Tenant
concerning the subject matter of this Lease. This Lease may only be
amended by an agreement in writing signed by the parties hereto.
1.07 Reasonableness
--------------
The Landlord and the Tenant shall, except as otherwise expressly provided
in this Lease, each act reasonably having regard to the fact that they are
the owner and a tenant, respectively, of a good quality office building,
in the exercise and the enforcement of their respective rights under this
Lease. Each right shall be exercisable and enforceable from time to time,
except as aforesaid.
1.08 Nature of the Lease
-------------------
This Lease is a completely net lease to the Landlord and accordingly,
except as otherwise expressly provided in this Lease, the Landlord has no
obligations to the Tenant with respect to either the Premises, the
Building the Common Areas the Common Service Areas, the Parking Facility,
or if any, the Project.
5.
<PAGE>
ARTICLE II
DEMISE AND TERM
2.01 Demised Premises
----------------
The Landlord hereby leases the Premises to the Tenant and the Tenant'
hereby leases and accepts part of the second (2nd) floor from the
Landlord, (being approximately seven thousand and three hundred (7,300)
square feet of Rentable Space) to have and to hold during the Term,
subject to the terms of this Lease.
2.02 Licenses
--------
The Landlord hereby grants to the Tenant throughout the Term and subject
to control by the Landlord, a non-exclusive license, revocable at any time
upon Notice by the Landlord:
(a) to use those parts of the Common Areas giving access to the Premises
and the Parking Facility, if any;
(b) to have its name displayed on the main lobby directory board for the
Building, on the floor lobby directory board on each floor on which
the Premises are located and on the main door to the Premises, all
such signs to be under the exclusive control of the Landlord and to
conform to the uniform pattern of identification signs for tenants of
the Building prescribed by the Landlord; and
(c) if the Premises constitute one or more full floors of the Building to
have a sign displaying the name of the Tenant in the elevator lobby
of each such floor, provided that the design of the sign has been
approved by the Landlord.
2.03 Term
----
The Term shall be ten (10) years beginning December is, 1992, and ending
the last day of November 2002.
2.04 Surrender on Termination
------------------------
Forthwith upon the Expiration of the Term, the Tenant shall vacate and
deliver up possession of the Premises in a neat and tidy state and in good
and substantial repair in accordance with the Tenant's obligation under
this Lease to repair the Premises, but subject to the Tenant's rights and
obligations in respect of removal in accordance with sections 9.04 and
9.05. At the same time the Tenant shall surrender to the Landlord at the
place then fixed for the payment of Rent all keys and other devices which
provide access to the Premises, the Building or any part
6.
<PAGE>
thereof and shall inform the Landlord of all combinations to locks safes
and vaults, if any, in the Premises.
2.05 Overholding
-----------
If the Tenant shall continue to occupy the Premises at the expiration of
this Lease with or without the consent of the Landlord and without any
further written agreement the Tenant shall be a monthly tenant at one
hundred and fifty percent (150%) of the monthly Fixed Rent herein reserved
for the last year of the Term and otherwise on the terms and conditions
herein set forth, except as to the length of tenancy.
ARTICLE III
RENT
3.01 Items of Rent
-------------
The Tenant shall pay to the Landlord:
(a) SUITE 200
---------
Per Square Foot/ Fixed Rent
Lease Year Per Annum Per Month Per Annum
---------- --------- ----------------------------
1 - 3 $ 13.00 $ 7,908.33 $ 94,900.00
4 - 5 $ 14.00 $ 8,516.67 $102,200.00
6 - 10 $ 18.00 $10,950.00 $131,400.00
(b) the Proportionate Share of operating Costs and Taxes;
(c) the Cost of Utilities supplied to the Premises;
(d) the Landlord's Cost on account of the following:
(i) the replacement, of tubes and ballasts in the Premises;
(ii) the installation and any change of the name of the Tenant on
the main lobby directory board for the Building, on each floor
lobby
7.
<PAGE>
directory board on which the Tenant has its name and on the
main door to the Premises;
(iii) any additional services and equipment agreed to be provided by
the Landlord at the request of the Tenant.
(e) the amount, if any, by which the operating Costs and Taxes attributed
to the Premises by the Landlord exceeds the Proportionate Share of
Operating Costs and Taxes if such excess is occasioned by the use or
improvement of the Premises.
(f) any applicable Goods and Services Tax.
(g) Free Fixed Rent
---------------
The Tenant shall have a free Fixed Rent period of fifteen (15) months
from the date of commencement of the Terms During this period the
Tenant shall pay to the Landlord its Proportionate Share of Operating
Costs and Taxes and any parking rental.
3.02 General
-------
All amounts payable by the Tenant to the Landlord under this Lease shall
be deemed to be Rent. The Tenant shall pay Rent without abatement,
deduction or set-off, except as expressly provided, in lawful money of
Canada to such person and at such address as the Landlord may advise. The
Tenant shall pay items of Rent of a recurring nature in advance in equal
monthly installments on the first day of each month of the Term and-shall
pay other items of Rent within 15 days of the delivery of an invoice
therefor. The Landlord shall estimate and may re-estimate, items of Rent
of a recurring and variable nature for each Fiscal Year and advise the
Tenant thereof. if the Commencement Date is not the first day of a month
or if the Expiration of the Term does not occur on the last day of a
month, Rent for the broken period shall be pro-rata on a per diem bases.
3.03 Final Determination of Certain Items of Rent
--------------------------------------------
The Landlord shall within 180 days after the end of each Fiscal Year
provide to the Tenant a statement (the "Statement") setting out in detail
the Proportionate Share of Operating Costs and Taxes and such other items
of Rent of a recurring and variable nature for such Fiscal Year. If the
aggregate monthly installments on account thereof paid during such Fiscal
Year differ from the actual amount thereof set forth in the Statement, the
Tenant shall pay or the Landlord shall refund the difference within 30
days after the Statement is provided. The Tenant may within the 120 day
period after the Statement is provided examine the books and records of
the Landlord relating to the Project. The Tenant may by Notice given
within such 120 day period but not otherwise dispute the Statement
8.
<PAGE>
whereupon the matter shall be finally resolved by an Expert. If the Expert
determines that the amount payable by the Tenant has been overstated by
more than 3% the Landlord shall pay the fee of the Expert.
If the Expert determines that the amount payable by the Tenant has not
been overstated by three (3%) per cent or more the Tenant shall pay such
fees. Any adjustment required to any previous payment made by the Tenant
or the Landlord by reason of any such determination shall be made
forthwith and shall bear interest at a rate equal to a Prime and 1% per
annum from the date the Statement is provided. The Landlord may not claim
a readjustment of the Proportionate Share of Operating Costs and Taxes or
of any other item of Rent based upon any error of computation or
allocation except by Notice given within 180 days after the Statement is
provided but not otherwise.
3.04 Post-Dated Changes
------------------
At the request of the Landlord, the Tenant shall present to the Landlord.
A series of monthly post-dated cheques for each lease year of the Term in
respect of the aggregate of the monthly payment of Rent, in advance, and
any other payments required by this Lease to be paid by the Tenant monthly
in advances. The Tenant agrees that if any of the Tenant's cheques are
returned for lack of sufficient funds the Tenant shall pay to the Landlord
upon receipt of the Landlord's invoice for same, a minimum administrative
fee of not lest than Twenty-Five Dollars ($25,00).
3.05 Deposit
-------
The deposit of thirty thousand, six hundred and eighty-four dollars and
twenty-one cents ($30,684.21) is to be applied in payment on the sixteenth
(16th) month's rent and the balance shall be applied as a security deposit
for the due performance by the Tenant of all the covenants and obligations
on its part herein contained, the Landlord hereby reserving unto itself at
its sole discretion the right to apply such sum to any damages resulting
from any default by the Tenant of any of its covenants and obligations
hereunder or towards the payment or reduction of any claim of the Landlord
against the Tenant including monthly Rent. If the Deposit hereunder shall
be applied in accordance with the provisions hereof, the Tenant covenants
to provide sufficient funds to ensure that the Deposit remains at the
level herein before indicated within ten (10) days of receipt of the
Landlord's Notice therefore. The application of the Deposit as aforesaid
shall be without prejudice to the Landlord in pursuing any of its other
rights and remedies contained in this Lease. Provided the Tenant is not
then in default under the Lease and provided that the Tenant has not, in
any way, damaged the Premises, the Landlord shall, within thirty (30) days
of the Tenant's vacating the Premises, return to the Tenant the balance of
the security deposit referred to in section 3.05.
9.
<PAGE>
ARTICLE IV
USE OF PREMISES
4.01 Use
---
The Premises shall be used for business office purposes only and not for
any other purpose without the prior written consent of the Landlord, which
consent may be withheld at the discretion of the Landlord. The Tenant
shall not permit any part of the Premises to the occupied by any person
other than the Tenant and its employees and any subtenant permitted under
section 10.03 and the employees of such subtenant.
4.02 Waste and Nuisance
------------------
The Tenant shall not commit or permit any waste or damage to the Premises
or any manner of use causing annoyance to other tenants of the Project.
4.03 Extraordinary Equipment
-----------------------
The Tenant shall not install any equipment which might affect the capacity
of either the structure or the basic systems of the Building.
4.04 Fire Prevention and Energy Conservation
---------------------------------------
The Tenant shall comply with the requirements of the Landlord with respect
to fire prevention and, with respect to the Premises, energy conservation.
4.05 Exterior Appearance of Premises
-------------------------------
The Tenant shall keep the exterior appearance of the Premises tidy and
business-like and shall not erect any sign or other like object within the
Premises which is visible from the exterior of the Premises.
10.
<PAGE>
ARTICLE V
LIMITATION OF LIABILITIES
5.01 Unavoidable Delay
-----------------
Except as herein otherwise expressly provided, it and whenever and to the
extent that either the Landlord and the Tenant shall be prevented, delayed
or restricted in the fulfillment of any obligations hereunder in respect
of the supply or provision of any service or utility, the making of any
repair, the doing of any work or any other thing (other than the payment
of Rent) by Unavoidable Delay, the time for fulfillment of such obligation
shall be extended during the period in which such circumstance operates to
prevent, delay or restrict the fulfillment thereof, and the other party to
this Lease shall not be entitled to compensation for any inconvenience,
nuisance or discomfort thereby occasioned nor shall Rent abate.
5.02 Limitation of Landlord's Liability
----------------------------------
The Landlord shall only be liable for any personal injury or death
suffered by the Tenant or any person in its employ who may be upon the
Premises or for the loss or any damage to any property located within the
Premises of the Tenant or of any employee of the Tenant if caused by the
actual fault or negligence of the Landlord.
5.03 Indemnity
---------
The Tenant shall indemnify and save the Landlord harmless in respect of:
(a) all claims and liabilities arising from any act or omission of the
Tenant or any person for whose conduct the Tenant is responsible and
the costs incurred by the Landlord in connection with any action
pertaining thereto; and
(b) any damage suffered by the Landlord by reason of the breach by the
Tenant of any of its obligations under this Lease and the costs
incurred by the Landlord in connection with any action pertaining
thereto.
The Landlord shall indemnify and save the Tenant harmless on the basis, of
the preceding sentence, making necessary changes.
11.
<PAGE>
ARTICLE VI
TAXES
6.01 Landlord's Taxes
----------------
The Landlord shall pay before delinquency the Taxes relating to the
Building.
6.02 Tenant's Taxes
--------------
The Tenant shall pay before delinquency all taxes and other charges imposed
by any lawful authority against the Tenant or any sub-tenant, licensee or
occupant of the Premises which if not paid would constitute either a lien
on either the Land or the Building or a liability of the Landlord.
6.03 Assessment Appeals
------------------
The Tenant shall not conduct any appeal from any governmental assessment or
determination of the value of the Land, the Building or the Premises.
ARTICLE VII
INSURANCE
7.01 Landlord's Insurance
--------------------
The Landlord shall maintain Insurance with respect to its interest in the
Building, the Common Areas and the Parking Facility, if any. Such insurance
shall include, if available, a waiver of any right of subrogation with
respect to property insurance only against the Tenant.
7.02 Tenant's Insurance
------------------
The Tenant shall maintain Insurance with respect to its interest in the
Premises, the Leasehold Improvements and all operations of the Tenant in
and from the Premises. The Tenant shall at the request of the Landlord
provide the Landlord with certificates of such insurance. If both the
Landlord and this Tenant have claims to be indemnified under any such
insurance, the indemnity shall be applied first to the settlement of the
claim of the Landlord and the balance to the settlement of the claim of the
Tenant. Such Insurance shall include the Landlord and any Mortgagee
designated by Notice by the Landlord as named insureds as their interests
may appear and, if available, shall contain a cross-liability clause
protecting the Landlord in respect of claims by the Tenant as if the
Landlord were separately insured and a provision prohibiting the insurer
from materially altering or cancelling the coverage without first giving
the Landlord at least 30 days, prior written notice thereof.
12.
<PAGE>
ARTICLE VIII
OPERATION, SERVICES, MAINTENANCE,
REPAIR AND ACCESS BY LANDLORD
8.01 Quiet Enjoyment
---------------
The Landlord covenants with the Tenant for quiet enjoyment
8.02 Standard of Operation
---------------------
The Landlord shall operate and manage the Building, the Land, the Common
Areas, the Common Service Areas and the Parking Facility, if any, to the
standard of a good quality office building, subject to the limitations
arising from the design of the Building and its basic systems.
8.03 Services to Premises
--------------------
The Landlord shall provide the following services to the Premises:
(a) heat, ventilation and air conditioning as required for the comfortable
use and occupancy of the Premises during the normal business hours as
determined by the Landlord from time to time (and being, at the date
of this Lease, 8:00 a.m. to 6:00 p.m. Monday to Friday except on legal
or statutory holidays);
(b) electrical power for lighting and office equipment;
(c) replacement of tubes and ballasts; and
(d) janitorial services.
8.04 Services to Building
--------------------
The Landlord shall provide for the Tenant and others the following services
(a) elevators;
(b) washroom facilities on each floor of the Building on which the
Premises are located;
(c) heat, ventilation, air conditioning, lighting, and janitorial service
in the appropriate interior portions of the Common Areas;
(d) snow removal and landscape maintenance for the appropriate exterior
portions of the Common Areas;
13.
<PAGE>
(e) exterior window washing;
(f) garbage removal; and
(g) janitorial services for the appropriate interior portions of the
Common Areas.
8.05 Additional Services
-------------------
The Landlord, if it shall from time to time so elect shall have the
exclusive right, by way of Additional Services, to provide or have its
designated agents or contractors provide any janitorial or cleaning
services to the Premises required by the Tenant which are additional to
those required to be provided by the Landlord under section 8.03, including
the Additional Services which the Landlord agrees to provide by arrangement
and to supervise the moving of furniture or equipment of the Tenant and the
making of repairs or alterations conducted within the Premises, and to
supervise or make deliveries to the Premises. The cost of Additional
Services (including the Landlord's administration fee) provided to the
Tenant, whether the Landlord shall be obligated hereunder or shall elect to
provide them as Additional Services, shall be paid to the Landlord by the
Tenant from time to time promptly upon receipt of invoices therefor from
the Landlord. The cost of Additional Services charged directly to the
Tenant and other tenants shall be credited in computing Operating Costs and
Taxes to the extent that they would otherwise have been included.
8.06 Extra Operating Costs
---------------------
Upon request by the Tenant, the Landlord may agree from time to time to
arrange for extra heating, ventilating and air conditioning supply,
electrical supply or for the supply of other services to the Premises above
those normally provided to tenants of the Building or outside of normal
business hours. The Tenant will pay to the Landlord in the manner in which
Operating Costs and Taxes are paid from time to time hereunder any and all
additional costs and expenses of the Landlord which may arise in respect of
the use by the Tenant of the Premises for business hours that do not
coincide with normal business hours for the Building generally or that may
arise in respect of extra heating, ventilating and air conditioning supply,
electrical supply and other services which are arranged to be provided to
the Tenant as a result of its activities over and above those normally
provided to the tenants of the Building or outside of normal business
hours, plus an administration fee equal to fifteen percent (15%) of each
component thereof. The Landlord reserves the right to install at the
Tenant's expense meters to check the Tenant's consumption of electricity,
water or other utilities.
8.07 Maintenance and Repair
----------------------
The Landlord shall maintain and repair the following:
14.
<PAGE>
(a) the Building and its basic systems but not the Premises or the
premises of other tenants;
(b) the structural elements of the Premises; and
(c) the Common Areas, the Common Service Areas and the Parking Facility,
if any, except where such maintenance and repair is required due to
the negligence of the Tenant or those for whom the Tenant is in law
responsible, in which circumstances the Tenant shall be liable for the
cost of such maintenance and repair.
8.08 Access by Landlord
------------------
The Landlord may enter the Premises in order:
(a) to perform its obligations hereunder;
(b) to install, maintain and repair equipment within or about the Premises
for the supply of services to other premises in the Building;
(c) to make repairs or alterations to the Building;
(d) to take such steps as the Landlord may deem necessary for the safety
or preservation of the Project; and
(e) to inspect the state of repair of the Premises.
Prior to the exercise of this right the Landlord whenever possible shall consult
with the Tenant in order to minimize inconvenience to the Tenant and in its
exercise of this right shall observe the security requirements of the Tenant
ARTICLE IX
MAINTENANCE, REPAIR AND
IMPROVEMENT BY TENANT
9.01 Maintenance of Premises
-----------------------
The Tenant shall maintain and repair the Premises and the Leasehold
Improvements.
9.02 Leasehold Improvements
----------------------
The Tenant may make Leasehold Improvements provided that:
(a) the Tenant shall furnish the Landlord with professionally prepared
plans and specifications therefore;
15.
<PAGE>
(b) such plans and specifications shall be approved by the Landlord and,
at its election, any Expert;
(c) the Tenant shall advise the Landlord of the identity of its
contractors and tradesmen and their respective labour affiliations;
(d) the Landlord shall either approve any contractors proposed by the
Tenant to perform any work which may affect the structure, the walls
or the systems of the Building or require that any such work be
performed by either the Landlord or its contractors in which case the
Tenant shall pay the Landlord's Cost on account thereof; the Landlord
may refuse to allow the contractors and tradesmen of the Tenant access
to the Building if their labour affiliations may conflict with those
of the Landlord or those employed by it or if they are not competent;
(e) the Tenant shall produce evidence satisfactory to the Landlord as to
the existence of all necessary permits and sufficient insurance
coverage;
(f) the Tenant shall pay the Landlord's Cost on account of the fees of any
Expert appointed to review the plans and specifications whether or not
the work proceeds;
(g) construction of the Leasehold Improvements shall be performed in
accordance with the plans and specifications submitted to the Landlord
and, where applicable, approved by the Landlord, subject to any
conditions or regulations imposed by the Landlord and in a good and
workmanlike and expeditious manner using good quality materials;
(h) the Landlord may inspect construction as it proceeds (the onus being
on the Tenant to advise the Landlord whenever any phase has been
completed so that an inspection can be made); and
(i) if the Tenant fails to observe any of the requirements of this section
the Landlord may require that construction stop and that the Premises
be restored to their prior condition failing which the Landlord may do
so and the Tenant shall pay the Landlord's Cost on account thereof.
Upon installation of any Leasehold improvements, such Leasehold
Improvements shall become the property of the Landlord and shall not be
removed by the Tenant except as hereinafter provided.
(j) Leasehold Improvement Allowance
-------------------------------
The Landlord shall pay to the Tenant a one (1) time only Tenant
Leasehold Improvement Allowance of twenty five dollars ($25.00) per
square foot of Rentable Area, to be applied towards the cost of Tenant
16.
<PAGE>
Leasehold Improvements. In the event the Tenant does not spend this
amount to improve the Premises, the balance shall be credited to the
Tenant in the form of additional Fixed Free Rent. Such allowance shall
be paid to the Tenant:
(i) upon presentation of bona fide paid invoices for the work and a
Statutory Declaration from the Tenant certifying that the
Tenant's contractors have been paid in full; and
(ii) only with respect to Tenant Leasehold Improvements acquired or
constructed in accordance with working drawings previously
approved by the Landlord, such approval not to be unreasonably
withheld.
9.03 Liens
-----
If any lien under the Builders Lien Act of British Columbia, as amended
from time to time, or any successor statute is registered against the title
to the Building and such lien relates to material, labour or any service
alleged to have been provided to the Tenants, the Tenant shall upon Notice
by the Landlord cause such lien to be discharged within 5 days after such
Notice has been given. If the Tenant shall fail to cause any such lien to
be discharged, as aforesaid, then in addition to any other rights or remedy
of the Landlord, the Landlord may (but shall not be so obligated) discharge
same by paying the amount claimed to be due into Court or directly to any
such lien claimant and the amount so paid by the Landlord and all costs and
expenses, including solicitor's fees on a solicitor client basis, incurred
for the discharge of such lien shall be due and payable by the Tenant to
the Landlord as Rent upon receipt of the Landlord's invoice for same.
9.04 Removal of Leasehold Improvements - Term
----------------------------------------
The Tenant may remove Leasehold Improvements either upon the exercise of
its right under, and upon the terms of, section 9.02 or with the approval
of the Landlord which may [illegible].
9.05 Removal of Leasehold Improvements - Expiration of Term
------------------------------------------------------
The Landlord may upon not less than 30 days Notice (except in the case of
default and re-entry in which case no prior Notice need be given) require
the Tenant before the Expiration of the Term to remove some or all
Leasehold Improvements and to restore the Premises to their original
condition, the cost of which shall be borne exclusively by the Tenant. Upon
the Expiration of the Term, all Leasehold Improvements (including carpeting
and light fixtures) and all personal property of the Tenant remaining in
the Premises shall become the property of the Landlord
17.
<PAGE>
ARTICLE X
TRANSFERS BY TENANT
10.01 Successors to Tenant
--------------------
This Lease shall enure to the benefit of and be binding upon the
executors, administrators, successors and assigns of the Tenant, subject
to the limitations of this Article.
10.02 Licenses, Franchises and Concessions
------------------------------------
The Tenant shall not suffer or permit any part of the Premises to be used
or occupied by any persons other than the Tenant, any subtenants permitted
under section 10.03 and the employees of the Tenant and any such permitted
subtenant, or suffer or permit any part of the Premises to be used or
occupied by any licensee, franchisee or concessionaire, or suffer or
permit any persons to be upon the Premises other than the Tenant, such
permitted subtenants and their respective employees, customers and others
having lawful business with them.
10.03 Assignment or Subletting
------------------------
The Tenant may assign this Lease or sublet the Premises in whole or in
part provided that:
(a) the Tenant shall by Notice first offer to surrender this Lease in
respect of the whole or the part of the Premises (the "Subject Area")
which the Tenant wishes to assign or sublet. Such offer shall be made
not less than 60 days prior to the date on which the Tenant proposes'
that the surrender be effective. The Landlord shall have a period of
15 days after any such offer is made to accept or to decline by
Notice;
(b) if the Landlord accepts the offer of the Tenant to surrender the
whole or any part of the Premises pursuant to subsection (a) of this
section, the Tenant shall do so upon the date specified in its
Notice. If part of the Premises is to be surrendered, the Rent
attributable by the Landlord thereto shall be apportioned by the
Landlord and paid to the date of surrender and the Rent for the
remainder of the Premises shall thereafter abate and become adjusted
in accordance with such attribution. The Landlord shall perform all
work required to separate the surrendered part from the remainder and
to make such part capable of separate use and the Tenant shall pay
the Landlord's Cost on account thereof. The provisions of section
9.O5 shall apply to the surrendered part of the Premises;
18.
<PAGE>
(c) if the Landlord declines such offer or does not respond within the
aforesaid period, the Tenant may within the next 180 day period
either assign this Lease or sublet the Subject Area provided that:
(i) the Tenant shall have received a bona fide [illegible] offer.
(ii) the Tenant shall have provided to the Landlord a true copy of
such offer and adequate information to enable the Landlord to
assess the creditworthiness, reputation and business of the
proposed assignee or subtenant;
(iii) the Tenant shall have obtained the approval of the Landlord to
such assignment or sublease (which may be withheld in its
discretion in the case of a sublease if the rate of rent either
is or might be less than that payable under this Lease);
(iv) the Tenant shall assign or sublets as the case may be only upon
the terms of the offer provided to the Landlord; and
(v) the proposed subtenant or assignee shall have agreed with the
Landlord to observe and perform all the obligations of the
Tenant under this Lease with respect to the Premises or the
Subject Area.
(d) if within the aforesaid 180 day period the Tenant has not assigned
this Lease or sublet the Subject Area, the provisions of subsection
(a) of this section shall again apply;
(e) the Tenant shall pay the Landlord's Cost on account of any request
for approval and, if applicable, the preparation of the implementing
documentation, in such form as may be acceptable to the Landlord; and
(f) notwithstanding any assignment or subletting, the Tenant shall remain
jointly and severally liable on this Lease and shall not be relieved
from performing any of the terms, covenants and conditions of this
Lease.
10.04 Change in Control
-----------------
Any change in the effective control of the Tenant (including, without
limitation, changes in the shareholders, directors or officers of the
Tenant) shall be deemed to be an assignment of the Premises to which the
provisions of section 10.03 shall apply. The Tenant shall provide to the
Landlord the information described in section 10.03(c)(ii) with respect to
the person or persons to whom control is passing.
10.05 Advertising of Premises
-----------------------
19.
<PAGE>
The Tenant shall not advertise or allow the Premises to be advertised as
being available for lease without the approval by the Landlord of the form
and content of such advertisement which shall not mention any financial
terms.
ARTICLE XI
TRANSFER BY LANDLORD, SUBORDINATION AND ATTORNMENT
11.01 Transfer by Landlord
--------------------
This Lease shall enure to the benefit of and be binding upon the
successors and assigns of the Landlord. If the Landlord transfers or
leases the Building, or any part thereof, and to the extent that the
transferee or lessee becomes liable to perform the obligations of the
Landlord hereunder, the Landlord shall thereupon no longer be liable.
11.02 Subordination and Attornment.
-----------------------------
The Tenant shall upon Notice:
(a) subordinate this Lease to any mortgage of the Building or the Land to
the intent that this Lease and all the interest of the Tenant in the
Premises shall be subject thereto as fully as if such mortgage had
been executed and registered and the money thereby secured had been
advanced before the execution and delivery of this Lease; and
(b) agree to attorn to any mortgagee under such mortgage.
11.03 Status Certificates
-------------------
The Tenant shall certify in writing to the Landlord or as it may direct
that this Lease in unmodified and in full force and effect (or if
modified, stating the modifications and that this Lease is in full force
and effect as modified), the dates to which Rent has been paid, whether or
not there is any existing default on the part of the Landlord of which the
Tenant has notice and any other requested information pertaining to the
performance by the Landlord and the Tenant of their respective obligations
hereunder. The Tenant shall provide such statement within ten (10) days
after written Notice from the Landlord requesting same. Any such statement
may be conclusively relied upon by any purchaser or mortgagee of the
Building or Land.
20.
<PAGE>
ARTICLE XII
TERMINATION AND RENT ABATEMENT
12.01 Termination by Tenant
---------------------
If the Premises or any other part of the Building, the Parking Facility,
if any, the Common Areas or the Common Service Areas are damaged and the
Landlord is thereby unable to fulfil its obligations to the Tenant and if
in the opinion of an Expert, which shall be given not more than 45 days
after the date of such damage, the damage cannot be repaired within a 180
day period (employing normal construction methods without overtime or
other premium unless the Landlord otherwise instructs the Expert) then the
Tenant may by Notice given not more than 15 days after receipt by the
Tenant of the opinion of the Expert (whose fee shall be payable by the
Tenant) terminate this Lease with effect as of the date on which such
Notice is given.
12.02 Termination by Landlord
-----------------------
If any part of the Building, the Parking Facility, if any, the Common
Areas or the Common Service Areas is damaged and the Landlord is thereby
unable to fulfil its obligations to the Tenant or to any other tenant of
the Project and if in the opinion of an Expert, which shall be given not
more than 45 days after the date of the damages the damage cannot be
repaired within a 180 day period (employing normal construction methods
without overtime or other premium), then the Landlord may by Notice given
not more than 15 days after receipt by the Landlord of the opinion of the
Expert terminate this Lease with effect either as of the date on which
such Notice is given, if the Premises have been materially damaged or if
the Premises have not been so damaged, then as of the date stipulated by
the Landlord in its Notice which shall be not less than 60 days after the
date on which it is given.
12.03 Abatement of Rent
-----------------
If the Premises are damaged to the extent that they are incapable,
notwithstanding a reasonable amount of inconvenience to the Tenant, of
being used by the Tenant for their intended purpose and if the damage has
not been caused by any act or omission of either the Tenant or those for
whom it is responsible Rent shall abate with effect as of the date of the
damage in proportion to the area of the Premises so damaged until either:
(a) the Landlord and the Tenant, each acting diligently, have completed
their respective obligations to repair; or
(b) the proceeds of any loss of rental income insurance attributable to
the damage are no longer available for application on account of the
21.
<PAGE>
abatement of the Rent payable under this Lease and the rent payable under
any other leases of premises in the Building affected by the same event of
damage or the period of time during which such proceeds would have been
available if the Landlord had performed its obligation to maintain the
coverage described in part (c)(ii) of the definition of insurance has
expired, whichever is the first to occur.
ARTICLE XIII
LANDLORD'S REMEDIES
13.01 Default and Re-Entry
--------------------
If the Tenant shall fail to make any payment of Rent as and when same is
due to be said hereunder and such default shall continue-for five (5) days
after written Notice is given by the Landlord to the Tenant or if the
Tenant fails to observe or perform any of its other obligations hereunder
after Notice specifying the default and a period to cure has been given,
the Tenant shall be deemed to be in default and the Landlord may at any
time thereafter re-enter the Premises and terminate this Lease.
Notwithstanding anything contained in section 13.01 to the contrary, in
the event the Tenant fails to pay any item of Rent when same is due to be
paid hereunder more than twice in any twelve (12) month period, then there
shall be no obligation on the part of the Landlord to give the Tenant
written Notice and the Landlord shall be entitled to proceed without
notice in accordance with the Landlord's rights pursuant to Article XIII
thereof.
13.02 Re-letting and Sale of Personality
----------------------------------
Whenever the Landlord becomes entitled to re-enter upon the Premises under
any provision of this Lease the Landlord in addition to all other rights
it may have, shall have the right as agent of the Tenant to enter the
Premises and re-let them (for a term or terms shorter or longer than the
balance of the Term, granting reasonable concessions in connection
therewith) and to receive the Rent therefor and as the agent of the Tenant
to take possession of any furniture or other property thereon and to sell
the same at public or private sale without Notice and to apply the
proceeds thereof and any Rent derived from re-letting the Premises upon
account of the Rent due and to become due under this Lease and the Tenant
shall be liable to the Landlord for the deficiency, if any.
13.03 Right of Landlord to Remedy
---------------------------
If the Tenant defaults hereunder, the Landlord may proceed to remedy the
defaults including the making of any payments due or alleged to be due by
the Tenant to third parties, and the Tenant shall pay on demand the
Landlord's Cost on account thereof, all without prejudice to the
Landlord's rights and remedies for such default by the Tenants.
22.
<PAGE>
13.04 Bankruptcy of Tenant
--------------------
If the Term or a substantial portion of the property of the Tenant on the
Premises is seized or taken in execution or attachment by a creditor of
the Tenant or if the Tenant makes an assignment for the benefit of
creditors or if a receiver-manager is appointed to control the conduct of
the business on or from the Promises or if the Tenant becomes bankrupt or
insolvent or takes the benefit of any act now or hereafter in force for
bankrupt or insolvent debtors or if an order is made for the winding-up of
the Tenant the next ensuing 3 months' rent immediately will become due and
payable as accelerated rent and the Landlord may re-enter and take
possession of the Premises as if the Tenant were holding over and this
Lease shall forthwith be terminated upon Notice by the Landlord to this
effect. Accelerated rent will be recoverable by the Landlord in the same
manner as the Rent hereby reserved.
13.05 Interest
--------
The Tenant shall pay to the Landlord interest at a rate equal to Prime and
5% per annum on all arrears of Rent.
13.06 Costs
-----
If legal action is brought by reason of any default by either party
hereunder and a default is established, the defaulting party shall pay to
the other party all costs incurred therefore, including legal fees (on a
solicitor and client basis). The Tenant shall also be responsible for, and
shall pay to the Landlord, including, without limitation reasonable
compensation for all time expended by the Landlord's own personnel legal
costs on a solicitor client basis and all other costs of any kind
whatsoever arising from or incurred as a result of any default of the
Tenant or any enforcement by the Landlord of any of the Tenant's
obligations under this Lease or any other agreement or obligation of the
Tenant to the Landlord whether or not related to the Premises. The Tenant
agrees that if the Tenant remains in default under this Lease after
receiving Notice as required pursuant to this Lease the Landlord shall be
entitled to receive from the Tenant and the Tenant shall pay a minimum
administration fee of not less than Fifty Dollars ($50.00) to the Landlord
which the Tenant acknowledges as being reasonable compensation for time
expended by the Landlord's personnel in enforcing any of the Landlord's
rights pursuant to this Lease after the giving of such Notice, it being
clearly understood that the payment or demand for such agreed reasonable
compensation shall not be in lieu of and shall be in addition to any other
fees, costs, compensations due to the Landlord as a result of the Tenant's
default pursuant to this Lease or pursuant to law or any order of court.
23.
<PAGE>
ARTICLE XIV
REGULATIONS
14.01 Purpose
-------
The Landlord may by Notice impose regulations from time to time, for the
orderly operation of the Building, the Common Areas and the Parking
Facility, if any the present regulation are attached to this Lease.
14.02 Observance
----------
The Tenant shall observe and shall cause those for whom it is responsible
to observe the regulations.
14.03 Enforcement
-----------
The Landlord shall enforce the regulations against all occupants of the
Building but in doing so will not be obligated to commence any legal
proceedings or be held liable for any claims by the Tenant or other
tenants arising out of the failure of the Landlord to commence legal
proceedings for any breach of regulations.
ARTICLE XV
MISCELLANEOUS
15.01 Exhibiting Premises
-------------------
The Landlord may exhibit the Premises to prospective purchasers,
prospective mortgagees and, during the last 6 months of the Term,
prospective tenants.
15.02 Name of Building
----------------
The Landlord may designate the name of the Building and the Project and
upon not less than 30 days' Notice may change the name of either the
Building of the Project. The Tenant shall only refer to the Building and
the Project by their designated names and shall only use such names as its
business address.
15.03 Relocation
----------
The Landlord and Tenant agree that at any time during the Term and any
renewal thereof, the Landlord shall have the right, upon providing the
Tenant at least thirty (30) days' prior written Notice, to relocate the
Tenant to other premises within the Building of approximately the same
size, quality and interior design as the Premises provided, however, that
the Tenant shall have the right to approve such new space, which approval
shall not be unreasonably withheld. The Tenant shall
24.
<PAGE>
give written Notice to the Landlord of its approval or disapproval of such
now space within ten (10) days of the receipt of the Landlord's Notice
requesting the Tenant to relocate. The Landlord shall pay the Tenant's
direct moving costs only provided the Tenant shall provide the Landlord
with reasonable evidence of such costs. The relocation shall be effective
on the date stated in the Landlord's Notice and the Tenant shall complete
its move in one (1) weekend. In the event the Landlord relocates the
Tenant to such new space, this Lease and each and all of its terms,
covenants and conditions shall remain in full force and effect and be
deemed applicable to such new space save and except:
(i) the Right of First Refusal, if any, if the new space is located
on a different floor than the original Premises; and
(ii) the location and size of the Premises which shall be in
accordance with the appropriate floor plan.
Upon the relocation taking place, the Fixed Rent per square foot for the
new space shall be the same Fixed Rent per square foot as for the Premises
and the Lease will be amended accordingly. If the Tenant reasonably
refuses to approve such new spaces, the Landlord shall have the right to
terminate this Lease by written Notice given to the Tenant within ten (10)
days following the Landlord's receipt of the Tenant's Notice disapproving
such new space, which termination shall be effective sixty (60) days after
the date of the original Notice.
15.04 Notice
------
Any Notice to be given pursuant to this Lease shall be in writing and
shall be deemed to have been given if signed by or on behalf of the party,
giving Notice and delivered or mailed by registered prepaid post to the
other party as follows:
(a) to the Landlord at:
THE CANADA LIFE ASSURANCE COMPANY
c/o COLLIERS MACAULAY NICOLLS INC.
16th Floor, 200 Granville Street
Vancouver, BC V6C 2R6
and
(b) to the Tenant at:
Suite 800
2005 Sheppard Avenue East
[illegible]
Any Notice so given shall be deemed to have been given, if delivered, on
the first business day following the date of such delivery or, if mailed,
on the third
25.
<PAGE>
business day following the date of such mailing. Either party way by
Notice change its address. During any interruption, threatened
interruption or substantial delay in postal services, all Notices shall be
delivered.
15.05 Compliance with Laws, etc.
--------------------------
The Landlord and the Tenant shall at all times in the performance of
their respective obligations under this Lease comply with all laws, by-
laws, regulations and orders of any competent authority and with the
requirements of any insurer of the interest of the Landlord in the
Project.
15.06 Governing Law and Severability
------------------------------
This Lease shall be governed by and construed in accordance with the laws
in force in the Province in which the Project is located. The Landlord and
the Tenant agree that all of the provisions of this Lease are to be
construed as covenants and agreements as though the words importing such
covenants and agreements were used in each separate section hereof. Should
any provision or provisions of this Lease be illegal or not enforceable,
it or they shall be considered separate and severable from the Lease and
its remaining provisions shall remain in force and be binding upon the
parties hereto as though the said provision or provisions had never been
included.
15.07 Registration
------------
The Tenant may register this Lease with the prior written approval of the
Landlord, which approval the Landlord may withhold in its discretion If
the Landlord provides such approval the Tenant shall not register this
Lease but shall prepare and have executed by the parties hereto a short
form of lease approved by the Landlord for the purpose only of enabling
notice of this Lease to be registered without affecting the respective
rights and obligations of the parties hereunder. The Tenant shall pay the
Landlord's Cost incurred in connection with such registration and, for
greater certainty, shall pay the cost of any necessary survey plan of the
Premises.
15.08 Expropriation
-------------
If at any time during the Term the interest of the Tenant under this Lease
or the whole or any part of either the Premises or any other part of the
Building shall be taken by any lawful power or authority by the right of
expropriation, the Landlord may at its option, give Notice to the Tenant
terminating this Lease on the date when the Tenant or Landlord is required
to yield up possession thereof to the expropriating authority. Upon such
termination, or upon termination by operation of laws as the case may beg
the Tenant shall immediately surrender the Premises and all its interest
therein, the Rent shall abate and be apportioned to the date of
termination, the Tenant shall forthwith pay to the Landlord the
apportioned Rent, all
26.
<PAGE>
other amounts which may by due to the Landlord up to the date of
termination, and the provisions of section 2.04 shall apply. The Tenant
shall have no claim upon the Landlord for the value of its property or the
unexpired Term of this Lease, but the parties shall each be entitled to
separately advance their claims for compensation for the loss of their
respective interests in the Premises and the parties shall each be
entitled to receive and retain such compensation as may be awarded to each
respectively. If an award of compensation made to the Landlord
specifically includes an award for the Tenant the Landlord will account
therefor to the Tenant. In this Section the word expropriation shall
include a sale by the Landlord to an authority with powers of
expropriation, in lieu of or under threat of expropriation.
15.09 Option To Renew
---------------
Provided the Tenant has not been in breach of the Lease, the Tenant shall
have the right to renew the Lease with respect to the Leased Premises and
any additional space leased for an additional Term of five (5) years on
the same terms and conditions, save only for the Fixed Rents, Free Rent
and Leasehold Improvement Allowance and that there will be no further
right of renewal. The rental during the renewal period will be the fair
market rental agreed between the parties, and failing such agreement, as
determined by arbitration pursuant to the Commercial Arbitration Act of
British Columbia. However, the Fixed Rent shall not be less than the Fixed
Rent payable in the last year of the Term. To exercise this rights the
Tenant shall give written notice to the Landlord no earlier than nine (9)
months and no later than six (6) months prior to the date of expiry of the
Term.
15.10 Parking
-------
The Landlord shall provide to the Tenant up to fourteen (14) parking
stalls in the Building at a rental of thirty-five dollars ($35.00) per
stall per month. The Tenant shall specify the number of parking stalls it
requires prior to taking occupancy in the Building. The Tenant shall be
responsible for payment of any applicable parking charges from the date of
occupancy. The rental for stalls is subject to adjustment for comparable
parking rates in the areas in the month selected by the Landlord for such
adjustment.
15.11 Early Occupation By Tenant
--------------------------
The Tenant shall have possession of the Leased Premises for the purposes
of fixturing on April 1, 1992. During any period prior to the commencement
of the Term (including the period from the date upon which the Leased
Premises are ready for the construction of Tenant Improvements until the
commencement of the Term) in which the Tenant is permitted to have
occupancy of the Leased Premises, whether exclusively or in common with
the Landlord, its contractors, subcontractors or employees, the Tenant
shall be bound by all the provisions of the Lease saving those requiring
payment of Fixed Rent or the Tenants Proportionate Share of Operating
Costs and Property Taxes.
27.
<PAGE>
SCHEDULE C
REGULATIONS
Pursuant to section 14.01 the Landlord hereby imposes the following regulations:
1. Deliveries of building materials, major pieces of equipment and furniture
and bulky goods shall only be made by prior arrangement with the Building
management and through the Delivery Facilities.
2. The Tenant shall only use the Building key system and shall obtain all keys
and cards providing access to the Building, the Parking Facility, if any
and the Premises from the Landlord. No additional locks shall be installed
on the doors to the Premises.
3. No bicycles or other vehicles shall be brought into the Buildings.
4. No inflammable oils or other dangerous materials shall be kept in the
Buildings.
5. The Common Areas shall not be obstructed.
6. The Tenant shall provide the Landlord with the-names of all persons
entitled to enter the Premises outside normal business hours. The Landlord
shall only be required to allow access to the Premises by such persons.
7. The Tenant shall not install any power or water consuming machinery and
equipment, except normal office equipment, without the approval of the
Landlord and, if required by the Landlord, shall connect such machinery and
equipment to separate meters.
8. If required by the Landlord, the Tenant shall arrange for pest controls.
9. The Tenant shall not remove or alter the Building standard window
coverings, or except with the approval of the Landlord, install any
additional window coverings.
10. The Tenant shall keep all window blinds down so as to prevent direct
sunlight from penetrating the Premises.
11. The Landlord may restrict canvassing or peddling in the Buildings.
12. The Tenant shall maintain with the Landlord current lists of the names and
license plate numbers of each employee using the Parking Facility if any
and shall cause its employees to affix to their automobiles whatever manner
of identification the Landlord may require.
C-1.
<PAGE>
13. The Tenant shall observe the directions of the Landlord as to parking
locations in the Parking Facility, if any according to automobile size.
14. The Tenant shall leave the Premises in a condition suitable for the
performance by the Landlord of its janitorial services.
C-2.
<PAGE>
SCHEDULE "D"
INDEMNITY AGREEMENT
This agreement made as of the 24th day of April, 1992.
BETWEEN:
INFONET/COMPUTER SCIENCES CANADA LTD.
(hereinafter called the "Indemnitor")
OF THE FIRST PART
- and -
ADASON PROPERTIES LIMITED
as agent for
THE CANADA LIFE ASSURANCE COMPANY
(hereinafter called the "Landlord")
OF THE SECOND PART
Whereas the Landlord has entered into a lease (the "Lease") dated as of the
______ day of March 1992, between it as Landlord and Osiware Inc. as tenant (the
"Tenant") and the Indemnitor has agreed to execute and deliver this agreement in
favour of the Landlord;
Now therefore for good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged by the Indemnitor), the Indemnitor hereby
agrees with the Landlord as follows:
(1) the Indemnitor shall indemnify and save the landlord harmless
from all damages and costs incurred by the Landlord if, during
the Term of the Lease and any renewal thereof, the Landlord does
not receive any amount payable by the Tenant under the case for
such period which, if the Lease were in full force and effect and
good standing, would be payable under the Lease;
(2) if the Tenant defaults in the payment of any amount payable under
the Lease or in the due performance of any other obligation of
the Tenant under the Lease the indemnitor shall forthwith upon
demand by the Landlord pay to the Landlord any amount so payable
and all damages that may arise upon the default by the Tenant in
the Payment thereof in the due performance of any such
obligation;
(3) the Indemnitor shall be jointly and severally bound with the
Tenant to the Landlord for the performance of the obligations of
the Tenant under the Lease, and its liability shall be that of a
direct and primary obligor and not merely that of a surety;
D-1.
<PAGE>
(4) if the Tenant defaults under the Lease the Landlord may proceed
against the Indemnitor is it if were the Tenant, without waiving
any of its rights against the Tenant and without any requirement
that the Landlord shall first have proceeded against the Tenant
or had recourse to or exhausted any of its remedies against the
Tenant;
(5) the obligations of the Indemnitor and the rights of the Landlord
hereunder shall not be affected or in any way Prejudiced or
impaired by any delay, neglect or forbearance by the Landlord in
enforcing performance by the Tenant of its obligations under the
Lease or by the granting by the Landlord to the Tenant of any
extension of time or by any waiver by the Landlord of any of the
Tenant's obligations or by any assignment or sublease or other
dealing by the Tenant with the Lease or Leased Premises whether
with or without the consent of the Landlord or by any want of
notice to the Indemnitor or by any dealing between the Landlord
and the Tenant with or without notice to the Indemnitor whereby
their respective obligations and rights of either the Landlord or
the Tenant are amended or by any other act or failure to act by
the Landlord which would release, discharge or affect the
obligations of the Indemnitor if it were a mere surety, and with
the intent that this indemnity shall not be released or affected
or the rights of the Landlord hereunder in any way impaired until
such time as all the obligations of the Tenant under the Lease
have been fully performed and satisfied;
(6) the obligations of the Indemnitor hereunder shall not be
released, discharged or affected by the bankruptcy or insolvency
of the Tenant of any disclaimer of the Lease by any trustee in
bankruptcy of the Tenant or by the Tenant ceasing to exist
(whether by operation at law, winding up, forfeiture,
cancellation or surrender of charter, or any other circumstance)
or by any event terminating the Lease including a re-entry
pursuant to the terms of the Lease; if a termination shall occur
under any such provisions the Landlord may require the indemnitor
to enter into a lease of the Leased Premises as a tenant upon the
same terms as the lease for the then unexpired residue of the
Term of the Lease including any renewal thereof;
(7) if the Lease is renewed or its Term extended, for any period
beyond the original termination date specified in the law, either
pursuant to any option granted under the Lease or otherwise at
any time, or if the Tenant holds over beyond the Term of the
Lease, or if the Law is modified in any way, the obligations
hereunder of the Indemnitor shall extend and apply with respect
to the, full performance and observance of all of the covenants,
terms, and conditions of the
D-2.
<PAGE>
Tease, as existing, extended, renewed or modified and of any such
amendment thereof;
(8) the obligations of the Indemnitor hereunder may be assigned by
the Landlord, will benefit and be enforceable by the successors
and assigns of the Landlord and shall bind the heirs, executors
and legal representative and the successors and assigns of the
Indemnitor; and
(9) this agreement shall be governed by the laws of the Province of
Ontario.
The Indemnitor acknowledges receipt of a copy of the Lease.
In witness whereof the Indemnitor has executed this agreement.
___________________________ By:_________________________________________
Witness
Seal
___________________________ By:_________________________________________
Witness
D-3.
<PAGE>
EXHIBIT 5.18
ASSIGNMENT AGREEMENT
--------------------
THIS ASSIGNMENT made the 29th day of July, 1997.
----------------------
A M O N G:
INFONET SOFTWARE SOLUTIONS INC.
a company incorporated under the laws of the Province of British Columbia
(hereinafter called the "Assignor")
OF THE FIRST PART;
-and-
ELECTRONIC ARTS (CANADA), INC.
a company incorporated under the laws of the Province of British Columbia
(hereinafter called the "Assignee")
OF THE SECOND PART;
-and-
547495 ONTARIO LIMITED
AS AGENT FOR THE LANDLORD
(hereinafter called the "Landlord")
OF THE THIRD PART;
WHEREAS by a Lease dated the 26th day of March 1992 (hereinafter called the
---- ----------
"Lease") made between THE CANADA LIFE ASSURANCE COMPANY as Landlord and OSIWARE
-------
INC., as the Tenant the Landlord demised and leased unto the Tenant premises
- ----
(hereinafter called the "Premises") composed of approximately seven thousand
three hundred (7,300) square feet on the second floor of the building
(hereinafter called the "Building") known as 4400 Dominion Street In the City of
Burnaby in the Province of British Columbia, and which is the structure erected
on the lands described in Schedule "A" to the Lease, together with access
thereto and being part of the lands and premises more particularly described in
the Lease together with certain rights of user and at the rent and subject to
the terms, covenants and conditions contained in the Lease for a term of ten
(10) years to be fully completed and ended on the 30th day of November, 2002;
AND WHEREAS the present Landlord of the Building has appointed 547495
Ontario Limited as its Agent
AND WHEREAS the Demised Premises were surveyed and determined to be
comprised of seven thousand three hundred and forty-seven square feet (7,347) of
Rentable Space effective as of December 1, 1992, and the Landlord and Tenant
acknowledge that the Lease Is hereby amended accordingly, and retroactively to
December 1, 1992, with respect to the Demised Premises, Items of Rent and all
other applicable clauses.
1.
<PAGE>
AND WHEREAS by Certificates of Amendment and Articles of Amendment copies
of which are attached hereto as a schedule, the Tenant's corporate name was
legally changed from Osiware Inc. to Infonet Software Solutions Inc.
AND WHEREAS the Assignee has requested the Ass a residue of the said term
of years and to assign the Lease to it effective 12:01 a.m., November, 1, 1997
---------------------------------------
(the "Effective Date").
- ----------------------
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
premises and of the mutual covenants and agreements herein contained, (the
receipt and sufficiency of which is hereby acknowledged) the parties hereto
agree as follows:
1. The Assignor hereby assigns to the Assignee the Assignor's interest in the
Premises together with the unexpired residue of the said term of years and
the Lease and all benefits to be derived therefrom subject to the payment
of the rent and the observance and performance of the covenants, provisos
and conditions on the part of the Tenant contained therein.
2. The Landlord confirms that the Lease is in good standing and in full force
and effect, the rent reserved thereby has been paid up to the Effective
---------
Date, which includes additional rent, and that the Lease has not been
----
modified, altered or amended and that there is no rent prepaid in advance
other than as specified in the Lease.
3. The Landlord consents to this assignment of the Lease to the Assignee
subject to the payment of rent and additional rent reserved by, and the
performance and observance of the covenants, provisions and conditions on
the part of the Tenant contained in the Lease.
4. The Assignor covenants with the Assignee that the Lease is a valid and
subsisting Lease, that the rent reserved thereby has been paid up to the
Effective Date, that the covenants, provisos and conditions thereof on the
--------------
part of the Tenant have been duly observed and performed up to the date
hereof, that the Assignor is entitled to assign the Lease, that subject to
the payment of the rent and the observance and performance of the
covenants, provisos and conditions of the Lease, the Assignee may enjoy the
Premises for the residue of the said term of years, without Interruption by
the Assignor or any person claiming through it and that the Assignor shall
at all times hereafter at the request and cost of the Assignee execute such
further assurances in respect of this Assignment as the Assignee may
reasonably require.
5. (i) The Assignee covenants with the Assignor (and the Landlord) that the
Assignee will throughout the residue of the said term of years, and all
additional rent and other monies reserved and made payable by the Lease at
the times and in the manner provided in the Lease and observe and perform
the covenants, provisos and conditions on the part of the Tenant contained
In the Lease and will Indemnify and save harmless the Assignor from all
actions, suits, costs, losses, damages and expenses in respect of
Assignee's failure to pay such Rent, additional rent and, other monies and
-------------------------------------------
to observe and perform any of such covenants, conditions and agreements
following the Effective Date of this Assignment.
--------------
2.
<PAGE>
(ii) The Assignee covenants with the Landlord that the Assignee will
throughout the residue of the said term of years, pay the rent and all
additional rent and other monies reserved and made payable by the Lease at
the times and in the manner provided in the Lease and observe and perform
the covenants, provisos and conditions on the part of the Tenant contained
In the Lease and will be liable to the Landlord for a breach of any of the
foregoing and any repudiation of the Lease, to the same extent as if the
Assignee were the original Tenant under the Lease. The Assignee further
-----------------------
covenants that notwithstanding any provision to the contrary contained in
-------------------------------------------------------------------------
the Lease, it will, before the expiration of the Term, if requested to do
-------------------------------------------------------------------------
so by the Landlord, remove some or all Leasehold Improvements and restore
-------------------------------------------------------------------------
the Premises to their original condition, the cost of which shall be borne
--------------------------------------------------------------------------
exclusively by the Assignee.
---------------------------
6. The Assignor shall at any time hereafter upon the request and the cost of
the Assignee execute such further assurances in respect to this Agreement
as the Assignee and/or the Landlord shall require.
7. Notwithstanding any other provision of this Agreement, the Assignor shall
remain jointly and severally liable with the Assignee for the fulfillment
of all of the obligations and responsibilities of the Tenant contained in
the Lease.
8. The Assignor has delivered to the Landlord a cheque in the amount of Five
-------- ----
Hundred and Thirty Five Dollars ($535.00) (inclusive of GST) which amount
-------------------------------
shall cover the Landlord's legal expenses in drafting, reviewing, and
approving this Agreement, a Certificate of Insurance as required in the
Lease.
9. Section 15.4 of the Lease is hereby amended by:
(a) changing the Landlord's address for the purpose of giving notice to
the Landlord to:
547495 Ontario Limited
c/o Beutel Goodman Real Estate Group
Suite 900-666 Burrard Street
Vancouver, BC V6C 2X8
(b) adding to the Tenant's address for the purpose of giving notice to the
Tenant to:
Electronic Arts (Canada), Inc.
Suite 400 - 4400 Dominion Street
Burnaby, BC V5G 4G3
3.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the dates set out below.
INFONET SOFTWARE SOLUTIONS INC.
Per:________________________________________
Name:_______________________________________
Title:______________________________________
(We have the authority to bind
the Corporation)
Dated this 30/th/ day of July, 1997.
ELECTRONIC ARTS (CANADA), INC.
(Assignee)
Per:________________________________________
Name:_______________________________________
Title:______________________________________
(We have the authority to bind
the Corporation)
Dated this 6/th/ day of August, 1997
547495 ONTARIO LIMITED
as Agent for the Landlord
(Landlord)
Per:________________________________________
Name:_______________________________________
Title:______________________________________
(We have the authority to bind
the Corporation)
Dated this 19/th/ day of August, 1997.
4.
<PAGE>
ADDENDUM
10. Section 10.04 of the Lease is hereby amended by:
addition of the following sentence at the end of the paragraph:
"Not withstanding the foregoing, this section 10.04 shall not apply if such
change occurs as the result in trading of shares listed upon a recognized
stock exchange."
L _________ T _________
(initials) (initials)
5.
<PAGE>
EXHIBIT 5.19
PCSUPPORT.COM
September 1, 1999
Mr. Irwin Olian
415 Carroll Canal
Venice, CA 90291
Re: Consulting Services
-------------------
Dear Irwin:
This will summarize the principal terms of our agreement with respect to
your consulting services to be provided to PCSUPPORT.COM (the "Company").
1. Commencing September 1, 1999 and continuing for a term of one year to
and including August 31, 2000, you shall be engaged as a business consultant for
the Company.
2. The scope of your services shall involve all matters related to the
development of the Company's business, with particular emphasis on corporate
finance and the capital markets, as well as publicity, legal and accounting
matters. The precise nature of your services shall be determined from time to
time by management of the Company, within the purview of your expertise. Your
services shall be provided to the Company as an independent contractor, not an
employee of the Company.
3. As full consideration for your services hereunder, you shall be granted
options to acquire 55,000 shares of the Company's Common Stock. The exercise
price for 35,000 of such shares shall be $1.00 per share and the exercise price
for 20,000 of such shares shall be $2.00 per share. The term of the options
shall be three years from the date hereof. Such options shall vest monthly for
the twelve-month period of this consulting agreement, commencing with the lower
price options. In the event your services shall be terminated hereunder, then
all unvested options shall be immediately canceled as of the effective date of
such termination. In the event the Company causes a stock option plan to be
registered under the Securities Act of 1933, as amended, then the Company agrees
to utilize its best efforts to include your options under such plan.
4. This agreement may be terminated by either party for any reason without
cause upon 30 days' prior written notice.
<PAGE>
5. You shall bear all customary office and secretarial expenses required
in connection with your services hereunder, including without limitation
telephone, fax, photocopying, postage, computer and supplies, as well as auto
mileage. In the event the Company requests you to travel outside Southern
California to perform services for the Company, then the Company agrees to
reimburse you upon substantiation for all reasonable and necessary travel
expenses incurred in connection therewith, subject to parameters to be
preapproved by the Company for each such trip. In addition, if you undertake any
other business on such trip, then expenses shall be fairly apportioned.
6. Upon execution of this letter by the parties, it shall be deemed to be
a legally binding agreement pending execution of any more formal documentation.
Very truly yours,
PCSUPPORT.COM
By: /s/ Mike McLean
----------------------
Accepted and Agreed:
/s/ Irwin Olian
---------------------------
Irwin Olian
<PAGE>
EXHIBIT 5.20
CONSULTING CONTRACT
AMONG
M. A. LEVY & ASSOC. ("MAL") AND
PCSUPPORT.COM, INC. ("PCS")
Whereas:
PCS wishes to engage MAL in a consulting assignment for the period August 1,
1999 to January 31, 1999.
Therefore:
This agreement establishes the components of the Consulting Assignment between
PCS and MAL.
1. Terms of Reference: To advance and enhance the understanding of the
business plan of PCS within the financial
community in general and specifically to the
contacts and acquaintances of MAL.
2. Start Date: 01 August 1999.
3. Completion Date: 31 January 2000.
4. Compensation schedule: $2500 per month
5. Payment Schedule: Last day of each month.
6. Base Options. PCS will award MAL 25,000 options priced at $1.00.
6.1 Vesting: All options will vest at the rate of 4167 options
on the last day of each month over the 6 month
term of the contract. If MAL's consulting contract
ceases, then all unvested Base Options will be
immediately cancelled.
6.2 Term: The term of the Base Options will be 3 years.
<PAGE>
7. Termination: This consulting contract can be terminated at any
time after November 1, 1999 by either party with
30 days notice.
AGREED:
For PCS: /s/ Mike McLean
--------------------------------
Mike McLean, President
For MAL /s/ Maurice Levy
------------------------------
Maurice Levy
Date: 8/6/99
------------------------------
<PAGE>
EXHIBIT 5.21
CONSULTING AGREEMENT
This Agreement made as of the 1st day of June, 1998.
BETWEEN:
RECONNAISSANCE TECHNOLOGIES INC., a body corporate incorporated under
the laws of the Province of British Columbia, and having its head
office at Vancouver, British Columbia
(herein called the "Company")
OF THIS FIRST PART
AND:
RICK MARK & ASSOCIATES, an unincorporated entity having an office at
5660 Honeysuckle Place, North Vancouver, British Columbia, V7R 4S4
(herein called the "Consultant")
OF THE SECOND PART
W H E R E A S:
A. The terms and conditions contained herein, the Company desires to
retain the services of Consultant to advise the Company with respect to certain
financing matters; and
B. Consultant acknowledges and affirms that it is sophisticated in
financing matters, has the requisite expertise for the advice being rendered by
it to the Company pursuant hereto and is deriving substantial benefit from its
association with the Company for the limited purposes discussed herein.
NOW THEREFORE, in consideration of the foregoing, and the mutual covenants,
terms and conditions contained herein, the Company and Consultant agree as
follows:
1 Term
----
1.1 Unless otherwise terminated pursuant to the terms hereof, the term of
this Agreement shall commence on June 1, 1998 and shall expire on the earlier of
November 30, 1999 or the completion of an Initial Public Offering (as
hereinafter defined), of the Company's common shares.
2 Services
--------
2.1 During the term of this Agreement, the Consultant agrees to consult
with the Board of Directors and officers of the Company and its subsidiaries
regarding certain financing and strategic matters including, without limitation,
acquisitions, mergers, and corporate financing transactions (the "Consulting
Services"). Consultant shall render the Consulting Services at such times and
at such places, as may be reasonably required.
2.2 The parties hereto acknowledge that the Consulting Services are being
provided during the term of this Agreement for the express purpose of assisting
in financing the Company's growth, in order to qualify the Company for and
commence trading of the Company's shares on a recognized stock exchange
<PAGE>
-2-
in Canada, or upon the NASDAQ Small Cap Market in the United States. In
connection with such stated goals, the Consulting Services shall include but
shall not be limited to:
(a) introducing the Company to certain investors, with a view to
completing a private placement of the Company's shares (the "Private
Placement") for minimum aggregate gross proceeds of (Cdn)$300,000,
(b) coordinating and introducing the Company to appropriate parties in the
Canada and elsewhere in order to facilitate the completion by the
Company of an underwriting and contemporaneous listing (the "Initial
Public Offering") on a recognized stock exchange in Canada or on the
NASDAQ Small Cap Market including appropriate introductions and
negotiations with Canadian or U.S. underwriters; and
(c) coordinating and introducing the Company to potential investors in
connection with any other financing transactions undertaken.
3 Compensation
------------
3.1 The Company shall pay the Consultant a fee of $5,000, plus G.S.T., per
month, commencing on June 1, 1998 and continuing until the termination of this
Agreement.
3.2 The Company shall reimburse the Consultant for all reasonable and
customary out-of-pocket expenses incurred in performing its duties hereunder
upon submission of proper documentation.
4 Financing
---------
4.1 The Company shall pay a cash bonus equal to 4% of all money raised by
the Company prior to the Initial Public Offering and a cash bonus equal to 2% of
all money raised through the Initial Public Offering to the Consultant, on
closing of each financing. In the event that this Agreement is terminated by the
Company, the Consultant will continue to be entitled to receive the
aforementioned cash bonuses for any money raised within thirty (30) days after
termination of this contract through contacts created by the Consultant.
4.2 The Company agrees to issue the Consultant such number of common
shares of the Company as is equal to 2% of the number of common shares of the
Company issued and outstanding on completion of the Private Placement. In
connection therewith, the Company hereby grants to the Consultant, the option
(the "Private Placement Option") to acquire, for no additional consideration on
the day of the completion of the Private Placement, such number of common shares
of the Company as is equal to 2% of the issued and outstanding common shares of
the Company on completion of the Private Placement for no additional
consideration. In the event that this Agreement is terminated by the Company,
the Consultant will still be entitled to exercise the Private Placement Option
if the Private Placement is closed within thirty (30) days of this Agreement
being terminated.
4.3 The Company agrees to issue to the Consultant such number of common
shares of the Company so that the Consultant will own, as of the completion of
the Initial Public Offering, a total of 4% of the issued and outstanding common
shares of the Company. In connection therewith, the Company hereby grants to the
Consultant the option (the "Initial Public Offering Option") to acquire, for no
additional consideration, on the day of the completion of the Initial Public
Offering, such number of common shares of the Company so that the Consultant
will own 4% of the issued and outstanding common shares on completion of the
Initial Public Offering. In the event that this Agreement is terminated by the
Company
<PAGE>
-3-
the Consultant will still be entitled to exercise the Initial Public Offering
Option if the Initial Public Offering is completed within sixty (60) days of
this Agreement being terminated, unless the delay in the Initial Public Offering
is caused by regulatory or filing delays.
4.4 The Company hereby grants an option (the "Consultant's Warrants") to
the Consultant to acquire common shares of the Company equal to an aggregate of
2% of the number of common shares of the Company issued and outstanding on
completion of the Initial Public Offering, at the price upon which the common
shares are offered to the public in the Initial Public Offering, for a period of
two years following the Initial Public Offering. Such price shall be subject to
adjustment where required by the applicable regulatory authorities. The
Consultant's Warrants are not exercisable until after the completion of the
Initial Public Offering. In the event that this Agreement is terminated by the
Company the Consultant will still be entitled to receive and exercise the
Consultant's Warrants if the Initial Public Offering is completed within sixty
(60) days of this Agreement being terminated, unless the delay in the Initial
Public Offering is caused by regulatory or filing delays.
5 Termination
-----------
5.1 This Agreement may be terminated by Consultant by notice in writing to
the Company at any time. In such event, Consultant shall no longer be entitled
to any compensation under this Agreement, and all of the Company's obligations
with respect to the issuance of shares pursuant to section 4 hereof shall
immediately cease. Any options outstanding held by the Consultant shall
immediately terminate and no longer be exercisable.
5.2 This Agreement may be terminated by the Company by notice in writing
to the Consultant at any time during the term hereof and in any of the following
events:
(a) for cause, in which case the Consultant shall be entitled to seven (7)
days notice or at the sole discretion of the Company to be paid the
equivalent amount termination pay in lieu of such notice; or
(b) if the Consultant is unable, as a result of a sickness, mental or
physical disability of its personnel to perform the duties required
hereunder for a period exceeding more than six (6) consecutive months,
and in the reasonable opinion of the Board of Directors, will be
unlikely to be capable of resuming such duties within the foreseeable
future, in which event the Consultant will not be entitled to any
notice.
For the purpose hereof "Cause" will include fraud, misappropriation, theft or
embezzlement of any of the Company's property or any of its subsidiaries'
property, any breach of the provisions this Agreement by the Consultant, and
competence including gross or chronic misconduct or gross or chronic neglect of
duties by Consultant or public of conduct of the Consultant which causes
substantial detriment to the Company's reputation.
5.3 This Agreement may be terminated at the option of the Consultant
without notice at any time. In the event that the Consultant terminates this
Agreement prior to the expiration of the term hereof, the Consultant shall not
be entitled to any bonuses pursuant to section 4 hereof, and shall only be
entitled compensation accrued pursuant to section 3 up to the date of the
termination of the Consultant.
5.4 This Agreement may be terminated at the option of the Company upon
sixty (60) days written notice or, in lieu of such written notice, upon notice
given together with the payment of $10,000.00 to the Consultant as termination
payment and its consideration for the full release and discharge by the
<PAGE>
-4-
Consultant of any rights, claims, recourse or rights of action which the
Consultant has or may have against the Company or any of its subsidiaries in
connection, or in respect of this Agreement.
6 Confidential Information
------------------------
6.1 The Consultant acknowledges that as a result of the provision of the
Consulting Services, the Consultant and its personnel will acquire information
about certain matters which are confidential to the Company which information is
the exclusive property of the Company, including but not limited to;
(a) information concerning product and service design and application
including but not limited to, technical drawings, designs and
concepts, software programs and source code, routines and formulas;
(b) information concerning pricing and sales policies, techniques and
concepts, including costing information, in respect of products and
services provided or to be provided by the Company;
(c) names and addresses, buying habits and preferences of customers of the
Company; and
(d) names and addresses of shareholders and investors in the Company.
6.2 The Consultant acknowledges that the information referred to in this
section could be used to the detriment of the Company. Accordingly, the
Consultant undertakes on behalf of itself and its personnel, to treat
confidentially all information and agrees not to disclose it to any third party
either during the term of this Agreement or following the termination thereof,
except as may be necessary to perform its duties hereunder, except with the
written permission of the Company.
7 Company Obligations
-------------------
7.1 The Company agrees to notify the Consultant promptly of all material
information concerning the Company, its business and prospects and to furnish
promptly to the Consultant copies of all reports and other filings made with
securities regulatory authorities, all communications to shareholders and all
audited and unaudited financial statements.
7.2 The Company agrees to provide the Consultant with adequate support
materials and equipment to enable it to conduct ongoing investor relations
activities.
7.3 The Company recognizes that the Consultant may have, either now or in
the future, obligations imposed upon it by federal securities laws to verify
independently certain information contained in releases about which the
Consultant will be entitled to make responsible inquires of the Company's
officers, employees, legal counsel and auditors with respect to such
information.
8 Independent Contractor
----------------------
8.1 The Company and Consultant hereby acknowledge and agree that
Consultant is performing services hereunder as an independent contractor for the
Company and that nothing in this Agreement shall be construed to create a
relationship of employer and employee, principal and agent, partners or joint
ventures between the Company and Consultant. Consultant shall not possess and is
not hereby granted any right or authority to assume or create any obligation or
to enter into any agreement, whether express or implied, on behalf of or in the
name of the Company, or to bind the Company in any manner whatsoever.
<PAGE>
-5-
The Consultant agrees to indemnify, defend and hold the Company and its
subsidiaries harmless from and against any loss, liability, damage or claim
arising out of any such obligation or agreement or act of Consultant or its
personnel which binds the Company that is not approved in advance in writing by
the President or the Company's Board of Directors. To the extent permitted by
law, and its constating documents, the Company agrees to indemnify, defend and
hold Consultant harmless from and against any loss, liability, damage or claim
(including reasonable attorneys fees) arising out of his performance of specific
Consulting Services requested by the Company in writing, provided that, the
Company shall have no obligation to indemnify Consultant for any loss,
liability, damage or claim arising from the fraud, recklessness or gross
negligence on the part of Consultant.
8.2 The Company shall not be required to make any deductions from any
payment made to Consultant hereunder, whether for state, federal or foreign
income tax purposes, including but not limited to social security, income tax
withholding, unemployment or disability insurance and other payroll tax
requirement. Consultant will not be entitled to receive any vacation or illness
payments. Consultant agrees that it shall be responsible for any and all other
taxes and other payments due on any payment received by Consultant from the
Company pursuant to the terms of this Agreement. Consultant will indemnify the
Company and hold it harmless from and against all claims, damages, losses and
expenses, including reasonable fees and expenses of attorneys and other
professionals, relating to any obligation imposed by law or regulation on the
Company for income, franchise or employment taxes or payments on any
compensation to Consultant, excluding such payments which are imposed on the
Company by law, as the employer's contribution towards such payments.
8.3 The Consultant acknowledges that as an independent contractor the
Company will not be responsible for and will not acquire, for or on behalf of
the Consultant, or others for whom the Consultant is responsible, insurance of
any kind and, as such, the Consultant agrees, to the extent that it deems
necessary, to maintain adequate insurance to protect Consultant (and employees
of Consultant) from the following: (a) claims under worker's compensation and
state disability acts; (b) claims for damages because of bodily injury,
sickness, disease or death which arise out of any negligent act or omission of
Consultant; and (c) claims for damages because of injury to or destruction of
tangible or intangible property, including loss of use resulting therefrom,
which arise out of any negligent act or omission of Consultant.
9 General
-------
9.1 Consultant may not assign Consultant's rights or delegate Consultant's
duties under this Agreement either in whole or in part without the prior written
consent of the Company. Any attempted assignment or delegation without such
consent will be void.
9.2 Because the Consulting Services are personal and unique and because
Consultant will have access to Confidential Information of the Company, the
Company will have the right to enforce this Agreement and any of its provisions
by injunction, specific performance or other equitable relief without prejudice
to any other rights and remedies that Company may have for a breach of this
Agreement.
9.3 This Agreement will be governed by and construed in accordance with
the substantive laws of British Columbia, Canada. If any provision of this
Agreement is for any reason found to be unenforceable, the remainder of this
Agreement will continue in full force and effect.
9.4 Any notices under this Agreement will be sent by facsimile, or by
certified or registered mail, return receipt requested, to the address specified
by the parties in writing. Such notice will be effective upon its mailing as
specified.
<PAGE>
-6-
9.5 This Agreement constitutes the complete and exclusive understanding
and agreement of the parties and supersedes all prior understandings and
agreements, whether written or oral, with respect to the subject matter hereof.
Any waiver, modification or amendment of any provision of this Agreement will be
effective only if in writing and signed by the parties hereto.
9.6 Consultant acknowledges that it has been advised to consult with its
own attorneys and tax advisers in connection with this Agreement and the
obligation hereunder and further that it is solely responsible for compliance by
the Consultant with applicable laws including, without limitation, applicable
tax legislation.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed the day
and year first above written.
RECONNAISSANCE TECHNOLOGIES INC.
Per: ___________________________
RICK MARK & ASSOCIATES
Per: ___________________________
<PAGE>
EXHIBIT 5.22
[LETTERHEAD OF RECONNAISSANCE TECHNOLOGIES INC. APPEARS HERE]
January 25, 1999
Rick Mark & Associates
5660 Honey Suckle Place
North Vancouver, British Columbia
V7R 4S4
Dear Sirs/Mesdames:
Re: Amendment to Consulting Agreement dated June 1, 1998 (the "Consulting
- --------------------------------------------------------------------------
Agreement")
-----------
This letter amends the Consulting Agreement between Rick Mark & Associates (the
"Consultant") and Reconnaissance Technologies Inc. (the "Company") dated June 1,
1998. This letter supercedes all written and verbal commitments for services
between the Consultant (including Rick Mark and Don Foran) and the Company. The
Consulting Agreement is amended as follows:
1. Section 3 - "Compensation" is deleted in its entirety and replaced with the
following:
"3 Compensation
------------
3.1 The Company shall pay the Consultant a fee of $35,000 plus G.S.T.,
together with reasonable and customary out-of-pocket expenses, for the
period commencing on June 1, 1998 and expiring on December 31, 1998. Such
compensation shall be paid on the closing of the financing (the "Initial
Financing") disclosed in the Company's Offering Memorandum dated September
30, 1998, as amended.
3.2 For the period commencing January 1, 1999 and expiring on the
termination of this Agreement, the Company shall pay the Consultant a fee
of $3,500 per month, plus G.S.T., together with reasonable and customary
out-of-pocket expenses. Of this $3,500, $2,500 will be paid in cash at the
end of each month, and the remaining $1,000 will be deferred until the
closing of a Major Financing. A "Major Financing" is considered to be a
financing (other than the Initial Financing) whether conducted privately or
publically, whether brokered or non-brokered, which results in aggregate
gross proceeds to the Company of more than $400,000.
3.3 The Company shall reimburse the Consultant for all reasonable and
customary out-of-pocket expenses incurred by the Consultant in performing
its duties in accordance with the terms of this Agreement on the submission
by the Consultant to the Company of documentation evidencing such
expenses."
<PAGE>
-2-
2. Section 4 - "Financing" is deleted in its entirety and replaced with the
following:
"4 Financing
---------
4.1 The Company shall pay a cash bonus equal to 2% of the Net Proceeds (as
hereinafter defined) of the Initial Financing and any Major Financing upon
the closing of each such financing.
4.2 The Company agrees to issue to the Consultant 150,000 common shares of
the Company upon completion of the Initial Financing. In connection
therewith, the Company hereby grants the Consultant option (the "Initial
Financing Option") to acquire, for no additional consideration on the day
of the completion of the Initial Financing, 150,000 common shares of the
Company.
4.3 Upon completion of the first Major Financing completed after the
Initial Financing, the Company agrees that it will issue to the Consultant
30,000 common shares of the Company and warrants (the "Warrants") to
acquire such number of common shares of the Company equal in value to 4% of
the net proceeds of such Major Financing. In connection therewith, the
Company hereby grants to the Consultant the option (the "Major Financing
Option") to acquire, for no additional consideration, on the day of the
next completion of each Major Financing, 30,000 common shares of the
Company and Warrants to acquire common shares of the Company equal in value
to 4% of the net proceeds of such Major Financing. Each Warrant will
entitle the Consultant to acquire one common share of the Company at a
price at which common shares are sold by the Company in such Major
Financing. The Warrants shall be exercisable for a period expiring two
years after an Initial Public Offering.
4.4 In the event that the applicable regulatory authorities require the
Company to cancel, change or amend the terms of the Warrants or any other
aspect of this Agreement, the Company will use its best efforts to
compensate the Consultant in a manner which is acceptable to the Consultant
and to the Company.
4.5 For the purposes of this Agreement, "Net Proceeds" of a particular
financing means the aggregate gross proceeds of such financing less the
cash portion of any finder's fees or commissions payable by the Company on
such financing."
3. Section 5 is deleted in its entirety and replaced with the following:
"5 Termination
-----------
5.1 This Agreement may be terminated by the Company by notice in writing
to the Consultant at any time during the term hereof for cause, in which
case the Consultant shall be entitled to seven (7) days notice or, at the
sole discretion of the Company, to be paid the equivalent of amount of
termination pay in lieu of such notice. For the purposes hereof, "Cause"
shall include fraud, misappropriation, debt or embezzlement of any of the
Company's property or any of its subsidiary's property, a breach of the
provisions of this Agreement by the Consultant, lack of competence by the
Consultant including gross or chronic misconduct or gross or chronic
neglect of duties by the Consultant or public conduct of the Consultant
which causes substantial detriment to the Company's reputation.
5.2 This Agreement may be terminated by the Consultant by notice in
writing to the Company at any time prior to March 1, 1999. In the event
that the Consultant terminates this Agreement prior
<PAGE>
-3-
to March 1, 1999, the Consultant will be owed no further compensation with
the exception of any part of the monthly retainer that has been billed to
the date of the notice advising the Company of the Consultant's termination
of this Agreement.
5.3 Except as provided for in subsections 5.1 and 5.2, this Agreement may
be terminated at the option of either party upon ten (10) days written
notice to the other party.
5.4 If this Agreement is terminated in accordance with the provisions of
subsection 5.3 before a competitive offer to finance the Company is
presented to the Company by the Consultant, the Consultant shall be
entitled to receive 30,000 common shares of the Company, plus the portion
of the monthly retainer that has been billed and not yet paid. In
connection therewith the Company hereby grants to the Consultant the option
(the "Pre-Offer Termination Option") to acquire, for no additional
consideration, 30,000 common shares of the Company.
5.5 If this Agreement is terminated in accordance with the provisions of
subsection 5.3 after a competitive offer to finance the Company is
presented to the Company by the Consultant (except for an offer to finance
the Company by Dan Matthews and his associates), but before a Major
Financing has been completed, the Company will pay to the Consultant a cash
bonus equal to 2% of the projected Net Proceeds of the best of the
competitive offers (if more than one), and will issue to the Consultant
30,000 common shares of the Company and Warrants to acquire common shares
of the Company equal in value to 2% of the projected net proceeds of the
best of the competitive offers (if more than one). In connection therewith,
the Company hereby grants to the Consultant the option (the "Post-Offer
Termination Option") to acquire, for no additional consideration, 30,000
common shares of the Company and Warrants to acquire common shares of the
Company equal in value to 2% of the projected Net Proceeds of the best
competitive offer to finance the Company.
5.6 If the Company terminates this Agreement pursuant to subsection 5.3
then, in addition to the compensation to which the Consultant will receive
under subsection 5.4 or 5.5, as the case may be, the Company will pay to
the Consultant a $7,000 severance fee."
4. Except as herein amended, all of the terms and conditions of the Consulting
Agreement shall remain in full force and effect.
If you are in agreement with the amendments noted above, please execute this
amendment by signing in the space provided below. Upon execution by you, this
letter will constitute a binding amendment to the Consulting Agreement.
RECONNAISSANCE TECHNOLOGIES INC. The Amended terms of the Consulting
Agreement are accepted and agreed to
Per: this _______ day of _________________,
1999.
Steven W. Macbeth RICK MARK & ASSOCIATES
Chief Executive Officer
Per: ______________________________
<PAGE>
EXHIBIT 5.23
MUTUAL RELEASE
THIS MUTUAL RELEASE made the 19/th/ day of May, 1999, between Reconnaissance
Technologies Inc. ("Reconnaissance"), 1500 Hornby Street, Suite C-1, Vancouver,
British Columbia, and Rick Mark & Associates ("Mark") of 5660 Honeysuckle Place,
North Vancouver, British Columbia (collectively the "Releasors").
WITNESS that in consideration of the payment of $1.00 by Reconnaissance to Mark
and in consideration of the payment of $1.00 by Mark to Reconnaissance, each of
the Releasors, for themselves and their respective directors, officers,
shareholders, partners, successors, assigns, servants, agents, attorneys, heirs
and executors and do hereby release the other, and the others respective
directors, officers, shareholders, partners, servants, successors, assigns
agents, attorneys, heirs and executors, from any and all obligations, services
owed, requirements to issue shares or other securities, payments of money,
debts, contracts, bonds, actions, causes of action, claims, damages and demands
of every nature and kind whatsoever and wheresoever, which may arise out of or
pursuant to the terms of the consulting agreement entered into between
Reconnaissance and Mark dated June 1, 1998, as amended January 25, 1999 (the
"Consulting Agreement"), other than as set out below.
Nothing in this Release shall release Reconnaissance from the obligation to make
the payments and issue the common shares set out in subsections 5.4 and 5.6 of
the Consulting Agreement, and nothing in this Release shall release Mark from
its obligations under Section 6 - "Confidential Information" of the Consulting
Agreement.
IN WITNESS WHEREOF the parties have set their hands and seals.
The Corporate Seal of Reconnaissance }
Technologies Inc. was hereunto affixed }
in the presence of: }
} C/S
- -------------------------------------- }
}
- -------------------------------------- }
RICK MARK & ASSOCIATES
Per: __________________________________
Don Foran - Authorized Signatory
<PAGE>
EXHIBIT 5.24
Reconnaissance Technologies Inc.
1500 Hornby Street, Suite C-1
Vancouver, British Columbia
V6Z 2R1
Telephone: (604) 257-3000 / Fax: (604) 602-9243
October 14, 1999
Rick Mark & Associates
250 -700 West Pender Street
Vancouver, British Columbia
V6C 1G8
Attention: Don Foran
Re: Consulting Agreement dated June 1, 1998, as amended January 25, 1999 (the
- ------------------------------------------------------------------------------
"Agreement")
------------
Please accept this letter as written notice of the election of Reconnaissance
Technologies Inc. (the "Company") to terminate the Agreement pursuant to section
5.3 thereof. In accordance with section 5.3, the Agreement will terminate 10
days from the date of this letter.
In accordance with section 5.4 and 5.6 of the Agreement, we confirm that within
10 business days you will receive 30,000 common shares of the Company pursuant
to the Pre-Offer Termination Option. As per your request, such shares will be
issued to the principals of Rick Mark & Associates in the amounts specified by
you. In addition, the Company will pay to you the portion of your monthly
retainer that has been billed and not yet paid, and a full one month's retainer
for the month of May, 1999. The total of such amounts, including GST, is
$7755.00.
In connection with the termination of the Agreement, we enclose a release
executed by the Company. The document, once executed by you and delivered to the
Company, releases both Rick Mark & Associates and the Company from any claims
which may arise under the Agreement. Please execute the release and return a
copy to our offices.
Reconnaissance Technologies Inc., and me personally, wish to thank you for your
service to the Company over the past 12 months. Your efforts in raising
financing were instrumental in the Company's success to date.
Yours very truly,
Reconnaissance Technologies Inc.
Per:
/s/ Michael McLean
Michael McLean
enclosure
