<PAGE>
As filed with the Securities and Exchange Commission on May 1, 2000.
Registration No. 333-90117
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
Pre-Effective Amendment No. 2 to
FORM SB-2
REGISTRATION STATEMENT
UNDER
SECURITIES ACT OF 1933
------------------------------
iGENISYS, INC,
------------------------------
(Name of small business issuer in its Charter)
Colorado 8742 84-1485196
- --------------------- ------------- -------------------
(State or other juris- (Primary Standard Industrial (IRS Employer Iden-
diction of incorpora- Classification Code Number) tification Number)
tion or organization)
654 North Belt East, Suite 310
Houston, Texas 77060
(281) 820-0200
(281) 447-8291 (fax)
------------------------------
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Carylyn K. Bell
Registered Agent
3200 Cherry Creek Drive South, Suite 430
Denver, Colorado 80209
(303) 282-4800
(303) 282-5800 (fax)
------------------------------
(Name, address, including zip code, and telephone number
of agent for service of process)
Copies to:
------------------------------
Clifford L. Neuman, Esq.
Neuman & Drennen, LLC
1507 Pine Street
Boulder, Colorado 80302
(303) 449-2100
(303) 449-1045 (fax)
------------------------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of the Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ x ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
==========================================================================
<PAGE>
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Proposed Proposed
Each Class of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price per Offering Registration
Registered Registered Share Price (1) Fee
- ------------- ---------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Common Stock,
$.001 par value
to be sold by
the Company 1,500,000 $1.50 $ 2,250,000 $594.00
Common Stock,
$.001 par value
to be sold by
the Selling
Shareholders 2,955,291 $1.50 $ 4,432,937 $1,170.30
Total 4,455,291 $1.50 $ 6,682,937 $1,764.30
</TABLE>
- --------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
EXPLANATORY NOTE
This Registration Statement contains two forms of Prospectuses; one to be
used in connection with the offering of up to 1,500,000 shares of the
Company's common stock, $.001 par value, and one to be used in connection with
the sale of common stock by certain selling shareholders. Both prospectus
will be identical in all respects except for the alternate pages for the
Selling Shareholders Prospectus included herein and labeled "Alternate Page
for Selling Shareholders Prospectus."
<PAGE>
<PAGE>
iGENISYS, INC.
Cross-Reference Index
Item No. and Heading Location
In Form SB-2 in Prospectus
Registration Statement
- ---------------------- -------------------
1. Forepart of the Registration Forepart of Registration Statement
Statement and Outside Front Statement and Outside Front Cover
Cover Page of Prospectus Page of Prospectus
2. Inside Front and Outside Back Inside Front and Outside Back Cover
Cover Pages of Prospectus Pages of Prospectus
3. Summary and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds; Risk Factors
5. Determination of Offering Price Front Cover Page
6. Dilution Dilution; Risk Factors
7. Selling Securityholders Selling Shareholders and Plan of
Distribution
8. Plan of Distribution Terms of Offering
9. Legal Proceedings Legal Proceedings
10. Directors, Executive Officers, Management
Promoters and Controlling Persons
11. Security Ownership of Certain Security Ownership of
Beneficial Owners and Management Management and Principal
Stockholders
12. Description of Securities Description of Securities
13. Interest of Named Experts and Legal Matters; Experts
Counsel
14. Disclosure of SEC Position on Management - Indemnification and
Indemnification for Securities Act Limitation on Liability of
Directors
15. Organization Within Last Five The Company; Business - Overview
Years
16. Description of Business Prospectus Summary; Risk Factors;
Business
17. Management's Discussion and Management's Discussion and
Analysis or Plan of Operation Analysis of Financial Condition and
Results of Operations; Financial
Statements; Business
18. Description of Property Business
19. Certain Relationships and Related Certain Transactions
Transactions
20. Market for Common Equity and Certain Market Information
Related Stockholder Matters
21. Executive Compensation Management - Executive Compensation
22. Financial Statements Financial Statements
23. Changes in and Disagreements with *
Accountants on Accounting and
Financial Disclosure
- -----------------
* Omitted from Prospectus because Item is inapplicable or answer is in the
negative
<PAGE>
<PAGE>
The information in this Prospectus is not
complete and may be changed. We may not sell
these securities until the Registration
Statement filed with the Securities and Exchange
Commission is effective. This Prospectus is not
an offer to sell the securities and it is not
soliciting an offer to buy these securities in
any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED _____________, 2000
PROSPECTUS
iGENISYS, INC.
1,500,000 Shares of Common Stock
iGeniSys, Inc. is offering up to 1,500,000 shares of its common stock. The
offering will begin on the date of this Prospectus and will end 90 days from
the date of this Prospectus, unless all of the shares are sold sooner. There
is no minimum investment requirement and, as a result, we cannot predict how
many shares will be sold. We have made no arrangement to place funds received
into a trust, escrow or other similar account. The public offering price per
share will be $1.50.
Before this offering, there has been no public market for our common stock.
At the same time that this offering will begin, an additional 2,955,291 shares
of common stock will be offered for sale by certain selling shareholders.
Investing in our common stock involves a high
degree of risk. You should read the "Risk
Factors" beginning on Page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is __________, 2000.
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
About Our Company
Please note that throughout this Prospectus the words "we", "our" or "us"
refers to iGeniSys, Inc., the parent company, and its wholly-owned subsidiary
GeniSys Information Systems, Inc., and not to any of the selling shareholders.
We will refer to the parent corporation separately as iGeniSys and the
subsidiary as GeniSys.
We are a business-to-business software development, integration and
consulting company specializing in providing business solutions for medium and
large corporations, and government agencies that manage, execute or finance
capital projects. While historically we have relied primarily on consulting
revenues, we have evolved into creating software that complements our services
and allows us to offer a more complete solution to our clients. Some of our
software products are complete and offered commercially, while others are in
development and in beta installations. These products are modular in
construction with individual modules performing different functions, focus on
timely communication of information using internet-based reporting about the
status of a particular project or program. Our software with three
dimensional graphic presentations of actual plans tied to business data
combined with existing client systems is designed to allow managers to review,
consolidate, filter and analyze their data on a near real-time basis over the
Internet to permit more effective decision making.
Our software development program is ongoing. Many of the ideas that
become our software products come from our field consultants who are working
with large companies and their enterprise systems which provide us with
feedback on where our products need to focus to maximize value for our
clients. Our consulting to date has led to relationships with Microsoft
Corp., Arthur Andersen, LLP and other organizations that help us with our
marketing. Currently, we are installing, or have just completed installations
of our software at Kinko's Corporation, The City of San Antonio, Boeing,
Charter Communications and other organizations.
Our principal executive offices are currently located in Houston, Texas
at 654 North Belt East, Suite 310, Houston, Texas 77060. Our telephone number
at that address is (281) 820-0200; our facsimile number is (281) 447-8291.
Our Internet Website address is http://www.genisystems.com. In addition to
our corporate office, we maintain a presence in Denver, Colorado, Torrance
(Los Angeles), California and Washington, D.C.
<PAGE>
<PAGE>
About The Offering
Securities offered: 1,500,000 shares of common stock
Price to the public: $1.50 per share
Manner of sales: Primarily through our officers and directors.
However, we may use the services of
broker/dealers to help us sell the shares.
Commissions: No commissions will be paid on sales by our
officers and directors; we may pay
broker/dealers who help us sell shares a
commission of 10% on sales made by them.
Term of offering: The offering will begin on the date of this
Prospectus and will end 90 days from the date of
this Prospectus, unless all 1,500,000 shares of
common stock are sold sooner.
No minimum investment/no
escrow: No minimum investment is required. We have made
no arrangement to place funds received into a
trust, escrow or other similar account.
Subscription agreements: Investors in the offering will be required to
sign a subscription agreement at the time of
their investment. Investors will receive their
certificates within 30 days following their
investment.
Participation by affiliates: Our affiliates may purchase shares in the
offering; however, no affiliate has made any
commitment to participate. We have not placed
any limitation on the number of shares an
affiliate may purchase in the offering.
<PAGE>
<PAGE>
Summary Financial Data
The following financial information summarizes the more complete
historical financial information enclosed in this prospectus. You should read
the information below along with all other financial information and analysis
in this prospectus. Please do not assume that the results below indicate
results we will achieve in the future.
<TABLE>
<CAPTION>
March 31,
----------------------- December 31,
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Current assets $ 1,107,489 $ 1,016,316 $ 560,478
Current liabilities $(1,467,455) $(1,047,773) $(1,432,699)
Net working capital
deficit $ (359,966) $ (31,457) $ (872,221)
Development costs, net $ 299,819 $ 46,521 $ 341,155
Equipment, net $ 147,359 $ 94,078 $ 147,693
Convertible note payable,
shareholder $ -0- $ (75,000) $ -0-
Shareholders' equity
(deficit) $ 154,056 $ 5,024 $ (267,280)
Total assets $ 1,644,821 $ 1,171,699 $ 1,165,419
For the Periods For the Nine Months
Ended March 31, Ended December 31,
------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Revenues $3,049,128 $1,882,445 $ 2,032,767 $ 1,868,671
Operating (loss)
income $ (466,934) $ 5,821 $ (813,185) $ (512,527)
Net loss $ (549,243) $ (20,076) $ (893,136) $ (558,702)
Weighted average
number of shares 6,165,715 4,602,510 10,295,938 4,602,510
Basic and diluted
loss per share $ (.089) $ (.004) $ (.087) $ (.121)
<PAGE>
<PAGE>
RISK FACTORS
An investment in our common stock is speculative and involves a high degree of
risk. Please carefully consider the following risk factors, as well as the
possibility of the loss of your entire investment in our securities, before
deciding to invest in our common stock.
We have a history of operating losses and may continue to incur operating
losses
We have incurred operating losses since our inception amounting to a net
accumulated deficit of $1,462,455 as of December 31, 1999. Such losses are
attributed to initial costs of starting the business, expenditures made in
developing corporate relationships with Microsoft and Arthur Andersen, LLP,
and expenses incurred developing initial releases of our software. We
continue to incur expenses relating to software development, expansion of our
markets, and personnel training. We anticipate that future losses will occur,
and there can be no assurances that our products will be accepted in the
marketplace nor that we will generate profitable operations.
The proceeds of this offering will not provide us with all the working capital
that we need
As there is no minimum funding in this offering and no commitment from
any investor to purchase any of our common stock, we cannot be assured that we
will receive any proceeds from this offering, let alone sufficient proceeds to
satisfy our immediate or near term working capital needs. We may seek
additional funding through public or private financings or collaborative or
other arrangements with third parties. There can be no assurance that
additional funds will be available on acceptable terms, if at all. If
additional funds are raised by issuing equity securities, our existing
stockholders, including those who invest in the offerings described in this
prospectus, may experience substantial dilution. If adequate funds are not
available, we may be required to delay, scale back or eliminate one or more of
our development programs or reduce our operations. We may also be forced to
obtain funds by entering into arrangements with collaborative partners or
others that may require us to relinquish rights to certain of our products or
technologies that we would not otherwise relinquish. In December 1999,
January 2000 and February 2000, our major stockholder and director loaned us
$276,500 to meet our obligations. We may need additional funding of this type
while this offering is being completed.
We believe that our future success will depend, in part, on our new software
products that are largely untested and may not be successful
Historically we have been primarily a project management consulting firm,
with limited sales of software. Over 90% of our revenues since inception in
1997 have been derived from consulting with clients on a wide range of project
management issues. However, we believe that to be successful we must
distinguish ourselves with our proprietary management software. Commercially
marketable versions of our software design are nearing completion and we are
currently testing enhanced versions of the prototype systems, but we need
additional financial resources to complete the software and make it ready for
market. Further, we need funds to expand our marketing efforts. However, the
software is largely untested and may not be commercially successful.
The book value of our software reflected in our financial statements may not
be realized
As of December 31, 1999, we had $341,155 of net capitalized software
costs and this represents 29% of our total assets. We have capitalized
software development costs incurred to date based upon the guidance of
generally accepted accounting principles and our belief that our software has
future value. These accounting principles also require us to evaluate the
carrying costs of our software in relation to the estimated revenues that
these software packages will generate in future periods. If the expected
revenues do not exceed the capitalized software costs, such costs should be
written-down to net recoverable value.
There is no minimum offering and no commitment to buy our shares
Our management and directors are planning to sell the 1,500,000 shares
under the Company offering without the assistance of an underwriter. This,
along with the other risks discussed in "Risk Factors," increases the
possibility that we may not be successful in selling the 1,500,000 shares. If
we are not successful in this offering, our planned software development,
market expansion, and opening of a regional office will have to be
substantially reduced.
Our ability to sell shares of common stock in the offering may be adversely
affected by resales of shares by the selling shareholders
We are currently planning to undertake our offering of up to 1,500,000
shares of common stock at the same time that the selling shareholders will be
offering for resale their shares of common stock. Although we do not intend
to develop a public trading market for our common stock until our offering is
terminated, the selling shareholders may be offering their shares of stock in
privately negotiated transactions at prices below the price to the public in
our offering. If this occurs, it may adversely affect our ability to sell
shares in our offering. In this event, we will be forced to either lower the
offering price to the public, which must be made by an amendment to our
registration statement, or terminate the offering. In either event, investors
in our offering will be adversely impacted by greater dilution as well as an
increased risk that we will not be able to continue as a going concern.
Our business must keep pace with rapid technological changes
We are a small, start-up entity with limited resources and technology
changes can be cost prohibitive for our company. In addition, we have a
limited number of staff assigned to ensure that we remain current and up-to-
date with a rapidly evolving technology world. If we are unable to stay
abreast of such technology changes, it could render our products obsolete,
thus reducing their value and our ability to generate sales.
Project management and software development professionals are in short supply
While the software applications and programs that we have developed are
important to our success, our future success also depends in large part upon
our ability to attract, retain and motivate highly skilled employees,
particularly software development, senior project managers, and other senior
personnel with experience in a wide variety of businesses and industries.
Qualified senior project managers and development professionals are in
particularly great demand and are likely to remain a limited resource for the
foreseeable future.
We face significant competition
The software development, project and program consulting and strategic
business consulting industries are comprised of a large number of
participants, are subject to rapid changes and are highly competitive. We
compete with, and face potential competition from, a number of companies that
have significantly greater financial, technical and marketing resources and
greater name recognition than we have. We also compete with smaller service
providers whose specific, more narrowly focused service offerings may be more
attractive to potential clients than our multi-dimensional approach. Our
clients primarily consist of government entities and agencies, Fortune 500
companies, and other large corporations. There are an increasing number of
companies in the software development, project consulting markets targeting
this client base. We believe that our ability to compete in these markets
depends in part on a number of factors outside our control, including the
ability of our competitors to hire, retain and motivate a significant number
of skilled project managers, our competitors ownership of, or ability to
develop, software applications that are competitive with our products and
services, and the price at which others offer comparable services.
In addition, our competitors have and continue to develop or acquire in-
house expertise and/or software applications similar to those which we
provide. This could decrease demand for our software and our services. No
assurance can be given that we will be able to maintain our existing client
base, maintain or increase the level of revenue generated by our existing
clients or be able to attract new clients.
We may be unable to protect our intellectual property rights
Software
We are developing certain foundation and application software tools,
programs and products that we will own and license to our clients. We regard
this software as proprietary and protect our rights in it where appropriate
with copyrights, trademarks, trade secret laws and contractual restrictions on
disclosure and transferring title. We cannot assure you that any steps we
take in this regard will be adequate to protect our rights or that third party
companies could develop functionally equivalent products.
Trademarks
We have developed and rely on the trademarks that we use with our
products, including GeniSys Enterprise Manager(-TM-) or GEM(-TM-), Visual
Project Manager(-TM-) or VPM(-TM-) , Gatekeeper(-TM-) and Tracer(-TM-). We
cannot assure you that we will obtain registrations for our trademarks or that
we will not be subject to opposition, cancellation or infringement proceedings
based upon the use of a particular trademark.
Trade Secrets
In addition, our success is dependent upon our specialized expertise and
methodologies. To protect this proprietary information, we rely upon a
combination of trade secret and common laws, employee nondisclosure policies
and third party confidentiality agreements. However, there can be no
assurance that any of the steps we take will be adequate to deter
misappropriation of our specialized expertise and methodologies.
Although we believe that our services and products do not infringe on the
intellectual property rights of others, there can be no assurance that an
infringement claim will not be asserted against us in the future.
Selling price of shares greater than net tangible book value
Investors purchasing shares of our common stock in this offering will
incur immediate and substantial dilution of their investment of approximately
$1.39 per share, or 93% of the offering price, based upon our adjusted net
tangible book value as of December 31, 1999. To the extent that currently
outstanding options to purchase our common stock are exercised, there will be
further dilution to investors acquiring shares of common stock.
The selection of our Board of Directors is controlled by Mr. and Mrs. Bell
Our Articles of Incorporation authorize the issuance of 10,000 shares of
Class B Common Stock only to J. Daniel Bell, our Chairman. These shares of
Class B Common Stock give Mr. Bell the right to select a majority of the
members of our Board of Directors. In addition, Carylyn K. Bell, Mr. Bell's
wife, is the beneficial owner of 62% of our outstanding Class A Common Stock
before the offering, and even if the maximum offering is sold, will be the
beneficial owner of 53% of our Class A Common Stock after the offering.
Accordingly, Mr. and Mrs. Bell will have the ability to control the selection
of all of our directors.
We have been arbitrary in setting the offering price
The offering price of the shares of common stock we are offering was
arbitrarily determined by us and is not necessarily related to our assets,
book value or financial condition, and may not be indicative of our actual
value.
Future issuances of our stock could dilute current shareholders and adversely
affect the market, if one develops
We have the authority to issue up to 100,010,000 shares of common stock,
50,000,000 shares of preferred stock, and to issue options and warrants to
purchase shares of our common stock without stockholder approval. These
future issuances could be at values substantially below the price paid for our
common stock by our current shareholders. In addition, we could issue large
blocks of our common stock to fend off unwanted tender offers or hostile
takeovers without further stockholder approval.
The issuance of preferred stock by our Board of Directors could adversely
affect the rights of the holders of our common stock. An issuance of
preferred stock could result in a class of outstanding securities that would
have preferences with respect to voting rights and dividends and in
liquidation over the common stock and could, upon conversion or otherwise,
have all of the rights of our common stock. Our Board of Directors' authority
to issue preferred stock could discourage potential takeover attempts or could
delay or prevent a change in control through merger, tender offer, proxy
contest or otherwise by making these attempts more difficult or costly to
achieve.
Future sales of our common stock could adversely affect the market
Future sales of our common stock into the market may also depress the
market price of our common stock if one develops in the future. We have
issued common stock, as well as options and warrants to purchase our common
stock. Sales of these shares of our common stock or the market's perception
that these sales could occur may cause the market price of our common stock to
fall. These sales also might make it more difficult for us to sell equity or
equity related securities in the future at a time and price that we deem
appropriate or to use equity as consideration for future acquisitions.
There is no public trading market for our common stock
There currently exists no public trading market for our common stock. We
do not intend to develop a public trading market until our offering is
terminated. There can be no assurance that a public trading market will
develop at that time or be sustained in the future. Without an active public
trading market, you may not be able to liquidate your investment without
considerable delay, if at all. If a market does develop, the price for our
securities may be highly volatile and may bear no relationship to our actual
financial condition or results of operations. Factors we discuss in this
prospectus, including the many risks associated with an investment in us, may
have a significant impact on the market price of our common stock.
No broker or dealer could maintain a market in our stock
We have no agreement with any broker or dealer to act as a marketmaker
for our securities and there is no assurance that we will be successful in
obtaining any marketmakers. Thus, no broker or dealer will have an incentive
to make a market for our stock. The lack of a marketmaker for our securities
could adversely influence the market for and price of our securities, as well
as your ability to dispose of, or to obtain accurate information about, and/or
quotations as to the price of, our securities.
Over-the-counter stocks are very risky
The over-the-counter markets for securities such as our common stock
historically have experienced extreme price and volume fluctuations during
certain periods. These broad market fluctuations and other factors, such as
new product developments and trends in our industry and the investment markets
generally, as well as economic conditions and quarterly variations in our
results of operations, may adversely affect the market price of the common
stock. See "Certain Market Information."
We have not applied to have our shares listed on Nasdaq, and do not plan
to do so in the foreseeable future. As a result, trading, if any, in our
securities will be conducted in the over-the-counter market on an electronic
bulletin board established for securities that do not meet Nasdaq listing
requirements, or in what are commonly referred to as the "pink sheets." As a
result, you will find it substantially more difficult to dispose of our
securities. You will also find it difficult to obtain accurate information
about, and/or quotations as to the price of, our common stock. Finally,
depending upon several factors, including the future market price of our
common stock, our securities are and may remain subject to the "penny stock"
rules. These "penny stock" rules place stringent requirements on brokers and
investors who want to buy or sell our shares and generally have a negative and
depressive effect on the trading price of public shares subject to the rules.
We cannot be sure that all risks associated with the Y2K problem have passed
We have not encountered any Year 2000 problems, however there is still a
risk of the following consequences:
* operational inconveniences and inefficiencies for us, our service
and content providers and our visitors that may divert our time and
attention and financial and human resources from our ordinary
business activities; and
* lesser system failures that may require significant efforts by us,
our service and content providers or our visitors to prevent or
alleviate material business disruptions.
We view the risk of material disruption to our service to be immaterial
and accordingly have not formulated a detailed contingency plan.
<PAGE>
<PAGE>
FORWARD-LOOKING STATEMENTS
In General
This prospectus contains statements that plan for or anticipate the
future. Forward-looking statements include statements about the future of the
software development, computer-based project management, consulting and
strategic business consulting industries, statements about our future business
plans and strategies, and most other statements that are not historical in
nature. In this prospectus, forward-looking statements are generally
identified by the words "anticipate," "plan," "believe," "expect," "estimate,"
and the like. Although we believe that any forward-looking statements we make
in this prospectus are reasonable, because forward-looking statements involve
future risks and uncertainties, there are factors that could cause actual
results to differ materially from those expressed or implied. For example, a
few of the uncertainties that could affect the accuracy of forward-looking
statements, besides the specific factors identified above in the Risk Factors
section of this prospectus, include:
* changes in general economic and business conditions affecting the
software development, computer-based project management consulting
and strategic business consulting industries;
* technical developments that make our products or services obsolete;
* changes in our business strategies;
* the level of demand for our products and services; and
* our ability to develop or maintain strategic relationships within
the software development, computer-based project management
consulting and/or strategic business consulting industries.
In light of the significant uncertainties inherent in the forward-looking
statements made in this prospectus, particularly in view of our early stage of
operations, the inclusion of this information should not be regarded as a
representation by us or any other person that our objectives and plans will be
achieved.
No "Safe Harbor"
The Private Securities Litigation Reform Act of 1995, which provides a
"safe harbor" for similar statements by existing public companies, does not
apply to our offerings.
<PAGE>
<PAGE>
USE OF PROCEEDS
As we are conducting this offering as a direct public offering through
our officers and directors without a minimum investment requirement, we cannot
accurately predict the amount, if any, of net proceeds that we may receive
from the sale of our shares. If the maximum of 1,500,000 shares is sold at
the public offering price of $1.50 per share, we will receive gross proceeds
of $2,250,000. If all of those sales are made through participating selling
agents to whom a 10% commission is paid and assuming our estimated offering
expenses to be $100,000, we would estimate our net proceeds from the maximum
offering to be approximately $1,925,000. Actual proceeds realized by the
Company from the offering could be substantially less than that amount.
As we cannot accurately predict the amount of net proceeds that we will
receive from the offering, the following sets forth our anticipated uses of
the funds in a decreasing order of priority:
* The first $250,000 in proceeds will be used to complete the
development of our software products
* The next $700,000 in proceeds will be used to pay our creditors to
the extent necessary to avoid disruption of our operations
* To the extent proceeds are available, we will use approximately
$100,000 in proceeds to expand our marketing efforts
* To the extent additional offering proceeds are generated, the
remaining funds will be used, subject to the discretion of
management, to:
* Recruit and train additional personnel
* Add regional offices as part of our growth strategy
* General corporate purposes, including working capital, funds
for operation and overhead expenses
There is no minimum funding requirement. All funds received from the
offering will be placed immediately into our general operating account and
used according to the priorities set forth above.
We have approximately $500,000 in current liabilities to vendors and
related companies that have provided us with products and services in the
past. In addition, we owe Mrs. Bell, our principal stockholder, Jennings D.
Bell, Jr., J. Daniel Bell's father, and Mr. Fong, one of our directors,
approximately $376,000 in short term loans. While we will try to use the
proceeds of the offering, if and to the extent they are received, to continue
the momentum of our software development program, it may be necessary for us
to divert some of those funds to the repayment of our creditors if to do so
becomes necessary in order to avoid unreasonable business interruption.
<PAGE>
<PAGE>
DIVIDEND POLICY
We have not declared or paid cash dividends on our common stock in the
preceding two fiscal years. We currently intend to retain all future
earnings, if any, to fund the operation of our business, and, therefore, do
not anticipate paying dividends in the foreseeable future. Future cash
dividends, if any, will be determined by our Board of Directors.
<PAGE>
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1999
on an actual basis. This section should be read in conjunction with the
consolidated financial statements and related notes contained elsewhere in
this prospectus.
</TABLE>
<TABLE>
<CAPTION>
As of December 31,
1999 (1)
------------
<S> <C>
Shareholders' Equity
Preferred Stock, $.01 par value, 50,000,000
shares authorized; no shares outstanding $ -0-
Common Stock, $.001 par value; authorized
100,010,000 shares:
Class A, issued and outstanding 10,915,027
shares (actual) 10,915
Class B, issued and outstanding 10,000
shares 10
Additional paid-in capital 1,184,250
Accumulated deficit (1,462,455)
-------------
Total shareholders' deficit and capitalization $ (267,280)
=============
</TABLE>
- -----------------
(1) Does not include 2,500,000 shares of common stock we may issue upon
exercise of options which may be granted under our Equity Incentive Plan.
Currently under the Plan we have issued 1,960,000 options which are
subject to outstanding and unexercised options having an exercise price.
Of the 1,960,000 options, 1,449,000 options are currently not exercisable
by the holder but will vest in the future, subject to the holder's
continuing employment.
<PAGE>
<PAGE>
DILUTION
At December 31, 1999, we had a historical net tangible book value of
($608,435) or ($.056) per share based upon 10,925,027 shares of Class A and
Class B Common Stock outstanding. Net tangible book value per share is
determined by dividing the number of outstanding shares of common stock into
our net book value (total assets less total liabilities) and then subtracting
capitalized, intangible software developments costs. If we sell all 1,500,000
shares of common stock that we are offering, of which there is no assurance,
(after deducting $225,000 of estimated commissions assuming all sales are made
through participating selling agents and $100,000 of estimated offering
expenses), the adjusted net tangible book value as of December 31, 1999 would
have been $1,316,565 or $.11 per share of common stock. This represents an
immediate increase in net tangible book value of $.17 per share to current
stockholders and an immediate dilution of $1.39 per share, or 93%, to you as
an investor in our offering. To the extent fewer shares are sold in the
offering, the dilution to investors will be greater. The following table
illustrates the per share dilution, assuming all 1,500,000 shares are sold in
our offering:(1)
<TABLE>
<CAPTION>
<S> <C> <C>
Public offering price per share of common stock $1.50
Net book value per share of common stock
before offering ($.06)
Increase per share of common stock attributable to
new investors .17
-------
Adjusted net book value per share of common stock
after offering .11
------
Dilution of net book value per share of common stock
to new investors $1.39
======
Dilution per share of common stock as a percentage of
offering price 93.0%
======
</TABLE>
- ----------------
(1) Does not include 2,500,000 shares of common stock we may issue upon
exercise of options which may be granted under our Equity Incentive Plan.
Currently under this Plan, we have issued 1,960,000 having an average
exercise price of $.40 per share, with 1,449,000 subject to future
vesting.
The following table sets forth, as of the date of this offering, the
number of shares of common stock purchased, the percentage of total
consideration paid, and the average price per share paid by (i) our existing
stockholders and (ii) investors purchasing shares of common stock in this
offering, before deducting estimated offering expenses we are responsible for
paying.
<TABLE>
<CAPTION>
Average
Shares Purchased Total Consideration Price
---------------- ------------------- --------
Number Percent Amount Percent Per Share
--------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Existing Stockholders 10,925,027 87.9% $1,195,175 34.7% $ .11
New Investors 1,500,000(1) 12.1% 2,250,000 65.3% $1.50
--------- ------- --------- -------
Total 12,425,027 100.0% $3,445,175 100.0% $ .28
========== ====== ========== ======
</TABLE>
- --------------
(1) Estimated.
<PAGE>
<PAGE>
CERTAIN MARKET INFORMATION
There currently exists no public trading market for our common stock. We
do not intend to develop a public trading market until our offering has
terminated. There can be no assurance that a public trading market will
develop at that time or be sustained in the future. Without an active public
trading market, there can be no assurances that you will be able to liquidate
your investment without considerable delay, if at all. If a market does
develop, the price for our securities may be highly volatile and may bear no
relationship to our actual financial condition or results of operations.
Factors we discuss in this prospectus, including the many risks associated
with an investment in us, may have a significant impact on the market price of
our common stock. Also, because of the relatively low price of our common
stock, many brokerage firms may not effect transactions in the common stock.
In addition, it is likely that the Company's common stock will be subject
to rules adopted by the Commission regulating broker dealer practices in
connection with transactions in "penny stocks." Those disclosure rules
applicable to "penny stocks" require a broker dealer, prior to a transaction
in a "penny stock" not otherwise exempt from the rules, to deliver a
standardized list disclosure document prepared by the Commission. That
disclosure document advises an investor that investment in "penny stocks" can
be very risky and that the investor's salesperson or broker is not an
impartial advisor but rather paid to sell the shares. The disclosure contains
further warnings for the investor to exercise caution in connection with an
investment in "penny stocks," to independently investigate the security, as
well as the salesperson with whom the investor is working and to understand
the risky nature of an investment in this security. The broker dealer must
also provide the customer with certain other information and must make a
special written determination that the "penny stock" is a suitable investment
for the purchaser and receive the purchaser's written agreement to the
transaction. Further, the rules require that, following the proposed
transaction, the broker provide the customer with monthly account statements
containing market information about the prices of the securities.
These disclosure requirements may have the effect of reducing the level
of trading activity in the secondary market for our common stock. Many
brokers may be unwilling to engage in transactions in our common stock because
of the added disclosure requirements, thereby making it more difficult for
stockholders to dispose of their shares.
<PAGE>
<PAGE>
SELECTED FINANCIAL DATA
Set forth below is our selected financial data as of and for our years
ended March 31, 1999 and 1998 and as of and for the nine month periods ended
December 31, 1999 and 1998 financial information is derived from our
consolidated financial statements and related notes included elsewhere in this
prospectus and is qualified by reference to these consolidated financial
statements and the related notes thereto.
<TABLE>
<CAPTION>
Periods Ended Nine Months Ended
March 31, December 31,
----------------------- -------------------
1999 1998 1999 1998
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Statements of Operations Data
Revenues $3,049,128 $1,882,445 $2,032,767 $1,868,671
Operating expenses $3,516,062 $1,876,624 $2,845,952 $2,381,198
Operating (loss) income $(466,934) $5,821 $(813,185) $(512,527)
Interest expense $82,309 $25,897 $79,951 $46,175
Net loss $(549,243) $(20,076) $(893,136) $(558,702)
Basic and diluted loss per
share(1) $ (0.89) $ (.004) $ (0.87) $(.121)
Weighted average number of
shares outstanding(1) 6,165,715 4,602,510 10,295,938 4,602,510
At March 31,
---------------------------- At December 31,
1999 1998 1999
------------ ------------- -------------
<S> <C> <C> <C>
Balance Sheet Data
Total assets $1,644,821 $1,171, 699 $1,165,419
Working capital deficit ($359,966) ($31,457) ($872,221)
Total liabilities $1,490,765 $1,166,675 $1,432,699
Accumulated deficit ($569,319) ($20,076) ($1,462,455)
Shareholders' equity (deficit) $154,056 $5,024 ($267,280)
</TABLE>
- ----------------
(1) Based upon the weighted average number of shares outstanding for the
years ended March 31, 1998 and 1999 and the nine month periods ended
December 31, 1999 and 1998.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this
Prospectus.
Overview
We operate with iGeniSys Inc. as the holding company of GeniSys
Information Systems, Inc. Our operations to date have been conducted through
our subsidiary.
An independent group of investors formed Zion Enterprises, Inc. in
February 1996 as a Colorado corporation. Zion was formed for the sole purpose
of establishing a widely held company that would subsequently seek a merger
with another entity that desired to merge into a public entity. Zion had no
operations or business activity and had never been subject to the reporting
requirements of the Securities Exchange Act of 1934. In March 1999, Zion
acquired all of the outstanding shares of the common stock of GeniSys in
exchange for 75% of the total issued and outstanding shares of Zion. Zion
became the parent company of GeniSys through this transaction. As a result of
the transaction, the former officers and directors of GeniSys assumed control
of Zion and changed the name to iGeniSys, Inc. This transaction has been
accounted for as an acquisition of Zion by GeniSys and a recapitalization of
GeniSys. The historical financial statements prior to this transaction are
those of GeniSys as Zion had no activities and such financial statements are
included in this document.
Our subsidiary, GeniSys, is a Colorado corporation formed on May 1, 1997.
Our primary business is consulting in the project management arena and the
development project and enterprise program management software. We also
perform services relating to assisting our customers in implementing our
software and improving overall project management and control.
Historically we have been primarily a project management consulting firm
with limited sales of software. Over 90% of our revenues since inception in
1997 have been derived from consulting with clients on a wide range of project
management issues. For the fiscal year ended March 31, 1999, 90.2% of our
revenues were attributable to consulting fees, and 9.8% attributable to
software sales. For the nine months ended December 31, 1999, approximately
95% of our revenues were attributable to consulting fees, and 5% attributable
to software sales. However, separating our revenues between consulting
services and software sales is not important to our financial performance,
since each of our clients is provided a total project management solution
which consists of a combination of software, training and consulting services.
Results of operations - year ended March 31, 1999 versus the period from
inception (May 1, 1997) to March 31, 1998
Net loss for the year ended March 31, 1999 versus the period from
inception (May 1, 1997) to March 31, 1998 changed to a net loss of $549,243
from a net loss of $20,076 in 1998. This increase in net loss was due to
increased operating costs as we expanded our business and product development
costs in their initial phases. Revenues for 1999 increased 61.9% ($1,166,683)
to $3,049,128 from $1,882,445 in 1998. This increase was due to the expanded
marketing efforts by our officers and the expansion of our alliance with
Arthur Andersen. Our revenues also increased as we were able to increase our
consulting hourly rates as our customer base became more established and we
did not need to substantially discount our billing rates to win work.
However, in 1999 our costs of operations increased 87.4% ($1,639,438) to
$3,516,062 from $1,876,624 in 1998. This increase is a result of the our
efforts to grow and reflects increases in marketing, development costs of a
research and development nature and general overhead expenses.
The revenues generated from work performed for Arthur Andersen, LLP
represented $915,630 (30.0%) in 1999 and $785,346 (41.7%) in 1998. Our
management does not believe this dollar level of revenue will decrease in the
future. In addition, another customer accounted for 10% of our revenues
during the year ended March 31, 1999. Our management is attempting to
diversify our customer base and believes the percent of our revenues derived
from these customers will decrease in the future.
Results of operations -- Nine months ended December 31, 1999 versus the nine
months ended December 31, 1998
Net loss for the nine-month period ended December 31, 1999 was $893,136
compared to a net loss for the nine-month period ended December 31, 1998 of
$558,702. This 59.9% ($334,434) increase in our net loss is due to making
selective investments in certain of our projects, thus increasing contract
costs coupled with the increased level of marketing and sales efforts.
However, in comparison to the prior nine-month period, revenues increased 8.8%
($164,096) from $1,868,271 to $2,032,767 for the period ended December 31,
1999. This increase reflects our efforts to expand corporate relationships
and our marketing efforts are being successful.
However, our operations and sales were adversely impacted in the last
three months of 1999, as customers postponed purchases of software and
consulting services due to concerns over the Year 2000 system issues. Year
2000 concerns caused many software companies to have reduced levels of income
in the last quarter of calendar 1999. Our management made the decision that
it was in our best long-term interest to retain our core group of
professionals as opposed to eliminating these positions. This decision
increased our overhead costs as unassigned personnel costs increased over the
same period in 1998, while our revenues decreased.
Although revenues increased by $164,096, our costs of operations
increased from $2,181,198 for the nine month period ended December 31, 1998 to
$2,845,952 (a 30% increase) for the similar period ended December 31, 1999.
In addition to increased unassigned labor costs, this increase in operating
costs was due to costs of performing work under our contracts as we made
investments in certain projects to be certain that our software functioned at
the highest level during this initial product roll-out phase. In addition and
as previously noted, our sales and marketing related expenses increased due to
expenses related to product introduction.
Liquidity and capital resources
We have financed our operations to date primarily through the private
sale of equity securities and borrowings from our majority shareholder and
other related parties. During the year ended March 31, 1999, we sold
1,472,083 shares of our common stock for $580,000. Through December 31, 1999,
we sold an additional 960,004 of our common stock for $471,800.
Since we began operations, we have experienced a shortage of working
capital. We need additional working capital in order to support our growth.
We do not believe that the working capital available to us through commercial
lenders will be sufficient to support all of our current and future growth.
As a result, we are depending upon the proceeds of this offering to supply us
with needed working capital. Unfortunately, since we are conducting the
offering ourselves, we are uncertain that this offering will be successful in
providing us with the needed funds. It is likely that additional financings
will be necessary in the future which may involve either the sale of
additional equity or debt. In either case, the terms of future financings
could have an adverse effect on the value of our securities.
Our working capital needs continue. In December 1999, our majority
shareholder loaned $50,000 in order for us to meet our operating costs. Such
loan is due in June 2000 and requires monthly payments with interest at 15%.
Further, in January 2000, our majority shareholder and Mr. Bell's father
loaned an additional $135,000 to the Company, which carries the same rate of
interest and is due in 90 days. In February 2000, a member of the Company's
Board of Directors loaned $100,000 to the Company. This loan was made to meet
our operating cash needs to purchase some past-due invoices from our financial
institution. This loan is secured by the purchased invoices and a second loan
on our software products. The loan carries an interest rate of 15% and is
payable in May 2000.
As of March 31, 1999, we had a working capital deficit of $359,966
compared to a deficit of $31,457 as of March 31, 1998. We also had a bank
overdraft of $16,632 and $23,937 as of March 31, 1999 and 1998, respectively.
Our accounts receivable remain outstanding to major corporations and
consulting firms and stayed fairly consistent at $933,134 as of March 31, 1999
and $889,091 as of March 31, 1998. Our accounts payable were $508,954 and
$402,378 as of March 31, 1999 and 1998, respectively. Our operations used
cash for the periods ended March 31, 1999 and 1998 of $537,095 and $174,207,
respectively.
As of December 31, 1999 we had a working capital deficit of $872,221
versus a deficit of $359,966 as of March 31, 1999. This increase in the
working capital deficit is due to the cash required to fund the operating loss
for the nine-month period ended December 31, 1999 and to fund the selective
investments in our projects and increased marketing efforts, as previously
discussed. As of December 31, 1999, we had a bank overdraft of $59,360 versus
$16,632 as of March 31, 1999. Accounts receivables decreased to $465,260 as
of December 31, 1999 from $933,134 as of March 31, 1999 due to the reduced
revenues in the last quarter of calendar 1999, our collection efforts, and the
payment on government contracts under which we performed work as a
subcontractor. Our accounts payable remained consistent from March 31, 1999
($508,954) to December 31, 1999 ($551,231). Included in our accounts payable
is approximately $400,000 of accumulated travel and other expenses which have
been charged to credit cards and must be repaid from future sources of
capital. Also, we owe a related company $126,304 for prior advances that also
must be repaid. For the nine months ended December 31, 1999 and 1998, our
cash flow from operations used $278,627 and $289,809, respectively.
In 1999, we entered into a revolving credit agreement with Strategic
Finance, Inc. under which we obtained a factoring line of credit with a
maximum borrowing limit of $2,000,000. The line of credit was secured by our
accounts receivable and personally guaranteed by Mr. and Mrs. Bell. At April
10, 2000, the outstanding balance on the line of credit was $540,000.
However, we have been informed by Strategic Finance that they are terminating
our credit arrangement effective April 29, 2000. We have obtained a temporary
backup line of credit from Guaranty Bank & Trust Company in Denver, Colorado,
with a maximum borrowing limit of $500,000 which is also guaranteed by Mr. and
Mrs. Bell and secured by accounts receivable. We recognize that this backup
line of credit will be inadequate to satisfy our working capital requirements.
As a result, we are in discussions with other lenders in an effort to obtain a
working capital line of credit with higher limits. However, if we are
unsuccessful in these efforts and if this offering is unsuccessful, we will
experience a significant shortage of working capital. In this event, we will
have to rely on working capital loans from our principal shareholder and
affiliates and will in all likelihood suffer a curtailment of our operations.
Capitalized software costs
Our software development costs consist primarily of enhancements and
software production costs related to products for which technological and
market feasibility has been established. We consider technological
feasibility to be achieved when we have completed all planning, designing,
coding and testing activities that are necessary to establish a working model
of the product. Capitalization ceases when the product has been completed and
the product is ready for release to our customers. Prior to achieving
technological feasibility, development costs are expensed. In the years ended
March 31, 1999 and 1998, we incurred approximately $450,000 and $100,000,
respectively, for research and development expenses related to software
development. During the nine months ended December 31, 1999 and 1998, we
incurred approximately $220,000 and $390,000, respectively, for software
development expenses. As of December 31, 1999, our capitalized software costs
and cumulative expenses incurred through December 31, 199 for each of our
products were approximately as follows:
<TABLE>
<CAPTION>
Date
Technological Research and
Feasibility Capitalized Development
Products Achieved Costs Expenses
- -------- ------------- ------------- -------------
<S> <C> <C> <C>
GeniSys Enterprise Management
(-TM-) December 1999 $ 182,619 $ 398,012
Gatekeeper(-TM-) March 1998 100,000 $ 251,383
Visual Project Manager(-TM-) December 1999 115,000 $ 775,785
-------------
397,619
Accumulated amortization 56,464
-------------
Net book value at December 31, 1999 $ 341,155
=============
</TABLE>
We expect to realize the net capitalized value through the future sales of our
software products.
Recent Accounting Pronouncements
Comprehensive Income. In June 1997, the FASB issued SFAS No. 130,
Reporting Comprehensive Income. This statement is effective for financial
statement issued for periods beginning after December 15, 1997. We adopted
this statement during 1998 and it had no material impact on our financial
statement disclosures.
Segments of an Enterprise and Related Information. In June 1997, the
FASB issued SFAS No. 131, Disclosure about Segments of an Enterprise and
Related Information. This statement is effective for fiscal years beginning
after December 15, 1997. SFAS 131 requires the reporting of profit and loss,
specific revenue and expense items, and assets for reportable segments. It
also requires the reconciliation of total segment revenues, total segment
profit or loss, total segment assets, and other amounts disclosed for
segments, in each case to the amounts in the general purpose financial
statements. As we only operate in one segment, adopting this statement had no
material impact on our financial statement disclosures.
Pension and Other Postretirement Benefits. In February 1998, the FASB
issued FAS No. 132, Employers' Disclosures about Pensions and Other Post-
retirement Benefits. SFAS 132 standardizes the disclosure requirements for
pensions and other post-retirement benefits and requires additional
information on changes in the benefit obligations and fair values of plan
assets. The statement is effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information for
earlier years to be restated. Adoption of SFAS 132 is expected to have no
effect on us, as there are no pension plans.
Derivative and Hedging Activities. In June 1998, the FASB issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. This
statement is effective for fiscal years beginning after June 15, 2000.
Currently, we do not have any derivative financial instruments and does not
participate in hedging activities, therefore management believes SFAS No. 133
will not impact our financial position or results of operations.
<PAGE>
<PAGE>
BUSINESS
Overview
Large commercial and governmental entities have projects of all sizes and
descriptions, and we offer solutions to improve the management and control of
those projects. Whether it is the development of a new aircraft, the
construction of a major office building, a time-sensitive overhaul to a
petrochemical plant, or a major software development project, managers at all
levels need to monitor the progress of these projects, control their
respective costs, and be alerted when problems arise.
Our services span a wide range of software development, project
management and consulting services. Our software development services have
been provided across a range of industries and have included everything from
the integration of commercial off-the-shelf software into existing platforms,
to the development of new, highly specialized software applications to better
meet our clients' needs. Our consulting services include completing detailed
needs assessments and independent risk assessments, construction oversite and
project management staffing and services.
We have performed project and program management work for a diverse
sampling of government entities and companies, including: the United States
Department of Defense, United States Navy, United States Army, United States
Air Force, Kinko's, Lockheed Martin Corporation, AT&T Global Information
Systems, Motorola Satellite and Communications, Boeing Corporation, Hughes
Aircraft, Wal-Mart, Mobil Corporation and the City of San Antonio.
Business strategy
Our current mission focuses on creating new software tools utilizing the
"World Wide Web" and integrating with three dimensional (3D) technologies.
Our business strategy is to anticipate market needs and apply leading-edge
information technologies in combination with project management consulting to
deliver business solutions.
The software that we have developed and continue to develop, when
combined with our consulting services, are designed to facilitate the
integration and management of project information interrelating estimates,
schedules, budgets, and project risk management. Our services and software
are designed to simplify data collection, integration and analysis, thus
allowing real-time comparison of actual performance data versus planned
schedules and budgets. Further, our software tools are expected to work in
conjunction with major project management software systems and are designed to
integrate with customers existing accounting systems to provide timely
management and cost information. We also provide software customization,
training, implementation, and project management personnel.
Business activities
We offer services in three major business activities:
* Project management software design, development, integration and
implementation;
* Business process improvement consulting; and
* Providing specialized technical services to the process industry.
Business project management software design, development, integration and
implementation
Our products are designed to work with major commercially available
project management software tools, to deliver to our customers the information
necessary to execute their tactical and strategic missions using the internet
as a medium for reporting. We believe that the most effective management
occurs through having current knowledge of the status of projects, for
instance, current schedule or budget status, as opposed to guessing what is
happening and then determining what went wrong after the fact. Our software
enables customers to utilize data currently in their project management
systems in a new consolidated view over the internet enabling them to make
informed and prompt decisions relative to their projects.
Jeff Spencer, our Senior Vice President, has provided recommendations to
Microsoft Corporation in the development of its project management software.
Participation at this level has been at Microsoft's invitation. We have
consulted with the design teams of several major project management software
packages, including Microsoft Project 98(-Registered Mark-), Primavera P3(-
Registered Mark-) and Open Plan.
We are currently working or have worked with major corporations, a number
of whom are in the Fortune 500, providing project management software
solutions, and services related to improving the efficiency and communications
of their existing project management applications. In many cases, we have
been engaged to enhance, integrate, and develop new software applications to
better serve our customers' requirements. Our work with customer's project
management systems gives our consultants insight into the voids in these
systems, and we use this knowledge to assist us in developing and implementing
new software tools to fill these gaps.
Business process improvement consulting
Working directly with clients and completing detailed project management
needs assessments, our consulting teams are able to provide a wide range of
value added business process services. These include assisting clients in
understanding where their own management systems are not meeting user needs.
Additionally, these engagements often require on-site assistance, including
on-site management, and regulatory compliance assistance. To this end, we
have a history of assisting our clients in bringing their management systems
into compliance with the most stringent governmental or industry reporting
requirements.
Providing specialized technical services to the process industry
We also provide construction management and project management services
and staffing to a variety of industries. We perform these services primarily
to expand our contacts in the project management arena, and maintain our
familiarity with the issues faced by project management in the field and at
headquarters. Among the project management services provided are construction
management, project engineering, planning and scheduling for new construction
projects, turnarounds and project management. In 1999, we completed a major
project management assignment for Coastal Aruba, N.V. on their $140 million
expansion project. This project involved establishing the management team,
setting up a system for tracking performance, and providing the executive
project manager.
Software products
Nearly all of our software products have been designed and are being
developed through the recognition of a broader need uncovered while completing
field assignments. Our design and development teams concentrate their efforts
on providing easy to use, flexible, solutions that provide key business
information on a timely basis over the internet. All of our products are
integrated with Microsoft(-Registered Mark-) products. The following is a
brief description of our current software products, some of which are still in
development:
* Visual Project Manager(-TM-) (VPM(-TM-)) iGeniSys is developing
VPM(-TM-) using existing software from Vuent, Inc. to create
internet based system that integrate 3-dimensional drawings with key
business information. VPM(-TM-) will make it possible for a client
to tie key business information to a 3-D plan view of a facility or
facilities, color coding them based on the client's criteria for
schedule and budget performance and providing this information over
the Internet directly to the user's computer. This system will
provide a collaborative environment over the Internet leveraging web
strategies to maximize the effectiveness of the client's staff and
the technology they use. A prototype of this software was completed
in December 1998 with general release planned for the third quarter
of 2000. There have been no sales of this product to date due to
our limited marketing resources and our emphasis on our GEM product.
We estimate that between $25,000 and $50,000 in development costs
will be required to complete the product subsequent to December 31,
1999.
* GeniSys Enterprise Manager(-TM-) (GEM(-TM-)) GEM is a project
management tracking, updating and reporting tool enabling an
organization to manage and monitor large projects across an
enterprise using the Internet. This software in concert with
Microsoft Project enables mission critical scheduling and planning
information to be available to all levels of management through the
Internet. It can be customized with additional integration
programming to interface with legacy systems such as SAP, Oracle,
J.D. Edwards and others. A GEM prototype has been sold to the City
of San Antonio and at Kinko's. Completion of the prototype was
finalized in March 1999 with general commercial release planned for
the second quarter of 2000. We have made beta installations of GEM
with both Kinko's and Charter Communications, and estimate
approximately $110,000 in additional development cost to complete
the product subsequent to December 31, 1999.
* Gatekeeper(-TM-) Integrates earned value cost data from MPM
(Microframe Project Manager) with Microsoft Project 98 scheduling
data providing essential information to management on earned value.
The concept of Earned Value Management Systems (EVMS) was developed
in recent years to assist governmental agencies in tracking
contractor progress on large projects. Gatekeeper is applicable to
every company executing project work for governmental agencies that
uses the Microframe cost tracking system. This product was
completed in 1998 and has been actively marketed. We are presently
installing or have installed this product for company-wide use at
Boeing, Allied Signal, Northrop Grumman and others. With over fifty
installed locations, revenues from Gatekeeper sales represented more
than 65% of all software sales during fiscal year ended March 31,
1999, and over 70% of software sales for the nine month period ended
December 31, 1999.
* GEM Web Builder(-TM-) We designed GEM Web Builder in the fall of
1999 for customers to use with Microsoft Project to share vital
project management information on the Internet. Whether interfacing
within large organizations and/or remote locations, Web Builder
collects and displays project management information for each level
of management over the Internet or Intranet. GEM Web Builder
enables a user to complete a web site in minutes and guide the user
through the process. Web Builder includes user-definable business
rules that are color-coded to project tracking information in order
to identify problem areas. GEM Web Builder also allows a user to
obtain detailed project information through the web site. We have
installed GEM Web Builder with approximately five clients.
Corporate relationships
We have developed several business relationships that are significant
contributors to the development of our business, both directly, via business
referrals, joint projects and, indirectly, through the value of association.
While we do not have any long-term agreements with any of these associates, we
believe that our relationships are an important asset whose continuation
depends upon our continued performance.
Microsoft Corporation
We are and have been since inception an authorized Microsoft Solution
Provider. Solution Providers are for one year terms based on
qualifications. In addition, we are active with the Microsoft Project
team in supporting design strategy for future releases, and assist in the
rollout of new versions of their project management products. Our
participation provides us with insight into their project management
development strategy. Combining our software tools with Microsoft Project
and this knowledge of future development helps us to develop and
implement complete project management solutions for our customers. In
conjunction with Microsoft, we conduct seminars and training sessions on
Microsoft Project and Project Management throughout the United States to
their customers and clients. Based on this key relationship, Microsoft
has begun to refer to us customers with challenging project management
issues. While we consider the relationship with Microsoft to be material
both in terms of our exposure as well as an important source of
referrals, the Microsoft relationship does not itself generate material
fees or revenues. Nevertheless, we attribute our important relationships
with the City of San Antonio, Charter Communications and Kinko's to our
association with Microsoft.
Arthur Andersen, LLP
We have a marketing alliance with Arthur Andersen LLP (AA) and several
subcontracts with their clients for software and services. Under this
marketing arrangement and resulting subcontracts, AA has made numerous
client referrals to us including Air Products, Inc., Enron Energy
Service, Inc., Kaiser-Hill, Rocky Flats, the U.S. Army Chemical Weapons
Demilitarization Program and the U.S. Healthcare Finance Administration.
These projects are very confidential as they relate to large projects or
mergers and acquisitions. In addition to these services for clients of
AA, we also provide internal project management software, training and
consulting to AA in several of their regional and international offices.
While our relationship with AA is considered very valuable, it can be
terminated at any time if they determine that the quality of our
performance is unsatisfactory.
Vuent, Inc.
We have a licensing agreement with Vuent, Inc. that allows us to use
their 3D-design software that streams 3-dimensional designs over the
Internet to our Visual Project Manager(-TM-) product. We integrated the
Vuent technology with our proprietary software creating Visual Project
Manager. Although the product is not yet complete and there have been no
sales to date, this tool will enable clients to customize the information
relating to schedule, budget, and cost performance to the actual 3-
dimensional plans of a project and to communicate this information over
the internet along with the plans. Under our agreement, Vuent may market
our Visual Project Manager software to their clients, although no orders
have been received to date. This agreement expires in April 2000 and we
are in the process of renewing it for another year.
Business Engine (FKA Micro-Frame)
We have a non-exclusive marketing agreement with Business Engine for one
of our proprietary software tools (Gatekeeper(-TM-)) that allows them to
sell our software to their customers. Business Engine developed an
earned value cost analysis system, known as Micro-Frame Project Manager
(MPM) that works with government contracting in completing required
reports. Our developers have integrated Gatekeeper with MPM. We also
have a direct marketing effort that has been successful in selling the
Gatekeeper software to some of the larger government contractors.
Gatekeeper is currently installed at Boeing, Northrop Grumman, ITT, and
other contractors.
Clients and Customers
It is the nature of being a solutions provider that some relationships
with clients are for a finite term and end following the initial installation
and training, while other relationships have ongoing, continuing and long-term
potential. For example:
* Air Products, Inc. This was initially a free consultation at the
request of AA. In December 1999, we began providing consulting
assistance and software under a contract that now requires the full
time on-site assistance of three of our employees.
* U.S. Army Chemical Weapons Demilitarization Program. This
originally began in 1997. Since then, four contracts have been
awarded on this program, and we anticipate continued renewal of this
relationship in the future.
* U.S. Healthcare Finance Administration. This relationship began in
1998 and continues to demand the on-site assistance of our staff
consultants.
* City of San Antonio. Beginning in January of 1999, as a result of a
call from the city, the relationship has now evolved to the
installation of a preliminary version of our GEM(-TM-) software and
related consulting services.
* Charter Communications, Inc. A Microsoft referred client, Charter
Communications retained us to install an enterprise-wide project
management system using MSProject and our GEM(-TM-) software. This
contract has and will continue to include additional software and
additional consulting services, training and implementation.
* Kinko's. Another Microsoft referred client, Kinko's has also hired
us to provide an enterprise-wide project management system using
MSProject and our GEM(-TM-) software.
As of the date of this Prospectus, we have ongoing total solutions
installations at more than twelve client locations throughout the United
States. Each of these relationships requires ongoing software development and
consulting services as well as followup maintenance and support, software
upgrade and enhancement.
Markets
Over the past decade there has been a tremendous change in the
sophistication of project management software. This gives the modern manager
access to tools and reports that were formerly unavailable to even the largest
companies. With the dramatic pace of business change, fueled by the expansion
of the Internet, the project management software industry segment has
experienced tremendous growth. Through direct marketing, the alliances we
have already established, and future collaborations and alliances, we believe
our market share in products and services can grow.
Business managers are focusing on project management issues at the
project level and at the enterprise level. We see increased demand for
project management software tools that communicate transparently over the
Internet to provide managers, at all levels of the organization, with access
to timely cost, budget and schedule reports. This marketplace includes the
federal government, state and local governmental entities and any organization
that manages large and/or diverse projects. This would include, but not be
limited to, large municipalities, engineering and construction companies,
aerospace, software development companies, petrochemical producers, and oil
and gas companies. Aggressive marketing of our products and services combined
with continued recruitment of industry experts will require additional working
capital which may not be obtained in this offering.
Marketing and sales
Our marketing efforts to date have been limited due to our lack of
working capital. We have relied on referrals from Arthur Andersen and
Microsoft Corporation for over 75% of our revenues since inception. Our
marketing to date has been targeted toward building these two relationships
and attendance at conventions and trade shows. Members of our management team
are frequently invited to Microsoft and Arthur Andersen to make presentations
on project management issues to their customers and clients. These
presentations have provided the principal exposure of our products and
services to companies, organizations and governmental entities that would have
an interest in our solutions. In addition, we have found that, once we have
established a relationship with a client, the client usually has ongoing needs
that require continued and follow up services as well as representing a market
for our product enhancements and upgrades. To date, our lack of working
capital has prevented us from developing a more aggressive marketing plan.
As we offer a solution package consisting of consulting services and our
software products, we do not expect to market our software independent of our
consulting services. Due to its complexity, we believe that it is unlikely
that our software can be marketed independently of our total solutions package
which includes our initial review and assessment, installation and follow on
services and support.
Competition
A number of other companies compete with GeniSys in providing the kinds
of services that we do in the project management arena. Companies that
compete in the project management arena generally include ABT Corporation,
with its ABT Workbench product, IMS Information Management Services, Inc.,
with its product ProductExchange, Artemis Corporation, with its product
Artemis Views Four, Elabor, Inc. and SME. Our principal competitive advantage
over these companies is that their products are not web-based. Companies that
have developed web-based functionality in project management include
OnProject.com and Pacific Edge Software. We believe that our products have
superior functionality. In addition, we believe that we gain competitive
advantages through our strategic relationships with Microsoft, Arthur Andersen
and other leaders in the project management field. Nevertheless, there can be
no assurance that larger companies with greater resources will not compete
with us in areas in which we have developed niches.
Intellectual property
We have developed certain foundation and application software tools,
programs and products that we own and license to our clients on a non-
exclusive basis. We regard this software as proprietary and protect our
rights in it where appropriate with copyrights, trademarks, trade secret laws
and contractual restrictions on disclosure and transferring title. There can
be no assurance that any steps we take in this regard will be adequate to
deter misappropriation of our proprietary rights or independent third party
development of functionally equivalent products.
We have developed and rely on the trademarks that we use with our
products, including GeniSys Enterprise Manager(-TM-) or GEM(-TM-), Visual
Project Manager(-TM-) or VPM(-TM-) and Gatekeeper(-TM-). We have not applied
for or obtained federal registrations with respect to the use of our
trademarks; however, we claim common law trademark rights to those names.
However, there can be no assurance that we will not be subject to opposition,
cancellation or infringement proceedings based upon the use of a particular
trademark. The loss of the use of any one or more of our trademarks could
have a material adverse effect upon our ability to profitably market the
associated product or service.
In addition, our success is dependent upon our specialized expertise and
methodologies. To protect this proprietary information, we rely upon a
combination of trade secret and common laws, employee nondisclosure policies
and third party confidentiality agreements. However, there can be no
assurance that any of the steps we take will be adequate to deter
misappropriation of our specialized expertise and methodologies.
Specifically, there can be no assurance that others will not independently
develop substantially equivalent proprietary information and techniques or
otherwise gain access to our trade secrets, that our trade secrets will not be
disclosed or that we can effectively protect our rights to unpatented and/or
uncopyrighted trade secrets. Despite precautions we may take, unauthorized
parties may attempt to engineer, reverse engineer, copy or obtain and use our
products and other information we consider proprietary. We pursue a policy of
having our employees and consultants execute non-disclosure agreements at the
beginning of employment or consulting relationships with us. These agreements
provide that all confidential information developed or made known to the
individual during the course of the relationship with us shall be kept
confidential except in specified circumstances. There can be no assurance,
however, that these agreements will provide meaningful protection for our
trade secrets or other proprietary information in the event they are used or
disclosed in an unauthorized manner.
Although we believe that our services and products do not infringe on the
intellectual property rights of others, there can be no assurance that an
infringement claim will not be asserted against us in the future.
Research and development
We have three full-time employees and four part-time consultants devoted
to research and development. These employees and consultants are software
programmers with the full-time employees being involved in product
architecture. The majority of our research and development is undertaken
under contract with customers and clients as a result of which we may develop
a unique software program or module for the client's use on a non-exclusive
use basis. We generally retain the rights to all products that we develop for
clients so that we can use them for other customers and adapt them to other or
new applications. In the years ended March 31, 1999 and 1998, we incurred
approximately $450,000 and $100,000, respectively, for research and
development costs related to software development. During the nine months
ended December 31, 1999 and 1998, we incurred approximately $220,000 and
$390,000, respectively, for software development costs.
Employees and consultants
We have 25 core full-time employees, of whom 14 are located in our main
office in Houston, Texas and 11 are based in our other locations. In addition
to these core employees, we also have an additional labor pool consisting of
contract professionals that are hired on a part-time basis.
Facilities and equipment
Our principal executive offices are located in Houston, Texas. In
addition, we have offices in Torrance (Los Angeles area), California, Denver,
Colorado and Washington, D.C. Our Houston office consists of approximately
6,643 square feet which we hold on a four year sublease expiring 2002. Our
monthly rent is $5,536, with triple net adjustments.
Our Torrance office consists of 2,644 square feet which we occupy under a
three year lease expiring in March 2001. The monthly rent at that location is
$3,305, together with triple net adjustments. We only have two employees in
our Torrance location and do not have immediate plans to expand that facility.
Our Denver office is shared with Corporate Stock Transfer, Inc., our
stock transfer agent and a company owned by our primary stockholder, Carylyn
K. Bell. We pay a market rate of $1,500 per month for use of this office for
approximately 750 square feet and this rate includes administrative support.
We reimburse this company for all other out-of-pocket expenses incurred on our
behalf.
Our Washington, D.C. office consists of space utilized in the office of
one of our consultants, American Defense International (see "Consultants").
As part of our agreement with these consultants, we utilize their office space
as needed. We do not have any current plans to change these arrangements for
Washington D.C. location. We believe that each of these facilities are
adequate for the foreseeable future and do not plan any substantial expansion
or alteration.
We own computer equipment and office furniture and fixtures.
Consultants
We have a consulting agreement with American Defense International
("ADI") which assists us in establishing, developing and maintaining contacts
within the federal government. Under the agreement, ADI is paid a monthly
consulting fee of $7,500 which we share with Andersen Consulting LLP. The
agreement can be terminated by either party at any time.
We also have a consulting arrangement with McCandish Partners, a company
controlled by Carylyn K. Bell, the Company's principal stockholder and wife of
J. Daniel Bell, pursuant to which it pays $3,000 per month for financial
advisory services.
Legal proceedings
On February 17, 1999, a former employee/independent contractor of a
company previously owned by one of our executive officers, filed suit in
Superior Court in San Diego California, against us, the executive officer,
Jeff Spencer, and our principal stockholders. This suit is captioned Patrick
Foley v. Program Management Solutions Inc.; GeniSys Information Systems, Inc.;
et al. On March 25, 1999, we were served with the complaint. The complaint
alleges breach of contract, constructive trust and conspiracy. Our management
and legal counsel believe the suit is without substantial merit, we have
asserted counterclaims and plan to vigorously defend the case. The pending
suit is not expected to have a material adverse effect on us, although it will
require a portion of our scarce working capital to defend.
History
We were originally formed in February 1996 under the name "Zion
Enterprises, Inc." for the limited purpose of making a distribution of our
shares of common stock in order to become a widely held company with a large
stockholder base which would then seek a merger opportunity with a private
company that wanted to become publicly traded through a merger. In March
1999, we acquired all of the outstanding shares of common stock of GeniSys
Information Systems, Inc. in exchange for issuance to the shareholders of
GeniSys Information Systems, Inc. 75% of the total issued and outstanding
shares of our common stock. The terms of the transaction were negotiated at
arm's length between Mr. Bell, as CEO of GeniSys Information Systems, Inc.,
and principals of Zion Enterprises, Inc. No fairness opinion was obtained for
the transaction. As a result of the transaction, the former shareholders,
officers and directors of GeniSys Information Systems, Inc. assumed control of
us and changed our name to iGeniSys, Inc. GeniSys Information Systems, Inc.
was formed in March 1997 to pursue the development of software and ancillary
services relating to business systems generally and project management and
cost and risk analysis in particular. On the date of the transaction, its
assets consisted of strategic client relationships and software under
development.
<PAGE>
<PAGE>
MANAGEMENT
Directors, executive officers and key employees
The name, position with the Company, age of each Director, executive
officer and key employee of the Company is as follows:
<TABLE>
<CAPTION>
Name(1) Age Position
------- --- --------
<S> <C> <C>
J. Daniel Bell 55 Chairman of the Board,
President, Chief Executive
Officer
Carylyn K. Bell 41 Director, Secretary
Walter Strycker 70 Director
Henry Fong 61 Director
Craig Crawford 46 Vice President and Current
Chief Financial Officer
Jeffery M. Spencer 40 Vice President
Cameron R. Kruse(2) 38 Chief Financial Officer
</TABLE>
We conduct business through our wholly owned subsidiary, GeniSys
Information Systems, Inc. The name, position, and age of each Director and
executive officer of such subsidiary are as follows:
<TABLE>
<CAPTION>
Name(1) Age Position
------- --- --------
<S> <C> <C>
J. Daniel Bell 55 Chairman of the Board,
Chief Executive Officer
Craig Crawford 46 Director, President and
Chief Financial Officer
Jeffery M. Spencer 40 Director, Senior Vice
President
William M. Bell 34 Director, Secretary and
Treasurer
</TABLE>
- -------------
(1) J. Daniel Bell and Carylyn K. Bell are husband and wife. William M. Bell
is the son of J. Daniel Bell.
(2) Mr. Kruse began his employment effective April 26, 2000.
The following sets forth biographical information with respect to our
Directors and executive officers for the prior five years:
J. Daniel Bell has been Chairman of the Board and Chief Executive Officer
since March 1999and Chairman and Chief Executive Officer of GeniSys
Information Systems, Inc. since inception. Prior to his association with
iGeniSys, from 1988 to 1997 Mr. Bell served as Chairman of the Board and Chief
Executive Officer of Industrial Services Technologies, Inc. ("IST"), a Denver-
based acquisition platform company. This company was privately sold to Phillip
Services, Inc., a Canadian-based conglomerate serving the process industries.
Over the past ten years, Mr. Bell has managed or co-managed over twelve
acquisitions of various sizes, including a specialty welding and fabrication
company. He is also a director and officer of Dunn International, Inc. based
in Houston, Texas. Dunn International, Inc. is not an operating entity at the
present time. Mr. Bell attended Texas A&M University and graduated from Lamar
University with degrees in Economics and Marketing.
Craig Crawford has been Director and President of the subsidiary and Vice
President of the Company since March 1999. He assumed the duties of Chief
Financial Officer in April 2000. Having originally joined GeniSys in 1997,
Mr. Crawford is responsible for the day-to-day operations of the Company with
a principal focus on the Company's sales and marketing efforts and customer
relations. Prior to iGeniSys, Mr. Crawford served as Vice President, Western
Region, for a specialty welding and mechanical contracting company from 1995
to 1997. He was the Vice President, West Region, for Serv-Tech, Inc. from
1993 to 1995, and has served in Senior Management positions from Operations to
Finance at Rice University, Brown and Root, Inc. and Goodwin Dannenbaum
Littman and Wingfield, Inc. He attended the Colorado School of Mines,
studying Chemical Engineering, and graduated from North Carolina State
University with a BBA, Business Management.
Jeffery M. Spencer has been Senior Vice President and Director of the
Subsidiary and Vice President of the Company since March 1999 and is
responsible for the development of software tools and delivery of services.
He has developed project management solutions on a wide range of complex
projects, for example: X-33 (Space Plane), JSF (Joint Strike Fighter), Space
Station, NAVAIR (E2-C), Supercollider, Army SDI, Air Force SDI, and Navy MIDS
(Superproject conversion). Prior to GeniSys Information Systems, from 1989 to
1997 Mr. Spencer was the President of Program Management Solutions
Incorporated, a consulting firm specializing the design and customization of
Decision Support Systems utilizing Microsoft Windows-based products, and
customized training programs for related Microsoft Windows applications. Mr.
Spencer received a Bachelors of Science in Production and Operations
Management from California State University, Northridge.
Cameron R. Kruse began as Chief Financial Officer on April 26, 2000. For
approximately one year prior to joining iGeniSys, he was an engagement
executive for AuditForce, a professional services company performing audit,
tax and financial services. From 1998 to 1999, he was Audit Manager for
Textron, an international diversified manufacturer. From 1994 to 1998, he
performed various functions as Controller for Siebe, PLC, a diversified
international technology control manufacturer and engineering services
company. From 1992 to 1994, he was an Audit Supervisor for Nashua
Corporation, and from 1989 to 1992 a Senior Auditor for Raytheon Corporation.
From 1986 to 1989, he was a Staff Auditor with PriceWaterhouseCoopers LLP.
Mr. Kruse received a Bachelor of Science degree in Finance from the University
of Houston in 1985 and a Masters of Science degree in Accounting from the
University of Houston in 1987.
Carylyn K. Bell, Director, Secretary and Treasurer since March 1999, is
the wife of J. Daniel Bell, Chairman of the Board and Chief Executive Officer.
In 1985, she founded Corporate Stock Transfer, Inc., a service company located
in Denver, Colorado representing public and private companies in all aspects
of shareholder needs and continues to serve as its chief executive. From 1988
until 1991, she held the offices of Secretary and Treasurer of Industrial
Services Technologies, Inc., a Denver based acquisition platform company
headed by her husband. She also served as Secretary for E-Management Corp.
from 1987 until 1997.
William M. Bell, Director since 1999, is Vice President of Huttner &
Company, a Houston, Texas based management consulting firm. Prior to working
with Huttner & Company, Mr. Bell worked in the corporate finance consulting
department at Coopers & Lybrand, LLP. Mr. Bell is the son of J. Daniel Bell,
our Chairman of the Board and Chief Executive Officer.
Walter Strycker, Director since 1999, joined the Board of Directors of
iGeniSys Inc. in June 1999. Mr. Strycker serves as the President of Marine
Coastal Corporation, a financial, merger and acquisition, and corporate
business consulting firm. Mr. Strycker served as Chief Executive officer of
Marie Callender Pie Shops, Inc. from March 1991 to 1995. Prior to 1991, Mr.
Strycker was employed in various executive positions including Senior Vice
President Wheelabrator Environmental Systems, Senior Vice President Signal
Energy Systems, President Air Pollution Control Division of Wheelabrator Frye,
and President of Associates Venture Capital Corporation. Also, Mr. Strycker
was a founder and Chief Financial Officer of Decimus Corporation, a joint
venture with the Bank of America involving financial leasing and computer
services. He also spent fifteen years with the IBM Corporation in various
marketing positions as well as product development. Mr. Strycker is a
graduate of the University of California at Berkeley with a degree in Finance.
Henry Fong, Director since 1999, has been the President, Treasurer and a
Director of Equitex, Inc. since its inception in January 1983. Equitex,
formerly an investment company, is now an operating company which has executed
a definitive agreement to merge with a single bank holding company. From 1987
to June 1997, Mr. Fong was Chairman of the Board and Chief Executive Officer
of RDM Sports Group, Inc. and was its President and Treasurer from 1987 to
1996. From July 1996 to October 1997, Mr. Fong was a Director of IntraNet
Solutions, Inc., a publicly held company which provides internet/intranet
solutions to Fortune 1000 companies and was the Chairman of the Board and
Treasurer of its predecessor company, MacGregor Sports and Fitness, Inc., from
February 1991 until the two companies merged in July 1996. From January 1993
to January 20, 1999, Mr. Fong was Chairman of the Board and Chief Executive
Officer of California Pro Sports, Inc., a publicly traded manufacturer and
distributor of in-line skates, hockey equipment and related accessories. From
1959 to 1982 Mr. Fong served in various accounting, finance and budgeting
positions with the Department of the Air Force. During the period from 1972
to 1981, he was assigned to senior supervisory positions at the Department of
the Air Force headquarters in the Pentagon. In 1978 he was selected to
participate in the Federal Executive Development Program, and in 1981 he was
appointed to the Senior Executive Service. In 1970 and 1971, he attended the
Woodrow Wilson School, Princeton University and was a Princeton Fellow in
Public Affairs. Mr. Fong received the Air Force Meritorious Civilian Service
Award in 1982. Mr. Fong is a certified public accountant.
Each director is elected to serve for a term of one year until a
successor is duly elected and qualified.
Our executive officers are elected annually at the first meeting of our
Board of Directors held after each annual meeting of stockholders. Each
executive officer will hold office until his successor is duly elected and
qualified, until his resignation or until he shall be removed in the manner
provided by our By-Laws.
Currently, we do not have standing Audit, Compensation or Nominating
Committees of the Board of Directors. During the first six months of 2000 we
do plan to form an Audit Committee. No member of the Audit Committee will
receive any additional compensation for his service as a member of that
Committee and members of this committee will be primarily comprised of non-
officer directors. The Audit Committee will be responsible for providing
assurance that financial disclosures made by management reasonably portray our
financial condition, results of operations, plan and long-term commitments.
To accomplish this, the Audit Committee will oversee the external audit
coverage, including the annual nomination of the independent public
accountants, review accounting policies and policy decisions, review the
financial statements, including interim financial statements and annual
financial statements, together with auditor's opinions, inquire about the
existence and substance of any significant accounting accruals, reserves or
estimates made by management, review with management the Management's
Discussion and Analysis section of the Annual Report, review the letter of
management representations given to the independent public accountants, meet
privately with the independent public accountants to discuss all pertinent
matters, and report regularly to the Board of Directors regarding its
activities.
We also plan to form a Compensation Committee during fiscal 2000. No
member of the Compensation Committee will receive any additional compensation
for his service as a member of that Committee. The Compensation Committee
will be responsible for reviewing pertinent data and making recommendations
with respect to compensation standards for our executive officers, including
the President and Chief Executive Officer, establishing guidelines and making
recommendations for the implementation of management incentive compensation
plans, reviewing the performance of the President and CEO, establishing
guidelines and standards for the grant of incentive stock options to key
employees under our Equity Incentive Plan, and reporting regularly to our
Board of Directors with respect to its recommendations.
Except for J. Daniel Bell's relationship to Carylyn K. Bell, his wife,
and William M. Bell, his son, there are no family relationships among
Directors, nor any arrangements or understandings between any Director and any
other person pursuant to which any Director was elected as such. Our Class B
Common Stock, which can only be issued to J. Daniel Bell, gives Mr. Bell the
right to elect a majority of the Board. The present term of office of each
Director will expire at the next annual meeting of stockholders.
Director compensation
During the fiscal year ended March 31, 1999, outside Directors received
no cash compensation or other remuneration for their service on our Board of
Directors, however they were reimbursed their expenses associated with
attendance at meetings or otherwise incurred in connection with the discharge
of their duties.
The Board of Directors has adopted a formula plan pursuant to which
outside Directors are entitled to receive, under our 1999 Equity Incentive
Plan, an initial grant of non-qualified stock options exercisable to purchase
30,000 shares of common stock and, for each additional year of service after
the first year, additional non-qualified stock options exercisable to purchase
10,000 shares of our common stock. All non-qualified stock options issuable
to outside Directors under the Plan have an exercise price equal to the fair
market value of our common stock on the date of grant, and are exercisable for
a period of five years from the date of grant.
Directors who are also our executive officers receive no additional
compensation for their services as Directors.
Executive compensation
The following table and discussion set forth information with respect to
all compensation earned by or paid to our Chief Executive Officer ("CEO"), and
our most highly compensated executive officers other than the CEO, for all
services rendered in all capacities to us and our subsidiaries for each of our
last two fiscal years ended March 31, 1999 and 1998 (since inception).
However, no disclosure has been made for any executive officer, other than the
CEO, whose total annual salary and bonus does not exceed $100,000.
<PAGE>
<PAGE>
<TABLE>
TABLE 1
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
----------------------------------
Annual Compensation(1) Awards Payouts
-------------------------- --------------------- -------
Other All
Annual Restricted Other
Name and Compen- Stock LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($)(2) ($) SARs ($) ($)
- --------------- ------- -------- ----- --------- ---------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Daniel Bell, Chairman 1999 33,500 -0- -0- -0- -0- -0- -0-
1998 32,400 -0- -0- -0- -0- -0- -0-
Craig Crawford, Vice 1999 116,417 10,000 -0- -0- 470,000 -0- -0-
President 1998 92,436 3,000 -0- -0- -0- -0- -0-
Jeff Spencer, Vice 1999 147,561 16,000 -0- 29,000 570,000 -0- -0-
President 1998 129,619 10,000 -0- -0- -0- -0- -0-
- ---------------------
</TABLE>
<PAGE>
<PAGE>
Employment agreements
We have entered into written employment agreements with three of our key
employees, Craig Crawford, President of our subsidiary, Jeff Spencer, Senior
Vice President, and Cameron Kruse, our new Chief Financial Officer.
Mr. Crawford's contract is an at-will employment agreement which may be
terminated by either party; provided that, if we terminate his employment
without cause, we are obligated to continue his compensation under his
agreement for a period of six months, or twelve months if there has been a
change in our control, following the date of termination, unless he obtains
alternative employment sooner. The agreement provides that he receives an
annual salary of $116,000, plus incentive stock options under our plan
exercisable to purchase 470,000 shares of our common stock.
Mr. Spencer's contract is also an at-will employment agreement with
substantially the same termination provisions as are contained in Mr.
Crawford's. Mr. Spencer's annual salary is $156,000 and he has been granted
incentive stock options under our plan exercisable to purchase 570,000 shares
of our common stock.
Mr. Kruse's contract has an initial term of one year and is thereafter
terminable by either party. His base compensation is $90,000 per year. In
addition, Mr. Kruse has been granted incentive stock options exercisable to
purchase 100,000 shares of our common stock, which options are subject to
future vesting.
We have not obtained any key man life insurance on any of our executive
officers.
Equity Incentive Plan
On May 17, 1999 we adopted an Equity Incentive Plan. Pursuant to the
Plan, stock options granted to eligible participants may take the form of
incentive stock options or ISOs under Section 422 of the Internal Revenue Code
of 1986, as amended, or options which do not qualify as ISOs, known as non-
qualified stock options or NQSOs. As required by Section 422 of the Code, the
aggregate fair market value of our common stock with respect to our ISOs
granted to an employee exercisable for the first time in any calendar year may
not exceed $100,000. The foregoing limitation does not apply to NQSOs. The
exercise price of an ISO may not be less than 100% of the fair market value of
the shares of our common stock on the date of grant. The exercise price of an
NQSO may be set by the Plan administrator. An option is not transferable,
except by will or the laws of descent and distribution. If the employment of
an optionee terminates for any reason (other than for cause, or by reason of
death, disability, or retirement), the optionee may exercise his options
within a ninety day period following such termination to the extent he was
entitled to exercise such options at the date of termination. Either our
Board of Directors (provided that a majority of directors are "disinterested")
can administer the Plan, or our Board of Directors may designate a committee
comprised of directors meeting certain requirements to administer the Plan.
The Administrator will decide when and to whom to make grants, the number of
shares to be covered by the grants, the vesting schedule, the type of award
and the terms and provisions relating to the exercise of the awards. An
aggregate of 2,500,000 shares of our common stock is reserved for issuance
under the Plan.
At April 15, 2000, we had granted a total of 1,960,000 incentive stock
options under the Plan exercisable at $.40 per share, and 80,000 non-qualified
stock options which have been issued to certain members of our outside Board
of Directors and optionholders exercisable at $.40 per share. All options
have been issued with exercise prices at or above market value on the date of
issuance.
The following tables set forth certain information concerning the
granting and exercise of incentive stock options during the last completed
fiscal year by each of the named executive officers.
<TABLE>
TABLE 2
Option/SAR Grants for Last
Fiscal Year - Individual Grants
<CAPTION>
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees in or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
- ---------------------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
J. Daniel Bell -0- -0- -0- -0-
Craig Crawford 470,000 26% $.40 2009
Jeff Spencer 570,000 32% $.40 2009
- ---------------------
</TABLE>
The options granted to these officers vest in these officers over the next
five years. None of the above options have been exercised by the officers.
<PAGE>
<PAGE>
<TABLE>
TABLE 3
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
----------------------------------------------------
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($) (1)
Shares Acquired Value Realized Exercisable Exercisable/
Name on Exercise (#) ($) (Unexercisable) Unexercisable
- ---------------- --------------- -------------- --------------- -----------------
<S> <C> <C> <C> <C>
J. Daniel Bell -0- -0- -0- -0-
Craig Crawford -0- -0- 470,000 -0-
Jeff Spencer -0- -0- 570,000 -0-
- ----------------------
</TABLE>
<PAGE>
<PAGE>
(1) Value Realized is determined by calculating the difference between the
aggregate exercise price of the options and the aggregate fair market
value of our common stock on the date the options are exercised.
(2) The value of unexercised options is determined by calculating the
difference between the fair market value of the securities underlying the
options at fiscal year end and the exercise price of the options. The
fair market value of the securities underlying the options are based upon
the determination of the Board of Directors in light of the arms-length
transactions in the same securities.
Indemnification and Limitation on Liability of Directors
Our Articles of Incorporation provide that we shall indemnify, to the
fullest extent permitted by Colorado law, any director, officer, employee or
agent of the corporation made or threatened to be made a party to a
proceeding, by reason of the former or present official of the person, against
judgments, penalties, fines, settlements and reasonable expenses incurred by
the person in connection with the proceeding if certain standards are met. At
present, there is no pending litigation or proceeding involving any of our
directors, officers, employees or agents where indemnification will be
required or permitted. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to our directors, officers
and controlling persons pursuant to the foregoing provisions, or otherwise, we
have been advised that in the opinion of the Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
Our Articles of Incorporation limit the liability of our directors to the
fullest extent permitted by the Colorado Business Corporation Act.
Specifically, our directors will not be personally liable for monetary damages
for breach of fiduciary duty as directors, except for (i) any breach of the
duty of loyalty to us or our stockholders, (ii) acts or omissions not in good
faith or that involved intentional misconduct or a knowing violation of law,
(iii) dividends or other distributions of corporate assets that are in
contravention of certain statutory or contractual restrictions,
(iv) violations of certain laws, or (v) any transaction from which the
director derives an improper personal benefit. Liability under federal
securities law is not limited by the Articles.
<PAGE>
<PAGE>
CERTAIN TRANSACTIONS
Founders and promoters of Zion Enterprises, Inc.
When we first formed the Company, we issued 895,000 shares of common
stock to our original founders and promoters in exchange for their services.
The following sets forth the names of the company's promoters and the amount
of shares received by each for their services:
<TABLE>
<CAPTION>
Amount
Name of Shares
---- ---------
<S> <C>
Earnest Mathis, Jr.(1) 298,334
Gary J. McAdam(2) 298,333
Gary A. Agron 298,333
</TABLE>
- ---------------
(1) Shares were issued in the name of Mathis Family Partners, Ltd.
(2) Shares were issued in the name of GM/CM Family Partners, Ltd.
In April and May 1996, we distributed an additional 81,250 shares to
approximately 240 persons in order to create a large shareholder base. We
received no payment from the persons who received these shares.
We have been informed by the Commission that it is their view that none
of the 976,250 shares of our common stock which were issued to the original
shareholders of Zion Enterprises, Inc. may be resold without their being
registered under the Securities Act. As a result, we have agreed to register
for resale all of these shares in the concurrent offering being undertaken by
the Selling Shareholders.
Founders and promoters of GeniSys Information Systems, Inc.
When GeniSys Information Systems, Inc. ("GISI") was formed and organized
in 1997, it issued shares of its common stock to the following persons for the
consideration set forth below:
<TABLE>
<CAPTION>
Number of
Name Class Shares Consideration
- ---- ----- --------- -------------
<S> <C> <C> <C>
Carolyn K. Bell Class A 1,660,000 $25,000; conversion of
$75,000 of debt plus accrued
interest
J. Daniel Bell Class B 10,000 $100
</TABLE>
In March 1999 when we acquired GISI, we issued to Mrs. Bell a total of
6,682,571 shares of our common stock in exchange for her shares of Class A
Common Stock of GISI. In that exchange, Mr. Bell received 10,000 shares of
our Class B Common Stock in exchange for 10,000 shares of Class B Common Stock
of GISI.
Bridge loans and conversion
In anticipation of completing our acquisition of GeniSys Information
Systems, Inc., we arranged for a total of $580,000 of bridge loans in February
1999 which GeniSys Information Systems, Inc. used for working capital. The
persons who made the bridge loans then agreed to convert all of the loans into
1,472,083 shares of common stock at the same time that the acquisition of
GeniSys Information Systems, Inc. was completed. This represented conversion
of the bridge loans into common stock at a value of $.394 per share. The
bridge loans were held by 17 persons, including Mr. Fong, one of our
directors, who converted $200,000 in loans.
Acquisition of GeniSys Information Systems, Inc.
In March 1999, we completed the acquisition of 100% of the outstanding
shares of common stock of GeniSys Information Systems, Inc. in exchange for
7,516,740 shares of common stock. This resulted in the persons who control
GeniSys Information Systems, Inc., Mr. and Mrs. Bell, acquiring control of the
Company as well.
Transactions with principal shareholder
Carolyn K. Bell is one of our founders and promoters and our largest
principal shareholder. During the past two years, we have had a number of
transactions with Mrs. Bell which can be summarized as follows:
* Mrs. Bell provided working capital through a factoring line of
credit and revolving line of credit which reached a maximum
principal amount of $400,000, until repaid in May of 1999 when we
obtained a credit arrangement with a commercial financing source.
* Mrs. Bell has provided numerous loans to the Company which, as of
the date of this Prospectus, total $276,500.
* Mrs. Bell arranged for a $100,000 loan for us at a financial
institution and the loan is secured by a $100,000 certificate of
deposit owned by Mrs. Bell.
* Mrs. Bell is the principal owner of our transfer agent, Corporate
Stock Transfer, Inc.
* We use office space provided by Corporate Stock Transfer, Inc. in
its Denver, Colorado offices and pay rent of $1,500 for this space
and administrative services.
* We pay $3,000 per month for financial advisory services to McCandish
Partners, a company owned by Mrs. Bell, which has been accrued and
as of December 31, 1999 $68,000 is owed.
* Mr. and Mrs. Bell have personally guaranteed our credit line with
Guaranty Bank & Trust Company in the amount of $500,000.
While we have not formally adopted any policy controlling transactions
with our affiliates and principal shareholders, in each instance we believe
that the terms of these arrangements are commercially reasonable. Mrs. Bell
has made working capital available to us under circumstances where we were
unable to obtain it from other sources.
Transactions by certain affiliates
In January 2000, Mr. Craig Crawford, President and Director of our
subsidiary, sold to three of our other employees 70,000 shares of common stock
which he owned, which sales were at a price of $.40 per share. These
transactions will result in a one-time, non-cash charge against our income in
January because they are viewed as being essentially compensatory in nature
and the shares were sold at less than fair market value.
In February 2000, Mr. Fong, a member of the our Board of Directors,
loaned us $100,000. This loan was made to meet our operating cash needs to
purchase some past-due invoices from our financial institution. This loan is
secured by the purchased invoices and a second lien on our software products.
The loan carries an interest rate of 15% and is payable in May 2000. In March
2000, approximately $30,000 of this note was repaid.
<PAGE>
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the date of this Prospectus, the
stock ownership of each person known by us to be the beneficial owner of five
(5%) percent or more of our Class A common stock, all of our executive
officers and directors individually and all of our directors and executive
officers as a group. Each person has sole voting and investment power with
respect to the shares shown, except as noted.
<TABLE>
<CAPTION>
Percent of Class(1)(2)
Name and Address Amount and Nature --------------------------
of Beneficial of Beneficial Before After
Owner(3) Ownership Offering(2) Offering(2)(4)
- ---------------- ---------- --------- ---------
<S> <C> <C> <C>
J. Daniel Bell(5)(6) 42,191 .4% .3%
2750 East Cedar Avenue
Denver, CO 80209
Carylyn K. Bell(5)(7) 6,682,571 61.2% 53.8%
2750 East Cedar Avenue
Denver, CO 80209
Jeffery Spencer(8) 1,176,695 10.8% 9.5%
Craig Crawford(9) 924,000 8.5% 8.9%
Walter Strycker(10) 30,000 .3% .2%
Henry Fong(11)(13) 654,008 5.9% .7%
William Maury Bell(3)(13) 88,071 .8% .4%
Gulfstream Financial 558,375 5.1% 0.4%
Partners, LLC(12)(13)
All Officers and Directors 9,509,465 81.1% 72.6%
as a Group (7 persons)
</TABLE>
- ---------------
(1) Under SEC Rules, we include in the number of shares owned by each person
the number of shares issuable under outstanding options if those options
are exercisable within 60 days of the date of this Prospectus. We
calculate the ownership of each person who owns exercisable options by
adding (i) the number of exercisable options for that person only to (ii)
the number of total shares outstanding and dividing that result into
(iii) the total number of shares and exercisable options owned by that
person.
(2) Does not reflect voting percent. Mr. Bell's 10,000 shares of Class B
Common Stock entitle him to elect a majority of our directors.
(3) Unless otherwise noted, the address of each person is 654 North Belt
East, Suite 310, Houston, Texas 77060.
(4) Does not give effect to the exercise of any outstanding options or
warrant. Assumes all 1,500,000 shares of common stock are sold in the
offering.
(5) J. Daniel Bell is the husband of Carylyn K. Bell and the father of
William Maury Bell.
(6) Consists of 10,000 shares of Class B Common Stock and 32,191 shares of
Class A Common Stock. Mr. Bell's 10,000 shares of Class B Common Stock
entitle him to elect a majority of our directors. On matters other than
the election of directors, the shares of Class B Common Stock are counted
equally with shares of Class A Common Stock.
(7) Includes 500,000 shares of common stock held by Mrs. Bell as custodian of
Caitlyn Ann Bell, Christopher Ryan Bell, Henry Daniel Bell, Ian Gregory
Bell and Kathleen Ann Bell under the Colorado Uniform Gifts to Minors
Act. Also includes 3,032,221 shares held of record by McCandish, LLC, a
limited liability company of which Mrs. Bell is a manager and controlling
person. In November 1999, Mr. Crawford exercised options from Mrs. Bell
and purchased 350,000 shares at $.01 per share. In January 2000, Mr.
Crawford sold 171,000 of these shares in three separate, private sales
for total consideration of $78,000. Further in January 2000, Mr.
Crawford gifted 41,500 shares to persons involved with the formation of
GeniSys Information Systems, Inc.
(8) Includes incentive stock options granted under the Plan exercisable to
purchase, in the aggregate, 570,000 shares of common stock at an exercise
price of $.40 per share, subject to future vesting.
(9) Includes options granted by Mrs. Bell to Mr. Crawford exercisable to
purchase from shares of common stock beneficially owned by Mrs. Bell
350,000 shares of common stock at a price of $.001 per share and 250,000
shares of common stock at a price of $.10 per share. Also includes
incentive stock options granted under the Plan exercisable to purchase,
in the aggregate, 470,000 shares of common stock at an exercise price of
$.40 per share, subject to future vesting.
(10) Consists of non-qualified stock options granted under the Plan
exercisable to purchase, in the aggregate, 30,000 shares of common stock
at an exercise price of $.40 per share.
(11) Includes non-qualified stock options granted under the Plan exercisable
to purchase, in the aggregate, 30,000 shares of common stock at an
exercise price of $.40 per share and warrants to purchase 5,967 shares.
Includes the 558,375 shares of common stock held of record by Gulfstream
Financial Partners, LLC, of which Mr. Fong would be deemed a beneficial
owner by virtue of his power to vote and dispose of such shares.
(12) Gulfstream Financial Partners, LLC is a Colorado Limited Liability
Company whose members include Henry Fong, a member of the Board of
Directors. The members have the authority by majority vote to make
decisions with respect to the voting or disposition of those shares owned
by us.
(13) In the concurrent offering being undertaken by certain selling
shareholders, Henry Fong, William Maury Bell and Gulfstream Financial
Partners, LLC are each offering shares for sale on a delayed and
continuous basis. The following table sets forth information related to
their share ownership giving effect to the Selling Shareholder offering:
<TABLE>
<CAPTION>
Shares Shares Beneficially
Name Offered Owned After Offering Percent
- ---- ------- -------------------- -------
<S> <C> <C> <C>
Henry Fong 59,666 35,967 .3%
William Maury Bell 38,071 53,807 .4%
Gulfstream Financial
Partners, LLC 507,614 50,761 .4%
</TABLE>
<PAGE>
<PAGE>
THE COMPANY OFFERING
We are offering on a best efforts basis up to 1,500,000 shares of our
common stock at an offering price of $1.50 per share. The offering price of
the common stock being offered hereby was arbitrarily determined by us and is
not necessarily related to our assets, book value or financial condition. In
determining the offering price and the number of shares of common stock to be
offered, we considered such factors as our financial condition, our net
tangible book value, limited operating history and general condition of the
securities market. Accordingly, the offering price of the common stock may
not indicate the actual value of the Company.
We are offering the shares of common stock to the public through our
chief executive officers and will rely primarily on the efforts of J. Daniel
Bell, our President and CEO and Henry Fong, a director. No commissions, fees
or other compensation will be paid to officers or directors in connection with
the offering. We may retain the services of selling agents who are members of
the National Association of Securities Dealers to assist us. On any sales
made by the selling agents, a commission of up to ten percent (10%) may be
paid. To date there exists no arrangements or commitments to retain any
selling agent.
We will offer the shares to the public beginning on the date of this
Prospectus and ending 90 days from the date of this Prospectus, unless all of
the shares are sold sooner. Investors in the offering will be asked to sign a
subscription agreement at the time they pay for their shares. We have no
arrangements to escrow or impound any of the proceeds from the sale of shares,
and all proceeds will be immediately deposited into our general operating
account and used for working capital. We intend to deliver to investors
certificates for their shares within 30 days of accepting their subscription
agreements.
There currently exists no public trading market for our common stock, and
we cannot assure you that such a market will develop in the future. In the
absence of an active public trading market, an investor may not be able to
liquidate his investment without considerable delay, if at all. If a market
does develop, the price for our securities may be highly volatile and may bear
no relationship to our actual financial condition or results of operation.
Our securities may be quoted on the OTC Electronic Bulletin Board or in
the "pink sheets" maintained by the National Quotations Bureau, Inc. which
reports quotations by brokers or dealers making a market in particular
securities. We have no agreement with any broker or dealer to act as a
marketmaker for our securities and there is no assurance that we will be
successful in obtaining any marketmakers. The lack of a marketmaker for our
securities could adversely influence the market for and price of our
securities, as well as your ability to dispose of, or to obtain accurate
quotations as to the price of, our securities.
<PAGE>
<PAGE>
DESCRIPTION OF SECURITIES
We are authorized to issue up to 100,010,000 shares of $.001 par value
common stock and 50,000,000 shares of $.01 par value preferred stock. As of
April 15, 2000, 10,915,027 shares of Class A Common Stock, 10,000 shares of
Class B Common Stock and no shares of preferred stock were issued and
outstanding, and there were 281 stockholders of record.
Common Stock
Our authorized common stock consists of 100,000,000 shares of Class A
Common Stock and 10,000 shares of Class B Common Stock. The shares of Class A
Common Stock and Class B Common Stock are identical with respect to the
relative rights and preferences of holders of such shares with respect to
dividends, payment on liquidation, lack of cumulative voting and preemptive
rights. However, the Class B Common Stock may only be issued to J. Daniel
Bell, our Chairman and CEO, or an entity controlled by Mr. Bell. The holders
of Class B Common Stock voting as a separate class have the right to elect a
majority of the members of our Board of Directors. All issued and outstanding
shares of Class B Common Stock automatically convert into an equal number of
Class A Common Stock if and when transferred to any person other than J.
Daniel Bell.
Each holder of common stock is entitled to one vote for each share held
of record. There is no right to cumulative voting of shares for the election
of directors. The shares of Class A Common Stock are not entitled to pre-
emptive rights and are not subject to redemption or assessment. Each share of
Class A Common Stock is entitled to share ratably in distributions to
stockholders and to receive ratably such dividends as may be declared by our
Board of Directors out of funds legally available therefor. Upon our
liquidation, dissolution or winding up, the holders of Class A Common Stock
are entitled to receive, pro-rata, our assets which are legally available for
distribution to stockholders. The issued and outstanding shares of common
stock are validly issued, fully paid and non-assessable.
Preferred Stock
We are authorized to issue up to 50,000,000 shares of $.01 par value
preferred stock. Our preferred stock can be issued in one or more series as
may be determined from time-to-time by our Board of Directors. In
establishing a series our Board of Directors shall give to it a distinctive
designation so as to distinguish it from the shares of all other series and
classes, shall fix the number of shares in such series, and the preferences,
rights and restrictions thereof. All shares of any one series shall be alike
in every particular. Our Board of Directors has the authority, without
stockholder approval, to fix the rights, preferences, privileges and
restrictions of any series of preferred stock including, without limitation:
* the rate of distribution,
* the price at and the terms and conditions on which shares shall be
redeemed,
* the amount payable upon shares for distributions of any kind,
* sinking fund provisions for the redemption of shares,
* the terms and conditions on which shares may be converted if the
shares of any series are issued with the privilege of conversion,
and
* voting rights except as limited by law.
Although we currently do not have any plans to issue shares of preferred
stock or to designate any series of preferred stock, there can be no assurance
that we will not do so in the future. As a result, we could authorize the
issuance of a series of preferred stock which would grant to holders preferred
rights to our assets upon liquidation, the right to receive dividend coupons
before dividends would be declared to common stockholders, and the right to
the redemption of such shares, together with a premium, prior to the
redemption to common stock. Our common stockholders have no redemption
rights. In addition, our Board could issue large blocks of voting stock to
fend off unwanted tender offers or hostile takeovers without further
stockholder approval.
Warrants
We have issued to certain investors a total of 147,205 Class A Warrants,
each exercisable for one year to purchase a share of our common stock at a
price of $1.00 per share. The Class A Warrants expire on October 31, 2000.
We have the ability to repurchase the warrants if we have registered the
exercise of the warrants with the Commission and our public trading price has
been more than $1.50 per share for at least ten consecutive trading days. In
such event, holders of the warrant will have a 30 day notice period in which
to exercise the warrants, and any warrants not exercised will be redeemed by
us at a redemption price of $.01 per share.
Transfer Agent, Warrant Agent and Registrar
The transfer agent and registrar for our common stock is Corporate Stock
Transfer, Inc., Denver, Colorado. Ms. Carylyn Bell, one of our directors,
executive officers and principal shareholders, is the controlling person of
the transfer agent.
Reports to Stockholders
We intend to furnish annual reports to stockholders which will include
audited financial statements reported on by our independent certified public
accountants. In addition, we will issue unaudited quarterly or other interim
reports to stockholders as it deems appropriate.
LEGAL MATTERS
The validity of the issuance of the shares we are offering will be passed
upon for us by Neuman & Drennen, LLC, Boulder, Colorado.
EXPERTS
The audited consolidated financial statements of iGeniSys, Inc. and
subsidiaries included herein and elsewhere in the Registration Statement have
been audited by Gelfond Hochstadt Pangburn, P.C., independent certified public
accountants, for the periods and to the extent set forth in their reports
appearing herein and elsewhere in the Registration Statement. Such financial
statements have been so included in reliance upon the reports of such firm
given upon their authority as experts in auditing and accounting.
<PAGE>
<PAGE>
AVAILABLE INFORMATION
You may read and copy any document we file at the Commission's Public
Reference Rooms in Washington, D.C., New York, New York, and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the Public Reference Rooms. You can also obtain copies of our
Commission filings by going to the Commission's website at http://www.sec.gov.
We have filed with the Commission a Registration Statement on Form SB-2
to register the shares of our common stock and common stock warrants to be
sold by the Selling Securityholders and issued pursuant to the exercise of the
warrants. This Prospectus is part of that Registration Statement and, as
permitted by the Commission's rules, does not contain all of the information
set forth in the Registration Statement. For further information about us or
our common stock, you may refer to the Registration Statement and to the
exhibits filed as part of the Registration Statement.
We are not currently subject to the informational filing requirements of
the Exchange Act. However, as a result of this offering, we will become
subject to these requirements and will file periodic reports, including annual
reports containing audited financial statements, reports containing unaudited
interim financial statements, quarterly and special reports, proxy statements
and other information with the Commission. We will provide without charge to
each person who receives this Prospectus copies of our reports and other
information which we file with the Commission. Your request for this
information should be directed to our Vice President and Chief Financial
Officer, Craig Crawford, at our corporate office in Houston, Texas. You can
also review this information at the public reference rooms of the Commission
and on the Commission's website as described above.
<PAGE>
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
This index relates to the consolidated financial statements set forth in
this Prospectus of iGeniSys, Inc.
Independent Auditors' Report of Gelfond Hochstadt Pangburn, P.C. F-2
Consolidated Balance Sheets as of March 31, 1999 and 1998 and
as of December 31, 1999 (unaudited) F-3
Consolidated Statements of Operations for the year ended
March 31, 1999, for the period May 1, 19997 (inception) to
March 31, 1998, and for the nine months ended December 31, 1999
(unaudited) and 1998 F-5
Consolidated Statements of Shareholders' Equity for the year
ended March 31, 1999 and for the period from May 1, 1997
(inception) to March 31, 1998 and the nine month period
ending December 31, 1999 (unaudited) F-6
Consolidated Statements of Cash Flows for the year ended
March 31, 1999, for the period May 1, 1997 (inception) to
March 31, 1998, and for the nine months ended December 31, 1999
(unaudited) and 1998 F-7
Notes to Consolidated Financial Statements F-9
<PAGE>
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
iGeniSys, Inc.
We have audited the accompanying consolidated balance sheets of iGeniSys, Inc.
and subsidiary as of March 31, 1999 and 1998, and the related consolidated
statements of operations, shareholders' equity, and cash flows for the year
ended March 31, 1999 and the period from May 1, 1997 (inception) to March 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with 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 misstatements. 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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of iGeniSys,
Inc. and subsidiary as of March 31, 1999 and 1998, and the results of their
operations and their cash flows for the year ended March 31, 1999 and the
period from May 1, 1997 (inception) to March 31, 1998, in conformity with
generally accepted accounting principles.
As discussed in Note 9 to the financial statements, subsequent to the issuance
of the Company's March 31, 1999 financial statements, management of the
Company determined that a portion of previously capitalized software costs
should have been expensed. As a result, development costs as shown on the
Company's March 31, 1999 balance sheet have been reduced by $250,000, and
selling, general and administrative expenses have been increased by a similar
amount increasing the net loss for the year ended March 31, 1999 to $549,243.
GELFOND HOCSTADT PANGBURN, P.C.
Denver, Colorado
June 25, 1999,
February 16, 2000 as to Note 9
<PAGE>
<PAGE>
iGENISYS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998 1999
(unaudited)
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
------
CURRENT ASSETS:
Accounts receivable, net of
allowance for doubtful accounts
of $79,500, $50,000, and
$104,000 as of March 31, 1999
and 1998 and December 31, 1999,
respectively $ 933,134 $ 889,091 $ 465,260
Other receivables 12,055 33,649 23,192
Contracts in process 125,611 45,723 8,031
Prepaid expenses and other 36,689 47,853 63,995
----------- ----------- -----------
Total current assets 1,107,489 1,016,316 560,478
EQUIPMENT, net (Note 3) 147,359 94,078 147,693
INTANGIBLES AND OTHER ASSETS:
Development costs, net of
accumulated amortization of
$10,366 at March 31, 1999
and $56,464 at December 31,
1999 (Note 9) 299,819 46,521 341,155
Royalties (Note 2) 81,000 11,000 55,000
Deposits and other 9,154 3,784 61,093
----------- ----------- -----------
$1,644,821 $ 1,171,699 $1,165,419
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Bank overdraft $ 16,632 $ 23,937 $ 59,360
Accounts payable, trade 508,954 402,378 551,231
Revolving line of credit
(Notes 4 and 10) 56,039 - 324,190
Revolving line of credit and
notes payable to shareholder
(Note 2) 394,409 144,000 96,531
Current portion of obligations
under capital leases (Note 5) 30,790 23,903 31,653
Accrued payroll, taxes and
withholdings 257,396 84,159 129,430
Due to affiliate (Note 2) 161,235 363,396 126,304
Deferred contract revenue - - 45,000
Management fees payable, affiliate
(Note 2) 42,000 6,000 69,000
----------- ----------- -----------
Total current liabilities 1,467,455 1,047,773 1,432,699
LONG-TERM DEBT:
Convertible note payable,
shareholder (Note 2) - 75,000 -
Long-term portion of obligations
under capital leases (Note 5) 23,310 43,902 -
Total liabilities 1,490,765 1,166,675 1,432,699
COMMITMENTS (Note 6 and 10)
SHAREHOLDERS' EQUITY (Notes 7 and 10):
Preferred stock, $.01 par; authorized
50,000,000 shares; no issued and
outstanding shares
Common stock, $.001 par value;
authorized 100,010,000 shares:
Class A; issued and outstanding
9,955,023 and 4,634,351 shares
as of March 31, 1999 and
1998, respectively, 10,915,027
at December 31, 1999 9,954 4,634 10,915
Class B; issued and outstanding
10,000 shares (1999 and 1998) 10 10 10
Additional paid-in capital 713,411 20,456 1,184,250
Accumulated deficit (569,319) (20,076) (1,462,455)
----------- ----------- -----------
154,056 5,024 (267,280)
----------- ----------- -----------
$1,644,821 $ 1,171,699 $ 1,165,419
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements
<PAGE>
<PAGE>
iGENISYS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the period For the nine months
For the year May 1, 1997 ended December 31,
Ended (inception), to ----------------------
March 31, 1999 March 31, 1998 1999 1998
(unaudited)
-------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES $ 3,049,128 $ 1,882,445 $ 2,032,767 $1,868,671
-------------- ------------- ----------- ------------
OPERATING EXPENSES:
Contract costs 1,478,633 1,036,945 1,297,519 975,912
Research and development 453,525 101,124 221,136 98,725
Selling, general and administrative:
Affiliates (Note 2) 36,000 6,000 27,000 27,000
Other 1,490,148 726,302 1,210,182 1,296,720
Depreciation and amortization 57,756 6,253 90,115 32,841
-------------- ------------- ----------- ------------
3,516,062 1,876,624 2,845,952 2,381,198
-------------- ------------- ----------- ------------
OPERATING (LOSS) INCOME (466,934) 5,821 (813,185) (512,527)
INTEREST EXPENSE
Shareholder (Note 2) 29,823 17,218 10,204 33,458
Other 52,486 8,679 69,747 12,717
-------------- ------------- ----------- ------------
82,309 25,897 79,951 46,175
-------------- ------------- ----------- ------------
NET LOSS $ (549,243) $ (20,076) $ (893,136) $ (558,702)
============== ============ ============ ===========
BASIC AND DILUTED LOSS PER SHARE $ (0.09) $ (0.00) $ (0.09) $ (0.12)
============== ============ ============ ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 6,165,715 4,602,510 10,295,938 4,602,510
============== ============ ============ ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements
<PAGE>
<PAGE>
iGENISYS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED MARCH 31, 1999 AND FOR THE PERIOD
FROM MAY 1, 1997 (INCEPTION) TO MARCH 31, 1998
AND THE NINE MONTH PERIOD ENDING DECEMBER 31. 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Class A Class B Addi- Total
Common Stock Common Stock tional Retained Share-
------------------- ---------------- Paid-in Earnings holders'
Shares Amount Shares Amount Capital Deficit Equity
---------- ------- ------- ------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES, May 1, 1997 - - - - - - -
Common stock issued for cash 4,634,351 $4,634 10,000 $ 10 $ 20,456 $ 25,100
Net income - - - - - $ (20,076) (20,076)
---------- ------- ------- ------- ---------- ---------- -----------
BALANCES, March 31, 1998 4,634,351 4,634 10,000 10 20,456 (20,076) 5,024
Conversion of notes and
interest payable 2,129,711 2,130 79,605 81,735
Common stock issued for
services 742,678 742 34,758 35,500
Acquisition of the assets of
Zion Enterprise, Inc.
(Note 1) 976,200 976 64 1,040
Common stock issued for cash 1,472,083 1,472 578,528 580,000
Net loss - - - - - (549,243) (549,243)
---------- ------- ------- ------- ---------- ---------- -----------
BALANCES, March 31, 1999 9,955,023 9,954 10,000 10 713,411 (569,319) 154,056
Common stock issued for cash,
unaudited 960,004 961 - - 470,839 - 471,800
Net loss, unaudited - - - - - (893,136) (893,136)
---------- ------- ------- ------- ---------- ---------- -----------
BALANCES, December 31,
1999, unaudited 10,915,027 $10,915 10,000 $ 10 $1,184,250$(1,462,455) $ 267,280
========== ======= ======= ======= ========== ========== ===========
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements
<PAGE>
<PAGE>
iGENISYS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION> For the For the nine
For the period May 1, months ended
year Ended1997 (incept- December 31,
Ended March tion), to ----------------------
31, 1999 March 31, 1998 1999 1998
(unaudited)
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (549,243) $ (20,076) $ (893,136) $ (558,702)
Adjustments to reconcile net loss to net cash
used in operating activities -
Provision for doubtful accounts 79,500 50,000 24,500 -
Depreciation and amortization 57,755 6,252 90,115 32,841
Provision for loss on royalties - - 26,000 -
Issuance of common stock as compensation 35,500 - - -
(Increase) decrease in -
Accounts and other receivables (123,543) (939,091) 443,374 425,495
Contracts in process (79,888) (45,723) 117,580 (106,832)
Prepaid expenses and other 32,758 (81,502) (38,443) (36,545)
Increase (decrease) in -
Accounts payable 113,311 402,378 42,280 66,336
Accrued payroll, taxes and withholdings 173,237 84,159 (127,966) 294,994
Due to affiliate (312,482) 363,396 (35,049) (413,396)
Deferred revenue - - 45,000 -
Management fees payable, affiliate 36,000 6,000 27,000 6,000
----------- ----------- ---------- ----------
Net cash used in operating activities (537,095) (174,207) (278,745) (289,809)
----------- ----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (88,013) (29,434) (45,334) (75,902)
Development costs (263,665) (46,521) (86,336) (57,625)
Purchase of royalties (70,000) (11,000) - (70,000)
Deposits and other assets (5,369) (3,784) (51,939) (5,370)
----------- ----------- ---------- ----------
Net cash used in operating activities (427,047) (90,739) (183,609) (208,897)
----------- ----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayment of) bank overdraft (7,305) 23,937 42,728 (23,937)
Proceeds from notes payable to shareholder 558,355 225,000 50,000 -
(Repayments of) proceeds from revolving line
of credit to shareholder (307,946) (6,000) (347,878) (8,257)
Proceeds from line of credit, net 166,360 - 268,151 589,882
Repayments of obligations under capital leases (26,362) (3,091) (22,447) (13,645)
Proceeds from issuances of common stock 581,040 25,100 471,800 -
----------- ----------- ---------- ----------
Net cash provided by financing activities 964,142 264,946 462,354 544,043
----------- ----------- ---------- ----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS - - - 9,703
CASH AND CASH EQUIVALENTS, BEGINNING - - - -
----------- ----------- ---------- ----------
CASH AND CASH EQUIVALENTS, ENDING $ - $ - $ - $ 9,703
=========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid for interest $ 87,232 $ 20,974 $ 84,592 $ 54,321
Cash paid for taxes - - - -
=========== =========== =========== ===========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
During the period from May 1, 1997 (inception) to March 31, 1998 and the year
ended March 31, 1999, the Company executed capital lease agreements for the
purchase of property and equipment totaling $12,657 and $70,896, respectively.
During August 1998 the Company's major stockholder converted $75,000 of
convertible notes payable plus accrued interest of $6,735 into 2,129,711 shares
of the Company's common stock, in satisfaction of amounts due.
The accompanying notes to financial statements are an integral part
of these statements.
<PAGE>
<PAGE>
iGENISYS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1999 AND 1998 AND NINE MONTHS ENDED
DECEMBER 31, 1999 AND 1998, (UNAUDITED)
1. Organization and summary of significant accounting policies:
Corporate Background
GeniSys Information Systems Inc. ("GeniSys") is a Colorado corporation
formed on May 1, 1997 and it is the operating subsidiary of iGeniSys, Inc.
(the "Company"). The Company's primary business is management consulting in
the project management arena and the development of supporting project
management software. GeniSys also performs ancillary services relating to
assisting its customers in implementing its software and performing
independent cost and risk analyses. Through March 31, 1999 (and December 31,
1999, unaudited), substantially all of the Company's customers were located
throughout the United States.
An independent group of investors formed Zion Enterprises, Inc. ("Zion")
in February 1996 as a Colorado corporation. Zion was formed for the sole
purpose of establishing a widely held company that would subsequently seek a
merger with another entity that desired to merge. Through March 1999, Zion had
no operations or business activity.
In March 1999, Zion acquired all of the outstanding shares of the common
stock of GeniSys in exchange for newly issued shares of Zion, whereby GeniSys'
shareholders received 75% of the outstanding post-merger common stock. Zion
became the parent company of GeniSys through this transaction. As a result of
the transaction, the former officers and directors of GeniSys assumed control
of Zion and changed the name to iGeniSys, Inc. This transaction has been
accounted for as an acquisition of Zion by GeniSys and a recapitalization of
GeniSys. The historical financial statements prior to this transaction are
those of GeniSys as Zion had no significant activities. Also, the equity
accounts of GeniSys have been restated to reflect the exchange ratio of one
GeniSys share for 4.184 Zion shares. All significant intercompany
transactions have been eliminated in consolidation.
The consolidated balance sheet as of December 31, 1999, the consolidated
statements of operations and cash flows for the nine months ended December 31,
1999 and 1998, and the consolidated statements of shareholders' equity for the
nine months ended December 31, 1999 have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows for all such periods have been made. The
results of operations for the nine months ended December 31, 1999 are not
necessarily indicative of the operating results for the full year.
Significant Accounting Policies
Basis of Preparation of Financial Statements - The Company has incurred
operating losses since inception due to unassigned labor costs, development of
its software products, and efforts to gain market acceptance for such
products. These losses have caused the Company to operate with limited
liquidity and created a deficit working capital as of March 31, 1999.
Management has developed a plan to increase its working capital and subsequent
to March 31, 1999 has raised equity capital of $471,800 as discussed in Note 9
through private placement of securities. This plan includes the effort to
raise additional equity through public sale of securities during fiscal year
ended March 31, 2000. Management's plans also include reducing operating
costs while increasing sales and marketing efforts. However, the Company is
not certain as to whether it will be successful in raising additional equity
or increasing revenues. If management's plans are not successful, operations
could be significantly reduced.
Contracts in Process - Contracts in process represent the cost of work
performed on contracts that have not been billed to the customer.
Property and Equipment - Property and equipment is stated at cost.
Depreciation, including amortization of capital leases, is provided for on the
straight-line method over the shorter of the lease term or estimated useful
lives of the assets, primarily five years.
Development Costs - The Company's software development costs consists
primarily of enhancements and software production from costs related to
products for which technological and market feasibility has been established.
Accordingly, such costs have been capitalized as incurred. Capitalization
ceases when the product has been completed and the product is ready for
release to our customers. Prior to the technological feasibility, development
costs were expensed. None of these costs were incurred under contracts with
customers. In the years ended March 31, 1999 and 1998, the Company incurred
approximately $450,000 and $100,000, respectively, for research and
development expenses related to software development. During the nine months
ended December 31, 1999 and 1998, the Company incurred approximately $220,000
and $390,000, respectively, for research and development expenses.
Amortization of the capitalized cost begins on a straight-line basis over the
estimated lives of the products, generally three years, when the product is
complete. Amortization expense of approximately $10,366 was recorded related
to these costs during the year ended March 31, 1999; no amortization was
recorded in the period ended March 31, 1998. During the nine month period
ended December 31, 1999 (unaudited), $46,098 was recorded as amortization
costs; no amortization was recorded in the corresponding period in 1998.
Management assesses the carrying values of its development costs and
other long-lived assets for impairment when circumstances warrant such a
review. Based on its review, management does not believe that any impairment
has occurred as of March 31, 1999 and 1998, nor as of December 31, 1999
(unaudited).
Revenue Recognition - Sales of the Company's software products are
recognized when shipped. The Company's revenues from consulting and
implementation services are recognized when the services are performed.
Software maintenance revenues are deferred and recognized over the term of the
related contract.
Income Taxes - Deferred tax assets and liabilities are recorded for the
estimated future tax effects of: (a) temporary differences between the tax
basis of assets and liabilities and amounts reported in the balance sheets,
and (b) operating loss and tax credit carryforwards. The overall change in
deferred tax assets and liabilities for the period measures the deferred tax
expense for the period. Effects of changes in enacted tax laws on deferred
tax assets and liabilities are reflected as adjustments to tax expense in the
period of enactment. The measurement of deferred tax assets may be reduced by
a valuation allowance based on judgmental assessment of available evidence if
deemed more likely than not that some or all of the deferred tax assets will
not be realized.
Basic and Diluted Loss per Share - The Company determines basic and
diluted loss per share in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 128, Earnings Per Share, which is effective for the
years ended after December 31, 1997. The basic net earnings (loss) per common
share is computed by dividing the net loss by the weighted average number of
shares outstanding during a period. Diluted net earnings (loss) per common
share is computed by dividing the net loss, adjusted on an as if converted
basis, by the weighted average number of common shares outstanding plus
potential dilutive securities. Stock options are not considered in the
calculation, as the impact of the potential common shares would be to decrease
loss per share.
Cash and Cash Equivalents - Cash and Cash Equivalents include cash and
other highly liquid investments with maturities of three months or less at the
date of acquisition. Cash equivalents are stated at cost, which approximates
market value.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions. These estimates and assumptions affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results will be determined based on the outcome of
future events and could differ from the estimates.
Credit and Other Risk Considerations - The Company's accounts receivable
and its costs and estimated earnings in excess of costs on uncompleted
contracts subject the Company to credit risk, as collateral is generally not
required. The Company performs credit evaluations of its customers' financial
condition and maintains allowances for potential credit losses. In the
opinion of management, actual losses and allowances have been within its
expectations. The carrying amount of the Company's receivables and its costs
and estimated earnings in excess of costs on uncompleted contracts
approximates their fair value.
For the periods ended March 31, 1999 and 1998, approximately 29% and 42 %
of the Company's revenues were billed to one customer, respectively
(approximately 42.3% and 11.6% for the nine month periods ended December 31,
1999 and 1998, respectively, unaudited). At March 31, 1999 and 1998,
approximately 56% and 47%, respectively, of total receivables were due from
this customer (17.1% at December 31, 1999). Also for the year ended March 31,
1999, another customer accounted for 10% of the Company's sales (approximately
18.3% and 14.1% for the nine month periods ended December 31, 1999 and 1998,
respectively, unaudited). Additionally, two other customers accounted for 10%
and 12% of total accounts receivables at March 31, 1999. At March 31, 1998,
another two customers accounted for 13% and 17% of total accounts receivable.
As of December 31, 1999, another two customers accounted for 19.6% and 12.4%
of our total accounts receivable.
The Company is subject to risks and uncertainties common to growing
technology-based companies, including rapid technological change, growth and
commercial acceptance of its products, dependence on principal products and
third party technology, new product development, new product introductions and
other activities of competitors, dependence on key personnel, and limited
operating history.
Stock- based Compensation - SFAS No. 123, Accounting for Stock-Based
Compensation, allows companies to choose whether to account for employee
stock-based compensation on a fair value method, or to continue accounting for
such compensation under the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB
25). The Company has chosen to account for employee stock-based compensation
using APB 25. Accordingly, compensation cost for stock options is measured as
the excess, if any, of the quoted market price of the Company's stock at the
date of the grant over the options' exercise price.
Recent Accounting Pronouncements
COMPREHENSIVE INCOME - In June 1997, the Financial Accounting Standards
("FASB") issued SFAS No. 130, Reporting Comprehensive Income. This statement
is effective for financial statement issued for periods beginning after
December 15, 1997. The Company adopted this statement during 1998 and it had
no material impact on the Company's financial statement disclosures.
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION - In June 1997, the
FASB issued SFAS No. 131, Disclosure about Segments of an Enterprise and
Related Information. This statement is effective for fiscal years beginning
after December 15, 1997. SFAS 131 requires the reporting of profit and loss,
specific revenue and expense items, and assets for reportable segments. It
also requires the reconciliation of total segment revenues, total segment
profit or loss, total segment assets, and other amounts disclosed for
segments, in each case to the amounts in the general purpose financial
statements. As the Company only operates in one segment, adopting this
statement had no material impact on the Company's financial statement
disclosures.
PENSION AND OTHER POSTRETIREMENT BENEFITS - In February 1998, the FASB
issued FAS No. 132, Employers' Disclosures about Pensions and Other Post-
retirement Benefits. SFAS 132 standardizes the disclosure requirements for
pensions and other post-retirement benefits and requires additional
information on changes in the benefit obligations and fair values of plan
assets. The statement is effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information for
earlier years to be restated. Adoption of SFAS 132 is expected to have no
effect on the Company, since there are no pension plans.
DERIVATIVE AND HEDGING ACTIVITIES - In June 1998, the FASB issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. This
statement is effective for fiscal years beginning after June 15, 2000.
Currently, the Company does not have any derivative financial instruments and
does not participate in hedging activities, therefore management believes SFAS
No. 133 will not impact the Company's financial position or results of
operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS - SFAS No. 107, Disclosures about
Fair Value of Financial Instruments, requires the Company to disclose
estimated fair values for its financial instruments, for which it is
practicable to estimate. The fair value of the Company's payables to the
shareholder, affiliate and related party and the royalty receivable are not
practicable to estimate due to the related party nature of the underlying
transactions. Management believes that the carrying amounts of the Company's
other financial instruments approximates their fair values primarily because
of the short-term maturity of these instruments.
Estimates are not necessarily indicative of the amounts which could be
realized or would be paid in a current market exchange. The effect of using
different market assumptions and/or estimation methodologies may be material
to the estimated fair value amount.
2. Related party transactions:
Through a series of transactions, the Company acquired the rights to
receive royalty payments from software in which one of Company's officers has
an interest. These rights were obtained in exchange for total consideration
of $81,000. Management expected, through December 1999, this amount would be
recovered from the future royalty payments. However, in December 1999, it was
determined that this amount would not be realized and, accordingly, the asset
was written down to its estimated net realizable value of $55,000 (unaudited).
The Company has entered into a management contract for professional
services with an entity, which is controlled by the Company's majority
shareholder ("major shareholder"). The contract provides for management fees
of $3,000 per month. During the year ended March 31, 1999 and the period
ended March 31, 1998, the Company charged $36,000 and $6,000, respectively, to
expenses in fees pursuant to this agreement. As of March 31, 1999 and 1998,
$42,000 and $6,000, respectively, are payable under this contract. As of
December 31, 1999, the Company owes $69,000 under this contract and charged
$27,000 to expense for fees under this agreement during each of the nine month
periods ended December 31, 1999 and 1998 (unaudited).
The Company had a revolving line of credit with the major shareholder
totaling $321,409 at March 31, 1999 collateralized by specific customer
invoices. This financing arrangement was a factoring arrangement for the
Company. Payments received on these accounts were forwarded to the
stockholder as they were paid and the appropriate amount of the note retired.
Interest charged on these notes is equal to the rate which the stockholder
borrows funds to advance on these notes (7.75% at March 31, 1999). This note
was repaid subsequent to March 31, 1999 as discussed in Note 8.
In addition, the Company had notes payable with the major shareholder for
$58,000 and $15,000 as of March 31, 1999 and for $94,000 and $50,000 as of
March 31, 1998. The notes accrued interest at an annual prime rate, which was
7.75% and 8.5% as of March 31, 1999 and 1998, respectively. The $94,000 note
payable is represented by a borrowing at a financial institution that is
collateralized with a $100,000 certificate of deposit owned by our major
shareholder. Accordingly, this loan is recorded on the accompanying financial
statements as a liability. These notes are payable on demand, and accordingly
are classified as current liabilities. As of December 31, 1999, the balances
of these notes were $31,530 and $15,000, respectively. (See Note 10 for other
related party loans).
During the year ended March 31, 1998, the Company borrowed $75,000 under
a convertible debt agreement with the major stockholder. Interest accrued
monthly on the outstanding principal at the rate of 6%. Under the terms of
the agreement, the unpaid principal amount and accrued interest was
convertible into common stock at a current market price at the option of the
major stockholder. As of August 31, 1998, the major shareholder converted
$75,000 of unpaid principal and related accrued interest of $6,735 into
2,129,711 shares of the Company's common stock.
The Company and an entity controlled by the Company's major shareholder
shared employees, common lease space, third-party vendor accounts, and a line
of credit as discussed in Note 4. Further, the Company and this related
entity borrowed funds on an unsecured non-interest bearing basis from each
other from time to time as a cash flow vehicle, not a primary funding source.
During the periods ended March 31, 1999 and 1998, the maximum net amount
payable to the related entity approximated $370,000 and $415,000,
respectively. As of March 31, 1999 and 1998, the Company owed $186,235 and
$363,395, respectively, to this related entity for the net amount of inter-
company transactions. As of December 31, 1999 (unaudited), this due to
affiliate had been reduced to $126,304. The Company ceased the inter-company
borrowings in June 1999 once the credit agreement discussed in Note 10 was
obtained. The Company intends to pay off the balance remaining within the
next six-months and, accordingly, the balance is classified as a current
liability.
3. Equipment:
Equipment is summarized by major classification as follows as:
<TABLE>
<CAPTION>
March 31, March 31,December 31,
1999 1998 1999
---------- ---------- ----------
(unaudited)
<S> <C> <C> <C>
Computer equipment $ 148,247 $ 93,447 $ 156,786
Computer software 10,915 5,260 37,124
Furniture and fixtures 41,839 1,624 48,331
---------- ---------- ----------
Total depreciable assets 201,001 100,331 242,241
Less accumulated
depreciation (53,642) (6,253) (94,548)
---------- ---------- ----------
$ 147,359 $ 94,078 $ 147,693
========== ========== ==========
</TABLE>
Included in these assets are certain assets under a capital lease
obligation (Note 5). As of March 31, 1999 and 1998, the net amount of leased
equipment was approximately $57,000 and $68,500, respectively. As of December
31, 1999 (unaudited), the net balance approximated $45,000.
4. Revolving lines of credit:
During the year ended March 31, 1999 the Company and a related entity
were party to a joint loan and security agreement with a financial institution
which allowed the companies to borrow up to $750,000 under a revolving line of
credit. As of March 31, 1999, the Company's share of this line of credit was
$56,039. At March 31, 1998, there were no balances outstanding under this
line of credit. A general of assignment accounts receivable, property and
equipment, and software costs secures borrowings under the line of credit.
Under the terms of the agreement, the Company and the related entity are co-
borrowers, and each has joint and several liability on the outstanding
balance. The borrowings bear interest at variable rates equal to the Central
Bank of Houston's Index Rate plus 3.0% (approximately 9% at March 31, 1999).
The credit facility was repaid in April 1999 as discussed in Note 10.
5. Capital lease obligations:
The Company has certain assets under capital lease obligations. The
leases require total monthly payments of $2,731 and have been recorded using
the Company's marginal cost of borrowing at the time the leases were entered
into of 12%.
The minimum lease payments required under the capital leases together
with the present value of the minimum lease payments at March 31, 1999 are as
follows:
<TABLE>
<CAPTION>
<S> <C>
2000 $ 30,790
2001 15,556
2002 8,376
2003 8,376
----------
Total 63,098
Less amount representing interest (8,998)
----------
Present value of future minimum
lease payments 54,100
Less current portion 30,790
----------
Long-term portion $ 23,310
==========
</TABLE>
Total interest expense related to these capital leases was $8,223 and
$891 in 1999 and 1998, respectively.
6. Commitments:
The Company leases office space in Houston and Los Angeles under
operating leases that expire through 2002. The leases generally require the
Company to pay for utilities, insurance, property taxes and maintenance.
Rental expense was approximately $110,000 and $70,000 for the periods ended
March 31, 1999 and 1998, respectively. For the nine months ended December 31,
1999 (unaudited), rental expense was $89,200 and $45,300, respectively.
Future minimum lease payments are approximately $120,000 annually through
2002.
7. Capital stock:
The Company has 50,000,000 shares of $.01 par value preferred stock
authorized, with no shares issued. These shares, when issued, will have
preferences and restrictions as determined by the Company's Board of
Directors.
The common stock of the Company is divided into Class A and Class B
shares. There are a total of 100,010,000 shares of $.001 par value common
stock authorized with 10,000 being designated as Class B shares. The rights
of Class A and B shares are identical, except that Class B shares may only be
issued to the Company's Chairman of the Board and Chief Executive Officer.
Further, Class B shares have the right to elect a majority of the Board of
Directors and such shares can be converted to Class A shares on a one-for-one
basis at the sole discretion of the holder.
In March 1999 and as part of the transaction discussed in Note 1, new
investors in Zion loaned GeniSys $580,000, at 10% interest annually, on a
temporary basis while the documentation of the stock purchase was being
completed. Prior to March 31, 1999, loan holders converted the temporary
loans of $580,000 into 1,472,083 shares of stock in the Company. Due to the
intent of the Company and investors, this transaction has been accounted for
as a sale of stock for cash in the accompanying financial statements.
In April, 1998, the Company agreed to issue 742,678 shares of Class A
common stock to two senior officers of the Company. The Company recorded
compensation expense of $35,500, based on management's estimate of the fair
value of the common stock.
8. Income taxes:
The Company has net operating loss carryforwards in excess of $250,000 as
of March 31, 1999 to offset future taxable income. Such net operating losses
begin to expire after 2019. As of March 31, 1999, the Company has provided a
100% valuation allowance for the deferred tax asset relating to such net
operating losses because it could not be determined that it was more likely
than not that the deferred tax asset would be realized through future
earnings. The Company has no other material deferred tax items since the
accounting methods used for financial reporting and income tax purposes are
substantially comparable.
9. Restatement of Software Development costs:
Subsequent to the original issuance of the Company's March 31, 1999
financial statements, management determined that a portion of the previously
capitalized software costs should have been expensed. Based upon further
evaluation of the working model of the Company's software, it was determined
that the software had not fully achieved technological feasibility at the date
the costs were incurred. Accordingly, such costs have been expensed as
research and development costs in the accompanying financial statements and
these statements have been restated to reflect this accounting change. The
effect of this correction is as follows:
<TABLE>
<CAPTION>
As Reported As Restated
----------- -----------
<S> <C> <C>
Software costs $ 549,819 $ 299,819
Shareholders' equity $ 404,056 $ 154,056
Net loss $(299,243) $(549,243)
Net loss per share $ ( .05) $ ( .09)
</TABLE>
In addition, in the quarter ending December 31, 1999, the Company
determined that software costs, which had been capitalized relating to the
completion of a major installation of its software, were in fact costs of the
project. These costs were initially capitalized, as it was believed these
costs would enable the software to be utilized by a wide variety of customers
and were incurred after the software prototype was functioning. After a
thorough analysis of such costs, management determined that such costs should
be expensed as a cost of the project. Accordingly, $200,000 of costs that had
been capitalized in the first two quarters of our 2000 fiscal year, were
expensed in the quarter ending December 31, 1999.
10. Subsequent events (unaudited):
On May 17, 1999, the Company entered into a credit agreement with a
financial entity. This new agreement provided the funds to fully repay the
note payable to the majority shareholder (Note 2) and the revolving line of
credit (Note 4). As of December 31, 1999 (unaudited), the Company had an
outstanding balance of $324,190 on this credit agreement. Under the terms of
this agreement, which is similar to a factoring arrangement, the Company is
able to obtain financing for 85% of specific accounts receivable. The Company
pays a processing fee for financing each receivable depending upon the number
of days from the funding of the advance until that invoice is paid by the
customer. In addition, the Company pays interest on the total amount advanced
at a rate equal to the prime rate plus 2%. The receivables are financed on a
full recourse basis and, accordingly, this financial arrangement is accounted
for as a borrowing. The agreement can be terminated with 30 days notice after
certain events are met.
In January 2000, our lender notified us that our factoring line of credit
was being reevaluated due to our operating losses and past-due nature of
certain of our customers and, accordingly, future advances under the line were
contingent upon meeting underwriting standards. Management met with the
lender and negotiated reinstatement of our line of credit. Under the terms of
this agreement, our principal stockholder (who is the guarantor of this credit
facility) and investors have committed to purchase invoices that reach 90 days
past due up to a maximum of $200,000. In addition, the agreement requires the
Company to report monthly results of operations to our lender, rather than
quarterly. Subsequent to execution of this agreement, the lender began
factoring our receivables. In April 2000 the lender informed the Company that
they will terminate the line of credit effective April 29, 2000. The Company
has obtained a temporary backup line of credit from a bank, with a maximum
borrowing limit of $500,000. Interest on the backup line of credit is at 1%
over the Wall Street Prime Rate and the line is collateralized by accounts
receivable and other assets of the Company. Management is currently
negotiating with other lenders in an effort to obtain a working capital line
of credit with higher limits.
Subsequent to March 31, 1999 and through October 19, 1999, the Company
raised $471,800 from the sale of its common stock through two private
placements. The Company has issued an additional 964,361 shares of common
stock in connection with these sales (unaudited).
In May 1999, the Company adopted the 1999 Equity Incentive Plan (the
"Plan"), which provides for awards in the form of options, including incentive
stock options (ISOs), nonstatutory options (NSOs), stock bonuses, rights to
purchase restricted stock, and stock appreciation rights (SARs). Employees,
directors, consultants and advisors of the Company will be eligible for the
grant of NSOs, stock bonuses, and rights to purchase restricted stock. Only
employees will be eligible for the grant of ISOs and SARs. Options issued are
to have exercise prices not less than the fair value of the Company's common
stock on the date of grant. The Company has reserved 2,500,000 shares of
common stock for issuance pursuant to the exercise of common stock under the
plan. In June 1999, the Company granted options to purchase 1,860,000 shares
of common stock an exercise price of $.40 per share, and of which 1,474,000
options are subject to future vesting. Options generally vest over a five year
period and options expire in July 2009. Management believes that the exercise
price of the options granted to employees was equal to the market value of the
Company's common stock at the date of grant (based on the Company's private
placements of common stock) and, accordingly, no compensation expense has been
recorded.
In May and June of 1999, the Company was named as a defendant in two
separate lawsuits in the state of California. One suit was filed by a
competing software company and the second by an individual. The suit with a
competing software company was settled through mediation in December 1999 with
no adverse financial impact on the Company. The suit, brought by the
corporation contains many allegations regarding the activities of the Company
and two senior officers of the Company, and it seeks damages of an unspecified
amount. The individual claims monies owed for past services to an entity
previously controlled by an officer of the Company. Management and legal
counsel believe that the remaining lawsuit is without merit, have filed
counterclaims, and plan to vigorously contest the case. The resolution of this
suit is not expected to have a material effect on the Company.
In June 1999, the Company entered into oral employment contracts, with
its Chief Executive Officer, President, Senior Vice President of Sales, and
the Chief Financial Officer. These arrangements require annual compensation of
approximately $418,000 in the aggregate, payment of performance bonuses, and
issuance of stock options at the sole discretion of the Board of Directors.
This compensation level is consistent with the amounts paid to senior
executives during the year ended March 31, 1999. These agreements are
generally for a one-year period and automatically renew, unless terminated by
either party with 60-day notice.
In October 1999, the Company issued to certain investors a total of
147,205 Class A Warrants, each exercisable for one year to purchase a share of
our common stock at a price of $1.00 per share. The Class A Warrants expire
in October 2000. The Company has the ability to repurchase the warrants if we
have registered the exercise of the warrants with the Commission and our
public trading price has been more than $2.00 per share for at least ten
consecutive trading days. In such event, holders of the warrant will have a
30 day notice period in which to exercise these warrants, and any warrants not
exercised will be redeemed at a redemption price of $.01 per share.
In December 1999, our principal stockholder loaned the company $50,000 in
order to meet our obligations. This loan was secured by certain of our
software products and carries an interest rate of 15%. The loan is payable in
six months with no early repayment penalty. Further, in January 2000, our
principal shareholder and related parties loaned the company an additional
$87,500 and these loans are secured by a second lien on certain accounts
receivable and our software. These loans are payable within 90 days and carry
an interest rate of 15%.
In February 2000, a member of the Company's Board of Directors loaned
$100,000 to the Company. This loan was made to meet our operating cash needs
to purchase some past-due invoices from our financial institution. This loan
is secured by the purchased invoices and a second lien on our software
products. The loan carries an interest rate of 15% and is payable in May
2000.
<PAGE>
<PAGE>
===========================================================================
You should rely only on the information contained in this document or that we
have referred you to. We have not authorized anyone to provide you with
information that is different. This Prospectus is not an offer to sell common
stock and is not soliciting an offer to buy common stock in any state where
the offer or sale is not permitted.
iGeniSys, Inc.
1,500,000 Shares of Common Stock
_________________, 2000
===========================================================================
Until ___________, 2000 (90 days after the
date of this prospectus), all dealers effecting
transactions in the shares offered by this pro-
spectus -- whether or not participating in the
offering - may be required to deliver a copy
of this prospectus. Dealers ;may also be
required to deliver a copy of this prospectus
when acting as underwriters and for their
unsold allotments or subscriptions.
TABLE OF CONTENTS
-----------------
Page
----
Prospectus Summary 2
Risk Factors 5
Forward-Looking Statements 11 -----------------------------
Use of Proceeds 12
Dividend Policy 13
Capitalization 14 Prospectus
Dilution 15
Certain Market Information 17 -----------------------------
Management Discussion 19
Business 24
Management 34
Certain Transactions 42 ___________, 2000
Principal Stockholders 45
The Company Offering 47
Description of Securities 48
Legal Matters 49
Experts 49
Available Information 50
<PAGE>
<PAGE>
[Alternate Page for Selling Shareholders' Prospectus]
PROSPECTUS
iGeniSys, INC.
2,955,291 Shares of Common Stock
This is an offering of shares of the common stock of iGeniSys, Inc. by persons
who were issued shares of our common stock in prior transactions.
At the same time that this offering will begin, we are offering an additional
1,500,000 shares of our common stock to the public.
Investing in our common stock involves a high degree of
risk. You should read the "Risk Factors" beginning on
Page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is __________, 2000
<PAGE>
<PAGE>
[Alternate Page for Selling Shareholders' Prospectus]
About The Offering
* This is an offering of shares of our common stock by persons who were
issued shares of our common stock. We refer to these persons as "Selling
Shareholders" in this Prospectus. We are registering the common stock
covered by this Prospectus in order to fulfill obligations we have under
agreements with the Selling Shareholders.
* The Selling Shareholders may offer their shares from time to time either
in privately negotiated transactions and, if a public trading market
develops for our common stock, then in public market transactions.
* We will not receive any proceeds from the sale of shares by the Selling
Shareholders
<PAGE>
<PAGE>
[Alternate Page for Selling Shareholders' Prospectus]
Summary Financial Data
The following financial information summarizes the more complete
historical financial information enclosed in this prospectus. You should read
the information below along with all other financial information and analysis
in this prospectus. Please do not assume that the results below indicate
results we will achieve in the future.
<TABLE>
<CAPTION>
March 31,
------------------------ December 31,
1999 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Current assets $1,107,489 $1,016,316 $560,478
Current liabilities $(1,467,455) $(1,047,773)$(1,432,699)
Net working capital deficit $(359,966) $(31,457) $(872,221)
Development costs, net $299,819 $46,521 $341,155
Equipment, net $147,359 $94,078 $147,693
Convertible note payable,
shareholder $-0- $(75,000) $-0-
Shareholders' equity (deficit) $154,056 $5,024 $ (267,280)
Total assets $1,894,821 $1,171,699 $1,165,419
For the Periods For the Nine Months
Ended March 31, Ended December 31,
------------------------ -------------------------
1999 1998 1999 1998
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues $3,049,128 $1,882,445 $2,032,767 $1,868,671
Operating (loss) income$(466,934) $5,821 $(813,185) $(512,527)
Net loss $(549,243) $(20,076) $(893,136) $(558,702)
Weighted average number
of shares 6,165,715 4,602,510 10,295,938 4,602,510
Basic and diluted loss
per share $(.089) $(.004) $(.087) $(.121)
</TABLE>
<PAGE>
<PAGE>
[Alternate Page for Selling Shareholders' Prospectus]
DILUTION
[Deleted]
<PAGE>
<PAGE>
[Alternate Page for Selling Shareholders' Prospectus]
SELLING SHAREHOLDERS AND PLAN OF DISTRIBUTION
This Prospectus also relates to the resale of shares of common stock by the
Selling Shareholders set forth below. None of the Selling Shareholders have
had any material relationship within the past three years with us, or any of
our predecessors or affiliates, except as specifically noted.
<TABLE>
<CAPTION>
Shares Shares
Beneficially Owned Shares Beneficially Owned
As of Offering Date Offered After Offering
------------------ ------- -----------------
Name of Percent Percent
Beneficial Owner Number (1) Number Number (1)(2)
- ---------------- ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
E. Barry Mansur(7) 264,594 2.4% 126,904 137,690 1.0%
Van D. Hipp, Jr.(8) 27,919 .3% 25,381 2,538 0%
Summer Breeze,
LLC(9) 28,494 .3% 25,904 2,590 0%
Earnest Mathis IRA
Rollover (10) 18,594 .2% 16,904 1,690 0%
AMN Investments, Ltd.63,452 1.3% 63,452 0 0%
Gulfstream Financial558,375 5.1% 507,614 50,761 .4%
Partners, LLC(3)(11)
Gregory Pusey(12) 96,850 .9% 88,405 8,445 .1%
Cambridge Holdings,
Ltd.(13) 167,612 1.5% 146,552 21,054 .1%
Jill Pusey C/F(14) 21,256 .2% 21,256 0 0%
Christopher Pusey, UGTMA
Jill Pusey C/F(15) 30,590 .3% 30,590 0 0%
Jacqueline Pusey, UGTMA
Sally Rogers(3)(14) 69,797 .6% 63,452 6,345 .1%
Mark M. King(5)(18) 69,797 .6% 63,452 6,345 .1%
Bruce Rogers and
Sally Rogers,
JTWROS(4)(18) 41,878 .4% 38,071 3,807 0%
William M.
Bell(6)(17) 91,878 .8% 38,071 53,807 .4%
Alfred O. Brehmer(18)69,797 .6% 63,452 6,345 .1%
Milton Herson(19) 13,959 .1% 12,690 1,269 0%
Michael Herson(20) 27,919 .3% 25,381 2,538 0%
Henry Fong(21) 654,008 5.9% 59,666 86,728 0.7%
Norman Brownstein 35,381 .2% 25,381 10,000 0%
L.F.S. No. 1 LLC 35,381 .2% 25,381 10,000 0%
Jennings D. Bell, Jr.50,761 .5% 50,761 0 0%
Michael Smith 150,761 1.4% 50,761 100,000 .8%
Iris Smith 50,761 .5% 50,761 0 0%
Wayne Mills 200,000 1.8% 200,000 0 0%
DFG Capital Corp. 48,202 .2% 19,035 29,167 .2%
Kleopatra Georgiades 29,357 .3% 12,690 16,667 .1%
Helene Abrahams 350 nil 350 0 0%
Marshall Abrahams 350 nil 350 0 0%
Gary Agron 257,313 2.4% 257,313 0 0%
Janice Puder Agron 41,020 0.4% 41,020 0 0%
Elaine Asarch 350 nil 350 0 0%
Richard Asarch 350 nil 350 0 0%
Asian Pacific
Industries Ltd. 350 nil 350 0 0%
Brenda S. Bagg 350 nil 350 0 0%
Gerald A. Bagg 350 nil 350 0 0%
Douglas C. Ball 350 nil 350 0 0%
Milton H. Barbarosh 350 nil 350 0 0%
Ricki Barbarosh 350 nil 350 0 0%
James D. Beatty 350 nil 350 0 0%
Susan Elliot Beatty 350 nil 350 0 0%
Gerald M. Berenstein 350 nil 350 0 0%
Kathy Berenstein 350 nil 350 0 0%
Andrew N. Bernstein 350 nil 350 0 0%
Barbara V. Bernstein 350 nil 350 0 0%
Mitchell H. Bernstein 350 nil 350 0 0%
Angela Bortoluzzi 350 nil 350 0 0%
Eugene Bortoluzzi 350 nil 350 0 0%
Bruce W Breitweiser 350 nil 350 0 0%
Jeannie W. Breitweiser 350 nil 350 0 0%
Arna K. Campbell 350 nil 350 0 0%
Roger R. Campbell 350 nil 350 0 0%
Capital General
Corporation Limited 350 nil 350 0 0%
Robert Carrier 350 nil 350 0 0%
Ben Casale 350 nil 350 0 0%
Christina Casale 350 nil 350 0 0%
John E. Cathcart 350 nil 350 0 0%
Ki Wai Chan 350 nil 350 0 0%
Ting Sun Chang 350 nil 350 0 0%
Barbara F. Chapman 350 nil 350 0 0%
Jay H. Chapman 350 nil 350 0 0%
Jiansi Chen 350 nil 350 0 0%
Andrew Chu 350 nil 350 0 0%
Kwok Fu Chu 350 nil 350 0 0%
Yin Kam Chu 350 nil 350 0 0%
Naomi R. Cohn 350 nil 350 0 0%
Rennei K. Coleman 350 nil 350 0 0%
Robert J. Coleman 350 nil 350 0 0%
David L. Cove 350 nil 350 0 0%
Jack R. Daugherty 350 nil 350 0 0%
Shelley F. Daugherty 350 nil 350 0 0%
Joseph F. Demeo 350 nil 350 0 0%
Mary Jean Demeo 350 nil 350 0 0%
Ernest DuFresne 350 nil 350 0 0%
James Eller 18,000 0.2% 18,000 0 0%
Joanne Ernsten 350 nil 350 0 0%
Heather Evans 350 nil 350 0 0%
H. Thomas Fehn 350 nil 350 0 0%
Monica R. Fehn 350 nil 350 0 0%
John E. Fitzpatrick 350 nil 350 0 0%
Suzanne Fitzpatrick 350 nil 350 0 0%
Five Oaks Investment
Corp. 350 nil 350 0 0%
Wayne Fletcher 350 nil 350 0 0%
Carolyn Fong 350 nil 350 0 0%
Chris Freeman 350 nil 350 0 0%
Maria Freeman 350 nil 350 0 0%
Jeffrey Frieldand 350 nil 350 0 0%
Penelope S. Gallagher 350 nil 350 0 0%
William J. Gallagher 350 nil 350 0 0%
Anthony P. Gargiulo 350 nil 350 0 0%
Marcia A. Gargiulo 350 nil 350 0 0%
Gary E. Keogh 700 nil 700 0 0%
Judith H. Geller 350 nil 350 0 0%
Richard A. Geller 350 nil 350 0 0%
GM/CM Family Partners
Ltd 280,002 2.6% 280,002 0 0%
Kimberly K. Gollehon 350 nil 350 0 0%
Ronald D. Gollehon 350 nil 350 0 0%
Wendy Avra Gordon 350 nil 350 0 0%
Zachary T. Gordon 350 nil 350 0 0%
Caryljo M. Greenblatt 350 nil 350 0 0%
Phill D. Greenblatt 350 nil 350 0 0%
Gregory Pusey
Investments 3,366 nil 3,366 0 0%
Ian Gunn 350 nil 350 0 0%
Michele Gunn 350 nil 350 0 0%
Gary Gutterman 350 nil 350 0 0%
Sheila M. Gutterman 350 nil 350 0 0%
Harris Trust Dtd
8/22/94 Robert Allen
Strahl Trustee 350 nil 350 0 0%
Kathy Hartzler 500 nil 500 0 0%
Deborah Hattoy-
Londelius 350 nil 350 0 0%
John Hickey 350 nil 350 0 0%
Marsha Hillhouse 350 nil 350 0 0%
Matthew Hillhouse 350 nil 350 0 0%
Anne Marie Janssens-
Lens 350 nil 350 0 0%
Paul F Janssens-Lens 350 nil 350 0 0%
John Epert Family Trust 350 nil 350 0 0%
Leys Johnston-Koyle 350 nil 350 0 0%
Jeffrey E. Kahler 350 nil 350 0 0%
Joshua S. Kanter 350 nil 350 0 0%
Linda B. Kaufmann 350 nil 350 0 0%
Thomas A. Kaufmann 350 nil 350 0 0%
Brian Kelley 350 nil 350 0 0%
Jack D. Kelley 350 nil 350 0 0%
Jane A. Kelley 350 nil 350 0 0%
Teresa M. Kelley 350 nil 350 0 0%
Mary Kilgore 350 nil 350 0 0%
Raymond Kilgore 350 nil 350 0 0%
Cynthia Kirby 350 nil 350 0 0%
Gerald Kirby 350 nil 350 0 0%
Lisa A. Kirby 350 nil 350 0 0%
Michael Kirby 350 nil 350 0 0%
Michael Kleinman 350 nil 350 0 0%
W. Koyle 350 nil 350 0 0%
Janet A. Kritzer 350 nil 350 0 0%
Stuart A. Kritzer 350 nil 350 0 0%
Dave Lageschulte 350 nil 350 0 0%
Noel Langdon 350 nil 350 0 0%
Mrs. Noel Langdon 350 nil 350 0 0%
Bernard Laurent 350 nil 350 0 0%
Corinne Laurent 350 nil 350 0 0%
Jill A. Lee 350 nil 350 0 0%
Herbert I. Lee 350 nil 350 0 0%
Alan J. Levin DDS 350 nil 350 0 0%
Cynthia L. Levin 350 nil 350 0 0%
John T. Lisenby 350 nil 350 0 0%
Mary Jane Lisenby 350 nil 350 0 0%
John Londelius 350 nil 350 0 0%
Patricia Lorenz 350 nil 350 0 0%
Chi Ting Lui 350 nil 350 0 0%
Luen Hing Lui 350 nil 350 0 0%
Michael Lupynec 350 nil 350 0 0%
Stephanie Lupynec 350 nil 350 0 0%
Neil G. Macey 350 nil 350 0 0%
Sharon Marks 350 nil 350 0 0%
Stanley Marks 350 nil 350 0 0%
David K. Marshall 350 nil 350 0 0%
Janet M. Marshall 350 nil 350 0 0%
Earnest Mathis 350 nil 350 0 0%
Mathis Family Partners,
Ltd., a Partnership269,451 2.5% 269,451 0 0%
Jessie Mathis 350 nil 350 0 0%
Don E. Montague 350 nil 350 0 0%
Betty J. Morey 22,843 0.2% 22,843 0 0%
Richard S Morey 22,843 0.2% 22,843 0 0%
Gary A. Mosko 63,802 0.6% 63,802 0 0%
Paula L. Mosko 350 nil 350 0 0%
Leslie L. Neadeau 350 nil 350 0 0%
Jeane Hays Nerlino 350 nil 350 0 0%
Vincent Nerlino 350 nil 350 0 0%
Paul Newland 350 nil 350 0 0%
Po Ming Ng 350 nil 350 0 0%
Gertrude R. Nittler 350 nil 350 0 0%
Roger J. Nittler 350 nil 350 0 0%
Noraminter Holdings
Limited 350 nil 350 0 0%
Kurt Ohlson 350 nil 350 0 0%
Tam Ohlson 350 nil 350 0 0%
868982 Ontario Inc. 350 nil 350 0 0%
932027 Ontario Inc. 350 nil 350 0 0%
Carol R. Paderski 350 nil 350 0 0%
David R. Paderski 350 nil 350 0 0%
Fong Nei Pak 350 nil 350 0 0%
C.K.C. Partners 350 nil 350 0 0%
Stuart W. Pattison 350 nil 350 0 0%
Gary B. Peterson 350 nil 350 0 0%
Gordon E. Peterson 350 nil 350 0 0%
Dana L. Phillips 350 nil 350 0 0%
Ramon D. Phillips 350 nil 350 0 0%
C.R. Plaxton 350 nil 350 0 0%
Gail E. Ploen 350 nil 350 0 0%
Jeff P. Ploen 350 nil 350 0 0%
Annette Pluss 350 nil 350 0 0%
Richard G. Pluss 350 nil 350 0 0%
Jeffrey B. Preitauer 350 nil 350 0 0%
Michelle Preitauer 350 nil 350 0 0%
Christopher Pusey
c/o Greg Pusey 350 nil 350 0 0%
Gregory Pusey 350 nil 350 0 0%
Jill Pusey 350 nil 350 0 0%
Adam Radley 350 nil 350 0 0%
Pamela S. Randall 350 nil 350 0 0%
Richard Randall 350 nil 350 0 0%
Gisela Ratcliff 350 nil 350 0 0%
Richard Ratcliff 350 nil 350 0 0%
Debra S Rhoads 350 nil 350 0 0%
Mitchell E. Rhoads 350 nil 350 0 0%
A. J. Robbins 350 nil 350 0 0%
Barbara J. Robbins 350 nil 350 0 0%
John Robertson 350 nil 350 0 0%
Shane XG Rodgers 350 nil 350 0 0%
Danielle L. Rosendahl 350 nil 350 0 0%
Steven F. Rosendahl 350 nil 350 0 0%
Len Rothstein 350 nil 350 0 0%
Dan Rudden 350 nil 350 0 0%
Peg Rudden 350 nil 350 0 0%
Martha H. Rudman 350 nil 350 0 0%
Ronald L Rudman 350 nil 350 0 0%
Salomon Smith Barney
Inc 350 nil 350 0 0%
Barry Schechter 350 nil 350 0 0%
Suzanne Schechter 350 nil 350 0 0%
John W. Scherer 350 nil 350 0 0%
Edward Schlauch 350 nil 350 0 0%
Janice Schneider 350 nil 350 0 0%
Richard Schneider 350 nil 350 0 0%
Chester P. Schwartz 350 nil 350 0 0%
Louise S. Schwartz 350 nil 350 0 0%
Adele A. Seger 350 nil 350 0 0%
Chad Seger 350 nil 350 0 0%
Shaneko Investment
Corporation 350 nil 350 0 0%
Jeanette I. Shaw 350 nil 350 0 0%
Jerry L. Shaw 350 nil 350 0 0%
Douglas Shields 350 nil 350 0 0%
Mary D. Silleck 350 nil 350 0 0%
R. Hayden Silleck 350 nil 350 0 0%
Dalia Silverman 29,356 nil 12,690 16,666 .1%
Beverle A. Skufca 350 nil 350 0 0%
William Skufca 350 nil 350 0 0%
Martha Sue Sloven 350 nil 350 0 0%
Sam S. Sloven 350 nil 350 0 0%
Snoflake Limited 350 nil 350 0 0%
Stewart Somers 350 nil 350 0 0%
Izzy Sonenreich 350 nil 350 0 0%
Peri G. Sonenreich 350 nil 350 0 0%
Terry J. Spencer 12,690 0.1% 12,690 0 0%
Tak Wing Tang 350 nil 350 0 0%
Wai Tang 350 nil 350 0 0%
Tak Wing Tang 350 nil 350 0 0%
Wai Tang 350 nil 350 0 0%
Yui Tang 350 nil 350 0 0%
Yuk Heung Tang 350 nil 350 0 0%
Yuk Sun Tang 350 nil 350 0 0%
Allan Taylor 350 nil 350 0 0%
Mrs. Allan Taylor 350 nil 350 0 0%
Sany Then 350 nil 350 0 0%
Dirk Tinley 350 nil 350 0 0%
Sian Piek Tjoe 350 nil 350 0 0%
U S Bank National
Assoc C/FBO 16,904 0.2% 16,904 0 0%
Vilacon Corporation
Pty, Ltd. 350 nil 350 0 0%
Wayne F. Vuolo 350 nil 350 0 0%
Suk Fan Wai 350 nil 350 0 0%
Donald Wasko 350 nil 350 0 0%
Joanne Wasko 350 nil 350 0 0%
Melvin Wedgle 350 nil 350 0 0%
Mark Weiss 350 nil 350 0 0%
Ingrid E. Whitney 350 nil 350 0 0%
Mary J Wilk 350 nil 350 0 0%
Brenda C. Winter 350 nil 350 0 0%
Richard L Winter 350 nil 350 0 0%
Kenneth J. Wolf 350 nil 350 0 0%
Chi Shing Wong 350 nil 350 0 0%
Kin Wong 350 nil 350 0 0%
Suet Ying Yau 350 nil 350 0 0%
Man Suet Yuen 350 nil 350 0 0%
David E. Zimmerman 350 nil 350 0 0%
Twila K. Zimmerman 350 nil 350 0 0%
Gail R. Zucker 350 nil 350 0 0%
Evan M. Zuckerman 350 nil 350 0 0%
</TABLE>
- ---------------
(1) Shares not outstanding but deemed beneficially owned by virtue of the
individual's right to acquire them as of the date of this Prospectus, or
within 60 days of such date, are treated as outstanding when determining
the percent of the class owned by such individual and when determining
the percent owned by the group.
(2) Assumes the sale of the 1,500,000 share maximum in this offering.
(3) Henry Fong, a Director of the Company, would be deemed a beneficial owner
of shares held of record by Gulfstream Financial Partners, LLC by virtue
of his ability to exercise shared power to vote and dispose of such
shares.
(4) Sally K. Rogers is Carylyn K. Bell's sister and J. Daniel Bell's sister-
in-law.
(5) Mark M. King is Carylyn K. Bell's brother and J. Daniel Bell's brother-
in-law.
(6) William M. Bell is J. Daniel Bell's son.
(7) Includes warrants exercisable for one year to purchase 12,690 additional
shares of common stock at an exercise price of $1.00 per share.
(8) Includes warrants exercisable for one year to purchase 2,538 additional
shares of common stock at an exercise price of $1.00 per share.
(9) Includes warrants exercisable for one year to purchase 2,590 additional
shares of common stock at an exercise price of $1.00 per share.
(10) Includes warrants exercisable for one year to purchase 1,690 additional
shares of common stock at an exercise price of $1.00 per share.
(11) Includes warrants exercisable for one year to purchase 50,761 additional
shares of common stock at an exercise price of $1.00 per share.
(12) Includes warrants exercisable for one year to purchase 3,807 additional
shares of common stock at an exercise price of $1.00 per share.
(13) Includes warrants exercisable for one year to purchase 14,655 additional
shares of common stock at an exercise price of $1.00 per share.
(14) Includes warrants exercisable for one year to purchase 6,345 additional
shares of common stock at an exercise price of $1.00 per share.
(15) Includes warrants exercisable for one year to purchase 6,345 additional
shares of common stock at an exercise price of $1.00 per share.
(16) Includes warrants exercisable for one year to purchase 3,807 additional
shares of common stock at an exercise price of $1.00 per share.
(17) Includes warrants exercisable for one year to purchase 3,807 additional
shares of common stock at an exercise price of $1.00 per share.
(18) Includes warrants exercisable for one year to purchase 6,345 additional
shares of common stock at an exercise price of $1.00 per share.
(19) Includes warrants exercisable for one year to purchase 1,269 additional
shares of common stock at an exercise price of $1.00 per share.
(20) Includes warrants exercisable for one year to purchase 2,538 additional
shares of common stock at an exercise price of $1.00 per share.
(21) Henry Fong is a director of the Company. Shares include options to
purchase 30,000 and warrants to purchase 5,967 shares of additional
common stock at an exercise price of $1.00 per share. Also includes
558,375 shares owned of record by Gulfstream Financial Partners, LLC.
The Selling Shareholders are offering shares of our common stock which
were issued to them in prior transactions or are issuable upon exercise of
outstanding warrants to purchase shares of our common stock. Of the shares
being offered, 1,472,083 shares were issued to the Selling Shareholders upon
conversion of a total of $580,000 in bridge loans which the Selling
Shareholders had made to our subsidiary. In our agreement to acquire the
subsidiary, we agreed to register the common stock in order to induce the
Selling Shareholders to convert their outstanding debt. 976,250 of the shares
were issued to our original shareholders when we were first organized. The
remaining shares being offered by the Selling Shareholders were purchased by
them in a private offering which we made in September and October 1999 or are
issuable upon exercise of warrants issued in those private offerings.
Investors in those offerings were given registration rights as part of their
agreement to invest. We are not registering the resale of any warrants held
by any Selling Shareholders.
We have agreed to indemnify the Selling Shareholders against specified
liabilities including liabilities under the Securities Act in connection with
their offering. The Selling Shareholders have agreed to indemnify us and our
directors and officers, as well as any persons controlling our company,
against certain liabilities, including liabilities under the Securities Act.
We will pay all expenses to register the shares, except that the Selling
Shareholders will pay any underwriting and brokerage discounts, fees and
commissions, specified attorneys' fees and other expenses to the extent
applicable to them.
Selling Shareholders who are affiliates of iGeniSys have agreed not to
sell any of their shares until iGeniSys has terminated its offering. We do
not intend to develop a public trading market for our common stock until our
offering has been terminated.
Selling Shareholders may sell their shares of common stock either
directly or through a broker-dealer or other agent at prices related to
prevailing market prices, if a public trading market develops and exists, or
negotiated prices, in one or more of the following kinds of transactions:
* Transactions in the over-the-counter market if a public trading
market develops;
* Transactions on a stock exchange that lists our common stock, or
transactions negotiated between Selling Shareholders and purchasers,
block sales or otherwise.
Broker-dealers or agents may purchase shares directly from a Selling
Shareholder or sell shares to someone else on behalf of a Selling Shareholder.
Broker-dealers may charge commissions to both Selling Shareholders selling
common stock, and purchasers buying shares sold by a Selling Shareholder. If
a broker buys shares directly from a Selling Shareholder, the broker may
resell the shares through another broker, and the other broker may receive
compensation from the Selling Shareholder for the resale.
To the extent required by laws, regulations or agreements we have made,
we will use our best efforts to file a Prospectus supplement during the time
the Selling Shareholders are offering or selling shares covered by this
Prospectus in order to add or correct important information about the plan of
distribution for the shares.
In addition to any other applicable laws or regulations, Selling
Shareholders must comply with regulations relating to distributions by Selling
Shareholders, including Regulation M under the Securities Exchange Act of
1934, as amended.
Some states may require that registration, exemption from registration or
notification requirements be met before Selling Shareholders may sell their
common stock and warrants. Some states may also require Selling Shareholders
to sell their common stock only through broker-dealers.
<PAGE>
<PAGE>
[Alternate Page for Selling Shareholders' Prospectus]
===========================================================================
You should rely only on the information contained in this document or that we
have referred you to. We have not authorized anyone to provide you with
information that is different. This Prospectus is not an offer to sell common
stock and is not soliciting an offer to buy common stock in any state where
the offer or sale is not permitted.
iGeniSys, Inc.
2,955,291 Shares of Common Stock
_________________, 2000
===========================================================================
Until ___________, 2000 (90 days after the
date of this prospectus), all dealers effecting
transactions in the shares offered by this pro-
spectus -- whether or not participating in the
offering - may be required to deliver a copy
of this prospectus. Dealers ;may also be
required to deliver a copy of this prospectus
when acting as underwriters and for their
unsold allotments or subscriptions.
TABLE OF CONTENTS
-----------------
Page
----
Prospectus Summary 2
Risk Factors 5
Forward-Looking Statements 11
Use of Proceeds 12
Dividend Policy 13
Capitalization 14
Certain Market Information 17 ----------------------------
Management Discussion 19
Business 24
Management 34 Prospectus
Certain Transactions 42
Principal Stockholders 45
Selling Shareholders and ----------------------------
Plan of Distribution 56
Description of Securities 48
Legal Matters 49 ___________, 2000
Experts 49
Available Information 50
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
The only statute, charter provision, bylaw, contract, or other
arrangement under which any controlling person, director or officers of the
Registrant is insured or indemnified in any manner against any liability which
he may incur in his capacity as such, is as follows:
Sections 7-109-101 through 7-109-110 of the Colorado Corporation Code
provide as follows:
7-109-101. Definitions. As used in this article:
(1) "Corporation" includes any domestic or foreign entity that is a
predecessor of a corporation by reason of a merger or other transaction
in which the predecessor's existence ceased upon consummation of the
transaction.
(2) "Director" means an individual who is or was a director of a corporation
or an individual who, while a director of a corporation, is or was
serving at the corporation's request as a director, officer, partner,
trustee, employee, fiduciary, or agent of another domestic or foreign
corporation or other person or of an employee benefit plan. A director
is considered to be serving an employee benefit plan at the corporation's
request if his or her duties to the corporation also impose duties on, or
otherwise involve services by, the director to the plan or to
participants in or beneficiaries of the plan. "Director" includes,
unless the context requires otherwise, the estate or personal
representative of a director.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect to a proceeding to
pay a judgment, settlement, penalty, fine, including an excise tax
assessed with respect to an employee benefit plan, or reasonable
expenses.
(5) "Official capacity" means, when used with respect to a director, the
office of director in a corporation and, when used with respect to a
person other than a director as contemplated in section 7-109-107, the
office in a corporation held by the officer or the employment, fiduciary,
or agency relationship undertaken by the employee, fiduciary, or agent on
behalf of the corporation. "Official capacity" does not include service
for any other domestic or foreign corporation or other person or employee
benefit plan.
(6) "Party" includes a person who was, is, or is threatened to be made a
named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative and
whether formal or informal.
7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this section, a corporation may
indemnify a person made a party to a proceeding because the person is or
was a director against liability incurred in the proceeding if:
(a) The person conducted himself or herself in good faith; and
(b) The person reasonable believed:
(I) In the case of conduct in an official capacity with the
corporation, that his or her conduct was in the corporation's
best interests; and
(II) In all other cases, that his or her conduct was at least not
opposed to the corporation's best interests; and
(c) In the case of any criminal proceeding, the person had no reasonable
cause to believe his or her conduct was unlawful.
(2) A director's conduct with respect to an employee benefit plan for a
purpose the director reasonably believed to be in the interests of the
participants in or beneficiaries of the plan is conduct that satisfies
the requirement of subparagraph (II) of paragraph (b) of subsection (1)
of this section. A director's conduct with respect to an employee
benefit plan for a purpose that the director did not reasonably believe
to be in the interests of the participants in or beneficiaries of the
plan shall be deemed not to satisfy the requirements of paragraph (a) of
subsection (1) of this section.
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not,
of itself, determinative that the director did not meet the standard of
conduct described in this section.
(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(b) In connection with any other proceeding charging that the director
derived an improper personal benefit, whether or not involving
action in an official capacity, in which proceeding the director was
adjudged liable on the basis that he or she derived an improper
personal benefit.
(5) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
7-109-103. Mandatory indemnification of directors. Unless limited by its
articles of incorporation, a corporation shall indemnify a person who was
wholly successful, on the merits or otherwise, in the defense of any
proceeding to which the person was a party because the person is or was a
director, against reasonable expenses incurred by him or her in connection
with the proceeding.
7-109-104. Advance of expenses to directors.
(1) A corporation may pay for or reimburse the reasonable expenses incurred
by a director who is a party to a proceeding in advance of final
disposition of the proceeding if:
(a) The director furnishes to the corporation a written affirmation of
the director's good faith belief that he or she has met the standard
of conduct described in section 7-109-102;
(b) The director furnishes to the corporation a written undertaking,
executed personally or on the director's behalf, to repay the
advance if it is ultimately determined that he or she did not meet
the standard of conduct; and
(c) A determination is made that the facts then known to those making
the determination would not preclude indemnification under this
article.
(2) The undertaking required by paragraph (b) of subsection (1) of this
section shall be an unlimited general obligation of the director but need
not be secured and may be accepted without reference to financial ability
to make repayment.
(3) Determinations and authorizations of payments under this section shall be
made in the manner specified in section 7-109-106.
7-109-105. Court-ordered indemnification of directors.
(1) Unless otherwise provided in the articles of incorporation, a director
who is or was a party to a proceeding may apply for indemnification to
the court conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court, after giving any
notice the court considers necessary, may order indemnification in the
following manner:
(a) If it determines that the director is entitled to mandatory
indemnification under section 7-109-103, the court shall order
indemnification, in which case the court shall also order the
corporation to pay the director's reasonable expenses incurred to
obtain court-ordered indemnification.
(b) If it determines that the director is fairly and reasonable entitled
to indemnification in view of all the relevant circumstances,
whether or not the director met the standard of conduct set forth in
section 7-109-102 (1) or was adjudged liable in the circumstances
described in section 7-109-102 (4), the court may order such
indemnification as the court deems proper; except that the
indemnification with respect to any proceeding in which liability
shall have been adjudged in the circumstances described in section
7-109-102 (4) is limited to reasonable expenses incurred in
connection with the proceeding and reasonable expenses incurred to
obtain court-ordered indemnification.
7-109-106. Determination and authorization of indemnification of directors.
(1) A corporation may not indemnify a director under section 7-109-102 unless
authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances
because the director has met the standard of conduct set forth in section
7-109-102. A corporation shall not advance expenses to a director under
section 7-109-104 unless authorized in the specific case after the
written affirmation and undertaking required by section 7-109-104 (1) (a)
and (1) (b) are received and the determination required by section 7-109-
104 (1) (-C-) has been made.
(2) The determinations required by subsection (1) of this section shall be
made:
(a) By the board of directors by a majority vote of those present at a
meeting at which a quorum is present, and only those directors not
parties to the proceeding shall be counted in satisfying the quorum;
or
(b) If a quorum cannot be obtained, by a majority vote of a committee of
the board of directors designated by the board of directors, which
committee shall consist of two or more directors not parties to the
proceeding; except that directors who are parties to the proceeding
may participate in the designation of directors for the committee.
(3) If a quorum cannot be obtained as contemplated in paragraph (a) of
subsection (2) of this section, and a committee cannot be established
under paragraph (b) of subsection (2) of this section, or, even if a
quorum is obtained or a committee is designated, if a majority of the
directors constituting such quorum or such committee so directs, the
determination required to be made by subsection (1) of this section shall
be made:
(a) By independent legal counsel selected by a vote of the board of
directors or the committee in the manner specified in paragraph (a)
or (b) of subsection (2) of this section or, if a quorum of the full
board cannot be obtained and a committee cannot be established, by
independent legal counsel selected by a majority vote of the full
board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and advance of expenses shall be made in
the same manner as the determination that indemnification or advance of
expenses is permissible; except that, if the determination that
indemnification or advance of expenses is permissible is made by
independent legal counsel, authorization of indemnification and advance
of expenses shall be made by the body that selected such counsel.
7-109-107. Indemnification of officers, employees, fiduciaries, and agents.
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification under section 7-
109-103, and is entitled to apply for court-ordered indemnification
under section 7-109-105, in each case to the same extent as a
director;
(b) A corporation may indemnify and advance expenses to an officer,
employee, fiduciary, or agent of the corporation to the same extent
as to a director; and
(c) A corporation may also indemnify and advance expenses to an officer,
employee, fiduciary, or agent who is not a director to a greater
extent, if not inconsistent with public policy, and if provided for
by its bylaws, general or specific action of its board of directors
or shareholders, or contract.
7-109-108. Insurance. A corporation may purchase and maintain insurance on
behalf of a person who is or was a director, officer, employee, fiduciary, or
agent of the corporation, or who, while a director, officer, employee,
fiduciary, or agent of the corporation, is or was serving at the request of
the corporation as a director, officer, partner, trustee, employee, fiduciary,
or agent of another domestic or foreign corporation or other person or of an
employee benefit plan, against liability asserted against or incurred by the
person in that capacity or arising from his or her status as a director,
officer, employee, fiduciary, or agent, whether or not the corporation would
have power to indemnify the person against the same liability under section 7-
109-102, 7-109-103, or 7-109-107. Any such insurance may be procured from any
insurance company designated by the board of directors, whether such insurance
company is formed under the laws of this state or any other jurisdiction of
the United States or elsewhere, including any insurance company in which the
corporation has an equity or any other interest through stock ownership or
otherwise.
7-109-109. Limitation of indemnification of directors.
(1) A provision treating a corporation's indemnification of, or advance of
expenses to, directors that is contained in its articles of incorporation
or bylaws, in a resolution of its shareholders or board of directors, or
in a contract, except an insurance policy, or otherwise, is valid only to
the extent the provision is not inconsistent with sections 7-109-101 to
7-109-108. If the article of incorporation limit indemnification or
advance of expenses, indemnification and advance of expenses are valid
only to the extent not inconsistent with the articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation's power to pay
or reimburse expenses incurred by a director in connection with an
appearance as a witness in a proceeding at a time when he or she has not
been made a named defendant or respondent in the proceeding.
7-109-110. Notice to shareholder of indemnification of director. If a
corporation indemnifies or advances expenses to a director under this article
in connection with a proceeding by or in the right of the corporation, the
corporation shall give written notice of the indemnification or advance to the
shareholders with or before the notice of the next shareholders' meeting. If
the next shareholder action is taken without a meeting at the instigation of
the board of directors, such notice shall be given to the shareholders at or
before the time the first shareholder signs a writing consenting to such
action.
* * *
b. Article XII of Registrant's Articles of Incorporation provide that
the corporation may indemnify each director, officer, and any employee or
agent of the corporation, his heirs, executors and administrators, against
expenses reasonably incurred or any amounts paid by him in connection with any
action, suit or proceeding to which he may be made a party by reason of his
being or having been a director, officer, employee or agent of the corporation
to the extent permitted by the law as recited above in subparagraph (a).
c. Article XII of Registrant's Articles of Incorporation provides, in
part:
"e. To the maximum extent permitted by law or by public
policy, directors of this Corporation are to have no personal
liability for monetary damages for breach of fiduciary duty as
a director."
Item 25. Other Expenses of Issuance and Distribution.
The estimated expenses of the offering are to be borne by us, are as
follows:
<TABLE>
<CAPTION>
<S> <C>
SEC Filing Fee $ 3,000
Printing Expenses 5,000
Accounting Fees and Expenses 15,000
Legal Fees and Expenses 25,000
Blue Sky Fees and Expenses 5,000
Registrar and Transfer Agent Fee 2,000
Offering Expenses 30,000
Miscellaneous 15,000
----------
Total $ 100,000
==========
</TABLE>
Item 26. Recent Sales of Unregistered Securities.
1. In March, 1999, we issued to a total of 17 persons, all of whom
qualified as "accredited investors" and aggregate of 1,472,083
shares of common stock in conversion of an aggregate of $580,000 in
convertible debt. In addition, in September 1999, we issued to
these persons pro rata warrants exercisable to purchase a total of
147,209 shares of common stock at a price of $1.00 per share. The
shares and warrants were restricted securities, which were taken for
investment and were subject to appropriate transfer restrictions,
were issued without registration under the Securities Act in
reliance upon the exemption provided in Section 4(2) of the
Securities Act.
2. In March, 1999, we issued to four (4) persons an aggregate of
7,516,740 shares of common stock in exchange for all of the issued
and outstanding shares of capital stock of GeniSys Information
Systems, Inc. The shares were issued exclusively to persons who
qualified as "accredited investors" within the meaning of Rule
501(a) of Regulation D under the Securities Act. The securities,
which were taken for investment and were subject to appropriate
transfer restrictions, were issued without registration under the
Securities Act, in reliance upon the exemption provided in Section
4(2) of the Securities Act.
3. Between April and October 1999, we issued an aggregate of 505,838
shares of common stock in consideration of $199,300, or $.394 per
share. The shares were issued exclusively to nine investors who
qualified as "accredited investors" within the meaning of Rule
501(a) of Regulation D under the Securities Act. The securities,
which were taken for investment and subject to appropriate transfer
restrictions, were issued without registration under the Securities
Act pursuant to exemption set forth in Section 4(2) of the
Securities Act and Rule 506 of Regulation D thereunder.
4. Between May and August 1999, we granted stock options exercisable to
purchase 1,860,000 shares of our common stock to employees and
consultants under our Equity Incentive Plan. The options are non-
transferrable under the Plan. The options were granted in reliance
upon the exemption contained in Section 4(2) of the Securities Act.
5. Between September and October 1999, we issued an aggregate of
454,167 shares of common stock and 125,000 warrants in consideration
of $272,500, or $.60 per share. The shares were issued exclusively
to six investors who qualified as "accredited investors" within the
meaning of Rule 501(a) of Regulation D under the Securities Act.
The securities, which were taken for investment and subject to
appropriate transfer restrictions, were issued without registration
under the Securities Act pursuant to exemption set forth in Section
4(2) of the Securities Act and Rule 506 of Regulation D thereunder.
Item 27. Exhibits
a. The following Exhibits are filed as part of this Registration
Statement pursuant to Item 601 of Regulation S-B:
Exhibit No. Title
- ---------- -----
2.0 Agreement Concerning the Exchange of Common Stock between Zion
Enterprises, Inc. and GeniSys Information Systems, Inc. with
exhibits
* 3.1 Amended and Restated Articles of Incorporation
* 3.2 Bylaws
* 4.1 Specimen Common Stock Certificate
* 4.2 Specimen Warrant Certificate
* 4.3 Form of Subscription Agreement
* 5.0 Opinion of Neuman & Drennen, LLC
* 10.1 1999 Equity Incentive Plan
10.2 Computer Sciences Corporation/IRS Prime Subcontract Agreement
10.3 Arthur Andersen, LLP Subcontract Agreement for Chem Demil
10.4 Arthur Andersen, LLP Subcontract Agreement for Air Products,
Inc.
10.5 Consulting and Software Licence Agreement with Kinkos, Inc.
10.6 Agreement with Cable Constructors, Inc. for Charter
Communications, Inc.
10.7 Agreement with Nivo International Corporation
10.8 Proposal for Work with ABB Network Management
10.9 Statement of Work Phase One for Charter Communications, Inc.
10.10 Office Sublease with Old Republic National Title Insurance
Company (Houston)
10.11 Koll Business Center Lease with John Hancock Mutual Life
Insurance Company (Torrance, California)
10.12 Revolving Loan Agreement with Guaranty Bank & Trust Company
10.13 Employment Agreement with Cameron Kruse
10.14 Employment Agreement with Craig Crawford
10.15 Employment Agreement with Jeff Spencer
* 21.0 List of Subsidiaries
23.1 Consent of Neuman & Drennen, LLC
23.2 Consent of Gelfond Hochstadt Pangburn, P.C.
- -------------------
* Previously filed
Item 28. Undertakings
The undersigned Registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
a. Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
b. Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement;
c. Include any additional or changed material information on the
plan of distribution.
2. That, for determining liability under the Securities Act, to treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.
3. To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
4. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
5. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred and
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered hereby, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on the Pre-Effective Amendment No. 2
to Form SB-2 and has duly caused this Registration Statement to be signed on
its behalf by the undersigned thereunto duly authorized, in the City of
Denver, State of Colorado on the 1st day of May, 2000.
iGENISYS, INC.
By: /s/ J. Daniel Bell
---------------------------------
J. Daniel Bell, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities with iGeniSys, Inc. and on the dates indicated.
Signature Position Date
- --------- -------- ----
/s/ Daniel J. Bell Chairman of the Board 5/1/00
- ------------------------ President,
Daniel J. Bell Chief Executive Officer
/s/ Carylyn K. Bell Director, Secretary
- ------------------------ 5/1/00
Carylyn K. Bell
/s/ Walter Strycker Director 5/1/00
- ------------------------
Walter Strycker
/s/ Henry Fong Director 5/1/00
- ------------------------
Henry Fong
/s/ Craig Crawford Vice President and 5/1/00
- ------------------------ Chief Financial Officer
Craig Crawford
<PAGE>
AGREEMENT
CONCERNING THE EXCHANGE OF COMMON STOCK
BETWEEN
ZION ENTERPRISES, INC.
AND
GENISYS INFORMATION SYSTEMS, INC. AND
THE STOCKHOLDERS OF GENISYS INFORMATION SYSTEMS, INC.
<PAGE>
<PAGE>
INDEX
ARTICLE I - EXCHANGE OF SECURITIES 1
1.1 - Issuance of Shares 1
1.2 - Exemption from Registration 1
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF GENISYS 1
2.1 - Organization 1
2.2 - Capital 2
2.3 - Subsidiaries 2
2.4 - Directors and Officers 2
2.5 - Financial Statements 2
2.6 - Absence of Changes 2
2.7 - Absence of Undisclosed Liabilities 2
2.8 - Tax Returns 2
2.9 - Investigation of Financial Condition 2
2.10 - Trade Names and Rights 2
2.11 - Compliance with Laws 3
2.12 - Litigation 3
2.13 - Authority; Counsel 3
2.14 - Ability to Carry Out Obligations 3
2.15 - Full Disclosure 3
2.16 - Assets 3
2.17 - Material Contracts 3
2.18 - Indemnification 3
2.19 - Restricted Securities 4
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF ZION 4
3.1 - Organization 4
3.2 - Capital 4
3.3 - Subsidiaries 4
3.4 - Directors and Officers 4
3.5 - Financial Statements 4
3.6 - Absence of Changes 4
3.7 - Absence of Undisclosed Liabilities 4
3.8 - Tax Returns 4
3.9 - Investigation of Financial Condition 5
3.10 - Trade Names and Rights 5
3.11 - Compliance with Laws 5
3.12 - Litigation 5
3.13 - Authority 5
3.14 - Ability to Carry Out Obligations 5
3.15 - Full Disclosure 5
3.16 - Assets and Liabilities 5
3.17 - Material Contracts 5
3.18 - Indemnification 5
ARTICLE IV - COVENANTS PRIOR AND SUBSEQUENT
TO CLOSING 6
4.1 - Investigative Rights 6
4.2 - Conduct of Business 6
4.3 - Continuing Relationship with Affiliated Companies 6
4.4 - Audited Financial Statements of GeniSys 6
4.5 - Offering of Zion Securities in Repayment of Loan 6
4.6 - Registration of Investor Shares 6
4.7 - Guarantee Regarding Bank Loan 7
ARTICLE V - CONDITIONS PRECEDENT TO ZION'S PERFORMANCE 7
5.1 - Conditions 7
5.2 - Accuracy of Representations 7
5.3 - Performance 7
5.4 - Absence of Litigation 7
5.5 - Officer's Certificate 7
5.6 - Certificate of Good Standing 7
5.7 - Guarantee of J. Daniel Bell and Carylyn K. Bell 7
ARTICLE VI - CONDITIONS PRECEDENT TO GENISYS'S PERFORMANCE 7
6.1 - Conditions 7
6.2 - Collateralized Loan 7
6.3 - Accuracy of Representations 7
6.4 - Performance 7
6.5 - Absence of Litigation 7
6.6 - Officer's Certificate 7
ARTICLE VII - CLOSING 8
7.1 - Closing 8
7.2 - Ownership of Zion 9
ARTICLE VIII- MISCELLANEOUS 9
8.1 - Captions and Headings 9
8.2 - No Oral Change 9
8.3 - Non-Waiver 9
8.4 - Time of Essence 9
8.5 - Entire Agreement 9
8.6 - Choice of Law 9
8.7 - Counterparts 10
8.8 - Notices 10
8.9 - Binding Effect 10
8.10 - Mutual Cooperation 10
8.11 - Finders 10
8.12 - Announcements 10
8.13 - Expenses 10
8.14 - Survival of Representations and Warranties 10
8.15 - Exhibits 10
8.16 - Binding Effect 10
Signatures 11
EXHIBITS
Allocation of Shares Exhibit 1.1
Subscription Agreement Exhibit 1.2
Financial Statements of GeniSys Exhibit 2.5
Tax Returns Exhibit 2.8
Litigation Involving GeniSys Exhibit 2.12
Material Contracts of GeniSys Exhibit 2.17
Assets and Liabilities of Zion Exhibit 3.16
Material Contracts of Zion Exhibit 3.17
Financial Statements of Zion Exhibit 3.5
<PAGE>
<PAGE>
AGREEMENT
AGREEMENT made this 12th day of March, 1999, by and between ZION
ENTERPRISES, INC., a Colorado corporation ("Zion"), GENISYS INFORMATION
SYSTEMS, INC., a Colorado corporation ("GeniSys"), J. Daniel Bell, Carylyn K.
Bell and the shareholders of GeniSys who are listed on Exhibit 1.1 hereto and
have executed Subscription Agreements in the form attached in Exhibit 1.2
hereto.
WHEREAS, Zion desires to acquire all of the issued and outstanding shares
of common stock of GeniSys from the GeniSys shareholders in exchange for an
aggregate of 7,516,740 newly issued unregistered shares of the no par value
common stock of Zion;
WHEREAS, GeniSys desires to assist Zion in acquiring all of the issued
and outstanding shares of GeniSys pursuant to the terms of this Agreement; and
WHEREAS, all of the GeniSys shareholders, by execution of Exhibit 1.2
hereto, agree to exchange all 1,797,500 shares of GeniSys for 7,516,740 shares
of Zion.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
representations contained herein, the parties hereto agree as follows:
ARTICLE I
Exchange of Securities
1.1 Issuance of Shares. Subject to the terms and conditions of this
Agreement, Zion agrees to issue and exchange 7,516,740 fully paid and
nonassessable unregistered shares of its no par value common stock (the "Zion
Shares") ) for all issued and outstanding shares of the $.01 par value Class A
and Class B common stock of GeniSys (the "GeniSys Shares") held by the GeniSys
shareholders ("GeniSys Shareholders"). Exhibit 1.1 lists all GeniSys
Shareholders, their shareholdings in GeniSys and the number of Zion Shares to
be issued to them. All Zion Shares will be issued directly to the GeniSys
Shareholders on the Closing Date, as hereinafter defined.
1.2 Exemption from Registration. The parties hereto intend that all
Zion Shares to be issued to the GeniSys Shareholders shall be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Act"), pursuant to Section 4(2) of the Act and the rules and regulations
promulgated thereunder. In furtherance thereof, the GeniSys Shareholders will
execute and deliver to Zion on the Closing Date a Subscription Agreement in
the form set forth in Exhibit 1.2 hereto.
ARTICLE II
Representations and Warranties of GeniSys
GeniSys, J. Daniel Ball and Carylyn K. Bell hereby represent and warrant
to Zion that:
2.1 Organization. GeniSys is a corporation duly organized, validly
existing and in good standing under the laws of Colorado, has all necessary
corporate powers to own its properties and to carry on its business as now
owned and operated by it, and is duly qualified to do business and is in good
standing in each of the states where its business requires qualification.
2.2 Capital. The authorized capital stock of GeniSys consists solely of
11,010,000 shares of which 1,000,000 shares constitute $.01 par value
preferred stock, 10,000,000 shares constitute $.01 par value Class A Common
Stock and 10,000 shares constitute $.01 par value Class B Common Stock. There
currently are no shares of Preferred Stock, 1,787,500 shares of Class A Common
Stock and 10,000 shares of Class B Common Stock issued and outstanding. All
of the outstanding common stock of GeniSys is duly and validly issued, fully
paid and nonassessable. There are no outstanding subscriptions, options,
rights, warrants, debentures, instruments, convertible securities or other
agreements or commitments obligating GeniSys to issue or to transfer from
treasury any additional shares of its capital stock of any class.
2.3 Subsidiaries. GeniSys does not have any subsidiaries or own any
interest in any other enterprise.
2.4 Directors and Officers. The names and titles of all directors and
officers of GeniSys as of the date of this Agreement are as follows: J. Daniel
Bell, President, Chief Executive Officer, Chairman and Director.
2.5 Financial Statements. Exhibit 2.5 hereto consists of the unaudited
financial statements of GeniSys for the year ended December 31, 1998 (the
"GeniSys Financial Statements"). The GeniSys Financial Statements have been
prepared in accordance with generally accepted accounting principles and
practices ("GAAP") consistently applied.
2.6 Absence of Changes. Since December 31, 1998, there has not been any
change in the financial condition or operations of GeniSys, except for changes
in the ordinary course of business, which changes have not in the aggregate
been materially adverse.
2.7 Absence of Undisclosed Liabilities. As of the date of GeniSys's
most recent balance sheet included in Exhibit 2.5, GeniSys did not have any
material debt, liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, that is
not reflected in such balance sheet except for those debts, liabilities and
obligations in the ordinary course of business.
2.8 Tax Returns. Within the times and in the manner prescribed by law,
GeniSys has filed all federal, state and local tax returns required by law and
has paid all taxes, assessments and penalties due and payable except for the
year 1997 for which no tax returns have been filed and there may be taxes due
as set forth in Exhibit 2.8. No filings are currently due and no taxes have
been paid for 1998 but GeniSys anticipates minimal taxes as disclosed in
Exhibit 2.8. There are no present disputes of any nature payable by GeniSys.
2.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, Zion
and its legal counsel and accountants shall have the opportunity to meet with
GeniSys's accountants and attorneys to discuss the financial condition of
GeniSys. GeniSys shall make available to Zion all books and records of
GeniSys.
2.10 Trade Names and Rights. GeniSys owns and holds all necessary
trademarks, service marks, trade names, copyrights, patents and proprietary
information and other rights necessary or material to its business as now
conducted or proposed to be conducted.
2.11 Compliance with Laws. GeniSys has complied with, and is not in
violation of, applicable federal, state or local statutes, laws and
regulations affecting its properties or the operation of its business where
the failure to comply or any violation would have a material adverse effect on
GeniSys and has disclosed any and all such non-compliances and/or violations
to Zion.
2.12 Litigation. GeniSys is not a defendant in any suit, action,
arbitration or legal, administrative or other proceeding, or governmental
investigation which is pending or, to the best knowledge of GeniSys,
threatened against or affecting GeniSys or its business, assets or financial
condition where the failure to disclose would have a material adverse effect
on GeniSys, except as disclosed in Exhibit 2.12. GeniSys is not in default
with respect to any order, writ, injunction or decree of any federal, state,
local or foreign court, department, agency or instrumentality applicable to
it. GeniSys is not engaged in any material litigation to recover monies due
to it.
2.13 Authority; Counsel. The Board of Directors of GeniSys has
authorized the execution of this Agreement and the consummation of the
transactions contemplated herein, and GeniSys has full power and authority to
execute, deliver and perform this Agreement, and this Agreement is a legal,
valid and binding obligation of GeniSys and is enforceable in accordance with
its terms and conditions. By execution of Exhibit 1.2, all of the GeniSys
Shareholders have agreed to and have approved the terms of this Agreement.
2.14 Ability to Carry Out Obligations. The execution and delivery of
this Agreement by GeniSys and the performance by GeniSys of its obligations
hereunder in the time and manner contemplated will not cause, constitute or
conflict with or result in (a) any breach or violation of any of the
provisions of or constitute a default under any license, indenture, mortgage,
instrument, article of incorporation, bylaw, or other agreement or instrument
to which GeniSys is a party, or by which it may be bound, nor will any
consents or authorizations of any party other than those hereto be required,
(b) an event that would permit any party to any agreement or instrument to
terminate it or to accelerate the maturity of any indebtedness or other
obligation of GeniSys, or (c) an event that would result in the creation or
imposition of any lien, charge or encumbrance on any asset of GeniSys.
2.15 Full Disclosure. None of the representations and warranties made
by GeniSys herein or in any exhibit, certificate or memorandum furnished or to
be furnished by GeniSys, or on its behalf, contains or will contain any untrue
statement of material fact or omit any material fact the omission of which
would be misleading.
2.16 Assets. GeniSys has good and marketable title to all of its
property, free and clear of all liens, claims and encumbrances, except as
otherwise indicated in Exhibit 2.5.
2.17 Material Contracts. GeniSys's only material contracts are those
disclosed in Exhibit 2.17 attached hereto.
2.18 Indemnification. GeniSys agrees to indemnify, defend and hold Zion
harmless against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorney fees, that it shall
incur or suffer, which arise out of, result from or relate to any breach of,
or failure by GeniSys to perform any of its representations, warranties,
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or to be furnished by GeniSys under this
Agreement.
2.19 Restricted Securities. GeniSys and the GeniSys Shareholders, by
execution of this Agreement and of Exhibit 1.2, respectively acknowledge that
all of the shares of Zion to be issued hereunder are restricted securities and
none of such shares of Zion may be sold or publicly traded except in
accordance with the provisions of the Securities Act of 1933, as amended.
ARTICLE III
Representations and Warranties of Zion
Zion represents and warrants to GeniSys that:
3.1 Organization. Zion is a corporation duly organized, validly
existing and in good standing under the laws of Colorado, has all necessary
corporate powers to own its properties and to carry on its business as now
owned and operated by it, and is duly qualified to do business and is in good
standing in each of the states where its business requires qualification.
3.2 Capital. The authorized capital stock of Zion consists of (i)
25,000,000 shares of no par value common stock, of which 976,200 shares of
common stock are currently issued and outstanding, and (ii) 10,000,000 shares
of no par value preferred stock, none of which are outstanding. All of the
outstanding common stock is duly and validly issued, fully paid and
nonassessable. There are no other outstanding subscriptions, options, rights,
warrants, debentures, instruments, convertible securities or other agreements
or commitments obligating Zion to issue or to transfer from treasury any
additional shares of its capital stock of any class, except as set forth in
this Section 3.2.
3.3 Subsidiaries. Zion does not have any subsidiaries or own any
interest in any other enterprise.
3.4 Directors and Officers. Earnest Mathis, Jr. is Zion's President and
a director, Gary McAdam is Zion's Secretary/Treasurer and a director and Gary
A. Agron is a director of Zion.
3.5 Financial Statements. Exhibit 3.5 hereto consists of the audited
financial statements of Zion for the period ended October 31, 1998 (the "Zion
Financial Statements"). The Zion Financial Statements have been prepared in
accordance with generally accepted accounting principles and practices
consistently followed by Zion throughout the period indicated, and fairly
present the financial position of Zion as of the date of the balance sheet
included in the Zion Financial Statements and the results of operations for
the period indicated.
3.6 Absence of Changes. Since October 31, 1998, there has not been any
change in the financial condition or operations of Zion.
3.7 Absence of Undisclosed Liabilities. Except as otherwise disclosed
in this Agreement, as of the date hereof and as of the Closing Date, Zion did
not have and will not have any material debt, liability or obligation of any
nature, whether accrued, absolute, contingent or otherwise, and whether due or
to become due, that is not reflected in such balance sheet.
3.8 Tax Returns. Zion is current with all any federal, state and local
tax returns required by law and has paid all taxes, assessments, and penalties
due and payable.
3.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, GeniSys
and its legal counsel and accountants shall have the opportunity to meet with
Zion's accountants and attorneys to discuss the financial condition of Zion.
Zion shall make available to GeniSys all books and records of Zion.
3.10 Trade Names and Rights. Zion does not own nor use any patent,
trademark, service mark, trade name or copyright in its business.
3.11 Compliance with Laws. Zion has complied with, and is not in
violation of, applicable federal, state or local statutes, laws or regulations
affecting its properties or the operation of its business, including all
federal and state securities laws.
3.12 Litigation. Zion is not a party in any suit, action, arbitration,
or legal, administrative or other proceeding, or governmental investigation
which is pending or, to the best knowledge of Zion, threatened against or
affecting Zion or its business, assets or financial condition. Zion is not in
default with respect to any order, writ, injunction or decree of any federal,
state, local or foreign court, department, agency or instrumentality
applicable to it. Zion is not engaged in any material litigation to recover
monies due to it.
3.13 Authority. The Board of Directors of Zion, has authorized the
execution of this Agreement and the transactions contemplated herein, and Zion
has full power and authority to execute, deliver and perform this Agreement,
and this Agreement is the legal, valid and binding obligation of Zion, and is
enforceable in accordance with its terms and conditions.
3.14 Ability to Carry Out Obligations. The execution and delivery of
this Agreement by Zion and the performance by Zion of its obligations
hereunder will not cause, constitute or conflict with or result in (a) any
breach or violation of any of the provisions of or constitute a default under
any license, indenture, mortgage, instrument, article of incorporation, bylaw
or other agreement or instrument to which Zion is a party, or by which it may
be bound, nor will any consents or authorization of any party other than those
hereto be required, (b) an event that would permit any party to any agreement
or instrument to terminate it or to accelerate the maturity of any
indebtedness or other obligation of Zion, or (c) an event that would result in
the creation or imposition of any lien, charge or encumbrance on any asset of
Zion.
3.15 Full Disclosure. None of the representations and warranties made
by Zion herein, or in any exhibit, certificate or memorandum furnished or to
be furnished by Zion or on its behalf, contains or will contain any untrue
statement of material fact or omit any material fact the omission of which
would be misleading.
3.16 Assets. Zion has no assets or liabilities except these listed in
Exhibit 3.16.
3.17 Material Contracts. Zion has no material contracts except these
listed in Exhibit 3.17.
3.18 Indemnification. Zion agrees to indemnify, defend and hold GeniSys
harmless against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties, and reasonable attorney fees, that it shall
incur or suffer, which arise out of, result from or relate to any breach of,
or failure by Zion to perform any of its representations, warranties,
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or to be furnished by Zion under this
Agreement.
ARTICLE IV
Covenants Prior and Subsequent to Closing
4.1 Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsel, accountants, auditors and other authorized representatives,
full access during normal business hours and upon reasonable advance written
notice to all of each party's properties, books, contracts, commitments and
records for the purpose of examining the same. Each party shall furnish the
other party with all information concerning each party's affairs as the other
party may reasonably request.
4.2 Conduct of Business. Prior to the Closing Date, each party shall
conduct its business in the normal course and shall not sell, pledge or assign
any assets without the prior written approval of the other party, except in
the normal course of business. Neither party shall amend its Articles of
Incorporation or Bylaws (except as may be described in this Agreement),
declare dividends, redeem or sell stock or other securities, incur additional
or newly-funded liabilities, acquire or dispose of fixed assets, change
employment terms, enter into any material or long-term contract, guarantee
obligations of any third party, settle or discharge any balance sheet
receivable for less than its stated amount, pay more on any liability than its
stated amount, or enter into any other transaction other than in the normal
course of business.
4.3 Continuing Relationships with Affiliated Companies. It is
acknowledged that J. Daniel Bell is also a principal of Dunn International and
PMSI ("Bell Companies") that currently provide services and products similar
to the that of GeniSys. J. Daniel Bell agrees, after Closing, not to divert
any clients or potential clients from GeniSys to either of the Bell Companies.
4.4. Audited Financial Statements of GeniSys. Within forty five (45)
days of the Closing Date, GeniSys will complete audited financial statements
for the year ended December 31, 1998 and the period ending March 31, 1999.
All such statements shall be prepared in accordance with generally accepted
accounting practices. The foregoing forty five (45) days may be extended by
written agreement between Zion and Zion's current President, Earnest Mathis,
Jr.
4.5 Offering of Zion Securities in Repayment of Loans. Zion is in the
process of borrowing up to $550,000 from certain individuals and entities (the
"Investors") which it has or will in turn loan to GeniSys. Following the
Closing Date, Zion will exchange up to 1,395,939 shares of its Common Stock
for $550,000 (or $.394 per share) in full payment of the Investors' loans to
Zion. Upon conversion of the loans to shares of Common Stock, the loans by
the Investors to Zion and the Zion loan to GeniSys will be canceled.
4.6 Registration of Investors Shares. GeniSys and J. Daniel Bell agree
that within forty five (45) days of the Closing Date they will cause Zion to
file an SB-2 Registration Statement with the Securities and Exchange
Commission to register the shares of Zion Common Stock issued in conversion of
the Investor loans mentioned in Section 4.5 above. The foregoing forty five
(45) days may be extended by written agreement between Zion, J. Daniel Bell
and Zion's current President, Earnest Mathis, Jr. It is further agreed that
no other shares of Zion Common Stock will be registered pursuant to this SB-2
Registration Statement ("SB-2") unless (i) such shares are being offered as
part of an equity offering for cash pursuant to the SB-2 and/or (ii) such
shares are sold in any private placement subsequent to the closing at a price
if not less than $.394 per share and a maximum of an aggregate of $250,000 is
raised in all such private placements and the current President of Zion,
Earnest Mathis, Jr. agrees in writing to the inclusion of the private
placement shares in the SB-2. Further, it is agreed that the Investors
referenced in Section 4.5 above shall have the opportunity to participate in
the purchase of one-half of all private placements referenced in 4.6 (ii)
herein.
4.7 Guarantee Regarding Bank Loan. There is currently a loan from
Central Bank - Houston, Texas, with a balance of $248,650.17 secured by the
assets of GeniSys and Dunn International, Inc. ("Dunn"), of which $202,070.09
is a debt of GeniSys and $46,580.08 is a debt of Dunn. J. Daniel Bell and
Carylyn K. Bell agree to guarantee that Central Bank will not assert a claim
against or execute upon GeniSys assets for any debts of Dunn and shall
indemnify Zion from any losses or damages, including but not limited to
attorney's fees and court costs resulting from any claim by Central Bank or
the holder of Central Bank's loan position against GeniSys' assets for
indebtedness of Dunn.
ARTICLE V
Conditions Precedent to Zion's Performance
5.1 Conditions. Zion's obligations hereunder shall be subject to the
satisfaction at or before the Closing of all the conditions set forth in this
Article V. Zion may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by Zion of any other condition of or any of Zion's
other rights or remedies, at law or in equity, if GeniSys shall be in default
of any of its representations, warranties or covenants under this Agreement.
5.2 Accuracy of Representations. All representations and warranties by
GeniSys in this Agreement or in any written statement that shall be delivered
to Zion by GeniSys under this Agreement shall be true and accurate on and as
of the Closing Date as though made at that time.
5.3 Performance. GeniSys shall have performed, satisfied and complied
with all covenants, agreements and conditions required by this Agreement to be
performed or complied with by it on or before the Closing Date.
5.4 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against GeniSys on or before the Closing Date, except
as disclosed in Section 2.12 above.
5.5 Officer's Certificate. GeniSys shall have delivered to Zion a
certificate dated the Closing Date and signed by J. Daniel Bell as the Chief
Executive Officer of GeniSys certifying that each of the conditions specified
in this Article has been fulfilled and that all of the representations set
forth in Article II are true and correct as of the Closing Date.
5.6 Certificate of Good Standing. GeniSys shall have delivered to Zion a
certificate of corporate good standing of GeniSys dated within 60 days of the
date of Closing.
5.7 Guarantee of J. Daniel Bell and Carylyn K. Bell. GeniSys shall have
delivered to Zion the personal guarantee set forth in Section 4.7 above.
ARTICLE VI
Conditions Precedent to GeniSys's Performance
6.1 Conditions. GeniSys's obligations hereunder shall be subject to the
satisfaction at or before the Closing of all the conditions set forth in this
Article VI. GeniSys may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by GeniSys of any other condition of or
any of GeniSys's rights or remedies, at law or in equity, if Zion shall be in
default of any of its representations, warranties or covenants under this
Agreement.
6.2 Accuracy of Representations. All representations and warranties by
Zion in this Agreement or in any written statement that shall be delivered to
GeniSys by Zion under this Agreement shall be true and accurate on and as of
the Closing Date as though made at that time.
6.3 Performance. Zion shall have performed, satisfied and complied with
all covenants, agreements and conditions required by this Agreement to be
performed or complied with by it on or before the Closing Date.
6.4 Absence of Litigation. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against Zion on or before the Closing Date.
6.5 Officer's Certificate. Zion shall have delivered to GeniSys a
certificate dated the Closing Date and signed by Earnest Mathis, Jr., as the
Chief Executive Officer of Zion, certifying that each of the conditions
specified in this Article has been fulfilled and that all of the
representations set forth in Article III are true and correct as of the
Closing Date.
6.6 Certificate of Good Standing. Zion shall have delivered to GeniSys a
certificate of corporate good standing of Zion dated within 60 days of the
date of Closing.
ARTICLE VII
Closing
7.1 Closing. The Closing of this Agreement shall be held at the Law
Offices of Michael J. Tauger, at any mutually agreeable time and date (the
"Closing Date") on March 12, 1999, unless extended by mutual agreement. At
the Closing:
(a) GeniSys shall deliver to Zion copies of Exhibit 1.2 executed by
all of the GeniSys Shareholders together with certificates representing all
outstanding GeniSys Shares duly endorsed to Zion;
(b) Zion shall deliver to the GeniSys Shareholders 7,516,740 shares
of Zion common stock, for which the GeniSys Shares have been exchanged,
pursuant to the share computations set forth in Exhibit 1.1 hereto;
(c) Zion shall deliver to GeniSys (i) Earnest Mathis, Jr's
certificate described in Section 6.5 and (ii) a signed consent of Zion's
directors, approving this Agreement and each matter to be approved under this
Agreement and (iii) Certificate of Good Standing of Zion.
(d) GeniSys shall deliver to Zion (i) J. Daniel Bell's certificate
described in Section 5.5 (ii) a signed consent and/or minutes of its directors
approving this Agreement and each matter to be approved under this Agreement
and (iii) Certificate of Good Standing of GeniSys.
(e) GeniSys shall deliver to Zion the personal guarantee set forth
in Section 4.7 above.
7.2 Ownership of Zion. Following the Closing, excluding the Zion shares
being issued to the Investors in accordance with Section 4.5 above, the stock
ownership of Zion shares shall be as follows:
GeniSys Shareholders 7,516,740 shares
Zion Shareholders 976,200 shares
Total 8,492,940 shares
ARTICLE VIII
Miscellaneous
8.1 Captions and Headings. The article and section headings throughout
this Agreement are for convenience and reference only and shall not define,
limit or add to the meaning of any provision of this Agreement.
8.2 No Oral Change. This Agreement and any provision hereof may not be
waived, changed, modified or discharged orally, but only by an agreement in
writing signed by the party against whom enforcement of any such waiver,
change, modification or discharge is sought.
8.3 Non-Waiver. The failure of any party to insist in any one or more
cases upon the performance of any of the provisions, covenants or conditions
of this Agreement or to exercise any option herein contained shall not be
construed as a waiver or relinquishment for the future of any such provisions,
covenants or conditions. No waiver by any party of one breach by another
party shall be construed as a waiver with respect to any other subsequent
breach.
8.4 Time of Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
8.5 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto and supersedes all prior
negotiations, agreements and understandings.
8.6 Choice of Law. This Agreement has been executed by all parties in
the State of Colorado and shall be governed by and construed and enforced
pursuant with the laws of the State of Colorado (without regard to any
conflict of laws or principals). All actions, suits and proceedings arising
out of or in connection with this Agreement shall be brought in the courts in
the State of Colorado which shall be the exclusive forum therefor. The
parties hereby irrevocably submit to the in personam jurisdiction and process
of the courts in the State of Colorado.
8.7 Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.8 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice
is to be given, or on the third day after mailing if mailed to the party to
whom notice is to be given, by first class mail, registered or certified,
postage prepaid, and properly addressed as follows:
Zion: Zion Enterprises, Inc.
26 West Dry Creek Circle, Suite 600
Littleton, Colorado 80120
Attn: Earnest Mathis, Jr.
GeniSys: GeniSys Information Systems, Inc.
654 North Belt, Suite 310
Houston, Texas 77060
Attn: J. Daniel Bell
8.9 Binding Effect. This Agreement shall inure to and be binding upon
the heirs, executors, personal representatives, successors and assigns of each
of the parties to this Agreement.
8.10 Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement and shall execute such other
and further documents and take such other and further actions as may be
necessary or convenient to effect the transaction described herein.
8.11 Finders. The parties hereto represent that no finder has brought
about this Agreement, and no finder's fee has been paid or is payable by
either party.
8.12 Announcements. The parties will consult and cooperate with each
other as to the timing and content of any public announcements regarding this
Agreement.
8.13 Expenses. Each party will pay its own legal, accounting and other
out-of-pocket expenses incurred in connection with this Agreement.
8.14 Survival of Representations and Warranties. The representations,
warranties, covenants and agreements of the parties set forth in this
Agreement or in any instrument, certificate, opinion or other writing
providing for in it, shall survive the Closing and remain in force for twelve
(12) months thereafter.
8.15 Exhibits. As of the execution hereof, the parties have provided
each other with the Exhibits described herein. Any material changes to the
Exhibits shall be immediately disclosed to the other party.
8.16 Binding Effect. This Agreement is a binding agreement on all
parties and is enforceable by its terms.
<PAGE>
In witness whereof, the parties have executed this Agreement on the date
indicated above.
ZION ENTERPRISES, INC. GENISYS INFORMATION SYSTEMS, INC.
By: By:
-------------------------- ----------------------------
Earnest Mathis, Jr., J. Daniel Bell, Chief
President Executive Officer
J. DANIEL BELL CARYLYN K. BELL
- ------------------------------- ----------------------------------
J. Daniel Bell Carylyn K. Bell
<PAGE>
<PAGE>
EXHIBIT 1.1
SCHEDULE OF GENISYS SHAREHOLDERS
AND
ALLOCATION OF ZION SHARES
Number of Zion
Name of Number of GeniSys Common Shares
GeniSys Shareholder Shares Exchanged To Be Issued
- ------------------- ----------------- --------------
Carylyn Bell 1,609,000 (Class A) 6,732,221
J. Daniel Bell 10,000 (Class B) 41,841
Jeffrey Spencer 145,000 (Class A) 606,695
John Winchester 32,500 (Class A) 135,983
--------- ----------
Total 1,796,500 7,516,740
<PAGE>
<PAGE>
EXHIBIT 1.2
SUBSCRIPTION AGREEMENT
In connection with my exchange of no par value common stock of GeniSys
Corporation ("GeniSys") for the no par value common stock (the "Common Stock")
of Zion Enterprises, Inc. ("Zion"), I acknowledge the matters set forth below
and promise that the statements made herein are true. I understand that Zion
is relying on my truthfulness in issuing the Common Stock to me.
I understand that the Common Stock is being issued to me in a private
transaction in exchange for my shares of GeniSys and in reliance upon the
exemption provided in section 4(2) of the Securities Act of 1933, as amended
(the "Act") for non-public offerings and pursuant to a Share Exchange
Agreement between Zion and GeniSys. I understand that the Zion Common Stock
is "restricted" under applicable securities laws and may not be sold by me
except in a registered offering (which may not ever occur) or in a private
transaction like this one. I know this is an illiquid investment and that
therefore I may be required to hold the Common Stock for an indefinite period
of time, but under no circumstances less than one year from the date of its
issuance.
I am acquiring the Common Stock solely for my own account, for long-term
investment purposes only and not with a view to sale or other distribution. I
agree not to dispose of any Common Stock unless and until counsel for Zion
shall have determined that the intended disposition is permissible and does
not violate the Act, any applicable state securities laws or rules and
regulations promulgated thereunder.
All information, financial and otherwise, or documentation pertaining to
all aspects of my acquisition of the Common Stock and the activities and
financial information of Zion has been made available to me and my
representatives, if any, and I have had ample opportunity to meet with and ask
questions of senior officers of Zion, and I have received satisfactory answers
to any questions I asked.
In acquiring the Common Stock, I have reviewed the Agreement Concerning
the Exchange of Common Stock between GeniSys and Zion and the Exhibits thereto
and have made an independent investigation of Zion. I am an experienced
investor, have made speculative investments in the past and am capable of
analyzing the merits of an investment in the Common Stock.
I understand that the Common Stock is highly speculative, involves a
great degree of risk and should only be acquired by individuals who can afford
to lose their entire investment. Nevertheless, I consider this a suitable
investment for me because I have adequate financial resources and income to
maintain my current standard of living even after my acquisition of the Common
Stock. I know that Zion is merely a "shell" company with no assets or
liabilities, its financial affairs can fluctuate dramatically from time to
time, and that although I could lose my entire investment, I am acquiring the
Common Stock because I believe the potential rewards are commensurate with the
risk. Even if the Common Stock became worthless, I could still maintain my
standard of living without significant hardship on me or my family.
Dated as of this _____ day of _______________________, 1999.
-----------------------------------
Signature
-----------------------------------
Name, Please Print
-----------------------------------
Residence Address
-----------------------------------
City, State and Zip Code
-----------------------------------
Area Code and Telephone Number
-----------------------------------
Social Security Number
-----------------------------------
Number of GeniSys Shares Exchanged
<PAGE>
<PAGE>
EXHIBIT 3.16
ASSETS AND LIABILITIES OF ZION
The only asset of Zion is a promissory note (the "GeniSys Note") dated
February 17, 1999 reflecting a loan by Zion as Lender and GeniSys as Borrower
in the principal amount of up to $550,000.
The only liabilities of Zion are promissory notes executed by Zion to
certain individuals and entities (the "Investors") currently in the total
principal amount of $505,000 and which, at Closing, shall not exceed the
principal amount of $550,000. All principal amounts borrowed by Zion from the
Investors prior to Closing shall be loaned to GeniSys pursuant to the GeniSys
Note and the Loan Agreement between GeniSys and Zion.
<PAGE>
<PAGE>
EXHIBIT 3.17
MATERIAL CONTRACTS OF ZION
The only material contract of Zion is a Loan Agreement dated February 17,
1999 between Zion as Lender and GeniSys as Borrower whereby Zion agrees to
loan to GeniSys up to $550,000 in accordance with the terms and conditions of
the Loan Agreement, a copy of which is attached to this Exhibit 3.17.
<PAGE>
CSC
Federal Sector - Civil Group
8400 Corporate Drive
Landover, Maryland 20785
301.429.3100
August 18, 1999
Mr. Gary Smith
Genisys Information Systems, Inc.
654 North Belt East
Suite 310
Houston, TX 77060
Subject: IRS Prime Subcontract Agreement #S800627
Reference: IRS PRIME Contract #TIRNO-99-D-0001
Dear Mr. Smith:
Please find enclosed two copies of the subject subcontract for your review and
signature. Please sign and return both copies to the attention of the
undersigned as soon as possible. A fully executed copy will be returned for
your files.
If you have questions or if I may be of further assistance, please contact the
undersigned at (301) 306-6427 or via e-mail [email protected].
Sincerely,
KENNETH L. GRACE
Principal Subcontract Administrator
Enclosure - Subcontract Agreement #S800627
<PAGE>
IRS PRIME SUBCONTRACT AGREEMENT
Subcontract Number: S800627 Effective Date: August 18, 1999
BETWEEN
Buyer AND Seller
----- ------
Computer Sciences Corporation Genisys Information Systems, Inc.
8400 Corporate Drive 654 North Belt East, Suite 310
Landover, MD 20785 Houston, TX 77060
Time and Materials X Labor Hour
Task Assignments Letter Subcontract
Basic Ordering Agreement Other _______________
Period of Performance: 18 August 1999 to 18 February 2000
Prime Contract Agency: Internal Revenue Service (IRS)
Prime Contract Number: TIRNO-99-D-00001
Priority Rating: N/A
F.O.B. Point: N/A
Part I. - THE SCHEDULE
----------------------
Section A. Subcontract Agreement (Face Page and Signature Page)
Section B. Supplies/Services and Price/Costs
Section C. Description/Specifications/Statement of Work (SOW)
Section D. Packaging and Marking
Section E. Inspection and Acceptance
Section F. Deliveries and Performance
Section G. Contract Administration
Section H. Special Contract Requirements
Part II. - CONTRACT CLAUSES
---------------------------
Section I. Contract Clauses
Part III. - LIST OF ATTACHMENTS
-------------------------------
Section J. N/A
Part IV. - REPRESENTATIONS
--------------------------
Section K. Incorporation of Representations and Certifications
<PAGE> SIGNATURE PAGE
This Subcontract Agreement may be referred to in this document as "Agreement,"
"Contract," or "Subcontract." Any reference to CSC's contract with the
Government or other customer will be to the "prime contract."
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT AS OF THE
DATES SET FORTH BELOW.
Computer Sciences Corporation Genisys Information Systems, Inc.
By: By: /s/ Craig Crawford 8/18/99
----------------------------------- --------------------------------
Signature Date Signature Date
Typed Name: Kenneth L. Grace Typed Name: Craig Crawford
Title: Principal Subcontract Administrator Title: Chief Operating
Officer
SECTION A. CONTRACT FORM
.1 CONTRACTING PARTIES
This subcontract is made and entered into as of August 18, 1999 by and
between Computer Sciences Corporation, Civil Group, IRS PRIME Alliance,
with offices at 8400 Corporate Drive, Landover, Maryland 20785
(hereinafter referred to as "CSC", "Prime Contractor", or "Buyer"), a
corporation organized, existing, an incorporated under the laws of
Nevada, and Genisys Information Systems, Inc. ("Genisys"), (hereinafter
referred to as "Subcontractor" or "Seller") with offices at 654 North
Belt East, Suite 310, Houston, Texas 77060.
A.2 AUTHORITY
(a) This contract, consisting of the FACE Page; the SCHEDULE;
CONTRACT CLAUSES; LIST OF ATTACHMENTS; REPRESENTATIONS,
together with all documents incorporated herein by
reference, constitutes the entire agreement between the
contracting parties. All oral or written representations,
inducements, understandings, commitments or agreements, of
any kind and of nature between the parties, not
incorporate into the contract, are superseded by this
contract.
(b) This contract is a subcontract under IRS Contract Number TIRNO-
99-D-00001. The prime contract is between Computer Sciences
Corporation and the United States Government (Internal Revenue
Service) and bears an effective date of 12/9/98.
(c) This subcontract shall be governed by and constructed in
accordance with the laws of the Commonwealth of Virginia.
A.3 GENERAL
If any provision of this order is held by a court of competent
jurisdiction to be invalid, illegal, or otherwise unenforceable it is to
that extent to the deemed committed, and the remainder of the order shall
in no way be affected or impaired thereby. Seller is hereby notified
that his order, after Seller's acceptance thereof, is proprietary
information of the Buyer and the Seller, unless disclosure is required by
law or Government responsibility.
A.4 TYPE OF CONTRACT
(a) This is a Labor Hour type of contract. The service to be provided
is labor hours provided over a fixed period of time. The amount of
effort is limited to within the ceiling price and hourly labor rates
set forth in this schedule. While the amount of effort may vary
within the contract period, that period of time may not vary and the
amount of effort may not be exceeded except as may be specifically
authorized within this contract or by an amendment to this contract.
(b) This article is intended solely to acquaint the reader with the
general nature of the agreement. Its specific terms, conditions and
procedures are each covered in subsequent Articles, Clauses and/or
Attachments.
A.5 ACCEPTANCE OF THIS SUBCONTRACT
This Agreement is not binding upon Buyer until accepted by Seller.
Acceptance of all terms and conditions of this order shall take place at
the election of Seller by execution of a subcontract by duly authorized
representatives of Seller and Buyer. None of the terms and conditions
contained in this purchase Order may be added to, modified, or
superseded, or otherwise altered, except by a written instrument signed
by duly authorized representatives of the Buyer and the Seller. The
provisions of this order are as negotiated. SELLER IS HEREBY URGED TO
ONLY ACCEPT THIS ORDER AFTER READING IT IN FULL AND AGREEING TO ITS
TERMS. IF SELLER DOES NOT AGREE TO ANY OF THE TERMS CONTAINED HEREIN, OR
BELIEVES ANY TO BE UNREASONABLE, SELLER SHOULD DECLINE THE ORDER AND
PROVIDE SUGGESTED REVISIONS TO BUYER.
SECTION B. SUPPLIES OR SERVICES AND PRICES/COSTS
B.1 WORK TO BE PERFORMED
The Seller, acting as an independent contractor and not as an agent of
the Buyer, shall furnish materials, personnel, facilities, support and
management necessary to provide the supplies and services in accordance
with Article C.1 entitled "Scope of Work."
B.2 DELIVERABLE REQUIREMENTS
(a) The subcontractor shall perform and/or deliver the following:
<TABLE>
<CAPTION>
Item Description Deliver Date
---- -------------------------------- -------------
<S> <C> <C>
1 Fixed labor hours 8/18/99 through
for the labor category 2/18/2000
and at the rate specified
in Article B.3, below,
for work set forth in the
Statement of Work, hereto
</TABLE>
(b) In the event the Seller anticipates difficulty in complying
with the delivery schedule, the Seller shall notify the Buyer
within a reasonable time frame, giving pertinent details,
including the date by which it expects to make delivery;
PROVIDED, however, that this data shall be informational only
in character and that receipt thereof shall not be construed as
a waiver by the Buyer of any contract delivery schedule, or any
rights or remedies provided by law or under this subcontract.
(c) For purposes of delivery, all deliverables shall be made by the
start of business (SOB) 8:00 A.M. EST, Monday through Friday,
or by mutual agreement by both parties.
(d) All deliverable reports, if applicable, shall be submitted in
one original camera ready copy to the Buyer's designated
Subcontracts Administrator (SA) and one electronic copy to the
Buyer's designated Task Manager (TM). All deliverables
submitted in electronic format shall be formatted on a 3-1/2 inch
High Density diskette or e-mailed to the Buyer's TM at @csc.com
and copy the Buyer's SA at [email protected]. Word processing
type documents shall be formatted in Microsoft Word or
compatible format and spreadsheet type tables, not already
incorporated into the Microsoft Word documents, shall be
delivered in a format compatible with Microsoft Excel.
Computer produced graphics shall be delivered on diskettes with
the generating hardware and software identified. Diskette(s)
shall be free of any computer virus. If a virus is found, the
deliverable will not be accepted.
B.3 VALUE
Direct labor hours provided for all work awarded under this
subcontract shall be reimbursed for the following labor category as
specified below at the hourly rates listed below. The rates set
forth in this schedule are fully burdened and are inclusive of
profit.
<TABLE>
<CAPTION>
CSC I IRS CSC I IRS CSC I IRS
Labor Site Rates Site Rates Site Rates
Category Base Yr. Est Hrs Opt. Yr. 1 Opt. Yr. 2
-------- -------- ------- ---------- ----------
<S> <C> <C> <C> <C>
Project
Scheduler $114/hour 1,100 N/A N/A
</TABLE>
Note: $114.00 per hour for the first 40 hours in each week.
$90.00 per hour for hours in excess of 40 hours in each
week.
Total Labor Hours: 1100 (0.53 FTE) NTE
Total Funded Labor Dollars: $125,400.00 NTE
B.4 PRODUCTIVE DIRECT LABOR HOURS
"Productive direct labor hours" are those hours expended by Seller
personnel in performing work under this subcontract. This does not
include sick leave, vacation, holidays, jury duty, military leave, or any
other kind of administrative leave.
SECTION C. DESCRIPTION OF WORK/WORK SPECIFICATION
Background
The Internal Revenue Service (IRS) is engaged in a long-term modernization of
the information systems that effect both the administration of the nation's
taxes and the operation of the IRS. As we move forward, a modern and secure
infrastructure must be designed and deployed which will be enterprise-wide in
scope, and must be able to scale to support and consistently respond to the
entire base of IRS employees, stakeholders, and taxpayers. Infrastructure
systems and components must be standards compliant, fully integrated and, as a
highly reusable national platform, must be capable of providing the full range
of traditional infrastructure services to all taxpayer, corporate, financial
and administrative support applications.
Historically, the IRS has developed distributed computing systems using unique
hardware and software configurations. These methods and practices have
manifested into "stove-piped" systems that are not standards based, do not
integrate with other (similar) systems, and demand a unique and costly system
support structure. Additionally, these stove-piped applications have become
increasingly expensive to maintain, lack the requisite security services, and
are not synchronized with the IRS modernization blueprint.
The infrastructure environment within the IRS now consists of highly
disjointed systems components and configurations (including data communication
domains and hardware/software standards) and lacks consistent security tools
and structure. Specifically, many fielded systems have little or no security
functionality and fail to interface with other systems or share services
(including local data) across system boundaries. Additionally, infrastructure
systems and components are vulnerable to both internal and external attack
that could lead to denial of critical services supporting service-wide
business functionality.
Most recently, numerous efforts have taken place to capture, validate and
consolidate infrastructure requirements in such areas as Compliance, Security
and End-User Computing. While these activities have identified and filled
requirement voids within various infrastructure service areas, we have not
confirmed that all areas have been sufficiently addressed, validated, or
integrated.
Scope
The purpose of this task order is to provide support to the program management
office, and specifically the program control office.
Duties will include working in the earned value department, developing and
maintaining msp schedules, working with the operational community to develop
schedules, baselines, and report status against the baselines, develop
resource loading tools in msp, work with the msp gateway in Artemis, maintain
the wbs structure, work with the customer to make improvements.
Prepared By:___________________
Dated:________________________
PMO:________________________
Dated:________________________
<PAGE>
SECTION D. PACKAGING AND MARKING
D.1 PRESERVATION, PACKAGING, AND PACKING
(a) Unless otherwise specified, all items shall be preserved,
packaged, and packed in accordance with normal commercial
practices. Seller shall be responsible for safe packing in
conformity with the requirements of the Uniform Freight
Classification and the National Motor Freight Classification
(issue in effect at time of shipment). Each shipping container
of each item in a shipment shall be of Uniform size and
content, except for residual quantities.
(b) Where special or unusual packing is specified in an order, but
not specifically provided for by the contract, such packing
details must be the subject of an agreement independently
arrived at between the ordering agency, the Prime
Contractor/Buyer and the Seller.
D.2 PACKING LIST
A packing list or other suitable shipping document shall accompany each
shipment and shall indicate: (1) Name and address of consignor; (2) Name
and complete address of consignee; (3) Subcontract Number; and (4)
Description of the material shipped, including item number, quantity,
number of containers, and package number (if any). One copy of the
packing list shall be forwarded to the Buyer, and one copy shall
accompany Seller's invoice.
D.3 MARKING
All data and correspondence submitted to the Subcontract
Administrator and the Task Monitor (TM) shall reference:
The prime contract and subcontract number; and
(2) The Buyer.
The Buyer's Subcontract Administrator shall receive a copy of all
correspondence listed in Article B.2.(a) submitted to the Buyer's
TM.
The Subcontractor shall place identical requirements on all lower
tier subcontracts.
D.4 CONTAINER MARKING
(a) The Subcontractor's markings on shipping containers shall be
clearly legible from a distance of 36 inches. The
Subcontractor may mark by stencil, rubber stamp, or lacquer
over a coated gummed label. Containers shall be clearly marked
as follows:
Name of Seller;
Description of items contained therein; and
(3) Consignee's name and address.
(b) The Subcontractor shall place identical requirements on all
lower tier subcontractors.
SECTION E. INSPECTION AND ACCEPTANCE
E.1 RESPONSIBILITY OF INSPECTION AND ACCEPTANCE
Inspection and acceptance of all work performance, reports and other
deliverables under this Subcontract shall be performed at the place
of delivery.
Inspection, acceptance, and verification that all deliverables
associated with Article 8.2 and the SOWs issued under this
Subcontract fulfill the requirements and standards under this
Subcontract will be accomplished by the Buyer's SA and/or TM.
Either the Buyer's SA or TM will inspect, and be responsible for,
the review and acceptance of all deliverables under this Subcontract
prior to its final acceptance by the Government.
Acceptance by the Prime Contractor, on items deliverable to the
Government as presented to Prime Contractor, shall be provisional
and subject to final acceptance by the Contracting Officer, or
designee.
E.2 INSPECTION AND ACCEPTANCE
(a) If the supplies or the tender of delivery fail in any respect
to conform to this Agreement, the Buyer may accept or reject
the whole or any portion thereof. Buyer may reject deliverable
and/or supplies within a reasonable time (not more than thirty
one (31) days) after receipt at the Buyer's site. Acceptance
occurs unless the Buyer, within thirty one (31) days of
receipt, signifies to Seller that it has not accepted the
deliverable, or services. Acceptance does not of itself impair
any other legal or equitable remedy for non-conformity.
Acceptance may be revoked if it was made with the reasonable
assumption that any non-conformity would be cured, the non-
conformity was difficult to discover before acceptance, or is
otherwise permitted by law or equity. Upon rejection the Buyer
may, at its option, and in addition to any other available
recourse, return at Seller's cost the deliverable or supply (a)
for complete credit, (b) repair and return at no increase in
price and on Buyer's schedule, or (c) an exchange on Buyer's
schedule.
E.3 SCOPE OF INSPECTION
All deliverables will be inspected for content, completeness, accuracy
and conformance to the SOW's requirements by the Buyer's Subcontract
Administrator or Task Monitor. Inspection may include validation of
reports, documentation, deliverables, information or software through the
use of automated tools and/or testing of the deliverables, as specified
in the SOW. The scope and nature of this testing will be determined by
the Buyer's TM and will be sufficiently comprehensive to ensure the
completeness, quality and adequacy of all deliverables.
E.4 BASIS OF ACCEPTANCE
The basis for acceptance shall be compliance with the requirements
set forth in Section C and other terms and conditions of this
Subcontract. The Buyer will provide written notification of
rejection of all deliverables, both draft and final, accompanied by
specific reason(s) for rejection. Deliverable items rejected shall
be rectified and re-submitted within a mutually agreed upon time
frame. If it is a "draft" deliverable, the Contractor shall rectify
the situation before the next schedules submission of the
deliverable(s).
Custom services will be accepted upon receipt of proper
documentation as specified in the SOW. If custom services are for
software development, the final acceptance of the software program
will occur when customer identified discrepancies, errors or other
deficiencies identified in writing by the Buyer have been resolved,
either through documentation updates, program correction, or other
mutually agreeable methods.
E.5 RE-SUBMITTED DELIVERABLES
The Buyer will review and verify that the original problem(s) has (have)
been resolved with the Contract deliverable(s) as re-submitted. If this
is a re-submission of a final deliverable, the Buyer will provide the
Seller written notice of acceptance/rejection within fifteen (15) days
after receipt of each re-submitted final deliverable. In the event the
Buyer does not issue a written acceptance/rejection notice or a request
for extension to the Seller within two (2) days after a thirty one (31)
day inspection and acceptance period, the Seller may consider this
deliverable to be accepted by the Seller.
E.6 ACCEPTANCE CRITERIA
(a) Deliverables will be accepted if they are completed in
accordance with the specification, schedules, test plans, or
other acceptance criteria stated herein and also those
acceptance criteria and other requirements which are
incorporated into the SOW.
(b) Reports, documents and narrative-type deliverables will be
accepted when the Buyer's comments/revisions, when applicable,
have been incorporated.
(c) Software deliverables will be accepted when customer identified
discrepancies, errors, or other deficiencies have been resolved
to the Government's satisfaction.
(d) Training will be accepted as complete when CSC specified
personnel have been trained in accordance with the Government
provided or accepted training plan/schedule as determined by
the Government.
E.7 NON-CONFORMING PRODUCTS OR SERVICES
Non-conforming products or services will be rejected. Subcontractor QA
shall maintain, as part of the performance record of the Subcontract,
records of the following:
The number and types of deficiencies found; and
(b) Decisions regarding the acceptabilility of processes, products and
corrective action procedures.
SECTION F. DELIVERIES OR PERFORMANCE
F.1 TERM OF CONTRACT
The Term of this Contract is from date of award for a six (6) month
period. The total duration of this Agreement shall not exceed twelve
(12) months, unless otherwise extended in writing and signed by both
parties.
This subcontract may be extended upon mutual agreement of the
parties prior to the expiration of the current, exercised,
performance period year.
F.2 PERIOD OF PERFORMANCE
The period of performance of this contract shall be from August 18, 1999 -
February 18, 2000.
F.3 PLACE OF PERFORMANCE
The Subcontractor shall perform all work at CSC's IRS PRIME program
facility located at 8400 Corporate Drive, Landover, MD 20785, or as
directed by Mr. Bill Liggett or designee.
F.4 NOTICE TO CSC OF DELAYS
In the event Seller encounters difficulty in meeting performance
requirements, or anticipates difficulty in complying with this
Agreement's delivery schedule or dates, or whenever Seller has knowledge
that any actual or potential situation is delaying or threatens to delay
the timely performance of this Agreement, Seller shall notify CSC within
a reasonable time frame, giving pertinent details. This notification
shall be informational only and compliance with this provision shall not
be construed as a waiver by CSC of any delivery schedule or date or of
any rights or remedies provided by law or under this Agreement.
F.5 FORCE MAJEURE
Neither party to the Agreement shall be considered to be in default or
its obligations under this Agreement to the extent that failure to
perform any such obligation arises out of causes beyond the control and
without the fault or negligence of the affected party. However, Seller
shall not be excused for failure to perform any obligation under this
Agreement if such failure is caused by a Subcontractor or Seller at any
tier and the cause of such failure was not beyond the control of the
Seller.
SECTION G. CONTRACT ADMINISTRATIVE DATA
G.1 GENERAL
The following paragraphs shall be applicable to all work issued under
this Subcontract. Additional subcontract administration data may be
specified in bilateral amendments incorporated hereto.
G.2 PAYMENT PROVISIONS
G.2(a) LABOR
The following invoicing and payment provisions shall apply to this
subcontract for labor only:
For any labor charges incurred by Seller under this Subcontract, for
which a timecard is completed by Seller's employee and such time card is
approved by an authorized CSC representative, CSC shall make payment to
Seller without submission of an invoice by Seller. The following
conditions shall apply:
CSC will issue checks in accordance with the net terms of this
subcontract.
Payment will be based on properly completed and approved time cards
which adhere to the terms and conditions of a valid purchase order
(i.e. funding, hourly labor rates and period of performance are in
place for the effort performed, etc.)
Time cards are to be furnished weekly to cognizant CSC project
personnel for approval. No payment will be made for any hours
worked in excess of 45 hours per week without written authorization
from CSC.
CSC accounting will issue a report to seller with each check
detailing the charges covered by that check.
Invoices shall not be submitted by seller to CSC for hourly labor
charges.
2. Invoices for charges, other than those described in (a), will
be submitted only for properly authorized, funded and incurred
travel costs, which charges are subject to the limitations,
restrictions, and requirements of federal regulations.
Invoices for the charges described in this paragraph may be
submitted no more often than once monthly.
All other terms and conditions regarding invoicing or payments remain
unchanged to the extent they do not conflict with this clause. In the
event of a conflict between such other terms or conditions and this
clause, the terms of this clause shall have precedence.
G.2(b) TRAVEL
No travel or any other ODC shall be allowed without prior written
approval and/or subcontract modification.
The Seller shall use tourist or coach class air or rail travel and
economy rental cars while traveling. Per diem rates shall be in
consonance with the Federal Travel Regulations in effect at the time of
travel. All travel must be approved in advance in writing by Kevin
Kelley or his designee.
THE FOLLOWING PAYMENT PROVISIONS SHALL APPLY TO THIS SUBCONTRACT FOR
TRAVEL ONLY:
1. Invoice or Voucher Submission Requirements and CSB Payment
a. The Seller's vouchers for all appropriate indirect costs
plus the substantiated actual travel costs shall be
submitted to the Computer Sciences Corporation, 8400
Corporate Driver, Landover, MD 20785, Attention: Mr. Bill
Liggett - Sr. Manager, Finance & Administration
b. Costs and supporting data on vouchers shall be
segregated by Task Orders. Supporting data
shall include at a minimum:
2. Basic Subcontract Number
3. Travel costs shall be broken down at the levels provided in
item (3) below, by Task Order, by Statement of Work (SOW) Line
Item Number (SLIN).
4. Supporting data to item (2) above, by Task Order, by SLIN as
follows:
a. period covered by the invoice;
b. travel costs breakouts (i.e., airline, auto rental,
hotels, meals, etc.) (current and cumulative);
5. Invoice total
6. Invoice number and date
<PAGE>
<PAGE>
All travel to be invoiced under this subcontract must be reported in a
specific format; hard and softcopy (Excel Diskette) should accompany the
standard invoice documentation. The table below details the IRS required
travel information and format:
<TABLE>
<CAPTION>
Dates Place
of of
Oth
er
Departure Origination Car Per
Diem(Parking,
and and No. of Transportation Rental Foo
d andCab Fare,
Return Destination Travelers Purpose Costs Cost Lod
gin
g etc.)
- ------- ----------- --------- ------- -------------- ------ ---
---
-----------
<S> <C> <C> <C> <C> <C> <C>
<C>
</TABLE>
7. The following certification:
I certify, to the best of my knowledge and belief, that all
services/supplies shown in this invoice have been performed,
delivered, accepted or incorporated into an item to be delivered.
All costs contained herein are current, complete and accurate.
____________________________________ _________________
Signature Date
<PAGE>
<PAGE>
G.2(c) Final Payment shall be made in accordance with FAR 52.216-7,
"Allowable Cost and Payment."
Invoices may be submitted for charges incurred and not previously
invoiced at a frequency corresponding to Subcontractor's normal payroll
schedule. However, invoices should only be submitted once in a 31-day
period. Payment will be made in a manner consistent with the terms of
NET 45 days provided appropriate funding is available.
G.3 SUBCONTRACT MANAGEMENT
Notwithstanding the Seller's responsibility for total Seller's personnel
management during the performance of this Subcontract, the administration
of the subcontract will require maximum coordination between the Buyer
and the Seller. The following individuals will be the Buyer's points of
contact during the performance of the subcontract.
Subcontract Administrator (SAC). All subcontract administration will
-------------------------------
be effected by the SA, Mr. Kenneth L. Grace, (301) 306-6427, or his
designee. Communications pertaining to contractual administrative
matters will be addressed to the SA. The word "Buyer" as used throughout
this contract or its attachments refers specifically to the SA. The SA
is the only person authorized to approve changes in any of the
requirements of this contract, and notwithstanding any provisions
contained elsewhere in this contract, said authority remains solely with
the SA. No changes or deviation from the scope of work shall be effected
without a written modification to the subcontract executed by the SA
authorizing such changes. Should schedule conditions warrant a "rapid
reaction," the SA may issue a verbal authorization to initiate work.
Should this occur, written confirmation shall be provided to the Seller
within five (5) calendar days following the verbal authorization to
proceed. Should the SA designate individuals to act as the Subcontracts
Administrator's Representative (SAR), such representative will be
designated by a letter of appointment and will not be authorized to
change any of the terms and conditions of the subcontract or task.
Technical Coordination.
Performance of work under this Subcontract shall be in compliance
with the Statement of Work and any approved tasks.
1. All technical coordination shall be within the scope of the
Subcontract and that task. No oral statements of any person
whatsoever will in any manner or degree modify or otherwise
affect the terms of this Subcontract, except as provided in
Article G.3.a. Technical coordination shall not result in any
condition that:
(a) constitutes an assignment of additional work
outside the SOW or the task,
(b) constitutes a change as defined in the contract
clause entitled "Changes" for Firm Fixed Price,
Time and Material and Cost Reimbursement
contracts,
(c) causes an increase in the total Subcontract
ceiling, value, or the time required for
subcontract or task performance,
(d) changes any of the expressed terms, conditions
or specifications of the Subcontract or task, or
(e) interferes with the Seller's right to perform
the terms and conditions of the contract.
G.4 MODIFICATIONS
No modification of this Agreement (including any additional or
different terms of the Seller or any increase in compensation or
funds allotted) shall be binding on CSC unless agreed to in writing
and signed by both parties. No course of dealing or failure by
either party to strictly enforce any term, right or condition of
this Agreement shall be construed as a waiver of such term, right or
condition.
(a) If, during the subcontract period, the subcontractor offers any
changes to its agreement (i.e., additions, deletions,
reductions, or administrative changes), he shall immediately
submit two (2) copies of the proposed modification, together
with all required certifications, information and supporting
documentation set forth in this section, to the SA and TM for
consideration.
(b) To help reduce the review time for the Buyer and its Government
Customer, the Seller offering changes is urged to submit
proposed modification data as follows:
1. All requests for contract modification are to be
in writing;
2. Identify the schedule contract number, the
proposed modification number, the effective
date, and the type of modification being
proposed;
3. Be signed by an authorized negotiator of the
Seller who may commit the Company;
4. Proposed modifications should not be grouped
indiscriminately. Trying to incorporate
unrelated actions (i.e., addition actions,
deletion actions, price reduction actions,
administrative actions) into a single
modification increases the risk that a
deficiency in one portion of the proposed
modification will result in a delay in its
overall consideration. For this reason,
proposed modifications should delineate a single
action.
G.6 NOTICES
Notices are required to be given in writing and delivered to the
following addresses:
For Buyer: For Seller:
Computer Sciences Corporation Genisys Information Systems, Inc.
8400 Corporate Drive 654 North Belt East
Landover, MD 20785 Suite 310
Houston, TX 77060
Attn: Kenneth L. Grace Attn: Craig Crawford
All notices to the Buyer must be in writing and delivered to the
Buyer's attention as cited in Article G.6(a), above.
<PAGE>
SUBCONTRACT-AGREEMENT
Genisys Information Systems, Inc.
Chem Demil, External Issues Analysis Engagement
This agreement is entered into as of December 10,1999, by and between Arthur
Andersen LLP, with offices at 711 Louisiana, Suite 1300, Houston, Texas ("AA")
and GENISYS Information Systems, with offices at 654 North Belt East, Suite
310, Houston, Texas ("Subcontractor").
WHEREAS, AA was successful in obtaining a modification of MOBIS Contract
#GS-23F-9781H Delivery Order DACA31-99-FOO48 for the preparation of an
Independent Assessment of External Issues Affecting the Chemical Weapons
Demilitarization Program (the "Contract"), to AA for AA to provide certain
services (the "Services").
WHEREAS, the parties desire to define the terms and conditions on which
Subcontractor shall act as a subcontractor to AA in connection with the
Services.
ARTICLE 1- RELATIONSHIP OF THE PARTIES
- --------------------------------------
1.1 AA shall act as prime contractor and the Subcontractor shall act as
a first-tier subcontractor to AA under the Contract.
1.2 The Subcontractor may not assign this Agreement or subcontract any
portion of the work to be performed hereunder to any other person without the
express written approval of AA.
ARTICLE 2 - RESPONSIBILITIES OF THE PARTIES; SCOPE OF WORK
- ----------------------------------------------------------
2.1 The Subcontractor shall coordinate and to work with AA, at the
direction of AA, to ensure an appropriate interaction between the work of AA
and the Subcontractor.
2.2 Subcontractor shall provide to AA the level of effort set forth in
the document entitled "Subcontractor Scope of Work," attached as Annex A
hereto and incorporated herein by reference. Title to all work, work in
process and deliverable items shall be in the name of AA, except as herein
provided. The work will be done on a labor hour basis, with a total fee not to
exceed $145;435 plus allowable, reimbursable expenses. Revisions or changes to
the Subcontractor's scope of work which necessitate additional work will be
mutually agreed to and done on a time and materials basis plus allowable
expenses.
2.3 Any personnel assignment by the Subcontractor shall be subject to
prior approval of AA.
2.4 Craig Crawford shall be considered key personnel and shall not be
removed from the work under this Agreement without AA's prior approval.
Subcontractor, at AA's request, shall remove from the work any personnel not
performing satisfactorily.
2.5 AA's Services Manager shall be James P. Gaines. The Subcontractor
personnel shall report to and work under the direction of the AA Services
Manager or his designee.
2.6 AA will have final decision-making authority on all Services
matters. Decisions in areas related to or impacting the Subcontractor will be
made in consultation with the appropriate
Subcontractor management personnel.
2.7 (a) Subcontractor personnel will participate in Services meetings
and discussions as required by the AA Services Manager or when the meeting or
discussion addresses areas involving the Subcontractor's work hereunder.
(b) Subcontractor will discuss all issues, recommendations and
decisions related to Services performance, status, or any major issue
affecting the Services with the AA Services Manager or his designee prior to
joint AA and Subcontractor discussion with Client
ARTICLE 3 - WARRANTIES
- ----------------------
3.1 Subcontractor warrants its deliverable items, services and other
work to AA in the same manner, to the same extent and for the same period of
time as AA warrants the same to the Client under the Contract. At all times
during the performance of the services of Subcontractor, AA shall have the
right to inspect the work performed by Subcontractor hereunder.
3.2 Subcontractor warrants that no work product delivered under this
Agreement will infringe any patent, trademark, copyright or any other
proprietary right issued or honored in the United States.
ARTICLE 4 - PAYMENT
- -------------------
Pricing terms applicable to this Subcontract and terms of payment to
Subcontractor hereunder are provided in Annex B, incorporated herein by
reference.
ARTICLE 5 - PROPRIETARY INFORMATION
- -----------------------------------
5.1 The parties anticipate that it may be necessary to provide access to
confidential and/or proprietary information to each other pursuant to this
Agreement in preparation of the Proposal and/or performance of Services
("Proprietary Information"). Proprietary Information shall be clearly
identified or labeled as such by the disclosing party at the time of
disclosure.
Where concurrent identification of Proprietary Information is not
feasible, the disclosing party shall provide such identification as promptly
thereafter as possible.
5.2 Each party shall protect the confidentiality of the Proprietary
Information in the same manner as it protects its own proprietary information
of like kind; provided that, with respect to the handling of any Proprietary
Information of the Client, each party will at all times comply with applicable
professional standards to which AA is subject. Disclosures of Proprietary
Information shall be restricted to those individuals who are directly
participating in preparation of the Proposal and other work related to the
Services. The parties shall return all Proprietary Information of the other
upon the earlier of a request by the disclosing party or upon termination of
this Agreement.
5.3 Neither party shall reproduce, disclose or use Proprietary
Information except as follows:
a. Proprietary Information furnished by AA may be used by the
Subcontractor in performing its obligations under this
Agreement;
b. Proprietary Information furnished by the Subcontractor may be
used by AA in performing its obligations under the Contract;
c. Proprietary Information furnished by AA or the Subcontractor
may be used in accordance with written authorization received
from the disclosing party.
d. To respond to a subpoena or other validly issued administrative
or judicial process.
5.4 The limitations on reproduction, disclosure, or use of Proprietary
Information shall not apply to, and neither party shall be liable for,
reproduction, disclosure, or use of Proprietary Information of the other
where:
a. Prior to the receipt under this Agreement, the information was
developed independently by the party receiving it, or was
lawfully received from other sources without an obligation of
confidence, including the Client; or
b. Subsequent to the receipt under this Agreement: (i) the
information is published or otherwise disclosed to others by
the disclosing party without restriction, (ii) the information
has been lawfully obtained by the party receiving it from other
sources, (iii) the information otherwise comes within the
public knowledge or becomes generally known to the public
without breach of this Agreement, or (iv) the information is
independently developed by the party receiving it.
5.5 Neither the execution of the Agreement, nor the furnishing of any
Proprietary Information by either party shall be construed as granting to the
other party expressly, by implication, by estoppel or otherwise, any license
under any invention, patent, trademark, copyright or other proprietary right
now or hereafter owned or controlled by the party furnishing same.
5.6 The provisions of this Article V shall survive termination of this
Agreement.
ARTICLE 6 - OWNERSHIP
- ---------------------
6.1 Any ownership rights to work product created by Subcontractor
hereunder and conferred upon either Client or AA by applicable Contract terms
incorporated herein shall be owned by the Client or AA, as applicable. Any
ownership rights to work product created by Subcontractor hereunder and not
conferred upon either Client or AA by applicable Contract terms incorporated
herein shall, as between AA and Subcontractor, be owned by Subcontractor.
ARTICLE 7 - TERMINATION
- -----------------------
7.1 This Agreement shall terminate automatically if Client disapproves
the selection of Subcontractor or disqualifies Subcontractor for any reason.
7.2 AA may terminate this Agreement:
a. for its convenience, upon written notice to Subcontractor
according to the same terms as the Contract with Client; or
b. upon termination of the Contract by Client for any reason.
In the event of such termination, AA shall pay Subcontractor for
satisfactory services performed and expenses incurred up to and including the
date of such termination, subject to Article 4 above.
7.3 AA may terminate this Agreement in the event Subcontractor breaches
any of its obligations hereunder and does not cure such breach within fifteen
(15) day sof receipt of notice from AA.
7.4 Upon termination of this Agreement for any reason, Subcontractor
shall deliver to AA all work in process, drafts, and other materials developed
in connection with the Services. Upon termination pursuant to Articles 7.1 or
7.3 above, Subcontractor further shall deliver to AA any other materials,
documentation or information necessary for AA to complete, or have completed,
the work to be performed hereunder by Subcontractor.
ARTICLE 8 - COMPLIANCE WITH LAWS
- --------------------------------
Subcontractor shall comply with all applicable Federal, state, county,
and local laws, ordinances, regulations, and codes in the performance herewith
including the procurement of any necessary permits and licenses.
ARTICLE 9 - INSURANCE
- ---------------------
The Subcontractor will provide the same insurance coverages required to
be maintained by AA under the Contract.
ARTICLE 10 - INDEMNITY
- ----------------------
Subcontractor shall indemnify and save harmless AA, its partners, agents,
and employees from all liability or expense resulting from (a) bodily injury
to any person (including injury resulting in death) or damage to property
arising out of the performance of this Agreement, providing such injury or
property damage is due or claimed to be due to the negligence of the
Subcontractor, its employees, agents, or subcontractors and occurs without
negligence on the part of AA or any of its employees, (b) any action taken by
or on behalf of Subcontractor which is not permitted by or pursuant to the
terms of this Agreement, (c) any act or omission constituting negligence or
willful misconduct or breach of fiduciary duty by any officer, director, agent
or employee of Subcontractor in connection with Subcontractor's performance
under this Agreement, or (d) claims by any of Subcontractor's employees or
former employees.
ARTICLE 11 - EXCUSABLE DELAY
- ----------------------------
Neither party shall be liable for any delay or failure in performance
hereunder arising out of causes beyond its control without its negligence or
fault. Subcontractor, in the event of such a cause, shall notify AA
immediately in writing of its delay or failure in performance, describing the
cause and its effect upon Subcontractor's performance and the anticipated
duration of the inability to perform.
ARTICLE 12 - GOVERNING LAW
- --------------------------
All questions arising under or in connection with this Subcontract shall
be governed and determined by the law applicable to the Contract; provided,
however; that where the law applicable to the Contract does not provide the
rules for determining the particular question, the law of the State of Texas
shall apply.
ARTICLE 13 - INDEPENDENT CONTRACTOR
- -----------------------------------
It is understood that in connection herewith, Subcontractor shall be
acting as an independent contractor. The partners, employees, officers and
agents of one party, in the performance of this Agreement, shall act only in
the capacity of representatives of that party and not as employees, officers
or agents of the other party and will not be deemed for any purpose to be
employees of the other. Subcontractor assumes full responsibility for the
actions of its personnel while they are performing services pursuant to this
Agreement and shall be solely responsible for their supervision, daily
direction and control, payment of salary (including withholding of income
taxes and social security), workers compensation, disability benefits and the
like. Neither party shall commit, nor be authorized to commit or bind, the
other party in any manner.
ARTICLE 14 - FURTHER ASSURANCES
- -------------------------------
Subcontractor shall execute such further documents as AA and/or the
Client may reasonably require in connection with the award or performance of
this Subcontract.
ARTICLE 15 - DISPUTES
- ---------------------
Subcontractor shall be bound to AA to the same extent that AA is bound to
the Client, under the terms of the Contract. Subcontractor shall seek recourse
solely against AA, and not against the Client in any of its capacities, for
any claim arising under this Agreement.
ARTICLE 16 - PRIME CONTRACT REQUIREMENTS APPLICABLE
- ----------------------------------------------------
Notwithstanding any other provision to the contrary, all work and/or
deliverable items shall be produced and performed strictly, in accordance with
the Contract, incorporated herein by reference and attached hereto as Annex C.
Subcontractor shall take all reasonable and necessary steps to enable AA to
comply with the Contract. As incorporated into this Agreement, any reference
to Client or AA (however defined in the Contract), respectively, shall be
deemed to mean AA and Subcontractor, respectively, for purposes of this flow
down provision. In determining where such substitutions are or are not
required by the context of the particular clause or provision in question, the
interpretation will be adopted which best preserves the parties' mutual
intention that their respective rights and obligations as between each other
are to be coextensive with and equivalent to the rights and obligations
existing as between Client and AA. If any Contract clause or other provision
incorporated herein refers specifically to another provision as governing
subcontract arrangements under the Contract, then such other provision also is
incorporated herein by reference and Subcontractor and all approved lower-tier
subcontractors shall be required to comply with its terms.
ARTICLE 17 - TERM
- -----------------
The term of this Subcontract shall be from the date of award thereof
through May 31, 2000, unless sooner terminated pursuant to the terms hereof.
ARTICLE 18 - NOTICES
- --------------------
Any notices required to be delivered by one party or another under or in
connection with this Subcontract shall be deemed sufficiently given if
actually received or if sent by certified mail, return receipt requested, to
the attention of the individual signing this Subcontract for the party to
which the notice is directed; at the address indicated below:
If to AA: Arthur Andersen LLP
711 Louisiana, Suite 1300
Houston, Texas 77002
Attn: James P. Gaines
If to Subcontractor: 654 North Belt East
Suite 310
Houston, Texas 77060
Attn: Craig Crawford
ARTICLE 19 - SURVIVAL
- ---------------------
The following Articles shall survive the termination or expiration of
this Agreement: Articles 5, 6,10 and 16.
ARTICLE 20 - ENTIRE DOCUMENT
- ----------------------------
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter and supersedes any previous understandings,
representations, commitments or agreements, oral or written. No provision of
this Agreement may be waived except by written stipulation signed by the party
to be charged, nor may this Agreement be amended except in writing executed by
both parties. If any provision, or portion thereof, of this Agreement is, or
becomes, invalid under any applicable statute or rule of law, it is to be
deemed stricken and the rest of this Agreement shall remain in full force and
effect.
ARTHUR ANDERSEN LLP GENISYS Information Systems
/s/ Craig Crawford
- --------------------------- ------------------------------
Name: George G. Hansen Name: Craig Crawford
Title: Partner Title: President and Chief Operating
Officer
01/27/00
- --------------------------- -------------------------------
Date Date
<PAGE>
ANNEX A
SUBCONTRACTOR'S STATEMENT OF WORK
Subcontractor shall provide professional time and effort in support of AA
to fulfill the requirements of the Contract. During the course of the
engagement it is anticipated and encouraged that the personnel working on the
engagement be identified as members of the AA project management team and not
as subcontractors or employees of another organization. More specifically,
Subcontractor shall:
1. Provide professionals who are knowledgeable and experienced in the
fields of project management, construction management and other related areas
that can support the analysis and work called for in the Contract.
2. Subcontractor shall provide the level of personnel and for the
number of hours of work as described below:
<TABLE>
<CAPTION>
AA Equivalent Level MOBIS Labor Category Hours
------------------- --------------------- -----
<S> <C> <C>
Senior Manager Senior Subject Matter Expert 60
Experienced Manager Senior Functional Specialist 800
Manager Functional Specialist 0
Experienced Consultant Task Manager 0
</TABLE>
3. Any additional services, additional personnel or any increase in the
number of hours will be mutually agreed to and documented by letter, email or
other written means prior to Genisys invoicing for the time or expenses
related thereto.
<PAGE>
ANNEX B
PAYMENT TERMS AND CONDITIONS
1. For the duration of the Contract, Subcontractor will provide the
professional services or any mutually agreed on additional services at hourly
rates equal to 85 percent of Andersen's allowable MOBIS labor category billing
rate. For FY00, Subcontractor will invoice AA at hourly rates not to exceed
the rate for each classification listed below:
<TABLE>
<CAPTION>
FY00 Genisys
MOBIS Chargeable
AA Equivalent Level MOBIS Labor Category Rate Rate
- ------------------- -------------------- --------- --------------
<S> <C> <C> <C>
Senior Manager Senior Subject Matter Expert $305 $259
Experienced Manager Senior Functional Specialist $191 $162
Manager Functional Specialist $136 $116
Experienced
Consultant Task Manager $126 $107
</TABLE>
2. Individual Subcontractor employees will qualify for the labor
categories listed above per the criteria established in the Arthur Andersen
Federal Supply Schedule Price List, Management, Organizational and Business
Improvement Services (MOBIS) Catalog, FSC Group 874, FSC Class 8742, Contract
Number GS-23F-9781H; SIN 874-1 Consultation Services, October 1,1997 through
September 30, 2002.
3. In no event will payments to Subcontractor for services rendered
hereunder exceed $156,400, including expenses, without an amendment to this
Agreement.
4. Subcontractor will be reimbursed for all necessary, allowable travel
and per diem expenses incurred while providing professional services per this
agreement, provided that such travel and per diem expenses are (1) allowable
under Federal expense reimbursement rules and regulations; (2) authorized by
the AA Services Manager or designee; and (3) do not exceed amounts allowable
under the Client's General Travel Regulations in effect at the time such
expenses are incurred. Total expenses will be limited to $12,000. Expenses in
excess of this amount must be approved in advance.
5. Subcontractor will invoice AA bi-monthly for amounts earned.
Invoices will indicate the number of hours worked and milestones accomplished
plus detail of expenses incurred. Proper support for time and expenses will be
provided to AA as required by the Contract, and records will be maintained for
a minimum of three (3) years. Proper support for time and expenses will be
submitted with each invoice.
6. AA will process invoices in a timely manner and will make every
effort to pay Genisys's invoices within 60 days of approval or payment to AA
by Client, whichever is shorter.
7. Should AA or Client dispute any item(s) on an invoice, AA will
deduct the amount of said item(s) from the total and will make payment of the
remainder as set forth above. The amounts and reasons for such disputed
item(s) will be promptly documented to Subcontractor. Disputed items that are
subsequently justified to AA's and/or Client's satisfaction will be included
in the next monthly payment.
<PAGE>
SUBCONTRACT-AGREEMENT
Genisys Information Systems, Inc.
Air Products Engagement
This agreement is entered into as of December 10,1999, by and between Arthur
Andersen LLP, with offices at 711 Louisiana, Suite 1300, Houston, Texas ("AA")
and GENISYS Information Systems, with offices at 654 North Belt East, Suite
310, Houston, Texas ("Subcontractor").
WHEREAS, AA has been contracted by Air Products, Inc. (the "Client") for AA to
provide certain consulting and project management services (the "Services");
and
WHEREAS, the parties desire to define the terms and conditions on which
Subcontractor shall act as a subcontractor to AA in connection with the
Services.
ARTICLE 1- RELATIONSHIP OF THE PARTIES
- --------------------------------------
1.1 AA shall act as prime contractor and the Subcontractor shall act as
a first-tier subcontractor to AA under the Contract.
1.2 The Subcontractor may not assign this Agreement or subcontract any
portion of the work to be performed hereunder to any other person without the
express written approval of AA.
ARTICLE 2 - RESPONSIBILITIES OF THE PARTIES; SCOPE OF WORK
- ----------------------------------------------------------
2.1 The Subcontractor shall coordinate and to work with AA, at the
direction of AA, to ensure an appropriate interaction between the work of AA
and the Subcontractor.
2.2 Subcontractor shall provide to AA the level of effort set forth in
the document entitled "Subcontractor Scope of Work," attached as Annex A
hereto and incorporated herein by reference. Title to all work, work in
process and deliverable items shall be in the name of AA,
except as herein provided. The work will be done on a labor hour basis, with a
total fee not to exceed $145;435 plus allowable, reimbursable expenses.
Revisions or changes to the Subcontractor's scope of work which necessitate
additional work will be mutually agreed to and done on a time and materials
basis plus allowable expenses.
2.3 Any personnel assignment by the Subcontractor shall be subject to
prior approval of AA.
2.4 Craig Crawford shall be considered key personnel and shall not be
removed from the work under this Agreement without AA's prior approval.
Subcontractor, at AA's request, shall remove from the work any personnel not
performing satisfactorily.
2.5 AA's Services Manager shall be James P. Gaines. The Subcontractor
personnel shall report to and work under the direction of the AA Services
Manager or his designee.
2.6 AA will have final decision-making authority on all Services
matters. Decisions in areas related to or impacting the Subcontractor will be
made in consultation with the appropriate
Subcontractor management personnel.
2.7 (a) Subcontractor personnel will participate in Services meetings
and discussions as required by the AA Services Manager or when the meeting or
discussion addresses areas involving the Subcontractor's work hereunder.
(b) Subcontractor will discuss all issues, recommendations and
decisions related to Services performance, status, or any major issue
affecting the Services with the AA Services Manager or his designee prior to
joint AA and Subcontractor discussion with Client
ARTICLE 3 - WARRANTIES
- ----------------------
3.1 Subcontractor warrants its deliverable items, services and other
work to AA in the same manner, to the same extent and for the same period of
time as AA warrants the same to the Client under the Contract. At all times
during the performance of the services of Subcontractor, AA shall have the
right to inspect the work performed by Subcontractor hereunder.
3.2 Subcontractor warrants that no work product delivered under this
Agreement will infringe any patent, trademark, copyright or any other
proprietary right issued or honored in the United States.
ARTICLE 4 - PAYMENT
- -------------------
Pricing terms applicable to this Subcontract and terms of payment to
Subcontractor hereunder are provided in Annex B, incorporated herein by
reference.
ARTICLE 5 - PROPRIETARY INFORMATION
- -----------------------------------
5.1 The parties anticipate that it may be necessary to provide access to
confidential and/or proprietary information to each other pursuant to this
Agreement in preparation of the Proposal and/or performance of Services
("Proprietary Information"). Proprietary Information shall be clearly
identified or labeled as such by the disclosing party at the time of
disclosure.
Where concurrent identification of Proprietary Information is not
feasible, the disclosing party shall provide such identification as promptly
thereafter as possible.
5.2 Each party shall protect the confidentiality of the Proprietary
Information in the same manner as it protects its own proprietary information
of like kind; provided that, with respect to the handling of any Proprietary
Information of the Client, each party will at all times comply with applicable
professional standards to which AA is subject. Disclosures of Proprietary
Information shall be restricted to those individuals who are directly
participating in preparation of the Proposal and other work related to the
Services. The parties shall return all Proprietary Information of the other
upon the earlier of a request by the disclosing party or upon termination of
this Agreement.
5.3 Neither party shall reproduce, disclose or use Proprietary
Information except as follows:
a. Proprietary Information furnished by AA may be used by the
Subcontractor in performing its obligations under this
Agreement;
b. Proprietary Information furnished by the Subcontractor may be
used by AA in performing its obligations under the Contract;
c. Proprietary Information furnished by AA or the Subcontractor
may be used in accordance with written authorization received
from the disclosing party.
d. To respond to a subpoena or other validly issued administrative
or judicial process.
5.4 The limitations on reproduction, disclosure, or use of Proprietary
Information shall not apply to, and neither party shall be liable for,
reproduction, disclosure, or use of Proprietary Information of the other
where:
a. Prior to the receipt under this Agreement, the information was
developed independently by the party receiving it, or was
lawfully received from other sources without an obligation of
confidence, including the Client; or
b. Subsequent to the receipt under this Agreement: (i) the
information is published or otherwise disclosed to others by
the disclosing party without restriction, (ii) the information
has been lawfully obtained by the party receiving it from other
sources, (iii) the information otherwise comes within the
public knowledge or becomes generally known to the public
without breach of this Agreement, or (iv) the information is
independently developed by the party receiving it.
5.5 Neither the execution of the Agreement, nor the furnishing of any
Proprietary Information by either party shall be construed as granting to the
other party expressly, by implication, by estoppel or otherwise, any license
under any invention, patent, trademark, copyright or other proprietary right
now or hereafter owned or controlled by the party furnishing same.
5.6 The provisions of this Article V shall survive termination of this
Agreement.
ARTICLE 6 - OWNERSHIP
- ---------------------
6.1 Any ownership rights to work product created by Subcontractor
hereunder and conferred upon either Client or AA by applicable Contract terms
incorporated herein shall be owned by the Client or AA, as applicable. Any
ownership rights to work product created by Subcontractor hereunder and not
conferred upon either Client or AA by applicable Contract terms incorporated
herein shall, as between AA and Subcontractor, be owned by Subcontractor.
ARTICLE 7 - TERMINATION
- -----------------------
7.1 This Agreement shall terminate automatically if Client disapproves
the selection of Subcontractor or disqualifies Subcontractor for any reason.
7.2 AA may terminate this Agreement:
a. for its convenience, upon written notice to Subcontractor
according to the same terms as the Contract with Client; or
b. upon termination of the Contract by Client for any reason.
In the event of such termination, AA shall pay Subcontractor for
satisfactory services performed and expenses incurred up to and including the
date of such termination, subject to Article 4 above.
7.3 AA may terminate this Agreement in the event Subcontractor breaches
any of its obligations hereunder and does not cure such breach within fifteen
(15) days of receipt of notice from AA.
7.4 Upon termination of this Agreement for any reason, Subcontractor
shall deliver to AA all work in process, drafts, and other materials developed
in connection with the Services. Upon termination pursuant to Articles 7.1 or
7.3 above, Subcontractor further shall deliver to AA any other materials,
documentation or information necessary for AA to complete, or have completed,
the work to be performed hereunder by Subcontractor.
ARTICLE 8 - COMPLIANCE WITH LAWS
- --------------------------------
Subcontractor shall comply with all applicable Federal, state, county,
and local laws, ordinances, regulations, and codes in the performance herewith
including the procurement of any necessary permits and licenses.
ARTICLE 9 - INSURANCE
- ---------------------
The Subcontractor will provide the same insurance coverages required to
be maintained by AA under the Contract.
ARTICLE 10 - INDEMNITY
- ----------------------
Subcontractor shall indemnify and save harmless AA, its partners, agents,
and employees from all liability or expense resulting from (a) bodily injury
to any person (including injury resulting in death) or damage to property
arising out of the performance of this Agreement, providing such injury or
property damage is due or claimed to be due to the negligence of the
Subcontractor, its employees, agents, or subcontractors and occurs without
negligence on the part of AA or any of its employees, (b) any action taken by
or on behalf of Subcontractor which is not permitted by or pursuant to the
terms of this Agreement, (c) any act or omission constituting negligence or
willful misconduct or breach of fiduciary duty by any officer, director, agent
or employee of Subcontractor in connection with Subcontractor's performance
under this Agreement, or (d) claims by any of Subcontractor's employees or
former employees.
ARTICLE 11 - EXCUSABLE DELAY
- ----------------------------
Neither party shall be liable for any delay or failure in performance
hereunder arising out of causes beyond its control without its negligence or
fault. Subcontractor, in the event of such a cause, shall notify AA
immediately in writing of its delay or failure in performance, describing the
cause and its effect upon Subcontractor's performance and the anticipated
duration of the inability to perform.
ARTICLE 12 - GOVERNING LAW
- --------------------------
All questions arising under or in connection with this Subcontract shall
be governed and determined by the law applicable to the Contract; provided,
however; that where the law applicable to the Contract does not provide the
rules for determining the particular question, the law of the State of Texas
shall apply.
ARTICLE 13 - INDEPENDENT CONTRACTOR
- -----------------------------------
It is understood that in connection herewith, Subcontractor shall be
acting as an independent contractor. The partners, employees, officers and
agents of one party, in the performance of this Agreement, shall act only in
the capacity of representatives of that party and not as employees, officers
or agents of the other party and will not be deemed for any purpose to be
employees of the other. Subcontractor assumes full responsibility for the
actions of its personnel while they are performing services pursuant to this
Agreement and shall be solely responsible for their supervision, daily
direction and control, payment of salary (including withholding of income
taxes and social security), workers compensation, disability benefits and the
like. Neither party shall commit, nor be authorized to commit or bind, the
other party in any manner.
ARTICLE 14 - FURTHER ASSURANCES
- -------------------------------
Subcontractor shall execute such further documents as AA and/or the
Client may reasonably require in connection with the award or performance of
this Subcontract.
ARTICLE 15 - DISPUTES
- ---------------------
Subcontractor shall be bound to AA to the same extent that AA is bound to
the Client, under the terms of the Contract. Subcontractor shall seek recourse
solely against AA, and not against the Client in any of its capacities, for
any claim arising under this Agreement.
ARTICLE 16 - PRIME CONTRACT REQUIREMENTS APPLICABLE
- ---------------------------------------------------
Notwithstanding any other provision to the contrary, all work and/or
deliverable items shall be produced and performed strictly, in accordance with
the Contract, incorporated herein by reference and attached hereto as Annex C.
Subcontractor shall take all reasonable and necessary steps to enable AA to
comply with the Contract. As incorporated into this Agreement, any reference
to Client or AA (however defined in the Contract), respectively, shall be
deemed to mean AA and Subcontractor, respectively, for purposes of this flow
down provision. In determining where such substitutions are or are not
required by the context of the particular clause or provision in question, the
interpretation will be adopted which best preserves the parties' mutual
intention that their respective rights and obligations as between each other
are to be coextensive with and equivalent to the rights and obligations
existing as between Client and AA. If any Contract clause or other provision
incorporated herein refers specifically to another provision as governing
subcontract arrangements under the Contract, then such other provision also is
incorporated herein by reference and Subcontractor and all approved lower-tier
subcontractors shall be required to comply with its terms.
ARTICLE 17 - TERM
- -----------------
The term of this Subcontract shall be from the date of award thereof
through May 31, 2000, unless sooner terminated pursuant to the terms hereof.
ARTICLE 18 - NOTICES
- --------------------
Any notices required to be delivered by one party or another under or in
connection with this Subcontract shall be deemed sufficiently given if
actually received or if sent by certified mail, return receipt requested, to
the attention of the individual signing this Subcontract for the party to
which the notice is directed; at the address indicated below:
If to AA: Arthur Andersen LLP
711 Louisiana, Suite 1300
Houston, Texas 77002
Attn: James P. Gaines
If to Subcontractor: 654 North Belt East
Suite 310
Houston, Texas 77060
Attn: Craig Crawford
ARTICLE 19 - SURVIVAL
- ---------------------
The following Articles shall survive the termination or expiration of
this Agreement: Articles 5, 6,10 and 16.
ARTICLE 20 - ENTIRE DOCUMENT
- ----------------------------
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter and supersedes any previous understandings,
representations, commitments or agreements, oral or written. No provision of
this Agreement may be waived except by written stipulation signed by the party
to be charged, nor may this Agreement be amended except in writing executed by
both parties. If any provision, or portion thereof, of this Agreement is, or
becomes, invalid under any applicable statute or rule of law, it is to be
deemed stricken and the rest of this Agreement shall remain in full force and
effect.
ARTHUR ANDERSEN LLP GENISYS Information Systems
/s/ Craig Crawford
- ------------------------------- ------------------------------------
Name: George G. Hansen Name: Craig Crawford
Title: Partner Title: President and Chief Operating
Officer
Date: Date: 01/27/00 effective 12/10/99
-------------------------- --------------------------------
<PAGE>
<PAGE>
ANNEX A
SUBCONTRACTOR'S STATEMENT OF WORK
Subcontractor shall provide professional time and effort in support of AA
to fulfill the requirements of the Contract. During the course of the
engagement it is anticipated and encouraged that the personnel working on the
engagement be identified as members of the AA project management team and not
as subcontractors or employees of another organization. More specifically,
Subcontractor will:
1. Provide an experienced project manager to oversee the development of
a Project Management Office and to develop Client's Masterplan.
2. Provide technical support in designing, developing, creating and
implementing a project management system for Client, including the
processes, procedures, information flows, reporting systems and
technology support necessary. Subcontractor's efforts will also
include assistance in system documentation and training Client
personnel.
3. Provide technical planning, scheduling and project management
software training to AA or to Client personnel as requested.
4. Provide proprietary software to supplement the overall project
management system put in place by Client. Subcontractor will work
with AA to identify required software, and such software will not be
installed without prior approval by AA and Client. All software so
provided will be licensed to Client by Subcontractor, including all
normal terms and conditions for maintenance and support of such
software as Subcontractor provides to its other clients.
5. Provide other general project management consulting services as may
be required. Such additional services, and any additional personnel
required, will be mutually agreed to and documented by letter, e-
mail or other written means.
<PAGE>
<PAGE>
ANNEX B
PAYMENT TERMS AND CONDITIONS
Subcontractor will be paid at hourly rates equal to 85 percent of AA's
allowable billing rates to Client for personnel of comparable experience and
billing level as AA. The rates Subcontractor will use are as follows:
<TABLE>
<CAPTION>
Genisys'
Equivalent AA Client Billable Chargeable
Labor Category Hourly Rate Rate
-------------- ---------------- --------------
<S> <C> <C> <C>
Crawford/Spencer/
Winchester Senior Manager $260 $221
Sean Hanson
(equivalent) Experienced Manager $232 $197
C. Meyers, R. McCoppin
(equivalent) Manager $200 $170
Planner/Scheduler Experienced Consultant $168 $143
Staff Consultant II $140 $119
</TABLE>
Subcontractor will be reimbursed for all necessary, allowable travel and
per diem expenses incurred while providing professional services per this
agreement, provided that such travel and per diem expenses are (1) allowable
under the Contract; (2) authorized or approved by the AA Services Manager or
designee; (3) are properly documented with receipts or other acceptable means;
and (4) do not exceed amounts allowable under the Client's General Travel
Regulations in effect at the time such expenses are incurred.
Subcontractor will invoice AA bi-monthly for amounts earned. Invoices
will indicate the number of hours worked and milestones accomplished plus
detail of expenses incurred. Proper support for time and expenses will be
provided to AA as required by the Contract, and records will be maintained for
a minimum of three (3) years. Proper support for time and expenses will be
submitted with each invoice.
AA will process invoices in a timely manner and will make every effort to
pay Genisys' invoices within sixty (60) days of approval.
Should AA or Client dispute any items on an invoice, AA will deduct the
amount of said items from the total and will make payment of the remainder as
set forth above. The amounts and reasons for such disputed items will be
promptly documented to Subcontractor. Disputed items that are subsequently
justified to AA's and/or Client's satisfaction will be included in the next
monthly payment.
Except as provided herein, it is understood that any and all costs and
expenses incurred by either party in connection with the Services will be home
by that Party.
<PAGE>
KINKO'S AGREEMENT WITH GENISYS
Acquisition, Modification, and Implementation of the
Genisys
Enterprise Project Management System
Consulting and Software License Agreement
THIS AGREEMENT is made as of this 1st day of August, 1999 ("Effective
Date") by and between Genisys Information Systems, Inc., a Colorado
corporation with offices at 654 North Belt East, Suite 310, Houston, Texas
77060, its affiliates and subsidiaries (collectively "Genisys" or
"Consultant") and Kinko's, Inc., a Delaware corporation with offices located
at 255 West Stanley Avenue, Ventura, California 93002-8000, (hereinafter
referred to as "Kinko's").
A. Kinko's owns and operates more than 900 retail service locations that
provide a variety of business services and reproduction products to
commercial and retail customers around the world under the trademark,
Kinko's(-Registered Mark-).
B. Consultant provides software applications and consulting services
designated to facilitate the integration and management of project
information to enable organizations to improve business performance.
C. Consultant has been providing services from time to time for Kinko's
since on or about July 13, 1999. Kinko's and Consultant desire to
memorialize their agreement regarding such services on the terms and
conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby acknowledged, the parties agree as follows:
1. Engagement of Consultant. Kinko's hereby engages Consultant to perform
consulting services from time to time, as specifically agreed and
described in this Agreement and on each schedule issued hereunder and
attached hereto and incorporated herein by this reference (collectively
"Services"). Consultant hereby accepts the engagement, and agrees to
perform the Service upon the terms and conditions set forth herein.
Additional schedules may be added fromtime to time as mutually agreed
between the parties. The term "Services" as used herein shall include
all services and deliverables described in all schedules attached hereto.
Consultant may be required to perform Services at the Kinko's offices
located at 255 W. Stanley Avenue, Ventura, California, Consultant's
Houston office, or at another location as may be authorized in writing by
Kinko's. To the extent that any provision of any schedule(s) attached
hereto and incorporated herein conflicts with any provision of this
Agreement, the specific provision of the schedule(s) shall take
precedence over this Agreement.
2. Term. This Agreement shall remain in effect from the Effective Date
through July 12, 2000, unless terminated sooner in accordance with the
provisions of this Agreement ("Term"). Each schedule issued hereunder
may define its own term which may extend beyond the Term of this
Agreement in which case the terms and conditions of this Agreement shall
survive and continue through the expiration date of each respective
schedule. The Term of this Agreement may be extended by the mutual
written consent of the parties as evidenced by an amendment to this
Agreement.
3. Consultant agrees to provide to Kinko's, if requested, periodic written
reports if its activities in sufficient detail to evidence the nature and
scope of the Services provided, and to provide work products and related
documents such as trip reports indicating persons visited and subjects
discussed, minutes of meetings and collateral memoranda and reports.
4. Consulting Fees and Expenses. For Services rendered under this Agreement,
Consultant shall be paid in accordance with the applicable Schedule(s)
attached hereto. Consultant shall submit invoices for all Services
rendered hereunder in accordance with the applicable schedule attached
hereto. Upon presentation of such invoices in form and detail
satisfactory to Kinko's, Kinko's shall make payment within thirty (30)
days of receipt of an acceptable invoice. If Kinko's makes payment within
ten (10) days of the date of receipt of the invoice, Consultant will
allow for a one percent (1%) early payment discount of the amount billed.
Except as may otherwise be provided in any Schedule, Consultant shall be
entitled to reimbursement of certain expenses in accordance with Kinko's
expense reimbursement policies. All expenses must be preapproved by
Kinko's and shall be supported by appropriate documentation.
5. Staffing, Fiduciary Standards and Conflict of Interest. (A) Staffing. If
Consultant assigns employees or agents to perform the Services or any
portion thereof under this Agreement, then in such event, such parties
shall be adequately trained to perform the Services ("Team") and informed
of the relevant terms and conditions of this Agreement. Consultant agrees
to allow Kinko's the right to approve each member of the Team who will
then be listed on the applicable Schedule attached hereto. Consultant
shall not remove any person from the Team unless Kinko's is given ten
(10) business days prior written notice of such change, along with the
names of potential replacements. In the event Kinko's finds any of the
Consultant's personnel unsuitable, Kinko's shall notify Consultant.
Consultant must submit replacement candidates for Kinko's approval within
five (5) days following receipt of such notice. (B) Fiduciary Standards
and Conflict of Interest. At all times during the performance of
Consultant's, its employees, agents and/or subcontractors, if any, duties
under this Agreement, each party shall adhere to the highest, fiduciary
standards, ethical practices and standards of care and competence. During
the period of their respective assignment to perform Services under an
applicable Schedule, Consultant's Team members performing such Services
shall not concurrently provide services to the named competitors of
Kinko's identified in the attached "Listing of Kinko's, Inc. Competing
Organizations" ("Kinko's Competitor List") which is incorporated herein
by this reference. Kinko's may amend the Kinko's Competitor List from
time to time upon written notice to Consultant. If Consultant is
currently performing Services for a newly identified competitor,
Consultant may continue such engagement and such engagement shall not be
a breach of this section. Consultant shall not otherwise be prohibited
from providing consulting services to other persons and organizations.
Consultant shall devote such reasonable time, effort, and attention to
the performance of Consultant's Services under this Agreement as Kinko's
deems reasonably necessary under the circumstances. Consultant shall be
liable for the acts of its agents and employees.
6. Compliance with Laws. Consultant shall, at its sole expense, promptly
comply with all lawful statutes, ordinances, rules, orders, regulations,
and requirements of the federal, state, local or municipal governments
now in force or hereafter enacted insofar as the conduct of business and
its performance of the Services and all of its other obligations pursuant
to this Agreement throughout the term of this Agreement including without
imitation, all applicable requirements of the Fair Labor Standards Act,
as amended.
7. Indemnification by Consultant. Consultant shall indemnify, defend and
hold harmless Kinko's, its affiliates, subsidiaries or assignees, and
their respective directors, officers and employees, agents and
shareholders from and against all losses, claims, actions, liabilities,
damages and all expenses incidental to such claims or actions, (including
without limitation reasonable attorneys' fees and costs), based upon or
arising out of damage to property or injury to persons or other tortious
acts caused by the negligent acts, errors or omissions of Consultant or
any person whom Consultant is legally responsible;; or any untrue or
inaccurate representation made in the course of performance under this
Agreement, provided the Consultant's aforesaid indemnity and hold
harmless agreement shall not be applicable to any liability based upon
the sole negligence of Kinko's.
8. Intellectual Property Infringement Indemnity. Consultant, at its own
expense, shall indemnify and hold harmless Kinko's, its subsidiaries,
affiliates or assignees, and their directors, officers, employees, agents
and shareholders and defend with counsel approved by Kinko's any action
brought against same with respect to any claim, demand, cause of action,
debt or liability, including attorneys' fees and costs, to the extent
that such action, claim, demand, cause of action, debt or liability
arises out of a claim that any of the Services or Software (as defined in
Schedule A attached hereto and incorporated by this reference) provided
hereunder infringes, violates or misappropriates any patents, copyrights,
trade secrets, licenses, or other intellectual property rights of any
third party. Kinko's may, at its own expense, assist in such defense if
it so chooses, provided that, as long as Consultant can demonstrate
sufficient financial resources, Consultant shall control such defense and
all negotiations relative to the settlement of any such claim. Kinko's
shall promptly provide Consultant with written notice of any claim that
Kinko's believes falls within the scope of this paragraph. In the event
that the Software provided hereunder, or any portion thereof is held to
constitute an infringement and its use is enjoined, Consultant shall have
the obligation to, at its expense, (i) modify the infringing Software
without impairing in any material respect the functionality or
performance, so that it is non-infringing, (ii) procure for Kinko's the
right to continue to use the infringing Software, or (iii) replace the
Software with equally suitable, non-infringing software. If none of the
foregoing alternatives are available to Consultant, and an action, claim,
demand, cause of action, debt or liability arises during the first twelve
(12) months of this Agreement then Kinko's at its option; may terminate
this Agreement without liability and receive repayment of all monies paid
to Consultant. If such action, claim, demand, cause of action, debt or
liability arises following such initial twelve (12) month period, then in
such event Kinko's, at its own option, may terminate this Agreement
without liability to Consultant. Notwithstanding anything herein to the
contrary, Consultant may not settle any action or claim without the prior
written consent of Kinko's, which consent shall not be unreasonably
withheld.
9. Insurance.
a. Consultant agrees to maintain at its own expense, during the Term of
this Agreement, and for one (1) year thereafter if Consultant's
coverage as depicted below is on a claims made basis, with an
insurer of insurers acceptable to Kinko's with a current rating by
Best of an A-VII or higher, the following insurance coverage:
(1) Commercial general liability insurance including
products/completed operations, blanket contractual liability,
and personal injury and advertising injury liability coverage
in amounts no less than Five Million Dollars ($5,000,000.00)
combined single limit for each single occurrence for bodily
injury and property damage and Five Million Dollars
($5,000,000.00) in the general aggregate;
(2) Disability Insurance, as required by federal or state law, for
each of its employees;
(3) Automobile liability insurance covering owned, non-owned and
hired automobiles with a bodily injury and property damage
combined single limit in the amount of no less than One Million
Dollars ($1,000,000.00) per occurrence; and
(4) Worker's compensation insurance, as required by law, for each
of its employees.
b. Prior to the commencement date of this Agreement Consultant shall
submit to Kinko's a certificate evidencing such insurance and the
appropriate additional insurance endorsement evidencing that Kinko's
has been named and is covered as an additional insured party on said
insurance and, with respect to any claim for which Consultant is
obligated to indemnify Kinko's, that said insurance shall be primary
coverage before any other similar insurance available to Kinko's.
The certificate and/or endorsement, as applicable, shall provide for
at least thirty (30) days advance written notice to Kinko's of any
cancellation or reduction in such coverage. In the event that
Consultant fails to obtain or maintain said insurance coverage as
provided herein, Kinko's shall have the right, but not the
obligation, to obtain such insurance coverage and bill the
Consultant for the cost thereof.
c. LIMITATIONS ON INDEMNIFICATION. EXCEPT FOR OBLIGATIONS OF
INDEMNIFICATION AND BREACHES OF CONFIDENTIALITY UNDER NO THEORY OF
LIABILITY SHALL EITHER PARTY TO THIS CONTRACT BE LIABLE TO THE OTHER
OR TO ANY THIRD PARTY FOR LOST PROFITS, LOST SAVINGS, LOSS OF
INFORMATION OR DATA OR ANY OTHER SPECIAL, INDIRECT, CONSEQUENTIAL OR
INCIDENTAL DAMAGES, HOWEVER CAUSED, ARISING IN ANY WAY OUT OF ANY
PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT EVEN IF THE
PARTIES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND
NOT WITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY.
d. None of the requirements contained herein as to the types, limits
and approval of insurance coverage to be maintained by Consultant
are intended to and shall not in any manner limit or qualify the
liabilities and obligations assumed by Consultant under this
Agreement
10. Independent Contractor. Consultant is and shall continue to be an
independent contractor and not an employee of Kinko's and is not
authorized to act as or represent itself as an agent of Kinko's for any
purpose whatsoever and shall not, commit Kinko's to any agreement,
contract or undertaking. Consultant shall not use the Kinko's name on its
business cards, stationary or in any promotional material. Consultant
shall conduct all of its business in its name and not in the name of or
as a representative of Kinko's. The Consultant shall be obligated to pay
any and all applicable state, federal and employment taxes applicable to
Consultant, its employees, agents and/or subcontractors. Kinko's shall
not be responsible to Consultant, its employees, agents and/or
subcontractors, or any governing body for any payroll related taxes
related to the performance of the Services.
11. Taxes.
a. Income Taxes. By reason of the independent status of Consultant,
Kinko's is not required to and will not withhold federal, state or
local income or any other tax from any payment to Consultant under
this Agreement. Consultant agrees to execute the necessary
documentation and/or provide such information as Kinko's may need to
document the independent status of Consultant. From the information
provided by Consultant, Kinko's may file information returns with
the United States Internal Revenue Service or similar state or local
agencies regarding such payment under conditions imposed by
applicable law or regulations.
b. Sales and Use Tax. Consultant agrees to collect and remit to any
taxing jurisdiction in which Consultant is registered all applicable
sales and use taxes that may be due under the terms of this
Agreement. However, due to the method of delivery required by
paragraph 23, no sales or use tax will be due on any software
delivered electronically to Kinko's at the location designated by
Kinko's.
c. Property Tax. Consultant shall be liable for all property taxes due
on any property to be sold, transferred, or delivered to Kinko's
under the terms of this Agreement until such time as title to such
property passes to Kinko's.
12. Termination.
a. Notwithstanding anything herein contained to the contrary, Kinko's
may terminate this agreement at any time, on (14) fourteen days
written notice, for default of the Consultant. The following events
shall each constitute an event of default: (a) Consultant's failure
to perform one or more of its material obligations provided for in
this Agreement; or (b) Consultant's failure to maintain in full
force and effect the insurance referred to herein above; or (c)
Consultant's inability to pay its debts when due, or assignment for
the benefit of its creditors, or the filing of any petition under
the bankruptcy or insolvency laws of any jurisdiction, county or
place, or the appointment or suffer the appointment of a receiver or
trustee for its business or property, or adjudication as a bankrupt
or an insolvent; (d) Consultant's use of the Kinko's Mark (as
hereinafter defined) without the prior written approval of Kinko's.
This event of default is not subject to cure.
b. Effect of Termination for Consultant's Breach: Termination by
Kinko's of any Schedule for Services or software support and
maintenance due to Consultant's default shall not, unless
specifically provided in Kinko's notice of default, affect Kinko's
rights to continue using the software provided to Kinko's under any
Schedule. This Agreement shall continue in effect as to the license
to use any such software. Kinko's shall be entitled to a pro-rata
refund of any support fees paid in advance for such software support
being terminated.
c. Termination for Convenience. Unless otherwise specifically provided
in any applicable Schedule, Kinko's may terminate support and
maintenance for any software product licensed to Kinko's at any time
upon thirty (30) days written notice to Consultant. Kinko's shall be
entitled to a pro-rata refund of any support fees paid in advance
for such software support being terminated. Either party may
terminate this Agreement at any time for any reason or no reason
upon thirty (30) days prior written notice. Notwithstanding the
foregoing, if Kinko's terminates this Agreement under this section,
Kinko's sole obligation shall be to pay Consultant for Services
performed up through the date of the termination notice in
accordance with any applicable Schedule; and if Consultant
terminates this Agreement under this Section, such termination shall
no affect any software license granted to Kinko's hereunder or
license to use the Creations and deliverables provided to Kinko's
under any applicable Schedule. Such termination shall not affect
Consultant's obligation to complete the Services outlined in any
Schedule.
13. Confidentiality and Non-Disclosure. Both parties acknowledges that during
the performance of Services hereunder, each party will have access to
certain of the other party's information, including without limitation,
technology, trade secrets, know-how, inventions, techniques, documents,
processes, schematics, drawings, contracts, customer lists, financial
information, computer programming code, methods of conducting business,
sales and marketing plans and information, and business plans relating to
the disclosing party's business which are proprietary and confidential to
the disclosing party (the foregoing, as well as all information and
materials developed pursuant to this Agreement, are collectively referred
to as "Confidential Information"). Confidential Information shall also
include, without limitation, any software, documentation, computer
programming code, processes, financial information or other information
of third parties which the disclosing party is required to maintain as
Confidential Information. All such third party property is also referred
to herein as Confidential Information. Both parties agrees that all items
of Confidential Information are proprietary to the disclosing party or
such third party, as applicable, and shall remain the sole property of
the disclosing party or such third party.
Each party agrees that all of its employees, agents and/or subcontractors
engaged by participating in the performance of Services under this
Agreement, shall be bound by the same confidentiality requirements as
those contained herein pursuant to a written agreement between said party
and such employee, agent and/or subcontractor.
Each party agrees as follows: (i) To use the Confidential Information
only for the purposes described herein; to not reproduce the Confidential
Information; to hold in confidence and protect the Confidential
Information from dissemination to and use by anyone not a party to this
Agreement; and to not use the Confidential Information to benefit itself
of others, except as contemplated by the terms of the applicable Schedule
and this Agreement. Except as provided for under the applicable Schedule
and this Agreement, neither party shall acquire any rights in the other
party's Confidential Information and may not create any derivative work
from such Confidential Information; (ii) To restrict access to the
Confidential Information to its personnel, if any, who (a) have a need to
have such access and (b) have been advised of and have agreed in writing
to treat such information in accordance with the terms of this Agreement;
(iii) To return all Confidential Information in its possession upon
termination of the applicable Schedule or upon request, whichever occurs
first; and (iv) To hold in confidence information and materials, if any,
developed pursuant to the consulting services hereunder. The provisions
of this Section 14 shall survive termination or expiration of this
Agreement and any of its Schedules.
14. Acceptance and Warranty. Consultant represents and warrants as follows:
a. That the Services provided hereunder do not infringe any copyright,
trademark, patent or other intellectual property rightof any third
party.
b. That all Services provided hereunder shall be performed in a
professional and competent workmanlike manner.
c. That all Services covered by this Agreement will conform with the
applicable Schedule(s) attached hereto, including the mutually agree
"Final Design Document" as defined and described in Schedule A
attached hereto and incorporated by this reference.
d. That Consultant is adequately funded and will remain adequately
funded throughout the Term of this Agreement to conduct its business
and perform the obligations as provided herein.
e. Consultant agrees that these warranties shall survive acceptance of
the Services by Kinko's. The warranties hereunder shall inure to the
benefit of Kinko's, its successors and assigns, customers and users
of its products.
f. All Services and deliverables provided hereunder are subject to
Kinko's review, inspection and acceptance during the performance of
this Agreement including, without limitation, to final inspection
and acceptance.
15. Year 2000 Compliance. Consultant warrants that the Services, Software,
Documentation and deliverables supplied hereunder, or associated with the
development, manufacture, delivery or support of products or services
hereunder shall accurately calculate dates up to, during, and after the
Year 2000 including leap year calculation capabilities required for
century date recognition, calculations which accommodate the same century
and multi-century formulas, and processing date values that reflect
century dates. All Services, Software, Documentation and deliverables,
individually and in combination, shall also provide correct results when
moving forward and backward in time across the Year 2000.
16. Attorney Fees. In the event that any dispute between the parties should
result in litigation or arbitration, the prevailing party in such dispute
shall be entitled to recover from the other party all reasonable fees,
costs and expenses or enforcing any right of the prevailing party,
including without limitation, easonable attorney's fees and expenses.
17. Assignment. This Agreement and the rights, duties, and obligations
hereunder may not be assigned or delegated by Consultant without the
prior written consent of Kinko's. This Agreement shall be binding upon
and inure to the benefit of the parties, and their respective successors
and assigns.
18. Prohibition Against Use of Trademark. In order to preserve the value of
the Consultant's and Kinko's respective name and/or any trademarks,
service marks, or tradenames (collectively, "Mark") neither the
consultant nor the Kinko's shall make any use of any of the other's Marks
for any reason, including but not limited- to, advertising, press
releases, or other publicity, except upon the written authorization of
the releasing party in each instance.
19. Notices
a. All notices or communications permitted or required hereunder must
be in writing, delivered in person or transmitted by Registered or
Certified United States Mail, postage prepaid return receipt
requested, addressed as follows, unless such address is changed by
written notice: General Counsel, Kinko's, Inc., Legal Department 255
West Stanley Avenue, Ventura, CA 93002-8000. If to Genisys: GENISYS
Information Systems, Inc., Attn: Craig Crawford, 654 North Belt
East, Suite 310, Houston, Texas 77060.
b. Anything herein contained to the contrary notwithstanding, written
reports required by Paragraph 3 hereof, and invoices and payments
hereunder, may be transmitted to the parties' addresses and to the
persons indicated herein by First Class United States Mail or by
facsimile.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
21. Books and Records. Consultant shall keep all usual and proper records
related to the performance of Services described in this Agreement as
required in accordance with Generally Accepted Accounting Principles at
its principal place of business for a period of two (2) years following
the expiration or termination of this Agreement. Kinko's reserves the
right, upon seven (7) days notice, to audit Consultant's records, only as
such records relate to services under this contract, for the purpose of
verifying Consultant's compliance with the performance of Services
pursuant to the terms of this Agreement during the term of this Agreement
and for a period of two (2) years thereafter. Such audits shall be
conducted during normal business hours in such a manner as to not
unreasonably interfere with the normal business operations of Consultant
and shall be paid for by Kinko's unless material discrepancies are
disclosed. "Material" shall mean a discrepancy of five percent (5%) or
higher between the amounts billed to Kinko's and amounts detailed in the
pricing structure under this Agreement. If Material discrepancies are
disclosed, Consultant agrees to promptly reimburse Kinko's for the costs
associated with the audit. Consultant agrees to promptly correct any
deficiencies detected in an audit and shall promptly refund any
overpayments disclosed by such audit, or Kinko's may, in its election,
set-off any such overpayment against any monies subsequently due by
Kinko's to Consultant.
22. Survival. The obligations of either party hereunder with respect to
paragraphs 7. Indemnification; 8. Intellectual Property Infringement
Indemnity; 13. Confidentiality and Non-Disclosure;. 14. Acceptance and
Warranty; 15. Year 2000 Compliance; 16 Attorney Fees; and 18. Prohibition
Against Use of Trademark; and 20 Governing Law; shall survive termination
of this Agreement and remain binding on the parties.
23. Electronic Delivery. Any Software delivered hereunder, shall be
transmitted electronically via the Internet or a modem at an electronic
location designated by Kinko's or Consultant, as the parties shall agree.
In lieu of electronic delivery, Consultant or an authorized agent of
Consultant, shall deliver the Software via the "load and leave". process
to a Kinko's location in California. As used herein "load and leave"
shall mean that Consultant or its authorized agent shall install the
Software on Kinko's equipment, as Kinko's shall direct, and Consultant,
or its agent, as applicable, shall immediately remove the Software media
from Kinko's premises. Consultant shall retain possession and control of
the Software media at all times. At no time shall title or possession of
the Software media pass to Kinko's.
24. Parties in Interest. Except as expressly provided in law controlling on
the subject matter and the parties to this Agreement, nothing in this
Agreement shall confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to this Agreement and
their respective successors and assigns nor shall anything is this
Agreement relieve or discharge the obligation or liability of any third
person to any party to this Agreement, nor shall any provision give any
third person any right of subrogation or action over or against any party
to this Agreement.
25. Headings. All headings herein are inserted only for convenience and ease
of reference and are not to be considered in the construction or
interpretation of any provision of this Agreement.
26. Interpretation. In the event any claim is made by any party hereto
relating to any conflict, omission or ambiguity in this Agreement, no
presumption or burden of proof or persuasion shall be implied by virtue
of the fact that this Agreement was prepared by or at the request of a
party or its counsel.
27. Multiple Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
28. Entire Agreement. This Agreement contains the entire Agreement between
the parties hereto and supersedes any prior understandings, commitments,
or agreements, oral or written, with respect to the subject hereof. This
Agreement shall not be modified, varied or amended except by a written
instrument of subsequent date duly executed by an authorized
representative of each party. If any provision of this Agreement is found
invalid, unenforceable, or illegal by any court of competent
jurisdiction, any such finding shall not affect the validity of the
remaining provisions which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective
as of the date first written above.
GENISYS INFORMATION KINKO'S, INC.,
SYSTEMS, INC. a Delaware corporation
"Consultant"
By: By:
--------------------------- ------------------------------
Name: Craig Crawford Name: Ross Waddell
Title: President Title: Vice President, Real Estate
and Purchasing
Date: 12/10/99 Date: 12/10/99
------------------------- ----------------------------
*Must be individual of the organization authorized in writing to legally bind
the organization
PLEASE BE ADVISED THAT ADDITIONS, DELETIONS, MODIFICATIONS OR INTERLINEATIONS
TO THIS AGREEMENT WILL NOT BE ACCEPTED UNLESS FULLY INITIALED BY ALL PARTIES
WHO HAVE EXECUTED THIS AGREEMENT.
<PAGE>
<PAGE>
LISTING OF KINKO`S.INC. COMPETING ORGANIZATIONS
Quick Printers
- --------------
Alphagraphics
American Speedy
Copy Club
Franklin's (owned by ICED)
Henry Armstrong
Ink Well (owned by ICED)
Insty -Prints
Kwik Kopy (owned by ICED)
Lazerquick
Minuteman Press
PIP Printing
Quick Print (XYAN)
Signal Graphics
Sir Speedy
Transamerica Printing
Triangle Repro Centers
Mail & Ship Companies
- ---------------------
Mail Boxes, Etc.(MBE)
Office Supply Superstores
- -------------------------
OfficeMax/Co Max
Office Depot
Staples
Office Equipment Companies
- --------------------------
Danka (Kodak)
Ikon
Lanier (division of Harris)
Pitney Bowes
Xerox
Retail
- ------
TRM Copy Centers Corp.
Your Office USA
<PAGE>
Commercial Printers
- -------------------
Banta Corp.
Big Flower Press
Corporate Express
Moore Co.
Quad/Graphics
Quebecor Printing
R.R. Donnelly & Sons
Standard Register
Wallace Computer Services
World Color Press
Paper Companies
- ---------------
Action Communications, Inc.
American Greetings
Ampad Corporation
Beaver Print
Colors by Design
Computer Sensations
Domtar Papers
Fitzgraphic
FMI
Geographics, Inc.
Graphics Papers
Great Papers
Hallmark
Idea Art
MM Design
Mead School & Office Products
Micro Format
Paper Access
Paper Adventures
Paper Company
Paper Showcase
Papers by Design
Pride Paper
Queblo
Quill
Rediform
Reliable
Sonborn
Taylor Corporation
Viking
Williamhouse Regency
Z-International
<PAGE>
<PAGE>
SCHEDULE A
To
Consulting and Software License Agreement
between Genisys Information Systems, Inc. and Kinko's, Inc.
Acquisition, Modification, and Implementation of the
Genisys Enterprise Project Management System
General Description of Services:
GENISYS (herein also referred to as "Consultant") will implement and configure
its Genisys Enterprise Project Management system (collectively "GEM", or
"Software") to create a project management tool (the "GENISYS Application")
for Kinko's that conforms to the requirements described herein and in the
Final Design Document. If there is a conflict in the Deliverables of this
Schedule A and the Final Design Document, the provisions of the Final Design
Document will prevail. The purpose of the GENISYS Application is to
efficiently track and manage Kinko's real estate development program. The
GENISYS Application tool will be comprised of the GEM Software and will use
Microsoft SQL 7.0 for its database with Microsoft Project 98 as the scheduling
engine.
The GEM Software is a state-of-the-art project management tracking and
reporting tool that shall enable Kinko's to manage and monitor large projects
more effectively. Mission critical information shall become available to all
levels of Kinko's management through the integration of Internet browsers and
web pages into the GEM system and shall enable appropriate users to access and
query project information across the Kinko's enterprise.
I. Scope of Work
A. Consultant shall configure its GEM for Kinko's Consultant Project as
follows:
1. Consultant will work with the Kinko's development team,
including a Kinko's retained consultant, The McIntosh Group,
(collectively, "Kinko's Team") to complete a needs assessment
as specified by Kinko's prior to beginning the design of the
final system.
2. Consultant will produce a system design document ("Final Design
Document") for Kinko's Team approval that describes all of the
components and how they will be used at Kinko's. Consultant
shall deliver the Final Design Document to Kinko's within five
(5) days after full execution of this Agreement. Kinko's will
have seven (7) days after receipt of the Final Design Document
or seven (7) days after full execution of this Agreement,
whichever is later, to accept the Final Design Document or
provide Consultant with comments on this Document. If
additional iterations of the Final Design Document are made,
Kinko's will have seven (7) days in which to accept the Final
Design Document as modified from the date of resubmission by
Consultant. Consultant will have seven (7) days to make the
requested revisions. If no comments are received within seven
(7) days, the Final Design Document as last submitted to
Kinko's will be considered accepted by Kinko's.
3. Consultant will develop scheduling templates that will be used
to populate the Kinko's database. These templates will be
accessible from a Kinko's web site for creating new project
plans and shall be developed in coordination with Kinko's.
4. Consultant will convert Kinko's existing access database for
Kinko's Real Estate Project Management Information System
("KinkoBuilder") to populate the GEM. The GEM shall contain all
of the data in KinkoBuilder excluding those fields that appear
on the Details tab, which can be contained in the fields of the
Microsoft Project 98 database schema. The exact data mapping
will be defined in the Final Design Document. Data converted
will be synchronized by Consultant, however Kinko's is
responsible for validity/ accuracy of such data.
5. Consultant will configure and implement its GEM status module
and GEM web generation module to meet the design requirements
listed in the final system design document as described in
subparagraph I. A. 2. above.
6. Consultant will work with Kinko's senior management or their
designees to implement the GEM business rules and those
specified by Kinko's Team as agreed upon in the Final Design
Document.
7. Data contained within the Kinko's Real Estate Project
Management Tool defined below in paragraph II. A. will be based
on the data that can be contained within the fields in
Microsoft Project 98.
8. Consultant will provide training documentation for each module
within the solution in electronic format such that Kinko's can
modify the documentation to tailor Kinko's needs for training
and ongoing documentation purposes.
9. Consultant will conduct four (4) levels of training for Kinko's
users in Kinko's Ventura, California offices. Level 1 is for
web viewers to gain an understanding of the GEM Kinko's web
site and how to use it. Level 2 is for Kinko's users who will
use the web for statusing and creating new projects. Level 3 is
for Kinko's users who need training in the use of Microsoft
Project 98. Level 4 is for Kinko's users in need of
administration training. Kinko's is responsible for providing
the facilities and required computer and audio/visual
equipment. A total of thirty-eight (38) hours of training will
be allocated as follows:
<TABLE>
<CAPTION>
Maximum Number
Attendees of
Level Description per class Hours/class Classes
- ----- ---------------- ---------- ----------- --------
<S> <C> <C> <C> <C>
1 Web Viewers 100 6 1
2 Editors 16 16 3
3 MS Project 98 8 8 1
4 Administrator 8 8 1
</TABLE>
10. Consultant shall at Kinko's request provide assistance,
including without limitation, in creating custom reports and
views; modeling a trainer class; and developing a recommended
next phase plan for the progression of the scheduling/ status
tools at an additional cost as agreed between the parties
before additional work has begun.
11. Consultant shall develop and test the GEM to enable the GEM to
accommodate Netscape Navigator.
II. Real Estate Project Management Tool Requirements
A. Hardware/ Software Requirements: The following hardware and software
requirements will apply.
1. The Kinko's co-worker's computer must be using one of the
following operating systems: Windows 95, Windows 98, or Windows
NT (version 4.0 or later) at Kinko's cost.
2. The Kinko's co-worker's computer will be able to access an MS
SQL 7.0 database located on a network data server at Kinko's
cost. If the Kinko's co-worker's computer is located at a site
not serviced by Kinko's corporate network, it must be capable
of accessing the Kinko's corporate network via the Internet.
Connections to the Internet are Kinko's responsibility.
B. Consultant Application Requirements
1. The Consultant Application will run on the Kinko's co-worker's
computer. It will access data stored in an MS SQL database
located on a Kinko's network data server. The data server will
be accessible from any remote location using the current
Kinko's Intranet architecture.
2. The Consultant Application will provide the Kinko's graphical
user interface features of a typical windows-based application.
3. The Consultant Application will be the primary data capture
tool. Such application shall contain a security feature that
enables a "system administrator" to grant or restrict a Kinko's
coworker's capability to add, delete, modify, or view the data.
4. The Consultant Application will provide the capability to print
pre-defined reports as listed in Section C below. The data
contained in the reports shall be able to be filtered and
printed at runtime. Reports will be a combination of Microsoft
Project Views; Web Page Views; and Crystal Reports with drill
down capability. The pre-defined reports will be designed based
upon the example reports listed below in Section C.
5. The Consultant Application will provide the capability to
build, clear, and run queries based on most of the fields in
the database.
C. Report Requirements: The following reports will be able to be
filtered at runtime on the following data columns: personnel,
division, branch opening year; and scope. In the event that the
report requirements change by the delivery date, the Consultant will
make every effort to substitute, replace or deliver an equivalent
report. Any reports requested beyond those provided herein and which
are not a substitute, replacement or equivalent report will be
provided at an additional cost to be mutually agreed between the
parties before the report is provided.
1. Management Reports
a. New Branch Opening Calendar Report: Purpose is to provide
operations and corporate executive management with a list
of openings for a specified period into the future. It is
used in real estate task force meetings held every-other
week. Summarizes a list of projected and actual NEW BRANCH
openings by period (month). Organized at summary level and
by division.
b. Program Summary Report: Purpose is to provide operations
and corporate executive management with a "report card"
illustrating the status of the overall program against
plan. Summarizes openings for a defined program year in
terms of project scope and class. Organized at summary
level and by division.
2. Real Estate Reports
a. Real Estate Key Measures Report: No description available.
b. Real Estate Report For Real Estate Meeting: Purpose is to
provide operations with an update of the status of the
program and is a means to surface and resolve key issues
between real estate and operations. Status of projects
organized first by division, then status (open, dead,
active/hold), then area, then opening date.
c. REM Report: Purpose is to provide REM's with a day-to-day
working tool to manage their individual projects. Status
of projects for a specific REM, organized first by status
(active/hold only), then by area, then by location (state,
city?). Contains key information and a look ahead feature.
d. SIR Authorize To Proceed/Design In Report: Purpose is to
communicate to design the key information that initiates
the design-in milestone.
e. Signage Proposal Request Report: Purpose is to communicate
to sign vendor the key information that authorizes sign
proposal. Report is generated available on the Web Site
and can be printed to a hard copy. All key information for
a single project along with special instructions,
contacts, etc.
3. Design Reports
a. Architect/ATP (By Scope) Report: Purpose is to communicate
to the architect the key information that initiates site
investigation report, space plan and construction
documents. Report is generated available on the Web Site
and can be printed to a hard copy. All key information for
a single project along with special instructions,
contacts, etc.
b. Equipment List Request Report: Purpose is to communicate
to the AVP the key information that initiates the
equipment list preparation. Report is generated available
on the Web Site and can be printed to a hard copy. All key
information for a single project along with special
instructions, contacts, etc.
c. Design And Image Key Measures Report: Purpose is to
provide the director with summary level information about
the performance of his/ her department. Key performance
measures include durations between milestones, variance
from norms, workload and are organized by department, by
division, by area and by individual manager (PM, Senior
designer).
d. Design Report For Real Estate Meeting: Purpose is to
provide operations and real estate with an update of the
status of the Design & Image function's responsibilities
within the program and is a means to support real estate
in surfacing and resolving key issues between real estate
and operations. Note: The purpose is not for surfacing and
resolving issues between Real Estate and Design. Status of
projects organized first. by division, then status (open,
dead, active /hold), then area, then opening date.
e. Permit Summary Report: Purpose is to provide management
with historical information about the duration of
permitting for planning purposes and perspective. List of
projects that have completed permitting organized by
division and area with their permit in and out dates and
length of time in days, with average durations summarized
by division, area, project manager.
f. Pending Permits Report: Purpose is to provide management
and others with a specific view of the status of projects
in permitting within a division and area. List of projects
that are in permitting organized by division and area with
their permit in, permit due dates and comments. First sort
within area will be overdue by length of time overdue
(longest to shortest), then sorted by due date.
g. PM Report: Purpose is to provide PM's with a day-to-day
working tool to manage their individual projects. Status
of projects for a specific PM, organized first by status
(active/hold only), then by area, then by design status
(SIR, Space planning, CD's, Permitting, Construction)
location (state, city?). Contains key information and a
look ahead feature.
h. Designer Report: Purpose is to provide Designers with a
day-to-day working tool to manage their individual
projects. Status of projects for a specific Designer,
organized first by status (active/hold only), then by
area, then by design status (space planning, CD's), then
by location (state, city?). Contains key information and a
look ahead feature.
III. Fees
A. Kinko's agrees to pay Consultant the following sums for Services and
GEM Software, Maintenance and Support:
1. GEM Software License:
a. Twenty Five Thousand Dollars ($25,000.00), payable upon
full execution of this Agreement.
2. Services: Kinko's agrees to pay Consultant the following
hourly rates for Services depending on the title of the Team
member performing the Services. The total fees payable under
this Schedule for the Services outlined herein shall not exceed
the sum of One Hundred Twenty Three Thousand Five Hundred
Dollars ($123,500.00).
Principal or Senior Manager 250.00/per hour
Project or Technical Manager 185.00/per hour
Senior Developer 165.00/per hour
Senior Staff Consultant 150.00/per hour
3. Changes: Any changes requested by Kinko's which materially
affects Consultant's services resulting in an increase or
decrease in the scope of effort required by Consultant
described herein shall be referred as a "Change." If the Change
decreases the scope of effort required by Consultant,
Consultant shall submit its proposal for the associated
decrease in Consultant's cost of Services. If the Change
materially increases the scope of effort required, Consultant
shall submit a written proposal for any equitable adjustment in
fees directly associated with the scope of such Change.
Consultant shall submit all proposals to Kinko's designated
co-worker. All such Changes shall be negotiated in good faith
and mutually agreed upon between the parties and shall require
a written amendment to this Agreement.
B. Travel Expenses.
Kinko's shall pay Consultant for Consultant's reasonable out of
pocket expenses such as transportation, hotels, meals, on-line data
base fees and telephone, necessarily incurred by Consultant while
performing Services at Kinko's specific request not to exceed the
total sum of Twenty One Thousand Dollars ($21,000.00). These
expenses are in addition to the fees described in Section A.2.
above. Any expenses in excess of Twenty One Thousand Dollars
($21,000.00) shall require Kinko's prior written consent pursuant to
Section 4 of this Agreement.
C. Invoices.
Invoices shall be submitted at least monthly to Kinko's designated
co-worker. All invoices shall contain the following detail: (a)
Consultant's hours where hourly work is involved; (b) a description
of Services performed by Consultant substantiating the hours worked
as applicable; (c) identify project by name as such project is
defined by Kinko's designated co-worker; (d) other information as
reasonably required by Kinko's. Invoices shall be payable in
accordance with Section 4 of this Agreement; and (e) for any invoice
containing charges relating to software licensing, the invoice shall
state that the Software is being transmitted electronically via the
Internet or modem to Kinko's, or via the "load and leave" process to
a Kinko's location in California.
IV. Deliverables
A. Electronic Delivery. Any Software delivered hereunder, shall be
transmitted electronically via the Internet or a modem at one
electronic location designated by Kinko's or Consultant, as the
parties shall agree. In lieu of electronic delivery, Consultant or
an authorized agent of Consultant, shall deliver the Software via
the "load and leave" process to a Kinko's location in California. As
used herein "load and leave" shall mean that Consultant or its
authorized agent shall install the Software on Kinko's equipment, as
Kinko's shall direct, and Consultant, or its agent, as applicable,
shall immediately remove the Software media from Kinko's premises.
Consultant shall retain possession and control of the Software media
at all times. At no time shall title or possession of the Software
media pass to Kinko's.
B. Consultant's "Deliverables" may be in the form of hardcopy or
softcopy graphics, electronic files, written documentation, written
comments, or other tangible form ("Deliverables"). All documentation
shall be provided in the Kinko's specified softcopy version, and/or
software version on disk with a hard copy for each Deliverables, as
specified by Kinko's, providing the format can be produced using one
of Microsoft's standard Office Suite products (i.e. Word, Excel,
PowerPoint, Access). Certain Deliverables may be delivered to
Kinko's in Adobe Acrobat format.
V. Consultant's Team
The Team assigned to perform the Services under this Agreement shall be
Consultant's Sr. Vice President; Sr. Project Manager; Los Angeles Area
Representative; and a Sr. Developer. Team members may be changed pursuant
to Section 5. of the Agreement.
VI. Kinko's Team
Kinko's designated co-worker(s) under this Agreement shall be Mike Marvin
or his respective designee(s).
Kinko's Team assigned under this Agreement shall consist of Kinko's
Program Manager; Kinko's Project Manager, Kinko's Lease Administration
Manager; Kinko's Director of Real Estate; Kinko's Director of Design and
Image; Division Counsel, Eastern Division; or each of their respective
designee(s).
VII. Term
The Term of this Schedule A shall begin as of the Effective Date and
continue through February 15, 2000 or until Kinko's has accepted
Consultant's completed performance of the Services, unless terminated
sooner in accordance with the provision of this Agreement. Subsequent
phases of work will be addressed in additional schedule(s) to the
Consulting and Software License Agreement as mutually agreed upon by
Consultant and Kinko's.
VIII. Warranty
Consultant hereby warrants that the GEM Software developed by Consultant
provided hereunder will contain features and functionality that Kinko's
agreed to in the Final Design Document. Such warranty shall be in effect
for one hundred and twenty (120) days from acceptance of the Software by
Kinko's. Acceptance of Software shall begin after Consultant has
installed the GEM Software. Kinko's shall conduct all its own testing
against the criteria established in the Final Design Document. In the
event that the GEM Software fails to meet the criteria established in the
Final Design Document as shown from the results of Kinko's testing and
provided in writing by Kinko's to Consultant, Consultant will have thirty
(30) days from Kinko's notice in which to correct such defect and cause
the GEM Software to fulfill the Final Design Document's criteria. In the
event Consultant is unable to cause the GEM Software to fully fulfill the
criteria as defined in the Final Design Document, Kinko's shall be
entitled to a refund as follows: (a) If the GEM Software as a result of
such defect or failure to meet the Final Design Document specifications
is unusable for Kinko's purposes as described in this Agreement and as
specified in the Final Design Document, then Kinko's shall be entitled to
an immediate refund of up to the $25,000 paid to the consultant for the
software. Kinko's shall remove and return to Consultant all copies of the
Software or certify that such Software has been destroyed; or (b) if
Kinko's desires to retain the Software despite the fact it does not fully
meet the Final Design Document specifications, then Kinko's shall receive
a prorata refund of the $25,000 software fee which are attributable to
the feature or function that is not performing as provided in the Final
Design Document.
IX. Kinko's Approval
Approval of Services and Deliverables. Services and Deliverables provided
to Kinko's by Consultant hereunder shall be reviewed and approved by
Kinko's designated co-worker. Kinko's shall accept or reject each.
Deliverable in writing within fifteen (15) days of receipt. Acceptance
shall not be unreasonably withheld. Any rejection shall state
specifically the manner in which the Deliverable is materially defective.
Consultant shall make the modifications necessary to correct such
material defects promptly, but no later than thirty-(30) days of receipt
of such notice of rejection, except as noted in the Section VIII.
Warranty, above.
X. License to Deliverables
Kinko's shall receive a license for the GEM Software as modified and
specifically configured hereunder as provided in Schedule B, attached
hereto and incorporated herein by this reference. Kinko's shall receive a
worldwide, perpetual, irrevocable, non-exclusive license to use the
Deliverables (except the GEM Software, which is provided pursuant to
Schedule B) in any manner in which Kinko's deems desirable, including
without limitation the right to transfer, assign or sublicense such
Deliverables.
XI. Source Code Escrow
Consultant shall place and maintain in escrow within sixty (60) days of
execution of this Agreement and at all times throughout the term hereof
and for a reasonable period thereafter as mutually agreed between the
parties at Kinko's sole cost and expense with an escrow agent as
designated by Kinko's specializing in software escrows, all versions of
the Software source code and any updates, upgrades and/or enhancements
thereto. This escrow shall contain the source code to the Software, any
updates, upgrades and/or enhancements thereto in magnetic media in the
original software programming language, a technical instruction manual,
an operator/user manual, maintenance tools (test software and software
specifications), descriptions of any proprietary or third party system
utilities (compiler, installer and assembler descriptions), descriptions
of system/software generation procedures, necessary non-Consultant
proprietary software to the extent that Consultant possesses a license or
other rights sufficient to allow transfer or sublicense, descriptions of
the system/software required for use and/or support for which Consultant
neither possesses, nor has rights sufficient to allow transfer or
sublicense, menu and support software or subroutine libraries in source
and object form, compilation procedures in machine readable form,
execution procedures in machine readable form and all other necessary and
available information which will enable a reasonably skilled computer
software programmer or analyst to reconstruct, maintain or enhance the
Software without the aid of Consultant, or any other person or reference
to any other materials. Such escrow agreement shall provide that Kinko's
shall be permitted to access and utilize all of the above referenced
items that are held in escrow in the event: (1) Consultant fails to
perform any material covenant or obligation contained in this Agreement;
(2) Consultant shall become insolvent, bankrupt, have an order of
receivership issued against it, file a petition of bankruptcy, make an
assignment of substantially all of its assets in favor of its creditors;
(3) Consultant, whether directly or through a successor or affiliate
ceases to be in the software business; (4) Consultant discontinues
Software as a product; or (5) Consultant elects not to provide Software
support to Kinko's. Such escrow agreement shall contain other terms and
conditions customary to software escrow transactions as mutually agreed
between the parties.
<PAGE>
<PAGE>
SCHEDULE B
To
Consulting and Software License Agreement
Between Genisys Information Systems, Inc., and Kinko's, Inc.
GEM SOFTWARE LICENSE AND SUPPORT
A. GEM Software Description. GEM is the state of the art Project
Management Tracking and Report tool enabling Kinko's organization to manage
and monitor large projects more effectively. Mission critical information
becomes available to all levels of management through the integration of
Internet browsers and web pages into the GEM system. This enables appropriate
users to access and query project information across the enterprise.
B. Software License. Consultant hereby grants to Kinko's a perpetual,
worldwide, irrevocable, non exclusive, enterprise-wide license (the "License")
to use the GEM computer software program supplied hereunder (the "Software")
on one server, and unlimited number of web viewers. Consultant shall provide
Kinko's with all appropriate materials applicable to the Software
("Documentation"). Consultant represents and warrants that it has all
necessary and appropriate rights to license the Software and Documentation
provided under this Agreement to Kinko's without violating any rights of any
third party; and there is currently no actual or threatened claim or
litigation pending by any third party against Consultant arising our of the
Software or Documentation.
C. Maintenance /Support Fees
1. The first fifty (50) hours of telephone support will be
provided at no additional charge.
2. Kinko's agrees to pay Consultant the total sum of Twelve
Thousand Five Hundred Dollars ($12,500.00) per year for
maintenance (defined below) for each year up to three (3)
years. Thereafter Consultant may increase maintenance fees for
the fourth year or any year thereafter. Provided however, such
increase shall not exceed ten percent (10%) of the prior year's
maintenance fees. All invoices shall be paid within forty-five
(45) days receipt.
3. If Kinko's exceeds the seventy-five (75) hours of telephone
support included in the annual maintenance fee provided in
paragraph C. 2 above, Kinko's shall have the following options:
Option 1: Kinko's may add seventy-five (75) hours of additional
telephone support for the sum of Five Thousand Dollars
($5,000.00) .
Option 2: Kinko's may add two hundred (200) hours of additional
telephone support for the sum of Ten Thousand Dollars
($10,000.00).
Option 3: Kinko's shall pay Seventy-Five Dollars ($75.00) per
hour for each additional hour of telephone support.
4. Telephone support will be tracked and billed in one-half (1/2) hour
increments.
5. Consultant shall provide Kinko's with a detailed report on a
quarterly basis during each annual maintenance term. Such report
shall set forth the number of calls made by Kinko's to Consultant,
the length of the call, and a description of the support required.
D. Software Maintenance.
1. Maintenance. Maintenance shall include without limitation,
seventy-five (75) hours of telephone support (pursuant to
Section 3 below) updates, upgrades, bug fixes, enhancements, if
any, to the Software. Consultant shall provide one (1) set of
documentation and one (1) machine executable copy of the object
code of the Software for each new release, update, upgrade
and/or enhancement. Kinko's may make additional copies of the
documentation and Software provided hereunder subject to the
terms and conditions of this Agreement.
2. Electronic Delivery. The Software and Maintenance shall be
provided electronically pursuant to paragraph 23 of the
Agreement.
3. Support. Telephone support shall be provided by professionally
trained personnel familiar with the Software and Kinko's
application(s).
a. Kinko's shall designate four (4) focal points for software
support issues, one from each of the following groups:
Kinko's Help Desk; Kinko's software development team;
Kinko's hardware engineering group; and Kinko's real
estate department.
b. Telephone support shall be available Monday through
Friday, 8:00 am through 5:00 pm, Central Standard Time
("CST") ("Standard Support Hours"), excluding
nationally-recognized holidays. A technician shall be
available to take Kinko's calls during Standard Support
Hours. After the Standard Support Hours, Consultant shall
have a technician available between the hours of 5:00 pm
and 12:00 am CST, Monday through Friday, excluding
nationally recognized holidays via a pager ("Non-Standard
Hours"). The technician shall return Kinko's page within
one (1) hour.
Consultant shall respond to Kinko's requests for Software support in
accordance with the severity levels described below:
Severity 1 Problems. Unrecoverable System Error. In the event the Software
does not operate or a substantial function or feature of the Software is
inoperable, which includes without limitation, processing of incorrect data or
the failure of any core module of the Software, then Consultant will assign
properly trained personnel familiar with the features and functions of the
Software to work on the problem within one (1) hour of Kinko's initial call.
Consultant shall coordinate its efforts and apply resources continuously on a
priority basis until the operation of the Software or the inoperable feature
or function is fully restored. It is understood that Consultant will make its
best efforts to resolve the error within forty-eight (48) hours. If such
correction is expected to take longer than forty-eight (48) hours, Consultant
will inform Kinko's in writing of such problem. However, Consultant agrees to
work continuously on such problem until it is resolved.
Severity 2 Problems. Application Database or other Error. In the event the
Software is operational but a specific function is inoperative or the
Software's functionality, taken as a whole, is significantly impaired or the
Software's performance is otherwise significantly degraded, Consultant shall
assign properly trained personnel familiar with the features and functions of
the Software to work on the problem within four (4) hours of Kinko's initial
call. Consultant shall continuously apply resources to restore the
functionality of the Software from the time of Kinko's notification to
Consultant and make every effort to fix and resolve the problem within
ninety-six (96) hours of notification.
Microsoft Certified Solution Provider
www.genisystems.com
654 North Belt East. Suite 310
Houston. Texas 77060
Office 281.820.0200
Fax 281.447.8291
February 25, 2000
Mr. Jeff Michaud
Cable Constructors, Inc.
105 Kent Street
Iron Mountain. M1 49801
Dear Mr. Michaud,
Genisys Information Systems, Inc. ("Genisys") is pleased to have the
opportunity to provide project management consulting services to Charter
Communications. Inc. ("Charter") through your company. Genisys will provide
these services to Cable Constructors, Inc. (CCI") as a subcontractor on work
CCI is performing for Charter. This letter documents our understanding of the
terms of our relationship:
Services: Genisys will provide project management consultants in various
regions across the United States as requested by Charter. Other
personnel could be requested from Genisys at a later time to
accomplish more clerical, scheduling tasks.
Compensation: Genisys project management consultants will be billed to CCI at
a rate of $150 per hour. Other personnel classifications as
requested by CCI will be billed at a rate agreed to by Genisys
and CCI. Genisys will also be reimbursed for usual and
customary travel related expense.
Invoicing: Genisys will invoice CCI on either a bi-weekly or weekly basis
for work on which CCI has a purchase order from Charter. Such
invoices will indicate the person performing the work, where
the work was performed, what work was performed, rate per hour,
number of hours per task, and total amount.
Payment: CCI will reimburse Genisys within 60 days of receipt of the
invoice. Payment to Genisys is not dependent upon CCI receiving
payment from Charter.
Term: The terms of this agreement is perpetual and this agreement is
cancelable with 30 days notice to either party.
Genisys looks forward to a mutually beneficial relationship with CCI.
Please contact either Gary Smith or me with any questions.
Sincerely, Agreed to Terms:
/s/ Ward P. Rivenburg /s/ Jeffrey G. Michaud
- --------------------- -----------------------
Ward P. Rivenburg Jeffrey G. Michaud
Chief Financial Officer For Cable Constructors. Inc
Vice President of Marketing
<PAGE>
NIVO INTERNATIONAL CORPORATION
WORK FOR HIRE / NONDISCLOSURE AGREEMENT
THIS AGREEMENT made and entered into this 10th day of December, 1999 by and
between Nivo International Corporation ("Nivo") and GENISYS Information Systems
Inc. ("Contractor").
WITNESSETH
WHEREAS, Nivo is an independent provider of educational and certification
testing products on desktop computer applications and, for example, is
authorized by Microsoft Corporation to conduct the Microsoft Office User
Specialist educational and certification examination program for the Microsoft
Office software products (the "MOUS Program") throughout the world; and
WHEREAS, the Nivo desires the Contractor to provide certain services; and
WHEREAS, Nivo and Contractor acknowledge that the work performed by
Contractor will be integrated into and to become part of certain proprietary
products owned by Nivo; and
WHEREAS, both Nivo and Contractor desire to set forth in writing the terms
and conditions of their dealings, relating to rights to MOUS examination
software, including all know-how, trade secrets, copyrights and patentable
inventions, customer information and reports, (hereafter referred to
collectively as the "Program Materials");
NOW THEREFORE, in consideration of the premises hereof and the mutual
covenants and conditions herein after set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Nivo and Contractor, intending to be legally bound, hereby agree as follows:
1. SERVICES
1.1 On the terms and conditions set forth in this Agreement, Nivo
hereby engages Contractor to perform the duties set forth in the attached
Exhibit A, and Contractor hereby accepts such engagement.
1.2 Nothing herein shall be deemed to preclude Nivo from retaining
the services of other persons or entities undertaking the same or similar
services as those undertaken by Contractor.
2. TERM. This Agreement shall terminate. one year from the date hereof
unless earlier terminated by either party upon 5 days' written notice to the
other party or extended by written agreement signed by both parties.
3. INDEPENDENT CONTRACTOR. Contractor agrees that it shall be acting as
an independent contractor and shall not be considered or deemed to be an agent,
employee, joint venturer, or partner of Nivo. Contractor shall have no authority
to contract for or bind Nivo in any manner and shall not represent itself as an
agent of Nivo or as otherwise authorized to act for on behalf of Nivo.
Contractor shall have no status as employee or any right to any benefits that
Nivo grants its employees.
4. COMPENSATION. Nivo agrees to pay Contractor in accordance with the
terms of Exhibit A.
5. OBLIGATION FOR EXPENSES. This agreement does not entitle Contractor
to any reimbursement of expenses, and Contractor shall bear sole responsibility
for any expenses it may incur at any time and in any connection with its
performance hereunder, except as described in Exhibit A.
6. OWNERSHIP OF PROGRAM MATERIALS.
6.1 Contractor agrees that all Program Materials, reports, and other
data or materials or generated or developed by Contractor under this Agreement
or furnished by Nivo to Contractor shall be and remain the property of Nivo.
Contractor specifically agrees that all copyrightable material generated or
developed under this Agreement shall be considered works made for hue and that
such material shall, upon creation, be owned exclusively by Nivo. Nivo shall be
entitled to obtain and hold in its name all copyrights in respect of such
materials.
6.2 If and to the extent Contractor may, under applicable law, be
entitled to claim any ownership interest in the data or materials generated or
developed by Contractor under this Agreement, Contractor hereby transfers;
grants, conveys, assigns, and relinquishes exclusively to Nivo all of the
Contractor's right, title, and interest in and to such materials under patent,
copyright, trade secret, trademark and other law, in perpetuity or for the
longest period otherwise permitted by law.
6.3 To the extent that any preexisting rights are embodied or
reflected in the data or materials generated or developed by Contractor,
Contractor hereby grants to Nivo the irrevocable, perpetual, non-exclusive,
worldwide, royalty-free right and license to (1) use, execute, reproduce,
display, perform, distribute copies of, and prepare derivative works based upon
such preexisting rights and any derivative works thereof and (2) authorize
others to do any or all of the foregoing.
6.4 Contractor hereby represents and warrants that it has full right
and authority to perform its obligations and grant the rights and licenses
herein granted, and that it has neither assigned nor otherwise entered into an
agreement by which it purports to assign or transfer any right, title; or
interest to any technology or intellectual property right that would conflict
with its obligations under this Agreement. Contractor covenants and agrees that
it shall not enter into any such agreements.
6.5 This Section 6 shall survive any termination of this Agreement.
7. CONFIDENTIAL INFORMATION--NONDISCLOSURE.
7.1 Contractor hereby agrees to keep confidential, and not use or
disclose to any person, all information, whether provided to Contractor in
writing or orally, about Nivo's products, services, product and service design,
marketing, accounting, information gathering techniques and methods, business
data, and customers, and all other information used or useful in Nivo's business
and not generally known to competitors of Nivo ("Confidential Information").
7.2 With respect to Confidential Information disclosed under this
Agreement, the party to whom the Information is disclosed shall have no
obligation to preserve the proprietary nature of any Information which: (a) was
previously known to such party free of any obligation to keep it confidential;
or (b) is or becomes publicly available by means other than breach of the
receiving party's obligation under this Agreement; or (c) is developed by or on
behalf of such party independent of any Information furnished under this
Agreement; or (d) is received from a third party whose disclosure does not, to
the receiving party's knowledge, violate any confidentiality obligation.
7.3 Any breach of Section 7.1 will cause substantial harm to Nivo's
business. In the event of a breach or a threatened breach of Section 7.1, Nivo
shall be entitled to temporary and permanent injunctive relief to restrain such
breach, and to any other appropriate equitable relief. Nothing herein shall be
construed as prohibiting Nivo from pursuing any other remedy available to it at
law or in equity for such breach or threatened breach.
7.4 Contractor shall upon the termination of this Agreement,
immediately deliver up to Nivo all Confidential Information received during the
term of the Agreement.
7.5 This Section 7 shall survive any termination of this Agreement
and Contractor's obligations with respect to Confidential Information
received during the term of the Agreement shall survive and continue for a
period of not less than three (3) years following the expiration or termination
of the Agreement.
8. RETURN OF MATERIALS. Upon the request of Nivo, but in any event upon
termination of this Agreement, Contractor shall surrender to Nivo all memoranda,
notes, records, drawings, manuals, computer software, and other documents or
materials (and all copies of the same) pertaining to the Program Materials,
reports, and other data or materials generated or developed by Contractor or
furnished by Nivo to Contractor.
9. SCOPE OF AGREEMENT. This Agreement is intended by the parties to be
the final expression of their agreement, and it constitutes the full and entire
understanding between the parties with respect to the subject hereof,
notwithstanding any representations, statements or agreements to the contrary
heretofore made. This Agreement may be amended only in writing signed by the
parties to this Agreement.
10. TERMINATION. In the event of termination under this Section 2 upon
five days' notice by either party prior to the expiration of the term hereof,
Nivo shall be obligated to compensate Contractor at the rate provided in Exhibit
A for the work completed prior to the notice of termination.
11. GOVERNING LAW. This Agreement is made under, and in all respects
shall be interpreted, construed, and governed by and in accordance with the
laws of the State of Utah.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
CONTRACTOR: COMPANY:
GENISYS INFORMATION SYSTEMS, INC. NIVO INTERNATIONAL
By: /s/ Craig Crawford By:
----------------------------- ------------------------------
Craig Crawford, President
Date: December 10, 1999 Date:
Address for correspondence: Address for correspondence:
654 North Belt East, Suite 310 1317 East 750 North
Houston, TX 77060 Orem, Utah 84097
<PAGE>
<PAGE>
EXHIBIT A
to
Work for Hire Agreement
Dated December 10, 1999
between
Nivo Corporation and GENISYS
1. Contractors duties.
Review JTA survey comments and where appropriate, suggest
modifications/clarifications to Microsoft Project 2000 MOUS exam objectives no
later than November 246', 1999; write, per the instructions contained in the
Nivo Item Writer's Guide, and deliver to Nivo up to one hundred and ten (110)
original examination items, or questions, consisting of one, two and three
subparts, premised on three to five background files, no later than December 15,
1999; review and where appropriate, incorporate feedback from item reviewers by
dates to be specified by Nivo product management.
2. Remuneration.
For execution of the above duties, Nivo shall pay Contractor
six-thousand-two-hundred and fifty dollars ($6,250) upon completion of the first
draft of up to one-hundred and ten (110) original examination items. Following
review and finalization by Contractor of the examination items, Nivo shall pay
Contractor a second installment of six thousand two hundred and fifty dollars
($5,250) for a total contract value of twelve thousand five hundred dollars
($12,500).
<PAGE>
GEM
Genisys Enterprise Manager
Proposal of Work
for
ABB Network Management
January 13, 2000
Genisys Information Systems, Inc.
654 North Belt East, Suite 310
Houston, TX 77060
(281) 820-0200
<PAGE>
<PAGE>
Genisys Enterprise Management System
ABB Network Management
Statement of Work
The purpose of this document is to define the deliverables for the Web Site
Generator solution to be implemented for ABB Network Management.
Features will include the ability to generate a Web site containing a ABB
drill-down tree, schedule Gantt charts, basic schedule data reports, and a notes
field.
The Web site will be viewed in the standard MS IE 4+ Web browser over the
company LAN, WAN, or over the Internet.
The deliverables described in the following sections are a means of
quantifying the scope of this project, what is required of Genisys, and what
information and assistance are required from ABB Network Management for the
successful completion of this project.
This statement of work has been developed based the information provided to
us during previous on-site services that Genisys has performed for ABB Network
Management.
Proposed Pre-Installation Services
Initially Genisys will complete a needs assessment to collect any
additional information necessary for this implementation. Utilizing the results
of the needs assessment, and with continuing assistance of our ABB liaison and
ABB management personnel, Genisys will modify or create as necessary the
required GEM customizations unique to ABB Network Management. Additional pre-
installation services will include:
* Modify Web Site Generator
* Create & Modify MS Project Global. mpt file
* Create Basic MS Project Views
* Codify MS Projects for trending and reporting
Installation and Testing
With continuing assistance of the ABB liaison and ABB personnel, Genisys
will install the required new software, verify the installation of existing
software for compatibility. In addition, Genisys will perform a series of tests
in order to verify the installation and proper functioning of the various
components of the system.
Training
GENISYS will train 1 system administrator on the complete use of the Web
Builder and 2 additional classes of not more than 15 people per class on the
viewer module.
Billing information and summary cost estimate
* This is a Time and Materials proposal. ABB Network Management will be
invoiced for actual hours worked.
* The estimate below does not include travel expenses. If applicable, ABB
Network Management will be billed for customary and reasonable travel
expenses.
* Genisys will submit invoices to ABB Network Management bi-weekly and are
due upon receipt.
<TABLE>
<CAPTION>
Budget Item Estimated Hours Cost Estimate
- ----------- --------------- -------------
<S> <C> <C>
Pre-Installation Services 40 $ 5,000.00
Installation and Testing 16 2,000.00
Training 8 1,000.00
Management Oversite and Quality Assurance 8 1,480.00
Genisys Web Site Generator 995.00
-----------
Total Amount of Estimate $ 10,475.00
</TABLE>
Accepted by:
Genisys Information Systems, Inc. ABB Network Management
By: /s/ Gary Smith By: /s/ Mike Culbertson
---------------------------- -------------------------
Gary Smith, Senior Acct Mgr Mike Culbertson, Controller
Date: 2/22/00 Date: 2/22/00
<PAGE>
GEM
Genisys Enterprise Manager
Statement of Work
Phase 1
for
Charter Communications
December 9, 1999
Genisys Information Systems, Inc.
654 North Belt East, Suite 310
Houston, TX 77060
(281) 820-0200
<PAGE>
<PAGE>
Genisys Enterprise Management System
Charter Communications Project
Statement of Work - Phase 1
The purpose of this document is to define the deliverables for the first
phase of the Genisys Enterprise Management (GEM) solution to be implemented for
Charter Communications. The GEM system installed during Phase 1 will consist of
the Genisys Web Site Generator, MS Project 2000, MS Outlook, and MS Internet
Explorer. These components will provide a system capable of combining multiple
MS Project files into an enterprise-wide master project for management and
reporting purposes. Additional features will include:
* The ability to initiate new projects from pre-designed templates.
* The ability to update status on existing projects via email.
* The ability to generate a Web site containing a Charter OBS drill-down
tree, schedule Gantt charts, basic schedule data reports, and a notes
field.
The Web site will be viewed in the standard MS IE 4+ Web browser over the
company LAN, WAN, or over the Internet
The deliverables described in the following sections are a means of
quantifying the scope of this project, what is required of Genisys, and what
information & assistance are required from Charter for the successful completion
of this phase of the project. Based upon our discussions and meetings to date,
Genisys understands that this statement of work represents the initial services
and technology that Charter will request to manage its variety of projects.
This statement of work has been developed bared the information provided to
us during an onsite needs assessment performed on December a and 9t'. Genisys
interviewed a number of Charter personnel including Division, Regional, and
Project Managers as well as IS management personnel. The purpose of the needs
assessment was to assemble the information necessary to establish the following
requirements:
* Equipment Requirements
* Software Requirements
* MS Project Coding Requirements
* GEM Web site Requirements
* Reporting Requirements
* Training Requirements
Proposed Pre-Installation Services 12113199 - 12/39199
Utilizing the results of the needs assessment, and with continuing
assistance of our Charter liaison and other Charter management personnel,
Genisys will modify or create as necessary, the required GEM customizations
unique to Charter Communications. The creation of the MS Project Job Templates
will require the assistance of a Charter Project Manager(s) as necessary to
create the templates. The initial template drafts will be distributed to all
Project Managers for review. It is important to arrive at a consensus on what
level of template detail is required to adequately plan and track the projects.
After the templates are marked-up and returned and a consensus reached, the
final templates will be created. Additional pre-installation services will
include:
* Modify Web Site Generator
* Create & Modify MS Project Global.mpt file
* Create (4) Basic MS Project Job Templates
The training required for Administrators, Project Managers, and Web Site
Users is described in the following sections. At this time it is Charter's
intention to bring the Project Managers to St Louis for training. Any potential
GEM Administrators are already assigned to the St Louis corporate office. After
receiving training from Genisys, it is understood that it will be the
responsibility of the Administrators and Project Managers to train tire Web site
users and the contractor personnel who will be responsible for returning the
e-mail status requests.
GEM Administrator
* GEM Concepts
* MS Project
* MS Outlook
* Outlook Components
* Adding a New Project
* Team Email Status Concepts
* Sending Email Status Requests
* Receiving & Validating Email Status Requests
* Coding
* Validation for Web Generation
* Web Generation
* Supporting Project Managers & Users
* Generating Reports
* Macros, Views, Tables, Filters
* Interacting With GEM Web site
Project Managers
* GEM Concepts
* MS Project
* MS Outlook
* Outlook Components
* Adding a New Project
* Team Email Status Concepts
* Sending Email Status Requests
* Receiving & Validating Email Status Requests
* Interacting With GEM Web site
Web Site Users (Training by Charter GEM Administrators)
* GEM Concepts
* Interacting With GEM Web site
Contractor Email Status Reporters (Training by Charter Project Managers)
* GEM Concepts
* Interacting With GEM Web site
* Team Status Concepts
* Completing & Returning Email Status Request
* Format (2) Basic MS Project Reports I Re-create as closely as possible, the
example installed footage/node report provided by Charter, and create a
standard schedule report with planned, earned date and progress information
for all activities with summaries by code structure.
* Create Team Status Form
* Assemble Training Materials
* Assemble Documentation
Installation, Testing & Final Documentation 01/03/00- 07/141000
Utilizing the results of the needs assessment, and with continuing
assistance of our Charter liaison and Charter Information Systems personnel,
Genisys will install the required new software, verify the installation of
existing software fur compatibility, and load any modifications required to the
existing software. In addition, Genisys will perform a series of tests in order
to verify the installation and proper functioning of the various components of
the system. Additional required desktop procedures and documentation will be
completed. Installation and Testing of Web site user and Contractors e-mail
Status Reporting software will be the responsibility of Charter.
GEM Administrator
* Install MS Project 2000,
* Ensure the MS IE4+ Installed
* Ensure the MS Outlook Installed
* Load Global.mpt File
* Create Empty Master Project
* Load Workgroup Status Form (Optional)
* Install Web Site Generator Front End
* Test Status Messaging Sending & Reply
* Test Web Site Generator
* Test Access Rights & Security
Project Managers
* Install MS Project 2000
* Ensure the MS IE4+ Installed
* Ensure the MS Outlook Installed
* Load Workgroup Status Form
* Test Status Messaging Sending & Reply
Web Site Users (Installation Verified & Tested by Charter)
* Ensure that MS IE 4+ Installed
Contractor Email Status Reporters (Installation Verified & Tested by Charter)
* Ensure the MS I E4+ Installed
* Ensure the MS Outlook Installed
* Ensure MSP Team Status Extensions Installed
Training 01/17/00- (To be determined. Not included in the estimate)
Genisys' standard rate for training is $1,500 per day per instructor plus
expenses. Charter will receive a discounted rate of $1,200 per day plus travel.
The total cost for training will be dependent on how much training is required.
Billing information and summary cast estimate to complete Phase 1 of the
project
* This is a Time and Materials proposal. Charter will be invoiced for actual
hours worked. All invoices will include a description of the work
performed.
* The estimate below does not include travel expenses. Charter will be billed
for customary and reasonable travel expenses.
* Genisys will submit invoices to Charter weekly and are due net 30 days.
* Genisys will provide weekly status reports via e-mail. Charter may at any
time, request verbal or written status reports and /or project reviews.
<TABLE>
<CAPTION>
Estimated Cost Matrix
Budget Item Estimated Hours Cost Estimate
- ----------- --------------- -------------
<S> <C> <C>
Pre-installation Services 190 $28,500.00
installation, Testing, and Documentation 160 24,000.00
Management Oversite and Quality Assurance 5,250.00
Genisys Web Site Generator 995.00
----------
Total Amount of Estimate $58,745.00
</TABLE>
Accepted by:
Genisys Information Systems, Inc. Charter Communications
By: /s/ Gary Smith By: /s/ Greg Winter
------------------------------- -------------------------
Gary Smith, Senior Acct Mgr Greg Winter, Program Manager
Date: December 14, 1999 Date: December 14, 1999
<PAGE>
November 5, 1998
Mr. Craig Crawford
Genisys Information Systems, Inc.
523 North Sam Houston Parkway East
Suite 300
Houston, Texas 77060
Re: Lease Agreement ("Lease") dated June 26,1997, by and between Koll Bren
Fund V. L.P. (successor -Interest to __________) ("Landlord") and Old
Republic National Title Insurance Company ("Tenant") for approximately
6,643 square feet of office space In the Bridgewood I Building located at
654 N. Sam Houston Pkwy East, Houston, Texas 77060 ("Premises")
Dear Mr. Hassen:
At your request and subject to those conditions set forth in this letter,
Landlord hereby consents to your subleasing the Premises to Genisys
Information Systems, Inc, ("Sublessor")
It is, however, expressly understood and agreed that this consent in no way
relieves Tenant of any of its liability or duties under the Lease and that
Tenant shall remain fully liable for (i) the prompt payment of all rent and
other sums under the Lease, and (ii) the performance of all conditions and
covenants under the Lease. Landlord expressly reserves the right to consent to
any further or additional subleases or assignments of the Lease or the
Premises.
It is further understood and agreed that this letter and the consent contained
therein does not amend the Lease in any way and any sublease agreement between
Tenant and Sublease ("Sublease") is subordinate in all respects to the Lease.
In the event of a termination of the Lease for my reason whatsoever, the
Sublease sha11 also be terminated.
If you have any questions or comments concerning the contents of this letter,
please do not hesitate to call.
Sincerely,
/s/ Mike Hackett
- ---------------------
Mike Hackett
Vice President/General Manager
CB Richard Ellis
acting as agent for Koll Bren Fund V, L.P.,
a Delaware Limited Partnership
Accepted and agreed To
This 4th day of November, 1998
Old Republic National Title Insurance Company
By: /s/ Dan Hassen
--------------------
Dan Hassen, Senior V.P.
<PAGE>
<PAGE>
AGREEMENT OF SUBLEASE
BY AND BETWEEN
OLD REPUBLIC NATIONAL- TITLE INSURANCE COMPANY
("SUBLESSOR")
GENISYS INFORMATION SYSTEMS, INC. ("SUBLESSEE")
DATED 10 - 28 - 98
THIS AGREEMENT OF SUBLEASE is entered into this ___ day of _________,
19___ , by and between Old Republic National Title Insurance Company
("SUBLESSOR") with offices at 777 Post Oak Blvd. and Genisys Information
Systems, Inc. ("SUBLESSEE") with offices at 523 North Sam Houston Parkway.
WITNESSETH:
WHEREAS, pursuant to a Lease dated June 26, 1997 between Texas Commerce
Bank N.A. ("PRIME LANDLORD") and Sublessor as Tenant, attached hereto as
Exhibit "A" ("PRIME LEASE"), Prime Landlord leased to Sublessor approximately
6,643 rentable square feet of office space located on the 3`d floor of the
Bridgewood I Building located at 654 North Belt.
WHEREAS, Sublessee desires to sublease 6,643 square feet of said
Premises, as indicated on the floor plan attached hereto as Exhibit "B"
("SUBLEASE PREMISES") from Sublessor;
NOW THEREFORE, the parties hereto agree as follows:
1. SUBLEASE
Sublessor hereby subleases to Sublessee, and Sublessee hereby hires and
subleases from Sublessor, on the terms, covenants and conditions hereinafter
provided, the Sublease Premises which the parties acknowledge and agree
contains 6,643 rentable square feet.
2. TERM
The Term of this Sublease shall commence two (2) weeks after the Prime
Landlord approves this sublease in writing (the "Commencement Date") and shall
expire on July 31, 2002 (the "Termination Date") unless sooner terminated by
reason of, or pursuant to, any provision set forth herein or in the Prime
Lease.
3. RENT
Sublessee shall pay Sublessor as Rent hereunder sixty-six thousand four
hundred thirty dollars ($66,430) per year, together with the additional Rent
referred to in Article 6 of this Sublease. Sublessee shall pay the Rent in
equal monthly installments of five thousand five hundred thirty-five dollars
and eighty-three cents ($5,535.83) and the additional Rent in advance on the
first (1st) day of each month of this Term. The first four months of Rent
shall be abated.
4. USE
The Sublease Premises shall be used for general office purposes and for
no other purpose.
5. ASSIGNMENT
Sublessee shall not assign this Sublease nor sublet the Sublease
Premises, in whole or in part, without Sublessor's and Prime Landlord's prior
written consent, which consent shall not be unreasonably withheld or delayed,
as defined in the Prime Lease, and shall not permit Sublessee's interest in
this Sublease to be vested in any third party by operation of law or
otherwise.
6. ESCALATION
If any such Rent or sums shall be due to additional use by Sublessee of
electrical current in excess of Sublessor's proportionate part of additional
use in the Premises demised under the Prime Lease, such excess shall be paid
in its entirety by Sublessee. If Sublessee shall procure any additional
services from the Building, such as alterations or after-hours air
conditioning service, Sublessee shall pay for same at the rates charged
therefore by Prime Landlord and shall make such payment to Sublessor or Prime
Landlord, as Sublessor shall direct.
Any direct or other sums payable by Sublessee under this Article 6 shall
be additional Rent and collectable as such.
If Sublessor shall receive any refund under said Article 6 (rent
escalation) of the Prime Lease, Sublessee shall be entitled to the return of
so much thereof as shall be attributable to prior payments by Sublessee.
7. PRIME LEASE This Sublease is subject and subordinate to the Prime
Lease. Except as may be inconsistent with the terms hereof, all of the terms,
covenants and conditions in the Prime Lease shall be applicable to this
Sublease with the same force and effect as if Sublessor were Landlord under
the Prime Lease and Sublessee were Tenant thereunder; and in case of any
breach hereof by Sublessee, Sublessor shall have all the rights against
Sublessee as would be available to Landlord against Tenant under the Prime
Lease if such breach were made by Tenant thereunder.
8. SERVICES PROVIDED BY PRIME LANDLORD
Notwithstanding anything contained herein, the only services or right to
which Sublessee is entitled hereunder are those to which Sublessor is entitled
under the Prime Lease, and for all such services and rights Sublessee will
look to Prime Landlord under the Prime Lease. Sublessor agrees to use its
reasonable efforts to support Sublessee in any efforts to require the Prime
Landlord to provide any services under the lease in the event Prime Landlord
fails or defaults on such services.
9. SUBLESSEE'S OBLIGATIONS & SUBLESSOR'S RIGHT TO PERFORM SUBLESSEE'S
OBLIGATIONS
Sublessee, with respect to the Sublease Premises, will duly and
faithfully observe all the terms and restrictions and perform all the
obligations imposed on Sublessor as Tenant under the Prime Lease. Sublessor
shall have the right (but not the obligation) to take at the sole expense of
Sublessee, any and all actions required to be taken by Sublessee which may be
necessary to prevent a default under, or to assure complete compliance with,
the terms of this Sublease or the Prime Lease. All costs and expenses incurred
by Sublessor, including but not limited to, counsel fees for any actions taken
pursuant to this Article 9 shall be payable by Sublessee as additional Rent
within five (5) days after delivery of a statement of any such costs to
Sublessee.
If Sublessor shall be charged for additional Rent or other sums pursuant
to the provisions of the Prime Lease, including without limitation Article(s)
6 (rent escalation) thereof, Sublessee shall be liable for one hundred percent
(100%) of such additional Rent or sums as adjusted for a Base Year of 1999.
10. SUBLESSOR'S NON-LIABILITY FOR DEFAULTS BY PRIME LANDLORD
Sublessor shall not be responsible, answerable or liable to Sublessee for
or by reason of any defaults by Prime Landlord under the Prime Lease, except
as stated above.
11. SUBLESSEE NOT TO CAUSE DEFAULT
Sublessee shall, not do or permit anything to be done which would cause
the Prime Lease to be terminated or forfeited by reason of any right to
termination or forfeiture reserved or vested in Landlord under the Prime
Lease.
12. INDEMNITY FOR SUBLESSEE'S BREACH
Sublessee shall indemnify and hold Sublessor harmless from and against
all claims of any kind whatsoever by reason of any breach or default of this
Sublease on the part of the Sublessee, except for any damage caused by the
gross negligence of Sublessor.
13. SECURITY
Sublessee has paid Sublessor on the execution and delivery of this
Sublease the sum of five thousand five hundred thirty-five dollars and
eighty-three cents ($5,535.83) as security for the full and faithful
performance of the terms, covenants and conditions to be performed or observed
under this Sublease by Sublessee, including but not limited to payment of Rent
and additional Rent in default or for any other sum which Sublessor may expend
or be required to expend by reason of Sublessee's default, including any
damages or deficiency in reletting the Sublease Premises, in whole or in part,
whether such damages shall accrue before or after summary proceedings or other
re-entry by Sublessor. If Sublessee shall fully and faithfully comply with all
the terms, covenants and conditions to be performed or observed under this
Sublease, the security or any unapplied balance thereof shall be returned to
Sublessee after the time fixed as the expiration of the demise Term and after
the removal of Sublessee and surrender of possession of the Sublease Premises.
Sublessor has no obligation to Sublessee for any interest on the security
deposit.
14. CONDITION OF SUBLEASE PREMISES
Sublessee hereby accepts the Sublease Premises in their current "as is"
condition. Upon the expiration or Termination Date of this Sublease, Sublessor
shall quit and surrender the Sublease Premises "broom clean", in the same
condition as on the Commencement Date, damages not the fault of Sublessee and
ordinary wear and tear excepted, and Sublessee shall comply in all respects
with the provisions of Article 14 of the Prime Lease, as incorporated herein.
15. SURRENDER OF PREMISES
Sublessee agrees that time shall be of the essence with respect to
Sublessee's obligation to surrender possession of the Sublease Premises to
Sublessor upon the Termination Date of this Sublease, and further agrees that
in the event that Sublessee does not promptly surrender possession of the
Sublease Premises to Sublessor upon such Termination Date, Sublessor in
addition to any other rights and remedies Sublessor may have against Sublessee
for such holding over, shall be entitled to bring summary proceedings against
Sublessee
16. ENTIRE AGREEMENT
This Sublease constitutes the entire agreement between the parties hereto
and no earlier statements or prior written matter shall have any force or
effect. Sublessee agrees that it is not relying on any representations or
agreements of the other party, except those contained in this Sublease. This
Sublease shall not be modified, canceled or amended except by written
instrument subscribed by both parties.
17. SUCCESSORS
The covenants, conditions and agreements contained in this Sublease shall
bind and inure to the benefit of Sublessor and Sublessee and their respective
successors and assigns.
18. NOTICES
Any notice required or desired to be given to any party hereto shall be
given by certified mail, return receipt requested, and be addressed to the
parties hereto at their addresses set forth below:
If to Sublessor: Mr. Dan Hassen
Old Republic National Title Insurance Company
777 Post Oak Blvd., Suite 200
Houston, Texas 77058
With a copy to Prime
Landlord: KB Fund V
c/o CB Richard Ellis
650 North Sam Houston Parkway East
Suite 330
Houston, Texas 77060
If to Sublessee: Genisys Information Systems, Inc.
654 North Sam Houston Parkway East
Suite 310
Houston, Texas 77060
Attn: Craig Crawford
Sublessee shall, at all times during the Term of this Sublease, send
Sublessor copies of all notices it receives from Prime Landlord and any
government body.
19. PRIME LANDLORD'S CONSENT
This Sublease is conditioned upon Sublessor's obtaining Prime Landlord's
written consent to this Sublease. Sublessor will seek Prime Landlord's consent
pursuant to the Prime Lease. If such consent is refused or if the same is not
obtained in writing within twenty (20) days after the date hereof, then
Sublessee shall have the option to terminate this Sublease and this Sublease
shall be null and void, of no force or effect, and all sums that Sublessee
shall have paid or delivered hereunder to Sublessor shall be promptly
returned to Sublessee.
20. BROKER(S)
Sublessee covenants, warrants and represents that it has not dealt with any
broker in connection with this Sublease other than The Staubach Company
("Broker"), Partners Commercial Realty, and Sublessor agrees to pay the
commission of Broker as specified under separate agreement. Sublessor agrees to
indemnify and hold Sublessee harmless from any and all liability, damage, costs,
expenses and fees (including attorneys' fees) which Sublessee may incur or be
required to pay as a result of Sublessor's breach of the foregoing
representation and warranty.
21. TERMINATION OPTION
Sublessor waives its right to exercise the Termination Option under Item
No. 8, page 3, of the 1997 Amendment to Lease Agreement dated June 26, 1997,
unless requested to exercise the same by Sublessee. Sublessee agrees to give
notice to Sublessor of its request in writing accompanied by a check in the
amount specified in Item No. 8 referred to above no less than thirty (30)
days prior to the expiration of the Termination Option.
22. INSURANCE
Sublessee agrees to provide Sublessor with certificates of insurance in
accordance with the Master Lease Agreement prior to occupancy of the Premises
and thereafter as required by the Master Lease.
IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be
signed and sealed as of the day and year first hereinbefore written.
OLD REPUBLIC NATIONAL TITLE INSURANCE
COMPANY ("SUBLESSOR")
By: /s/ Dan Hassen
--------------------------------
DATE: 10-28-98
----------------
GENISYS INFORMATION SYSTEMS, INC.
("SUBLESSEE")
BY: /s/ Craig Crawford, Vice President
---------------------------------
DATE: /s/ Oct 23,1998
--------------
THE UNDERSIGNED HEREBY CONSENTS
TO THE FOREGOING AGREEMENT:
KB FUND V ("PRIME LANDLORD")
BY:
-----------------------
DATE:
-------------
<PAGE>
KOLL BUSINESS CENTER LEASE
1. BASIC LEASE TERMS
a. DATE OF LEASE: March 13, 1998
b. TENANT: GENISYS INFORMATION SYSTEMS, INC., a Colorado Corporation
Trade Name: same
Address (Leased Premises): 3510 Torrance Boulevard, Suite 301
Torrance, CA 90503
Building/Unit: N301
Address (For Notices): same
c. LANDLORD: JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a
Massachusetts Corporation
Address (For Notices): 3838 Carson Street, Suite 100
Torrance, CA 90503
with a copy to Asset Management Division, the Koll Company,
P.O. Box 1980, Newport Beach, CA 92660, or to such other place
as Landlord may from time to time designate by notice to
Tenant.
d. TENANT'S USE OF PREMISES: Software Consultants
e. PREMISES AREA: 2,644 Rentable Square Feet
f. PROJECT AREA: 343,130 Square Feet
g. TERM OF LEASE: Commencement: April 1, 1998
Expiration: March 31, 2001
Number of Months: 36
h. BASE MONTHLY RENT: $3,305.00
i. RENT ADJUSTMENT (Initial One):
(1) Cost of Living. If this provision is initialed, the cost of
living provisions of section 4.b(1) apply.
(2) Step Increase. If this provision is initialed, the step
adjustment provisions of Section 4.b(2) apply as follows:
Effective Date of
Rent Increase
------------------
October 1, 1999 $3,569.40
j. ANNUAL EXPENSE BASE
Expense Rate $ 5.95
Premises Area Square Feet x 2,664
Annual Expense Base $15,731.80
k. PREPAID RENT: $ N/A
l. SECURITY DEPOSIT: $ 3,305.00
NON-REFUNDABLE CLEANING FEE: $ 125.00
m. BROKER(S): The Seeley Company - M. Cassidy, P. Mattice, S.
Lawson
The Everest Group - D. Mensinger
n. GUARANTOR(S): N/A
o. ADDITIONAL SECTIONS
Additional sections of this lease numbered 29 through 32 are
attached hereto and made a part hereof. If none, so state in the
following space ---------------.
p. ADDITIONAL EXHIBITS
Additional exhibits lettered D through -------- are attached hereto
and made a part hereof. If none, so state in the following space --
----------.
2. TERM. The term of this lease is for the period set forth in Section 1,
commencing on the date in Section 1. If Landlord, for any reason, cannot
deliver possession of the Premises to Tenant upon commencement of the
term, this Lease shall not be void or voidable, nor shall Landlord be
liable to Tenant for any loss or damage resulting from such delay. In
that event, however, there shall be a rent abatement covering the period
between the commencement of the term and the time when Landlord delivers
possession to Tenant, and all other terms and conditions of this Lease
shall remain in full force and effect, provided, however, that if
Landlord cannot deliver possession of the Premises to Tenant, this Lease
shall be void. If a delay in possession is caused by Tenant's failure to
perform any obligation in accordance with this Lease, the term shall
commence as set forth in Section 1 and there shall be no reduction of
rent between the commencement of the term and the time Tenant takes
possession.
3. RENT.
a. Base Rent. Tenant shall pay Landlord monthly base rent in the
initial amount in Section 1 which shall be payable monthly in
advance on the first day of each and every calendar month ("Base
Monthly Rent") provided, however, the first month's rent is due and
payable upon execution of this Lease. If the term of this Lease
contains any rental abatement period, Tenant hereby agrees that if
Tenant breaches the Lease and/or abandons the Premises before the
end of the Lease term, or if Tenant's right to possession is
terminated by Landlord because of Tenant's breach of the Lease,
Landlord shall, at is option, (1) void the rental abatement period;
and (2) recover from Tenant, in addition to any damages due Landlord
under the terms and conditions of the Lease, rent prorated for the
entirety of the rental abatement period at a rental rate equivalent
to two (2) times the Base Monthly Rent.
For purposes of Section 467 of the Internal Revenue Code, the
parties to this Lease hereby agree to allocate the stated rents,
provided herein, to the periods which correspond to the actual rent
payments as provided under the terms and conditions of this
agreement.
b. Rent Adjustment.
Cost of Living Adjustment. If Section 1.i(1) is initialed, the Base
Monthly Rent shall be subject to increase on each annual anniversary
of the commencement of the term of this Lease. The Base for
computing the increase is the Consumer Price Index All Urban
Consumers U.S. City Average (1982-84=100), published by the United
States Department of Labor, Bureau of Labor Statistics ("Index"),
which is in effect on the ninetieth (90th) day preceding the date of
the commencement of the term ("Beginning Index"). The Index
published and in effect on the ninetieth (90th) day preceding each
anniversary of the commencement of the term of this Lease
("Extension Index") is to be used in determining the amount of the
increase from one year to the next. Beginning with the rent due on
and after the first anniversary the Base Monthly Rent shall be
increased to equal the product achieved by multiplying the full Base
Monthly Rent due with respect to the month immediately preceding
such anniversary date by a fraction. On the first anniversary of
the Commencement Date, the numerator of the fraction will be the
Extension Index and the denominator will be the Beginning Index. On
the second and any subsequent anniversaries of the Commencement
Date, the numerator of the fraction will be the current Extension
Index and the denominator will be the Extension Index used to
calculate the previous year's rental increase. If there is a
decline from one lease year to the next in the Extension Index, the
monthly rent due during the subsequent lease year shall equal the
monthly rent due during the then present lease year.
If the Index is changed so that the base year differs from that in
effect when the term commences, the Index shall be converted in
accordance with the conversion factor published by the United States
Department of Labor, Bureau of Labor Statistics. If the Index is
discontinued or revised during the term, such other government index
or computation with which it is replaced shall be used in order to
obtain substantially the same result as would be obtained if the
Index had not been discontinued or revised.
Step Increase. If Section 1.i(2) is initialed, Base Monthly Rent
shall be increased periodically to the amounts and at the times set
forth in Section 1.I(2).
Expenses. The purpose of this Section 4.c is to ensure that Tenant
bears a shares of all Expenses related to the use, maintenance,
ownership, repair or replacement, an insurance of the Project.
Accordingly, beginning on the date Tenant takes possession of the
Premises, Tenant shall pay to Landlord that portion of Tenant's
Share (as defined below) of Expenses related to the Project which is
in excess of the Annual Expense Base shown in Section 1.
c. Expenses Defined. The term "Expenses" shall mean all costs and
expenses of the ownership, operation, maintenance, repair or
replacement, and insurance of the Project, including without
limitation, the following costs:
(a) All supplies, materials, labor, equipment, and utilities used
in or related to the operation and maintenance of the Project;
(b) All maintenance, management, janitorial, legal, accounting,
insurance, and service agreement costs related to the Project;
(c) All maintenance, replacement and repair costs relating to the
areas within or around the Project, including, without
limitation, air conditioning systems, sidewalks, landscaping,
service areas, driveways, parking areas (including resurfacing
and restriping parking areas), walkways, building exteriors
(including painting), signs and directories, repairing and
replacing roofs, walls, etc. These costs may be included
either based on actual expenditures or the use of an accounting
reserve based on past cost experience for the Project.
(d) Real Property Taxes including all taxes, assessments (general
and special) and other impositions or charges which may be
taxed, charged, levied, assessed or imposed upon all or any
portion of or in relation to the Project or any portion
thereof, any leasehold estate in the Premises or measured by
rent from the Premises, including any increase caused by the
transfer, sale or encumbrance of the Project or any portion
thereof. "Real Property taxes" shall also include any form of
assessment, levy, penalty, charge or tax (other than estate,
inheritance, net income, or franchise taxes) imposed by any
authority having a direct or indirect power to tax or charge,
including, without limitation, any city, county, state, federal
or any improvement or other district, whether such tax is (1)
determined by the value of the Project or the rent or other
sums payable under this Lease; (2) upon or with respect to any
legal or equitable interest of Landlord in the Project or any
part thereof; (3) upon this transaction or any document to
which Tenant is a party creating a transfer in any interest in
the Project; (4) in lieu of or as a direct substitute in whole
or in part of or in addition to any real property taxes on the
Project; (5) based on any parking spaces or parking facilities
provided in the Project; or (6) in consideration for services,
such as police protection, fire protection, street, sidewalk
and roadway maintenance, refuse removal or other services that
may be provided by any governmental or quasi-governmental
agency from time to time which were formerly provided without
charge or with less charge to property owners or occupants.
4. PREPAID RENT. Upon the execution of this Lease, Tenant shall pay to
Landlord the prepaid rent set forth in Section 1, and if Tenant is not in
default of any provisions of this Lease, such prepaid rent shall be
applied toward the rent due for the last month of the term. Landlord's
obligations with respect to the prepaid rent are those of a debtor and
not of a trustee, and Landlord can commingle the prepaid rent with
Landlord's general funds. Landlord shall not be required to pay Tenant
interest on the prepaid rent. Landlord shall be entitled to immediately
endorse and cash Tenant's prepaid rent; however, endorsement and cashing
shall not constitute Landlord's acceptance of this Lease. In the event
Landlord does not accept this Lease, Landlord shall return said prepaid
rent.
5. USE OF PREMISES AND PROJECT FACILITIES. Tenant shall use the Premises
solely for the purposes set forth in Section 1 and for no other purpose
without obtaining the prior written consent of Landlord. Tenant
acknowledges that neither Landlord nor any agent of Landlord has made any
representation or warranty with respect to the Premises or with respect
to the suitability of the Premises or the Project for the conduct of
Tenant's business, nor has Landlord agreed to undertake any modification,
alteration or improvement to the Premises or the Project, except as
provided in writing in this Lease. Tenant acknowledges that Landlord may
from time to time, at its sole discretion, make such modifications,
alterations, deletions or improvements to the Project as Landlord may
deem necessary or desirable, without compensation or notice to Tenant.
Tenant shall promptly comply with all laws, ordinances, orders and
regulations affecting the Premises and the Project, including, without
limitation, any rules and regulations that may be attached to this Lease
and to any reasonable modifications to these rules and regulations as
Landlord may adopt from time to time. Tenant shall not do or permit
anything to be done in or about the Premises or bring or keep anything in
the Premises that will in any way increase the premiums paid by Landlord
on its insurance related to the Project or which will in any way increase
the premiums for fire or casualty insurance carried by other tenants in
the Project. Tenant will not perform any act or carry on any practices
that may injure the Premises or the Project; that may be a nuisance or
menace to other tenants in the Project; or that shall in any way
interfere with the quiet enjoyment of such other tenants. Tenant shall
not sue the Premises for sleeping, washing clothes, cooking or the
preparation, manufacture or mixing of anything that might emit any
objectionable odor, noises, vibrations or lights onto such other tenants.
If sound insulation is required to muffle noise produced by Tenant on the
Premises, tenant at its own cost shall provide all necessary insulation.
Tenant shall not do anything on the premises which will overload any
existing parking or service to the Premises. Pets and/or animals of any
type shall not be kept on the Premises.
6. EMISSIONS; STORAGE, USE AND DISPOSAL OF WASTE.
a. Emissions. Tenant shall not:
(1) Permit any vehicle on the premises to emit exhaust which is in
violation of any governmental law, rule, regulation or
requirement;
(2) Discharge, emit or permit to be discharged or emitted, any
liquid, solid or gaseous matter, or any combination thereof,
into the atmosphere, the ground or any body of water which
matter, as reasonable determined by Lessor or any governmental
entity, does, or may, pollute or contaminate the same, or is,
or may become, radioactive or does, or may, adversely affect
the (a) health or safety of persons, wherever located, whether
on the Premises or anywhere else, (b) condition, use or
enjoyment of the Premises or any other real or personal
property, whether on the Premises or anywhere else, or (c)
Premises or any of the improvements thereto or thereon
including buildings, foundations, pipes, utility lines,
landscaping or parking areas;
(3) Produce, or permit to be produced, any intense glare, light or
heat except within an enclosed or screened area and then only
in such manner that the glare, light or heat shall not be
discernible from outside the Premises;
(4) Create, or permit to be created, any sound pressure level which
will interfere with the quiet enjoyment of any real property
outside the Premises, or which will create a nuisance or
violate any governmental law, rule, regulation or requirement.
(5) Create, or permit to be created, any ground vibration that is
discernible outside the Premises;
(6) Transmit, receive or permit to be transmitted or received, any
electromagnetic, microwave or other radiation which is harmful
or hazardous to any person or property in, or about the
Premises, or anywhere else.
b. Storage and Use.
(1) Storage. Subject to the uses permitted and prohibited to
Tenant under this lease, Tenant shall store in appropriate leak
proof containers all solid, liquid or gaseous matter, or any
combination thereof, which matter, if discharged or permitted
into the atmosphere, the ground or any body of water, does nor
may (a) pollute or contaminate the same, or (b) adversely
affect the (i) health or safety of persons, whether on the
Premises or anywhere else, (ii) condition, use or enjoyment of
the Premises or any real or personal property, whether on the
Premises or anywhere else, or (iii) Premises or any of the
improvements thereto or thereon.
(2) Use. In addition, without Landlord's prior written consent,
Tenant shall not use, store or permit on the Premises any
solid, liquid, or gaseous matter which is, or may become
radioactive. If Landlord does give its consent, Tenant shall
store the materials in such a manner that no radioactivity will
be detectable outside a designated storage area.
c. Disposal of Waste.
(1) Refuse Disposal. Tenant shall not keep any trash, garbage,
waste or other refuse on the Premises except in sanitary
containers and shall regularly and frequently remove same from
the Premises. Tenant shall keep all incinerators, containers
or other equipment used for storage or disposal of such
materials in a clean and sanitary condition.
(2) Sewage Disposal. Tenant shall properly dispose of all sanitary
sewage and shall not use the sewage disposal system (a) for the
disposal of anything except sanitary sewage or (b) excess of
the lesser amount (i) reasonably contemplated by the uses
permitted under this Lease or (ii) permitted by any
governmental entity. Tenant shall keep the sewage disposal
system free of all obstructions and in good operating
condition.
(3) Disposal of Other Waste. Tenant shall properly dispose of all
other waste or other matter delivered to, stored upon, located
upon or within, use on, or removed from, the Premises in such a
manner that it does not, and will not, adversely affect the (a)
health or safety of persons, wherever located, whether on the
Premises or elsewhere (b) condition, use or enjoyment of the
Premises or any other real or personal property, wherever
located, whether on the Premises or anywhere else, or (c)
Premises or any of the improvements thereto or thereon
including buildings, foundations, pipes, utility lines,
landscaping or parking areas.
d. Information. Tenant shall provide Landlord with any and all
information regarding hazardous or toxic materials in the Premises,
including copies of all filings and reports to governmental entities
at the time they are originated, and any other information requested
by Landlord. In the event of any accident, spill or other incident
involving hazardous or toxic matter, Tenant shall immediately report
the same to Landlord and supply Landlord with all information and
reports with respect to the same. All information described herein
shall be provided to Landlord regardless of any claim by Tenant that
it is confidential or privileged.
e. Compliance with Law. Notwithstanding any other provision in this
Lease to the contrary, Tenant shall comply with all laws, statutes,
ordinances, regulations, rules and other governmental requirements
in complying with its obligations under this lease, and in
particular, relating to the storage, use and disposal of hazardous
or toxic matter.
f. Indemnification. Tenant shall defend, indemnify and hold Landlord
harmless from any loss, claim, liability or expense, including
attorneys' fees and costs, arising out of or in connection with its
failure to observe or comply with the provisions of this Lease.
7. SIGNAGE. All signing shall comply with rules and regulations set forth
by Landlord as may be modified from time to time. Current rules and
regulations relating to signs are described on Exhibit C. Tenant shall
place no window covering (e.g., shades, blinds, curtains, drapes,
screens, or tinting materials), stickers, signs, lettering, banners or
advertising or display material on or near exterior windows or doors if
such materials are visible from the exterior of the Premises, without
Landlord's prior written consent. Similarly, Tenant may not install any
alarm boxes, foil protection tape or other security equipment on the
Premises without Landlord's prior written consent. Any material
violating this provision may be destroyed by Landlord without
compensation to Tenant.
8. PERSONAL PROPERTY TAXES. Tenant shall pay before delinquency all taxes,
assessments, license fees and public charges levied, assessed or imposed
upon its business operations as well as upon all trade fixtures,
leasehold improvements, merchandise and other personal property in or
about the Premises.
9. PARKING. Landlord grants to Tenant and Tenant's customers, suppliers,
employees and invitees, a non-exclusive license to use the designated
parking areas in the Project for the use of motor vehicles during the
term of this Lease. Landlord reserves the right at any time to grant
similar non-exclusive use to other tenants, to promulgate rules and
regulations relating to the use of such parking areas, including
reasonable restrictions on parking by tenants and employees to designate
specific spaces for the use of any tenant, to make changes in the parking
layout from time to time, and to establish reasonable time limits on
parking. Overnight parking is prohibited and any vehicle violating this
or any other vehicle regulation adopted by Landlord is subject to removal
at the owner's expense.
10. UTILITIES. (Strike and initial clause which does not apply).
a. Office Space. Landlord shall provide, in the area shown on Exhibit
A hereto as office space, all heat, electricity, air conditioning
and gas, during the hours of 8:00 a.m. to 6:00 p.m. Monday through
Friday, except legal holidays, and water for restroom facilities, if
any. If Tenant uses water, electricity, heat or air conditioning in
excess of normal office use, Landlord may separately meter the
increased use and Tenant shall pay the increased cost directly to
the appropriate utility; or Landlord may, in its sole judgement,
measure or estimate the increased use and Tenant shall pay Landlord,
on demand, any increased costs so measured or estimated. In any
event, Tenant shall pay all telephone, waste removal and any other
services for which Tenant shall contract.
b. Industrial Space. Tenant shall pay for all water, gas, heat, light,
power, sewer, electricity, telephone or other service metered,
chargeable or provided to the Premises. Landlord reserves the right
to install separate meters for any such utility and to charge Tenant
for such installation.
11. ALTERATIONS. Tenant shall not make any alterations to the Premises, or
to the Project, including any changes to the existing landscaping,
without Landlord's prior written consent. If Landlord gives its consent
to such alterations, Landlord may post notices in accordance with the
laws of the state in which the premises are located. Any alterations
made shall remain on and be surrendered with the Premises upon expiration
or termination of this Lease, except that Landlord may, within 30 days
before or 30 days after expiration of the term, elect to require Tenant
to remove any alterations which Tenant may have made to the Premises. If
Landlord so elects, at its own cost Tenant shall restore the Premises to
the condition designated by Landlord in its election, before the last day
of the term or within 30 days after notice of its election is given,
whichever is later.
Should Landlord consent in writing to Tenant's alteration of the
Premises, Tenant shall contract with a contractor approved by Landlord
for the construction of such alternations, shall secure all appropriate
governmental approvals and permits, and shall complete such alterations
with due diligence in compliance with plans and specifications approved
by Landlord. All such construction shall be performed in a manner which
will not interfere with the quiet enjoyment of other tenants of the
Project. Tenant shall pay all costs for such construction and shall keep
the Premises and the Project free and clear of all mechanics' liens which
may result from construction by Tenant.
12. RELEASE AND INDEMNITY. As material consideration to Landlord, Tenant
agrees that Landlord shall not be liable to Tenant for any damage to
Tenant or Tenant's property from any cause, and Tenant waives all claims
against Landlord for damage to persons or property arising for any
reason, except for damage resulting directly from Landlord's breach of
its express obligations under this Lease which Landlord has not cured
within a reasonable time after receipt of written notice of such breach
from Tenant. Tenant shall indemnify and hold Landlord harmless from all
damages arising out of any damage to any person or property occurring in,
on or about the Premises or Tenant's use of the Premises or Tenant's
breach of any term of this Lease.
13. INSURANCE. Tenant, at its cost, shall maintain public liability and
property damage insurance and products liability insurance with a single
combined liability limit of $1,000,000, insuring against all liability of
Tenant and its representatives, employees, invitees, and agents arising
out of or in connection with Tenant's use or occupancy of the Premises.
Public liability insurance, products liability insurance and property
damage insurance shall insure performance by Tenant of the indemnity
provisions of Section 15. Landlord shall be named as additional insured
and the policy shall contain cross-liability endorsements. On all its
personal property, at its cost, Tenant shall maintain a policy of
standard fire and extended coverage insurance with vandalism and
malicious mischief endorsements and "all risk" coverage on all Tenant's
improvements and alterations, including without limitation, all items of
Tenant responsibility described in Section 13 in or about the Premises,
to the extent of at least 90% of their full replacement value. The
proceeds from any such policy shall be used by Tenant for the replacement
of personal property and the restoration of Tenant's improvements or
alterations. All insurance required to be provided by Tenant under this
Lease shall release Landlord from any claims for damage to any person or
the Premises and the Project, and to Tenant's fixtures, personal
property, improvements and alterations in or on the Premises or the
Project, caused by or resulting from risks insured against under any
insurance policy carried by Tenant in force at the time of such damage.
All insurance required to be provided by Tenant under this Lease: (a)
shall be issued by insurance companies authorized to do business in the
state in which the premises are located with a financial rating of at
least an A+XII status as rated in the most recent edition of Best's
Insurance Reports; (b) shall be issued as a primary policy; and (c) shall
contain an endorsement requiring at least 30 days prior written notice of
cancellation to Landlord and Landlord's lender, before cancellation or
change in coverage, scope or amount of any policy. Tenant shall deliver
a certificate or copy of such policy together with evidence of payment of
all current premiums to Landlord within 30 days of execution of this
Lease. Tenant's failure to provide evidence of such coverage to Landlord
may, in Landlord's sole discretion, constitute a default under this
Lease. Tenant shall name Landlord, "John Hancock Mutual Life Insurance
Company and CB Commercial Real Estate Group, and all its affiliates", as
additionally insured on the certificate.
14. DESTRUCTION. If during the term, the Premises or Project are more than
10% destroyed from any cause, or rendered inaccessible or unusable from
any cause, Landlord may, in its sole discretion, terminate this Lease by
delivery of notice to Tenant within 30 days of such event without
compensation to Tenant. If in Landlord's estimation, the Premises cannot
be restored within 90 days following such destruction, the Landlord shall
notify tenant and Tenant may terminate this Lease by delivery of notice
to Landlord within 30 days of receipt of Landlord's notice. If Landlord
does not terminate this Lease and if in Landlord's estimation the
Premises can be restored within 90 days, then Landlord shall commence to
restore the Premises in compliance with then existing laws and shall
complete such restoration with due diligence. In such event, this Lease
shall remain in full force and effect, but there shall be an abatement of
rent between the date of destruction and the date of completion of
restoration, based on the extent to which destruction interferes with
Tenant's use of the Premises.
15. CONDEMNATION.
a. Definitions. The following definitions shall apply. (1)
"Condemnation" means (a) the exercise of any governmental power of
eminent domain, whether by legal proceedings or otherwise by
condemnor and (b) the voluntary sale or transfer by Landlord to any
condemnor either under threat of condemnation or while legal
proceedings for condemnation and proceeding; (2) "Date of Taking"
means the date the condemnor has right to possession of the property
being condemned; (3) "Award" means all compensation, sums or
anything of value awarded, paid or received on a total or partial
condemnation; and (4) "Condemnor" means any public or quasi-public
authority, or private corporation or individual, having power of
condemnation.
b. Obligations to be Governed by Lease. If during the term of the
Lease there is any taking of all or any part of the Premises or the
Project, the rights and obligations of the parties shall be
determined pursuant to this Lease.
c. Total or Partial Taking. If the Premises are totally taken by
condemnation, this Lease shall terminate on the date of taking. If
any portion of the Premises is taken by condemnation, this Lease
shall remain in effect, except that Tenant can elect to terminate
this Lease if the remaining portion of the Premises is rendered
unsuitable for Tenant's continued use of Premises. If Tenant elects
to terminate this Lease, Tenant must exercise its right to terminate
by giving notice to Landlord within 30 days after the nature and
extent of the taking have been finally determined. If Tenant elects
to terminate this Lease, Tenant shall also notify Landlord of the
date of termination, which date shall not be earlier than 30 days
nor later than 90 days after Tenant has notified Landlord of its
election to terminate; except that this Lease shall terminate on the
date of taking if the date of taking falls on a date before the
dater of termination as designated by Tenant. If any portion of the
Premises is taken by condemnation and this Lease remains in full
force and effect, on the date of taking the rent shall be reduced by
an amount in the same ratio as the total number of square feet in
the Premises taken bears to the total number of square feet in the
Premises immediately before the date of taking.
16. ASSIGNMENT OR SUBLEASE. Tenant shall not assign or encumber its interest
in this Lease or the Premises or sublease all or any part of the Premises
or allow any other person or entity (except Tenant's authorized
representatives, employees, invitees, or guests) to occupy or use all or
any part of the Premises without first obtaining Landlord's consent which
Landlord may withhold or condition in its sole discretion. Any
assignment, encumbrance or sublease without Landlord's written consent
shall be voidable and at Landlord's election, shall constitute a default.
If Tenant is a partnership, a withdrawal or change, voluntary,
involuntary or by operation of law of any partner, or the dissolution of
the partnership, shall be deemed a voluntary assignment. If Tenant
consists of more than one person, a purported assignment, voluntary or
involuntary or by operation of law from one person to the other shall be
deemed a voluntary assignment. If Tenant is a corporation, any
dissolution, merger, consolidation or other reorganization of Tenant, or
sale or other transfer of a controlling percentage of the capital stock
of Tenant, or the sale of at least 25% of the value of the assets of
Tenant shall be deemed a voluntary assignment. The phrase "controlling
percentage" means ownership of and right to vote stock possessing at
least 25% of the total combined voting power of all classes of Tenant's
capital stock issued, outstanding and entitled to vote for election of
directors. This Section 19 shall not apply to corporations the stock of
which is traded through an exchange or over the counter. All rent
received by tenant from its subtenants in excess of the rent payable by
tenant to Landlord under this Lease shall be paid to Landlord, or any
sums to be paid by an assignee to Tenant in consideration of the
assignment of this Lease shall be paid to Landlord. If Tenant requests
Landlord to consent to a proposed assignment or subletting, Tenant shall
pay to Landlord, whether or not consent is ultimately given, $100 or
Landlord's reasonable attorney's fees incurred in connection with such
request, whichever is greater.
The interest of Tenant in this Lease shall be assignable by involuntary
assignment through operation of law (including without limitation the
transfer of this Lease by testacy or intestacy). Each of the following
acts shall be considered an involuntary assignment: (a) if Tenant is or
becomes bankrupt or insolvent, makes an assignment for the benefit of
creditors, or institutes proceedings under the Bankruptcy Act in which
Tenant is the bankrupt; or if Tenant is partnership or consists of more
than one person or entity, if any partner of the partnership or other
person or entity is or becomes bankrupt or insolvent, or makes an
assignment for the benefit of creditors; or (b) if a writ of attachment
or execution is levied on this Lease; or (c) if in any proceeding or
action to which Tenant is a party, a receiver is appointed with authority
to take possession of the Premises. An involuntary assignment shall
constitute a default by Tenant and Landlord shall have the right to elect
to terminate this Lease, in which case this Lease shall not be treated as
an asset of Tenant.
17. DEFAULT. The occurrence of any of the following shall constitute a
default by Tenant: (a) a failure to pay rent or other charge when due;
(b) abandonment and vacation of the Premises (failure to occupy and
operate the Premises for ten consecutive days shall be deemed an
abandonment and vacation); or (c) failure to perform any other provision
of this Lease.
18. LANDLORD'S REMEDIES. Landlord shall have the following remedies if
Tenant is in default. (These remedies are not exclusive; they are
cumulative and in addition to any remedies now or later allowed by law):
Landlord may terminate Tenant's right to possession of the Premises at
any time. No act by Landlord other than giving notice to Tenant shall
terminate this Lease. Acts of maintenance, efforts to relet the
Premises, or the appointment of a receiver on Landlord's behalf to
protect Landlord's interest under this Lease shall not constitute a
termination of Tenant's right to possession. Upon termination of
Tenant's right to possession, Landlord has the right to recover from
Tenant: (1) the worth of the unpaid rent that had been earned at the time
of termination of Tenant's right to possession; (2) the worth of the
amount of the unpaid rent that would have been earned after the date of
termination of Tenant's right to possession; (3) any other amount,
including but not limited to, expenses incurred to relet the premises,
court, attorney and collection costs, necessary to compensate Landlord
for all detriment caused by Tenant's default. "The Worth" as used for
item 21(1) in this Paragraph 21 will be computed by allowing interest at
the rate of 18 percent per annum. If the interest rate specified in this
Lease is greater than the rate permitted by law, the interest rate is
hereby decreased to the maximum legal interest rate permitted by law.
The Worth as used for Item 21(2) in this Paragraph 21 is to be computed
by discounting the amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of termination of Tenant's right to
possession.
19. ENTERING ON PREMISES. Landlord and its authorized representatives shall
have the right to enter the Premises at all reasonable times for any of
the following purposes: (a) to determine whether the Premises are in good
condition and that Tenant is complying with its obligations under this
Lease; (b) to do any necessary maintenance and to make any modification
to the Premises or the Project that Landlord has the right or obligation
to perform; (c) to post "for sale" signs at any time during the term, to
post "for rent" or "for lease" signs during the last 90 days of the term,
or during any period while Tenant is in default; (d) to show the Premises
to prospective brokers, agents, buyers, tenants or persons interested in
leasing or purchasing the Premises, at any time during the term; or (e)
to repair, maintain or improve the Project and to erect scaffolding and
protective barricades around and about the Premises but not so as to
prevent entry to the Premises, or to do any other act or thing necessary
for the safety or preservation of the Premises or the Project. Landlord
shall not be liable in any manner for any inconvenience, disturbance,
loss of business, nuisance or other damage arising out of Landlord's
entry onto the Premises as provided in this Section 22. Tenant shall not
be entitled to an abatement or reduction of rent when Landlord exercises
any rights reserved in this Section 22. Landlord shall conduct this
activities on the Premises as stated herein in a manner what will cause
the lease inconvenience, annoyance or disturbance to Tenant.
20. ADDITIONAL PROVISIONS.
a. Time of Essence. Time is of the essence of each provision of this
Lease.
b. Successor. This Lease shall be binding on and inure to the benefit
of the parties and their successors, except as provided in Section
19 herein.
c. Landlord's Consent. Any consent required by Landlord under this
Lease must be granted in writing and may be withheld or conditioned
by Landlord in its sole and absolute discretion.
d. Other Charges. If Landlord becomes a party to any litigation
concerning this Lease, the Premises or the Project, by reason of any
act or omission of Tenant or Tenant's authorized representatives,
Tenant shall be liable to Landlord for reasonable attorneys' fees
and court costs incurred by Landlord in the litigation. Should the
court render a decision which is thereafter appealed by any party
thereto, tenant shall be liable to Landlord for reasonable
attorneys' fees and court costs incurred by Landlord in connection
with such appeal.
If either party commences any litigation against the other party or
files an appeal of a decision arising out of or in connection with
the Lease, the prevailing party shall be entitled to recover from
the other party reasonable attorney's fees and costs of suit. If
Landlord employs a collection agency to recover delinquent charges,
Tenant agrees to pay all collection agency and attorneys' fees
charged to Landlord in addition to rent, late charges, interest and
other sums payable under this Lease. Tenant shall pay a charge of
$75 to Landlord for preparation of a demand for delinquent rent.
e. Landlord's Successors. In the event of a sale or conveyance by
Landlord of the Project, the same shall operate to release Landlord
from any liability under this Lease, and in such event Landlord's
successor in interest shall be solely responsible for all
obligations of Landlord under this Lease.
f. Interpretation. This Lease shall be construed and interpreted in
accordance with the laws of the state in which the premises are
located. This Lease constitutes the entire agreement between the
parties with respect to the Premises and the Project, except for
such guarantees or modifications as may be executed in writing by
the parties from time to time. When required by the context of this
Lease, the singular shall include the plural, and the masculine
shall include the feminine and/or neuter. "Party" shall mean
Landlord or Tenant. If more than one person or entity constitutes
Landlord or Tenant, the obligations imposed upon that party shall be
joint and several. The enforceability, invalidity or illegality of
any provision shall not render the other provisions unenforceable,
invalid or illegal.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY,
a Massachusetts Corporation
By /s/ John McDonaugh
--------------------------------------
John McDonaugh, Investment Officer
IGENISYS INFORMATION SYSTEMS, INC.,
a Colorado Corporation
By: /s/ Craig Crawford
---------------------------------
Craig Crawford, Chief Operating Officer
<PAGE>
<PAGE>
ADDITIONAL SECTIONS
29. AMERICANS WITH DISABILITIES ACT (ADA):
Tenant, at Tenant's sole cost and expense, shall comply with all laws,
rules, orders, ordinances, directions, regulations and requirements of
federal, state, county and municipal force which shall impose any duty
upon Landlord or Tenant with respect to the use, occupation or alteration
of the Premises (Section 2.e), including, without limitation the
Americans with Disabilities Act.
30. PHONE INSTALLATION:
All Tenant phone systems must be installed within Tenant's suite. No
Tenant systems are permitted to be housed within the building common area
phone rooms for security reasons. Any equipment found in said phone
rooms will be removed and relocated within Tenant's suite at Tenant's
sole cost.
31. TENANT IMPROVEMENTS:
Landlord, at Landlord's sole cost and expense, shall amend Exhibit A by
providing the following:
1) Addition of a wall and doorway to sink area;
2) Addition of a wall and doorway to counter top area opposite sink
location;
3) Addition of a doorway to office located in Southeast corner of
Suite; and
4) Clean carpet and paint in Tenant's choice of building standard
color.
32. CONFIDENTIALITY CLAUSE:
The economics of this Lease are granted to GENISYS INFORMATION SYSTEMS,
INC. in the strictest of confidence. This Lease contains concessions far
below the project's pro forma rate and will not be duplicated for any
prospective Tenants in the Park.
<PAGE>
<PAGE>
EXHIBIT C
RULES AND REGULATIONS
1. Except as specifically provided in the Lease to which these Rules and
Regulations are attached, no sign, placard, picture, advertisement, name
or notice shall be installed or displayed on any part of the outside or
inside of any building within the Project without prior written consent
of Landlord. Landlord shall have the right to remove, at Tenant's
expense and without notice, any sign or lettering on doors and walls
shall be printed, painted, affixed or inscribed at the expense of Tenant
by a person approved by Landlord.
2. If Landlord objects in writing to any curtains, blinds, shades, screens
or hanging plants or other similar object attached to or used in
connection with any window or door of the Premises, or placed on any
windowsill, which is visible from the exterior of the Premises, Tenant
shall immediately discontinue such use. Tenant shall not place anything
against or near glass partitions or doors or windows which may appear
unsightly from outside the Premises.
3. Tenant shall not obstruct any sidewalks, halls, passages, exits or
entrances of the Project. The passages, exits, entrances and halls are
not for the general public, but are open, subject to reasonable
regulations for Tenant's business invitees. Landlord shall in all cases
retain the right to control and prevent access thereto of all persons
whose presence in the judgment of Landlord would be prejudicial to the
safety, character, reputation and interests of the Project and its
Tenants; provided that nothing herein contained shall be construed to
prevent such access to persons with whom any Tenant normally deals in the
ordinary course of its business, unless such persons are involved in
illegal activities. No tenant and no employee or invitee of any tenant
shall go upon the roof of the building.
4. The directory of the building or Project will be provided exclusively for
the display or the name and location of tenants only and Landlord
reserves the right to exclude any other names therefrom.
5. All cleaning and janitorial services for the Project will be provided
exclusively through Landlord, and except with the written consent of
Landlord, no person or persons other than those approved by Landlord
shall be employed by Tenant or permitted to enter the Project for the
purpose of cleaning the same. Tenant shall not cause any unnecessary
labor by carelessness or indifference to the good order and cleanliness
of the Premises.
6. Landlord will furnish Tenant, free of charge, with two keys to each door
lock in the Premises. Landlord may make a reasonable charge for any
additional keys. Tenant shall not make or have any additional keys made,
and Tenant shall not alter any lock or install a new additional lock or
bolt on any door of the Premises. Tenant, upon termination of its
tenancy, shall deliver to Landlord the keys to all doors which have been
furnished to Tenant, and in the event of loss of any keys so furnished,
shall pay Landlord thereof.
7. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, Tenant shall first obtain and comply with Landlord's
instructions in their installation.
8. Elevator(s) shall be available for use by all tenants in the building,
subject to such reasonable scheduling as Landlord, in its discretion,
shall deem appropriate. No equipment, materials, furniture, packages,
supplies, merchandise or other property will be received in the building
or carried in the elevators except between such hours and in such
elevators as may be designated by Landlord. Tenant's initial move in and
subsequent deliveries of bulky items, such as furniture, sales and
similar items shall, unless otherwise agreed in writing by Landlord, be
made during the hours of 6:00 p.m. to 6:00 a.m. or on Saturday or Sunday.
Deliveries during normal office hours shall be limited to normal office
supplies and other small items. No deliveries shall be made which impede
or interfere with other tenants or the operation of the building.
9. Tenant shall not place a load upon any floor of the Premises which
exceeds the load per square foot which such floor was designed to carry
and which is allowed by law. Landlord shall have the right to prescribe
the weight, size and position of all equipment, materials, furniture or
other property brought into the building. Heavy objects shall, if
considered necessary by Landlord, stand on such platforms as determined
by Landlord to be necessary to properly distribute the weight, which
platforms shall be provided at Tenant's expense. Business machines and
mechanical equipment belonging to Tenant, which cause noise or vibration
that may be transmitted to the structure of the building or to any space
therein to such a degree as to be objectionable to Landlord or to any
tenants in the building, shall be placed and maintained by Tenant, at
Tenant's expense, on vibration eliminators or other devices sufficient to
eliminate noise or vibration. The person employed to move such equipment
in or out of the building must be acceptable to Landlord. Landlord will
not be responsible for loss of, or damage to, any such equipment or other
property from any cause, and all damage done to the building by
maintaining or moving such equipment or other property from any cause,
and all damage done to the building by maintaining or moving such
equipment or other property shall be repaired at the expense of Tenant.
10. Tenant shall not use or keep in the Premises any kerosene, gasoline or
inflammable or combustible fluid or material other than those limited
quantities necessary for the operation or maintenance of equipment.
Tenant shall not use or permit to be used in the Premises any foul or
noxious gas or substance, or permit or allow the Premises to be occupied
or used in a manner offensive or objectionable to Landlord or other
occupants of the building by reason of noise, odors or vibrations, nor
shall Tenant bring into or keep about the Premises any birds or animals.
11. Tenants shall not use any method of heating or air conditioning other
than supplied or approved by Landlord.
12. Tenant shall not waste electricity, water or air conditioning and agrees
to cooperate fully with Landlord to assure the most effective operation
of the heating and air conditioning and to comply with any governmental
energy savings rules, laws or regulations of which Tenant has actual
notice, and shall refrain from attempting to adjust controls. Tenant
shall keep corridor doors closed and shall close window coverings at the
end of each business day.
13. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the
building.
14. Landlord reserves the right to exclude from the building, between the
hours of 6:00 p.m. and 7:00 a.m. the following day, or such other hours
as may be established from time to time by Landlord, and on Sundays and
legal holidays, any persons unless that person is known to the person or
employee in charge of the building and has a pass or is properly
identified. Tenant shall be responsible for all persons for whom it
requests passes and shall be liable to Landlord for all acts of such
persons. Landlord shall not be liable for damages for any error with
regard to the admission to or exclusion from the building of any person.
Landlord reserves the right to prevent access to the building in case of
invasion, mob, riot, public excitement or other commotion by closing the
doors or by other appropriate action.
15. Tenant shall close and lock the doors of its Premises and entirely shut
off all water faucets or other water apparatus, and electricity, gas or
air outlets before tenant and its employees leave the Premises. Tenant
shall be responsible for any damage or injuries sustained by other
tenants or occupants of the building or by Landlord for noncompliance
with this rule.
16. Tenant shall not obtain for use on the Premises ice, drinking water,
food, beverage, towel or other similar services or accept barbering or
bootblacking service upon the Premises, except at such hours and under
such regulations as may be fixed by Landlord.
17. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any other purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be
thrown therein. The expense of any breakage, stoppage or damage
resulting from the violation of this rule shall be borne by the Tenant
who, or whose employees or invitees, shall have caused it.
18. Tenant shall not sell, or permit the sale at retail of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise
to the general public \in or on the Premises. Tenant shall not make any
room to room solicitation of business from other tenants in the Project.
Tenant shall not use the Premises for any business or activity other than
that specifically provided for in Tenant's Lease.
19. Tenant shall not install any radio or television antenna, loudspeaker or
other device on the roof or exterior walls of the buildings in the
Project. Tenant shall not interfere with radio or television
broadcasting or reception from or in the Project or elsewhere.
20. Tenant shall not mark, drive nails, screw or drill into the partitions,
woodwork, plaster or concrete or in any way deface the Premises or any
part thereof, except to instal normal wall hangings. Landlord reserves
the right to direct electricians as to where and how telephone and
telegraph wires are to be introduced to the Premises. Tenant shall not
cut or bore holes for wires. Tenant shall not affix any floor covering
to the floor of the Premises in any manner except as approved by
Landlord. Tenant shall repair any damage resulting from noncompliance
with this rule.
21. Tenant shall not install, maintain or operate upon the premises any
vending machines without the written consent of Landlord.
22. Canvassing, soliciting and distribution of handbills or any other written
material, and peddling in the Project, are prohibited and Tenant shall
cooperate to prevent such activities.
23. Landlord reserves the right to exclude or expel from the building any
person who, in Landlord's judgment, is intoxicated or under the influence
of liquor or drugs or who is in violation of any of the Rules &
Regulations of the buildings.
24. Tenant shall store all its trash and garbage within its Premises or in
designated trash areas. Tenant shall not place in any trash box or
receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. All garbage and refuse
disposal shall be made in accordance with direction issued from time to
time by Landlord.
25. The Premises shall not be used for the storage of merchandise held for
sale to the general public, or for lodging, nor shall the Premises be
used for any improper, immoral or objectionable purpose. No cooking
shall be done or permitted on the Premises without Landlord's consent,
except that use by Tenant or Underwriter's Laboratory approved equipment
for brewing coffee, tea, hot chocolate and similar beverages or use of
microwave ovens for employee use shall be permitted, provided that such
equipment and use is in accordance with all applicable federal, state,
county and city laws, codes, ordinances, rules and regulations.
26. Tenant shall not use in any space or in the public halls or the Project
any hand truck except those equipped with rubber tires and side guards or
such other material handling equipment as Landlord may approve. Tenant
shall not bring any other vehicles of any kind into the building or
Project.
27. Without the written consent of Landlord, tenant shall not sue the name of
the Project in connection with or in promoting or advertising the
business of Tenant except as Tenant's address.
28. Tenant shall comply with all safety, life protection and evacuation
procedures and regulations established by Landlord or any governmental
agency.
29. Tenant assumes any and all responsibility for protecting its Premises
from theft, robbery and pillage, which includes keeping doors locked and
other means of entry to the Premises closed.
30. Tenant's requirements will be attended to only upon appropriate
application to the Project management office by an authorized individual.
Employees of Landlord shall not perform any work or do anything outside
of their regular duties unless under special instructions from Landlord,
and no employee of Landlord will admit any person (Tenant or otherwise)
to any office without specific instructions from Landlord.
31. Landlord may waive any one or more of these Rules & Regulations for the
benefit of Tenant or any other Tenant, but no such waiver by Landlord
shall be construed as a waiver of such Rules & Regulations in favor of
Tenant or any other Tenant, nor prevent Landlord from thereafter
enforcing any such Rules & Regulations against any or all of the Tenants
of the building.
32. These Rules & Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of any lease of the Premises in the building.
33. Landlord reserves the right to make such other reasonable Rules &
Regulations as, in its judgment, may from time to time be needed for
safety and security, for care and cleanliness of the building and for the
preservation of good order therein. Tenant agrees to abide by all such
Rules & Regulations herein above stated and any additional Rules &
Regulations which are adopted.
34. Tenant shall be responsible for the observance of all of the foregoing
rules by Tenant's employees, agents, clients, customers, invitees and
guests.
<PAGE>
COMMERCIAL/AGRICULTURAL
REVOLVING OR DRAW
NOTE - VARIABLE RATE
LENDER: Guaranty Bank and Trust Company
Seventeenth & Market Street
PO Box 5847
Denver, CO 80217
(303) 296-9600
BORROWER: GENISYS INFORMATION SYSTEMS, INC.
CARYLYN K. BELL
ADDRESS: 3200 Cherry Creek Drive South
Suite 430
Denver, CO 80209
Officer Initials: SLM
Interest Rate: Variable
Principal Amount/Credit Limit: $500,000.00
Funding/Agreement Date: 4/24/00
Maturity Date: 4/24/01
Loan Number: 5600182001
PROMISE TO PAY
For value received, Borrower promises to pay to the order of Lender indicted
above the principal amount of Five Hundred Thousand and No/100 ($500,000.00)
or, if less, the aggregate unpaid principal amount of all loans or advances
made by the Lender to the Borrower, plus interest on the unpaid principal
balance at the rate and in the manner described below. All amounts received
by Lander shall be applied first to late payment charges and expenses, then to
accrued interest, and then to principal.
INTEREST RATE: This Note has a variable rate feature. Interest on the Note
may change from time to time if the Index Rate identified below changes.
Interest shall be computed on the basis of 360 days and the actual number of
days per year. Interest on this Note shall be calculated at a variable rate
equal to 500/1000 percent (0.500%) per annum over the Index Rate. The initial
Index Rate is currently nine and no/1000 percent (9.000%) per annum.
Therefore, the initial interest rate on this Note shall be nine and 500/1000
(9.5000%) percent per annum. Any change in the interest rate resulting from a
change in the Index Rate will be effective on the day Wall Street Prime Rate
changes.
INDEX RATE: The Index Rate for this Note shall be Wall Street Prime Rate.
MINIMUM RATE/MAXIMUM RATE: The minimum interest rate on this Note shall be n/a
percent (n/a%) per annum. The maximum interest rate on this Note shall not
exceed Forty-Five and no/1000 percent (45.000%) per annum or the maximum
interest rate Lender is permitted to charge by law, whichever is less.
DEFAULT RATE: In the event of any default under this Note, the Lender may in
its discretion, determine that all amounts owed to Lender shall bear interest
at the lesser of Thirty-Six and no/100 percent (36.00%) per annum or the
maximum interest rate Lender is permitted to charge by law.
PAYMENT SCHEDULE: Borrower shall pay the principal and interest according to
the following schedule:
Interest only payments beginning May 24, 2000 and continuing at monthly
time intervals thereafter. A final payment of the unpaid principal
balance plus accrued interest is due and payable on April 24, 2001.
All payments will be made to Lender at its address described above and in
lawful currency of the United States of America.
RENEWAL: If checked ___, this Note is a renewal of loan number
__________________.
SECURITY: To secure the payment and performance of obligations incurred under
this Note, Borrower grants Lender a security interest in, and pledges and
assigns to Lender all of Borrower's rights, title, and interest, in all
monies, instruments, savings, checking and other deposit accounts of
Borrower's (excluding IRA, Keogh and trust accounts and deposits subject to
tax penalties if so assigned) that are now or in the future in Lender's
custody or control. Upon default, and to the extent permitted by applicable
law, Lender may exercise its security interest in all such property which
shall be in addition to Lender's common law right of setoff. ____If checked,
the obligations under this Note are also secured by a lien and/or security
interest in the property described in the documents executed in connection
with this Note as well as any other property designated as security now or in
the future.
PREPAYMENT: This Note may be prepaid in part or in full on or before the
maturity date. If this Note contains more than one installment, all
prepayments will be credited as determined by Lender and as permitted by law.
If this Note is prepaid in full, there will be:
X No minimum finance charge or prepayment penalty.
- ----
A minimum finance charge of $___________.
- ----
A prepayment penalty of ________% of the principal prepaid.
- ----
<PAGE>
LATE PAYMENT CHARGE: If a payment is received more than n/a days
late, Borrower will be charged a late payment charge of $ n/a
or 0.000 % of the payment amount, whichever is ___greater ___less, as
permitted by law.
REVOLVING OR DRAW FEATURE: X This Note possesses a revolving feature.
----
Upon satisfaction of the conditions set forth in this Note, Borrower shall be
entitled to borrow up to the full principal amount of the Note and to repay
and reborrow from time to time during the term of this Note. ____This Note
possesses a draw feature. Upon satisfaction of the conditions set forth in
this Note, Borrower shall be entitled to make one or more draws under this
Note. The aggregate amount of such draws shall not exceed the full principal
amount of this Note.
Lender shall maintain a written ledger of the amounts loaned to and repaid by
Borrower under this Note. The aggregate unpaid principal amount shown on such
ledger shall be rebuttable presumptive evidence of the principal amount owing
and unpaid on this Note. The Lender's failure to record the date and amount
of any loan or advance on such ledger shall not limit or otherwise affect the
obligations of the Borrower under this Note to repay the principal amount of
the loans or advances together with all interest accruing thereon. Lender
shall not be obligated to provide Borrower with a copy of the ledger on a
periodic basis, however, Borrower shall be entitled to inspect or obtain a
copy of the ledger during Lender's business hours.
CONDITIONS FOR ADVANCES: If there is no default under this Note, Borrower
shall be entitled to borrow monies under this Note (subject to the limitations
described above) under the following conditions:
Advances may be made by phone or in person. Contact your Officer's
loan assistant.
Borrower acknowledges that the Borrower has read, understands, and agrees to
the terms and conditions of this Note including the provisions on the reverse
side. Borrower acknowledges receipt of an exact copy of this Note.
Note Date: April 24, 2000
Borrower: GENISYS INFORMATION BORROWER: Carylyn K. Bell
SYSTEMS, INC.
/s/ J. Daniel Bell /s/ Carylyn K. Bell
- ----------------------------- -------------------------------
Chief Executive Officer individually
<PAGE>
<PAGE>
DISBURSEMENT INSTRUCTIONS
LENDER: Guaranty Bank and Trust Company
Seventeenth & Market Street
PO Box 5847
Denver, CO 80217
(303) 296-9600
BORROWER: GENISYS INFORMATION SYSTEMS, INC.
CARYLYN K. BELL
ADDRESS: 3200 Cherry Creek Drive South
Suite 430
Denver, CO 80209
Officer Initials: SLM
Interest Rate: Variable
Principal Amount/Credit Limit: $500,000.00
Funding/Agreement Date: 4/24/00
Maturity Date: 4/24/01
Loan Number: 5600182001
Dated: April 24, 2000
Borrower has borrowed money from Lender indicated above pursuant to a
Promissory Note dated April 24, 2000.
Borrower hereby instructs Lender to disburse the initial or complete proceeds
from Promissory Note in the following manner:
Title Examination n/a
Title Insurance Company n/a
Appraisal Fee n/a
Paid to Public Officials n/a
Attorney Fees n/a
Mortgage Registration Fee n/a
Credit Reporting Fee $2,500.00
Paid to Loan Fee n/a
Paid to n/a
Paid to n/a
Paid to n/a
Paid to n/a
Borrower: GENISYS INFORMATION BORROWER: Carylyn K. Bell
SYSTEMS, INC.
/s/ J. Daniel Bell /s/ Carylyn K. Bell
- ------------------------------ ------------------------------
Chief Executive Officer individually
<PAGE>
<PAGE>
CORPORATE RESOLUTION
The undersigned Clerk/Secretary/Assistant Clerk/Secretary of Genisys
Information Systems, Inc. ("Company"), a corporation duly organized and
existing under the laws of the State of Colorado, hereby certifies that ___at
a meeting of the Board of Directors of the Company duly called and held at
_______________________________, City of _______________________, County of
__________________, State of ___________________ on _________________, at
which meeting a quorum was continuously present; ___pursuant to a unanimous
written consent of all members of the Board of Directors; the following
resolutions were adopted, are now in full force and effect, and have not been
modified or rescinded in any manner:
RESOLVED, that any ____________ (______) of the following persons:
___ President ___ any assistant Treasurer
___ any Vice President ___ Clerk/Secretary
___ any Assistant Vice President ___ any Assistant Clerk/Secretary
___ Treasurer ___ Other:
(collectively "Authorized Party") is authorized and empowered to perform one
or more of the following actions (if checked) with Guaranty Bank and Trust
Company ("Lender"); for and on behalf of the Company and on such terms and
conditions a any Authorized Party may deem advisable in his sole discretion
(The execution of any agreement, document or instrument shall constitute a
conclusive presumption that the terms, covenants and conditions of said
documents so signed are agreed to by and binding on the Company):
____ Open and maintain any safety deposit boxes, lockboxes and escrow,
savings, checking depository, or other accounts;
____ Assign, negotiate, endorse and deposit in and to such boxes and accounts
any checks, drafts, notes, and other instruments and funds payable to or
belonging to the Company;
____ Withdraw any funds or draw, sign and deliver in the name of the Company
any check or draft against funds of the Company in such boxes or
accounts;
____ Implement additional depository and funds transfer services (including,
but not limited to, facsimile signature authorizations, wire transfer
agreements, automated clearinghouse agreements, and payroll deposit
programs);
X
- ---- Obtain one or more loans or other forms of financing in any amount from
the Lender (including, but not limited to, a $500,000.00 promissory note
or line of credit);
____ Guaranty the present and future libations of any third party to the
Lender (including, but not limited to, the obligations of
_________________________________________);
FURTHER RESOLVED, that with respect to the foregoing guaranty, the Board
of Directors of the Company hereby determine that such guaranty may reasonably
be expected to benefit, directly or indirectly, the Company.
X
- ---- Assign for security purposes, pledge, hypothecate, mortgage, or grant to
the Lender a lien, security interest, or other encumbrance upon any of
the Company's personal or real property (including, but not limited to,
the assignments for security purposes, pledges, hypothecations,
mortgages, deeds of trust, liens, security interests and encumbrances
contained in the loan documents pertaining to the promissory note, line
of credit, or guaranty described above);
____ Endorse to the Lender any checks, drafts, notes or other instruments
payable to the Company;
____ Appoint the Lender as the Company's attorney-in-fact for any purpose
(including, but not limited to, endorsing any checks, drafts, notes or
other instruments payable to the Company);
____ Assign, convey, sell, lease, or otherwise transfer to the Lender or any
third party any of the Company's personal or real property; and
X
- ---- Execute any document (including, but not limited to, facsimile signature
authorization agreements, wire transfer agreements, automated
clearinghouse agreements, payroll deposit agreements, line of credit
agreements, promissory notes, security agreements, assignments for
security purposes, mortgages, deeds of trust, assignments of rents,
guaranties, powers of attorney, and waivers) and take or refrain from
taking any action on behalf of the Company.
FURTHER RESOLVED, that any of the foregoing or related activities taken
by any Authorized Party prior to the adoption of the preceding resolutions are
hereby ratified and declared to be binding obligations of the Company in a
full and complete manner;
FURTHER RESOLVED, that the authority and power of any Authorized Party as
provided in the preceding resolutions will continue in full force and effect
until the Board of Directors of the Company adopt a resolution amending,
modifying or revoking one or more of the preceding resolutions and a certified
copy of the properly executed resolution is received by the Lender via
certified mail; and
FURTHER RESOLVED, that the Clerk/Secretary or any Assistant
Clerk/Secretary of the Company is authorized to certify the adoption of the
foregoing resolutions to the Lender, the continuing effect of these
resolutions, and the incumbency of the various parties authorized to exercise
the rights in these resolutions from time to time.
The undersigned Clerk/Secretary/Assistant Clerk/Secretary certifies that
the following persons are duly elected officers or otherwise authorized to act
on behalf of the Company in the capacities set forth below and that the
following original signatures are genuine in all respects:
<PAGE>
NAME TITLE SIGNATURE
J. Daniel Bell Chairman of the Board, CEO /s/ J. Daniel Bell
- ----------------- -------------------------- ------------------------
- ----------------- -------------------------- ------------------------
- ----------------- -------------------------- ------------------------
The undersigned Clerk/Secretary/Assistant Clerk/Secretary certifies that
the Articles of Incorporation and Bylaws of the Company attached hereto are in
full force and effect and have not been amended, modified, replaced, or
substituted in any manner. Clerk/Secretary/Assistant Clerk/Secretary
certifies that a Certificate of Shareholder Approval ___is ___is not required
under the Company's Articles of Incorporation or Bylaws.
Dated this _________ day of ___________________.
[SEAL]
____________________________________
Clerk/Secretary/
Assistant Clerk/Secretary
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of April 11, 2000 by and between Cameron R.
Kruse, (the "EMPLOYEE") and GENISYS INFORMATION SYSTEMS, INC. (the "COMPANY").
In consideration of the mutual covenants and agreements set forth herein and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows, effective as of
the date hereof:
1. DUTIES AND SCOPE OF EMPLOYMENT.
(a) Position. For the term of his employment under this Agreement
("EMPLOYMENT"), the Company agrees to employ Employee in the position of Chief
Financial Officer (CFO) or in such other comparable position consistent with
the Employee's experience, stature, and Base Compensation (as defined below),
as the Company may subsequently assign to Employee.
(b) Term of Employment. Employment shall continue until terminated by
Employeeor the Company subject to the following:
(i) Termination by Employee may be accomplished by provision of
Notice of Intent to Resign, written and delivered 60 days
prior to effective date of resignation, delivered to the
Chairman of the Board of Directors of Company.
(ii) Termination by Company may be accomplished by delivery of
written notification of termination and employee may be
terminated for cause or insolvency only during the first year
of employment. After one year of employment EMPLOYEE is subject
to at will employment and notice of termination is effective
immediately.
(iii)Company may terminate Employee for good cause at any time .
Company may terminate without good cause after one year of
employment. Employment shall commence as of date employee
begins earning compensation from company.
(iv) Employee may terminate employment upon a formal declaration of
insolvency of Company.
(c) Obligations. During the term of his Employment, Employee shall
devote his best effort to the business of the Company and shall not render
business services to any competing person or entity whether on a compensated
or non-compensated basis ("OTHER EMPLOYMENT") without the express prior
approval of the Company's Chief Executive Officer. The Employee shall serve
as Chief Financial Officer of the Company and shall have the usual and
customary duties, responsibilities and authority of a CFO subject to the power
of the board of directors of the Company (the "BOARD"), the Company's Chief
Executive Officer ("CEO"), or any duly designated officer of Genisys.
(d) Employment Commencement. Employee shall be a full-time employee with
the Company at the time that this agreement is executed.
2. CASH AND INCENTIVE COMPENSATION.
(a) Salary. The Company shall pay Employee as compensation for his
services a starting salary of $90,000 yearly (subject to annual increases as
shall be determined by the Board of Director's) ("BASE COMPENSATION"). Such
salary shall be payable in accordance with the Company's standard payroll
procedures.
(b) The employee shall have the right to participate in the Companies
employee stock option plan. (see 2.(e))
(c) Benefits. Employee shall be eligible to participate in such benefit
programs offered by the Company, such as health, dental, life insurance,
vision, employee stock purchase plan, vacations and 401(k). The Company
agrees that during the Employment Term it will provide to Employee, at its own
expense, a level of indemnification and coverage under any applicable
Officer's and Director's liability guidelines, bylaws or insurance policies
commensurate with Employee's actions as an officer of the Company.
(d) Business Expenses. During the term of his Employment, Employee shall
be authorized to incur necessary and reasonable travel, entertainment and
other business expenses in connection with his duties hereunder. The Company
may advance such expenses, and shall reimburse Employee for such expenses upon
presentation of an itemized account and appropriate supporting documentation,
all in accordance with the Company's (and/or Genisys's) generally applicable
policies.
(e) Bonuses and Other Incentives. The Employee shall be entitled to
participate in any bonuses or other incentive programs made available by the
Company as the Board of Directors may determine to award in its sole
discretion. In addition to normal bonus awards, Employee is to be awarded
options for 100,000 shares of class A common stock as part of and in
accordance with the terms and conditions of the current employee stock option
program now in effect. If during the vesting period of these 100,000 options,
iGenisys is sold and a change of control occurs, other than through a public
offering, all of these options will vest immediately prior to sale.
(g) An additional bonus of $5000.00 shall be paid to Employee subject
to Companies completion of first $600,000 of public stock offering.
3. AT WILL EMPLOYMENT.
(a) After the first year of employment the Employee shall be subject to
the following Basic Rule. The Company agrees to employ the Employee and
Employee agrees to employment with the Company, from the time set forth in
Section 1(d). Employee's Employment with the Company shall be "at will." This
means that either Employee or the Company may terminate the Employee's
Employment at any time for any reason, with or without Cause (as defined
below). Any contrary representations which may have been made to the Employee
shall be superseded by this Agreement. This Agreement shall constitute the
full and complete agreement between the Employee and the Company on the "at
will" nature of the Employee's Employment, which may only be changed in an
express written agreement signed by the Employee and the CEO.
(b) Rights Upon Termination.
(i) Upon Employee's voluntary termination of employment or the
Company's termination of Employee's Employment for Cause,
Employee shall only be entitled to the compensation, benefits
and reimbursements described in Sections 1 and 2 for the period
preceding the effective date of the termination and for such
payments as may be required in Section 3, (b), (ii) of this
document.
(ii) In the event ,after the first year of employment, the Company
terminates Employee's Employment without Cause, the Company
shall be obligated to pay Employee (A) his then current Base
Compensation for a one month term (the "Termination Payment
Period"), plus (B) all accrued but unpaid amounts payable to
Employee pursuant to Section 2(d) of this Agreement (other than
Base Compensation). Base Compensation payable under this
subsection shall be payable, at the Company's option, either
(i) in accordance with the payroll practices of the Company or
(ii) in a single lump sum payment equal to the aggregate amount
of the payments, upon such termination, the Company shall also
continue to provide Employee with all insurance (including
self-insurance) medical and disability benefits, subject to the
terms, conditions and restrictions of the specific plans,
through the end of the Termination Payment Period. The Company
shall arrange for and pay for group or private health insurance
and disability benefits similar to those which Employee was
receiving immediately prior to the termination. If Employee
meets eligibility terms, conditions and restrictions of COBRA,
the Company will pay the COBRA premiums for Employee and, if
covered prior to the termination, Employee's dependents.
Insured benefits otherwise receivable by Employee pursuant to
this Section 3(b)(ii) will be reduced to the extent comparable
benefits are actually received by Employee during such period
from another source. Thereafter, the Company shall have no
obligation to make any further payments to or to provide any
further benefits hereunder to Employee except those required by
COBRA.
(c) Cause. "CAUSE" as used herein shall mean Employee's (i) commission
of fraud or embezzlement, an act of moral turpitude, or of any
tortious or unlawful act or a felony causing harm to the Company's
business, standing or reputation, (ii) act of material dishonesty or
fraud with respect to the Company, (iii) breach of his/her duty of
loyalty or care to the Company, (iv) ongoing refusal or failure to
perform Employee's duties other than as a result of Disability after
receiving written notice describing his non-performance and being
given a reasonable opportunity to cure such non-performance; (v)
deliberate and consistent refusal to conform to or follow any
reasonable policy adopted by the Company's Board or lawful
instructions of the CEO or any Genisys Executive officer after
receiving written notice describing his/her non-compliance and being
given a five (5) business days opportunity to cure (to the extent
curable) such non-compliance; or (vii) material breach of this
Agreement, the Proprietary Information and Inventions Agreement
between Employee and the Company.
4. NON-COMPETITION.
(a) General Terms. The parties acknowledge that it would be detrimental
to the Company if Employee were to compete with the Company in any part of the
Business (as defined below). As a result of the foregoing, the parties
expressly acknowledge that the intention of the non-competition provisions
contained in this Agreement are so that such provisions shall be enforceable
pursuant to the provisions of Texas law.
(b) Non-Competition During Employment. Employee agrees that during his
Employment with the Company, Employee will not engage in Other Employment in
competition with the Company.
(c) Permit the name of Employee to be used in connection with a
competitive Business.
(d) Exceptions. Notwithstanding Subsection (c) above:
(i) Employee may engage in a business that relates to the Business
if Employee receives the prior written approval of the Board
(as evidenced by a duly adopted Board resolution) to do so.
Such written approval will not be unreasonably withheld if such
outside employment business or activity would not be
detrimental to the Company.
(ii) Employee may own, directly or indirectly, solely as an
investment, up to one percent (5%) of any class of "publicly
traded securities" of any person or entity which owns a
business that relates to the Business. For the purposes of
this paragraph, the term "publicly traded securities" shall
mean securities that are traded on a national securities
exchange or listed on the Nasdaq Stock Market or SmallCap
Markets.
(iii)Employee shall not be prohibited from competing with the
Business, if the Company or Genisys or their respective
successors, and any entity deriving title to their goodwill or
shares, cease to carry on a like Business therein or becomes
insolvent or became insolvent prior to termination.
(iv) Nothing in this section is intended to prevent Employee from
engaging in any activity which does not compete with the
Company, and is not detrimental to the Company.
5. NON-SOLICITATION AND NON-DISCLOSURE.
(a) Non-Solicitation. During the period commencing on the date of this
Agreement and continuing through the "restricted period" in 4(c), Employee
shall not directly or indirectly, personally or through others, solicit or
attempt to solicit (on Employee's own behalf or on the behalf of any other
person or entity) (i) any employee or independent contractor of the Company
or any of the Company's affiliates to cease performing work or services for
the Company or to perform work or services for any other party, (ii) any
customer, supplier, licensee, or other business relations of the Company or
Genisys (and/or its affiliates) for purpose of encouraging them to terminate
their relationship with the Company or Genisys (and/or its affiliates) or in
any way interfere with the relationship between such customer, supplier,
licensee, or business relationship, on the one hand, and the Company or
Genisys (and/or its affiliates), on the other hand, or (iii) any person who
was an employee or independent contractor of the Company or Genisys (on any of
its affiliates) within six (6) months after Employee's Employment was
terminated, unless Genisys (and/or its affiliates) becomes or is insolvent.
(b) Non-Disclosure. Employee shall enter into a Non-Disclosure/Trade
Secrets Agreement with the Company, which is attached hereto as Exhibit B
6. MISCELLANEOUS PROVISIONS.
(a) Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or three days after deposit in the U.S. registered mail,
return receipt requested and postage prepaid. In the case of Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Secretary; with copy to Genisys, 654
North Belt East, Suite 310, Houston, Texas 77060 or such other address
properly changed.
(b) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in
writing and signed by Employee and by an authorized officer of the Company
(other than Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of
the same condition or provision at another time.
(c) Whole Agreement; Modifications. Except for the Proprietary
Information and Inventions Agreement, and the Non-Disclosure/Trade Secrets
Agreement, and no other agreements, representations or understandings (whether
oral or written and whether express or implied) which are not expressly set
forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. A modification of this Agreement shall
be valid only if it is made in writing and executed by both parties hereto.
(d) Withholding Taxes. All payments made under this Agreement shall be
subject to reduction to reflect taxes or other charges required to be withheld
by law.
(e) CHOICE OF LAW. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS.
(f) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions hereof. The parties hereto further
agree to replace such invalid, illegal or unenforceable provision of this
Agreement with a valid, legal and enforceable provision that will achieve, to
the extent possible, the economic, business and other purposes of such
invalid, illegal or unenforceable provision.
(g) No Assignment of this agreement may be made by either party.
(h) Company's Successors. This Agreement shall be binding upon any
successor (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets. For all purposes under this Agreement, the
term "COMPANY" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.
(i) Employee's Successors. This Agreement and all rights of Employee
may not be transferred or assigned by Employee at any time without the prior
written consent of the Company authorized by a duly adopted Board resolution;
and shall inure to the benefit of, and be enforceable by, Employee's personal
or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
(j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(k) Joint Participation in Preparation of Agreement. The parties hereto
participated jointly in the negotiation and preparation of this Agreement and
each party has had the opportunity to obtain the advice of legal counsel and
to review, comment upon, and redraft this Agreement. Accordingly, it is agreed
that no rule of construction shall apply against any party in favor of any
party. This Agreement shall be construed as if the parties jointly prepared
it, and any uncertainty or ambiguity shall not be interpreted against any one
party and in favor of the other.
(l) Remedies.
(m) In the event of a breach or threatened breach by the Company or
Employee of any of the provisions of this agreement, the Employee or Company
shall be entitled to an injunction restraining the Employee or the Company
from such breach and/or in the case of an injunction in favor of the Company
or Employee, from rendering any services to any person, firm, corporation,
association, or other entity receiving (or to receive) the benefit of such
breach, since the remedy at law would be inadequate and insufficient.
(n) In addition, the Employee or Company shall be entitled to such
damages as he or it can show he or it has sustained by reason of such breach.
As among themselves, the parties agree that the prevailing party shall bear
the costs and expenses of enforcing the provisions of the Agreement. Nothing
herein contained shall be construed as prohibiting the Employee or Company
from pursuing any other remedies available for such breach or threatened
breach or any other breach of this Agreement at law or in equity or otherwise.
(o) IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as of the day and
year first above written.
- --------------------------------------
[EMPLOYEE]
GENISYS INFORMATION SYSTEMS, INC.
BY:
-----------------------------------
NAME:
TITLE:
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of February 16, 2000 by and between Craig
Crawford (the "EMPLOYEE") and GENISYS INFORMATION SYSTEMS, INC. (the
"COMPANY") and iGenisys, Inc. (the "Parent Company"). This agreement reduces
to writing the oral employment agreements previously agreed to by the Company
and Employee. In consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows,
effective as of the date hereof:
1. DUTIES AND SCOPE OF EMPLOYMENT.
(a) Position. For the term of his employment under this Agreement
("EMPLOYMENT"), the Company agrees to employ Employee in the position of Vice
President or in such other comparable position consistent with the Employee's
experience, stature, and Base Compensation (as defined below), as the Company
may subsequently assign to Employee.
(b) Term of Employment. Employment shall continue until terminated by
Employee, by Company or by insolvency of Company.
(i.) Termination by Employee may be accomplished by provision of
written resignation delivered to the Chief Executive Officer (CEO), or by
delivery of written resignation to the Board of Directors.
(ii.) Termination by Company may be accomplished by delivery of
written notification or termination and is effective immediately.
(iii.) Company may terminate Employee for good cause or without good
cause.
(iv.) Employee may terminate employment upon the insolvency of
Company.
(c) Obligations. During the term of his Employment, Employee shall
devote his best effort to the business of the Company and shall not render
business services to any competing person or entity whether on a compensated
or non-compensated basis ("OTHER EMPLOYMENT") without the express prior
approval of the CEO or the Board of Directors. The Employee shall serve as
Vice President of the Company and shall have the usual and customary duties,
responsibilities and authority of a Vice President subject to the power of the
board of directors of the Company (the "BOARD"), the CEO , or any duly
designated officer of the Company or Parent Company. The Board of Directors
has the authority to (i) expand or limit such duties, responsibilities and
authority and (ii) to override the actions of the Employee. The Employee
shall report to the CEO, and shall perform his duties and responsibilities to
the best of his abilities in a diligent and professional manner. Employee
represents and warrants to the Company that he is under no contractual
commitments inconsistent with his obligations under this Agreement.
(d) Employment Commencement. Employee has been, and is a full-time
employment with the Company at the time that this agreement is executed.
Crawford's original employment date will be recorded as from October 1, 1995
the date of his first service with Bell controlled companies.
2. CASH AND INCENTIVE COMPENSATION.
(a) Salary. The Company shall pay Employee as compensation for his
services a starting base salary at a rate of $11,250 per month (subject to
annual increases as shall be determined by the Board of Director's) ("BASE
COMPENSATION"). Such salary shall be paid in accordance with the Company's
standard payroll procedures, but at least twice a month.
(b) Options. The Employee will be granted options at the sole
discretion of the Board under the Genisys 1999 Equity Incentive Plan. In
subsequent years, the Employee is eligible for award of future options at the
discretion of the Board. Prior to this written agreement the Employee was
granted 470,000 options under the Genisys 1999 Equity Incentive Plan having an
exercise price of $0.40 per share. In the event of a change in control in the
Company or Parent Company unvested shares in the option grant will be
immediately accelerated and become one hundred percent available to the
employee as fully assessed and registered shares. A change in control would
be a material shift in stock holdings enabling a different person or entity to
exercise majority control in electing The Board of Directors.
(c) Benefits. Employee shall be eligible to participate in such benefit
programs offered by the Company, such as health, dental, life insurance,
vision, long term disability, employee stock purchase plan, vacations and
401(k). The Company stipulates that it does not intend to purchase
Director's and Officer's Liability Insurance, but agrees to defend the actions
of the Employee unless the action is that of the Employee as defined in 3c
below (for Cause).
(d) Business Expenses. During the term of his Employment, Employee shall
be authorized to incur necessary and reasonable travel, entertainment and
other business expenses in connection with his duties hereunder. The Company
may advance such expenses, and shall reimburse Employee for such expenses upon
presentation of an itemized account and appropriate supporting documentation,
all in accordance with the Company's (and/or Genisys's) generally applicable
policies.
(e) Bonuses and Other Incentives. The Employee shall be entitled to
participate in any bonuses or other incentive programs made available by the
Company as the Board of Directors may determine to award in its sole
discretion.
3. AT WILL EMPLOYMENT.
(a) Basic Rule. The Company agrees to employ the Employee and Employee
agrees to commence employment with the Company, from the time set forth in
Section 1(d). Employee's Employment with the Company shall be "at will." This
means that either Employee or the Company may terminate the Employee's
Employment at any time for any reason, with or without Cause (as defined
below). Any contrary representations which may have been made to the Employee
shall be superseded by this Agreement. This Agreement shall constitute the
full and complete agreement between the Employee and the Company on the "at
will" nature of the Employee's Employment, which may only be changed in an
express written agreement signed by the Employee and the CEO.
(b) Rights Upon Termination.
(i) Upon Employee's voluntary termination of employment or the
Company's termination of Employee's Employment for Cause, Employee shall only
be entitled to the compensation, benefits and reimbursements described in
Sections 1 and 2 for the period preceding the effective date of the
termination and for such payments as may be required in Section 3, (b), (ii)
of this document.
(ii) In the event the Company terminates Employee's Employment
without Cause, the Company shall be obligated to pay Employee (A) his then
current Base Compensation until Employee becomes re-employed as an employee or
consultant or for a six month term (the "Termination Payment Period"), which
ever is shorter, but in no case less than three months, plus (B) all accrued
but unpaid amounts payable to Employee pursuant to Section 2(d) of this
Agreement (other than Base Compensation). If the Company terminates the
Employee's employment based on a change in control (2.b.) or a diminishment of
responsibilities, the Company shall be obligated to pay Employee his then
current base compensation for a twelve month term. Base Compensation payable
under this subsection shall be payable, at the Company's option, either (i) in
accordance with the payroll practices of the Company or (ii) in a single lump
sum payment equal to the aggregate amount of the payments. Upon such
termination The Company shall also continue to provide Employee with all
health insurance, and other employee insurance, subject to the terms,
conditions and restrictions of the specific plans, through the end of the
Termination Payment Period. If Employee meets eligibility terms, conditions
and restrictions of COBRA, the Company will pay the COBRA premiums for
Employee and, if covered prior to the termination, Employee's dependents.
Insured benefits otherwise receivable by Employee pursuant to this Section
3(b)(ii) will be reduced to the extent comparable benefits are actually
received by Employee during such period from another source. Thereafter, the
Company shall have no obligation to make any further payments to or to provide
any further benefits hereunder to Employee.
(c) Cause. "CAUSE" as used herein shall mean Employee's, (i) commission
of fraud or embezzlement, an act of moral turpitude, or of any tortious or
unlawful act or a felony causing harm to the Company's business, standing or
reputation, (ii) act of material dishonesty or fraud with respect to the
Company, (iii) breach of his/her reasonable duty of loyalty or care to the
Company, (iv) other misconduct that is materially detrimental to the Company
as reasonably determined by a majority of the Board of Directors, (v) ongoing
refusal or failure to perform Employee's duties other than as a result of
Disability after receiving written notice describing his non-performance and
being given a reasonable opportunity to cure such non-performance; (vi)
deliberate and consistent refusal to conform to or follow any reasonable
policy adopted by the Company's Board or lawful instructions of the CEO after
receiving written notice describing his/her non-compliance and being given a
five (5) business days opportunity to cure (to the extent curable) such non-
compliance; or (vii) material breach of this Agreement, the Proprietary
Information and Inventions Agreement between Employee and the Company.
4. NON-COMPETITION.
(a) General Terms. The parties acknowledge that it would be detrimental
to the Company if Employee were to compete with the Company in any part of the
Business (as defined below). As a result of the foregoing, the parties
expressly acknowledge that the intention of the non-competition provisions
contained in this Agreement are so that such provisions shall be enforceable
pursuant to the provisions of Texas law.
(b) Non-Competition During Employment. Employee agrees that during his
Employment with the Company, Employee will not engage in Other Employment in
competition with the Company. This non-competition includes, but is not
limited to, development of project management software programs and consulting
services.
(c) Employee further covenants with Company that all trade secrets,
processes, designs, concepts, formulas, data, standards, specifications,
discoveries, improvements, inventions, computer software, computer programming
code, techniques and know-how of the Company, or those with whom the Company
transacts business, customer and client identity and contracts and information
contained in or derived from the Company's client and customer lists and
third-party agreements whether active, inactive or prospective, supplier and
manufacturer identity and contracts, marketing and sales plans, product
agreements, strategic contractual relationships, financial information,
pricing information, product research and development, and all other concepts
or ideas involving or reasonably related to the business of the Company,
information received by the Company as to which there is a bona fide
obligation, contractual or otherwise, on the part of the Company not to
disclose same and not generally available to the public, and any information
of the type similar to the information described above which the Company
treats or regards as confidential or designates as proprietary or
confidential, is confidential information and will be treated by an Employee
as such, and that he will not hereafter, directly or indirectly, make use of
such information or divulge any such information nor reveal any customer lists
or other confidential information to any other person not related to the
Company. The foregoing restrictions on disclosure of information shall not
include (i) information that has properly come into the public domain, (ii)
information learned by an Employee from a third party without an obligation of
confidentiality, (iii) information gained or learned by an Employee
independent of activities undertaken on behalf of Company, or (iv) information
otherwise protected by applicable law, such as the information pertaining to
patents or copyrights.
(d) Any and all research, reports, memoranda, developments, inventions
or discoveries, computer software, source code, modules, algorithms and the
like, made, devised or developed by Employee during such time as he holds an
Executive officer Position with the Company, either alone or jointly with
others, pertaining to any of the business, properties or operations of the
Company are deemed works for hire and are hereby assigned by Employee to the
Company and shall remain the Company's sole, exclusive and separate property.
Employee agrees to execute any assignments to the Company of his entire
rights, title and interest in and to any trade secrets, copyrightable
material, inventions, discoveries, reports or research, whether or not
copyrightable, that may be requested by the Company. Any and all
copyrightable and/or patentable material generated or developed by Employee
for the Company, including, without limitation, source codes and computer
programs and documentation pertaining thereto, shall be works for hire and
considered the property and copyrights of the Company, and the Company shall
have the right to register and hold same in its own name, free of any claim of
Employee. All documentation containing or relating to any Confidential
Information of the Company which Employee shall use or prepare or come into
contact with, shall remain the sole and separate property of the Company, and
upon the request of the Company, or upon termination of Employee's position as
an officer, director or stockholder of the Company, all such materials shall
be promptly returned to the Company, together with all copies thereof.
(e) Non-Competition Following Termination of Employment. Subject to and
except as set forth in Section 4(d), for purposes of this Section 4, the
restricted period shall be, the period of Employment plus the period
commencing with the date of termination of Employment and ending on (i) in the
case of a termination of Employee's Employment by the Company for Cause or a
termination of the Employee's Employment for any reason by Employee (other
than Disability), a period of six months following such termination, and (ii)
in the event of a termination of the Employee's Employment by the Company for
any reason other than for Cause, a period of six months following such
termination (the "RESTRICTED PERIOD"). During the Restricted Period, Employee
shall not, as an employee, agent, consultant, advisor, independent contractor,
general partner, officer, director, stockholder, investor, lender or guarantor
of any corporation, partnership or other entity (or as a sole proprietorship
or by way of another business), or in any other capacity, directly or
indirectly:
(i) Participate or engage in any business in which the Company is
engaged, (or any business in which the Company or Genisys engages in during
the term of Employment or, as at the termination of the term of Employment, is
then actively preparing to engage (collectively, the "BUSINESS").
(ii) Permit the name of Employee to be used in connection with a
competitive Business.
(f) Exceptions. Notwithstanding Subsection (c) above:
(i) Employee may engage in a business that relates to the Business
if Employee receives the prior written approval of the CEO to do so. Such
written approval will not be unreasonably withheld if such outside employment
business or activity would not be detrimental to the Company.
(ii) Employee may own, directly or indirectly, solely as an
investment, up to five percent (5%) of any class of "publicly traded
securities" of any person or entity which owns a business that relates to the
Business. For the purposes of this paragraph, the term "publicly traded
securities" shall mean securities that are traded on a national securities
exchange or listed on the Nasdaq Stock Market or SmallCap Markets.
(iii) Employee shall not be prohibited from competing with the
Business, if the Company or Genisys or their respective successors, and any
entity deriving title to their goodwill or shares, cease to carry on a like
Business therein or becomes insolvent or became insolvent prior to
termination. Insolvent, for purposes of this agreement means the inability to
satisfy Genisys' current financial obligations for at least 90 days.
(iv) Nothing in this section is intended to prevent Employee from
engaging in any activity which does not compete with the Company, and is not
detrimental to the Company.
(v) The Restricted Period shall end at such time that the Company
ceases to compensate Employee.
5. NON-SOLICITATION AND NON-DISCLOSURE.
(a) Non-Solicitation. During the period commencing on the date of this
Agreement and continuing through the "restricted period" in 4(c), Employee
shall not directly or indirectly, personally or through others, solicit or
attempt to solicit (on Employee's own behalf or on the behalf of any other
person or entity) (i) any employee of the Company or any of the Company's
affiliates to cease performing work or services for the Company or to perform
work or services for any other party, (ii) any customer, supplier, licensee,
or other business relations of the Company or Genisys (and/or its affiliates)
for purpose of encouraging them to terminate their relationship with the
Company or Genisys (and/or its affiliates) or in any way interfere with the
relationship between such customer, supplier, licensee, or business
relationship, on the one hand, and the Company or Genisys (and/or its
affiliates), on the other hand, or (iii) any person who was an employee of the
Company or Genisys (on any of its affiliates) within six (6) months after
Employee's Employment was terminated, unless Genisys (and/or its affiliates)
becomes or is insolvent.
(b) Non-Disclosure. Employee shall enter into a Non-Disclosure/Trade
Secrets Agreement with the Company, which is attached hereto as Exhibit B
6. MISCELLANEOUS PROVISIONS.
(a) Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or three days after deposit in the U.S. registered mail,
return receipt requested and postage prepaid. In the case of Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Secretary; with copy to Genisys, 654
North Belt East, Suite 310, Houston, Texas 77060 or such other address
properly changed.
(b) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in
writing and signed by Employee and by an authorized officer of the Company
(other than Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of
the same condition or provision at another time.
(c) Whole Agreement; Modifications. Except for the Proprietary
Information and Inventions Agreement, and the Non-Disclosure/Trade Secrets
Agreement, and no other agreements, representations or understandings (whether
oral or written and whether express or implied) which are not expressly set
forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. A modification of this Agreement shall
be valid only if it is made in writing and executed by both parties hereto.
(d) Withholding Taxes. All payments made under this Agreement shall be
subject to reduction to reflect taxes or other charges required to be withheld
by law.
(e) CHOICE OF LAW. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS.
(f) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions hereof. The parties hereto further
agree to replace such invalid, illegal or unenforceable provision of this
Agreement with a valid, legal and enforceable provision that will achieve, to
the extent possible, the economic, business and other reasonable purposes of
such invalid, illegal or unenforceable provision.
(g) No Assignment of this agreement may be made by either party.
(i) Company's Successors. This Agreement shall be binding upon any
successor (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets. For all purposes under this Agreement, the
term "COMPANY" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.
(ii) Employee's Successors. This Agreement and all rights of
Employee may not be transferred or assigned by Employee at any time without
the prior written consent of the Company authorized by a duly adopted Board
resolution; and shall inure to the benefit of, and be enforceable by,
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
(iii) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(i) Joint Participation in Preparation of Agreement. The parties hereto
participated jointly in the negotiation and preparation of this Agreement and
each party has had the opportunity to obtain the advice of legal counsel and
to review, comment upon, and redraft this Agreement. Accordingly, it is
agreed that no rule of construction shall apply against any party in favor of
any party. This Agreement shall be construed as if the parties jointly
prepared it, and any uncertainty or ambiguity shall not be interpreted against
any one party and in favor of the other.
(j) Remedies. In the event of a breach or threatened breach by the
Company or Employee of any of the provisions of this agreement, the Employee
or Company shall be entitled to an injunction, as may be permitted under Texas
law, restraining the Employee or the Company from such breach and/or in the
case of an injunction in favor of the Company or Employee, from rendering any
services to any person, firm, corporation, association, or other entity
receiving (or to receive) the benefit of such breach, since the remedy at law
would be inadequate and insufficient.
(k) DAMAGES. In addition, the Employee or Company shall be entitled to
such damages as he or it can show he or it has sustained by reason of such
breach. As among themselves, the parties agree that the prevailing party
shall bear the costs and expenses of enforcing the provisions of the
Agreement. Nothing herein contained shall be construed as prohibiting the
Employee or Company from pursuing any other remedies available for such breach
or threatened breach or any other breach of this Agreement at law or in equity
or otherwise.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year
first above written.
----------------------------------
[EMPLOYEE]
----------------------------------
GENISYS INFORMATION SYSTEMS, INC.
BY:
-------------------------------
NAME:
-----------------------------
TITLE:
----------------------------
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of February 16, 2000 by and Jeffrey
Spencer Spencer] the "EMPLOYEE") and GENISYS INFORMATION SYSTEMS, INC. (the
"COMPANY"). This agreement reduces to writing the oral employment agreements
previously agreed to by the Company and Employee. In consideration of the
mutual covenants and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows, effective as of the date hereof:
1. DUTIES AND SCOPE OF EMPLOYMENT.
(a) Position. For the term of his employment under this Agreement
("EMPLOYMENT"), the Company agrees to employ Employee in the position of
Senior Vice President or in such other comparable position consistent with the
Employee's experience, stature, and Base Compensation (as defined below), as
the Company may subsequently assign to Employee.
(b) Term of Employment. Employment shall continue until terminated
by Employee, by Company or by insolvency of Company.
(i) Termination by Employee may be accomplished by provision
of written resignation delivered to the Chief Executive
Officer (CEO), by delivery of written resignation to the
Board of Directors.
(ii) Termination by Company may be accomplished by delivery of
written notification or termination and is effective
immediately.
(iii)Company may terminate Employee for good cause or without
good cause.
(iv) Employee may terminate employment upon the insolvency of
Company.
(c) Obligations. During the term of his Employment, Employee shall
devote his best effort to the business of the Company and shall not render
business services to any competing person or entity whether on a compensated
or non-compensated basis ("OTHER EMPLOYMENT") without the express prior
approval of the CEO. The Employee shall serve as Senior Vice President of the
Company and shall have the usual and customary duties, responsibilities and
authority of a Senior Vice President subject to the power of the board of
directors of the Company (the "BOARD"), the CEO, or any duly designated
officer of Genisys Inc., a Colorado corporation and parent of the Company
("Genisys" executive ("GENISYS EXECUTIVE") (i) to expand or limit such duties,
responsibilities and authority and (ii) to override the actions of the
Employee. The Employee shall report to the CEO, and shall perform his duties
and responsibilities to the best of his abilities in a diligent and
professional manner. Employee represents and warrants to the Company that he
is under not contractual commitments inconsistent with his obligations under
this Agreement.
(d) Employment Commencement. Employee has been, and is a full-time
employment with the Company at the time that this agreement is executed.
2. CASH AND INCENTIVE COMPENSATION.
(a) Salary. The Company shall pay Employee as compensation for his
services a starting base salary at a rate of $13,000 per month (subject to
annual increases as shall be determined by the Board of Director's) ("BASE
COMPENSATION"). Such salary shall be paid in accordance with the Company's
standard payroll procedures.
(b) The Employee will be granted options at the sole discretion of
the Board under the Genisys 1999 Equity Incentive Plan. In subsequent years,
the Employee is eligible for award of future options at the discretion of the
Board. Prior to this written agreement the Employee was granted 570,000
options under the Genisys 1999 Equity Incentive Plan having an exercise price
of $.40 per share.
(c) Benefits. Employee shall be eligible to participate in such
benefit programs offered by the Company, such as health, dental, life
insurance, vision, employee stock purchase plan, vacations and 401(k). The
Company stipulates that it does not intend to purchase Director's and
Officer's Liability Insurance but agrees to defend the actions of the Employee
unless the action is that of the Employee as defined in 3c below (for Cause).
(d) Business Expenses. During the term of his Employment, Employee
shall be authorized to incur necessary and reasonable travel, entertainment
and other business expenses in connection with his duties hereunder. The
Company may advance such expenses, and shall reimburse Employee for such
expenses upon presentation of an itemized account and appropriate supporting
documentation, all in accordance with the Company's (and/or Genisys's)
generally applicable policies.
(e) Bonuses and Other Incentives. The Employee shall be entitled
to participate in any bonuses or other incentive programs made available by
the Company as the Board of Directors may determine to award in its sole
discretion.
3. AT WILL EMPLOYMENT.
(a) Basic Rule. The Company agrees to employ the Employee and
Employee agrees to commence employment with the Company, from the time set
forth in Section 1(d). Employee's Employment with the Company shall be "at
will." This means that either Employee or the Company may terminate the
Employee's Employment at any time for any reason, with or without Cause (as
defined below). Any contrary representations, which may have been made to the
Employee, shall be superseded by this Agreement. This Agreement shall
constitute the full and complete agreement between the Employee and the
Company on the "at will" nature of the Employee's Employment, which may only
be changed in an express written agreement signed by the Employee and the CEO.
(b) Rights Upon Termination.
(i) Upon Employee's voluntary termination of employment or the
Company's termination of Employee's Employment for Cause,
Employee shall only be entitled to the compensation,
benefits and reimbursements described in Sections 1 and 2
for the period preceding the effective date of the
termination and for such payments as may be required in
Section 3, (b), (ii) of this document.
(ii) In the event the Company terminates Employee's Employment
without Cause, the Company shall be obligated to pay
Employee (A) his then current Base Compensation until
Employee becomes re-employed as an employee or consultant
or for a six month term (the "Termination Payment
Period"), which ever is shorter, plus (B) all accrued but
unpaid amounts payable to Employee pursuant to Section
2(d) of this Agreement (other than Base Compensation).
Base Compensation payable under this subsection shall be
payable, at the Company's option, either (i) in accordance
with the payroll practices of the Company or (ii) in a
single lump sum payment equal to the aggregate amount of
the payments, upon such termination The Company shall also
continue to provide Employee with all health insurance,
subject to the terms, conditions and restrictions of the
specific plans, through the end of the Termination Payment
Period. If Employee meets eligibility terms, conditions
and restrictions of COBRA, the Company will pay the COBRA
premiums for Employee and, if covered prior to the
termination, Employee's dependents. Insured benefits
otherwise receivable by Employee pursuant to this Section
3(b)(ii) will be reduced to the extent comparable benefits
are actually received by Employee during such period from
another source. Thereafter, the Company shall have no
obligation to make any further payments to or to provide
any further benefits hereunder to Employee.
(c) Cause. "CAUSE" as used herein shall mean Employee's (i)
commission of fraud or embezzlement, an act of moral turpitude, or of any
tortious or unlawful act or a felony causing harm to the Company's business,
standing or reputation, (ii) act of material dishonesty or fraud with respect
to the Company, (iii) breach of his/her duty of loyalty or care to the
Company, (iv) other misconduct that is materially detrimental to the Company
(v) ongoing refusal or failure to perform Employee's duties other than as a
result of Disability after receiving written notice describing his non-
performance and being given a reasonable opportunity to cure such non-
performance; (v) deliberate and consistent refusal to conform to or follow any
reasonable policy adopted by the Company's Board or lawful instructions of the
CEO or any Genisys Executive officer after receiving written notice describing
his/her non-compliance and being given a five (5) business days opportunity to
cure (to the extent curable) such non-compliance; or (vii) material breach of
this Agreement, the Proprietary Information and Inventions Agreement between
Employee and the Company.
4. NON-COMPETITION.
(a) General Terms. The parties acknowledge that it would be
detrimental to the Company if Employee were to compete with the Company in any
part of the Business (as defined below). As a result of the foregoing, the
parties expressly acknowledge that the intention of the non-competition
provisions contained in this Agreement are so that such provisions shall be
enforceable pursuant to the provisions of Texas law.
(b) Non-Competition During Employment. Employee agrees that during
his Employment with the Company, Employee will not engage in Other Employment
in competition with the Company. This non-competition includes, but is not
limited to, development of software programs and project management consulting
services.
(c) Employee further covenants with Company that all trade secrets,
processes, designs, concepts, formulas, data, standards, specifications,
discoveries, improvements, inventions, computer software, computer programming
code, techniques and know-how of the Company, or those with whom the Company
transacts business, customer and client identity and contracts and information
contained in or derived from the Company's client and customer lists and
third-party agreements whether active, inactive or prospective, supplier and
manufacturer identity and contracts, marketing and sales plans, product
agreements, strategic contractual relationships, financial information,
pricing information, product research and development, and all other concepts
or ideas involving or reasonably related to the business or prospective
business of the Company, information received by the Company as to which there
is a bona fide obligation, contractual or otherwise, on the part of the
Company not to disclose same and not generally available to the public, and
any information of the type similar to the information described above which
the Company treats or regards as confidential or designates as proprietary or
confidential, is confidential information and will be treated by an Employee
as such, and that he will not hereafter, directly or indirectly, make use of
such information or divulge any such information nor reveal any customer lists
or other confidential information to any other person. The foregoing
restrictions on disclosure of information shall not include (i) information
that has properly come into the public domain, (ii) information learned by an
Employee from a third party without an obligation of confidentiality, (iii)
information gained or learned by an Employee independent of activities
undertaken on behalf of Company, or (iv) information otherwise protected by
applicable law, such as the information pertaining to patents or copyrights.
(d) Any and all research, reports, memoranda, developments,
inventions or discoveries, computer software, source code, modules, algorithms
and the like, made, devised or developed by Employee during such time as he
holds an Employee Position with the Company, either alone or jointly with
others, pertaining to any of the business, properties or operations of the
Company are deemed works for hire and are hereby assigned by Employee to the
Company and shall remain the Company's sole, exclusive and separate property.
Employee agrees to execute any assignments to the Company of his entire
rights, title and interest in and to any trade secrets, copyrightable
material, inventions, discoveries, reports or research, whether or not
copyrightable, that may be requested by the Company. Any and all
copyrightable and/or patentable material generated or developed by Employee
for the Company, including, without limitation, source codes and computer
programs and documentation pertaining thereto, shall be works for hire and
considered the property and copyrights of the Company, and the Company shall
have the right to register and hold same in its own name, free of any claim of
Employee. All documentation containing or relating to any Confidential
Information of the Company which Employee shall use or prepare or come into
contact with, shall remain the sole and separate property of the Company, and
upon the request of the Company, or upon termination of Employee's position as
an officer, director or stockholder of the Company, all such materials shall
be promptly returned to the Company, together with all copies thereof.
(e) Non-Competition Following Termination of Employment. Subject to
and except as set forth in Section 4(d), for purposes of this Section 4, the
restricted period shall be, the period of Employment plus the period
commencing with the date of termination of Employment and ending on (i) in the
case of a termination of Employee's Employment by the Company for Cause or a
termination of the Employee's Employment for any reason by Employee (other
than Disability), a period of six months following such termination, and (ii)
in the event of a termination of the Employee's Employment by the Company for
any reason other than for Cause, a period of six months following such
termination (the "RESTRICTED PERIOD"). During the Restricted Period, Employee
shall not, as an employee, agent, consultant, advisor, independent contractor,
general partner, officer, director, stockholder, investor, lender or guarantor
of any corporation, partnership or other entity (or as a sole proprietorship
or by way of another business), or in any other capacity, directly or
indirectly:
(i) Participate or engage in any business in which the Company
or Genisys is engaged, (or any business in which the
Company or Genisys engages in during the term of
Employment or, as at the termination of the term of
Employment, is then actively preparing to engage
(collectively, the "BUSINESS").
(ii) Permit the name of Employee to be used in connection with
a competitive Business.
(d) Exceptions. Notwithstanding Subsection (c) above:
(i) Employee may engage in a business that relates to the
Business if Employee receives the prior written approval
of the CEO to do so. Such written approval will not be
unreasonably withheld if such outside employment business
or activity would not be detrimental to the Company.
(ii) Employee may own, directly or indirectly, solely as an
investment, up to five percent (5%) of any class of
"publicly traded securities" of any person or entity,
which owns a business that relates to the Business. For
the purposes of this paragraph, the term "publicly traded
securities" shall mean securities that are traded on a
national securities exchange or listed on the NASDAQ Stock
Market or SmallCap Markets.
(iii)Employee shall not be prohibited from competing with the
Business, if the Company or Genisys or their respective
successors, and any entity deriving title to their
goodwill or shares, cease to carry on a like Business
therein or becomes insolvent or became insolvent prior to
termination. Insolvent, for purposes of this agreement
means the inability to satisfy Genisys' financial
obligations for at least 90 days.
(iv) Nothing in this section is intended to prevent Employee
from engaging in any activity, which does not compete with
the Company, and is not detrimental to the Company.
(v) The Restricted Period shall end at such time that the
Company ceases to compensate Employee.
(f) Genisys acknowledges notice of Spencer's employment on a part-
time basis with Mediatrain.net, Inc (MediaTrain) and has approved his
continuing activity with MediaTrain. Specifically, Spencer acknowledges and
Genisys approves of Spencer working with Mediatrain.net up to 10 hours per
week, from the date of the execution of this agreement, and thereafter may
work with Mediatrain.net, up to 5 hours per week. Spencer is authorized to
continue his engagement with MediaTrain, and is further authorized to hold an
ownership position in MediaTrain, should that opportunity occur. Spencer
agrees to provide a report each year by December 31 of his ownership
percentage. Further, Spencer acknowledges that where opportunities exist for
the referral of business from Mediatrain.net, and/or its contacts, to Genisys,
he will make such referrals.
5. NON-SOLICITATIONS AND NON-DISCLOSURE.
(a) Non-Solicitation. During the period commencing on the date of
this Agreement and continuing through the "restricted period" in 4(c),
Employee shall not directly or indirectly, personally or through others,
solicit or attempt to solicit (on Employee's own behalf or on the behalf of
any other person or entity) (i) any employee or independent contractor of the
Company or any of the Company's affiliates to cease performing work or
services for the Company or to perform work or services for any other party,
(ii) any customer, supplier, licensee, or other business relations of the
Company or Genisys (and/or its affiliates) for purpose of encouraging them to
terminate their relationship with the Company or Genisys (and/or its
affiliates) or in any way interfere with the relationship between such
customer, supplier, licensee, or business relationship, on the one hand, and
the Company or Genisys (and/or its affiliates), on the other hand, or (iii)
any person who was an employee or independent contractor of the Company or
Genisys (on any of its affiliates) within six (6) months after Employee's
Employment was terminated, unless Genisys (and/or its affiliates) becomes or
is insolvent.
(b) Non-Disclosure. Employee shall enter into a Non-
Disclosure/Trade Secrets Agreement with the Company, which is attached hereto
as Exhibit B.
6. MISCELLANEOUS PROVISIONS.
(a) Notice. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or three days after deposit in the U.S. registered
mail, return receipt requested and postage prepaid. In the case of Employee,
mailed notices shall be addressed to him at the home address, which he most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all
notices shall be directed to the attention of its Secretary; with copy to
Genisys, 654 North Belt East, Suite 310, Houston, Texas 77060 or such other
address properly changed.
(b) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by Employee and by an authorized officer of the Company
(other than Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of
the same condition or provision at another time.
(c) Whole Agreement; Modifications. Except for the Proprietary
Information and Inventions Agreement, and the Non-Disclosure/Trade Secrets
Agreement, and no other agreements, representations or understandings (whether
oral or written and whether express or implied) which are not expressly set
forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. A modification of this Agreement shall
be valid only if it is made in writing and executed by both parties hereto.
(d) Withholding Taxes. All payments made under this Agreement
shall be subject to reduction to reflect taxes or other charges required to be
withheld by law.
(e) CHOICE OF LAW. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS.
(f) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions hereof. The parties hereto further
agree to replace such invalid, illegal or unenforceable provision of this
Agreement with a valid, legal and enforceable provision that will achieve, to
the extent possible, the economic, business and other purposes of such
invalid, illegal or unenforceable provision.
(g) No Assignment of this agreement may be made by either party.
(h) Company's Successors. This Agreement shall be binding upon any
successor (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets. For all purposes under this Agreement, the
term "COMPANY" shall include any successor to the Company's business and/or
assets, which become bound by this Agreement.
(i) Employee's Successors. This Agreement and all rights of
Employee may not be transferred or assigned by Employee at any time without
the prior written consent of the Company authorized by a duly adopted Board
resolution; and shall inure to the benefit of, and be enforceable by,
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
(j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(k) Joint Participation in Preparation of Agreement. The parties
hereto participated jointly in the negotiation and preparation of this
Agreement and each party has had the opportunity to obtain the advice of legal
counsel and to review, comment upon, and redraft this Agreement. Accordingly,
it is agreed that no rule of construction shall apply against any party in
favor of any party. This Agreement shall be construed as if the parties
jointly prepared it, and any uncertainty or ambiguity shall not be interpreted
against any one party and in favor of the other.
(l) Remedies.
(i) In the event of a breach or threatened breach by the
Company or Employee of any of the provisions of this
agreement, the Employee or Company shall be entitled to an
injunction restraining the Employee or the Company from
such breach and/or in the case of an injunction in favor
of the Company or Employee, from rendering any services to
any person, firm, corporation, association, or other
entity receiving (or to receive) the benefit of such
breach, since the remedy at law would be inadequate and
insufficient.
(ii) In addition, the Employee or Company shall be entitled to
such damages as he or it can show he or it has sustained
by reason of such breach. As among themselves, the parties
agree that the prevailing party shall bear the costs and
expenses of enforcing the provisions of the Agreement.
Nothing herein contained shall be construed as prohibiting
the Employee or Company from pursuing any other remedies
available for such breach or threatened breach or any
other breach of this Agreement at law or in equity or
otherwise.
(m) IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of
the day and year first above written.
- --------------------------------------
[EMPLOYEE]
GENISYS INFORMATION SYSTEMS, INC.
BY:
-----------------------------------
NAME:
TITLE:
<PAGE>
NEUMAN & DRENNEN, LLC
Attorneys at Law
TEMPLE-BOWRON HOUSE
1507 PINE STREET
BOULDER, COLORADO 80302
Telephone: (303) 449-2100
Facsimile: (303) 449-1045
May 1, 2000
iGeniSys, Inc.
654 North Belt East, Suite 310
Houston, Texas 77060
Re: S.E.C. Registration Statement on Form SB-2
Ladies and Gentlemen:
We hereby consent to the inclusion of our opinion regarding the legality
of the securities being registered by the Registration Statement to be filed
with the United Stated Securities and Exchange Commission, Washington, D.C.,
pursuant to the Securities Act of 1933, as amended, by iGeniSys, Inc., a
Colorado corporation, (the "Company") in connection with the offering of up to
4,455,291 shares of its Common Stock, $.001 par value, as proposed and more
fully described in such Registration Statement.
We further consent to the reference in such Registration Statement to our
having given such opinions.
Sincerely,
Clifford L. Neuman
CLN:gg
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in this Registration Statement on Form SB-2 of our
report dated June 25, 1999 (February 16, 2000 as to Note 9) relating to the
financial statements of iGeniSys, Inc. and subsidiary as of March 31, 1999 and
1998, and for the year ended March 31, 1999 and the period from May 1, 1997
(inception) to March 31, 1998; and to the reference to our Firm under the
caption "Experts" in the Prospectus.
GELFOND HOCHSTADT PANGBURN, P.C.
Denver, Colorado
April 28, 2000
