<PAGE> 1
DRAFT
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of The Securities Exchange Act of 1934
SUMMEDIA.COM INC.
(Name of Small Business Issuer in its Charter)
<TABLE>
<S> <C>
COLORADO 95-4734398
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(State or Other Jurisdiction of Incorporation of (I.R.S Employer Identification No.)
Organization)
</TABLE>
1200-1055 WEST HASTINGS STREET
VANCOUVER B.C. CANADA V6E 2E9 V6E 2E9
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(Address of principal executive officers) (Zip Code)
Issuer's telephone number: (604) 605-0901
Securities to be registered pursuant to Section 12(b) of the Act.
Title of each Class Name of exchange on which
registered
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Securities to be registered pursuant to Section 12(g) of the Act.
Common Stock
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(Title of Class)
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ITEM 1. DESCRIPTION OF BUSINESS
(a) BUSINESS DEVELOPMENT
SUMmedia.com Inc. ("SUMmedia.com" or the "Company") was incorporated on
December 7, 1990 under the laws of the State of Delaware as Pursuit Ventures
Corporation. Under a merger agreement, effective August 21, 1998, SUMmedia.com
merged with a Colorado corporation that was incorporated on March 20, 1997,
under the name Remington Assets Limited, and, effective August 19, 1998, changed
its name to Pursuit Ventures Corporation. Under the terms of the merger
agreement, Pursuit Ventures Corporation, was the surviving corporation.
SUMmedia.com changed its name to Reliance Resources Inc., effective September 8,
1998.
On August 20, 1999, SUMmedia.com entered into a share exchange with SUM
Media Corp., a British Columbia, Canada company. Pursuant to the terms of the
transaction, SUMmedia.com issued 3,200,000 shares of common stock for 100% of
the issued and outstanding common stock of SUM Media Corp. At the time of the
transaction, the two companies were under common control, and therefore the
transaction was accounted for similar to a pooling of interests where the
assets, liabilities, shareholders' equity and results of operations of both
companies were combined at their carrying amounts. SUMmedia.com was inactive
from inception until this transaction. SUMmedia.com was incorporated in March
1999 and commenced operations in June 1999.
SUMmedia.com subsequently changed its name to SUMmedia.com Inc.,
effective August 25, 1999. It received approval to change its trading symbol in
the over-the-counter bulletin board (from "PSVC") to "ISUM", effective August
30, 1999.
SUMmedia.com is a development stage company.
(b) BUSINESS OF THE ISSUER
Business
SUMmedia.com is an Internet media and marketing company that provides
online coupons, or "eCoupons," for small businesses through its portal,
SavingUMoney.com. SUMmedia.com's goal is to provide Internet marketing
initiatives for smaller businesses lacking the expertise or financial resources
to embrace "eCommerce."
In addition to its current eCoupon operations, SUMmedia.com plans to
develop, market, and support online marketing and promotional activities for Web
site design and hosting, and online shopping storefronts that enable small
businesses to cost effectively utilize the Internet, regardless of their size,
resources, or global address.
There are a number of issues frequently encountered by companies in an
early stage of development in new and rapidly evolving markets. To address these
issues, SUMmedia.com plans to, among other things:
o protect and enhance its brand;
o expand its product and service offerings;
o increase the amount of Internet traffic to SUMmedia.com and
SavingUMoney.com, as well as other Web sites owned but currently under
development;
o increase the number and types of businesses that use its products and
services;
o increase the value of its eCouponing services to the public and to its
retail customers and to its potential advertisers; and
o attract, integrate, retain and motivate qualified personnel.
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Of its services, SUMmedia.com anticipates that eCoupons will be its
major source of revenue for the near future. SUMmedia.com's eCoupon offerings
are still in their infancy and, as a result, the effectiveness of eCoupons, as
compared to traditional methods of reaching customers, cannot yet be determined.
SUMmedia.com hopes to demonstrate to corporate customers that its eCoupons will
increase the rate at which comparison shoppers become purchasers, improve
customer satisfaction on SUMmedia.com's Web sites and offer a cost-effective
alternative to newspaper and magazine advertising. If SUMmedia.com is unable to
do this, its ability to attract and retain corporate customers will likely be
impaired.
Currently, SUMmedia.com has approximately 2,500 customers. Many of
these customers are doing business under SUMmedia's promotional program of
90-day e-Coupon hosting with the signing of a 1-year contract. The majority of
SUMmedia's customer contracts for eCoupons have a term of one year. As a result,
if SUMmedia is unable to offer sufficient value to its customers during the term
of these contracts, such customers may not renew their contracts. If
SUMmedia.com does not obtain a sufficient amount of contract renewals, or if
such renewal contracts are obtained on terms less favorable than the original
contracts, its business will be materially adversely affected.
It is anticipated that revenues from Internet advertising will be an
incidental portion of SUMmedia.com's future revenues. However, because the
Internet advertising market is new and rapidly evolving, SUMmedia.com cannot yet
gauge its effectiveness, as compared to traditional advertising media.
Advertisers that have traditionally relied on other advertising media may be
reluctant to advertise on the Internet in the belief that Internet advertising
is less effective than traditional advertising media for promoting their
products and services. Consequently, advertisers may allocate only limited
portions of their advertising budgets to Internet advertising. SUMmedia.com's
business could be materially adversely affected if Internet advertising does not
materialize or if SUMmedia.com is unsuccessful in developing its advertising
revenues. Another risk lies in the deep discounting offered by online
advertising, a strategy that SUMmedia.com believes it must match for the
foreseeable future in order to penetrate this market.
Competition
There are a significant number of sites on the Internet offering
coupons for use online and offline. Two of SUMmedia.com's most significant
competitors are ValuPage.com and CoolSavings.com. ValuPage.com is a grocery-only
site, and is one of the most popular online coupon providers. In June 1999,
ValuPage.com was ranked 46th in the top 100 list of most visited web domains
with 3.8 million unique visitors each month. CoolSavings.com ranks 61st on the
same list, with more than 2.2 million unique visitors per month. While the Cool
Savings.com site coupon content is not limited to grocery items, it is
exclusively focused on nationally branded products and national retail chains
with coupons for approximately 300 companies. There are numerous smaller online
coupon sites and competitors using traditional media such as newspaper inserts,
direct mail flyers and co-op envelopes to distribute their coupons. Many of
SUMmedia.com's existing competitors, as well as potential new competitors, have
longer operating histories, greater name recognition, larger customer bases, and
significantly greater financial, technical and marketing resources.
Intellectual Property
SUMmedia.com is attempting to be proactive in protecting its
intellectual property rights. It has filed five trademark applications in Canada
and is in the process of making applications in other countries. SUMmedia.com
owns approximately 20 domain names and plans to protect them with trademarks as
it deems necessary. SUMmedia.com has not applied for any patents.
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Pursuant to Canadian intellectual property laws, copyright protection,
at a base level, has been acquired automatically in Canada for the computer
programs and web site designs developed by SUMmedia.com employees. Canadian law
provides a higher level of copyright protection once the copyright is
registered. We anticipate filing copyright applications for SUMMEDIA and SAVING
U MONEY in the near future.
In general, SUMmedia.com plans to protect its copyrights, service
marks, trademarks, and trade secrets through a combination of laws and
contractual restrictions, including confidentiality and non-disclosure
agreements. For example, SUMmedia.com may elect to register its trademarks and
service marks in the United States and internationally. However, effective
trademark, service mark, copyright and trade secret protection may not be
available in every country in which SUMmedia.com's services are made available
online. Because SUMmedia.com is devoting significant resources to building its
brands, primarily "savingUmoney" and "SUMmedia.com," through media advertising
campaigns, if it is not granted registered status for the trade and service
marks for which it has applied, or if it is unable to defend its intellectual
property rights, its business may be materially and adversely affected.
Computer programs and web site designs, or portions thereof, that have
been developed by independent contractors/consultants engaged by SUMmedia.com
must be supported by the proper agreements to transfer the copyright to
SUMmedia.com. Management has authorized final drafting of the appropriate
documents.
Domain names generally are regulated by Internet regulatory bodies. The
relationship between regulations governing domain names and laws protecting
trademarks and similar proprietary rights is unclear. Accordingly, SUMmedia.com
could be unable to prevent third parties from acquiring domain names that
infringe or otherwise reduces the value of its trademarks and other proprietary
rights.
Regulation
Any new law or regulation pertaining to the Internet, or the
application or interpretation of existing laws, could decrease the demand for
SUMmedia.com's services, increase its cost of doing business or otherwise have a
material adverse effect on its business. There is, and will likely continue to
be, an increasing number of laws and regulations pertaining to the Internet.
These laws or regulations may relate to liability for information retrieved from
or transmitted over the Internet, online content regulation, user privacy,
taxation, and the quality of products and services. Furthermore, the growth and
development of electronic commerce may prompt popular demand for more stringent
consumer protection laws that may impose additional burdens on electronic
commerce companies. Moreover, the applicability to the Internet of existing laws
governing intellectual property ownership and infringement, copyright,
trademark, trade secret, obscenity, libel, employment, personal privacy and
other issues is uncertain and developing.
SUMmedia.com will file tax returns in such jurisdictions as required by
law based on principles applicable to traditional businesses. However, one or
more jurisdictions could seek to impose additional income tax obligations or
sales tax collection obligations on foreign companies, such as SUMmedia.com,
which engage in or facilitate electronic commerce. A number of proposals have
been made at state and local levels that could impose such taxes on the sale of
products and services through the Internet or the income derived from such
sales. Such proposals, if adopted, could substantially impair the growth of
electronic commerce and adversely affect SUMmedia.com's business.
Legislation limiting the ability of the states to impose taxes on
Internet-based transactions recently has been enacted by the United States
Congress. However, this legislation, known as the Internet Tax Freedom Act,
imposes only a three-year moratorium, commencing on October 1, 1998 and ending
on October 21, 2001, on state and local electronic commerce taxes, where such
taxes are
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discriminatory, unless such taxes were generally imposed and actually enforced
prior to October 1, 1998. It is possible that the tax moratorium could fail to
be renewed prior to October 21, 2001. Failure to renew this legislation would
allow various states to impose Internet-based taxes.
Research and Development
During the quarter ended September 30, 1999, SUMmedia.com expended
$130,000 ($39,000 to June 30, 1999) on research and development. No costs were
incurred in prior years. Research and development costs primarily were made up
of payments to outside contractors and associated expenses related to
engineering design work and testing of SUMmedia.com's technology. These costs
are included as general and administrative costs.
Employees
As of September 30, 1999, SUMmedia.com had approximately 100 employees
(approximately 25 in Toronto, Ontario, 50 in Vancouver, British Columbia, and 25
in Seattle, Washington). SUMmedia.com has never experienced an employee
organized work stoppage, and no employees are represented under collective
bargaining agreements. SUMmedia.com considers relations with its employees to be
good. SUMmedia.com plans to launch 15 new territories in the next 12 months.
Each new launch of a business in a new region is expected to require the
addition of approximately 25 people to the Company's staffing levels.
ITEM 2. MANAGEMENT'S PLAN OF OPERATION
The following discussion should be read in conjunction with the
consolidated financial statements of SUMmedia.com Inc.
Forward-Looking Statements
This document contains certain forward-looking statements that involve
risks and uncertainties, such as statements of SUMmedia.com's plans, objectives,
expectations and intentions. When used in this document, the words "expects,"
"anticipates," "intends," "plans" and similar expressions are intended to
identify certain of these forward-looking statements. The cautionary statements
made in this document should be read as being applicable to all related forward
- -looking statements wherever they appear in this document. SUMmedia.com's actual
results could differ materially from those discussed in this document.
Expansion Plans
Over the next 12 months, the management of SUMmedia.com plans to expend
significant resources to:
o expand marketing and sales in current and new locations served by the
SavingUMoney.com Website;
o build awareness of SUMmedia.com through advertising campaigns;
o enter into markets in other U.S. cities, Europe, Asia, Australia and
New Zealand; and
o open new offices and hire additional employees.
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Cash requirements
SUMmedia.com believes that its existing cash and cash sources will not
be sufficient to fund its losses from operations, its capital expenditures and
other obligations beyond the next month. If SUMmedia.com is not successful in
generating sufficient cash flow from operations or in raising additional capital
when required in sufficient amounts and on terms acceptable to SUMmedia.com, its
business, financial condition and operating results will be materially adversely
affected.
It is anticipated that significant cash will be required over the next
twelve months to fund: establishing and launching businesses in Australia ($1.5
million), Hong Kong ($1 million) and other Asian countries ($5 million);
software and hardware for an enterprise-wide data and financial management
system ($3 million); new U.S. territory launches ($3 million); a Canadian
advertising and marketing campaign ($5 million); and general operations ($5
million). No budget has yet been set for the US or Asian advertising and
marketing campaigns.
Research and Development
During the next 12 months, SUMmedia.com intends to expend significant
resources in the pursuit of Internet research and development to support
internal operations, Internet content and geographic expansions.
Purchases of significant equipment
SUMmedia.com has no material commitments for capital expenditures at
September 30, 1999, but expects such expenditures to be at least $1 million
through the remainder of 1999. Such expenditures will primarily be for computer
equipment for SUMmedia.com's enterprise-wide systems, furniture and fixtures,
personal computers and leasehold improvements. SUMmedia.com also has total
minimum lease obligations of $938,000 under certain operating leases and $59,000
in capital leases through September 2004.
Employees
Each new launch of a business in a new region is expected to require
the addition of approximately 25 people to SUMmedia.com's staffing levels. As a
result, if SUMmedia.com launches 15 new territories in the next 12 months, it
can expect to add approximately 375 additional employees.
Results of Operations
SUMmedia.com commenced operations in March 1999. From inception to that
date, was an inactive "shell" with no operations or revenues; it had an
accumulated deficit of approximately $60,000 comprised mainly of general and
administrative costs (legal, audit, etc.). As a result, comparative figures are
not meaningful and are therefore not included or discussed in this report.
SUMmedia.com incurred a deficit of $2.9 million from December 7, 1990
(date of inception) through September 30, 1999 ($2.5 million in the quarter then
ended), due to continuing costs of raising capital, stock-based compensation
charges, initial operating expenses, and marketing and branding development.
Revenues for the nine months ended September 30, 1999 were $145,401
(there were no revenues for the period from inception to June 30, 1999). There
were no revenues for the period from inception to June 30, 1999. Approximately
80% of SUMmedia.com's revenues for the quarter ended September 30, 1999 were
derived from exclusivity fees from Canadian businesses. The balance of
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SUMmedia.com's revenues were derived from eCoupon sales and Website development
and hosting fees paid by its customers. To date, online advertising on
SUMmedia.com's website has not significantly contributed to revenues.
General and administrative expenses for the nine months ended September
30, 1999 were $2.1 million. These expenses are generally attributed to the
hiring of over 30 administrative staff to build the infrastructure of
SUMmedia.com in areas of executive management, administrative personnel and
technical support for SUMmedia.com's offices at a cost of $1.3 million which
includes $1,033,000 in stock-based compensation. Also included are fees for
external professional advisors. A significant general and administrative expense
was incurred through the purchase of software licenses for $100,000. Another
significant expenditure was travel expenses associated with trips to the United
States, Australia, and Asia to secure financing and business partners for
SUMmedia.com at a cost of $175,000. Leased office space increased from
approximately 1,000 square feet at the end of the quarter ended June 30, 1999 to
over 13,000 square feet office space at September 30, 1999, resulting in a cost
of $66,000. SUMmedia.com anticipates that expenses will continue to increase as
SUMmedia.com pursues its product rollouts.
Research and development costs amounted to $169,000 for the nine months
ended September 30, 1999. Research and development costs were primarily
comprised of payments to outside contractors and expenses related to engineering
design work and testing of SUMmedia.com's technology. These costs are included
in the general and administrative category. Product development expenses are
expected to increase significantly in future periods primarily due to the
payment of consulting fees, salaries, and additional depreciation costs as
SUMmedia.com continues to purchase equipment to improve and expand its
operations both domestically and internationally, and as it completes the
commercial development of its technology.
During the nine months ended September 30, 1999, SUMmedia.com incurred
$716,000 in various advertising and marketing costs, of which $315,000 was spent
on salaries for over 40 new sales and marketing employees. SUMmedia.com's sales
and marketing expenses are comprised primarily of compensation for
SUMmedia.com's sales and marketing personnel, advertising, tradeshow and other
promotional costs and expenses for creative design of SUMmedia.com's websites.
The increases resulted primarily from continued growth in the number of
personnel, increases in online, radio, and international advertising and
third-party services. Sales and marketing expenses are expected to increase in
the near term due to branding, advertising and marketing, and incremental
expenses associated with personnel additions made in the current nine months and
those expected in future quarters.
Amortization expense was $133,000 for the nine months ended September
30, 1999 during which period SUMmedia.com purchased computers and office
furniture at a total cost of $336,000 and a promotional vehicle for $86,000.
Liquidity and Capital Resources
At September 30, 1999, SUMmedia.com had $327,247 in cash, a working
capital deficiency of $(131,679) and shareholders' equity of $172,827. Net cash
used in SUMmedia.com's operating activities was $2.3 million for the nine months
ended September 30, 1999. The net cash used in operating activities in the
period resulted primarily from net losses, offset by the timing of payable
settlements, funds from shareholders, subscriptions receivable, and, to a lesser
degree, by non-cash charges for depreciation and amortization and increases in
various current asset and liability categories. Since SUMmedia.com has no
significant revenues, working capital will continue to be depleted by operating
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expenses. Furthermore, if SUMmedia.com should generate an operating loss for the
last nine months comparable to the loss incurred for the nine months ended
September 30, 1999, a substantial portion of the Corporation's remaining cash
will be depleted and the working capital deficiency increased.
Since June 1999, SUMmedia.com has financed its operations primarily
through stock offerings and unsecured advances from the founders of SUM Media
Corp.
Net cash provided by financing activities in July and late September
1999 resulted from the sale of 1,500,000 shares of common stock for gross
proceeds of $2.5 million. The net proceeds from these financing activities were
used for funding operations and capital expenditures.
Net cash used in investing activities in 1999 primarily resulted from
the purchase of $421,000 in capital assets composed primarily of computer
equipment, furniture, and a promotional vehicle. In additional investing,
SUMmedia.com acquired all of the shares of SUM Media Corp., a private British
Columbia company, in exchange for 3.2 million shares.
SUMmedia.com's funding needs may vary depending upon a number of
factors, including the number and nature of the marketing and sales launch
initiatives; progress of SUMmedia.com's research and development programs; the
number and breadth of these programs; the progress of the development and
commercialization efforts of new products; and competing technological and
market developments. In the future, SUMmedia.com will need to raise substantial
additional funds to continue to conduct its branding, marketing plans, research
and development, and to implement enterprise-wide infrastructure programs.
SUMmedia.com intends to seek additional funding through public or private
financing and up-front licensing fees of its technology. There can be no
assurance that such funds will be available on favorable terms, or at all. If
adequate funding is not available, SUMmedia.com may be required to delay, reduce
or eliminate one or more of its marketing strategies or research and development
programs. These changes may also require SUMmedia.com to seek funding on less
favorable terms than it would otherwise.
Year 2000 Issues
Many currently installed computer systems and software products are
coded to accept only two-digit entries in the date code field and cannot
reliably distinguish dates beginning on January 1, 2000 from dates prior to the
year 2000. Many companies' software and computer systems may need to be upgraded
or replaced in order to correctly process dates beginning in 2000 and to comply
with the "Year 2000" requirements. SUMmedia.com has reviewed its internal
programs and has determined that there are no significant Year 2000 issues
within SUMmedia.com's systems or services. SUMmedia.com has completed
modifications to its internal systems to fix identified Year 2000 issues in an
attempt to ensure Year 2000 compliance. The costs of these modifications have
not been material and have involved a reallocation of internal resources rather
than incremental expenditures. SUMmedia.com believes that its own software is
Year 2000 compliant. However, SUMmedia.com could face unexpected expenses to fix
any Year 2000 issues or unanticipated website outages, either of which would
harm its business. In addition, SUMmedia.com uses third-party equipment and
software that may not be Year 2000 compliant. SUMmedia.com is also conducting a
further review of third-party software and embedded systems used in its online
business. In addition, SUMmedia.com expects that the incremental cost of all of
these reviews will not exceed $50,000. The cost of any necessary upgrades or
changes cannot currently be precisely estimated. SUMmedia.com may be harmed if
necessary upgrades or changes are not identified, or, if identified, are not
timely and successfully implemented at an acceptable cost. SUMmedia.com also may
be harmed by Year 2000 problems of its vendors and business partners. For
example, SUMmedia.com may rely on credit card companies to collect the majority
of its revenues from users. Due to the nature of the credit card system, some
industry analysts have questioned the effect of the year 2000 on credit card
processing and billing. Failure of SUMmedia.com's credit card vendors or
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other third-party equipment or software vendors to properly process dates for
the year 2000 and thereafter could require it to incur unanticipated expenses in
seeking alternative means of payment or hardware or software replacements. It
also could result in loss of revenues or unanticipated website outages.
SUMmedia.com's marketing efforts are also dependent on the continued operation
of Internet portals and other Internet sites on which it advertises.
Although SUMmedia.com has not yet developed contingency plans with
respect to collecting payment under these circumstances, it is unable to make
such contingency plans if any significant number of the computers constituting
the Internet fail to process dates properly for the year 2000 and there is a
system-wide slowdown or breakdown. SUMmedia.com's business is dependent on the
continued successful operation of the Internet. Any interruption or significant
degradation of Internet operations due to Year 2000 problems could harm
SUMmedia.com's business.
Selected unaudited consolidated financial data
The following selected consolidated financial data are qualified by
reference to, and should be read in conjunction with, the Consolidated Financial
Statements and the Notes thereto and "Results Of Operations" appearing elsewhere
in this document. The selected consolidated statement of operations data
presented below for the period from inception through September 30, 1999 and the
consolidated balance sheet data at September 30, 1999 are derived from the
unaudited consolidated financial statements included elsewhere in this document.
The unaudited consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of our financial position and results of operations for these
periods. The consolidated financial data for the nine months ended September 30,
1999 are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 1999 or any other future period.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF PERIOD FROM
OPERATIONS DATA: DECEMBER 7, 1990
(INCEPTION)
THROUGH DECEMBER 31, YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30
1995 1996 1997 1998 1998 1999
(AUDITED) (AUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Coupons -- -- -- -- -- 27,992
Licenses -- -- -- -- -- 113,014
Websites -- -- -- -- -- 8,653
Total Revenues -- -- -- -- -- 149,659
Operating Expenses:
General & Administrative 44,500 3,500 7,230 4,500 3,000 2,115,585
Marketing & Sales -- -- -- -- -- 765,890
Amortization -- -- -- -- -- 133,493
Total Operating Expenses 44,500 3,500 7,230 4,500 3,000 3,014,968
Loss from Operations (44,500) (3,500) (7,230) (4,500) (3,000) (2,865,309)
</TABLE>
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<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET DATA: AS OF DECEMBER 31, AS OF SEPTEMBER 30, 1999
(AUDITED) (UNAUDITED)
1996 1997 1998
<S> <C> <C> <C> <C>
Cash and cash equivalents -- -- -- 327,247
Working capital (Deficiency) (13,000) (20,000) (4,500) (131,679)
Total assets -- -- -- 866,055
Capital lease obligations -- -- -- 59,445
Total stockholders' equity (13,000) (20,000) (4,500) 172,827
</TABLE>
Quantitative and Qualitiaive Disclosure about Market Risk
SUMmedia.com's exposure to market risk is principally confined to its
cash and cash equivalents and available-for-sale securities, which have short
maturities and, therefore, are believed to involve minimal market risk.
Business Overview
SUMmedia.com is an Internet media and marketing company that provides
online coupons, or eCoupons, for small businesses through its portal,
SavingUMoney.com. SUMmedia.com's goal is to provide Internet marketing
initiatives for smaller businesses lacking the expertise to exploit eCommerce
opportunities.
Future Acquisitions
SUMmedia.com will consider strategic acquisitions of companies with
a strong brand identity and with customer and product information databases that
augment its databases. It will be SUMmedia.com's practice to allow the acquired
company's management team to retain responsibility for critical front-end
business functions such as merchandising, creative presentation and marketing,
while consolidating operational functions under its organization to realize
economies of scale.
ITEM 3. DESCRIPTION OF PROPERTY
SUMmedia.com conducts all of its operations from leased and sub-leased
facilities at various locations. SUMmedia.com believes that these facilities
will be adequate for its current and foreseeable future needs, although future
additions will be required with the set up of any new offices under
SUMmedia.com's expansion plans.
The following table sets forth certain information relating to SUMmedia.com's
facilities:
<TABLE>
<CAPTION>
Location Size (sq. ft) Use Lease Expiration
<S> <C> <C> <C>
Vancouver, BC, Canada 8,800 Headquarters and sales office July 31, 2003
Toronto, ON, Canada 3,500 Sales office September 30, 2004
Seattle, WA, USA 3,900 Sales office October 31, 2004
</TABLE>
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to beneficial
ownership of SUMmedia.com's common stock as of November 30, 1999 for:
o each person or entity known by SUMmedia.com to beneficially own more
than 5% of its outstanding common stock;
o each of its directors and named executive officers; and
o all of SUMmedia.com's directors and named executive officers as a
group.
Unless otherwise indicated, the address for each of the individuals listed
in the table is care of SUMmedia.com, 1200 - 1055 West Hastings Street,
Vancouver, B.C., V6E 2E9, Canada. Unless otherwise indicated by footnote,
the persons named in the table have sole voting and sole investment power
with respect to all shares of common stock shown as beneficially owned by
them.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT AND NATURE
OR NAME OF OFFICER OR DIRECTOR OF BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
------------------------------------ ----------------------- -------------------
<S> <C> <C>
Dennis Molloy(2) 4,932,794 31.7%
Grant M. Petersen(3) 4,951,994 31.4%
John E. Veltheer(4) 163,000 1.1%
David R. Lewis(5) 143,200 (10)
Jihong M. Zhang(6) 248,000 1.6%
Andre Dragon(7) 86,000 (10)
Albert C. Szajman(8) 64,000 (10)
David E. Jubb(9) 24,000 (10)
David R. Noble(9) 24,000 (10)
All Officers and directors as a group 10,636,987 68.1%
(9 persons)
</TABLE>
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(1) Percentage of beneficial ownership is based on 14,990,000 shares of common
stock issued and outstanding as of November 30, 1999.
(2) Mr. Molloy's address is 24446 - 80th Avenue, Langley, B.C., Canada.
Includes 48,000 shares underlying stock options currently exercisable, or
exercisable within 60 days and 500,000 shares underlying warrants currently
exercisable, or exercisable within 60 days.
(3) Includes 67,000 shares underlying stock options currently exercisable, or
exercisable within 60 days and 500,000 shares underlying warrants currently
exercisable, or exercisable within 60 days.
(4) Includes 48,000 shares underlying stock options currently exercisable, or
exercisable within 60 days.
(5) Includes 43,200 shares underlying stock options currently exercisable, or
exercisable within 60 days.
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(6) Includes 48,000 shares underlying stock options currently exercisable, or
exercisable within 60 days.
(7) Includes 36,000 shares underlying stock options currently exercisable, or
exercisable within 60 days.
(8) Includes 24,000 shares underlying stock options currently exercisable, or
exercisable within 60 days.
(9) Represents 24,000 shares underlying stock options currently exercisable, or
exercisable within 60 days.
(10) Less than one percent.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth information regarding the executive
officers and directors and key employees of SUMmedia as of November 30, 1999:
<TABLE>
<CAPTION>
NAME AND POSITION AGE HELD POSITION SINCE
<S> <C> <C>
Grant M. Petersen, Chairman of the Board, and 43 1999
Chief Executive Officer
John E. Veltheer, President and Director 34 1999
David R. Lewis, Chief Financial Officer, 54 1999
Secretary, Treasurer, and Director
Andre Dragon, Chief Operating Officer 41 1999
David R. Noble, Chief Information Officer 38 1999
Albert C. Szajman, Vice President, Marketing 42 1999
Jihong M. Zhang, Vice President, Offshore 31 1999
Expansion and Corporate Development and
Director
David E. Jubb, Vice President, ePartnering 56 1999
</TABLE>
All directors have served since August 20, 1999. The SUMmedia.com board is
divided into three classes designated as Class I, Class II and Class III and its
directors will be assigned to each class by the board. At the first annual
meeting of stockholders following the submission of this registration, the term
of office of the Class I directors will expire and Class I directors will be
elected for a full term of three years; Class II directors will be elected for a
full term of two years; and Class III directors will be elected for a full term
of one year. At the second annual meeting of stockholders following the
submission of this registration, the term of office of the Class III directors
will expire and Class III directors will be elected for a full term of three
years. At the third annual meeting of stockholders following the submission of
this registration, the term of office of the Class II directors will expire and
Class II directors will be elected for a full term of three years. At each
succeeding annual meeting of stockholders, directors will be elected for a full
term
- --------------------------------------------------------------------------------
page 12
<PAGE> 13
of three years to succeed the directors of the class whose terms expire at
such annual meeting. The Class I directors are Grant Petersen, John Veltheer,
Jihong Zhang, and David Lewis; there are no Class II or Class III directors as
of November 30, 1999.
The following is a brief summary of the business experience of each
director and officer over the last five years:
GRANT M. PETERSEN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Mr. Petersen has been an officer and director of the Company since June
1999. Over the past five years Mr. Petersen has been working in the automobile
leasing business. Previously, Mr. Petersen was involved in various
entreprenurial endeavors, ranging from the construction industry to the
automotive sector.
JOHN E. VELTHEER
PRESIDENT
Dr. Veltheer has been an officer of the Company since June 1999 and a
director since August 1999. From early 1997 to June 1999, Dr. Veltheer worked
with numerous technology startup companies where he used his investor relations,
business planning, consulting, and financing skills. From 1998 to June 1999, he
was manager of shareholder relations at Softwex Technologies Inc. and remains
the principal of a Vancouver-based venture capital company: Iridium Capital Inc.
From September 1995 to September 1996, Dr. Veltheer was research associate at
the University of British Columbia. From September 1993 to August 1995, he was a
post-doctoral fellow at the University of California, Berkeley. Dr. Veltheer has
a PhD in Chemistry from University of British Columbia.
DAVID R. LEWIS
CHIEF FINANCIAL OFFICER
Mr. Lewis has been an officer of the Company since July 1999 and a
director since August 1999. Prior to joining SUMmedia.com in July 1999, Mr.
Lewis was the CFO at Alya International Inc., a publicly traded developer of
advanced security and building management systems for large facilities. In 1998,
he was the CFO and a director at Net Nanny Software International Inc., a
publicly-traded a developer of Internet and Web filtering software. From
mid-1994 to early 1998, Mr. Lewis provided management consulting to various
startup companies to help them achieve their operational and financial
objectives through the design and implementation of practical financial and
productivity solutions. Mr. Lewis was with Hariston Corporation, a public
company, from 1992 to mid-1994. He joined Hariston as International Controller
in late 1992 and became CFO in late 1993. Hariston was engaged in a number of
international ventures, including investments in US minerals recovery
operations, Canadian oil and gas working and royalty interests, proprietary home
medical products, and European supermarkets and home improvement stores. Mr.
Lewis has a degree in Metallurgical Engineering from Dalhousie University in
Halifax and a Chartered Accountant designation obtained while with Coopers &
Lybrand in Toronto, Ontario.
ANDRE DRAGON
CHIEF OPERATING OFFICER
Mr. Dragon has been an officer of the Company since July 1999. From May
1997 to June 1999, Mr. Dragon was the National Director, Sales and Marketing
with Nextport Media, a subsidiary of Bell Actimedia, BCE Inc.'s marketing,
printing and publishing group. From October 1994 to November 1996, Mr. Dragon
was Director, International Expansion and Regional General Manager at
Interactive Media
- --------------------------------------------------------------------------------
page 13
<PAGE> 14
Group, a Toronto, Ontario developer of interactive communications solutions. Mr.
Dragon holds a Master of Business Administration degree from Concordia
University in Montreal, Quebec.
DAVID R. NOBLE
CHIEF INFORMATION OFFICER
Mr. Noble joined SUMmedia.com in November 1999 from Oracle Corporation,
where he was a Technical Manager responsible for Internet Development from the
beginning of 1999. From 1994 to 1998, Mr. Noble was with Sierra Systems
Consultants Inc, where he was a principal and Technology Leader for the Public
Sector Practice and responsible for the Oracle Technology Partnership. Mr. Noble
received an honours degree in Computer Science and Information Processing at
Brock University, St. Catharines, Ontario (with a minor in Business Management)
and a Communications Diploma at Napier College in Scotland.
JIHONG (MELODY) ZHANG
SENIOR VICE PRESIDENT, OFFSHORE EXPANSION AND CORPORATE DEVELOPMENT
Ms. Zhang joined SUM Media Corp. in May 1999 and has been an officer
of SUMmedia.com Inc. since July 1999 and a director since August 1999. From 1998
to early 1999, Ms. Zhang managed a cellular phone distribution company (which
she founded) in China and which was the exclusive regional phone distributor for
China Unicom, the second largest telecommunications company in China. From 1997
to 1998, Ms. Zhang was an independent marketing and technology consultant. From
1991 to 1997, Ms. Zhang was General Manager of Zhuhai Suntech Computer Co.,
Ltd.; a company that distributed brand name computers and accessories. Ms. Zhang
has a Bachelor of Science in Physics from the University of Science and
Technology, China.
ALBERT C. SZAJMAN
VICE PRESIDENT, MARKETING
Mr. Szajman joined the Company in August 1999 and has been an officer
of SUMmedia.com Inc. since that time. From 1997 to 1999, he was Vice President
of Palmer Jarvis DDB in Vancouver, BC. From 1991 to 1997, Mr. Szajman was with
Bryant, Fulton & Shee, Baird Advertising where he rose from Account Director to
Promotional Marketing Director. Mr. Szajman is a graduate of the Advertising and
Marketing program at British Columbia Institute of Technology.
DAVID E. JUBB
VICE PRESIDENT, EPARTNERING
Mr. Jubb has been an officer of the Company since September 1999.
From 1992 to 1996 and from 1998 to late 1999, Mr. Jubb was Vice President, Sales
of Liberty Integration Software. From 1996 to 1998, he was also the founder and
proprietor of a local sales consultancy operation for more than two years. Mr.
Jubb received a Batchelor of Arts degree from the University of North Carolina.
Mr. Jubb spent four years in the US Marine Corps, before beginning a career in
high tech sales management.
- --------------------------------------------------------------------------------
page 14
<PAGE> 15
ITEM 6. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
During the fiscal year ended December 31, 1998, no executive officer of
SUMmedia.com received a salary. The following table sets forth information
concerning compensation earned in the fiscal year ended December 31, 1998 by
Patrick Brooks, SUMmedia.com's President. The information in the table includes
salaries, bonuses, stock options granted and other miscellaneous compensation.
Annual Compensation
<TABLE>
<CAPTION>
Name and Principal Other Annual All Other
Position Year Salary($) Bonus($) Compensation($) Compensation($)
------------------ ---- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Patrick Brooks, President and 1998 -- -- -- --
sole director to August 1999
-------- --------------- ---------------
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
During the fiscal year ended December 31, 1998, SUMmedia.com did not
grant stock options to any person.
Director Compensation
Currently, SUMmedia.com's directors do not receive any compensation
for their services as directors. In the near future, SUMmedia.com expects to
establish a compensation plan for non-employee directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of SUMmedia.com's executive officers serve as members of the board
of directors or compensation committee of any entity that has one or more
executive officers who serve on our board or compensation committee.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the nine months ended September 30, 1999, Grant M. Petersen, the
Chief Executive Officer and a director of SUMmedia.com and Dennis Molloy,
together loaned SUMmedia.com $171,726 without interest and without stated terms
of repayment.
- --------------------------------------------------------------------------------
page 15
<PAGE> 16
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
SUMmedia.com is authorized to issue 65,500,000 shares of $0.01 par
value common stock, of which 14,990,000 shares are issued and outstanding as of
November 15, 1999. As of November 15, 1999, SUMmedia.com had approximately 50
holders of record of its common stock. Holders of record of SUMmedia.com's
common stock did not include persons whose shares are held in their securities
brokerage accounts. SUMmedia.com estimates that there are approximately 50
beneficial holders of its common stock. Holders of shares of common stock are
entitled to one vote per share on all matters submitted to vote of the
shareholders of SUMmedia.com. However, in the election of directors, each holder
of shares of common stock is entitled to have as many votes for each share owned
as there are directors to be elected. There is no right to accumulate votes in
the election of directors. A majority of the votes entitled to be cast on a
matter by a voting group constitutes a vote for action on a matter. Subject to
preferences that may apply to shares of preferred stock outstanding, the holders
of shares of common stock are entitled to receive dividends out of assets
legally available at such time and in such amounts as the board of directors may
from time to time determine. Upon the occurrence of a liquidation, dissolution
or winding up of the assets of the Corporation, the holders of shares of common
stock will be entitled to share ratably in the distribution of all assets
remaining available for distribution after satisfaction of all liability and the
payment of any liquidation preference on any outstanding preferred stock.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED SHAREHOLDER MATTERS
MARKET INFORMATION.
SUMmedia.com's common stock trades on the OTC Bulletin Board. The range
of high and low bid quotations for the quarter ended September 30, 1999 was
between $5.92 and $2.88. These quotations represent prices between dealers and
do not include retail markups, markdowns, or commissions and may not necessarily
represent actual transactions. Management has been unable to locate any trading
information for the quarterly periods ended between December 31, 1997 and June
30, 1999. The sourcew of the high and low bid information is from Bloomburg
Website Services.
The market in which SUMmedia.com's common stock trades is commonly
referred to as the electronic bulletin board. As a result, an investor may find
it more difficult to dispose of or to obtain accurate quotations as to the
market value of SUMmedia.com's common stock. In addition, SUMmedia.com is
subject to a rule promulgated by the Securities and Exchange Commission that
provides that if SUMmedia.com fails to meet certain criteria set forth in such
rule, various sales practice requirements are imposed on broker/dealers who sell
SUMmedia.com's common stock to persons other than established customers and
accredited investors. For these types of transactions, the broker/dealer has to
make special suitability determination for the purchaser and have received the
purchaser's written consent to the transactions prior to sale. Consequently, the
rule may have an adverse effect on the ability of broker/dealers to sell
SUMmedia.com's common stock, which may have an adverse effect on the ability of
purchasers to sell SUMmedia.com's common stock in the market.
- --------------------------------------------------------------------------------
page 16
<PAGE> 17
HOLDERS
As of November 15, 1999, SUMmedia.com has approximately 50 holders of
record of its common stock.
DIVIDENDS
SUMmedia.com has not declared cash dividends on its common stock since
its inception. SUMmedia.com does not anticipate paying any dividends on its
common stock in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
SUMmedia.com is not currently a party to any legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
A decision to change SUMmedia.com's principal independent accountant
was recommended by the board of directors and was approved by the shareholders
on August 20, 1999. This change is the result of SUMmedia.com's desire to engage
a global accounting firm. As of the date of this registration statement, Henry
Schiffer, P.C. has not been dismissed as SUMmedia.com's principal independent
accountant and no other accounting firm has been formally engaged.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On August 6, 1999, SUMmedia.com issued 3,200,000 shares of its common
stock for 9,000,001 shares (100%) of SUM Media Corp. Issuance of the shares was
made in reliance upon the exemption from registration provided by Section 4(2)
of the Securities Act of 1933, as amended ("1933 Act"). The purchaser had access
to full information concerning SUMmedia.com and represented that it purchased
the shares for the purchaser's own account and not for the purpose of
distribution. The shares contained a restrictive legend advising that the
securities represented by the shares may not be offered for sale, sold or
otherwise transferred without having first being registered under the 1933 Act
or pursuant to an exemption from registration under the 1933 Act. No
underwriters were involved in the transaction.
In August 1999, SUMmedia.com issued 500,000 units each to Tigerlily
Financial Inc. and Cambridge Asset Holdings S.A. for gross proceeds of
$1,000,000. Each unit consisted of one share of common stock and one common
stock purchase warrant. Each warrant is exercisable for 24 months for $3.00 for
one share of common stock. Issuance of the units was made in reliance upon the
exemption from registration provided by Section 4(2) of the 1933 Act. The
purchaser had access to full information concerning SUMmedia.com and represented
that it purchased the units for the purchaser's own account and not for the
purpose of distribution. The units contained a restrictive legend advising that
the securities represented by the units may not be offered for sale, sold or
otherwise transferred without having first being registered under the 1933 Act
or pursuant to an exemption from registration under the 1933 Act. No
underwriters were involved in the transaction.
In September 1999, SUMmedia.com issued 500,000 units for gross cash
proceeds of $1,500,000 to Startech Corporation. Each unit consisted of one share
of common stock and common stock purchase warrant. Each warrant is exercisable
for 12 months for $4.50 for one share of common stock. Issuance of the units was
made in reliance upon the exemption from registration provided by Section 4(2)
of the
- --------------------------------------------------------------------------------
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<PAGE> 18
1933 Act. The purchaser had access to full information concerning SUMmedia.com
and represented that it purchased the units for the purchaser's own account and
not for the purpose of distribution. The units contained a restrictive legend
advising that the securities represented by the units may not be offered for
sale, sold or otherwise transferred without having first being registered under
the 1933 Act or pursuant to an exemption from registration under the 1933 Act.
No underwriters were involved in the transaction.
In November 1999, SUMmedia.com issued 500,000 units for gross cash
proceeds of $1,500,000 to Valdar Enterprises Ltd. Each unit consisted of one
share of common stock and common stock purchase warrant. Each warrant is
exercisable for 12 months for $4.50 for one share of common stock. Issuance of
the units was made in reliance upon the exemption from registration provided by
Section 4(2) of the 1933 Act. The purchaser had access to full information
concerning SUMmedia.com and represented that it purchased the units for the
purchaser's own account and not for the purpose of distribution. The units
contained a restrictive legend advising that the securities represented by the
units may not be offered for sale, sold or otherwise transferred without having
first being registered under the 1933 Act or pursuant to an exemption from
registration under the 1933 Act. No underwriters were involved in the
transaction.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
SUMmedia.com has applied for a directors and officers liability
insurance policy. This insurance policy is expected to insure the past, present
and future directors and officers of SUMmedia.com, with certain exceptions, from
claims arising out of any error, omission, misstatement, misleading statement,
neglect or breach of duty or act by any of the officers or directors of
SUMmedia.com while acting in their respective capacities as such. Claims include
claims arising under federal and state securities laws.
Section 7-109-102 of the Colorado Business Corporation Act permits a
Colorado corporation to indemnify any director against liability if such person
acted in good faith and, in the case of conduct in an official capacity with the
corporation, that the directors conduct was in the corporation's best interest
and, in all other cases, that the director's conduct was at least not opposed to
the best interests of the corporation or, with regard to criminal proceedings,
the director had no reasonable cause to believe the director's conduct was
unlawful.
SUMmedia.com's Amended and Restated Articles of Incorporation
provide that a corporation shall, to the fullest extent permitted by the laws of
the state of Colorado, indemnify any person who was or is a party or threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative, and whether formal or informal by reason of the fact that he or
she is or was a director, officer, fiduciary agent of the corporation or is or
was serving at the request of the corporation as a director, officer, fiduciary
or agent of any other foreign or domestic corporation or of any partnership,
joint venture, trust, other enterprise or employee
- --------------------------------------------------------------------------------
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<PAGE> 19
benefit plan. In addition, the Amended and Restated Articles of Incorporation
state that the corporation shall have the right, in its sole discretion, to
indemnify any other person to the fullest extent allowed by the laws of the
state of Colorado, except as may be limited by law from time to time in effect.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
SUMMEDIA.COM INC.
Date: December 20, 1999
Grant M.Petersen, Chairman and Chief
Executive Officer
PART F/S
The financial statements located in the Company's Annual Reports on
Form 10-KSB for the years ended December 31, 1998 and 1997 and located in the
Company's Quarterly Report on Form 10-QSB for the quarter ended September 30,
1999 are incorporated into this registration statement by reference.
- --------------------------------------------------------------------------------
page 19
<PAGE> 20
SUMMEDIA.COM INC.
CONSOLIDATED BALANCE SHEETS
(A DEVELOPMENT STAGE COMPANY)
AS AT SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(UNAUDITED - PREPARED BY MANAGEMENT)
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 DECEMBER 31, 1998
ASSETS (NOTE 1)
------------------ -----------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 327,247 $ --
Short term deposits 30,959
Accounts receivable (Note 4) 137,190 --
Prepaid expenses 25,164 --
----------- -----------
$ 520,560 $ --
Security deposits 57,481 --
Capital assets (Note 4) 358,562 --
----------- -----------
$ 936,603 $ --
=========== ===========
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities (Note 4) $ 436,914 $ 4,500
Deferred revenue (Note 4) 25,143 --
Current portion of obligation under capital lease (Note 8) 18,456 --
Due to related parties (Note 9) 171,726 --
----------- -----------
$ 652,239 $ 4,500
----------- -----------
LONG TERM LIABILITIES
Obligation under capital lease (Note 8) $ 40,989 $ --
----------- -----------
SHAREHOLDERS' EQUITY
Preferred shares, $1.00 par value; 1,000,000 shares
authorized; nil (1998 - nil) shares issued
and outstanding (Note 7)
Common shares, $0.01 par value; 65,500,000 shares
authorized; 13,990,000 (1998 - 2,000,000) shares issued
and outstanding (Note 7) $ 12,000 $ 2,000
Additional paid-in capital (Note 7) 2,076,230 53,230
Share subscriptions (Note 7) 1,000,000 --
Deficit (2,854,491) (59,730)
Accumulated other comprehensive income 9,636 --
----------- -----------
$ 243,375 $ (4,500)
----------- -----------
$ 936,603 $ --
=========== ===========
</TABLE>
Nature of operations and going concern (Note 1)
Commitments (Note 8)
Subsequent Events (Note 11)
The accmpanying notes are integral to these consolidated financial statements.
-1-
<PAGE> 21
SUMMEDIA.COM INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(A DEVELOPMENT STAGE COMPANY)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND YEAR ENDED DECEMBER 31, 1998
(UNAUDITED - PREPARED BY MANAGEMENT)
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID IN SHARE
SHARES AMOUNT CAPITAL SUBSCRIPTIONS
----------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 500,000 $ 500 $ 34,730 $ --
Shares issued to officer for cancellation of
debt (Note 7) 1,500,000 1,500 18,500 --
Net loss, year ended December 31, 1998 -- -- -- --
----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1998 2,000,000 2,000 53,230 --
Cancellation of shares issued to officer for
cancellation of debt in June 1998 (Note 7) (1,500,000) -- -- --
Forward stock split 1:32 (Note 7) 15,500,000 -- -- --
Cancellation of shares to sole officer (Note 7) (6,210,000) -- -- --
Acquisition of subsidiary (Note 7) 3,200,000 -- -- --
Private placement #1 (Note 7) 1,000,000 10,000 990,000 --
Private placement #2 (Note 7) -- -- -- 1,500,000
Share subscription receivable (Note 7) -- -- -- (500,000)
Stock-based compensation (Note 7) -- -- 1,033,000 --
Foreign currency translation -- -- -- --
Net loss for the nine months -- -- -- --
----------- ----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1999 13,990,000 $ 12,000 $ 2,076,230 $ 1,000,000
=========== =========== =========== ===========
<CAPTION>
ACCUMULATED
OTHER TOTAL
COMPREHENSIVE SHAREHOLDERS'
DEFICIT INCOME EQUITY (DEFICIT)
----------- ------------- ----------------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 $ (55,230) $ -- $ (20,000)
Shares issued to officer for cancellation of
debt (Note 7) -- -- 20,000
Net loss, year ended December 31, 1998 (4,500) -- (4,500)
----------- ----------- -----------
BALANCE, DECEMBER 31, 1998 (59,730) -- (4,500)
Cancellation of shares issued to officer for
cancellation of debt in June 1998 (Note 7) -- -- --
Forward stock split 1:32 (Note 7) -- -- --
Cancellation of shares to sole officer (Note 7) -- -- --
Acquisition of subsidiary (Note 7) -- -- --
Private placement #1 (Note 7) -- -- 1,000,000
Private placement #2 (Note 7) -- -- 1,500,000
Share subscription receivable (Note 7) -- -- (500,000)
Stock-based compensation (Note 7) -- -- 1,033,000
Foreign currency translation -- 9,636 9,636
Net loss for the nine months (2,794,761) -- (2,794,761)
----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1999 $(2,854,491) $ 9,636 $ 243,375
=========== =========== ===========
COMPREHENSIVE INCOME
Net income as above $(2,794,761)
Translation adjustment 9,636
-----------
Total comprehensive income $(2,785,125)
===========
</TABLE>
The accmpanying notes are integral to these consolidated financial statements.
-2-
<PAGE> 22
SUMMEDIA.COM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(A DEVELOPMENT STAGE COMPANY)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED - PREPARED BY MANAGEMENT)
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30,1998 SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
------------------ ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
SALES $ 145,401 $ -- $ 149,659 $ --
COST OF SALES 28,633 -- 34,062 --
--------------- --------------- --------------- ---------------
GROSS MARGIN $ 116,768 $ -- $ 115,597 $ --
--------------- --------------- --------------- ---------------
OPERATING EXPENSES
General and administrative $ 1,798,041 $ 2,000 $ 2,002,522 $ 3,000
Marketing and sales 599,426 -- 750,828 --
Amortization 142,033 -- 157,008 --
--------------- --------------- --------------- ---------------
$ 2,539,500 $ 2,000 $ 2,910,358 $ 3,000
--------------- --------------- --------------- ---------------
LOSS FROM OPERATIONS FOR THE PERIOD AND BEFORE
INCOME TAXES $ (2,422,732) $ (2,000) $ (2,794,761) $ (3,000)
PROVISION FOR INCOME TAXES -- -- -- --
--------------- --------------- --------------- ---------------
NET LOSS FOR PERIOD $ (2,422,732) $ (2,000) $ (2,794,761) $ (3,000)
=============== =============== =============== ===============
NET LOSS PER SHARE (BASIC) (0.21) $ -- $ (0.06) $ --
WEIGHTED AVERAGE SHARES (BASIC) 11,616,374 64,000,000 43,409,373 34,420,664
=============== =============== =============== ===============
<CAPTION>
PERIOD FROM
DECEMBER 7, 1990
(DATE OF INCEPTION) TO
SEPTEMBER 30, 1999
----------------------
<S> <C>
SALES $ 149,659
COST OF SALES $ 34,062
---------------
GROSS MARGIN $ 115,597
---------------
OPERATING EXPENSES
General and administrative $ 2,062,252
Marketing and sales 750,828
Amortization 157,008
---------------
$ 2,970,088
---------------
LOSS FROM OPERATIONS FOR THE PERIOD AND BEFORE
INCOME TAXES $ (2,854,491)
PROVISION FOR INCOME TAXES --
---------------
NET LOSS FOR PERIOD $ (2,854,491)
===============
NET LOSS PER SHARE (BASIC)
WEIGHTED AVERAGE SHARES (BASIC)
</TABLE>
The accompanying notes are integral to these consolidated financial statements.
-3-
<PAGE> 23
SUMMEDIA.COM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(A DEVELOPMENT STAGE COMPANY)
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED - PREPARED BY MANAGEMENT)
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
PERIOD FROM
DECEMBER 7, 1990
NINE MONTHS ENDED NINE MONTHS ENDED (DATE OF INCEPTION) TO
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998 SEPTEMBER 30, 1999
-------------------- -------------------- ----------------------
<S> <C> <C> <C>
CASH PROVIDED BY (USED FOR) OPERATIONS
Net loss for period $ (2,794,761) $ (3,000) $ (2,854,491)
Adjustments to reconcile net loss to net cash used in
operating activities
Amortization of capital assets and goodwill 157,008 -- 157,008
Changes in non-cash working capital
Short term deposit (30,959) (30,959)
Accounts receivable (137,190) -- (137,190)
Prepaid expenses (25,164) -- (25,164)
Accounts payable and accrued liabilities 432,414 3,000 436,914
Deferred revenue 25,143 -- 25,143
Due to related parties 171,726 -- 171,726
------------ ----------- ------------
$ (2,201,783) $ -- $ (2,257,013)
------------ ----------- ------------
FINANCING ACTIVITIES
Issuance of common stock $ 2,033,000 $ -- 2,088,230
Share subscription less subscription receivable 1,000,000 -- 1,000,000
$ 3,033,000 $ -- $ 3,088,230
------------ ----------- ------------
INVESTING ACTIVITIES
Security deposits $ (57,481) $ -- $ (57,481)
Purchase of capital assets (456,125) -- (515,570)
------------ ----------- ------------
$ (513,606) $ -- $ (573,051)
------------ ----------- ------------
FOREIGN EXCHANGE EFFECT ON CASH 9,636 -- 9,636
------------ ----------- ------------
INCREASE IN CASH ON HAND $ 327,247 $ -- $ 267,802
CASH ON HAND, BEGINNING OF PERIOD -- -- --
------------ ----------- ------------
CASH ON HAND, END OF PERIOD $ 327,247 $ -- $ 267,802
============ =========== ============
</TABLE>
The accmpanying notes are integral to these consolidated financial statements.
-4-
<PAGE> 24
SUMMEDIA.COM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
THE COMPANY
SUMmedia.com Inc. (the "Company" or "SUMmedia.com") is an Internet media
and marketing company that provides online coupons for small business
through its portal, SavingUMoney.com. The Company's business consists of
providing Internet marketing initiatives including eCoupons, discount
eShopping and website design and hosting primarily for smaller businesses.
The company plans to generate revenue from several sources, including
eCoupons, hosting fees, fees from advertisers and exclusivity fees.
The Company was incorporated on December 7, 1990 under the laws of the
State of Delaware as Pursuit Ventures Corporation ("Pursuit").
Under a Plan and Agreement of Merger dated August 21, 1998, Pursuit merged
with Remington Assets Limited ("Remington"), a Colorado corporation that
was incorporated on March 20, 1997. Under the terms of the Agreement of
Merger, Pursuit became the surviving company. Effective September 8, 1998,
Pursuit changed its name to Reliance Resources Inc. ("Reliance").
On August 20, 1999, Reliance entered into a share exchange agreement with
SUM Media Corp., a British Columbia, Canada company. Pursuant to the terms
of the transaction, Reliance issued 3,200,000 common shares from treasury
for 100% of the issued and outstanding shares of SUM Media Corp. At the
time of the transaction, Reliance and SUM Media Corp. were under common
control and as such, this transaction has been accounted for similar to a
pooling of interests whereby assets, liabilities, shareholders equity and
results of operations of both companies have been combined at their
carrying amounts.
GOING CONCERN AND BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements, in
management's view, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company's financial
position, results of operations and cash flows.
The Company has not yet generated significant revenues and has no assurance
of the future profitability. Even if marketing efforts are successful,
substantial time may pass before profitability will be achieved. During
this time, the Company will require additional financing. The Company has
had net working capital deficits and losses from operations that raise
substantial doubt about its ability to continue as a going concern.
These unaudited interim consolidated financial statements have been
prepared on the basis of accounting principles applicable to a going
concern which assumes the realization of assets and discharge of
liabilities in the normal course of business. The Company is in discussions
with financing institutions in Asia with respect to securing equity
financing. However, there are no assurances that the Company will be
successful in closing such financing transactions.
-5-
<PAGE> 25
SUMMEDIA.COM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
The Company's ability to continue as a going concern is dependent upon
obtaining additional financing and upon its ability to attain profitable
operations. These consolidated financial statements do not give effect to
any adjustments that would be necessary should the Company not be able to
continue as a going concern.
2. SUPPLEMENTAL CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
DECEMBER 7
1990 (INCEPTION
OF DEVELOPMENT
STAGE) TO
SEPTEMBER 30 DECEMBER 31 DECEMBER 31
1999 1998 1997
<S> <C> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $Nil $Nil $Nil
Cash paid for income taxes $Nil $Nil $Nil
SUPPLEMENTAL NON-CASH INVESTING AND
FINANCING ACTIVITIES
Issuance of Common Stock for:
Stock-based compensation $1,033,000 $Nil $Nil
Capital lease obligations $ 59,445 $Nil $Nil
---------- ---- ----
Share subscription receivable $ 500,000 $Nil $Nil
---------- ---- ----
</TABLE>
3. SIGNIFICANT ACCOUNTING POLICIES
DEVELOPMENT STAGE
The Company's activities since April 1999 have primarily consisted of
establishing facilities, recruiting personnel, conducting research and
development, developing business and financial plans and raising capital.
Accordingly, the Company is considered to be in the development stage. The
accompanying financial statements should not be regarded as typical for a
normal operating period. Prior to April 1999, the Company was inactive
incurring only general and administrative expenses.
GENERALLY ACCEPTED ACCOUNTING POLICIES
These consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States.
BASIS OF CONSOLIDATION
These consolidated financial statements of the Company include the accounts
of the Company and its wholly- owned subsidiary, SUM Media Corp. All
significant intercompany balances and transactions have been eliminated on
consolidation (refer to Note 1).
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States requires the Company's
management to make estimates and assumptions which affect the amounts
reported in these financial statements and the notes thereto. Actual
results could differ from those estimates.
-6-
<PAGE> 26
SUMMEDIA.COM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on deposit and highly liquid
short-term interest bearing securities with maturities at the date of
purchase of three months or less. Interest earned and any market value
gains or losses are recognized immediately in the statement of income.
CAPITAL ASSETS
Capital assets are recorded at cost and are amortized on a straight line
basis over their estimated useful lives as follows:
<TABLE>
<S> <C>
Software 1 year
Computer equipment 2 years
Automobile 3 years
Office equipment 5 years
Furniture and fixtures 5 years
Leasehold improvements the remaining lease term
</TABLE>
STOCK-BASED COMPENSATION
The Company accounts for stock-based employee compensation arrangements in
accordance with the provisions of Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees", ("APB No. 25") and complies
with the disclosure provisions of Statement of Financial Accounting
Standard No. 123, "Accounting for Stock-Based Compensation" ("SFAS No.
123"). Under APB No. 25, compensation expense is recognized based on the
difference, if any, on the date of grant between the estimated fair value
of the Company's stock and the amount an employee must pay to acquire the
stock. Compensation expense is recognized immediately for past services and
rateably for future services over the option vesting period.
The Company accounts for equity instruments issued in exchange for the
receipt of goods or services from other than employees in accordance with
SFAS No. 123 and the conclusions reached but the Emerging Issues Task Force
in Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring or in Conjunction with Selling, Goods or
Services" (EITF 96-18). Costs are measured at the estimated fair market
value of the consideration received or the estimated fair value of the
equity instruments issued, whichever is more reliably measurable. The value
of equity instruments issued for consideration other than employee services
is determined on the date on which there first exists a firm commitment for
performance by the provider of goods or services as defined by EITF 96-18.
For purposes of valuing the Company's stock-based compensation transactions
and equity instruments issued for the receipt of goods or services the
Company uses the market price of its common stock, as quoted on the
OTC-bulletin board, on the measurement date for the applicable transaction.
PRODUCT DEVELOPMENT COSTS
Product development costs include expenditures incurred by the Company to
design and enhance the Company's website. Product development costs are
expensed in the period in which they are incurred.
-7-
<PAGE> 27
SUMMEDIA.COM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to a significant
concentration of credit risk consist primarily of cash and cash
equivalents, short-term deposits, and accounts receivable which are not
collateralized. The Company limits its exposure to credit loss by placing
its cash and cash equivalents and short-term deposits with high credit
quality financial institutions. Concentrations of credit risk with respect
to accounts receivable are considered to be limited due to the low average
billing and large number of customers comprising the Company's customer
base.
The Company performs ongoing credit evaluations of its customers financial
condition to determine the need for an allowance for doubtful accounts. The
Company has not experienced significant credit losses to date.
REVENUE RECOGNITION
Revenues from regional exclusivity fees are recognized over the period that
initial set-up and training services are completed and the Company is
satisfied all significant obligations in accordance with the terms of the
arrangement and collectability of the related fees is reasonably assured.
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
The Company reports in U.S. dollars; however, the Canadian dollar is the
Company's functional currency. The Company uses the current rate method for
translating financial statements denominated in foreign currencies. Under
this method, assets and liabilities are translated into U.S. dollars using
period end exchange rates, whereas revenues and expenses are translated
using average exchange rates for the period. Transaction amounts
denominated in foreign currencies are translated at exchange rates
prevailing at the transaction dates. Translation gains and losses are
deferred and accumulated as a component of other comprehensive income in
shareholder's equity. Net gains and losses resulting from foreign exchange
transactions are included in the consolidated statement of operations.
LOSS PER COMMON SHARE
Net loss per share computations are in accordance with SFAS No. 128,
"Earnings Per Share" and Staff Accounting Bulletin ("SAB") No. 98. Basic
net loss per share is computed using the weighted average number of common
shares outstanding, after giving retroactive effect to the 1:32 forward
stock split, adjusted by the common share exchange ratios of the share
exchange described in Note 1. Diluted loss per share is computed using the
weighted average number of common and common equivalent shares outstanding.
Common equivalent shares consist of stock options and warrants (using the
treasury stock method). Common equivalent shares have been excluded from
the computation of net loss per share as their effect is anti-dilutive.
COMPREHENSIVE INCOME
In December 1997, the FASB issued Statement Number 130 on Reporting
Comprehensive Income, which established a new financial statement to be
included in a full set of general-purpose financial statements.
Comprehensive income is defined as the change in equity from transactions
and other events and circumstances other than those resulting from
investments by owners and distributions to owners. Comprehensive income
consists of net
-8-
<PAGE> 28
SUMMEDIA.COM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
income and other comprehensive income. The accumulated balance of other
comprehensive income is included in the equity section of the balance
sheet. The Company's other comprehensive income consists of foreign
exchange translation adjustments.
RECENT ACCOUNTING PRONOUNCEMENTS
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP98-1"). SOP98-1
provides guidance for determining whether computer software is internal-use
software and accounting for the proceeds of computer software originally
developed or obtained for internal use and then subsequently sold to the
public. It also provides guidance on capitalization of the costs incurred
for computer software developed or obtained for internal use. The
disclosures prescribed by SOP98-1 will be effective for the year ending
December 31, 2000 consolidated financial statements. The Company has not
yet determined the impact, if any, of adopting this statement.
In June 1998, the FASB issued Statement Number 133 "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133
establishes accounting and reporting standards for derivative instruments,
embedded in other contracts, and for hedging activities. It requires that
an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. The accounting for changes in fair value of the derivative depends
on the intended use of the derivative and the resulting designation. The
Company has not yet determined the impact, if any, of adopting this
statement.
SEGMENT INFORMATION
Effective July 1, 1999, the Company adopted the provisions of the FASB's
Statement of Financial Accounting Standards Number 131, "Disclosures about
Segments of an Enterprise and Related Information. SFAS 131 establishes the
standards for reporting information about operating segments in annual
financial statements and requires that certain selected information about
operating segments be reported in interim financial reports. It also
establishes standards for related disclosures about products and services
and geographic areas. Segment selection is based upon the internal
organization structure, the manner in which these operations are managed
and their performance evaluated by management, the availability of separate
financial information, and overall materiality considerations. Segment
performance measurement is based on operating income before income taxes,
amortization of intangibles, stock compensation, and merger related costs.
The Company operates within a single operating segment being online
couponing services, and currently operates in only one geographic area
being Canada. Substantially all of the Company's assets are located in
Canada and substantially all of its revenues are earned in Canada.
-9-
<PAGE> 29
SUMMEDIA.COM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
4. BALANCE SHEET COMPONENTS
(a) ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
------------------
<S> <C>
Sales taxes recoverable $ 66,658
Advances to consultants 63,178
Trade receivables 7,354
---------
$ 137,190
=========
</TABLE>
(b) CAPITAL ASSETS
<TABLE>
<CAPTION>
ACCUMULATED NET
COST AMORTIZATION SEPTEMBER 30,1999
---- ------------ -----------------
<S> <C> <C> <C>
Software $ 94,063 $ 23,515 $ 70,548
Computer Equipment 270,063 101,760 168,303
Automobile 85,526 21,370 64,156
Office equipment 31,171 4,678 26,493
Furniture and Fixtures 18,380 2,740 15,640
Leasehold Improvements 16,367 2,945 13,422
---------- ---------- ----------
$ 515,570 $ 157,008 $ 358,562
========== ========== ==========
</TABLE>
(c) ACCOUNTS PAYABLE
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
------------------
<S> <C>
Trade accounts payable $ 247,870
Accrued liabilities 126,835
Employee and payroll taxes 62,209
---------
$ 436,914
=========
</TABLE>
(d) DEFERRED REVENUE
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
------------------
<S> <C>
Deferred exclusivity fees $ 25,143
</TABLE>
5. INCOME TAXES
Income taxes are accounted for using an asset and liability approach, which
requires the recognition of taxes payable or refundable for the current
period and deferred tax liabilities and assets for future tax consequences
of events that have been recognized in the Company's financial statements
or tax returns. The measurement of current and deferred tax liabilities and
assets are based on provisions of enacted tax laws; the effects of future
changes in tax laws or rates are not anticipated. The measurement of
deferred tax assets is reduced, if necessary, by a valuation allowance,
where, based on available evidence, the probability of realization of the
deferred tax asset does not meet a more likely than not criteria.
The Company is subject to: U.S. Federal, Colorado and Washington State
income taxes in the U.S.; Canadian Federal, and Ontario and British
Columbia Provincial taxes in Canada; and Federal taxes for the operations
in Hong Kong.
At September 30, 1999, the Company has net operating loss carryforwards of
approximately $2,700,000 arising from Canadian operations available to
reduce future Canadian taxable income and approximately $40,000 arising
from U.S. operations available to reduce future U.S. taxable income. The
Canadian losses expire in 2006 and the U.S. losses expire from 2000 to
2005. The potential benefits relating to these losses have not been
recognized in the consolidated financial statements.
-10-
<PAGE> 30
SUMMEDIA.COM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
Net deferred tax assets are composed of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1999 1998
<S> <C> <C>
Net operating loss carryforwards $2,700,000 $40,000
Gross deferred tax assets 1,180,000 16,000
Deferred tax asset valuation allowance 1,180,000 16,000
Net deferred tax assets $0 $0
</TABLE>
Based on a number of factors including, the lack of a history of profits,
management believes that there is sufficient uncertainty regarding the
realization of deferred tax assets such that a full valuation allowance has
been provided.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments, including cash and cash equivalents,
accounts receivable and accounts payable are carried at cost, which
approximates their fair value due to their short-term maturity. The fair
value of the obligation under capital lease approximates carrying value as
the lease was executed in July, 1999.
7. COMMON STOCK
AUTHORIZED
65,500,000 common shares with par value of $.01 per share
1,000,000 preferred shares with a par value of $1.00 per share
ISSUED
13,990,000 common shares
Holders of common shares are entitled to one vote per share on all matters
submitted to vote of the shareholders of SUMmedia.com. However, in the
election of directors, each holder of common shares is entitled to have as
many votes for each share owned as there are directors to be elected. There
is no right to accumulate votes in the election of directors. A majority of
the votes entitled to be cast on a matter by a voting group constitutes a
vote for action on a matter. Subject to preferences that may apply to
preferred shares outstanding, the holders of common shares are entitled to
receive dividends out of assets legally available at such time and in such
amounts as the board of directors may from time to time determine. Upon the
occurrence of a liquidation, dissolution or winding up of the assets of the
Corporation, the holders of common shares will be entitled to share ratably
in the distribution of all assets remaining available for distribution
after satisfaction of all liability and the payment of any liquidation
preference on any outstanding preferred shares.
As at December 31, 1998, the authorized common shares of the Company
consisted of 50,000,000 common shares with a par value of $.001 of which
2,000,000 common shares were issued and outstanding. Pursuant to a June 4,
1999 Board of Directors resolution, the sole Director and Officer of
Reliance agreed to the cancellation of 1,500,000 shares previously issued
as compensation. On June 16, 1999, the Board of Directors passed a
resolution to adopt a forward stock split at a ratio of 1:32 with the
effect that the total issued and outstanding shares would be 16 million.
Concurrently, the sole director and officer of
-11-
<PAGE> 31
SUMMEDIA.COM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
Reliance executed a formal waiver of the right to receive 6.21 million
post-split shares; the resultant issued and outstanding shares then totaled
9.79 million.
On June 24, 1999, the Company's Articles of Incorporation were amended to
increase the Company's authorized common stock to 65,500,000 shares.
As discussed in Note 1, on August 20, 1999, the Company acquired all of the
issued and outstanding shares of SUM Media Corp. for the consideration of
3,200,000 SUMmedia.com Inc. treasury shares.
On August 26, 1999, the Company closed a private placement of 1,000,000
equity units at a price of $1 per unit for gross cash proceeds of
$1,000,000. Each unit consisted of one common share and one share purchase
warrant. The warrant may be exercised to acquire an additional common share
of the Company at a price of $3 for a period expiring 24 months after
issuance. The company did not have any warrants outstanding at the
beginning of the year.
In September 1999, the Company announced a private placement which
consisted of 500,000 units at a price of $3 per unit for gross cash
proceeds of $1.5 million of which $1 million was received by September 30,
1999. In October 1999, the remaining $500,000 was received. Each unit
consisted of one common share and one share purchase warrant. The warrant
may be exercised to acquire an additional common share of the Company at a
price of $4.50 for a period of 12 months from the issuance date.
For the period ended September 30, 1999, SUM Media Corp. issued 1,378,125
shares of Common Stock to key employees at $0.01 per share which were
subsequently exchanged for 490,000 shares of SUMmedia.com. Based on third
party stock sales, management estimated the fair value of the Common Stock
at the time of issuance to be $0.75 per share. As the fair value exceeded
the $0.01 per share received from the issuance of these shares, the Company
recorded $1,033,000 of compensation expense in the period.
8. COMMITMENTS
The Company has the following annual commitments for the rental of office
premises under the terms of an operating leases:
<TABLE>
<CAPTION>
YEAR OPERATING
---- ---------
<S> <C>
2000 $ 231,700
2001 228,850
2002 228,850
2003 228,850
2004 67,750
---------
$ 938,000
=========
</TABLE>
Office lease payments for the nine months ended September 30, 1999 of
$68,510 were included in general and administrative costs. A letter of
credit has been issued by Company's bank in the amount of $30,959 for the
benefit of the Vancouver landlord.
-12-
<PAGE> 32
SUMMEDIA.COM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
The Company has the following annual lease commitments for office equipment
under the terms of a capital lease:
<TABLE>
<CAPTION>
YEAR CAPITAL
---- -------
<S> <C>
2000 $ 18,456
2001 18,456
2002 18,456
2003 15,380
70,748
---------
Amount representing interest (11,303)
---------
$ 59,445
Less: current portion (18,456)
---------
$ 40,989
=========
</TABLE>
9. RELATED PARTY TRANSACTIONS
During the nine month period ended September 30, 1999, two shareholders
advanced the Company $171,726. The advances are unsecured, non-interest
bearing, and without stated terms of repayment.
The Company incurred $40,500 for management consulting and related services
to a company controlled by one of the significant shareholders of the
Company during the nine month period ended September 30, 1999.
10. OPTION PLAN
In August of 1999, the Company has prepared a stock option plan which
provides for issuance of up to 20% of the issued and outstanding common
shares of the Company in connection with incentive and non-statutory stock
option awards granted to employees, directors and consultants to the
Company. Options will be issued in amounts in accordance with terms and
conditions as determined by the Company's Board of Directors. The stock
option plan is subject to regulatory shareholder and Board of Director
approval.
11. SUBSEQUENT EVENTS
On September 23, 1999, the Company entered into a lease commitment for
office space located in Seattle, Washington. The lease period is for 60
months, commencing November 1, 1999, and is for 3,916 square feet at a base
rental rate of $86,152 for the first three years increasing to $90,068 for
the fourth and fifth years.
In October of 1999, the Company's Board of Directors approved the granting
of an initial allotment of stock options to employees and directors of the
Company to purchase an aggregate of 2,349,000 common shares from treasury,
at an exercise price of $3.12 per common share. Of the options granted,
563,760 vested immediately and 939,600 vest October, 2000 and the remainder
equally over the following 12 months. Additionally, the Company must secure
approval of the Stock Option Plan, under which these options were granted,
from the Company's shareholders and necessary regulatory authorities before
any of these options are eligible to be exercised.
-13-
<PAGE> 33
PART III
ITEM 1. INDEX TO EXHIBITS
The following is a list of all exhibits filed as a part of this
registration statement or, as noted, incorporated by reference to this
registration statement:
14
<PAGE> 34
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description and Method of Filing
----------- --------------------------------
<S> <C>
Exhibit 2.1 Share Purchase Agreement between JCC Consulting
Services, Ltd., Corbridge Asset Holdings S.A.,
Tigerlily Financial Inc., Grant Peterson,
Jihong Zhang, Andre Dragon, Dennis Malloy.
Albert Szajman, John Veltheer, David Lewis,
Reliance Resources Inc. and SUMmedia Corp.
dated June 11, 1999.
Exhibit 3.1.1 Amended and Restated Articles of Incorporation
dated June 23, 1999.
Exhibit 3.1.2 Articles of Amendment dated August 20, 1999
(incorporated by reference to the registrant's
Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1999).
Exhibit 3.2 Bylaws adopted by registrant on August 10, 1998.
Exhibit 10.1 Software License and Services Agreement between
SUMmedia.com and Oracle Corporation Canada Inc.
Exhibit 21 Subsidiaries of the Registrant.
Exhibit 27 Financial data schedule.
Exhibit 99.1 Financial Statements from the Annual Report on
Form 10-KSB for the year ended December 31,
1997 incorporated by reference to the same.
Exhibit 99.2 Financial Statements from the Annual Report on
Form 10-KSB for the year ended December 31,
1998 incorporated by reference to the same.
Exhibit 99.3 Financial Statements from the Quarterly Report
on Form 10-QSB for the quarter ended September
30, 1999 incorporated by reference to the
same.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
SHARE PURCHASE AGREEMENT
THIS AGREEMENT dated for reference the ____ day of __________, 1999.
BETWEEN:7
JCC CONSULTING SERVICES LTD., CAMBRIDGE ASSET HOLDINGS S.A.,
TIGERLILY FINANCIAL INC., GRANT PETERSEN, JIHONG ZHANG, ANDRE
DRAGON, DENNIS MOLLOY, ALBERT SZAJMAN, JOHN VELTHEER, DAVID
LEWIS
(hereinafter collectively called the "Vendors")
AND:
RELIANCE RESOURCES INC., a Colorado corporation with a
registered office in the State of Colorado, USA, located at
1560 Broadway, Suite 200, Denver, CO, USA, 80202, and a head
office within BC located at Suite 1200, 1055 West Hastings
Street, Vancouver
(hereinafter called the "Purchaser")
AND:
SUM MEDIA CORP., a company duly incorporated under the laws of
BC and having an office and place of business at Suite 1200,
1055 West Hastings Street, Vancouver
(hereinafter called the "Company")
WITNESSES THAT WHEREAS:
A. The Vendors are the legal and/or beneficial owners of an aggregate of
9,000,001 common shares in the capital of the Company (the "Shares"),
allocated as follows:
<TABLE>
<S> <C>
JCC Consulting Services Ltd. 562,500
Albert Szajman 112,500
John Veltheer 281,250
David Lewis 281,250
Cambridge Asset Holdings S.A. 1,125,000
Tigerlily Financial Inc. 1,125,000
Grant Petersen 2,404,688
Jihong Zhang 562,500
Andre Dragon 140,625
Dennis Molloy 2,404,688
---------
TOTAL 9,000,001
</TABLE>
B. The Vendors have each agreed to sell and the Purchaser has agreed to
purchase the Shares upon the terms and conditions herein set forth;
NOW THEREFORE in consideration of the premises, the covenants and agreements and
warranties hereinafter set forth, it is hereby agreed as follows:
-1-
<PAGE> 2
SALE AND PURCHASE
1. Based on and relying upon the representations and warranties herein, the
Vendors hereby each agree to sell the Shares to the Purchaser and the
Purchaser hereby agrees to purchase the Shares from the Vendors on the
terms and conditions herein contained.
2. The purchase price payable by the Purchaser to the Vendors for the Shares
shall be US $600,000 (the "Purchase Price") payable on the Closing Date by
the issuance of 3,200,000 common shares in the capital stock of the
Purchaser (the "Exchangeable Shares") as per the allocation table set out
in Schedule "A", to be issued in exchange for the Shares held by the
Vendors in the Company.
3. The Exchangeable Shares will be issued pursuant to exemptions under
Regulation S promulgated under the US SECURITIES ACT 1933 and under the
British Columbia SECURITIES ACT.
COMPANY AND VENDORS' REPRESENTATIONS AND WARRANTIES
4. The Company and the Vendors, jointly and severally, represent and warrant
to the Purchaser, to the best of their knowledge, information and belief
after making due inquiry that:
(a) the Company is a company duly incorporated under the laws of the
Province of British Columbia, is not a reporting company and is a valid
and subsisting company in good standing with all regulatory
authorities;
(b) the authorized capital of the Company consists of 30,000,000 Common
Shares without par value, of which there are 9,000,001 Common Shares
issued and outstanding;
(c) the Shares are free and clear of all liens, claims, charges and
encumbrances of every nature and kind whatsoever;
(d) the Shares are duly authorized, validly issued and outstanding as fully
paid and non-assessable shares;
(e) the Vendors are the sole registered and/or beneficial owners of the
Shares and have due and sufficient right and authority to transfer the
legal and beneficial title and ownership of the Shares to the
Purchaser, and each of the Vendors and the Company has due and
sufficient right, power and authority (including any and all necessary
corporate and/or shareholder authorizations) to enter into this
Agreement on the terms and conditions herein set forth, and this
Agreement, when executed and delivered by the Vendors and Company, will
constitute a legal and binding obligation of each such party
enforceable against it in accordance with its terms;
(f) no person, firm or corporation has any agreement or option or a right
capable of becoming an agreement for the purchase of the Shares or any
other shares in the capital of the Company owned by the Vendors or any
right capable of becoming an agreement for the purchase, subscription
or issuance of any of the unissued shares in the capital of the
Company;
(g) the Company has the full corporate power and authority to carry on the
business presently being carried on by it and as proposed to be carried
on by it;
(h) the Company holds all licenses and permits as may be requisite for
carrying on its business in the manner in which it has heretofore been
carried on.
(i) there are no material liabilities, contingent or otherwise, of the
other than as set forth in Schedule "B" attached hereto;
(j) at the Time of Closing, the Company shall not have any material
liabilities, contingent or otherwise other than those liabilities set
forth in Schedule "B" attached hereto;
(k) the books and records of the Company fairly and correctly set out and
disclose in all material respects, in accordance with Canadian
generally accepted accounting principles, the financial position of the
-2-
<PAGE> 3
Company as at the date hereof and all material financial transactions
of the Company relating to its business have been accurately recorded
in such books and records;
(l) no payments of any kind have been made or authorized to or on behalf of
the Vendors or any of them or to or on behalf of officers, directors or
shareholders of the Company or under any management agreements with the
Company which are not recorded in the books or records of the Company
or which have not been disclosed in writing to the Purchaser other than
payments made in the normal course of business;
(m) there is no basis for and there are no actions, suits, judgments,
investigations or proceedings outstanding or pending or to the
knowledge of the Company or the Vendors, jointly or severally,
threatened against or affecting the Company at law or in equity or
before or by any federal, state, municipal or other governmental
department, commission, board, bureau or agency;
(n) to the best of the Vendors' knowledge, the Company is not in breach of
any laws, ordinances, statutes, regulations, by-laws, orders or decrees
to which it is subject or which apply to it;
(o) the Company is not a party to any collective agreement with any labour
union or other association or employees and no attempt has been made to
organize or certify the employees of the Company as a bargaining unit;
(p) there are no pensions, profit sharing, group insurance or similar plans
or other deferred compensation plans affecting the Company;
(q) the Company is not indebted to any employee of the Company or other
workers engaged in the business of the Company and the Company has not
received or been notified of any general wage claims;
(r) the Company is the sole beneficial owner and has good and marketable
title to all its properties and assets free and clear of all liens,
mortgages, pledges, deeds of trust, conditional sale agreements,
encumbrances, charges or claims of every kind and nature whatsoever;
(s) the Company has not experienced nor is it aware of any occurrence or
event which has had, or might reasonably be expected to have, a
materially adverse affect on its business or the results of its
operations;
(t) neither the Vendors nor any officer, director, employee or shareholder
of the Company is now indebted or under obligation to the Company on
any account whatsoever; and the Company is not indebted or under
obligation to the Vendors or any officer, director, employee or
shareholder of the Company.
(u) this Agreement once duly executed and delivered by the Vendors and the
Company will constitute a legal, valid and binding obligation of the
Vendors and the Company; enforceable against the Vendors and the
Company in accordance with its terms;
5. The Vendors hereby jointly and severally represent and warrant to the
Purchaser as follows that:
(a) the Vendors have the capacity to protect their own interests in
connection with the acquisition of the common Shares of the Purchaser
and are capable of evaluating the merits and risks of an investment in
the Purchaser by reason of their business and financial knowledge and
experience;
(b) the Vendors are acquiring the shares of common stock of the Purchaser
for investment for their own account, not as a nominee or agent, and
not with the view to, or for resale in connection with, any
distribution thereof. The Vendors understand that the shares of common
stock of the Purchaser have not been, and will not be, registered under
the US SECURITIES ACT 1933, as amended (the "Securities Act"), by
reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy
of the Vendors' representations as expressed herein;
-3-
<PAGE> 4
(c) each Vendor acknowledges that the shares of common stock of the
Purchaser must be held indefinitely unless subsequently registered
under the Securities Act or unless an exemption from such registration
is available. Each Vendor is aware of the restrictions and limitations
on resale of the shares of common stock of the Purchaser into the
United States or to a US Person pursuant to the provisions of
Regulation S promulgated under the Securities Act. In addition, each
Vendor is aware of the provisions of Rule 144 promulgated under the
Securities Act ("Rule 144") which permit limited resales in the US of
shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things, the existence of a
public market for the shares of common stock of the Purchaser, the
availability of certain current public information about the Purchaser,
the resale occurring not less than one year after a party has purchased
and paid for the security to be sold, the sale being effected through a
"broker's transaction" or in transactions directly with a "market
maker" and the number of shares being sold during any three-month
period not exceeding specified limitations;
(d) each of the Vendors has had an opportunity to discuss the Purchaser's
business, management and financial affairs with the Company's
management and has also had an opportunity to ask questions of the
Purchaser's officers, which questions were answered to the Vendors'
satisfaction. Each Vendor has been furnished with or has had access to
such information as a sophisticated investor would customarily require
to evaluate the merits and risks of the proposed investment together
with such additional information as is necessary to verify the accuracy
of the information supplied. The Vendors represent and acknowledge that
they have been solely responsible for their own due-diligence
investigation of the Purchaser and its management and business, for its
own analysis of the merits and risks of this investment, and for its
own analysis of the terms of the investment, and that in taking any
action or performing any role relative to the proposed investment, it
has acted solely in its own interest, and that neither it nor any of
its agents or employees has acted as an agent, employee, partner or
fiduciary of any other person, or as an agent of the Purchaser, or as
an issuer, underwriter, broker, dealer or investment advisor relative
to this investment;
(e) each of the Vendors understands that the Purchaser has no operating
history, and that investment in the Purchaser involves substantial
risks. The Vendors further understand that the acquisition of the
shares of common stock of the Purchaser will be a highly speculative
investment. Each of the Vendors is able, without impairing his
financial condition, to hold the shares of common stock of the
Purchaser for an indefinite period of time and to suffer a complete
loss of his investment;
(f) each of the Vendors agrees to indemnify and hold harmless the Purchaser
and its officers, directors and agents for any costs, liabilities or
losses caused by any misstatement of material fact by such Vendor with
respect to the representations and warranties contained in this Section
or any other written information provided to the Purchaser by such
Vendor in connection with the investment contemplated by this
Agreement; and
(g) each Vendor represents and warrants to the Purchaser that he is not a
US Person as defined in Regulation S as promulgated under the
Securities Act and that the buy order for the common shares of the
Purchaser originated by each Vendor outside of the US.
VENDORS' COVENANTS
6. The Vendors jointly and severally covenant and agree that:
(a) the representations and warranties contained in this Agreement shall be
true at and as of the Time of Closing as if such representations and
warranties were made as of such time;
(b) the Vendors will permit the Purchaser or whoever it directs on its
behalf to examine the records, statements and accounts of the Company
on regular business days and during regular business hours up to and
including the Closing Date and make such audit of the books of account
of the Company and physical verification of the inventory of the
Company as the Purchaser may see fit;
-4-
<PAGE> 5
(c) the representations, warranties, covenants and agreements contained
herein shall survive the Closing Date and notwithstanding the Closing
of the purchase and sale herein contemplated, shall continue in full
force and effect;
(d) the Vendors will, jointly and severally, prior to Closing, take all
steps and proceedings and execute such further assurances and documents
as may be required to obtain the transfer and registration of the
Shares into the name of the Purchaser provided that all terms and
conditions to be observed and performed by the Purchaser at the Time of
Closing have been observed and performed;
PURCHASERS' REPRESENTATIONS AND WARRANTIES
7. As an inducement to the Company and each of the Vendors to enter into this
Agreement and to consummate the transactions provided for herein, the
Purchaser represents and warrants to the Company and each of the Vendors,
to the best of its knowledge, information and belief after making due
inquiry that:
(a) the Purchaser was incorporated on December 7, 1990 under the laws of
the State of Delaware as Pursuit Ventures Corporation. Under a Plan and
Agreement of Merger, effective August 21, 1998, the Purchaser merged
with a Colorado corporation. The Colorado corporation was incorporated
on March 20, 1997, under the name Remington Assets Limited, and,
effective August 11, 1998, changed its name to Pursuit Ventures
Corporation. Effective with the terms of the Agreement of Merger,
Pursuit Ventures Corporation, Colorado, became the surviving company.
The Purchaser filed for a name change with the Colorado Secretary of
State to Reliance Resources Inc., which became effective September 8,
1998;
(b) the Purchaser is duly incorporated, validly existing and in good
standing under the laws of the State of Colorado;
(c) the Purchaser is now and as of the Closing Date will be traded on the
OTC Bulletin Board and no further action must be taken before the
Closing Date for continued trading on the Bulletin Board except for the
filing of a registration statement with the U.S. Securities and
Exchange Commission, on Form 10-SB or similar prescribed form, such
filing to be the responsibility of the Purchasers new management
following the Closing Date;
(d) it has full and absolute right, power and authority to enter into this
Agreement on the terms and conditions herein set forth, to carry out
the transactions contemplated hereby and, to transfer on the Closing
Date to the vendors all legal and beneficial ownership in and to the
Exchangeable Shares;
(e) this Agreement once duly executed and delivered by the Purchaser will
constitute a legal, valid and binding obligation of the Purchaser;
enforceable against the Purchaser in accordance with its terms;
(f) no proceedings have been taken or authorized by the purchaser, or to
the knowledge of the purchaser, by any person, with respect to the
bankruptcy, insolvency, liquidation, dissolution or winding-up of the
Purchaser or with respect to any amalgamation, merger, consolidation,
arrangement or reorganization relating to the Purchaser;
(g) the authorized capital stock of the Purchaser consisted of 50,000,000
shares of common stock with a par value of US $0.001 per share, of
which 500,000 were issued and outstanding. On June 16, 1999, the Board
of Directors passed a unanimous resolution to adopt a forward stock
split at the ratio of 32 to 1. On June 24, 1999 the Secretary of the
State of Colorado received the amendment of the Purchaser's Articles of
Incorporation, under which its authorized capital stock is now
65,500,000 shares of common stock with a par value of US $0.01 per
share. Pursuant to a Stock Purchase Agreement dated June 11, 1999,
between Caribbean Avionics Ltd. et al, the Purchaser and Patrick C.
Brooks (a copy of which is attached hereto as Schedule "C"), on June
16, 1999, Patrick C. Brooks cancelled and returned to the Purchaser
6,210,000 post-split shares of common stock. The Purchaser's issued and
outstanding post-split shares of common stock, on the Closing Date,
shall be 10,790,000 which, includes 1,000,000 shares of common stock to
be issued pursuant to the private placement referred to in subsection
7(p). The authorized capital stock of the
-5-
<PAGE> 6
Purchaser also consists of 1,000,000 shares of preferred stock, with a
par value of US $0.01 per share, none of which are issued and
outstanding;
(h) following the forward stock split, and the cancellation of 6,210,000
post-split shares of common stock referred to in subsection 7(g), there
are no persons or group of persons acting in concert, that directly or
indirectly hold shares of the Purchaser that would constitute a control
block;
(i) other than the 1,000,000 share purchase warrants referred to in
subsection 7(p), on the Closing Date there will not be outstanding (i)
any options, warrants, rights of first refusal or other rights to
purchase any shares of the Purchaser, (ii) any securities convertible
into or exchangeable for such shares, or (iii) any other commitments of
any kind for the issuance of additional shares of the Purchaser or
options warrants or other securities of the Purchaser;
(j) all of the issued and outstanding shares of the Purchaser have been
duly and validly authorized and issued in accordance with applicable
laws and are validly outstanding, fully paid and non-assessable;
(k) all of the Exchangeable Shares which will be issued to the Vendors
hereunder in compliance with applicable laws and the articles of the
Purchaser, and will be issued fully paid and non-assessable, and free
and clear of all liens, charges, encumbrances and trading restrictions
other than as may be imposed by applicable U.S. Federal and State laws,
and the laws of British Columbia;
(l) the Purchaser has no subsidiaries;
(m) the officers and directors of the Purchaser are as follows:
<TABLE>
<CAPTION>
Name Position
---- --------
<S> <C>
Julia Petersen Director, President, Secretary
</TABLE>
(n) attached hereto as Schedule "D" are true and complete copies of the
Purchasers audited financial statements for the fiscal year ended on
December 31, 1998 and unaudited financial statements as contained in
the Purchasers' Form 10-QSB for the fiscal quarter ending on March 31,
1999 (the "Purchasers Financial Statements"). The Purchasers Financial
Statements have been prepared in accordance with American GAAP and
present fairly the financial position, results of operations and
statements of changes in the Parent's financial position for the period
indicated;
(o) no adverse material changes in the affairs of the purchaser have
occurred since April 1, 1999;
(p) the Purchaser is in the process of obtaining irrevocable subscriptions
from purchasers not residents or citizens of Canada or the United
States, for the purchase of 1,000,000 units of the Purchaser at US
$1.00 per unit pursuant to Rule 504 (the "Rule 504 Offering"). Each
unit consists of 1 share of common stock and 1 two-year warrant. Each
warrant entitles the holder to purchase, within 2 years from the date
of the subscription agreement, 1 additional share of common stock at
the price of US $3.00 per share, for total proceeds of US $1,000,000,
such subscriptions being made in accordance with an exemption from the
registration requirements of the US SECURITIES ACT 1933 and applicable
U.S. state legislation, and will bear a restrictive legend pursuant to
restrictions on resale under Rule 144;
(q) there are no liabilities, contingent or otherwise of the Purchaser
which are not disclosed or reflected in its Financial Statements or as
set forth in Schedule "D" attached hereto;
(r) at the time of Closing the Purchaser shall not have any liabilities,
contingent or otherwise, other than those liabilities set forth in
Schedule "E" attached hereto;
(s) there are no employment, consulting, severance pay, continuation pay,
termination pay, indemnification agreements, collective agreements,
employee benefit plans or other similar agreement of any nature
whatsoever affecting the Purchaser;
-6-
<PAGE> 7
(t) there is no litigation, proceeding, or investigation pending or
threatened against the Purchaser, nor does the Purchaser know, or have
grounds to know, of any basis for any litigation, proceeding or
investigation against the Purchaser, except as disclosed in writing to
the Vendors;
(u) since April 1, 1999, the Purchaser's business has been operated
substantially in accordance with all laws, rules, regulations, orders
of competent regulatory authorities, and there has not been:
(i) any event or change in circumstances that has had, or which
the Purchaser may expect to have, a material adverse effect on
the Purchaser or its business;
(ii) any change in liabilities of the Purchaser that has had, or
which the Purchaser may expect to have, a material adverse
effect on the Purchaser or its business;
(iii) any incidence, assumption or guarantee of any indebtedness for
borrowed money by the Purchaser;
(iv) any payments by the Purchaser in respect of any indebtedness
of the Purchaser for borrowed money or in satisfaction of any
liabilities of the Purchaser, other than in the ordinary
course of business;
(v) the creation, assumption or sufferance of the existence of any
lien on any assets reflected on the Purchaser Financial
Statements;
(vi) any transaction or commitment made, or any contract entered
into, by the Purchaser other than the Stock Purchase Agreement
attached hereto as Schedule "C";
(vii) any grant of any severance, continuation or termination pay to
any director, officer, stockholder or employee of the
Purchaser; or any entering into of an employment, deferred
compensation or other similar agreement, or amendment or
variation to any such existing agreement;
(viii) any change by the Purchaser in its accounting principles,
methods or practices or in the manner it keeps its books and
records;
(ix) any distribution, dividend, bonus, management fee or other
payment by the Purchaser to any of its respective officers,
directors stockholders or affiliates, or any of their
respective affiliates or associates; and
(x) any material capital expenditure or commitment by the
Purchaser or material sale, assignment, transfer, lease or
other disposition of or agreement to sell, assign, transfer
lease or otherwise dispose of any asset or property by the
Purchaser other than in the ordinary course of business.
(v) the Purchaser does not own or lease any real property or material
assets;
(w) the Purchaser currently has no operating business and has not had an
operating business since December 7, 1990, being the date the Purchaser
was organized under the laws of Delaware as Pursuit Ventures
Corporation;
(x) there are no contracts or indebtedness between the Purchaser and any of
its shareholders, or affiliates or associates of any of its
shareholders;
(y) there are no material contracts to which the Purchaser is a party other
than as specified in this Agreement;
(z) the operation of the Purchaser's business has not violated or infringed
any U.S. Federal or State securities laws or regulations;
-7-
<PAGE> 8
(aa) all tax returns and reports of the Purchaser required by law to be
filed prior to the date hereof have been filed and are substantially
true, complete and correct, and all taxes and other government charges
have been paid or accrued in the Purchaser Financial Statements;
(bb) the information contained in the documents, certificates and written
statements (including this Agreement and the attachments thereto)
furnished by the Purchasers to the Vendors are true and complete in all
material respects and do not omit to state any material fact necessary
in order to make the statements therein; and
(cc) there is no fact known to the Purchaser that has not been disclosed to
the Vendors in writing that could reasonably have a material adverse
effect on the Purchaser.
PURCHASERS COVENANTS
8. The Purchaser covenants and agrees as follows:
(a) on the Closing Date, Julia Petersen shall resign as Director, President
and Secretary and the following persons will be appointed the directors
and officers of the Purchaser:
<TABLE>
<CAPTION>
Name Position
---- --------
<S> <C>
John Veltheer Director, President
David Lewis Director, Secretary
Grant Petersen Director
</TABLE>
(b) on the Closing Date, and provided that all terms and conditions to be
observed and performed by the Vendors at the Time of Closing have been
observed and performed, the Purchaser will issue the Exchangeable
Shares to the Vendors, such Exchangeable Shares to be issued free and
clear of any liens, encumbrances and charges, but subject to applicable
trading restrictions imposed by U.S. securities legislation, and
imposed under such other securities legislation applicable in the each
jurisdiction where any of the Vendors are resident;
(c) the Purchaser shall not disseminate to any third party any information,
by press-release or otherwise, without the prior written consent of the
Vendors and the Company;
(d) to forthwith deliver to Vendors or legal counsel designated by the
Vendor, a copy of the corporate records and minute books of the
Purchaser, a copy of all documents filed with US State and Federal
securities regulatory authorities since the date of incorporation of
the Purchaser, a current copy of the shareholder list kept by the
transfer agent of the Purchaser and all such documents as the Vendors
or its legal counsel may request as part of their due diligence
investigation of the Purchaser. The Purchaser agrees to provide access
to all corporate records and otherwise assist the Vendors in the
completion of their due diligence;
(e) the Purchaser agrees to sign all documents required, and otherwise
assist the Vendors, to transfer of signing authority over all bank
accounts of the Purchaser.
CONDITIONS PRECEDENT FOR THE VENDORS
9. The joint and several obligations of the Vendors to carry out the terms of
this Agreement and to complete the sale contemplated herein is subject to
the following conditions:
(a) the Purchaser shall have performed and satisfied each of its
obligations hereunder required to be performed and satisfied by it on
or prior to the Closing Date and each of the representations and
warranties of the Purchaser contained herein shall have been true and
correct and contained no misstatement or omission that would make any
such representation or warrant misleading when made, and shall be true
and correct and contain no misstatement or omission that would make any
such representation or warranty misleading at and as of the Closing
Date with the same force and effect as if made as of the Closing Date;
-8-
<PAGE> 9
(b) the Vendors shall have had the opportunity to complete their due
diligence, and all matters arising therefrom shall have been resolved
by the Purchaser. The Vendors, acting reasonably, may in their sole
discretion terminate this Agreement without further obligation or
liability to the Purchaser, if matters arising from the due diligence
investigation of the Purchaser are considered to be materially adverse
to the interests of the Vendors or the Company, and such matters cannot
be cured or otherwise rectified promptly by the Purchaser;
(c) the transactions contemplated by this Agreement shall not violate any
applicable law and there shall be no pending actions or proceedings by
any State, U.S. Federal or Provincial regulatory authority or by any
other person challenging or seeking to materially restrict or prohibit
the transfer and exchange contemplated hereby or the consummation of
the transactions contemplated by this Agreement;
(d) subsequent to the date hereof and prior to the Closing Date, there
shall not have been any event, occurrence, development or state of
circumstances or facts that has had or that may be reasonably expected
to have a material adverse effect on the Purchaser;
(e) the Purchaser's Board of Directors, by proper and sufficient vote
respectively, shall have approved this Agreement and the transactions
contemplated hereby;
(f) prior to the Closing Date, the Purchaser shall have taken all steps
legally necessary to:
(i) effect the forward stock split of the Purchaser's shares of
common stock at the ratio of 32 to 1;
(ii) amend its Articles of Incorporation; and
(iii) cancel the 6,210,000 post-split shares of common stock in the
capital of the Purchaser held by Patrick C. Brooks; and
(g) the Purchaser shall have completed the Rule 504 Offering and issued the
shares to the investors thereunder and the Purchaser shall have filed
the appropriate Form D with the U.S. Securities and Exchange Commission
and any state securities regulatory authority, as required by
applicable Federal and State securities laws.
CONDITIONS PRECEDENT FOR THE PURCHASER
10. All obligations of the Purchaser under this Agreement are subject to the
fulfillment on or prior to Closing, of each of the following conditions to
the satisfaction of the Purchaser's solicitor:
(a) all covenants, warranties and agreements of the Vendors to be performed
on or before the Closing Date pursuant to the terms and conditions of
this Agreement have been duly performed;
(b) the Vendors shall transfer the Shares to the Purchaser and such Shares
shall be registered on the books of the Company in the name of the
Purchaser at the Time of Closing; and
(c) the representations and warranties of the Vendors set forth in this
Agreement shall be true and correct as of the date of the Agreement and
shall be true and correct as at the Date of Closing as if made by the
Vendors on the Closing Date.
11. The Vendors jointly and severally agree that the foregoing conditions in
section 10 are inserted for the exclusive benefit of the Purchaser and may
be waived by the Purchaser in whole or in part at any time.
12. In the event any of the conditions set forth in section 10, are not met by
the Closing Date for whatever reason, the Purchaser at his option, may
elect not to proceed with the purchase of the Shares contemplated herein
without prejudice to any other rights and remedies.
-9-
<PAGE> 10
SHARE CERTIFICATE LEGENDS
13. It is understood that the certificates evidencing the Purchaser's shares of
common stock may bear one or more legends in substantially the following
forms, as well as any other legend required by the laws of any applicable
jurisdiction:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE U.S. OR TO US PERSONS IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER
SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED. HEDGING TRANSACTIONS FOR SUCH SECURITIES
MAY NOT BE MADE UNLESS IN COMPLIANCE WITH SUCH ACT.
THE SHARES ARE SUBJECT TO RESTRICTION ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD IN THE U.S. OR TO US PERSONS EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
The Purchaser need not record a transfer of the shares, unless the
conditions specified in any applicable legends are satisfied. The Purchaser
may also instruct its transfer agent not to record the transfer of any of
the shares unless the conditions specified in the applicable legends are
satisfied.
14. The legend relating to the Securities Act endorsed on a stock certificate
pursuant to this Agreement and the stop transfer instructions with respect
to the shares represented by such certificate shall be removed and the
Purchaser shall issue a certificate without such legend to the holder of
such shares if such shares are registered under the Securities Act and a
prospectus meeting the requirements of Section 10 of the Securities Act is
available or if such holder provides to the Purchaser an opinion of counsel
reasonably satisfactory to the Purchaser, or a no-action letter or
interpretive opinion of the staff of the Securities and Exchange Commission
(the "SEC") to the effect that a public sale, transfer or assignment of
shares may be made without registration and without compliance with any
restriction such as Rule 144.
CLOSING
15. The sale and purchase of the Shares shall be closed on July 30, 1999, or on
such other date agreed by all of the parties hereunder, at the office of
Morton & Company, or at any other place agreed to by all of the Parties,
which date and time are referred to herein as the "Date of Closing", the
"Closing Date", the "Closing" and the "Time of Closing".
16. At Closing, the Vendors shall deliver to the Purchaser:
(a) share certificates duly endorsed for transfer of 9,000,001 Common
Shares without par value in the capital of the Company into the
Purchaser's name representing the Shares;
(b) certified copies of resolutions of the directors of the Company
authorizing and approving the transfer of the Shares, registration of
the Shares in the name of the Purchaser, authorizing the issue of new
share certificates representing the Shares in the name of the
Purchaser, and entry of the name and address of the Purchaser into the
Register of Members and Register of Directors of the Company;
(c) all corporate records and books of account of the Company, including,
without limitation, the minute book, corporate seal, share register
books, share certificate books and annual reports of the Company;
(d) certified copies of such resolutions of the shareholders and directors
of the Company as are to be passed to authorize the execution, delivery
and implementation of this Agreement and of all documents to be
delivered by the Vendor pursuant thereto;
-10-
<PAGE> 11
(e) a certificate signed by the Vendors that all covenants, warranties and
agreements of the Vendors pursuant to the terms of this Agreement have
been duly performed and that the representations and warranties of the
Vendors set forth in this Agreement are true and correct as at the Date
of Closing;
17. On Closing the Purchaser shall deliver to the Vendor the following:
(a) share certificates representing the Exchangeable Shares in the names
and denominations set out in Schedule "A" hereto;
(b) certified copies of resolutions of the directors of the Purchaser
authorizing and approving the issuance of the Exchangeable Shares,
registration of the Exchangeable Shares in the name of the Vendors in
accordance with Schedule "A" hereto and authorizing the issue of the
new share certificates representing such Exchangeable Shares;
(c) all corporate records and books of account of the Company, including
without limitation, the minute book;
(d) certified copies of such resolutions of the directors of the Purchaser
as are to be passed to authorize the execution, delivery and
implementation of this Agreement and of all documents to be delivered
to the Vendors pursuant thereto;
(e) a certificate signed by a duly authorized officer of the Purchaser that
all covenants, warranties and agreements of the Purchaser pursuant to
the terms of this Agreement have been duly performed and that the
representations and warranties of the Purchaser set forth in this
Agreement are true and correct as at the Closing;
(f) the signed resignations of Julia Petersen as director, President and
corporate secretary of the Purchaser and good evidence of proper
termination of all employment or consulting contracts to which the
Purchaser is a party; and
(g) a certified cheque from Global Securities Corporation in the amount of
US $1,000,000, less any amounts previously forwarded (as at August 4,
1999 approximately US $550,000 has been forwarded to the Company)
payable to SUM Media Corp., or as the Company may otherwise direct,
representing the proceeds of the Rule 504 Offering.
INDEMNITY
18. The Purchaser shall be indemnified and held harmless by the Vendors in
respect of any and all damages incurred by the Purchaser as a result of any
inaccuracy or misrepresentation in or breach of any representation or
warranty, covenant or agreement made in this Agreement by the Vendors.
19. The Vendors shall each be indemnified and held harmless by the Purchaser in
respect of any and all damages incurred by any of such Vendors as a result
of any inaccuracy or misrepresentation in or breach of any representation,
warranty, covenant or agreement made by the Purchaser in this Agreement.
SURVIVAL OF REPRESENTATION, WARRANTIES AND COVENANTS
20. Except as hereinafter provided, all representations, warranties, covenants,
agreements and obligations of the parties hereto shall survive the Closing
and shall expire one year following the Closing Date.
GENERAL
21. This Agreement and the terms hereunder shall be treated as confidential
information and no disclosure thereof can be made without the written
consent of the Vendors and the Company.
-11-
<PAGE> 12
22. This Agreement shall be governed by and be construed in accordance with the
laws of the Province of British Columbia.
23. Any notice to be given to a party hereto shall be in writing and signed by
or on behalf of such party and shall be given to the other party by
delivery thereto, or by sending by prepaid registered mail, telex,
facsimile, telegram or cable to the address of the other as hereinbefore
set forth or to such other address of which notice is given, and any notice
shall be deemed not to have been sufficiently given until it is received.
Any notice or other communication contemplated herein shall be deemed to
have been received on the day delivered, if delivered; on the seventh
business day following the mailing thereof, if sent by registered mail; and
on the business day following the transmittal thereof, if sent by telex,
facsimile, telegram or cable. If normal mail, telex, facsimile, telegram or
cable service shall be interrupted by strike, slow down, force majeure or
other cause, the party sending the notice shall utilize any of the other
such services which have not been so interrupted or shall deliver such
notice in order to ensure prompt receipt of same by the other party.
24. The parties shall execute such further assurances and other documents and
instruments and do such further and other things as may be necessary to
implement and carry out the intent of this Agreement.
25. The provisions herein contained constitute the entire agreement between the
parties hereto and supersede all previous expectations, understandings,
communications, representations and agreements whether verbal or written
between parties.
26. This Agreement may be amended by a written instrument signed by the party
against whom enforcement of the amendment is sought and any waivers made on
the part of the Purchaser with respect to any terms or conditions herein
must be in writing and signed by them.
27. If any provision of this Agreement is unenforceable or invalid for any
reason whatever, such unenforceability or invalidity shall not effect the
enforceability or validity of the remaining provisions of this Agreement
and such provision shall be severable from the remainder of this Agreement.
28. Time shall be of the essence hereof.
29. The headings appearing in this Agreement are inserted for convenience of
reference only and shall not affect the interpretation of this Agreement.
30. This Agreement shall enure to the benefit of and be binding upon the
parties and their successors and permitted assigns.
-12-
<PAGE> 13
31. This Agreement may be executed in as many counterparts as may be necessary
or by facsimile and each such agreement or facsimile so executed shall be
deemed to be an original and such counterparts together shall constitute
one and the same Agreement.
IN WITNESS WHEREOF the parties hereto have caused this indenture to be executed
as of the day and year first above written.
CAMBRIDGE ASSET HOLDINGS S.A.
Per:
- -----------------------------------------
Authorized Signatory
- -----------------------------------------
Authorized Signatory
TIGERLILY FINANCIAL INC.
Per:
- -----------------------------------------
Authorized Signatory
- -----------------------------------------
Authorized Signatory
JCC CONSULTING SERVICES LTD.
Per:
- -----------------------------------------
Authorized Signatory
- -----------------------------------------
Authorized Signatory
SIGNED, SEALED and DELIVERED by Grant )
Petersen in the presence of: )
)
)
)
- ----------------------------------------- ) --------------------------------
witness name ) GRANT PETERSEN
)
)
)
)
- ----------------------------------------- )
witness address )
-13-
<PAGE> 14
SIGNED, SEALED and DELIVERED by
Albert Szajman in the presence of: )
)
)
)
- ----------------------------------------- ) --------------------------------
witness name ) ALBERT SZAJMAN
)
)
)
)
- ----------------------------------------- )
witness address )
SIGNED, SEALED and DELIVERED by
John Veltheer in the presence of: )
)
)
)
- ----------------------------------------- ) --------------------------------
witness name ) JOHN VELTHEER
)
)
)
)
- -----------------------------------------
witness address
- -----------------------------------------
witness occupation
SIGNED, SEALED and DELIVERED by David Lewis
in the presence of: )
)
)
)
- ----------------------------------------- ) --------------------------------
witness name ) DAVID LEWIS
)
)
)
)
- ----------------------------------------- )
witness address )
)
)
- ----------------------------------------- )
witness occupation )
-14-
<PAGE> 15
SIGNED, SEALED and DELIVERED by
Jihong Zhang in the presence of: )
)
)
)
- ----------------------------------------- ) --------------------------------
witness name ) JIHONG ZHANG
)
)
)
)
- ----------------------------------------- )
witness address )
)
)
- ----------------------------------------- )
witness occupation
SIGNED, SEALED and DELIVERED by
Andre Dragon in the presence of: )
)
)
- ----------------------------------------- ) --------------------------------
witness name ) ANDRE DRAGON
)
)
)
)
- ----------------------------------------- )
witness address )
)
)
- ----------------------------------------- )
witness occupation
SIGNED, SEALED and DELIVERED by
Dennis Molloy in the presence of: )
)
)
- ----------------------------------------- ) --------------------------------
witness name ) DENNIS MOLLOY
)
)
)
)
- ----------------------------------------- )
witness address )
)
)
- ----------------------------------------- )
witness occupation
-15-
<PAGE> 16
RELIANCE RESOURCES INC.
Per:
- -----------------------------------------
Authorized Signatory
- -----------------------------------------
Authorized Signatory
SUM MEDIA CORP.
Per:
- -----------------------------------------
Authorized Signatory
- -----------------------------------------
Authorized Signatory
-16-
<PAGE> 17
SCHEDULE "A"
Share Allocation Table for shares of the Purchaser to be issued to the Vendors
<TABLE>
<CAPTION>
NAME NO. OF SHARES
---- -------------
<S> <C>
JCC Consulting Services Ltd. 200,000
Albert Szajman 40,000
John Veltheer 100,000
David Lewis 100,000
Cambridge Asset Holdings S.A. 400,000
Tigerlily Financial Inc. 400,000
Grant Petersen 855,000
Jihong Zhang 200,000
Andre Dragon 50,000
Dennis Molloy 855,000
-------
TOTAL 3,200,000
</TABLE>
-17-
<PAGE> 18
SCHEDULE "B"
Current Material Liabilities of
Sum Media Corp.
As of _____________, Sum Media Corp. has no current material
liabilities, contingent or otherwise except for the following:
-18-
<PAGE> 19
SCHEDULE "C"
Stock Purchase Agreement re Patrick C. Brooks
-19-
<PAGE> 20
SCHEDULE "D"
Financial Statements of Reliance Resources Inc. for the
year ended December 31, 1998
and the quarter ended March 31, 1999
-20-
<PAGE> 21
SCHEDULE "E"
Current Liabilities of Reliance Resources Inc.
As at _____________, Reliance Resources Inc. had no current
liabilities, contingent or otherwise, except for the following:
Nil
-21-
<PAGE> 1
EXHIBIT 3.1.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
RELIANCE RESOURCES, INC.,
a Colorado corporation
The undersigned, constituting all members of the corporation's board of
directors, and acting pursuant to C.R.S. Section 7-110-107(2), hereby amend and
restate the corporation's Articles of incorporation, declaring these Amended and
Restated Articles of Incorporation effective as of the date of filing with the
Colorado Secretary of State. These Amended and Restated Articles of
Incorporation were adopted by the corporation's shareholders, the votes cast
approving adoption by each voting group entitled to vote separately on the
question sufficient for approval by each such voting group.
ARTICLE I
Name
The name of the Corporation is RELIANCE RESOURCES, INC.
ARTICLE II
Purposes and Power
The Corporation shall have and may exercise all of the rights, powers
and privileges now or hereafter conferred upon corporations organized under the
laws of the State of Colorado, and shall have and may exercise all powers
necessary or convenient to effect any of the purposes for which the Corporation
has been organized.
ARTICLE III
Capital Structure
3.1. Aggregate Shares. Classes and Series. The aggregate number of
shares of capital stock which the Corporation shall have the authority to issue
is sixty-five million five hundred thousand (65,500,000) shares of stock
designated "Common Stock", par value $0.01, and one- million (1,000,000) shares
of stock designated "Preferred Stock", par value $0.01.
The increase in the authorized amount of Common Stock from fifty
million to sixty-five million, five hundred thousand (65,500,000) shares is
accomplished by first converting each share issued and outstanding as of the
effective date of these Amended and Restated Articles of Incorporation, which
shares number five hundred thousand (500,000), into thirty-two (32) shares of
Common Stock (1:32), thereby increasing the total number of authorized shares to
sixty-five million, five hundred thousand (65,500,000), with the number issued
and outstanding as of the effective date equal to sixteen million (16,000,000).
All shares of any one series shall be alike in every particular. In
establishing a series, the 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 as to Preferred
<PAGE> 2
Stock fix the preferences, rights and restrictions thereof. Shares of Common
Stock shall, in any case, have unlimited voting rights and unfettered rights to
receive the net assets of the Corporation upon dissolution, regardless of series
designations, which rights may nonetheless be shared with other classes of
stock. All series of Preferred Stock shall be alike except that there may be
variations, as determined by the Board of Directors, as to: (1), right of
dividend; (2), terms, conditions, and price of redemption; (3), amounts payable
upon either voluntary and/or involuntary liquidation, (4), sinking fund
provisions, if any, for the call or redemption of the shares; (5), terms and
conditions of conversion, if any, and (6), voting rights consistent with
Colorado law. Before issuing any shares of a class or series, the preferences,
limitations and relative rights of which are determined by the Board of
Directors, the Corporation shall deliver to the Colorado Secretary of State
appropriate Articles of Amendment, as required by law.
3.2 Consideration for Shares. Each share of stock, when issued, shall
be My paid and nonassessable. The shares of the Corporation shall be issued for
such consideration expressed in dollars as shall be fixed from time to time by
the Board of Directors of the Corporation. The consideration for the issuance of
shares may be paid, in whole or in park in money, in other property, tangible or
intangible, or in labor or services actually performed for the Corporation. The
promise of future services shall not constitute payment or part payment for
shares of the Corporation, and neither the promissory note of a subscriber or
direct purchaser of shares from the Corporation, nor the unsecured or
nonnegotiable promissory note of any other person shall constitute payment or
part payment for shares of the Corporation. The judgment of the Board of
Directors as to the value of any property or services received shall, in the
absence of fraud or bad faith, be conclusive upon all persons.
ARTICLE IV
Voting of Share
Each shareholder of record shall have one vote for each share of stock
standing in his or her name on the books of the Corporation and entitled to
vote, except in the election of directors he or she shall have the right to vote
such number of shares for as many persons as there are directors to be elected.
Cumulative voting shall not be allowed in the election of directors or for any
other purpose.
ARTICLE V
Preemptive Rights
No holder of shares of the Corporation of any class shall have any
preemptive or preferential right in or preemptive or preferential right to
subscribe to or for or acquire any new or additional shares, or any subsequent
issue of shares, or any unissued or treasury shares of the Corporation, whether
now or hereafter authorized, or any securities convertible into or carrying a
right to subscribe to or for or acquire any such shares, whether now or
hereafter authorized.
-2-
<PAGE> 3
ARTICLE VI
Regulation of Internal Affairs
6.1 Bylaws. The initial bylaws shall be adopted by the Board of
Directors. The Board of directors may amend or repeal the bylaws unless the
shareholders, in amending or repealing a particular bylaw, provide expressly
that the directors may not amend or repeal such bylaw The shareholders may amend
or repeal the bylaws even though the bylaws may also be amended or repealed by
the Board of Directors. The bylaws may contain any provisions for the regulation
and management of the affairs of the Corporation not inconsistent with law or
these articles of incorporation.
6.2 Quorum of Shareholders and Vote Required. At all meetings of the
shareholders, a majority of the shares entitled to vote, represented in person
or by proxy, shall constitute a quorum, unless the quorum required for the
meeting has been fixed by order of a court pursuant to C.R.S. Section 7-107-103,
and at any meeting at which a quorum is present the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders, unless the vote of a
greater proportion or number is required by the Colorado Business Corporation
Act.
6.3 Registered Holder of Shares. The Corporation shall be entitled to
treat the record holder of any shares of the Corporation as the owner thereof
for all purposes, including all rights deriving from the shares. The Corporation
shall not be bound to recognize any equitable or other claim to or interest in
the shares or rights deriving from the shares on the part of any other person,
including, without limitation, a purchaser, assignee or transferee of such
shares or rights deriving from the shares, unless and until the purchaser,
assignee, transferee or other person becomes the record holder of the shares,
whether or not the Corporation shall have either actual or constructive notice
of the interest. Until the purchaser, assignee or transferee of any of the
shares of the Corporation has become the record holder of the shares, he or she
shall not be entitled to receive notice of meetings, examine fists of the
shareholders, receive dividends or other sums payable to shareholders, or own,
enjoy and exercise any other property or rights deriving from the shares of the
Corporation.
6.4 Indemnification. The Corporation shall, to the fullest extent
permitted by the laws of the State of Colorado, indemnify any person who was or
is a party or threatened to be made a party to any threatened, pending or
completed action, wit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, and whether formal or informal, by reason of the
fact that he or she is or was a director, officer, fiduciary or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, fiduciary or agent of any other foreign or domestic
corporation or of any partnership, joint venture, trust, other enterprise or
employee benefit plan. The right of indemnification shall inure to the benefit
of the heirs, executors, administrators and personal representatives of such
person. The Corporation shall have the right, in its sole discretion, to
indemnify any other person to the fullest extent allowed by the laws of the
State of Colorado, except as may be limited by the bylaws from time to time in
effect.
-3-
<PAGE> 4
6.5 Insurance. The Corporation shall have the power, consistent with
Colorado law, to purchase And maintain insurance on behalf of any person who is
or was a director, officer, employee, or agent of the Corporation, or who is Or
was serving at the request of the Corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him or her and incurred by
him or her in any such capacity, or arising out of his or her status as such,
whether or not the Corporation would have authority to indemnify him or her
against the liability under the provisions of these articles, or under law.
ARTICLE VII
Offices and Agents
7.1 Initial Registered Office and Agent. The address of the initial
registered office of the Corporation is: c/o Frascona, Joiner & Goodman, P.C.,
4750 Table Mesa Drive, Boulder, Colorado, 80303-5575. The name of the initial
registered agent at that address is Richard Byron Peddie.
7.1.2 Consent. I, Richard Byron Peddie, give my consent to
serve and act as initial registered agent:
-------------------------------
Richard Byron Peddie
7.2 Principal Office. The principal office of the Corporation is: Suite
1200 - 1055 West Hastings Street, Vancouver, British Columbia V6E 2E9 CANADA.
ARTICLE VIII
Directors
8.1 Number. Increase and Decrease. The number of directors may be
increased or decreased by the adoption of the amendment to, or in the manner
provided in, the bylaws, but no decrease shall have the effect of shortening the
term of any incumbent director. In the absence of any provision in the bylaws
fixing the number of directors, the number shall be the same as provided in
these articles of incorporation. The number of directors shall be one; in no
case shall the number of directors exceed nine. Directors shall serve for the
term for which they are elected and thereafter until successors are elected and
qualified.
8.2 Limitation of Personal Liability of Directors. To the extent
permitted by Section 7-108- 402 of the Colorado Business Corporation Act, as the
same may be amended and supplemented, no director of the Corporation shall be
personally liable to the Corporation or to its shareholders for monetary damages
for breach of fiduciary duty as a director, except that the foregoing shall not
eliminate or limit the liability of a director to the Corporation or to its
shareholders for monetary damages: (i) for any breach of the director's duty of
loyalty to the Corporation or to its shareholders; (H) for acts or omissions not
in good faith or which involve intentional misconduct
-4-
<PAGE> 5
or a knowing violation of law, (iii) for acts specified in Section 7-108-403 of
the Colorado Business Corporation Act; or (iv) for any transaction from which
the director derived an improper personal benefit.
* * * * *
These Amended and Restated Articles of Incorporation are effective as
of their filing with the Secretary of State of the State of Colorado.
Our hands and seals this ____ day of __________, 1999:
----------------------------------
President
----------------------------------
Chair, Board of Directors
Attest:
----------------------------------
Secretary
-5-
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
PURSUIT VENTURE CORPORATION
ARTICLE ON
OFFICES
1.01 Principal Office. The principal office of the corporation in the
State of Colorado shall be located in the City of Boulder, Boulder. The
corporation may have such other offices either within or without the State of
Colorado as the Board of Directors may designate or the business of the
corporation may require from time to time.
1.02 Registered Office. The registered office of the corporation,
required by the Colorado Corporation Code to be maintained in the State of
Colorado, may be, but need not be, identical with the principal office in the
State of Colorado, and the address of the registered office may be changed from
time to time by the Board of Directors.
ARTICLE TWO
SHAREHOLDERS
2.01 Annual Meeting. The annual meeting of the shareholders shall be
held at such time on such day as shall be fixed by the Board of Directors, for
the purpose of electing Directors and for the transaction of such other business
as may come before the meeting. If the day fixed for the annual meeting shall be
a legal holiday in the State of Colorado, such meeting shall be held on the next
succeeding business day. f the election of Directors shall not be held on the
day designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as may be
convenient.
2.02 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the President or by the Board of Directors, and shall be called by the President
at the request of the holders of not less than one-tenth (1/10) of all
outstanding shares of the corporation entitled to vote at the meeting.
2.03 Place of and Notice of Meeting. The Board of Directors may
designate any place either within or without the State of Colorado as a place of
meeting for any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the corporation in
the State of Colorado. Written notice stating the place, day and hour of the
meeting of shareholders and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall, unless otherwise prescribed by
statute, be delivered not less than ten (10) nor more
<PAGE> 2
than fifty (50) days before the date of the meeting, either-personally or by
mail, by or at the direction of the President, or the Secretary, or the Officer
or other persons calling the meeting, to each shareholder of record entitled to
vote at such meeting; provided however that if the authorized shares of the
corporation are to be increased, at least thirty (30) days notice shall be
given, and if sale of all or substantially all assets are to be voted upon, at
least twenty (20) days notice shall be given. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail, addressed to
the shareholder at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid.
2.04 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at any meeting of shareholders except as otherwise provided by the Colorado
Corporation Code and the Articles of Incorporation. In the absence of a quorum
at any such meeting, the majority of the shares so represented may adjourn the
meeting from time to time for a period not to exceed sixty (60) days without
further notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. The shareholders present at a duly organized
meeting may continue to transact business until adjourned, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
2.05 Meeting of All Shareholders. If all of the shareholders shall meet
at any time and place, either within or outside of the State of Colorado, and
consent to the holding of a meeting at such time and place, such meeting shall
be valid without call or notice, and at such meeting any corporate action may be
taken.
2.06 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other purpose, the Board of Directors of the corporation
may provide that the share transfer books shall be closed for a stated period
but not to exceed, in any case, fifty days. If the share transfer books shall be
closed for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for at least ten
days immediately preceding such meeting. In lieu of closing the share transfer
books, the Board of Directors may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than fifty days and, in case of a meeting of shareholders, not less than ten
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the share transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.
-2-
<PAGE> 3
2.07 Voting. If a quorum is present, the affirmative vote of a majority
of the shares represented at the meeting and entitled to vote on the subject
matter shall be the act of the shareholders, unless a vote of a greater
proportion or number of votes by classes is otherwise required by statute, or by
the Articles of Incorporation, or by these Bylaws. At all meetings of
shareholders, a shareholder may vote in person or by proxy executed in writing
by the shareholder or by his duly authorized attorney in fact. Such proxy shall
be filed with the Secretary of the corporation before or at the time of the
meeting. No proxy shall be valid after eleven (11) months from the date of its
execution, unless otherwise provided in the proxy.
The original stock transfer books shall be the prima facie evidence as
to who are the shareholders entitled to examine the record or transfer books or
to vote at any meeting of shareholders.
2.08 Manner of Acting. If a quorum is present, the affirmative vote of
the majority of the shares represented at the meeting and entitled to vote on
the subject matter shall be the act of the shareholders, unless the vote of a
greater proportion or number or voting by classes is otherwise required by
statute or by the Articles of Incorporation or these Bylaws.
2.09 Voting of Shares. Unless otherwise provided by these Bylaws or
Articles of Incorporation, each outstanding share entitled to vote shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders, and each fractional share shall be entitled to a corresponding
fractional vote on each such matter.
2.10 Voting of Shares by Certain Shareholder. Shares standing in the
name of another corporation may be voted by such officer, agent or proxy as the
Bylaws of such corporation may prescribe, or, in the absence of such provision,
as the Board of Directors of such other corporation may determine.
Shares standing in the name of a deceased person, a minor ward or an
incompetent person, may be voted by an administrator, executor, Court appointed
guardian or conservator, either in person or by proxy without a transfer of such
shares into the name of such administrator, executor, Court appointed guardian
or conservator. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into the trustee name if authority so to
do be contained in an appropriate order of the Court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
-3-
<PAGE> 4
Neither shares of its own stock belonging to this corporation, nor
shares of its own stock held by it in a fiduciary capacity, nor shares of its
own stock held by another corporation if the majority of shares entitled to vote
for the election of directors of such corporation is held by that corporation
may be voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time.
Redeemable shares which have been called for redemption shall not be
entitled to vote on any matter and shall not be deemed outstanding shares on and
after the latter of the date on which written notice of redemption has been
mailed to shareholders and a sum sufficient to redeem such shares has been
deposited with a bank or trust company with irrevocable instruction and
authority to pay the redemption price to the holders of the shares upon
surrender of certificates therefore.
2.11 Voting by Ballot. Voting on any question or in any election may be
by voice vote unless the presiding officer shall order or any shareholder shall
demand that voting be by ballot.
2.12 Informal Action by Shareholders. Any action required or permitted
to be taken at a meeting of the shareholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the shareholders entitled to vote with respect to the subject matter thereof.
2.13 No Cumulative Voting. No shareholder shall be permitted to
cumulate his votes by giving one candidate as many votes as the number of such
directors multiplied by the number of his shares shall equal, or by distributing
such votes on the same principle among any number of candidates.
ARTICLE THREE
BOARD OF DIRECTORS
3.01 General Powers. The business and affairs of the corporation shall
be managed by its Board of Directors.
3.02 Number of Directors, Tenure and Qualification. The number of
directors of the corporation shall be fixed from time to time by a resolution of
the Board of Directors but shall not be less than one (1), or that number
otherwise required by law. Each director shall hold office until his successor
shall have been elected and qualified. Directors need not be residents of the
State of Colorado or shareholders of the corporation.
The Board of Directors shall be divided into three classes as nearly
equal in number as possible. The initial terms of directors elected in 1997
shall expire as of the annual meeting of shareholders for the years indicated
below:
Class I Directors ..........................2000
Class II Directors..........................1999
Class III Directors.........................1998
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<PAGE> 5
Upon expiration of the initial term specified for each class of
directors, their successors shall be elected for a three-year term. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain or attain, if possible, the equality of the
number of directors in each class, but in no case will a decrease in the number
of directors shorten the term of any incumbent director. If an equality in
number is not possible, the increase or decrease shall be apportioned among the
classes in such a way that the difference in the number of directors in any
class shall not exceed one.
3.03 Chairman of the Board. There shall be a Chairman of the Board, who
has been elected from among the directors. He shall preside at all meetings of
the stockholders and of the Board of Directors. He shall have such other powers
and duties as may be prescribed by the Board of Directors.
3.04 Regular Meetings. Regular meeting of the Board of Directors shall
be held without other notice than this Bylaw immediately after, and at the same
place, as the annual meeting of shareholders. The Board of Directors may
provide, by resolution, the time and place either within or without the State of
Colorado, for the holding of additional regular meetings without other notice
than such resolution.
3.05 Special Meeting. Special meetings of the Board of Directors may be
called by or at the request of the President or any director. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State of Colorado, as the place for
holding any special meeting of the Board of Directors called by them.
3.06 Notice. Written notice of any special meeting of directors shall
be given as follows: (a) by mail to each director at his business address at
least three (3) days prior to the meeting, or (b) by personal delivery or
telegram at least twenty-four (24) hours prior to the meeting to the business
address of each director, if any, but in the event such notice is given on
Saturday, Sunday or a holiday, personal delivery to the residence address of
each director. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, so addressed, with postage thereon
pre-paid. If notice be given by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Any director
may waive notice of any meeting. The attendance of a director at any meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
3.07 Quorum. A majority of the number of directors fixed by or pursuant
to Section 3.02 of this Article III shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if less
than such majority is present at a meeting, a majority of the directors present
may adjourn the meeting from time to time without further notice.
3.08 Participation by Electronic Means. Any member of the Board of
Directors or any committee designated by such board may participate in a meeting
of the Board of Directors or a committee by means of telephone conference or
similar communications equipment by which all persons participating in a meeting
can hear each other at the same time. Such participation shall constitute the
presence of the person at the meeting.
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<PAGE> 6
3.09 Manner of Acting. Except as otherwise required by law or by the
Articles of Incorporation, the act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors.
3.10 Informal Action by Directors. Any action required or permitted to
be taken by the Board of Directors or in a committee thereof at a meeting may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the directors or all of the committee members
entitled to vote with respect to the subject matter thereof.
3.11 Vacancies. Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining directors through
less than a quorum of the Board of Directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors may be filled by election by the Board of Directors for a term of
office continuing only until the next election by the shareholders.
3.12 Resignation. Any director of the corporation may resign at any
time by giving written notice to the President or the Secretary of the
corporation. The resignation of any director shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such notice; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective. When one or more directors shall resign from
the board, effective at a future date, a majority of the- directors then in
office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective.
3.13 Removal. Any director or directors of the corporation may be
removed at any time, with or without cause, in the manner provided in the
Colorado Corporation Code.
3.14 Committees. By resolution adopted by a majority of the Board of
Directors, the directors may designate two or more directors to constitute a
committee, any of which shall have such authority in the management of the
corporation as the Board of Directors shall designate and as shall be prescribed
by the Colorado Corporation Code.
3.15 Compensation. By resolution of the Board of Directors and
irrespective of any personal interest of any of the members, each director may
be paid his expenses, if any, of attendance at each meeting of the Board of
Directors, and may be paid a stated salary as director or a fixed sum for
attendance of each meeting of the Board of Directors or both. No such payment
shall preclude any director from serving the corporation in any other capacity
and receiving any other compensation therefor.
3.16 Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the Secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
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<PAGE> 7
ARTICLE FOUR
OFFICERS
4.01 Number of Officers. The officers of the corporation shall be a
President, Vice President, a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. Such other officers and assistant officers as
may be deemed necessary may be elected or appointed by the Board of Directors.
Any two (2) or more offices may be held by the same person. Officers need not be
residents of the State of Colorado or shareholders of the corporation.
4.02 Election and Term of Office. The officers of the corporation to be
elected by the Board of Directors shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after the annual
meeting of the shareholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as practicable.
Each officer shall hold office until his successor shall have been duly elected
and shall have qualified or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided.
4.03 Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights.
4.04 Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise may be filled by the Board of Directors
for the unexpired portion of the term.
4.05 President. The President shall be the Chief Executive Officer of
the corporation and subject to the control of the Board of Directors shall, in
general, supervise and control all of the business and affairs of the
corporation. He may sign, with the Secretary or any other proper officer of the
corporation thereunto authorized by the Board of Directors, certificates for
shares of the corporation and deeds, mortgages, bonds, contracts or other
instruments which the Board of Directors has authorized to be executed, except
in cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these Bylaws to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed or executed, and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the Board of Directors from time to time.
4.06 Vice-President. If elected or appointed by the Board of Directors,
the Vice-President (or in the event there be more than one vice-president, the
vice-presidents in the order designated at the time of their election, or in the
absence of any designation, then in the order of their election) shall, in the
absence of the President or in the event of his death, inability or refusal to
act, perform all duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. Any
Vice-President may sign, with the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, certificates for shares of the corporation;
and shall perform such other duties as from time to time may be assigned to him
by the President or by the Board of Directors.
4.07 The Secretary. The Secretary shall: a) Keep the minutes of the
proceedings of the shareholders and of the Board of Directors in one (1) or more
books provided for that purpose, b) See that all notices are duly given in
accordance with provisions of these Bylaws or as required by law, c) Be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents the execution of
which on behalf of the corporation under its seal
-7-
<PAGE> 8
is duly authorized, d) Keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder, e)
Sign with the President for certificates for shares of the corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors, f) Have general charge of the stock transfer books of the
corporation, and g) In general, perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned by the
President or by the Board of Directors.
4..08 Treasurer. The Treasurer shall: a) Have charge and custody of and
be responsible for all funds and securities of the corporation; b) Receive and
give receipts for money due and payable to the corporation from any source
whatsoever, and deposit all such monies in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Article Five of these Bylaws; and c) In general, perform
all duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the President or by the Board of
Directors.
4.09 Assistant Secretaries and Assistant Treasurers. The Assistant
Secretaries, when authorized by the Board of Directors, may sign with the
Chairman or Vice-Chairman of the Board of Directors or the President or
Vice-President certificates for shares of the corporation the issuance of which
shall have been authorized by a resolution of the Board of Directors. The
Assistant Secretaries and Assistant Treasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the President or the Board of Directors.
4.10 Bonds. If the Board of Directors by resolution shall so require,
any officer or agent of the corporation shall give bond to the corporation in
such amount and with such surety as the Board of Directors may deem sufficient,
conditioned upon the faithful performance of their respective duties and
offices.
4.11 Salaries. The salaries of the officers shall be fixed from time to
time by the Board of Directors. An officer shall not be prevented from receiving
such salary by reason of the fact that he is also a director of the corporation.
4.12 Excessive Compensation. Officers will return to the corporation
any and all compensation that is deemed excessive by the IRS or the Courts.
4.13 Reimbursement of Expense. Officers will reimburse the corporation
for any and all expenses that are subsequently deemed by the IRS or the Courts
to be personal rather than corporate in nature.
ARTICLE FIVE
CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.01 Contract. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on be-half of the corporation, and such authority
may be general or confined to specific instances.
5.02 Loan. No loans shall be contracted on behalf of the corporation
and no evidences of indebtedness shall be issued in its name unless authorized
by a resolution of the Board of Directors.
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<PAGE> 9
.Such authority may be general or confined to specific instances.
5.03 Checks, Drafts, etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by such officer or officers, agent or agents of
the corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
5.04 Deposit. All funds of the corporation not otherwise shall be
deposited from time to time to the credit of the corporation in such banks,
trust companies or other depositories as the Board of Directors may select.
ARTICLE SIX
SHARES AND CERTIFICATES FOR SHARES AND TRANSFER OF SHARES
6.01 Share Certificate. Certificates representing shares of the
corporation shall be respectively numbered serially for each class of shares or
series thereof as they are issued, shall be impressed with the corporate seal or
a facsimile thereof, and shall be signed by the President or Vice- President and
by the Secretary or Treasurer; provided that such signatures may be facsimile if
the certificate is countersigned by a transfer agent. Each certificate shall
state the name of the corporation, the fact that the corporation is organized or
incorporated under the laws of the State of Colorado, the name of the person-to
whom issued, the date of issue, the class (or series of any class), the number
of shares represented thereby and the par value of the shares represented
thereby or a statement that such shares are without par value.
A statement of the designations, preferences, qualifications,
limitations, restrictions and special or relative rights of the shares of each
class shall be set forth in full or summarized on the face or back of the
certificates which the corporation shall issue, or in lieu thereof, the
certificate may set forth that such a statement or summary will be furnished to
any shareholder upon request without charge. Each certificate shall be otherwise
in such form as may be prescribed by the Board of Directors and as such shall
conform to the rules of any stock exchange on which the shares may be listed.
The corporation shall not issue certificates representing fractional
shares and shall not be obligated to make any transfers creating a fractional
interest in a share of stock. The corporation may, but shall not be obligated
to, issue scrip in lieu of any fractional shares, such scrip to have terms and
conditions specified by the Board of Directors.
6.02 Cancellation of Certificates. All certificates surrendered to the
corporation for transfer shall be canceled and no new certificates shall be
issued in lieu thereof until the former certificate for a like number of shares
shall have been surrendered and canceled, except as herein provided with respect
to lost, stolen or destroyed certificates.
6.03 Transfer of Shares. Subject to the terms of any shareholder
agreement relating to the transfer of shares or other transfer restrictions
contained in the Articles of Incorporation or authorized therein, shares of the
corporation shall be transferable on the books of the corporation by the holder
thereof in person or by his duly authorized attorney, upon the surrender and
cancellation of the certificate or certificates for a like number of shares.
Upon presentation and surrender of a certificate for shares properly endorsed
and payment of all taxes therefor, the transferee shall be entitled to a new
certificate or
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<PAGE> 10
certificates in lieu thereof. As against the corporation, the transfer of shares
will be made only on the books of the corporation and in the manner hereinabove
provided, and the corporation shall be entitled to treat the holder of record of
any share as the owner thereof and shall not be bound to recognize any equitable
or other claim to or interest in such share on the part of any other person,
whether or not it shall have express or other notice thereof, save as expressly
provided by the statutes of the State of Colorado.
6.04 Lost, Stolen or Destroyed Certificates. Any shareholder claiming
that his certificate for shares is lost, stolen or destroyed may make an
affidavit or affirmation of that fact and lodge the same with the Secretary of
the corporation, accompanied by signed application for a new certificate,
Thereupon, and upon the giving of a satisfactory bond of indemnity to the
corporation not exceeding an amount double the value of the shares as
represented by such certificate (the necessity for such bond and the amount
required to be determined by the President and Treasurer of the corporation), a
new certificate may be issued of the same tenor and representing the same
number, class and series of shares as were represented by the certificate
alleged to be lost, stolen or destroyed.
6.05 Regulation. The Board of Directors may make such rules and
regulations as it may deem appropriate concerning the issuance, transfer and
registration of certificates for shares of the corporation, including the
appointment of transfer agents and registrars.
ARTICLE SEVEN
FISCAL YEAR
The fiscal year of the corporation shall be the calendar year, unless
otherwise established by the Board of Directors.
ARTICLE EIGHT
DIVIDENDS
The Board of Directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its Articles of Incorporation.
ARTICLE NINE
CORPORATE SEAL
The Board of Directors shall be authorized, but not required, to use a
corporate seal, which if used shall be circular in form and contain the name of
the corporation and the words "Corporate Seal".
ARTICLE TEN
WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of
these Bylaws or under the provisions of the Articles of Incorporation or under
the provisions of the Colorado Corporate Code, or otherwise, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether
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<PAGE> 11
before or after the event or other circumstance requiring such notice, shall be
deemed equivalent to the giving of such notice.
ARTICLE ELEVEN
AMENDMENTS
These Bylaws may be altered, amended or repealed and new By-laws may be
adopted by a majority of the Directors present at any meeting of the Board of
Directors of the corporation at which a quorum is present.
ARTICLE TWELVE
EMERGENCY BYLAWS
13.01 The Emergency Bylaws provided in this Article shall be operative
during any emergency in the conduct of the business of the corporation resulting
from an attack on the United States or any nuclear or atomic disaster,
notwithstanding any different provision in the preceding Articles of the Bylaws
or in the Articles of Incorporation of the corporation or in the Colorado
Corporation Code. To the extent not inconsistent with the provisions of this
Article, the Bylaws provided in the preceding articles shall remain in effect
during such emergency and upon its termination the Emergency Bylaws shall cease
to be operative.
During any such emergency:
(a) A meeting of the Board of Directors may be called by any officer or
director of the corporation. Notice of the time and place of the meeting shall
be given by the person calling the meeting to such of the directors as may be
feasible to reach by any available means of communication. Such notice shall be
given at such time in advance of the meeting as circumstances permit in the
judgment of the person calling the meeting.
(b) At any such meeting of the Board of Directors, a quorum shall
consist of the number of directors in attendance at such meeting.
(c) The Board of Directors, either before or during any such emergency,
may, effective in the emergency, change the principal office or designate
several alternative principal offices or regional offices, or authorize the
officers so to do.
(d) The Board of Directors, either before or during any such emergency,
may provide, and from time to time modify, lines of succession in the event that
during such an emergency any or all officers or agents of the corporation shall
for any reason be rendered incapable of discharging their duties.
(e) No officer, director or employee acting in accordance with these
Emergency Bylaws shall be liable except for willful misconduct.
(f) These Emergency Bylaws shall be subject to repeal or change by
further action of the Board of Directors or by action of the shareholders, but
no such repeal or change shall modify the
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<PAGE> 12
provisions of the next preceding paragraph with regard to action taken prior to
the time of such repeal or change any amendment of these Emergency Bylaws may
make any further or different provision that may be practical and necessary for
the circumstances of the emergency.
ARTICLE THIRTEEN
INDEMNIFICATION
The corporation shall indemnify any person (including his estate) made
or threatened to be made a party to any suit or proceeding, whether civil or
criminal, by reason of the fact that he was a director or officer of the
corporation or served at its request as a director or officer of another
corporation, against judgments, fines, amounts paid in settlement and reasonably
expenses, including attorney fees actually and necessarily incurred as a result
of such threat, suit or proceeding, or any appeal therein, to the full extent
permitted by the Colorado Corporation Code.
Certificate
I hereby certify that the foregoing Bylaws, consisting of eleven (11)
pages, including this page, constitute the Bylaws of Pursuit Venture
Corporation, adopted by the Board of Directors of the corporation as of August
10th, 1998.
- ---------------------------------
Corporate Secretary
-12-
<PAGE> 1
EXHIBIT 10.1
[ORACLE LOGO] SOFTWARE LICENSE AND SERVICES AGREEMENT
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
CUSTOMER: 1200-1055 W. Hastings St. PURCHASE ORDER NO.:
ADDRESS: Vancouver, BC V6E 2E9 PURCHASE ORDER DATE:
ORACLE AGREEMENT NO:.
CONFIGURATION ID (CID):
- --------------------------------------------------------------------------------------------------------------------------------
# OF NUMBER
COPIES OF USER LICENSE LEVEL OF
PRODUCTS AND SERVICES TO SHIP USERS TYPE TYPE LICENSE FEES SUPPORT SUPPORT FEES
- ----------------------------------------------------- -------- ------- ------ ------- --------------- --------- ----------------
(cont'd from previous page)
Oracle JDeveloper Suite 1 1 D F S
Oracle Developer 1 1 D F S
Subtotal $ 2,121,065.00 $ 512,520.00
Less discount $ (615,108.85) (148,630.80)
Less discount $ (151,620.50)
Less discount $ (60,648.20)
Total $ 1,354,335.65 $ 303,241.00
- --------------------------------------------------------------------------------------------------------------------------------
TAXES WILL BE BILLED TO CUSTOMER UNLESS EXEMPTION IS CERTIFIED. CHECK IF NON-TAXABLE: GST: [ ] PST: [ ]
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE AND OPERATING SYSTEM USER TYPE LICENSE TYPE LEVEL OF SUPPORT
- -------------------------------------- --------- ------------ ----------------
MAKE/MODEL: Intel NT unless specified (C) CONCURRENT (F) FULL USE (B) BRONZE
OPERATING SYSTEM: NT (N) NAMED (A) APPLICATION (S) SILVER
SPECIFIC
MACHINE REFERENCE: (CO) COMPUTER (W) WEB SPECIFIC
SOFTWARE MEDIA : CD (CA) CASUAL (WA) WEB APPLICATION SPECIFIC
CPU LOCATION: Customer Site (P) POWER UNIT
FOR APPLICATION SPECIFIC ONLY - CUSTOMER APPLICATION:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
CONTRACT ADMINISTRATOR TECHNICAL SUPPORT CONTACT
NAME: David Noble NAME: David Noble
ADDRESS: 1200-1055 W. Hastings St. ADDRESS: 1200-1055 W. Hastings St.
Vancouver, BC V6E 2E9 Vancouver, BC V6E 2E9
PHONE: 604-618-2317 PHONE: 604-618-2317
BILLING/ACCOUNTS PAYABLE CONTACT SHIP TO
NAME: David Lewis NAME: David Noble
ADDRESS: 1200-1055 W. Hastings St. ADDRESS: 1200-1055 W. Hastings St.
Vancouver, BC V6E 2E9 Vancouver, BC V6E 2E9
PHONE: 604-605-0901 PHONE: 604-648-2317
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
SPECIAL NOTES: UNLESS OTHERWISE SPECIFIED HEREIN OR IN AN ORDER FORM, CUSTOMER IS LICENSED TO USE THE PROGRAMS IN CANADA
ONLY.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
CUSTOMER: SUMmedia.com ORACLE CORPORATION CANADA INC.
- --------------------------------------------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURE: AUTHORIZED SIGNATURE:
- --------------------------------------------------------------------------------------------------------------------------------
NAME: NAME:
- --------------------------------------------------------------------------------------------------------------------------------
TITLE: TITLE:
- --------------------------------------------------------------------------------------------------------------------------------
DATE: DATE:
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE EFFECTIVE DATE OF THIS AGREEMENT SHALL BE ______________, 19__ , OR IF LEFT
BLANK THE EARLIER OF THE DATES SET OUT ABOVE. THIS ORDER IS PLACED SUBJECT TO
THE TERMS AND CONDITIONS ABOVE AND ON THE FOLLOWING PAGES.
Page 1 of 6
<PAGE> 2
[ORACLE LOGO] SOFTWARE LICENSE AND SERVICES AGREEMENT
TERMS AND CONDITIONS
This Software License and Services Agreement (the "Agreement") is between Oracle
Corporation Canada Inc. with its principal place of business at 110 Matheson
Blvd., West, Suite 100, Mississauga, Ontario, L5R 3P4 ("Oracle") and the
customer identified on the signature page of this Agreement ("Customer"). The
terms of this Agreement shall apply to each Program license granted and to all
Services provided by Oracle under this Agreement and any Order Form.
I DEFINITIONS
1.1 "APPLICATION SPECIFIC PROGRAM" shall mean one or more of the Programs
with the following restrictions:
(a) limited for use solely for the purpose of executing the Customer
application identified in an Order Form (the "Application");
(b) may not be used to create new tables or alter tables except to the
extent necessary to implement the Application and may not allow
use of the Program's "Create" or "Alter" commands or any other
command to create or alter tables outside the scope of that which
is necessary for the operation of the Application; and
(c) may not be used to build or modify reports or with other
applications.
1.2 "CASUAL USER" shall mean an individual authorized by the Customer to only
run queries or reports against Oracle Application Programs. Casual Users
are licensed to use any of the Oracle Applications and Extensions to
Oracle Applications for which Customer has acquired Named User licenses."
1.3 "COMMENCEMENT DATE" shall mean the date on which the Programs are
delivered by Oracle to Customer or, if no delivery is necessary, the
Effective Date set forth on the relevant Order Form.
1.4 "CONCURRENT DEVICES" shall mean the maximum number of input devices
accessing the Programs at any given point in time. If multiplexing
software or hardware (e.g. a TP monitor, webserver product) is used, this
number must be measured at the multiplexing front-end.
1.5 "DESIGNATED SYSTEM" shall mean the computer hardware and operating system
designated on the relevant Order Form.
1.6 "DOCUMENTATION" shall mean the user guides and manuals for installation
and use of the Program software. Documentation is provided in CD-ROM or
bound form, whichever is generally available.
1.7 "FULL-USE PROGRAMS" shall mean unaltered versions of the Programs with
all functions intact.
1.8 "LIMITED PRODUCTION PROGRAM" shall mean a Program which does not appear
on the Price List or which is designated as Limited Production by Oracle.
1.9 "ORDER FORM" shall mean the document in hard copy or electronic form by
which Customer orders Program licenses and/or Services and which is
agreed to by the parties. The Order Form shall reference the Effective
Date of this Agreement.
1.10 "PRICE LIST" shall mean Oracle's applicable standard commercial fee
schedule that is in effect when a Program license or any other product or
service is ordered by Customer.
1.11 "PROGRAM" shall mean the software in object code form distributed by
Oracle for which Customer is granted a license pursuant to this
Agreement, the media, the Documentation and Updates.
1.12 "SERVICES" shall mean Technical Support, training, consulting or other
services provided by Oracle to Customer under this Agreement.
1.13 "SUPPORTED PROGRAM LICENSE" shall mean a Program license for which
Customer has ordered Technical Support for the relevant time period.
1.14 "TECHNICAL SUPPORT" shall mean Program support provided under Oracle's
policies in effect on the date Technical Support is ordered.
1.15 "UPDATE" shall mean a subsequent release of the Program which is
generally made available for Supported Program Licenses at no additional
charge other than media and handling charges. Update shall not include
any release, option or future product which Oracle licenses separately.
1.16 "USER," unless otherwise specified on the Order Form, shall mean a person
authorized by Customer to use specified Programs, regardless of whether
the individual is actively using the Programs at any given time.
II. PROGRAM LICENSE
2.1. RIGHTS GRANTED
A. Oracle grants to Customer a nonexclusive license to use the
Programs Customer obtains under this Agreement, as of the
Commencement Date as follows:
i. to use the Programs solely for Customer's operations on the
Designated System or on a backup system if the Designated
System is inoperative, consistent with the use and/or User
limitations specified or referenced in this Agreement, an
Order Form and the Documentation. Customer may not
re-license, rent or lease the Programs or use the Programs
for third-party training, commercial time-sharing, rental
or service bureau use;
ii. to use the Documentation in support of Customer's
authorized use of the Programs;
iii. to copy the Programs for archival or backup purposes and to
make a sufficient number of copies for the User limitations
specified in the Order Form. All titles, trademarks,
copyright and restricted rights notices shall be reproduced
in such copies. All archival and backup copies of the
Programs are subject to the terms of this Agreement;
iv. to modify the Programs and combine them with other software
products; and
v. to allow third parties to use the Programs for Customer's
operations so long as Customer
Page 2 of 6
<PAGE> 3
[ORACLE LOGO] SOFTWARE LICENSE AND SERVICES AGREEMENT
ensures that use of the Programs is in accordance with the
terms of this Agreement.
Customer shall not copy or use the Programs except as otherwise
specified in this Agreement or an Order Form.
In the event that the number of copies of the Programs shipped to
Customer is less than the number actually licensed pursuant to
this Agreement, then Customer shall have the right to make copies
of the Programs up to the number licensed hereunder. In the event
Customer does not, for any reason whatsoever, make and/or use the
number of copies actually licensed pursuant to this Agreement, it
shall, nevertheless, pay to Oracle all license fees due hereunder.
In the event Customer specifies that no shipment of media is
required for any Program, then Customer shall have been deemed to
have a master copy of such Program and no additional shipment is
required.
Customer shall have no right to use any other Oracle software
program that may be delivered with the Programs.
B. Customer agrees not to cause or permit the reverse engineering,
disassembly or decompilation of the Programs, except to the extent
required to obtain interoperability with other independently
created software or as specified by law.
C. Oracle shall retain all title, copyright and other proprietary
rights in the Programs. Customer does not acquire any rights,
express or implied, in the Programs, other than those specified in
this Agreement.
2.2. NETWORK LICENSE
Customer may order a Network license for Programs using a
Network Order Form which shall have the following additional rights
granted:
A. To use the Programs on up to five (5) Server operating systems. If
the number of Server operating systems specified in a Network
Order Form is less than five (5), Customer may, by written notice
to Oracle during the one-year period commencing on the effective
date of the Network Order Form, request Oracle to deliver, (at a
charge of One Thousand Dollars ($1000) per Server operating system
to cover media, documentation, shipping and handling charges), the
corresponding software media and Documentation for the Network
Program Set, for such additional Server operating system(s), up to
a maximum of five (5), added by Customer to the Network; provided
that: i) the Programs licensed hereunder are available in
production release status on the additional Server operating
system(s) at the time Customer elects to add such additional
Server operating system(s); and ii) Customer has continuously
maintained Technical Support for the Network Program Set on the
Server operating systems being used prior to such written notice.
B. The addition of new Server operating systems beyond the five (5)
provided for in this Agreement shall, in addition to the
provisions set out in 2.2A above, be subject to payment by
Customer to Oracle of ten percent (10%) of the net license fees
for the Network Program Set as set forth in a Price Addendum in
effect, or, in the absence of a valid Price Addendum, under
Oracle's standard Price List in effect at the time of such
addition. Payment shall be due and payable on the date Customer
exercises this option.
C. Despite anything to the contrary contained in this Agreement,
Customer shall not be required to report to Oracle which Programs
included in the Network Program Set are installed on which Server
or how many Servers are included in the Network. Customer may
freely transfer the Programs between Servers in the Network at no
additional charge; however substitutions of Server operating
systems licensed under this Agreement may be made (at a charge of
One Thousand Dollars ($1000) per Server operating system to cover
media, documentation, shipping and handling charges) for a period
of three (3) years from the effective date of the applicable
Network Order Form provided that: i) Customer has maintained
continuous Technical Support for the Programs, ii) notifies Oracle
in writing of any such change in Server operating systems; and
iii) the total number of Server operating systems on which the
Network Program Set is run does not exceed five (5). Thereafter
such changes may require the payment of additional fees in
accordance with Oracle's standard license transfer policies then
in effect.
D. Notwithstanding the foregoing, Oracle makes no representation or
guarantee with respect to the future availability of the Programs
on any operating system and Oracle shall not be liable for any
expenditures incurred, or loss suffered, as a result of Customer
relying on the future delivery by Oracle of the Programs on any
operating system.
All fees paid pursuant to this Section 2.2 are non-cancellable and the
sum paid non-refundable.
2.3. TRANSFER AND ASSIGNMENT
A. Customer may transfer a Program license within its organization
upon notice to Oracle. Transfers are subject to the terms and fees
specified in Oracle's transfer policy in effect at the time of the
transfer.
B. Program licenses are personal to Customer. Customer may not assign
this Agreement or a Program license, or any interest in either, to
a legal entity separate from Customer except as part of a merger
or other sale of Customer's business. Such assignment requires the
prior written consent or Oracle, which shall not be unreasonably
withheld.
2.4. VERIFICATION
At Oracle's written request, not more frequently than annually, Customer
shall furnish Oracle with a signed certification verifying that the
Programs are being used pursuant to the provisions of this Agreement.
Oracle may, at its expense, audit Customer's use of the Programs. Any
such audit shall be conducted during regular business hours at Customer's
facilities and shall not unreasonably interfere with Customer's business
activities. Customer agrees to co-operate in the audit, including
providing access to servers, employees and information reasonably
requested by Oracle. If an audit reveals that Customer has underpaid fees
to Oracle, Customer shall be invoiced for such underpaid fees based on
the Price List in effect at the time the audit is completed. Audits shall
be conducted no more than once annually.
III. SERVICES
3.1. TECHNICAL SUPPORT SERVICES
Page 3 of 6
<PAGE> 4
[ORACLE LOGO] SOFTWARE LICENSE AND SERVICES AGREEMENT
Technical Support ordered by Customer will be provided under Oracle's
Technical Support policies in effect on the date Technical Support is
ordered, subject to the payment by Customer of the applicable fees.
3.2. CONSULTING, TRAINING AND OTHER SERVICES
A. PROVISION OF SERVICES Oracle will provide consulting, training and
other services agreed to by the parties under the terms of this
Agreement. Consulting services shall be billed on a time and
materials basis unless the parties expressly agree otherwise in
writing.
B. DIRECTION OF SERVICES Unless otherwise specifically agreed in
writing, Customer shall be responsible for the direction of the
services.
C. NON-SOLICITATION
During the term of an Oracle employee's work or assignment in
connection with Services, and for a period of six (6) months after
such work or assignment terminates, Customer agrees not to
directly or indirectly solicit, recruit for employment or offer
sub-contracting opportunities to or knowingly employ any such
employee, without the prior written consent of Oracle. In the
event of a breach of this provision by Customer, Customer shall
pay Oracle as liquidated damages and not as a penalty, an amount
equal to twelve (12) months salary for the employee engaged by the
Customer.
D. CHANGES Oracle shall not be in breach of any warranties provided
for in this Agreement if any of the relevant software, hardware,
products, goals or related system environment has been changed by
Customer or any other person without Oracle's specific consent in
writing. Where such unauthorized changes impede or make more
costly the provision of Technical Support or consulting services
hereunder, Oracle shall take such corrective action only if
Customer agrees to bear such additional cost, at Oracle's then
prevailing rates.
E. COOPERATION Customer acknowledges that the timely provision of and
access to office accommodations, facilities, equipment,
assistance, cooperation, complete and accurate information and
data from its officers, agents, and employees, and suitably
configured computer products are essential to performance of any
Services and that Oracle's ability to complete any Services is
dependent upon same. If the relevant requirement(s), project
plan(s), schedule, scope, specification(s), design(s), software,
hardware product(s), or related system environment(s) or
architecture are changed by Customer or any other person, Oracle
shall not be responsible for the change unless Customer and Oracle
specifically consent to the change, scheduling, and additional
charges, if any, in writing.
3.3. INCIDENTAL EXPENSES
For any on-site Services requested by Customer, Customer shall reimburse
Oracle for actual, reasonable travel and out-of-pocket expenses incurred.
IV. TERM AND TERMINATION
4.1. TERM
If not otherwise specified on the Order Form, each Program license shall
remain in effect perpetually unless the license or this Agreement is
terminated as provided in Section 4.2 or 4.3.
4.2. TERMINATION BY CUSTOMER
Customer may terminate any Program license at any time; however,
termination shall not relieve Customer's obligations specified in Section
4.4.
4.3. TERMINATION BY ORACLE
Oracle may terminate this Agreement or any Program license upon written
notice if Customer breaches this Agreement and fails to correct such
breach within 30 days following written notice thereof.
4.4. EFFECT OF TERMINATION
Termination of this Agreement or any license shall not limit either party
from pursuing other remedies available to it, including injunctive
relief, nor shall such termination relieve Customer's obligation to pay
all fees that have accrued or are otherwise owed by Customer under any
Order Form or other similar ordering document under this Agreement. The
parties' rights and obligations under Sections 2.1B, 2.1C, 2.2B and 2.3,
and Articles IV, V, VI and VII shall survive termination of this
Agreement.
4.5. HANDLING OF PROGRAMS UPON TERMINATION.
If a license granted under this Agreement terminates, Customer shall: (a)
cease using the applicable Programs; and (b) certify to Oracle within one
month after termination that Customer has destroyed or has returned to
Oracle the Programs and all copies. This requirement applies to copies in
all forms, partial and complete, in all types of media and computer
memory, and whether or not modified or merged into other materials.
V. INDEMNITY, WARRANTIES, REMEDIES
5.1. INFRINGEMENT INDEMNITY
Oracle will defend and indemnify Customer against a claim that the
Programs infringe a copyright or patent, provided that: (a) Customer
notifies Oracle in writing within 30 days of the claim; (b) Oracle has
sole control of the defense and all related settlement negotiations; and
(c) Customer provides Oracle with the assistance, information and
authority necessary to perform Oracle's obligations under this Section.
Reasonable out-of-pocket expenses incurred by Customer in providing such
assistance will be reimbursed by Oracle. Oracle shall have no liability
for any claim of infringement based on use of a superseded or an altered
release of a Program if the infringement would have been avoided by the
use of a current unaltered release of the Program which Oracle provides
to Customer.
In the event a Program is held or is believed by Oracle to infringe,
Oracle shall have the option, at its expense, to; (a) modify the Program
to be non-infringing; or (b) obtain for Customer a license to continue
using the Program. If it is not commercially reasonable to perform either
of the above options, then Oracle may terminate the license for the
infringing Program and refund the license fees paid for the Program. This
Section 5.1 states Oracle's entire liability and Customer's exclusive
remedy for infringement.
Page 4 of 6
<PAGE> 5
[ORACLE LOGO] SOFTWARE LICENSE AND SERVICES AGREEMENT
5.2. WARRANTIES AND DISCLAIMERS
A. PROGRAM WARRANTY
Oracle warrants for a period of one year from the Commencement Date that
each unmodified Program will perform the functions described in the
Documentation.
Oracle warrants that the current production version of the Programs will,
to the extent applicable as set forth in the Documentation, fully comply
with the following millennium compliance statement when configured and
used according to the documented instructions. The definition of
compliance is the ability to:
(a) correctly handle date information before, during and after 1
January 2000 accepting date input, providing date output and
performing calculation on dates or portions of dates;
(b) function according to the Documentation, during and after 1
January 2000 without changes in operation resulting from the
advent of the new century assuming correct configuration;
(c) where appropriate, respond to two digit date input in a way
that resolves the ambiguity as to century in a disclosed,
defined and predetermined manner;
(d) store and provide output of date information in ways that are
unambiguous as to century; and
(e) manage the leap year occurring in the year 2000, following the
quad-centennial rule.
Oracle shall have no liability for any alleged or actual breach of the
"year 2000" warranty provided in the preceding sentence if such claim is
based upon a superseded or altered release of Programs and such claim
would have been avoided by the use of a current unaltered release of
Programs which Oracle provides to Customer. Any breach of this warranty
is subject to the exclusive remedies as set forth in Section 5.3 of the
Agreement
B. MEDIA WARRANTY
Oracle warrants the tapes, diskettes or other media to be free of defects
in materials and workmanship under normal use for 90 days from the
Commencement Date.
C. SERVICES WARRANTY
Oracle warrants that Services will be performed in accordance with
generally accepted industry standards. This warranty shall be valid for
90 days from the performance of such Services.
D. DISCLAIMERS
THE WARRANTIES ABOVE ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES AND
CONDITIONS OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
ORACLE DOES NOT WARRANT THAT THE PROGRAMS WILL MEET CUSTOMER'S
REQUIREMENTS, THAT THE PROGRAMS WILL OPERATE IN THE COMBINATIONS WHICH
CUSTOMER MAY SELECT FOR USE, THAT THE OPERATION OF THE PROGRAMS WILL BE
UNINTERRUPTED OR ERROR-FREE, OR THAT ALL PROGRAM ERRORS WILL BE
CORRECTED. LIMITED PRODUCTION PROGRAMS, PRE-PRODUCTION RELEASES OF
PROGRAMS, AND COMPUTER-BASED TRAINING PRODUCTS ARE DISTRIBUTED "AS IS."
5.3. EXCLUSIVE REMEDIES
For any breach of the warranties contained in Section 5.2, Customer's
exclusive remedy, and Oracle's entire liability, shall be:
A. FOR PROGRAMS
The correction of Program errors that cause breach of the warranty
or, if Oracle is unable to make the Program operate as warranted,
Customer shall be entitled to terminate the Program license and
recover the fees paid to Oracle for the Program license.
B. FOR MEDIA
The replacement of defective media returned within 90 days from the
Commencement Date.
C. FOR SERVICES
The re-performance of the Services or, if Oracle is unable to perform
the Services as warranted, Customer shall be entitled to recover the
fees paid to Oracle for the unsatisfactory Services.
VI. PAYMENT PROVISIONS
6.1. INVOICING AND PAYMENT
All fees for Programs and Services provided hereunder shall be due and
payable 30 days from the date of Oracle's invoice. Any amounts payable by
Customer hereunder which remain unpaid after the due date shall be
subject to a late charge equal to 12% per annum, calculated from the due
date until such amounts are paid. Customer agrees to pay applicable media
and shipping charges. Customer shall issue a purchase order or
alternative document acceptable to Oracle, on or before the Effective
Date of the applicable Order Form.
6.2. TAXES
The fees listed in this Agreement do not include taxes; if Oracle is
required to pay sales, use, goods and services or other taxes based on
the licenses granted or Services provided pursuant to this Agreement or
on Customer's use of Programs or Services, then such taxes shall be
billed to and paid by Customer. This Section shall not apply to taxes
based on Oracle's income.
VII. GENERAL TERMS
7.1 NONDISCLOSURE
By virtue of this Agreement, the parties may have access to information
that is confidential to one another ("Confidential Information").
Confidential Information shall be limited to the Programs, the terms and
pricing contained in this Agreement, and all information clearly
identified as confidential. A party's Confidential Information shall not
include information that: (a) is or becomes a part of the public domain
through no act or omission of the other party; (b) was in the other
party's lawful possession prior to the disclosure and had not been
obtained by the other party either directly or indirectly from the
disclosing party; (c) is lawfully disclosed to the other party by a third
party without restriction on disclosure; or (d) is independently
developed by the other party. Customer shall not disclose the results of
any benchmark tests of the Programs to any third party without Oracle's
prior written approval. The parties agree to hold each other's
Confidential Information in confidence during the term of this Agreement
and for a period of two years after termination of this Agreement. The
parties agree, unless required by law, not to make each other's
Confidential Information available in any form to any third party or to
use each other's Confidential Information for any purpose other than the
implementation of this Agreement. Each party agrees to take all
reasonable steps to ensure that Confidential Information is not disclosed
or distributed by its employees or agents in violation of the terms of
this Agreement.
7.2 GOVERNING LAW
Page 5 of 6
<PAGE> 6
[ORACLE LOGO] SOFTWARE LICENSE AND SERVICES AGREEMENT
This Agreement and all matters arising out of or relating to this
Agreement shall be governed by the laws of the Province of Ontario.
7.3 JURISDICTION
Any legal action or proceeding relating to this Agreement shall be
instituted in a court in Toronto, Ontario. Oracle and Customer agree to
submit to the jurisdiction of, and agree that venue is proper in, these
courts in any such legal action or proceeding.
7.4 NOTICE
All notices, including notices of address change, required to be sent
hereunder shall be in writing and shall be deemed to have been received
on the third business day following mailing by first class mail to the
first address listed in the relevant Order Form (if to Customer) or to
the Oracle address on the Order Form (if to Oracle). To expedite order
processing, Customer agrees that Oracle may treat documents faxed by
Customer to Oracle as original documents; nevertheless, either party may
require the other to exchange original signed documents.
7.5 LIMITATION OF LIABILITY
In no event shall either party be liable for any indirect, incidental,
special or consequential damages, or damages for loss of profits,
revenue, data or use, incurred by either party or any third party,
whether in an action in contract or tort, even if the other party has
been advised of the possibility of such damages or even if such damages
were reasonably foreseeable. Oracle's liability for damages hereunder
shall in no event exceed the amount of fees paid by Customer under the
relevant Order Form, and if such damages result from Customer's use of
the Programs or the provision of Services such liability shall be limited
to fees paid for the relevant Program or Services giving rise to the
liability. The provisions of this Agreement allocate the risks between
Oracle and Customer. Oracle's pricing reflects this allocation of risk
and the limitation of liability specified herein.
7.6 SEVERABILITY
In the event any provision of this Agreement is held to be invalid or
unenforceable, the remaining provisions thereof will remain in full
force.
7.7 WAIVER
The waiver by either party of any default or breach of this Agreement
shall not constitute a waiver of any other or subsequent default or
breach. Except for actions for non-payment or breach of Oracle's
proprietary rights in the Programs, no action, regardless of form,
arising out of this Agreement may be brought by either party more than
one year after the cause of action has arisen.
7.8 EXPORT ADMINISTRATION
Customer agrees to comply fully with all relevant export laws and
regulations of Canada and the United States ("Export Laws") to assure
that neither the Programs nor any direct product thereof are (1)
exported, directly or indirectly, in violation of Export Laws; or (2) are
intended to be used for any purposes prohibited by the Export Laws
including, without limitation, nuclear, chemical or biological weapons
proliferation.
7.9 RELATIONSHIP BETWEEN THE PARTIES
Nothing in this Agreement shall be construed to create a partnership,
joint venture or agency relationship between the parties.
7.10 ENTIRE AGREEMENT
This Agreement constitutes the complete agreement between the parties and
supersedes all prior or contemporaneous agreements or representations,
written or oral, concerning the subject matter of this Agreement. This
Agreement may not be modified or amended except in writing signed by a
duly authorized representative of each party; no other act, document,
usage or custom shall be deemed to amend or modify this Agreement. It is
expressly agreed that the terms of this Agreement and any Order Form
shall supersede the terms contained in any Customer purchase order or
other ordering document. This Agreement shall also supersede the terms of
any unsigned or "shrinkwrap" license included in any package, media, or
electronic version of Oracle-furnished software and any such software
shall be licensed under the terms of this Agreement, provided that the
use limitations contained in any unsigned ordering document shall be
effective for the specified licenses.
7.11 SEPARATION OF LICENSES AND SERVICES
Any Services acquired by Customer from Oracle are deemed to have been bid
and acquired separately from any Program licenses granted under this
Agreement, with Customer having the right to acquire such Services and
Program licenses without acquiring the other.
Oracle is a registered trademark of ORACLE CORPORATION
REDWOOD CITY, CA, USA
ORACLE CORPORATION CANADA INC.
110 MATHESON BLVD. WEST
SUITE 100
MISSISSAUGA, ONTARIO
L5R 3P4
Page 6 of 6
<PAGE> 7
Software Agreement 1
(EXHIBIT 10.1)
[ORACLE LOGO] SOFTWARE LICENSE AND SERVICES AGREEMENT
- --------------------------------------------------------------------------------
CUSTOMER: SUMmedia.com PURCHASE ORDER NO.:
ADDRESS: 1200-1055 W. Hastings St. PURCHASE ORDER DATE:
Vancouver, BC V6E 2E9 ORACLE AGREEMENT NO:
CONFIGURATION ID (CID):
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
# OF
COPIES NUMBER USER LICENSE LEVEL OF
PRODUCTS AND SERVICES TO SHIP OF USERS TYPE TYPE LICENSE FEES SUPPORT SUPPORT FEES
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Oracle Financials 1 20 N F S
Oracle Financials 1 5 CA F S
Oracle Financial Analyzer 1 25 N F S
Oracle Express Server 1 13 C F S
Oracle Field Sales 1 300 N R S
Oracle Sales Compensation 1 5 N F S
Oracle 8i Standard Edition for HP UX 1 40 C F S
Oracle 8i Standard Edition for HP UX 1 400 P P S
Oracle iStore 1 400 P P S
Oracle iPayment 1 400 P P S
Oracle iMarketing 1 400 P P S
Oracle Application Server Enterprise Edition 1 400 P P S
Oracle Developer Server 1 400 P P S
(cont'd) (cont'd) (cont'd)
- ------------------------------------------------------------------------------------------------------------------------
TAXES WILL BE BILLED TO CUSTOMER UNLESS EXEMPTION IS CERTIFIED. CHECK IF NON-TAXABLE: GST: [ ] PST: [ ]
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE AND OPERATING SYSTEM USER TYPE LICENSE TYPE LEVEL OF SUPPORT
- -------------------------------------- --------- ------------ ----------------
MAKE/MODEL: PC Win NT unless specified (C) CONCURRENT (F) FULL USE (B) BRONZE
OPERATING SYSTEM: NT (N) NAMED (A) APPLICATION SPECIFIC (S) SILVER
MACHINE REFERENCE: (CO) COMPUTER (W) WEB SPECIFIC
SOFTWARE MEDIA: CD (CA) CASUAL (WA) WEB APPLICATION SPECIFIC
CPU LOCATION: Customer Site (P) POWER UNIT
FOR APPLICATION SPECIFIC ONLY - CUSTOMER APPLICATION:
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
CONTRACT ADMINISTRATOR TECHNICAL SUPPORT CONTACT
- ---------------------- -------------------------
NAME: David Noble NAME: David Noble
ADDRESS: 1200-1055 W. Hastings St. ADDRESS: 1200-1055 W. Hastings St
Vancouver, BC V6E 2E9 Vancouver, BC V6E 2E9
PHONE: 604-648-2317 PHONE: 604-648-2317
BILLING/ACCOUNTS PAYABLE CONTACT SHIP TO
- -------------------------------- -------
NAME: David Lewis NAME: David Noble
ADDRESS: 1200-1055 W. Hastings St. ADDRESS: 1200-1055 W. Hastings St
Vancouver, BC V6E 2E9 Vancouver, BC V6E 2E9
PHONE: 604-605-0901 PHONE: 604-648-2317
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
SPECIAL NOTES: Unless otherwise specified herein or in an Order Form, Customer is licensed to use the Programs in
Canada only. The Oracle 8I Standard Edition will be running on one, one-processor machine with a total of 400 Mhz of
processing power (1 x 1 x 400 MHz = 400 MHz = 400 Power Units). The Oracle iStore, iPayment, iMarketing, Application
Server Enterprise Edition, and Developer Server will be running on one, one-processor machine with a total of 400 Mhz
of processing power (1 x 1 x 400 MHz = 400 MHz = 400 Power Units. Quote is valid until Nov. 24, 1999 at 5:00 pm Pacific
time.
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
CUSTOMER: ORACLE CORPORATION CANADA INC.
SUMmedia.com
- ------------------------------------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURE: AUTHORIZED SIGNATURE:
- ------------------------------------------------------------------------------------------------------------------------
NAME: NAME:
- ------------------------------------------------------------------------------------------------------------------------
TITLE: TITLE:
- ------------------------------------------------------------------------------------------------------------------------
DATE: DATE:
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Effective Date of this Agreement shall be ________________________, 19___,
or if left blank the earlier of the dates set out above. This order is placed
subject to the terms and conditions above and on the following pages.
Page 1 of 6
<PAGE> 8
[ORACLE LOGO] SOFTWARE LICENSE AND SERVICES AGREEMENT
TERMS AND CONDITIONS
This Software License and Services Agreement (the "Agreement") is between Oracle
Corporation Canada Inc. with its principal place of business at 110 Matheson
Blvd., West, Suite 100, Mississauga, Ontario, L5R 3P4 ("Oracle") and the
customer identified on the signature page of this Agreement ("Customer"). The
terms of this Agreement shall apply to each Program license granted and to all
Services provided by Oracle under this Agreement and any Order Form.
I DEFINITIONS
1.1 "APPLICATION SPECIFIC PROGRAM" shall mean one or more of the Programs
with the following restrictions:
(a) limited for use solely for the purpose of executing the Customer
application identified in an Order Form (the "Application");
(b) may not be used to create new tables or alter tables except to the
extent necessary to implement the Application and may not allow use
of the Program's "Create" or "Alter" commands or any other command
to create or alter tables outside the scope of that which is
necessary for the operation of the Application; and
(c) may not be used to build or modify reports or with other
applications.
1.2 "CASUAL USER" shall mean an individual authorized by the Customer to only
run queries or reports against Oracle Application Programs. Casual Users
are licensed to use any of the Oracle Applications and Extensions to
Oracle Applications for which Customer has acquired Named User licenses."
1.3 "COMMENCEMENT DATE" shall mean the date on which the Programs are
delivered by Oracle to Customer or, if no delivery is necessary, the
Effective Date set forth on the relevant Order Form.
1.4 "CONCURRENT DEVICES" shall mean the maximum number of input devices
accessing the Programs at any given point in time. If multiplexing
software or hardware (e.g. a TP monitor, webserver product) is used, this
number must be measured at the multiplexing front-end.
1.5 "DESIGNATED SYSTEM" shall mean the computer hardware and operating system
designated on the relevant Order Form.
1.6 "DOCUMENTATION" shall mean the user guides and manuals for installation
and use of the Program software. Documentation is provided in CD-ROM or
bound form, whichever is generally available.
1.7 "FULL-USE PROGRAMS" shall mean unaltered versions of the Programs with
all functions intact.
1.8 "LIMITED PRODUCTION PROGRAM" shall mean a Program which does not appear
on the Price List or which is designated as Limited Production by Oracle.
1.9 "ORDER FORM" shall mean the document in hard copy or electronic form by
which Customer orders Program licenses and/or Services and which is
agreed to by the parties. The Order Form shall reference the Effective
Date of this Agreement.
1.10 "PRICE LIST" shall mean Oracle's applicable standard commercial fee
schedule that is in effect when a Program license or any other product or
service is ordered by Customer.
1.11 "PROGRAM" shall mean the software in object code form distributed by
Oracle for which Customer is granted a license pursuant to this
Agreement, the media, the Documentation and Updates.
1.12 "SERVICES" shall mean Technical Support, training, consulting or other
services provided by Oracle to Customer under this Agreement.
1.13 "SUPPORTED PROGRAM LICENSE" shall mean a Program license for which
Customer has ordered Technical Support for the relevant time period.
1.14 "TECHNICAL SUPPORT" shall mean Program support provided under Oracle's
policies in effect on the date Technical Support is ordered.
1.15 "UPDATE" shall mean a subsequent release of the Program which is
generally made available for Supported Program Licenses at no additional
charge other than media and handling charges. Update shall not include
any release, option or future product which Oracle licenses separately.
1.16 "USER," unless otherwise specified on the Order Form, shall mean a person
authorized by Customer to use specified Programs, regardless of whether
the individual is actively using the Programs at any given time.
II. PROGRAM LICENSE
2.1. RIGHTS GRANTED
A. Oracle grants to Customer a nonexclusive license to use the Programs
Customer obtains under this Agreement, as of the Commencement Date as
follows:
i. to use the Programs solely for Customer's operations on the
Designated System or on a backup system if the Designated System
is inoperative, consistent with the use and/or User limitations
specified or referenced in this Agreement, an Order Form and the
Documentation. Customer may not re-license, rent or lease the
Programs or use the Programs for third-party training,
commercial time-sharing, rental or service bureau use;
ii. to use the Documentation in support of Customer's authorized use
of the Programs;
iii. to copy the Programs for archival or backup purposes and to make
a sufficient number of copies for the User limitations specified
in the Order Form. All titles, trademarks, copyright and
restricted rights notices shall be reproduced in such copies.
All archival and backup copies of the Programs are subject to
the terms of this Agreement;
iv. to modify the Programs and combine them with other software
products; and
v. to allow third parties to use the Programs for Customer's
operations so long as Customer ensures that use of the Programs
is in accordance with the terms of this Agreement.
Page 2 of 6
<PAGE> 9
[ORACLE LOGO] SOFTWARE LICENSE AND SERVICES AGREEMENT
Customer shall not copy or use the Programs except as otherwise
specified in this Agreement or an Order Form.
In the event that the number of copies of the Programs shipped to
Customer is less than the number actually licensed pursuant to this
Agreement, then Customer shall have the right to make copies of the
Programs up to the number licensed hereunder. In the event Customer
does not, for any reason whatsoever, make and/or use the number of
copies actually licensed pursuant to this Agreement, it shall,
nevertheless, pay to Oracle all license fees due hereunder.
In the event Customer specifies that no shipment of media is required
for any Program, then Customer shall have been deemed to have a
master copy of such Program and no additional shipment is required.
Customer shall have no right to use any other Oracle software program
that may be delivered with the Programs.
B. Customer agrees not to cause or permit the reverse engineering,
disassembly or decompilation of the Programs, except to the extent
required to obtain interoperability with other independently created
software or as specified by law.
C. Oracle shall retain all title, copyright and other proprietary rights
in the Programs. Customer does not acquire any rights, express or
implied, in the Programs, other than those specified in this
Agreement.
2.2. NETWORK LICENSE
Customer may order a Network license for Programs using a Network Order
Form which shall have the following additional rights granted:
A. To use the Programs on up to five (5) Server operating systems. If
the number of Server operating systems specified in a Network Order
Form is less than five (5), Customer may, by written notice to Oracle
during the one-year period commencing on the effective date of the
Network Order Form, request Oracle to deliver, (at a charge of One
Thousand Dollars ($1000) per Server operating system to cover media,
documentation, shipping and handling charges), the corresponding
software media and Documentation for the Network Program Set, for
such additional Server operating system(s), up to a maximum of five
(5), added by Customer to the Network; provided that: i) the Programs
licensed hereunder are available in production release status on the
additional Server operating system(s) at the time Customer elects to
add such additional Server operating system(s); and ii) Customer has
continuously maintained Technical Support for the Network Program Set
on the Server operating systems being used prior to such written
notice.
B. The addition of new Server operating systems beyond the five (5)
provided for in this Agreement shall, in addition to the provisions
set out in 2.2A above, be subject to payment by Customer to Oracle of
ten percent (10%) of the net license fees for the Network Program Set
as set forth in a Price Addendum in effect, or, in the absence of a
valid Price Addendum, under Oracle's standard Price List in effect at
the time of such addition. Payment shall be due and payable on the
date Customer exercises this option.
C. Despite anything to the contrary contained in this Agreement,
Customer shall not be required to report to Oracle which Programs
included in the Network Program Set are installed on which Server or
how many Servers are included in the Network. Customer may freely
transfer the Programs between Servers in the Network at no additional
charge; however substitutions of Server operating systems licensed
under this Agreement may be made (at a charge of One Thousand Dollars
($1000) per Server operating system to cover media, documentation,
shipping and handling charges) for a period of three (3) years from
the effective date of the applicable Network Order Form provided
that: i) Customer has maintained continuous Technical Support for the
Programs, ii) notifies Oracle in writing of any such change in Server
operating systems; and iii) the total number of Server operating
systems on which the Network Program Set is run does not exceed five
(5). Thereafter such changes may require the payment of additional
fees in accordance with Oracle's standard license transfer policies
then in effect.
D. Notwithstanding the foregoing, Oracle makes no representation or
guarantee with respect to the future availability of the Programs on
any operating system and Oracle shall not be liable for any
expenditures incurred, or loss suffered, as a result of Customer
relying on the future delivery by Oracle of the Programs on any
operating system.
All fees paid pursuant to this Section 2.2 are non-cancellable and the
sum paid non-refundable.
2.3. TRANSFER AND ASSIGNMENT
A. Customer may transfer a Program license within its organization upon
notice to Oracle. Transfers are subject to the terms and fees
specified in Oracle's transfer policy in effect at the time of the
transfer.
B. Program licenses are personal to Customer. Customer may not assign
this Agreement or a Program license, or any interest in either, to a
legal entity separate from Customer except as part of a merger or
other sale of Customer's business. Such assignment requires the prior
written consent or Oracle, which shall not be unreasonably withheld.
2.4. VERIFICATION
At Oracle's written request, not more frequently than annually, Customer
shall furnish Oracle with a signed certification verifying that the
Programs are being used pursuant to the provisions of this Agreement.
Oracle may, at its expense, audit Customer's use of the Programs. Any
such audit shall be conducted during regular business hours at Customer's
facilities and shall not unreasonably interfere with Customer's business
activities. Customer agrees to co-operate in the audit, including
providing access to servers, employees and information reasonably
requested by Oracle. If an audit reveals that Customer has underpaid fees
to Oracle, Customer shall be invoiced for such underpaid fees based on
the Price List in effect at the time the audit is completed. Audits shall
be conducted no more than once annually.
Page 3 of 6
<PAGE> 10
[ORACLE LOGO] SOFTWARE LICENSE AND SERVICES AGREEMENT
III. SERVICES
3.1. TECHNICAL SUPPORT SERVICES
Technical Support ordered by Customer will be provided under Oracle's
Technical Support policies in effect on the date Technical Support is
ordered, subject to the payment by Customer of the applicable fees.
3.2. CONSULTING, TRAINING AND OTHER SERVICES
A. PROVISION OF SERVICES
Oracle will provide consulting, training and other services agreed to
by the parties under the terms of this Agreement. Consulting services
shall be billed on a time and materials basis unless the parties
expressly agree otherwise in writing.
B. DIRECTION OF SERVICES
Unless otherwise specifically agreed in writing, Customer shall be
responsible for the direction of the services.
C. NON-SOLICITATION
During the term of an Oracle employee's work or assignment in
connection with Services, and for a period of six (6) months after
such work or assignment terminates, Customer agrees not to directly
or indirectly solicit, recruit for employment or offer
sub-contracting opportunities to or knowingly employ any such
employee, without the prior written consent of Oracle. In the event
of a breach of this provision by Customer, Customer shall pay Oracle
as liquidated damages and not as a penalty, an amount equal to twelve
(12) months salary for the employee engaged by the Customer.
D. CHANGES
Oracle shall not be in breach of any warranties provided for in this
Agreement if any of the relevant software, hardware, products, goals
or related system environment has been changed by Customer or any
other person without Oracle's specific consent in writing. Where such
unauthorized changes impede or make more costly the provision of
Technical Support or consulting services hereunder, Oracle shall take
such corrective action only if Customer agrees to bear such
additional cost, at Oracle's then prevailing rates.
E. COOPERATION
Customer acknowledges that the timely provision of and access to
office accommodations, facilities, equipment, assistance,
cooperation, complete and accurate information and data from its
officers, agents, and employees, and suitably configured computer
products are essential to performance of any Services and that
Oracle's ability to complete any Services is dependent upon same. If
the relevant requirement(s), project plan(s), schedule, scope,
specification(s), design(s), software, hardware product(s), or
related system environment(s) or architecture are changed by Customer
or any other person, Oracle shall not be responsible for the change
unless Customer and Oracle specifically consent to the change,
scheduling, and additional charges, if any, in writing.
3.3. INCIDENTAL EXPENSES
For any on-site Services requested by Customer, Customer shall reimburse
Oracle for actual, reasonable travel and out-of-pocket expenses incurred.
IV. TERM AND TERMINATION
4.1. TERM
If not otherwise specified on the Order Form, each Program license shall
remain in effect perpetually unless the license or this Agreement is
terminated as provided in Section 4.2 or 4.3.
4.2. TERMINATION BY CUSTOMER
Customer may terminate any Program license at any time; however,
termination shall not relieve Customer's obligations specified in Section
4.4.
4.3. TERMINATION BY ORACLE
Oracle may terminate this Agreement or any Program license upon written
notice if Customer breaches this Agreement and fails to correct such
breach within 30 days following written notice thereof.
4.4. EFFECT OF TERMINATION
Termination of this Agreement or any license shall not limit either party
from pursuing other remedies available to it, including injunctive
relief, nor shall such termination relieve Customer's obligation to pay
all fees that have accrued or are otherwise owed by Customer under any
Order Form or other similar ordering document under this Agreement. The
parties' rights and obligations under Sections 2.1B, 2.1C, 2.2B and 2.3,
and Articles IV, V, VI and VII shall survive termination of this
Agreement.
4.5. HANDLING OF PROGRAMS UPON TERMINATION.
If a license granted under this Agreement terminates, Customer shall: (a)
cease using the applicable Programs; and (b) certify to Oracle within one
month after termination that Customer has destroyed or has returned to
Oracle the Programs and all copies. This requirement applies to copies in
all forms, partial and complete, in all types of media and computer
memory, and whether or not modified or merged into other materials.
V. INDEMNITY, WARRANTIES, REMEDIES
5.1. INFRINGEMENT INDEMNITY
Oracle will defend and indemnify Customer against a claim that the
Programs infringe a copyright or patent, provided that: (a) Customer
notifies Oracle in writing within 30 days of the claim; (b) Oracle has
sole control of the defense and all related settlement negotiations; and
(c) Customer provides Oracle with the assistance, information and
authority necessary to perform Oracle's obligations under this Section.
Reasonable out-of-pocket expenses incurred by Customer in providing such
assistance will be reimbursed by Oracle. Oracle shall have no liability
for any claim of infringement based on use of a superseded or an altered
release of a Program if the infringement would have been avoided by the
use of a current unaltered release of the Program which Oracle provides
to Customer.
In the event a Program is held or is believed by Oracle to infringe,
Oracle shall have the option, at its expense, to; (a) modify the Program
to be non-infringing; or (b) obtain for Customer a license to continue
using the Program. If it is not commercially reasonable to perform either
of the above options, then Oracle may terminate the license for the
infringing Program and refund the license fees paid for the Program. This
Section 5.1 states Oracle's entire liability and Customer's exclusive
remedy for infringement.
Page 4 of 6
<PAGE> 11
[ORACLE LOGO] SOFTWARE LICENSE AND SERVICES AGREEMENT
5.2. WARRANTIES AND DISCLAIMERS
A. PROGRAM WARRANTY
Oracle warrants for a period of one year from the Commencement Date that
each unmodified Program will perform the functions described in the
Documentation.
Oracle warrants that the current production version of the Programs will,
to the extent applicable as set forth in the Documentation, fully comply
with the following millennium compliance statement when configured and
used according to the documented instructions. The definition of
compliance is the ability to:
(a) correctly handle date information before, during and after 1
January 2000 accepting date input, providing date output and
performing calculation on dates or portions of dates;
(b) function according to the Documentation, during and after 1 January
2000 without changes in operation resulting from the advent of the
new century assuming correct configuration;
(c) where appropriate, respond to two digit date input in a way that
resolves the ambiguity as to century in a disclosed, defined and
predetermined manner;
(d) store and provide output of date information in ways that are
unambiguous as to century; and
(e) manage the leap year occurring in the year 2000, following the
quad-centennial rule.
Oracle shall have no liability for any alleged or actual breach of the
"year 2000" warranty provided in the preceding sentence if such claim is
based upon a superseded or altered release of Programs and such claim
would have been avoided by the use of a current unaltered release of
Programs which Oracle provides to Customer. Any breach of this warranty
is subject to the exclusive remedies as set forth in Section 5.3 of the
Agreement
B. MEDIA WARRANTY
Oracle warrants the tapes, diskettes or other media to be free of defects
in materials and workmanship under normal use for 90 days from the
Commencement Date.
C. SERVICES WARRANTY
Oracle warrants that Services will be performed in accordance with
generally accepted industry standards. This warranty shall be valid for
90 days from the performance of such Services.
D. DISCLAIMERS
THE WARRANTIES ABOVE ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES AND
CONDITIONS OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
ORACLE DOES NOT WARRANT THAT THE PROGRAMS WILL MEET CUSTOMER'S
REQUIREMENTS, THAT THE PROGRAMS WILL OPERATE IN THE COMBINATIONS WHICH
CUSTOMER MAY SELECT FOR USE, THAT THE OPERATION OF THE PROGRAMS WILL BE
UNINTERRUPTED OR ERROR-FREE, OR THAT ALL PROGRAM ERRORS WILL BE
CORRECTED. LIMITED PRODUCTION PROGRAMS, PRE-PRODUCTION RELEASES OF
PROGRAMS, AND COMPUTER-BASED TRAINING PRODUCTS ARE DISTRIBUTED "AS IS."
5.3. EXCLUSIVE REMEDIES
For any breach of the warranties contained in Section 5.2, Customer's
exclusive remedy, and Oracle's entire liability, shall be:
A. FOR PROGRAMS
The correction of Program errors that cause breach of the warranty
or, if Oracle is unable to make the Program operate as warranted,
Customer shall be entitled to terminate the Program license and
recover the fees paid to Oracle for the Program license.
B. FOR MEDIA
The replacement of defective media returned within 90 days from the
Commencement Date.
C. FOR SERVICES
The re-performance of the Services or, if Oracle is unable to perform
the Services as warranted, Customer shall be entitled to recover the
fees paid to Oracle for the unsatisfactory Services.
VI. PAYMENT PROVISIONS
6.1. INVOICING AND PAYMENT
All fees for Programs and Services provided hereunder shall be due and
payable 30 days from the date of Oracle's invoice. Any amounts payable by
Customer hereunder which remain unpaid after the due date shall be
subject to a late charge equal to 12% per annum, calculated from the due
date until such amounts are paid. Customer agrees to pay applicable media
and shipping charges. Customer shall issue a purchase order or
alternative document acceptable to Oracle, on or before the Effective
Date of the applicable Order Form.
6.2. TAXES
The fees listed in this Agreement do not include taxes; if Oracle is
required to pay sales, use, goods and services or other taxes based on
the licenses granted or Services provided pursuant to this Agreement or
on Customer's use of Programs or Services, then such taxes shall be
billed to and paid by Customer. This Section shall not apply to taxes
based on Oracle's income.
VII. GENERAL TERMS
7.1 NONDISCLOSURE
By virtue of this Agreement, the parties may have access to information
that is confidential to one another ("Confidential Information").
Confidential Information shall be limited to the Programs, the terms and
pricing contained in this Agreement, and all information clearly
identified as confidential. A party's Confidential Information shall not
include information that: (a) is or becomes a part of the public domain
through no act or omission of the other party; (b) was in the other
party's lawful possession prior to the disclosure and had not been
obtained by the other party either directly or indirectly from the
disclosing party; (c) is lawfully disclosed to the other party by a third
party without restriction on disclosure; or (d) is independently
developed by the other party. Customer shall not disclose the results of
any benchmark tests of the Programs to any third party without Oracle's
prior written approval. The parties agree to hold each other's
Confidential Information in confidence during the term of this Agreement
and for a period of two years after termination of this Agreement. The
parties agree, unless required by law, not to make each other's
Confidential Information available in any form to any third party or to
use each other's Confidential Information for any purpose other than the
implementation of this Agreement. Each party agrees to take all
reasonable steps to ensure that Confidential Information is not disclosed
or distributed by its employees or agents in violation of the terms of
this Agreement.
Page 5 of 6
<PAGE> 12
[ORACLE LOGO] SOFTWARE LICENSE AND SERVICES AGREEMENT
7.2 GOVERNING LAW
This Agreement and all matters arising out of or relating to this
Agreement shall be governed by the laws of the Province of Ontario.
7.3 JURISDICTION
Any legal action or proceeding relating to this Agreement shall be
instituted in a court in Toronto, Ontario. Oracle and Customer agree to
submit to the jurisdiction of, and agree that venue is proper in, these
courts in any such legal action or proceeding.
7.4 NOTICE
All notices, including notices of address change, required to be sent
hereunder shall be in writing and shall be deemed to have been received
on the third business day following mailing by first class mail to the
first address listed in the relevant Order Form (if to Customer) or to
the Oracle address on the Order Form (if to Oracle). To expedite order
processing, Customer agrees that Oracle may treat documents faxed by
Customer to Oracle as original documents; nevertheless, either party may
require the other to exchange original signed documents.
7.5 LIMITATION OF LIABILITY
In no event shall either party be liable for any indirect, incidental,
special or consequential damages, or damages for loss of profits,
revenue, data or use, incurred by either party or any third party,
whether in an action in contract or tort, even if the other party has
been advised of the possibility of such damages or even if such damages
were reasonably foreseeable. Oracle's liability for damages hereunder
shall in no event exceed the amount of fees paid by Customer under the
relevant Order Form, and if such damages result from Customer's use of
the Programs or the provision of Services such liability shall be limited
to fees paid for the relevant Program or Services giving rise to the
liability. The provisions of this Agreement allocate the risks between
Oracle and Customer. Oracle's pricing reflects this allocation of risk
and the limitation of liability specified herein.
7.6 SEVERABILITY
In the event any provision of this Agreement is held to be invalid or
unenforceable, the remaining provisions thereof will remain in full
force.
7.7 WAIVER
The waiver by either party of any default or breach of this Agreement
shall not constitute a waiver of any other or subsequent default or
breach. Except for actions for non-payment or breach of Oracle's
proprietary rights in the Programs, no action, regardless of form,
arising out of this Agreement may be brought by either party more than
one year after the cause of action has arisen.
7.8 EXPORT ADMINISTRATION
Customer agrees to comply fully with all relevant export laws and
regulations of Canada and the United States ("Export Laws") to assure
that neither the Programs nor any direct product thereof are (1)
exported, directly or indirectly, in violation of Export Laws; or (2) are
intended to be used for any purposes prohibited by the Export Laws
including, without limitation, nuclear, chemical or biological weapons
proliferation.
7.9 RELATIONSHIP BETWEEN THE PARTIES
Nothing in this Agreement shall be construed to create a partnership,
joint venture or agency relationship between the parties.
7.10 ENTIRE AGREEMENT
This Agreement constitutes the complete agreement between the parties and
supersedes all prior or contemporaneous agreements or representations,
written or oral, concerning the subject matter of this Agreement. This
Agreement may not be modified or amended except in writing signed by a
duly authorized representative of each party; no other act, document,
usage or custom shall be deemed to amend or modify this Agreement. It is
expressly agreed that the terms of this Agreement and any Order Form
shall supersede the terms contained in any Customer purchase order or
other ordering document. This Agreement shall also supersede the terms of
any unsigned or "shrinkwrap" license included in any package, media, or
electronic version of Oracle-furnished software and any such software
shall be licensed under the terms of this Agreement, provided that the
use limitations contained in any unsigned ordering document shall be
effective for the specified licenses.
7.11 SEPARATION OF LICENSES AND SERVICES
Any Services acquired by Customer from Oracle are deemed to have been bid
and acquired separately from any Program licenses granted under this
Agreement, with Customer having the right to acquire such Services and
Program licenses without acquiring the other.
Oracle is a registered trademark of ORACLE CORPORATION
REDWOOD CITY, CA, USA
ORACLE CORPORATION CANADA INC.
110 MATHESON BLVD. WEST
SUITE 100
MISSISSAUGA, ONTARIO
L5R 3P4
Page 6 of 6
<PAGE> 13
[ORACLE LOGO] ADDENDUM
ADDENDUM NO. 1 to the Software License and Services Agreement between
SUMmedia.com ("Customer") and Oracle Corporation Canada Inc. ("Oracle") bearing
an Effective Date of ____________ (the "Agreement"). This Addendum shall only be
deemed to supersede the terms of the Agreement that are inconsistent with a term
or provision contained herein. All the defined terms contained in the Agreement
and used in this Addendum shall have the same meanings unless varied herein.
The parties hereby agree to amend the Agreement as follows:
1. The license type of the Oracle Field Sales Program listed herein is
Restricted Use. The use of this Program is restricted to utilization of
customers functionality only. In the event Customer wishes to use any additional
functionality, it must obtain a Full Use license of such Program.
This Addendum shall become effective as of ___________________, 1999.
IN WITNESS WHEREOF, the parties have executed this Addendum through their duly
authorized representatives.
<TABLE>
<S> <C> <C>
CUSTOMER: SUMMEDIA.COM ORACLE CORPORATION CANADA INC.
--------------------------------------
Signed: Signed:
--------------------------------------- --------------------------------------
Name: Name:
--------------------------------------- --------------------------------------
Title: Title:
--------------------------------------- --------------------------------------
Date: Date:
--------------------------------------- --------------------------------------
Address: 1200-1055 W. Hastings St. Address: 110 Matheson Blvd. West
--------------------------------------- Suite 100
Vancouver, BC V6E 2E9 Mississauga, Ontario L5R 3P4
---------------------------------------
</TABLE>
<PAGE> 14
[ORACLE LOGO] ADDENDUM
ADDENDUM NO. 2 to Order Form bearing an effective date of ________ under the
Software License and Services Agreement between ("Customer") and Oracle
Corporation Canada Inc.("Oracle") bearing an Effective Date of ________ (the
"Agreement"). This Addendum shall only be deemed to supersede the terms of the
Agreement that are inconsistent with a term or provision contained herein. All
the defined terms contained in the Agreement and used in this Addendum shall
have the same meanings unless varied herein.
The parties hereby agree to amend the Agreement as follows:
1. The Program(s) listed herein is licensed to Customer pursuant to the Power
Unit licensing method set out below and such Program(s) is designated as a
Web Specific Program license, also as set out below.
2. "POWER UNIT - RISC": One Power Unit - RISC is defined as one MHz of power
in all RISC processors in the computers on which the Programs are installed
and operating. The total number of Power Units - RISC is determined by
adding together the number of MHz in all the processors in all such
computers. Customer may add processors and computers, or modify existing
processors and computers, provided that if, at any time, Customer's use
exceeds the total number of licensed Power Units - RISC, Customer will
acquire licenses for the additional Power Units - RISC. At Oracle's
request, no more than once annually, Customer shall certify in writing the
Power Unit - RISC computation, including the number of relevant computers
and processors, and the MHz of each such processor. (For example: two
computers with two 400 MHz processors each would equal 1,600 Power Units -
RISC).
3. A "WEB SPECIFIC" Program is defined as a Program license which may only be
accessed by third parties via internet networking protocols and which is
limited to use solely for deployment of Customer's public web site.
Customer's application may allow third party web access to a licensed Web
Specific Program solely for viewing, querying or adding data, provided such
use is in accordance with the other terms of the Agreement.
No corporate use or internal data processing by Customer or its clients
shall be permitted with a Web Specific Program. Prohibited corporate and
internal uses shall include, but shall not be limited to, the following
types of uses: human resource, finance and administration, internal
messaging and communications, accounting, sales force management, etc
This Addendum shall become effective as of
IN WITNESS WHEREOF, the parties have executed this Addendum through their duly
authorized representatives.
<TABLE>
<S> <C>
CUSTOMER: SUMMEDIA.COM ORACLE CORPORATION CANADA INC.
---------------------------
Signed: Signed:
---------------------------- ---------------------------
Name: Name:
---------------------------- ---------------------------
Title: Title:
---------------------------- ---------------------------
Date: Date:
---------------------------- ---------------------------
Address: 1200-1055 W. Hastings St. Address: 110 Matheson Blvd. West
---------------------------- Suite 100
Vancouver, BC V6E 2E9 Mississauga, Ontario L5R 3P4
----------------------------
</TABLE>
Page 1 of 1
<PAGE> 1
EXHIBIT 21
Subsidiaries of the Registrant
SUM Media Corp.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUMMEDIA.COM
INC.'S QUARTERLY REPORT ON FORM 10-QSB FOR THE PERIOD ENDED SEPTEMBER 30, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 327,247
<SECURITIES> 0
<RECEIVABLES> 153,628
<ALLOWANCES> (16,438)
<INVENTORY> 0
<CURRENT-ASSETS> 520,560
<PP&E> 421,507
<DEPRECIATION> (133,493)
<TOTAL-ASSETS> 866,055
<CURRENT-LIABILITIES> 652,239
<BONDS> 0
0
0
<COMMON> 12,000
<OTHER-SE> 160,827
<TOTAL-LIABILITY-AND-EQUITY> 866,055
<SALES> 0
<TOTAL-REVENUES> 149,659
<CGS> 34,062
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,910,420
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,794,761)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,794,761)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,794,761)
<EPS-BASIC> (0.06)
<EPS-DILUTED> 0
</TABLE>
