-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OMPZOvoRf8IyObiUZwWvIkTYsXLAtU9SQcX0e+xnW6KFnbbPxRC1vVxQ4fMwYucB 2iqry/ux39dsYZbAGTVkrQ== /in/edgar/work/0001021890-00-500030/0001021890-00-500030.txt : 20001116 0001021890-00-500030.hdr.sgml : 20001116 ACCESSION NUMBER: 0001021890-00-500030 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELEMETRIX INC CENTRAL INDEX KEY: 0000742814 STANDARD INDUSTRIAL CLASSIFICATION: [2400 ] IRS NUMBER: 593453156 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-14724 FILM NUMBER: 768955 BUSINESS ADDRESS: STREET 1: 1225 SAGE ST CITY: GERING STATE: NE ZIP: 69341 BUSINESS PHONE: 3033837610 MAIL ADDRESS: STREET 1: 1225 SAGE ST CITY: GERING STATE: NE ZIP: 69341 FORMER COMPANY: FORMER CONFORMED NAME: ARNOX CORP DATE OF NAME CHANGE: 19960612 10QSB 1 0001.txt QUARTERLY REPORT ON FORM 10-QSB-SEPTEMBER 30, 2000 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. FORM 10-QSB Quarterly Report pursuant to Section 13 of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2000 TELEMETRIX INC. (Exact Name of Registrant as Specified in its Charter) Delaware 0-14724 59-345-3156 --------------- ---------------------- ---------------------- (Jurisdiction of (Commission File Number) (I.R.S. Employer incorporation) Identification Number) Telemetrix Inc. c/o J. Doyle, Chief Financial Officer 1225 Sage Gering, Nebraska 69341 (308) 436-3453 ----------------------------------------------- (Address, including zip code, & telephone number, of Registrant's principal executive offices) Indicate by check mark whether the Registrant has: Yes [X] No [ ] (1) filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) been subject to such filing requirements for the past 90 days. On September 30, 2000, Registrant had 16,230,165 issued and outstanding common shares. Transitional Small Business Disclosure Format: Yes [ ] No [X] TELEMETRIX INC. (Commission File No. 0-14724) TABLE OF CONTENTS FOR FORM 10-QSB Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements.............................................. 3 Condensed Consolidated Balance Sheets............................. 3 Consolidated Statements of Operations............................. 4 Consolidated Statements of Cash flows............................. 5 Notes to Consolidated Financial Statements........................ 6 Item 2. Management's Discussion & Analysis of Financial Condition and Results of Operations............................................. 11 PART II - OTHER INFORMATION Item 1. Legal Proceedings................................................. 19 Item 2. Changes in Securities and Use of Proceeds......................... 19 Item 3. Defaults Upon Senior Securities................................... 19 Item 4. Submission of Matters to a Vote of Security Holders............... 19 Item 5. Other Information................................................. 19 Item 6. Exhibits and Reports on Form 8-K.................................. 20 SIGNATURES .................................................................. 21 NOTE CONCERNING FORWARD-LOOKING INFORMATION. This Quarterly Report on SEC Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties that constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Forward-looking terms such as "may", "might", "will", "should", "could", "expect", "plans", "anticipate", "believe", "estimate", "continue" or similar words identify such statements. Investors should read statements that contain these terms carefully because they: (1) discuss our future expectations; (2) project our future results of operations or financial condition; or (3) state other "forward-looking" information. Such statements do not recite historical facts; they merely explain our expectations about the future. We believe that it is important to communicate such future expectations to our investors. However, the accuracy of our expectations and forward-looking statements could be affected by: o our limited operating history and commercial experience; o market acceptance of T3000; o availability of additional capital; o protection of our intellectual property rights; o evolving technologies and markets; o competitive developments; o telecommunications regulatory environment; and o our ability to manage growth. These factors might cause actual results to differ materially from the forward-looking statements as well as materially & adversely affecting our business, operating results & financial condition. 2
TELEMETRIX INC. (Commission File No. 0-14724) CONDENSED CONSOLIDATED BALANCE SHEETS (Information as of September 30, 2000, is unaudited) Sept. 30 December 31 2000 1999 ASSETS --------- ----------- Current assets: Cash.................................................................................$ 160 $ 16 Accounts receivable, net of allowance for doubtful accounts .......................... 135 259 Note receivable-- related party ...................................................... 363 348 Due from related companies ........................................................... 223 54 Prepaid expenses ..................................................................... 22 3 -------- -------- Total current assets .............................................................. 903 680 Property & equipment, net ............................................................... 1,671 2,317 Investments - Restricted ................................................................ 562 Intangibles and other assets............................................................. 7,975 8,545 -------- -------- Total assets...................................................................$ 11,111 $ 11,542 ======== ======== LIABILITIES & STOCKHOLDERS' (EQUITY) DEFICIT Current liabilities Line of credit.......................................................................$ 200 $ 195 Accounts payable ..................................................................... 2,033 709 Accrued expenses ..................................................................... 757 1,264 Due to related companies ............................................................. 480 354 Current portion-- long term debt-- related parties ................................... -- 2,157 Current portion of long term debt .................................................... 202 8 -------- -------- Total current liabilities .......................................................... 3,672 4,687 -------- -------- Deferred rent liability ................................................................. -- 130 Long term debt .......................................................................... 1,844 836 Long term debt-- related party .......................................................... 947 4,588 -------- -------- Total long-term liabilities ........................................................ 2,791 5,554 -------- -------- Total Liabilities ................................................................ 6,463 10,241 -------- -------- Stockholders' equity (deficit): Common stock ......................................................................... 16 13 Additional paid-in capital ........................................................... 44,289 33,466 Foreign currency translation ......................................................... (13) 31 Retained earnings (deficit) .......................................................... (39,644) (32,209) -------- -------- Total Stockholders' Equity (deficit) ............................................. 4,648 1,301 -------- -------- Total Liabilities and Stockholders' Equity (deficit)........................$ 11,111 $ 11,542 ======== ========
Financial data was rounded to the nearest thousand dollars. The accompanying notes are an integral part of these consolidated financial statements 3
TELEMETRIX INC. (Commission File No. 0-14724) CONSOLIDATED STATEMENTS OF OPERATIONS (Information relating to the three-month and nine-month periods ended September 30, 1999 and 2000 is unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2000 1999 2000 1999 ---- ---- ---- ---- Revenue: Equipment sales & rental ..................... $ 71 $ 1 $ 213 $ -- Service income ............................... 81 1,017 300 1,985 ------------ ------------ ------------ ------------ Total revenue ............................ 152 1,018 513 1,985 ------------ ------------ ------------ ------------ Expenses: Cost of revenue .............................. 22 -- 143 -- Research & development ....................... 735 5,081 3,427 5,393 Selling, general & administrative ............ 1,334 3,026 4,008 14,244 ------------ ------------ ------------ ------------ Total operating expenses ................. 2,091 8,107 7,578 19,637 ------------ ------------ ------------ ------------ Net loss from operations ....................... (1,939) (7,089) (7,065) (17,652) ------------ ------------ ------------ ------------ Other Expense: Interest expense (income) .................... 55 101 380 289 Other expense (income) ....................... 5 (91) (10) 16 ------------ ------------ ------------ ------------ Total other expense (income) ............. 60 10 370 305 ------------ ------------ ------------ ------------ Net (loss) ...................................... $ (1,999) $ (7,099) $ (7,435) $ (17,957) ============ ============ ============ =========== Weighted average shares outstanding during period .............................. 14,826,258 5,214,201 13,966,434 8,039,800 Loss per share .................................. $ (0.13) $ (1.36) $ (0.53) $ (2.23) ============ ============ ============ ============ Financial data was rounded to the nearest thousand dollars (except per share data). The accompanying notes are an integral part of these consolidated financial statements
4
TELEMETRIX INC. (Commission File No. 0-14724) CONSOLIDATED STATEMENTS OF CASH FLOWS (Information relating to the nine month periods ended September 30, 1999 and 2000 is unaudited) See note 4. Nine Months Ended September 30, -------------------- 2000 1999 ---- ---- Cash flow from operating activities Net loss for the period......................................................... $ (7,435) $(17,957) Adjustments to reconcile net loss to cash used in operations Amortization & depreciation ................................................... 1,565 6,413 Changes in assets and liabilities In accounts receivable ...................................................... 124 (763) In accounts payable ......................................................... 1,324 1,245 In other assets ............................................................. (19) -- In other liabilities ........................................................ -- 864 In accrued liabilities ...................................................... 119 -- -------- -------- Total adjustments ......................................................... 3,113 7,759 -------- -------- Net cash used in operating activities ................................ (4,322) (10,198) -------- -------- Cash flow from investing activities Investment in subsidiaries and Wireless ......................................... -- (215) Increase in intangibles ......................................................... -- (9,424) Increase in capital assets ...................................................... (282) (2,471) -------- -------- Net cash used in investing activities .................................. (282) (12,110) -------- -------- Cash flow from financing activities Net activity on line-of-credit .................................................. 5 -- Advances on notes receivable - related party .................................... (15) -- Proceeds (payments) from long-term debt ......................................... 1,107 -- Proceeds (payments) from long-term debt - related party ......................... 49 -- Proceeds from issuance of share capital ......................................... 3,689 18,973 Advances to related parties ..................................................... (169) -- Advances from related companies ................................................. 126 3,389 -------- -------- Net cash from financing activities ..................................... 4,792 22,362 -------- -------- Effect of foreign currency translation on cash ..................................... (44) -- -------- -------- Net increase (decrease) in cash .................................................... 144 54 -------- -------- Cash, beginning of period .......................................................... 16 112 -------- -------- Cash, end of period................................................................ $ 160 $ 166 ======== ========
Financial data was rounded to the nearest thousand dollars. The accompanying notes are an integral part of these consolidated financial statements 5 TELEMETRIX INC. (Commission File No. 0-14724) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Information as of and relating to the three-month and nine-month periods ended September 30, 1999 and 2000, is unaudited) 1. Description of Business Telemetrix Inc. offers wireless telemetry systems (hardware and software), communications software and technology to telecommunications carriers, private businesses and commercial entities that utilize wireless telemetry. Those companies include gas and electric distribution companies, cities, municipalities, private commercial enterprises and a complete range of remote monitoring, remote control, security and alarm type businesses ("Telemetry Users"). Wireless telemetry uses wireless devices and transmissions for remote data collection, distribution and monitoring. For example, a telemetry device in a vending machine can transmit the amount of cash receipts and a nightly inventory to the owner's monitoring computer. The owner can then decide whether to refill the machine, order more products and add that vending machine to the delivery truck's itinerary. Telemetry thus requires transceiver devices, transmission services, central control devices and management software. Personal Communications Services ("PCS") carriers can use our technology to provide transmission services for Telemetry Users. With widespread coverage and easy mobility, wireless telecommunications companies and providers are especially suitable for telemetry applications. Telemetrix Inc. wireless telemetry hardware, software and collection methods thus present new and potentially significant revenue sources for wireless communication service providers. Additionally, through its subsidiary, the Company offers wireless paging service and PCS to businesses and individuals. The Company was formed through a series of corporate combinations during 1999 involving Arnox Corporation (an inactive public corporation) and three private corporations: o On January 2, 1999, Telemetrix Resource Group Inc., a Colorado corporation ("TRG--USA"), acquired Telemetrix Resource Group Limited, a Nova Scotia corporation ("TRG--Canada"), from Hartford Holdings Ltd. ("HHL", TRG--Canada's sole shareholder), pursuant to a share exchange and plan of reorganization. o On March 22, 1999, Arnox, TRG--USA and Tracy Corporation II d/b/a Western Total Communication ("WTC") executed a Plan of Reorganization for a share exchange and reorganization transaction (the "Combination"). o On April 5, 1999, the first phase of the Combination occurred, whereby Arnox acquired 100% of the issued and outstanding common shares of TRG--USA in exchange for 6,127,200 shares of Arnox's common stock. o On September 22, 1999, the Combination's final phase closed, whereby the Company acquired 100% of the issued and outstanding common shares of WTC in exchange for 5,372,800 shares of Arnox's common stock. 6 TELEMETRIX INC. (Commission File No. 0-14724) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continuted) (Information as of and relating to the three-month and nine-month periods ended September 30, 1999 and 2000, is unaudited) Through the Combination, the stockholders of WTC and TRG--USA received a total of 11,500,000 shares of Arnox common stock (approximately 90%) and therefore acquired control of Arnox. After the Combination, the companies changed their names to reflect their complementary businesses: -- Arnox became Telemetrix Inc. ("Telemetrix"; "Arnox"; we use "Arnox" and "Telemetrix" for activities before and after, respectively, the Combination); -- TRG-US became Telemetrix Solutions Ltd. ("Telemetrix Solutions"; for the collective activities of both TRG-US and TRG--Canada, we use "TRG" and "TSI" for activities before and after, respectively, the Combination); -- WTC became Telemetrix Technologies Inc. ("Telemetrix Technologies"; we use "WTC" and "Telemetrix Technologies" for activities before and after, respectively, the Combination). Arnox was inactive prior to the acquisition of TRG on April 5, 1999. As a result of the Combination, Arnox's historical financial statements became those of TRG--Canada, as TRG--Canada's operations were the ongoing operations of the combined companies (Arnox, TRG--USA & TRG--Canada). Consequently, TRG--Canada is treated as the "predecessor" to Telemetrix. Except for the acquisition of WTC, all transactions comprising the Combination were accounted for as reverse acquisitions and no goodwill was recorded. Arnox's assets were recorded at carryover basis and no goodwill was recorded on the transaction. The Company accounted for the WTC acquisition as a purchase at fair value; these financial statements include the activity of WTC only from the acquisition date (i.e., from September 22-30, 1999). 2. Basis of Presentation of Interim Information The consolidated unaudited financial statements for September 30, 2000, include the accounts of Telemetrix Inc. (the parent company) and its wholly owned subsidiaries (Telemetrix Solutions and Telemetrix Technologies), while the consolidated unaudited financial statements for September 30, 1999, include only the activities of TRG. The results for three months and nine months ended September 30, 2000, do not necessarily indicate the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the financial statements & footnotes included in the Company's 1999 Annual Report on SEC Form 10-KSB filed with the U.S. Securities & Exchange Commission. 7 TELEMETRIX INC. (Commission File No. 0-14724) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continuted) (Information as of and relating to the three-month and nine-month periods ended September 30, 1999 and 2000, is unaudited) In Management's opinion, the accompanying unaudited interim financial statements include all normal adjustments necessary to present fairly the Company's financial position at September 30, 2000, and the results from operations for the three and nine months ended September 30, 2000, and the cash flows for the nine months ended September 30, 2000. 3. Related Party Transactions HHL, the Company's largest shareholder, also controls Mondetta Telecommunications Inc., Web CCB Systems Inc., The Becker Group of Companies and The Software Factory Inc. (collectively, "Affiliated Companies"). The Company advanced funds to certain Affiliated Companies and borrowed funds from HHL and other Affiliated Companies. (in thousands) Due from Related Companies Mondetta Telecommunications Inc....................... $ 10 Tracy Broadcasting.................................... 8 Web CCB Systems Inc................................... 27 The Software Factory.................................. 178 ------- $ 223 ======= Due to Related Companies The Software Factory.................................. $ 185,000 Becker Group of Companies............................. 295,000 ----------- $ 480,000 =========== HHL is the Parent of WEB, BGC, and The Software Factory Inc., while Mondetta is controlled by a relative of HHL's sole shareholder. The Company has a note receivable from The Software Factory, which matured May 1999. The outstanding principal balance at September 30, 2000, was $348,000. The note accrues interest at 7.5% until maturity at which time the interest rate was adjusted to 15% and a penalty of 15% of the outstanding balance was incurred. In addition, the Company has a receivable from Mondetta of approximately $44,000 at September 30, 2000, for services rendered. The Company has a receivable from Mondetta of approximately $10,000, at September 30, 2000 for rent and shared office expenses. An additional $185,000 is due to Telemetrix Software Factory for shared expenses at September 30, 2000. 4. Supplemental Disclosure of Cash Flow Information Total cash paid for interest for the nine months ended September 30, 2000 was $90,000. Non-cash investing and financing activities included: During the three months ended September 30, 2000, the Company issued 50,000 shares of stock to accredited investors in exchange for investment banking services. Additionally the Company issued 300,000 shares to accredited investors as part of a convertible debenture offering. Finally, on September 30, 2000 the Company issued 1,177,240 shares of stock in a conversion of existing debt. 8 TELEMETRIX INC. (Commission File No. 0-14724) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continuted) (Information as of and relating to the three-month and nine-month periods ended September 30, 1999 and 2000, is unaudited) 5. Commitments & Contingencies The Company contracted with a vendor for research and development of software to be used in the Company's telemetry technology. The total contract amount was $2 million and is payable as (a) certain milestones in the project are completed and (b) in the form of royalties until the total contract amount has been paid. During the quarter ended September 30, 2000, the Company paid $36,000 to the vendor. Manufacturing Design Agreements. The Company contracted with Plexus Corporation for manufacturing design and implementation to be used in the Company's telemetry technology. At September 30, 2000, the Company had committed to pay $2.2 million and had paid a total of $1.8 million. The balance is due upon completion of certain milestones. Legal Proceedings. The Company is party to various negotiations and legal proceedings regarding claims on contracts in the normal course of its business. Management believes that the outcome of such negotiations and legal proceedings, as well as commitments, will not have a material adverse effect on the Company's consolidated and combined financial statements. Employment Contracts. The Company is party to several employment contracts. These contracts indicate that options to purchase 225,000 shares of the Company's common stock were granted at exercise prices ranging from $4.69 to $10.00 Borrowings. The Company has drawn on its line of credit with Valley Bank, Scottsbluff, Nebraska, for a total of $200,000. The Company also borrowed $907,000 from two principal shareholders at interest rates ranging from 9% to 11%. All funds will be used for the continuation of the development of the T3000 technology and for working capital. Private Placement. During the quarter ended March 31, 2000, the Company successfully completed a private placement of common stock. The Company sold 101 Units, each Unit consisting of 12,500 shares of Telemetrix common stock and a warrant to purchase 6,250 shares of Telemetrix common stock, for approximately $2.5 million. The Company used the proceeds of this private placement for pre-manufacturing design, manufacturing and working capital. 9 TELEMETRIX INC. (Commission File No. 0-14724) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continuted) (Information as of and relating to the three-month and nine-month periods ended September 30, 1999 and 2000, is unaudited) Conversion of Debt to Equity. On June 30, 2000, the Becker Group of Companies converted notes payable totaling $1.03 million (including principal and accrued interest) into 510,778 shares of common stock. On September 30, 2000, Hartford Holdings converted notes payable totaling $6.47 million (including principal and accrued interest) into 1,177,240 shares of common stock Convertible Debentures. On September 8, 2000, the Company completed a $1.2 million placement of Convertible Debentures. The Debentures mature on December 31, 2001 and bear an interest rate of 6% per annum, compounded semi-annually. Interest will accrue but not be paid until redemption or repayment. In conjunction with issuance of the debentures, the note holders received 300,000 shares of common stock which have been deferred as debt issuance costs. The shares were valued at market and will be recognized as interest expense over the life of the debenture. 10 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended September 30, 2000 Item 2. Management's Discussion & Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the unaudited Consolidated Financial Statements and related notes. The results presented in this Report do not necessarily indicate the results to be expected in any future periods. This discussion contains forward-looking statements based on our current expectations, which involve risks and uncertainties. These risks and uncertainties mean that future events could dramatically differ from our forward-looking statements. OVERVIEW. The Company received patents on January 11, 2000, for our method and system of using the short message service portion of digital communications systems to transmit telemetry data. This technology allows data to be sent over the existing communications systems, without affecting the overall voice and data capacity of the system. This technology does not require any modification, alteration or other changes to the communications network hardware or software. We have developed the PCS e-Telemetry Data products, which consist of hardware and software for data collection, data distribution, and system monitoring. The T3000 can be used in a wide variety of applications, including automatic utility meter reading, home security, monitoring vending machines and other specialty applications. Our T3000 PCS telemetry system includes hardware (e.g., the CommCenter and Optical Reader), software, network monitoring services, and support services. We provide all of the components of the T3000. We also provide wireless telecommunications services over our licensed wireless PCS and paging network (the "WTC Network"), which includes two separate wireless communication systems. The total coverage area encompasses portions of western Nebraska, northeastern Colorado and southeastern Wyoming. Our operations consequently encompass research & development, applications development, product design, manufacturing, training, installation support and management, telecommunications services, data management and carrier support services. T3000. Telemetrix is transitioning T3000 into commercial production and is currently conducting testing and evaluation programs with several utility-based commercial clients and is currently establishing the marketing and distribution network. We have beta-tested the T3000 in western Nebraska for the past 27 months, and are designing the hardware and software that integrate the system and the Management and Information Points ("MIPs"). We have executed Testing and Evaluation agreements in California, Florida, Minnesota, Virginia Washington and Nebraska. We use a Telemetrix GSM-PCS radio module of our design and manufacture. We can add a "Subscriber Line Interface" for interconnecting the T3000 GSM-PCS radio module with existing household telephony wiring. We also have applied for the necessary type approvals, acceptances and certifications, such as FCC certification of the radio module, and demonstrate compliance with various technical standards (e.g., GSM, UL, ITU, ANSI). In August 2000, we received notification of GSM certification for our GSM-PCS radio module. We have contracted with Plexus Corporation for commercial manufacturing and have 11 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended September 30, 2000 identified and approved sources for components. All vendors and manufacturers are ISO 9001 compliant. We estimate that completing product development through commercial production will require a total amount of approximately $11.0 million: $1.7 million for product development (both internal and by third parties), $1.0 million for technology licensing, $1.0 million for manufacturing, $1.8 million for development and testing applications, $0.9 million for testing & certification, $2.6 million for the Network Operations Center and $2.0 million for working capital. We have commercial orders for delivery in December 2000. This following schedule illustrates our product development activities.
2000 2001 June July August Sept. Oct. Nov. Dec. Jan. Feb. | | | | | | | | | Begin volume production | | Software integration & development | | Implement Managed Services FCC/GSM certification. Begin volume installations
In year 2001, we expect to integrate TDMA wireless hardware and technology into T3000, which will expand the available market coverage primarily in North and South America and other international markets. Concurrent future T3000 enhancements will provide CDMA wireless transmission technology, Bluetooth capability and other advanced communication capabilities. Because of the modular construction and design of the T3000 these features and enhancements should be quickly and easily integrated into the hardware and software products. Wireless Services. Our wireless communications services currently consist of paging operations in Nebraska, Colorado and Wyoming over the WTC Network. These operations (paging services plus equipment sales, rentals and repairs) now generate approximately $30,000 in monthly revenue. We acquired the PCS licenses in 1996, began network deployment in late 1997 and finished network deployment in April 1999. PCS network testing is underway, and we hope to commence commercial PCS operations in first quarter 2001. The PCS network has been used for the past 27 months as a research and development facility for the development of the T3000 hardware and software. Service Bureau. TRG acquired the TRACCS software in April 1998, and completed software development ("Billing Software") in the third quarter 1998. TRG began Service Bureau customer care operations (where TRG performs customer management services for long distance carrier customers) in late 1998. The service bureau company faced strong competition during 1999 and therefore did not obtain the forecasted number of contracts and resultant revenues. During first quarter 2000, management reviewed the operations of the Service Bureau and determined that those operations and the ultimate direction of TRG did not fit the Company's business plan. During the second and third quarter, the Company actively sought a buyer for the Service Bureau and in August 2000, we sold the assets of the Service Bureau operations. This sale reduced our monthly operating overhead, eliminate the deficits created by this operation, focus on our core competencies and redirect management and operation's efforts to commercializing and deploying of the T3000 system. 12 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended September 30, 2000 DESCRIPTION OF FINANCIAL COMPONENTS Revenue and Cost of Sales: The following chart summarizes the anticipated components of revenue and the associated cost of sales (excluding depreciation) from our proposed operations:
Activity Revenue Source Costs of Sales (excluding depreciation) - -------- -------------- --------------------------------------- Service Bureau Service bureau Compensation for Service (Sold in August 2000) Consulting income Representatives & fulfillment charges Wireless telecommunications PCS services Carrier settlements for airtime charges Equipment sales Equipment costs Paging services Operating overhead Paging equip. sales Equipment costs Wireless Telemetry T3000 equipment sales Manufacturing costs; license fees T3000 software sales License fees Managed Services Monthly active port fee Short message fee Carrier settlements for airtime charges System sales Hardware and software costs
Operating Expenses. Our operating expenses consist principally of research & development, marketing, pre-production, license and general & administrative costs. Upon launching products and services, sales & marketing expenses will substantially increase, while research & development, pre-production and license costs gradually and moderately decrease. After sales of products and services reach forecast levels, the principal operating expenses will be sales & marketing, manufacturing, general & administrative, research & development and operation costs for managed services and application services. Research & Development and Application Development. Our research & development activities principally focus on commercialization of the T3000 system. Research & development always constitutes a significant operating expense and will continue to do so. We must enhance T3000 through the integration of new wireless technologies such as Bluetooth, and enhancements to GSM, TDMA and CDMA. Application development resources will be increased as the T3000 technology is adapted to specific customer requirements. We expect to spend about $2.4 million for those related research & development costs during 2001. Capital Expenditures. A significant capital expenditure will be deploying and equipping the T3000 Network Operation Center ("T-NOC"). The T-NOC is the central repository of telemetry information and acts as the gateway between the PCS service providers and the Telemetry Users (customers) of T3000. We will implement a Telemetry Services Operation Center (T-SOC), which will include the T-NOC and a Customer Service Center. We estimate that the deployment of the T-NOC could require as much as $2.6 million. In addition to the T-NOC and T-SOC, we will acquire an Ericsson Short Message Service Center (eSMSC), which will allow the short messages from the T3000 to be exchanged with the T-NOC. We estimate the cost of the eSMSC at approximately $600,000. 13 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended September 30, 2000 T-NOC and T-SOC Operation. The expenses to deploy and operate the Telemetry Services Operation Center and the Telemetrix Customer Service Centers include customer service representatives, network managers, hardware and software technicians and management for this 7/24 customer service and telemetry service facility. Licensing. Some products and services utilize the intellectual property of other parties, which may require us to pay license fees. Such license fees are payments, continuing royalties or both. We expect to spend about $900,000 for pre-production and compliance testing costs. Sales & Marketing. Sales & Marketing expenses include salaries and commissions for sales staff, trade show expenses and advertising. Since our Company, products and services are innovative and relatively unknown, we must conduct considerable initial marketing to create awareness of our products and services. The development of a marketing organization, sales organization and associated support is anticipated to cost approximately $750,000 over the next year, which includes trade show expense, staff salaries, benefits and travel expenses. Manufacturing. T3000 includes some specific use customized components; we must commit to large volume purchases, and in some cases make advance payment for critical components to ensure timely delivery and to control costs. We estimate inventory costs to amount to $3.6 million during the second year of T3000 sales. Inventory costs include substantially completed T3000 units waiting for final assembly prior to installation at the customers' locations General & Administrative. General & administrative expenses primarily consist of salaries and related expenses of management, support personnel, occupancy fees, professional fees, non-capitalized research & development, general corporate and administrative expenses. As the size and scope of our business grow, we will expand our corporate and administrative staff. Depreciation and Amortization. These non-cash expenses include depreciation of tangible property, networks and equipment plus amortization of intangible assets (such as FCC Licenses and patents) and goodwill. The goodwill resulted from our acquisition of WTC and therefore should not increase. Interest Expense. Interest expense includes interest incurred from debt. Our principal interest expense results from amounts we borrowed from our principal shareholders, which incur interest at annual rates ranging from 7.5% to 9.5%. RESULTS OF OPERATIONS Three & nine months ended September 30, 2000, compared to the three & nine months ended September 30, 1999 During the quarter ended September 30, 2000 ("Recent Quarter") and the nine months ended September 30, 2000 ("Recent Period"), our prime focus was manufacturing design, testing and pre-production manufacturing of the T3000 technology while working to sell the billing software asset of Telemetrix Solutions and create an orderly transition for the employees that were associated with that division. All significant intercompany transactions and balances have been eliminated. 14 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended September 30, 2000 The following discussion contains only minimal comparisons between the Recent Quarter & Period (collectively, "Latest Periods") and the Prior Quarter & Period (collectively, "Past Periods"). The financial statements for the Past Periods include only TRG because WTC was not acquired until September 1999; however, the financial statements for the Latest Periods include Telemetrix, TSI and Telemetrix Technologies. Since the Past Periods did not include any operations of WTC, the results of operations for the Latest Periods are not comparable to the Past Periods. We expect that this situation will continue until first quarter 2001, when both periods being compared will contain WTC's operations. Revenue totaled $152,000 & $513,000 during the Latest Periods (Recent Quarter & Recent Period, respectively) compared to $1.0 million and $2.0 million during both Past Periods; this decrease primarily results from our decision to de-emphasize the Service Bureau and reduced paging revenues. During the Latest Periods, we received $71,000 & $213,000 from equipment sales & rentals and $81,000 & $300,000 from Service Bureau clients. We expect revenue to increase substantially upon launch of the T3000 system. Operating expenses were $2.1 million & $7.6 million during the Latest Periods. These expenses are primarily due to design and pre-manufacturing costs for the T3000 technology, amortization of goodwill resulting from the acquisition of WTC, and the operations of the Service Bureau. Costs of Revenue was approximately $22,000 & $143,000 for the Latest Periods. These expenses primarily consist of the costs of the equipment sold and salaries and wages of employees related to the sales. Research & Development expenses were approximately $735,000 & $3.4 million for the Latest Periods. The primary component of this expense is the $2.2 million to Plexus Corporation for manufacturing design & pre-manufacturing setup costs for the T3000. Additionally, two other companies were paid for software licensing and development of the wireless GSM-related technology used by the T3000. Licensing fees will increase upon production of the T3000. Research & development expenses will continue to be substantial through the fourth quarter of 2000. Manufacturing expenses were not incurred during the Latest Periods or the Past Periods. We will incur manufacturing expenses for the T3000 in the fourth quarter of 2000. Selling, General & Administrative expenses were $1.3 million & $4.0 million for the Latest Periods. The primary component of the SG&A expense is depreciation and amortization; $0.6 million & $1.6 million for the Latest Periods. Amortization includes the amortization of goodwill from the acquisition of WTC and amortization of patents and FCC licenses. SG&A expenses also include marketing costs for the T3000 and salaries and administrative costs of Telemetrix Solutions and Technologies. The $14.2 million SG&A expenses for the Prior Period were primarily salaries in the Service Bureau operations and the amortization of the Billing Software (which was written off in late 1999). Interest expenses were $55,000 & $380,000 for the Latest Periods. This expense represents primarily the interest charges on related party loans, including loans from HHL. The HHL loans were converted to equity. Interest expense for the Prior Period was $289,000, also interest on loans from HHL. 15 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended September 30, 2000 Net loss. We reported a net loss of $2.0 million & $7.4 million for the Latest Periods. The principal components of this net loss were the research & development expense for the T3000 as well as operating costs. We did not reflect any benefit for income taxes due to the uncertainty surrounding the realization of the favorable tax attributes in future tax returns. LIQUIDITY AND CAPITAL RESOURCES. During the Latest Period, we used $5.1 million in cash for operations, primarily research & development. We used $282,000 of cash for investment purposes primarily to develop WTC's PCS network in western Nebraska. During the Latest Period we generated cash flow from financing activities of $5.5 million. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS. SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" requires companies to record derivatives on the balance sheet as assets or liabilities, measured at fair market value. Gains or losses resulting from changes in the values of those derivatives are accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in achieving offsetting changes in fair value or cash flows. SFAS No. 133 is effective for fiscal years beginning after June 15, 2000. Management believes that the adoption of SFAS No. 133 will have no material effect on its financial statements. In March 2000, the FASB issued FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation" ("FIN 44"), which was effective July 1, 2000, except that certain conclusions in this Interpretation, which cover specific events that occur after either December 15, 1998 or January 12, 2000 are recognized on a prospective basis from July 1, 2000. This Interpretation clarifies the application of APB Opinion 25 for certain issues related to stock issued to employees. The Company believes its existing stock based compensation policies and procedures are in compliance with FIN 44 and therefore, the adoption of FIN 44 had no material impact on the Company's financial condition, results of operations or cash flows. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") 101, which provides guidance on applying generally accepted accounting principles to selected revenue recognition issues. Management believes that the Company's revenue recognition policies are in accordance with SAB 101. FUNDING REQUIREMENTS. In order to pay operating expenses and achieve self-sustaining operations, we expect to require substantial funding during the next two years of approximately $10 to $12 million. We will need funds for: Research and Development projects include expanding the capabilities of the T3000 system, particularly the integration of other PCS radio technologies to expand the potential markets. We estimate that our research and development activity over the next two years will require $2.4 million. Working Capital. As demand for the T3000 product grows, we must build an inventory of equipment to allow for load balancing the manufacturing demand while maintaining a short delivery period. This inventory will also serve as a supply of spare units to cover immediate shipment for warranty purposes. We also will need working capital (between $2 - 5 million) for developing our corporate infrastructure and paying T3000 marketing costs. Manufacturing capacity. Projected demand growth of T3000 units will require additional manufacturing capacity. We will contract with outside vendors for manufacturing, licensing of the software and the compliance testing, at an expected cost of $2.0 million. T3000 Network Operation Center. Capital will be required to equip the T-NOC and T-SOC. We estimate that deployment of the T-NOC and T-SOC will require $2.6 million. Repay Loans from Related Parties. We plan must repay loans from related parties as soon as sufficient funding becomes available. The expected amount of loans that will be repaid is $1.0 million. 16 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended September 30, 2000 PART II - OTHER INFORMATION Item 1. Legal Proceedings There are no pending legal proceedings against Registrant. Item 2. Changes in Securities and Use of Proceeds. (a) Not Applicable. (b) Not Applicable. (c) Issuance of Unregistered Securities. The following table summarizes all securities that we issued or sold during the quarter ended September 30, 2000, in unregistered offerings:
Deemed Per Date Title of Security Amount Class of Purchaser Exemption Share Price Proceeds ---- ----------------- ------ ------------------ --------- ----------- -------- 8/01/00 Common Stock(1) 20,000 Accredited Investor Sec. 4(2) $2.00(3) $ 40,000 9/1/00 Common Stock(1) 30,000 Accredited Investor Sec. 4(2) $2.00(3) $ 60,000 9/1/00 Common Stock(5) 300,000 Accredited Investor Sec. 4(2) $2.00(3) $ 600,000 9/30/00 Common Stock(2) 1,177,240 Accredited Investor Sec. 4(2) $5.5002(2) $ 1,029,278
-------------------- (1) Shares issued in exchange for investment banking services. (2) Conversion of existing debt into Common Stock. (3) Share price based on negotiated value. (4) Trading price of the Common Stock on the conversion date. (5) Shares issued with convertible debenture. (d) Not Applicable. Item 3. Defaults Upon Senior Securities. (a) Not Applicable. (b) Not Applicable. Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted for a vote of Security Holders. Item 5. Other Information In May 2000, Registrant executed a Teaming Agreement with Ericsson Messaging Systems Inc. Under that agreement, Registrant and Ericsson may refer customers to the other party and may submit proposals incorporating products and services of both companies. The agreement also specifies procedures when submitting joint bids or when a party provides products & services to the other party. 17 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended September 30, 2000 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. (10) Material Contracts. (10.2) TRACCS Software Purchase Agreement (10.3) Employment Agreement for James Doyle (10.4) Employment Agreement for Marguerite McKee (10.5) Employment Agreement for Joseph Schon (27) Financial Data Schedules. (b) Reports on Form 8-K. None. 18 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended September 30, 2000 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TELEMETRIX INC., a Delaware corporation November 11, 2000 By: /S/ JAMES DOYLE ------------------------------------ James Doyle Signing for Registrant and as Chief Financial Officer 19 TELEMETRIX INC. (Commission File No. 0-14724) Quarterly Report on SEC Form 10-QSB for the Quarter ended September 30, 2000 INDEX TO EXHIBITS FILED WITH THIS QUARTERLY REPORT Exhibit Exhibit Page - ------- ------- (10) Material Contracts (10.2) TRACCS Software Purchase Agreement....................... 21 (10.3) Employment Agreement for James Doyle...................... 36 (10.4) Employment Agreement for Marguerite McKee................. 44 (10.5) Employment Agreement for Joseph Schon..................... 53 (27) Financial Data Schedule.......................................... 63 EX-10.1 2 0002.txt TRACCS SOFTWARE PURCHASE AGREEMENT TRACCS SOFTWARE PURCHASE AGREEMENT TELEMETRIX RESOURCE GROUP LTD., a Nova Scotia corporation ("Seller"), TELEMETRIX INC., a Delaware corporation ("Parent"), and NEXTECH CATALYSTS INC. ("Buyer"), execute this TRACCS SOFTWARE PURCHASE AGREEMENT ("Contract") effective as of August 31, 2000 ("Contract Date"). WHEREAS, Seller owns the Telemetrix Revenue Awareness Customer Care System ("TRACCS") software for telecommunications customer billing & management services; WHEREAS, Seller provides telecommunications customer billing & management services using TRACCS (the "Business"); WHEREAS, Parent is Seller's ultimate corporate parent; WHEREAS, Buyer holds common stock of Superwire.com Inc. ("Superwire"); WHEREAS, Buyer, Seller and Parent propose that Buyer acquire TRACCS and associated assets and assume selected liabilities of the Business in exchange for Superwire common stock owned by Buyer; NOW, THEREFORE, in consideration of the mutual promises and covenants of this Contract, the receipt and sufficiency of which is hereby acknowledged, the parties agree: 1. Sale of TRACCS Assets. Seller hereby sells for the consideration set forth in Section 5 of this Agreement, assigns, and delivers to Buyer the assets identified in Schedule 1 (the "TRACCS Assets") and transfers the Approved Contracts identified on Schedule 3 assumed liabilities identified in Schedule 4. Except as identified in Schedule 1, all TRACCS Assets shall be transferred free and clear of all liens and encumbrances. 2. Responsibility for Accounts Receivable. Seller shall retain ownership of all accounts receivables identified in Schedule 2 ("Accounts Receivables"). All Accounts Receivables arising from Seller's operation of the Business prior to August 31, 2000, including, but not limited to, the Accounts Receivable shown in Schedule 2, shall belong to Seller and those Accounts Receivable arising from the operation of the Business by Buyer after September 1, 2000 shall belong to Buyer. Buyer shall, for a period of ninety (90) days following August 31, 2000, have the obligation to collect Seller's accounts receivable as Seller's agent without commission or compensation. Buyer shall use its best efforts, short of instituting legal action, to collect such Accounts Receivable. Buyer will not, without the consent of the Seller, compromise to settle for less than full value, any such Accounts Receivable, and, during the nine-day (90) period, all moneys collected from any customer indebted to Seller shall first be applied to such customer's account with Seller, provided, however, in the event Buyer shall discover that any of Seller's Accounts Receivable are disputed in good faith by the customer, Buyer shall promptly notify the Seller in writing. Seller shall have at least ten (10) days from receipt of such notice to investigate and/or object said such Accounts Receivables, and if, at the end of such period, the matter shall not have been resolved, Buyer shall return such Accounts Receivable to Seller and may thereafter deal with customers as if they were not indebted to Seller, without the obligation of applying any funds subsequently received from such customer to its account with Seller. Buyer shall account to Seller with respect to the collection of Seller's Accounts Receivables and remit to Seller the amount due Seller every seven (7) days during the ninety (90)-day period in which Buyer shall collect Seller's Accounts Receivables. Buyer shall remit by wire transfer all Amounts collected under this section. For credit to National Bank of Commerce: ABA Routing 104000058 For further credit for Valley Bank and Trust: 7952000350 For final credit for Telemetrix Inc. Account: 167882 The parties understand that Schedule 2 lists outstanding invoices and estimates of invoices which will be posted to Seller's customers for work completed through August 31, 2000 (the "Accounts Receivable Date") but does not include any work in progress after the Accounts Receivable Date. 3. Assignment of Approved Contracts. Seller assigns all of its rights and interests to the leases, leasehold interests or contracts identified in Schedule 3 ("Approved Contracts"): Approved Contracts listed in Schedule 3 are hereby assigned to Buyer; Approved Contracts listed in Schedule 3.A will be automatically assigned to Buyer after Seller receives all requisite consents necessary to assign those Approved Contracts. Only the Approved Contracts will be transferred to Buyer; Buyer will not have any liability for any contractual obligation of Seller not expressly listed in Schedule 3. 4. Assumption of Liabilities. Buyer hereby assumes the liabilities identified in Schedule 4 ("Assumed Liabilities"). Buyer does not assume or have any liability for any obligation or liability of Seller not identified in Schedule 4. 5. Transfer of Superwire Stock to Parent. Buyer hereby transfers 1 million shares of Superwire.com, Inc. ("Superwire") common stock (the "Superwire Stock") to Parent (an Executed Stock Power is attached as Exhibit 5). Parent agrees not to sell the Superwire Stock before January 1, 2001. 6. Additional Superwire Stock to Parent. If the closing price for Superwire's common stock does not exceed ten dollars ($10.00) by January 1, 2001, then Buyer must transfer additional Superwire Stock to parent, so that the parent will own ten million dollars ($10,000,000) of Superwire common stock, such value to be based on the average closing price of Superwire common stock ten (10) consecutive trading days preceding February 1, 2001, provided, however, that the number of additional shares of Superwire common stock Buyer must transfer to Seller, pursuant to this Section 6 and shall not exceed Five Hundred Thousand (500,000) shares. 7. Seller's Representations & Warranties. Seller represents and warrants that, to its actual knowledge after reasonable inquiry ("Knowledge"): 7.1. Corporate Organization and Good Standing. Seller is duly organized, validly existing and in good standing under the laws of Nova Scotia. 7.2. Ownership of Assets. Except as listed in Schedules 1, 2 & 3, Seller has exclusive ownership of the TRACCS Assets, Accounts Receivable and Approved Contracts, including all associated intellectual property rights. 7.3. Corporate Authority. Seller has full corporate power and authority to enter into this Contract and to perform its obligations. 7.4. No Litigation. Except as identified in the Schedules, there is no litigation, proceeding, investigation pending or threatened that involves the TRACCS Assets, Accounts Receivable, Approved Contracts or Assumed Liabilities. 7.5. Report by Management Network Group. Seller provided Buyer with a true and correct copy of the report by the Management Network Group that evaluated TRACCS. Seller does not represent or warrant as to the accuracy of that report. 2 8. Parent's Representations & Warranties. Parent represents and warrants that: 8.1. Accredited Investor. Parent has over $5 million in total assets and therefore is an "accredited investor" as defined in SEC Rule 501(a). 8.2. Corporate Organization and Good Standing. Parent is duly organized, validly existing and in good standing under the laws of Delaware. 8.3. Ownership of Seller. Parent indirectly owns 100% of Seller's voting stock and can direct Seller to enter into this Contract and to perform its obligations. 8.4. Corporate Authority. Parent has full corporate power and authority to enter into this Contract and to perform its obligations. 9. Buyer's Representations and Warranties. Buyer represents and warrants that: 9.1. Corporate Organization and Good Standing. Buyer is duly organized, validly existing and in good standing under the laws of the Province of Ontario, Canada. 9.2. Corporate Authority. Buyer has full corporate power and authority to enter into this Contract and to carry out its obligations. 9.3. Ownership of Superwire Shares. Buyer has exclusive ownership rights to the Superwire Shares. The Superwire Shares are duly authorized, issued, fully paid and non-assessable. 9.4. Rule 144(k) Qualification. Buyer has owned the Superwire Shares since its date of incorporation and acquired the Superwire Shares from a non-affiliate of Superwire. Buyer is not an affiliate of Superwire. 9.5. Superwire Disclosure. Buyer caused Superwire to provide the Disclosure Information specified in the Superwire's. Officer's Certificate (Exhibit 6). 9.6. No Litigation. There is no litigation, proceeding, investigation pending or threatened that involves the Superwire Shares. 9.7. Officer's Certificates. Buyer shall cause Superwire to deliver and execute the Superwire.com Officer's Certificate representing and warranting certain matters as set forth in Exhibit 6. 10. Further Assurances. Each party will execute such additional instruments and take such other actions requested by another party in order to effectuate this Contract. 11. Governing Law. This Contract shall be governed by and construed and enforced in accordance with the laws of the State of Nebraska. 12. Arbitration of Disputes. All disputes arising from this Agreement will be submitted to binding arbitration in accordance with the Expedited Procedures of the American Arbitration Association's Commercial Arbitration Rules. The arbitration will be held in Denver, Colorado. The Arbitrator's decisions must be delivered in writing supported by written findings of fact and conclusions of law. Any competent court may enter judgment upon the Arbitrator's awards. The prevailing party, as part of its damages, shall be entitled to recover its legal fees and expenses incurred in such action from the losing party. 13. Construction and Interpretation. Unless the context requires otherwise, words denoting the singular may be construed as denoting the plural and the words of the plural may be construed as denoting the singular as is appropriate. The terms "include" and "including" mean "including without limitation". The term "laws" include constitutions, statutes, rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, restrictions and charges; a reference to a specific statute also refers to regulations relating to that statute. An "Affiliate" of a party means any person (individual or entity) that directly, or indirectly through one or more intermediaries, controls, is 3 controlled by or is under common control with the party. The section titles are stated only for convenience and shall not control or affect the interpretation or construction of any provision of this Contract. If any particular provision of this Contract is found to be invalid or unenforceable, it is to that extent deemed to be omitted in the particular jurisdiction(s) where the provision is invalid or unenforceable and the remaining provisions of this Contract shall not be affected by such omission. No provision of this Contract shall be altered, amended, revoked or waived, except by an instrument in writing signed by all parties. A waiver of a breach of any provision of this Contract shall not operate or be construed as a waiver of any subsequent or other breach. This Contract may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute a single instrument; provided, however, that this Contract shall not become binding upon any of the parties unless and until counterparts are executed by all parties. Each such counterpart shall be considered an original. A facsimile signature shall constitute an original signature. 14. Entire Agreement. This Contract sets forth the entire agreement and understanding of the parties and supersedes all prior understandings, agreements or representations by or between the parties, whether written or oral. IN WITNESS WHEREOF, after reading and understanding its terms, each party's duly authorized representative has executed this Contract. SELLER: TELEMETRIX RESOURCE GROUP LTD., a Nova Scotia corporation By: /s/ Marguerite McKee ----------------------------------------- Marguerite McKee, President PARENT: TELEMETRIX INC., a Delaware corporation By: /s/ Michael J. Tracy ----------------------------------------- Michael J. Tracy, Chief Executive Officer BUYER: NEXTECH CATALYSTS INC., an Ontario, Canada corporation By: /s/ ----------------------------------------- Secretary 4 SCHEDULE 1: BUSINESS ASSETS A. Business Assets not subject to Liens: 1. Telemetrix Revenue Awareness Customer Care System ("TRACCS") Software
2. Furniture:+ Area Quantity Description ----------- ---- -------- ----------- Financial 1 work station 1 desk chair Secretarial station 1 wooden 2 piece desk 1 desk chair Exec office 1 table 1 3 piece wooden desk 1 desk chair 6 table chairs 1 bookcase 1 wall cupboard 1 wood credenza G Bigwood 2 visitor chairs 1 desk chair 1 2 drawer file cabinet 1 2 piece wood desk L Bigwood 2 visitor chairs 2 desk chair 2 2 drawer file cabinet 1 2 piece wood desk N Jamshed 2 visitor chairs 1 desk chair 1 4 drawer file cabinet 1 wood desk 1 small wood table Printer 1 wood credenzas Workstations 17 Chairs 10 File cabinets 3 four drawer Meeting room 1 long wood table chairs
- ---------------------------- + The Call center furniture belongs to Mondetta, which had loaned it to Seller. SCHEDULE 1: BUSINESS ASSETS (continued) A. Business Assets not subject to Liens: (continued)
3. Computers: --------- Type Mfr. Model Serial Number ---- --- ----- ------------- Desktop Dell D1028L 66746-JDUUQ-68 Desktop Dell VCDTS21348-2M 8490309879 Laptop Toshiba PAS250CA 7801270 Desktop Compaq 491 615CBQ3AAQ77 Laptop IBM 2640-40U 78-RB533 Desktop IBM Netfinity 3000 Desktop Dell E80HQ Desktop Dell PowerEdge 2200 Desktop IBM 6892 235YMME Desktop Acer M11E/H71 83016143AQ Desktop Dell PowerEdge 2300 Desktop IBM Netfinity 3000 Desktop Compaq Laptop Acer Extensa 9147A015019110013BM Laptop Dell Insprion 3200 5119C Desktop IBM 8G84610952 Desktop IBM 6892 23N7579 Laptop Acer Extensa 9145B01605903002F4K Desktop IBM 6892 23N7798 Desktop IBM 6892 23N8017 Desktop IBM 6892 23N7616 Desktop Dell PowerEdge 2200 Desktop Dell OptiPlexGx1p 46EZA Desktop Dell PowerEdge 2300 Desktop Dell E80HR Laptop Dell
4. Business Solutions AS 400 Computer Equipment Type/Part# Quantity Serial Number -------------------- -------- ------------- AS 400 Terminals 10 unknown 9406 E35 10-29261 9337 240 10-19110 10-16442 10-11073 10-14683 020 10-03464 10-12225 10-07467 10-05146 D60 9406 10-25129 9337 020 10-02781 9337 020 10-04176 9337 10-11626 9337 10-05288 9337 10-05848 9406 5042 10-05118 9406 5042 10-01095 9336 020 10-16168 Proprietary System Software Telemetrix Revenue Assurance and Customer Care System: - all program source code - all procedures - all utilities - all user documentation - all system documentation - all P.C. related support code and utilities Pre-Paid Unlimited Usage Plan: - all program source code - all procedures - all utilities - all user documentation - all system documentation - all P.C. related support code and utilities - all Database engines compilers, utilities - all 3rd Party support software - all AS/400 related support code and utilities AS/400 Hardware/System Software Inventory AS/400 Model D-60 Processor s/n 9406-FC5042-05288 Storage rack s/n 10-00A6445 Storage rack s/n 10-00A4467 Storage rack s/n 10-00B0529 Storage rack s/n 10-25129 Storage rack s/n 10-04176 AS/400 Model E-35 Processor s/n 9406-10-29261 Storage rack s/n 10-0040189 AS/400 Model B-35 Processor s/n 9406-10-0079483 Storage rack s/n 10-0018175 All AS/400 Terminals, Routers, Hubs, and Cables Powerware plus UPS (uninterruptible power supply) 3 racks s/n B0482A0133 QMS 3225 laser printer s/n Q0078268 QMS 3225 laser printer s/n Q0052595 IBM 3812 laser printer s/n 40707P170P All Operating systems, Compilers, and Support Utilities All AS/400 based 3rd Party support software SCHEDULE 1: BUSINESS ASSETS (continued) A. Business Assets not subject to Liens: (continued) 4. Business Solutions AS 400 Computer (continued) ---------------------------------- Equipment Type/Part# Quantity Serial Number -------------------- -------- ------------- 9336 10-31584 10-01528 10-09113 10-12903 10-13204 10-11981 10-15510 10-06011 10-02579 10-22468 9337 10-13499 10-12322 10-18749 10-17457 10-04252 10-03448 LMC Magna MCI 9955 12251 IBM3570 1353947 9347 38005 9406 B35 10-28201 9336 010 10-07227 10-04226 10-01795 10-01790 10-05392 10-08702 Power Ware Plus UPS BQ48280113 9347-001 10-09871 Printers QMS3225 2 SCHEDULE 1: BUSINESS ASSETS (continued) B. Business Assets subject to Liens: Asset Lienholder Associated Document ----- ---------- ------------------- None Identified C. Assets specifically retained by TRG 1. Computers: --------- Type Mfr. Model Serial Number ---- --- ----- ------------- Laptop Acer 330 9140C0100591500383M Lapton Acer Extensa 9147A0132182900501M Desktop IBM 6892 23N8221 Laptop++ IBM 2640 78N544 2. Furniture: Area Quantity Description ---------- ---- -------- ----------- M McKee 1 3-piece wood desk 1 Desk chair 4 Visitor chairs 1 Credenza G Wasylyk 1 2-piece desk 1 credenza 2 visitor chairs 1 desk chair Financial 1 desk chair 1 visitor chair 1 workstation 2 2-drawer file cabinet 1 4-drawer file cabinet Display Booth 1 10'x10' Nimlok with accessories - ------------------------- ++ With Oz Pedde In Winnepeg. SCHEDULE 2: ACCOUNTS RECEIVABLES As of August 31, 2000 Name Total Due Christian Telecom Network US $ 8,629.63 Commonwealth US $ 5,008.21 Comtel Communications US $ 73,981.18 FON Digital Network US $ 0.00 Mondetta Telecommunications US $ 73,683.63 Promise Net International US $ 20,752.45 TransNet Connect US $ 7,642.33 UC Hub Inc. US $ 13,415.07 TOTAL US $ 203,112.50 Less Mondetta -73,683.63 Accounts Receivable Balance Due on Closing 129,428.87 ---------- NOTES SCHEDULE 3: APPROVED CONTRACTS A. Contracts immediately assignable: 1. Photocopier and fax machine lease (with Image Financial (formally OE --------------------------------- Canon Leasing)). 2. Customer Contracts ------------------ Comtel UCHub (to be signed) Transnet Connect CTN CommonWealth/Wordlink FON Digital PromiseNet Canyon Telecom Technology Depot (inactive) USA Digital (inactive) 3. Other Contracts: Tony Kemp Employment Agreement --------------- B. Contracts to be assigned after receiving requisite consents: 1. Dell computer leases: --------------------
Lease Monthly Lease No. Mfr. Product Serial Number Term Started Expires Payment --------- ---- ------- ------------- ---- ------- ------- ------- 270158-003 Dell Inspiron 3200 5119C 2 years 10/1/98 10/1/00 $215.96 270158-004 Dell Inspiron 2 years 2/1/00 2/1/01 $294.09 270158-006 Dell SQL Server E80HR 3 years 4/5/00 4/5/03 $576.84
2. IAC computer leases: -------------------
Lease Monthly Lease No. Mfr. Product Serial Number Term Started Expires Payment --------- ---- ------- ------------- ---- ------- ------- ------- Schedule IBM 8484610952 IBM 6892 23N7579 Acer Extensa 9145B01605903002F4K IBM 6892 23N7798 IBM 6892 23N8017 IBM 6892 23N7616 Dell OptiPlexGx1p 4EZA
SCHEDULE 3: APPROVED CONTRACTS (continued) B. Contracts to be assigned after receiving requisite consents: (continued) 2. IAC computer leases: -------------------
Monthly Lease No. Product Term Started Expires Rent GST PST Payment --------- ------- ---- ------- ------- --------- --- --- ------- Schedule A 3 years 12/5/98 12/5/01 $705.78 Schedule B 3 years 1/1/99 1/1/02 $436.20 Schedule C 3 years 12/5/98 3/13/02 $567.49
3. Rented Equipment for Business Solutions AS 400 ---------------------------------------------- Equipment Type/Part# Serial Number -------------------- ------------- 9406 D60 10-AS712 9406 5042 10-02005 9337 240 10-18707 10-18654 10-18099 10-36799 SCHEDULE 4: ASSUMED LIABILITIES A. All Liabilities incurred after Closing on the TRACCS Assets and Approved Contracts. B. All personal property taxes with respect to the TRACCS Assets and Approved Contracts after Closing. C. The following Employee at the salary indicated and employment contract, as noted: Name Salary CPP/EI Comments - ---- ------ ------ -------- Kemp Tony $5,458.33 $392.14 Employment contract EXHIBIT 5: STOCK POWER AND ASSIGNMENT FOR BUYER'S SUPERWIRE STOCK FOR VALUE RECEIVED, Nextech Catalysts Inc , ("Assignor"), does hereby transfer unto Telemetrix Inc., a Delaware corporation ("Transferee"), 1,000,000 common shares (the "Shares") of SUPERWIRE.COM, INC., a Nevada corporation (the "Corporation"). The Shares are registered in Assignor's name on the Corporation's stock records and are represented by attached Stock Certificate No. . Assignor hereby irrevocably appoints the Corporation's corporate Secretary, with full power of substitution, as attorney-in-fact to transfer the Shares on the Corporation's stock records. ASSIGNOR: NEXTECH CATALYSTS INC. By: -------------------------------------- - --------------------------- ) ) ss. - --------------------------- ) ________________________________ personally appeared before me and provided me with satisfactory evidence of his identity. After being duly sworn, he stated he is the _______________________of Nextech Catalysts Inc. ("Assignor"), executed the foregoing STOCK POWER AND ASSIGNMENT ("Document") in his capacity as Assignor's Partner, and certified that by his execution of this Document Assignor executed and verified this Document. WITNESS my hand and official seal. Notary Public ------------------------------- My commission expires: ---------------------- EXHIBIT 6: SUPERWIRE OFFICER'S CERTIFICATE The undersigned ("Executive") hereby certifies that he is the duly elected, qualified, and serving President of SUPERWIRE.COM, INC., a Nevada corporation ("Company"). Company represents and warrants that, on the day of this Certificate: 1. Corporate Organization and Good Standing. Company is duly organized, validly existing and in good standing under the laws of Nevada. 2. Nextech Catalysts Inc. ("Buyer") owns at least one million shares of the Company's common stock. The stock owned by Buyer was duly authorized and issued and is fully paid and nonaccessable. Buyer's owned that Company stock since its date of the incorporation. Buyer is not a Company affiliate "as defined in SEC Rule 144(a)(1)," the Buyer has never been a Company affiliate, and Buyer did not acquire the Company stock referred to in this paragraph from a Company Affiliate. 3. Company provided TELEMETRIX RESOURCE GROUP LTD. ("Seller") and TELEMETRIX INC., a Delaware corporation ("Parent") with documents and information about the Company ("Disclosure Information"). That Disclosure Information: 3.1. is accurate and complete; 3.2. includes all public information specified in SEC Rule 144(c)(2); 3.3. contains all documents and information provided to either the SEC or the National Association of Securities Dealers ("NASD"); 3.4. does not make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; Since the date of the Disclosure Information, there has been no material adverse change in the Company's business, financial condition, properties, results of operations or prospects. 4. No material litigation or other material proceeding has been commenced by any person or governmental agency relating to the offering of Company's common stock or against the Company or its properties which is material to the Company's business, financial condition, properties, results of operations or prospects. Company provides this Officer's Certificate in accordance with Section 10 of the TRACCS Software Purchase Agreement, dated August 11, 2000, among TELEMETRIX RESOURCE GROUP LTD., TELEMETRIX INC., a Delaware corporation ("Parent"), and Nextech Catalysts Inc. Buyer. IN WITNESS WHEREOF, I execute this Certificate as of August 31, 2000. SUPERWIRE.COM, INC., a Nevada corporation By: -------------------------------------- President EX-10.2 3 0003.txt EMPLOYMENT AGREEMENT--JAMES DOYLE EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT ("Agreement") is entered into by and between TELEMETRIX INC., a Delaware corporation (the "Company"), and JAMES DOYLE, ("Executive"). The effective date of this Agreement shall be _________________ (the "Effective Date"). R E C I T A L S: WHEREAS, The Company desires to hire and employ Executive as its Chief Financial Officer; WHEREAS, Executive desires to become employed by the Company in such capacity; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows: 1. Employment. The Company agrees to employ Executive and Executive hereby agrees to be employed by the Company on a full time basis. Executive represents and warrants to the Company that the execution of this Agreement and his performance under this Agreement does not breach any other agreement to which Executive is a party or under which Executive may be bound and does not require the consent of any other person. 2. Duties. Executive shall be employed as the Company's Chief Financial Officer ("CFO") and in such capacity shall perform the duties and bear the responsibilities commensurate with the office of CFO, serve the Company faithfully and to the best of his ability, strive to meet the objectives established by his Supervisor and perform, without additional compensation, such other duties for the Company and/or for its Affiliates (as such term is defined in Section 3 herein) as may be delegated to Executive by his Supervisor (as defined below) and hold such other offices to which he may be appointed or elected from time-to-time (collectively, the "Position"). Mr. Michael J. Tracy, the Company's President and Chief Executive Officer, or his designee, shall supervise Executive's activities ("Supervisor"). In its sole discretion the Company may assign Executive to a position of lesser responsibility. Executive's conduct must promote the best interests of the Company and its Affiliates and must not discredit the Company, its Affiliates, its products or services. 3. Exclusivity. Executive shall devote his full business time, efforts, attention, skill and energy to the Company's business, and shall effectively perform his duties under this Agreement and strive to achieve the objectives designated by his Supervisor. Executive shall disclose to the Supervisor his involvement in any other business activities related to the industries in which the Company or a person, firm or corporation that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control of the Company (collectively, "Affiliate") are involved and Executive shall not engage in any other business activities that require significant personal services by Executive or in any way diminish Executive's ability to effectively perform his duties hereunder to the satisfaction of his Supervisor. Notwithstanding the foregoing, after notifying the Supervisor, Executive may take reasonable personal time for: 3.1. personal investments that do not require significant services by Executive; 3.2. participation in volunteer or charitable activities; 3.3. participation in industry-related organizations; 3.4. with prior Supervisor approval, serving as a director for other companies; and 3.5. activities approved in advance by the Supervisor; except that Executive shall cease any outside activity if the Supervisor determines that such activity will interfere or conflict with the Company's interests. 4. Conflicts of Interest. Executive shall not engage in any activity that, in the Supervisor's judgment, may interfere or conflict with the proper performance of Executive's duties or the Company's or its Affiliates' interests. If Executive has any interest in a proposed transaction involving the Company, that interest must be fully disclosed to the Company and the Supervisor must approve the transaction. 5. Confidentiality. Executive acknowledges that the Company's products and services are unique and have world-wide application, and that the Company has expended significant sums and resources to develop its products and services. The relationship between the Company and Executive is one of confidence and trust. Executive agrees that the provisions of this Section 5 are fair and reasonable because, as a result of his employment by the Company, he will have access to proprietary information and intellectual property of the Company and its Affiliates and Executive acknowledges that such information is a highly valued asset of the Company. 5.1. Confidential Information. The term "Confidential Information" means all information relating to the Company, its Affiliates, its customers and suppliers considered by the Company to be confidential, including, without limitation: 5.1.1. technology, plans, products, processes and personnel; 5.1.2. software, source codes and manuals; 5.1.3. the nature of the Company's and its Affiliates' services and any area where such services are performed or planned to be performed; 5.1.4. research, development, manufacturing, purchasing, and engineering; 5.1.5. markets, marketing strategies, customer lists and prospect lists; 5.1.6. merchandising, selling, pricing or contractual terms, 5.1.7. inventions, discoveries, concepts and ideas, whether patentable or not, processes, methods, formulas, and techniques, trade secrets, related improvements and knowledge; 5.1.8. financial and accounting information; 5.1.9. business expertise; and 5.1.10. any component of Confidential Information or anything derived from Confidential Information. The Company's determination that specific information constitutes Confidential Information shall be binding, except for information already in the public domain other than placed therein by Executive's act except in the reasonable performance of his duties and except for information which is no longer a trade secret or patentable as defined by applicable legislation or law. 5.2. Non-disclosure. Executive agrees that he shall at no time, whether during his employment or at any time thereafter, disclose or use any Confidential Information for any purpose other than the conduct of the Company's business pursuant to this Agreement. Upon the breach or threatened breach of this covenant by Executive, the Company shall be entitled without notice to obtain relief pursuant to Section 11 below. 5.3. Notice to Company. Executive will immediately notify the Company if he learns that Confidential Information has been disclosed or is about to be disclosed, whether by Executive's acts, acts of third parties, law, regulation or court order. Executive will cooperate with the Company's efforts to prevent or limit disclosure of Confidential Information. 2 5.4. Ownership. Any Confidential Information that is directly originated, developed or perfected to any degree by Executive during his Company employment shall be and remain the sole property of the Company and shall be deemed trade secrets of the Company. To the extent that any Confidential Information constitutes an original work of authorship by Executive which is protectable by copyright, Executive acknowledges that such work is a "work for hire" as defined by the U.S. Copyright Act (17 U.S.C. ss. 101 et seq.) and is intended to be and is hereby agreed to be the sole and exclusive property of the Company and the Executive does hereby quitclaim and release all right, title and interest in and to the same to the Company. 5.5. Assignment. The Executive hereby assigns to the Company all of his intellectual property rights (including copyrights, patents, and trademarks) that may arise out of his employment with the Company or his involvement with its Affiliates. 5.6. Return of Confidential Information. Upon termination of Executive's employment or upon request by the Company, Executive or his legal representative shall without delay deliver to the Company all original and duplicates and/or copies of all documents, records, notebooks, computer records or media, and similar materials containing Confidential Information then in his possession. 5.7. Further Assurances. Executive agrees to execute such separate and further confidentiality agreements and/or assignments embodying and enlarging upon the provisions of this Section 5 as the Company may reasonably request. 6. Compensation and Benefits. In consideration of the services to be rendered pursuant to this Agreement, commencing as of the Effective Date, Executive shall receive the following compensation and benefits during the Term (as defined in Section 7 herein) of his employment: 6.1. Salary. The Company shall pay Executive an annual salary of Ninety Thousand and 00/100 U.S. Dollars ($90,000.00), payable semi-monthly in arrears. 6.2. Benefits. The Company shall provide Executive with standard benefits customary for Company employees of the nature, kind and status of Executive. 6.3. Leave. Executive shall be entitled to Company-declared holidays, sick leaves, personal days and other time off in accordance with Company policies for Company employees of the nature, kind and status of Executive. 6.4. Reimbursement of Expenses. Upon receipt of an itemized accounting of such expenses with reasonable supporting documentation, the Company shall reimburse Executive for all reasonable and necessary out-of-pocket expenses incurred by Executive in connection with the business of the Company and in performance of Executive's duties under this Agreement. 6.5. Stock Options. Employee shall be eligible for participation in the Company's Stock Option Plan 2000 (the "Plan") adopted by the Company's Board of Directors (the "Board") as of February 15, 2000. Options to purchase Company common stock ("Stock Options") pursuant the Plan shall be granted at the discretion of the Board or its designated committee authorized to administer the Plan (the "Committee"). The terms and conditions of any Stock Options granted by the Board or the Committee, including, without limitation, the number of shares, exercise price, payment terms, grant date, vesting schedule and expiration date, shall be determined at the discretion of the Board or the Committee. 7. Duration. Executive's employment pursuant to this Agreement shall commence on the Effective Date and continue for a period of three (3) years or until terminated in accordance with Section 8 herein (the "Term"). 3 7.1 First Renewal Term. At the expiration of the Term, the Company may, at its sole election, renew Executive's employment on the terms and conditions contained in this Agreement unless different terms are agreed to by the Company and evidenced in a writing signed by the Company and Executive, for an additional term of one (1) year (the "First Renewal Term") by providing written notice to Executive of its intent to renew not less than sixty (60) calendar days prior to the expiration of the Term ("Renewal Notice"). 7.2. Second Renewal Term. At the expiration of the First Renewal Term, the Company may, at its sole election, renew Executive's employment on the terms and conditions contained in this Agreement unless different terms are agreed to by the Company and evidenced in a writing signed by the Company and Executive, for another additional term of one (1) year (the "Second Renewal Term") by providing Renewal Notice to Executive not less than sixty (60) calendar days prior to the expiration of the First Renewal Term. 8. Termination. Executive's employment may be terminated prior to expiration of the Term, or if renewed pursuant to subsections 7.1 and/or 7.2 above, prior to expiration of the First Renewal Term or the Second Renewal Term, as the case may be, as follows: 8.1. Discretion. Either party, in its sole discretion, may terminate Executive's employment at any time upon thirty (30) calendar days' prior written notice to the other party. 8.2. Death. If Executive dies during the term of his employment, the Company shall pay his estate the compensation that would otherwise be payable to him for the month in which his death occurs, and his employment shall be deemed terminated on the last day of such month. 8.3. Cause. The Company may immediately terminate Executive's employment at any time for: 8.3.1. non-performance or gross negligent performance by Executive of Executive's obligations under this Agreement or of any material duties as an Executive of the Company; or 8.3.2. the commission of any theft, fraud, embezzlement or similar crime involving the commission of any indictable offense; for acts of dishonesty or moral turpitude; for violation of applicable local, state or federal laws or regulations, including anti-discrimination laws or securities laws, which acts cause or could reasonably be expected to cause material economic damage to the Company or material damage to the business reputation of the Company. 8.4. Severance. If the Company terminates Executive's employment pursuant to subsection 8.1 herein, subject to the conditions set forth in this subsection 8.4, the Company agrees to maintain Executive on its payroll until such time as Executive has received that amount equal to one-third of his annual salary as set forth in subsection 6.1 herein, less applicable withholdings and deductions ("Severance"). As a condition to the payment of Severance, Executive agrees that he will (a) comply with the provisions of subsections 5.6 and 5.7 herein to the satisfaction of the Company and (b) execute and deliver to the Company in form satisfactory to the Company and its attorneys a release waiving all claims against the Company. The Company shall have the right to delay distribution to Executive of payroll disbursements comprising the Severance until such time as the conditions specified in (a) and (b) of this subsection 8.4 have been satisfied by Executive, notwithstanding the continuing obligations of Executive pursuant to Section 5 herein. 4 8.5 Surviving Provisions. After termination of Executive's employment for any reason whatsoever, the applicable provisions of Sections 5 and 9 shall remain in full force and effect until the time specified in each such section. 9. Covenant Not to Compete. Since Executive will be a key employee of the Company, Executive will have access to Confidential Information, and in light of the Company's and its Affiliates' substantial investment of resources in its business, operations, technology, services, customers and customer prospects, Executive acknowledges that certain of his future activities could cause material harm to the Company and its Affiliates. Additionally, Executive acknowledges that the Confidential Information was obtained through his Employment with the Company and involvement with its Affiliates, that the Company's and its Affiliates' business is of a world-wide scope, and that at the time entering into this Agreement, Executive's covenant not to compete with the Company and its Affiliates was a material part of the negotiated terms and conditions of this Agreement. Accordingly, Executive agrees that in the event his employment is terminated, the specific restrictions set forth in this Section 9 are fair, reasonable and necessary and are not overly burdensome on Executive's future activities. The covenants contained in this Section 9 shall continue until one (1) year after termination of Executive's employment for any reason whatsoever (the "Covenant Period"). 9.1. Until the Covenant Period expires, Executive shall not without the Company's prior written consent, which consent shall not be unreasonably withheld, directly or indirectly, own, manage, operate, control, be employed by, assist or participate in the ownership, management, operation or control of a company operating in Canada or the United States engaged in any of the following or related products, services and activities: 9.1.1. paging and communication services, personal communications services ("PCS"), mobile telecommunications services, wireless local loop ("WLL") products, polling, monitoring and controlling remote devices such as electrical meters and burglar alarms, data collection, acquisition and distribution, and meter reading (collectively, the "Activities"); 9.1.2. the provision of necessary infrastructure components to deploy the Activities and/or WLL capabilities; 9.1.3. the utilization of the discoveries, concepts and ideas, processes, methods, formulas, and techniques underlying the technology known as the T3000 System, including any updated versions thereto ("T3000 System") and/or WLL for any application including, without limitation, voice communications, data transmission, automatic utility meter reading, home security, home health, and vending replenishment; 9.1.4. marketing and sale of T3000 System-competitive equipment and/or components. 9.2. Until the Covenant Period expires, Executive shall not directly or indirectly: 9.2.1. induce any employee of the Company and its Affiliates to leave the employ of the Company or its Affiliates; 9.2.2. interfere with the relationship between the Company or its Affiliates and any employee of the Company or its Affiliates; 5 9.2.3. hire any Company employee or Affiliate employee to work for any organization of which Executive is an officer, director, employee, consultant, independent contractor or owner of an equity or other financial interest; or 9.2.4. interfere or attempt to interfere with any transaction involving the Company or its Affiliates. 10. Securities Matters. Since the Executive will have access to Confidential Information, his ability to engage in securities transactions will be limited. Executive agrees to: 10.1. not engage in any transactions that violate all applicable federal and state securities laws; 10.2. file all reports required by securities regulatory authorities; 10.3. provide information about securities transactions when requested by the Company; 10.4. follow written Company policies concerning securities transactions; 10.5. execute any "lock-up" agreements or other restrictions on transactions when requested by the Company; 10.6. comply with applicable federal and state securities law requirements for all transactions. While Executive may request Board permission for proposed securities transactions, Executive is still responsible for compliance with legal requirements. 11. Injunctive Relief. Upon a material breach or threatened material breach by Executive of any of the provisions of Sections 3, 4, 5, 9 and 10 of this Agreement, the Company or its Affiliate, as the case may be, shall be entitled to an injunction restraining Executive from such breach, together with any other relief or remedy available, for such breach or threatened breach, including the recovery of damages. Nothing herein shall be construed as prohibiting the Company or its Affiliates from pursuing any other remedies for such breach or threatened breach. If the Company or its Affiliate take legal action to enforce the provisions of this Agreement or to enjoin Executive from violating this Agreement, the prevailing party, as part of its damages, shall be entitled to recover its legal fees and expenses incurred in such action from the losing party. 12. Severability. It is the desire and intent of the parties that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision or portion of this Agreement shall be adjudicated to be invalid or unenforceable, this Agreement shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of such section in the particular jurisdiction in which such adjudication is made. 13. Notices. All communications, requests, consents and other notices under this Agreement shall be given in writing and delivered by facsimile, courier, registered or certified mail (postage prepaid) to the receiving party at the recipient's last known address. Notice shall be deemed given on the date of delivery as shown by the facsimile confirmation or delivery receipt. 14. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Nebraska. 6 15. Arbitration of Disputes. Except for injunctive relief pursuant to Section 11, all disputes concerning this Agreement will be submitted to binding arbitration in Denver, Colorado in accordance with the American Arbitrations Act. The Arbitrator's decisions must be delivered in writing accompanied by written findings of fact and conclusions of law. Any competent court may enter judgment upon the Arbitrator's awards. The prevailing party, as part of its damages, shall be entitled to recover its legal fees and expenses incurred in such action from the losing party. 16. Assignment. The Company may assign its rights and obligations under this Agreement to any Affiliate, any successor corporation or to any acquirer of substantially all of the business and assets of the Company, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by or against any such assignee. Neither this Agreement nor any rights or duties hereunder may be assigned or delegated by Executive. 17. General Provisions. This Agreement may be executed in multiple counterparts, no one of which needs to be executed by all of the parties; provided, however, that this Agreement shall not become binding upon any of the parties unless and until a counterpart is executed by all parties. Each such counterpart shall be considered an original. Facsimile signatures will have the same effect as original signatures. This Agreement only be modified by a written amendment signed by the Company and Executive. A waiver by the Company of a breach of any provision of this Agreement by Executive shall not operate or be construed as a waiver of any subsequent or other breach by Executive. Except as otherwise provided herein, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, heirs, successors and assigns. This Agreement sets forth the entire agreement and understanding of the parties with respect to the subject matter herein and supersedes all prior understandings, agreements or representations by or between the parties, whether written or oral. [Remainder of this page intentionally left blank.] 7 IN WITNESS WHEREOF, the parties have executed this Employment Agreement to be effective as of the Effective Date. COMPANY: TELEMETRIX INC., a Delaware corporation By: /s/ Michael J. Tracy ------------------------------------- Michael J. Tracy President and Chief Executive Officer EXECUTIVE: JAMES DOYLE By: /s/ James Doyle ------------------------------------- James Doyle, an individual 8 EX-10.3 4 0004.txt EMPLOYMENT AGREEMENT--MARGUERITE MCKEE EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT ("Agreement") is entered into by and between TELEMETRIX SOLUTIONS INC., a Colorado corporation (the "Company"), and MARGUERITE MCKEE ("Executive"). The effective date of this Agreement shall be March 1, 2000 (the "Effective Date"). R E C I T A L S: WHEREAS, The Company desires to hire and employ Executive as President of its wholly owned subsidiary Telemetrix Resource Group Ltd., an entity duly incorporated under the laws of the province of Nova Scotia, Canada ("TRG"); WHEREAS, Executive desires to become employed by the Company in such capacity; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows: 1. Employment. The Company agrees to employ Executive and Executive hereby agrees to be employed by the Company on a full time basis. Executive represents and warrants to the Company that the execution of this Agreement and her performance under this Agreement does not breach any other agreement to which Executive is a party or under which Executive may be bound and does not require the consent of any other person. Executive acknowledges that her employment with the Company commenced prior to the Effective Date of this Agreement on terms not set forth herein. When capitalized and used in this Agreement, the term "Employment" shall include a) such prior employment and b) Executive's employment subsequent to the Effective Date pursuant to this Agreement. When not capitalized and used herein, the term "employment" shall refer to Executive's employment subsequent to the Effective Date pursuant to this Agreement. 2. Duties. 2.1 President. Executive shall be employed as President of TRG and in such capacity shall (a) perform the duties and bear the responsibilities commensurate with the office of President, (b) continue to perform the duties and bear the responsibilities of her employment prior to the Effective Date in her prior capacity as Vice President of Product Commercialization, which position shall merge with and into Executive's position as President pursuant to this Agreement, (c) serve the Company faithfully and to the best of her ability, and (d) perform, without additional compensation, such other duties for the Company and/or its Affiliates as may be delegated to Executive by her Supervisor (as defined below) and hold such other offices to which she may be appointed or elected from time-to-time (collectively, the "Position"). Mr. Michael J. Tracy, the Company's President and Chief Executive Officer, or his designee, shall supervise Executive's activities ("Supervisor"). In its sole discretion the Company may assign Executive to a position of lesser responsibility. Executive's conduct must promote the best interests of the Company and its Affiliates and must not discredit the Company, its Affiliates, its products or services. 2.2 Director. Executive shall serve as a director of TRG ("Director") commencing on the later of (a) the Effective Date or (b) such time as all required TRG corporate action has been taken authorizing such appointment, and terminating on the earlier of (x) the expiration of the Term (as defined in Section 7 herein) or (y) Executive's resignation, removal, death or TRG's next annual shareholder meeting at which directors are elected. In her capacity as Director Executive shall be subject to removal in accordance with TRG's corporate governance documents and the Companies Act of the province of Nova Scotia, Canada (the "Act"). Notwithstanding that the Company will use reasonable efforts to maintain Executive in her directorship, the Company makes no guarantee to Executive as to the term of Executive's directorship. 2.3 Indemnification. In connection with Executive's position as Director, the Company agrees to indemnify Executive to the extent provided under TRG's Articles of Association against costs, losses and expenses that Executive in her capacity as Director may incur or become liable to pay in connection with any claim made against Executive by reason of being or having been a TRG director, provided that Executive's conduct which gave rise to such costs, losses or expenses conformed to that standard of conduct for directors prescribed by TRG's corporate governance documents and the Act. 3. Exclusivity. Executive shall devote her full business time, efforts, attention, skill and energy to the Company's business, and shall effectively perform her duties under this Agreement and strive to achieve the objectives designated by her Supervisor. Executive shall disclose to the Supervisor her involvement in any other business activities related to the industries in which the Company or a person, firm or corporation that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control of the Company (collectively, "Affiliate") are involved and Executive shall not engage in any other business activities that require significant personal services by Executive or in any way diminish Executive's ability to effectively perform her duties hereunder to the satisfaction of her Supervisor. Notwithstanding the foregoing, after notifying the Supervisor, Executive may take reasonable personal time for: 3.1. personal investments that do not require significant services by Executive; 3.2. participation in volunteer or charitable activities; 3.3. participation in industry-related organizations; 3.4. with prior Supervisor approval, serving as a director for other companies; and 3.5. activities approved in advance by the Supervisor; 3.6. consulting work for Escalator Handrail Company located in Oshawa, Ontario, Canada ("Escalator Handrail"), provided that (a) Executive will not without the Company's prior written consent perform any work for Escalator Handrail not within the capacity or time frame described in the letter from Executive to the Company disclosing the material terms of Executive's agreement with Escalator Handrail, which letter is attached as Exhibit A hereto and by this reference incorporated herein, (b) such consulting work does not in any way interfere or conflict with the Company's or its Affiliates' interests nor affect Executive's ability to effectively perform her duties under this Agreement, and (c) the Supervisor's approval may be withdrawn at any time if the Supervisor in his sole discretion determines that such consulting work is in conflict with subsection 3.6(b) above; except that Executive shall cease any outside activity if the Supervisor determines that such activity will interfere or conflict with the Company's or its Affiliates' interests. 4. Conflicts of Interest. Executive shall not engage in any activity that, in the Supervisor's judgment, may interfere or conflict with the proper performance of Executive's duties or the Company's interests. If Executive has any interest in a proposed transaction involving the Company, that interest must be fully disclosed to the Company and the Supervisor must approve the transaction. 5. Confidentiality. Executive acknowledges that the Company's product and services are unique and have world-wide application, and that the Company has expended significant sums and resources to develop its product and services. The relationship between the Company and Executive is one of confidence and trust. Executive agrees that the provisions of this Section 5 are fair and reasonable because, as a result of her Employment by the Company, she has had and will continue to have access to proprietary information and intellectual property of 2 the Company and Executive acknowledges that such information is a highly valued asset of the Company. The Company acknowledges and recognizes that prior to her Employment with the Company, Executive had considerable knowledge and expertise related to the telecommunications industry (the "Executive's Prior Knowledge"). 5.1. Confidential Information. The term "Confidential Information" means all information relating to the Company, its Affiliates, customers and suppliers considered by the Company to be confidential, excluding the Executive's Prior Knowledge, and including, without limitation: 5.1.1. technology, plans, products, processes and personnel; 5.1.2. software, source codes and manuals; 5.1.3. the nature of the Company's and its Affiliates' services and any area where such services are performed or planned to be performed; 5.1.4. research, development, manufacturing, purchasing, and engineering; 5.1.5. markets, marketing strategies, customer lists and prospect lists; 5.1.6. merchandising, selling, pricing or contractual terms, 5.1.7. inventions, discoveries, concepts and ideas, whether patentable or not, processes, methods, formulas, and techniques, trade secrets, related improvements and knowledge; 5.1.8. financial and accounting information; 5.1.9. business expertise; and 5.1.10. any component of Confidential Information or anything derived from Confidential Information. The Company's determination that specific information constitutes Confidential Information shall be binding, except for information already in the public domain other than placed therein by Executive's act except in the reasonable performance of her duties and except for information which is no longer a trade secret or patentable as defined by applicable legislation or law. 5.2. Non-disclosure. Executive agrees that she shall at no time, whether during her Employment or at any time thereafter, disclose or use any Confidential Information for any purpose other than the conduct of the Company's business. Upon the breach or threatened breach of this covenant by Executive, the Company shall be entitled without notice to obtain relief pursuant to Section 11 below. 5.3. Notice to Company. Executive will immediately notify the Company if she learns that Confidential Information has been disclosed or is about to be disclosed, whether by Executive's acts, acts of third parties, law, regulation or court order. Executive will cooperate with the Company's efforts to prevent or limit disclosure of Confidential Information. 5.4. Ownership. Any Confidential Information that is directly originated, developed or perfected to any degree by Executive during her Employment by the Company shall be and remain the sole property of the Company and shall be deemed trade secrets of the Company. To the extent that any Confidential Information constitutes an original work of authorship by Executive which is protectable by copyright, Executive acknowledges that such work is a "work for hire" as defined by the U.S. Copyright Act (17 U.S.C. ss. 101 et seq.) and is intended to be and is hereby agreed to be the sole and exclusive property of the Company and the Executive does hereby quitclaim and release all right, title and interest in and to the same to the Company. 3 5.5. Assignment. The Executive hereby assigns to the Company all of her intellectual property rights (including copyrights, patents, and trademarks) that may arise out of her Employment with the Company or her involvement with its Affiliates. 5.6. Return of Confidential Information. Upon termination of Executive's employment or upon request by the Company, Executive or her legal representative shall deliver to the Company all original and duplicates and/or copies of all documents, records, notebooks, computer records or media, and similar materials containing Confidential Information then in her possession. 5.7. Further Assurances. Executive agrees to execute such separate and further confidentiality agreements and/or assignments embodying and enlarging upon the provisions of this Section 5 as the Company may reasonably request. 6. Compensation and Benefits. In consideration of the services to be rendered pursuant to this Agreement, commencing as of the Effective Date, Executive shall receive the following compensation and benefits during the Term (as defined in Section 7 herein) of her employment: 6.1. Salary. The Company shall pay Executive an annual salary of One Hundred Fifty Seven Thousand Four Hundred and 00/100 Canadian Dollars ($157,400.00 Cdn.), payable semi-monthly in arrears. 6.2. Benefits. The Company shall provide Executive with standard benefits customary for Company employees of the nature, kind and status of Executive. 6.3. Leave. Executive shall be entitled to Company-declared holidays, sick leaves, personal days and other time off in accordance with Company policies for Company employees of the nature, kind and status of Executive. 6.4. Reimbursement of Expenses. Upon receipt of an itemized accounting of such expenses with reasonable supporting documentation, the Company shall reimburse Executive for all reasonable and necessary out-of-pocket expenses incurred by Executive in connection with the business of the Company and in performance of Executive's duties under this Agreement. 6.5 Stock Options, Bonuses, Additional Compensation. Executive shall be entitled to participate in a Company stock option plan and shall be eligible for bonuses paid in the form of options to acquire capital stock in the Company or its Affiliates at such time as the Company elects, in its sole discretion, to adopt such compensation plans. Options to purchase capital stock pursuant to any stock option plan or bonus arrangement will be at the discretion of a compensation committee (the "Committee"). The terms and conditions of any such stock options or bonus stock payments, including, without limitation, the class, series and issuer of the capital stock, number of shares, exercise price, payment terms, grant date, vesting schedule and expiration date, shall be determined at the discretion of the Committee. 7. Duration. Executive's employment pursuant to this Agreement shall commence on the Effective Date of this Agreement and continue for a period of three (3) years or until terminated in accordance with Section 8 herein (the "Term"). After termination of Executive's employment for any reason whatsoever, the applicable provisions of Sections 5 and 9 shall remain in full force and effect until the time specified in each such section. 8. Termination. Executive's employment may be terminated as follows: 8.1. Discretion. Either party, in its sole discretion, may terminate Executive's employment at any time upon thirty (30) calendar days' prior written notice. 4 8.2. Death. If Executive dies during the term of her employment, the Company shall pay her estate the compensation that would otherwise be payable to her for the month in which her death occurs, and her employment shall be deemed terminated on the last day of such month. 8.3. Cause. The Company may immediately terminate Executive's employment at any time for: 8.3.1. non-performance or gross negligent performance by Executive of Executive's obligations under this Agreement or of any material duties as an Executive of the Company; or 8.3.2. the commission of any theft, fraud, embezzlement or similar crime involving the commission of any indictable offense; for acts of dishonesty or moral turpitude; for violation of applicable local, state or federal laws or regulations, including anti-discrimination laws or securities laws, which acts cause or could reasonably be expected to cause material economic damage to the Company or material damage to the business reputation of the Company. 8.4. Severance. If the Company terminates Executive's employment pursuant to subsection 8.1 herein, subject to the conditions set forth in this subsection 8.4, the Company agrees to maintain Executive on its payroll until such time as Executive has received that amount equal to one-third of her annual salary (as set forth in subsection 6.1 herein), less applicable withholdings and deductions ("Severance"). As a condition to the payment of Severance, Executive agrees that she will promptly (a) comply with the provisions of subsections 5.5, 5.6 and 5.7 herein and (b) execute and deliver to the Company a release waiving all claims against the Company. The Company shall have the right to delay distribution to Executive of payroll disbursements comprising the Severance until such time as the conditions of this subsection 8.4 have been fully performed by Executive to the satisfaction of the Company. 9. Covenant Not to Compete. Since Executive will be a key employee of the Company, Executive will have access to Confidential Information, and in light of the Company's and its Affiliates' substantial investment of its resources in its business, operations, technology, services, customers and customer prospects, Executive acknowledges that certain of her future activities could cause material harm to the Company and its Affiliates. Additionally, Executive acknowledges that the Confidential Information was obtained through her Employment with the Company and involvement with its Affiliates, that the Company's and its Affiliates' business is of a world-wide scope, and that at the time entering into this Agreement, Executive's covenant not to compete with the Company and its Affiliates was a material part of the negotiated terms and conditions of this Agreement. Accordingly, Executive agrees that in the event her employment is terminated, the specific restrictions set forth in this Section 9 are fair, reasonable and necessary and are not overly burdensome on Executive's future activities. The covenants contained in this Section 9 shall continue until one (1) year after termination of Executive's employment for any reason whatsoever (the "Covenant Period"). 9.1. Until the Covenant Period expires, Executive shall not without the prior written consent of the Company, which consent shall not be unreasonably withheld, directly or indirectly, own, manage, operate, control, be employed by, assist or participate in the ownership, management, operation or control of a company operating in Canada or the United States engaged in any of the following or related products, services and activities: 9.1.1. paging and communication services, personal communications services ("PCS"), mobile telecommunications services, wireless local loop ("WLL") products, polling, monitoring and controlling remote devices such as electrical meters and burglar alarms, data collection, acquisition and distribution, and meter reading (collectively, the "Activities"); 5 9.1.2. the provision of necessary infrastructure components to deploy the Activities and/or WLL capabilities; 9.1.3. the utilization of the discoveries, concepts and ideas, processes, methods, formulas, and techniques underlying the technology known as the T3000 System ("T3000 System") and/or WLL for any application including, without limitation, voice communications, data transmission, automatic utility meter reading, home security, home health, and vending replenishment; 9.1.4. marketing and sale of T3000 System-competitive equipment and/or components. 9.2. Until the Covenant Period expires, Executive shall not directly or indirectly: 9.2.1. induce any employee of the Company and its Affiliates to leave the employ of the Company or its Affiliates; 9.2.2. interfere with the relationship between the Company or its Affiliates and any employee of the Company or its Affiliates; 9.2.3. hire any Company employee or Affiliate employee to work for any organization of which Executive is an officer, director, employee, consultant, independent contractor or owner of an equity or other financial interest; or 9.2.4. interfere or attempt to interfere with any transaction involving the Company or its Affiliates. 10. Securities Matters. Since the Executive will have access to Confidential Information, her ability to engage in securities transactions will be limited. Executive agrees to: 10.1. not engage in any transactions that violate the securities laws; 10.2. file all reports required by securities regulatory authorities; 10.3. provide information about securities transactions when requested by the Company; 10.4. follow written Company policies concerning securities transactions; 10.5. execute any "lock-up" agreements or other restrictions on transactions when requested by the Company; 10.6. comply with securities law requirements for all transactions. While Executive may request Board permission for proposed securities transactions, Executive is still responsible for compliance with legal requirements. 11. Injunctive Relief. Upon a material breach or threatened material breach by Executive of any of the provisions of Sections 3, 4, 5, 9 and 10 of this Agreement, the Company or its Affiliate, as the case may be, shall be entitled to an injunction restraining Executive from such breach, together with any other relief or remedy available, for such breach or threatened breach, including the recovery of damages. Nothing herein shall be construed as prohibiting the Company or its Affiliates from pursuing any other remedies for such breach or threatened breach. If the Company or its Affiliate take legal action to enforce the provisions of this Agreement or to enjoin Executive from violating this Agreement, the prevailing party, as part of its damages, shall be entitled to recover its legal fees and expenses incurred in such action from the losing party. 6 12. Severability. It is the desire and intent of the parties that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision or portion of this Agreement shall be adjudicated to be invalid or unenforceable, this Agreement shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of such section in the particular jurisdiction in which such adjudication is made. 13. Notices. All communications, requests, consents and other notices under this Agreement shall be given in writing and delivered by facsimile, courier, registered or certified mail (postage prepaid) to the receiving party at the recipient's last known address. Notice shall be deemed given on the date of delivery as shown by the facsimile confirmation or delivery receipt. 14. Governing Law. Except for the statutory standards of conduct set forth in subsection 2(b) herein, this Agreement and all of Executive's rights pursuant to her Employment are governed solely by and interpreted consistent with the laws (but not the choice of law rules) of the U.S. State of Nebraska without giving any effect whatsoever to the laws of Canada or the laws of any province therein. 15. Consent to Jurisdiction; Waiver of Service of Process. Executive acknowledges that the Company is a U.S. corporation incorporated under the laws of the U. S. State of Colorado with its parent company's headquarters located in the U.S. State of Nebraska. In light of such knowledge, Executive consents to jurisdiction and waives service of process in accordance with the terms of this Section 15. The parties hereby irrevocably submit to the jurisdiction of any Federal District Court sitting in Denver, Colorado over any action or proceeding arising out of or relating to this Agreement and/or Executive's Employment and hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined in such Federal District Court. The parties irrevocably consent to the service of any and all process in any such action or proceeding by mailing, delivering or telefaxing copies of such process to them in the manner provided by Section 13 herein. The parties agree that a final judgment in any such action or proceeding, not subject to further appeal, shall be conclusive and may be enforced in any other jurisdictions by suit on the judgment or in any other manner provided by law. To the extent that any party has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process with respect to itself or its property, such party hereby irrevocably waives such immunity with respect to this Agreement and/or Executive's Employment. 16. Assignment. The Company may assign its rights and obligations under this Agreement to any Affiliate, any successor corporation or to any acquirer of substantially all of the business and assets of the Company, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by or against any such assignee. Neither this Agreement nor any rights or duties hereunder may be assigned or delegated by Executive. 17. General Provisions. This Agreement may be executed in multiple counterparts, no one of which needs to be executed by all of the parties; provided, however, that this Agreement shall not become binding upon any of the parties unless and until a counterpart is executed by all parties. Each such counterpart shall be considered an original. Facsimile signatures will have the same effect as original signatures. This Agreement only be modified by a written amendment signed by the Company and Executive. A waiver by the Company of a breach of any provision of this Agreement by Executive shall not operate or be construed as a waiver of any subsequent or other breach by Executive. Except as otherwise provided herein, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, 7 heirs, successors and assigns. This Agreement sets forth the entire agreement and understanding of the parties with respect to the subject matter herein and supersedes all prior understandings, agreements or representations by or between the parties, whether written or oral. IN WITNESS WHEREOF, the parties have executed this Employment Agreement to be effective as of the Effective Date. COMPANY: TELEMETRIX SOLUTIONS INC., a Colorado corporation By: /s/ Michael J. Tracy ------------------------------------- Michael J. Tracy President and Chief Executive Officer EXECUTIVE: MARGUERITE MCKEE By: /s/ Marguerite McKee ------------------------------------- Marguerite McKee, an individual 8 Exhibit A March 13,2000 Michael Tracy Telemetrix Inc 1225 Sage St Gering, Nebraska Subject: Escalator Handrail Company Michael, I provide part-time consulting for Escalator Handrail Company in Oshawa, Ontario assisting their company in the implementation of their Business Strategy using Structural Consulting Techniques. They are first in the world in manufacturing handrails for escalators and are expanding their business into other lift industry products. I have been assisting them in reviewing their plans for the implementation of both their three year and one year business objectives. I anticipate spending a few hours a week ( two to six) of my personal time to support them in assessing their plans. I am also giving them a two and a half day course in mid- April (vacation days) in the fundamentals of Structural Thinking to assist them in being self sufficient. I expect to be finished working with them by June or July this year. This is the only activity that I have in a consulting capacity. Regards, /s/ Marguerite McKee EX-10.4 5 0005.txt EMPLOYMENT AGREEMENT--JOSEPH G. SCHON EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT ("Agreement") is entered into by and between TELEMETRIX INC., a Delaware corporation (the "Company"), and JOSEPH G. SCHON, ("Executive"). The effective date of this Agreement shall be June 12, 2000 (the "Effective Date"). R E C I T A L S: WHEREAS, The Company desires to hire and employ Executive as its Chief Operating Officer; WHEREAS, Executive desires to become employed by the Company in such capacity; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows: 1. Employment. The Company agrees to employ Executive and Executive hereby agrees to be employed by the Company on a full time basis as defined further in paragraph 3. Executive represents and warrants to the Company that the execution of this Agreement and his performance under this Agreement does not breach any other agreement to which Executive is a party or under which Executive may be bound and does not require the consent of any other person. 2. Duties. Executive shall be employed as the Company's Chief Operating Officer ("COO") and in such capacity shall perform the duties and bear the responsibilities commensurate with the office of COO, serve the Company faithfully and to the best of his ability, strive to meet the objectives established by his Supervisor as set forth in Exhibit A attached and perform, without additional compensation, such other duties for the Company and/or for its Affiliates (as such term is defined in Section 3 herein) as may be delegated to Executive by his Supervisor (as defined below) and hold such other offices to which he may be appointed or elected from time-to-time (collectively, the "Position"). Mr. Michael J. Tracy, the Company's President and Chief Executive Officer, or his designee, shall supervise Executive's activities ("Supervisor"). In its sole discretion the Company may assign Executive to a position of lesser responsibility. Executive's conduct must promote the best interests of the Company and its Affiliates and must not discredit the Company, its Affiliates, its products or services. 3. Exclusivity. Executive shall devote his full business time, efforts, attention, skill and energy to the Company's business, and shall effectively perform his duties under this Agreement and strive to achieve the objectives designated by his Supervisor. Executive has disclosed his involvement in current business activities and enterprises unrelated to this employment and shall disclose to the Supervisor his involvement in any other business activities which may be related to the industries in which the Company or a person, firm or corporation that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control of the Company (collectively, "Affiliate") and Executive shall not engage in any business activities not disclosed at the time of this agreement as set forth herein, without prior notification to "supervisor" that would require significant personal services by Executive or in any way diminish Executive's ability to effectively perform his duties hereunder to the satisfaction of his Supervisor. Notwithstanding the foregoing, after notifying the Supervisor, Executive may take reasonable personal time for: 3.1. personal investments that do not require significant services by Executive; 3.2. participation in volunteer or charitable activities; 3.3. participation in industry-related organizations; 3.4. with prior Supervisor approval, serving as a director for other companies; and 3.5. activities approved in advance by the Supervisor; except that Executive shall cease any outside activity if the Supervisor determines that such activity will interfere or conflict with the Company's interests. 4. Conflicts of Interest. Executive shall not engage in any activity that, in the Supervisor's judgment, may interfere or conflict with the proper performance of Executive's duties or the Company's or its Affiliates' interests. If Executive has any interest in a proposed transaction involving the Company, that interest must be fully disclosed to the Company and the Supervisor must approve the transaction. 5. Confidentiality. Executive acknowledges that the Company's products and services are unique and have world-wide application, and that the Company has expended significant sums and resources to develop its products and services. The relationship between the Company and Executive is one of confidence and trust. Executive agrees that the provisions of this Section 5 are fair and reasonable because, as a result of his employment by the Company, he will have access to proprietary information and intellectual property of the Company and its Affiliates and Executive acknowledges that such information is a highly valued asset of the Company. 5.1. Confidential Information. The term "Confidential Information" means all information relating to the Company, its Affiliates, its customers and suppliers considered by the Company to be confidential, including, without limitation: 5.1.1. technology, plans, products, processes and personnel; 5.1.2. software, source codes and manuals; 5.1.3. the nature of the Company's and its Affiliates' services and any area where such services are performed or planned to be performed; 5.1.4. research, development, manufacturing, purchasing, and engineering; 5.1.5. markets, marketing strategies, customer lists and prospect lists; 5.1.6. merchandising, selling, pricing or contractual terms, 5.1.7. inventions, discoveries, concepts and ideas, whether patentable or not, processes, methods, formulas, and techniques, trade secrets, related improvements and knowledge; 5.1.8. financial and accounting information; 5.1.9. business expertise; and 5.1.10.any component of Confidential Information or anything derived from Confidential Information. The Company's determination that specific information constitutes Confidential Information shall be binding, except for information already in the public domain other than placed therein by Executive's act except in the reasonable performance of his duties and except for information which is no longer a trade secret or patentable as defined by applicable legislation or law. 5.2. Non-disclosure. Executive agrees that he shall at no time, whether during his employment or at any time thereafter, disclose or use any Confidential Information for any purpose other than the conduct of the Company's business pursuant to this Agreement. Upon the breach or threatened breach of this covenant by Executive, the Company shall be entitled without notice to obtain relief pursuant to Section 11 below. 2 5.3. Notice to Company. Executive will immediately notify the Company if he learns that Confidential Information has been disclosed or is about to be disclosed, whether by Executive's acts, acts of third parties, law, regulation or court order. Executive will cooperate with the Company's efforts to prevent or limit disclosure of Confidential Information. 5.4. Ownership. Any Confidential Information that is directly originated, developed or perfected to any degree by Executive during his Company employment shall be and remain the sole property of the Company and shall be deemed trade secrets of the Company. To the extent that any Confidential Information constitutes an original work of authorship by Executive which is protectable by copyright, Executive acknowledges that such work is a "work for hire" as defined by the U.S. Copyright Act (17 U.S.C. ss. 101 et seq.) and is intended to be and is hereby agreed to be the sole and exclusive property of the Company and the Executive does hereby quitclaim and release all right, title and interest in and to the same to the Company. 5.5. Assignment. The Executive hereby assigns to the Company all of his intellectual property rights (including copyrights, patents, and trademarks) that may arise out of his employment with the Company or his involvement with its Affiliates. 5.6. Return of Confidential Information. Upon termination of Executive's employment or upon request by the Company, Executive or his legal representative shall without delay deliver to the Company all original and duplicates and/or copies of all documents, records, notebooks, computer records or media, and similar materials containing Confidential Information then in his possession. 5.7. Further Assurances. Executive agrees to execute such separate and further confidentiality agreements and/or assignments embodying and enlarging upon the provisions of this Section 5 as the Company may reasonably request. 6. Compensation and Benefits. In consideration of the services to be rendered pursuant to this Agreement, commencing as of the Effective Date, Executive shall receive the following compensation and benefits during the Term (as defined in Section 7 herein) of his employment: 6.1. Salary. The Company shall pay Executive an annual salary of Seventy-two Thousand and 00/100 U.S. Dollars ($72,000.00), payable semi-monthly in arrears. 6.2. Benefits. The Company shall provide Executive with standard benefits customary for Company employees of the nature, kind and status of Executive. 6.3. Leave. Executive shall be entitled to Company-declared holidays, sick leaves, personal days and other time off in accordance with Company policies for Company employees of the nature, kind and status of Executive. 6.4. Reimbursement of Expenses. Upon receipt of an itemized accounting of such expenses with reasonable supporting documentation, the Company shall reimburse Executive for all reasonable and necessary out-of-pocket expenses incurred by Executive in connection with the business of the Company and in performance of Executive's duties under this Agreement. 6.5. Stock Options. Employee shall be eligible for participation in the Company's Stock Option Plan 2000 (the "Plan") adopted by the Company's Board of Directors (the "Board") as of February 15, 2000. Options to purchase Company common stock ("Stock Options") pursuant the Plan shall be granted at the discretion of the Board or its designated committee authorized to administer the Plan (the "Committee"). The terms and conditions of any Stock Options granted by 3 the Board or the Committee, including, without limitation, the number of shares, exercise price, payment terms, grant date, vesting schedule and expiration date, shall be determined at the discretion of the Board or the Committee. The Board has granted employee stock options as described on Exhibit B. 7. Duration. Executive's employment pursuant to this Agreement shall commence on the Effective Date and continue for a period of three (3) years or until terminated in accordance with Section 8 herein (the "Term"). 7.1 First Renewal Term. At the expiration of the Term, the Company may, at its sole election, renew Executive's employment on the terms and conditions contained in this Agreement unless different terms are agreed to by the Company and evidenced in a writing signed by the Company and Executive, for an additional term of one (1) year (the "First Renewal Term") by providing written notice to Executive of its intent to renew not less than sixty (60) calendar days prior to the expiration of the Term ("Renewal Notice"). 7.2. Second Renewal Term. At the expiration of the First Renewal Term, the Company may, at its sole election, renew Executive's employment on the terms and conditions contained in this Agreement unless different terms are agreed to by the Company and evidenced in a writing signed by the Company and Executive, for another additional term of one (1) year (the "Second Renewal Term") by providing Renewal Notice to Executive not less than sixty (60) calendar days prior to the expiration of the First Renewal Term. 8. Termination. Executive's employment may be terminated prior to expiration of the Term, or if renewed pursuant to subsections 7.1 and/or 7.2 above, prior to expiration of the First Renewal Term or the Second Renewal Term, as the case may be, as follows: 8.1. Discretion. Either party, in its sole discretion, may terminate Executive's employment at any time upon thirty (30) calendar days' prior written notice to the other party. 8.2. Death. If Executive dies during the term of his employment, the Company shall pay his estate the compensation that would otherwise be payable to him for the month in which his death occurs, and his employment shall be deemed terminated on the last day of such month. 8.3. Cause. The Company may immediately terminate Executive's employment at any time for: 8.3.1. non-performance or gross negligent performance by Executive of Executive's obligations under this Agreement or of any material duties as an Executive of the Company; or 8.3.2. the commission of any theft, fraud, embezzlement or similar crime involving the commission of any indictable offense; for acts of dishonesty or moral turpitude; for violation of applicable local, state or federal laws or regulations, including anti-discrimination laws or securities laws, which acts cause or could reasonably be expected to cause material economic damage to the Company or material damage to the business reputation of the Company. 8.4. Severance. If the Company terminates Executive's employment pursuant to subsection 8.1 herein, subject to the conditions set forth in this subsection 8.4, the Company agrees to maintain Executive on its payroll until such time as Executive has received that amount equal to one-third of his annual salary as set forth in subsection 6.1 herein, less applicable withholdings and deductions ("Severance"). As a condition to the payment of Severance, Executive agrees that he will (a) comply with the provisions of subsections 5.6 and 5.7 herein to the satisfaction of the Company and (b) execute and deliver to the 4 Company in form satisfactory to the Company and its attorneys a release waiving all claims against the Company. The Company shall have the right to delay distribution to Executive of payroll disbursements comprising the Severance until such time as the conditions specified in (a) and (b) of this subsection 8.4 have been satisfied by Executive, notwithstanding the continuing obligations of Executive pursuant to Section 5 herein. 8.5 Surviving Provisions. After termination of Executive's employment for any reason whatsoever, the applicable provisions of Sections 5 and 9 shall remain in full force and effect until the time specified in each such section. 9. Covenant Not to Compete. Since Executive will be a key employee of the Company, Executive will have access to Confidential Information, and in light of the Company's and its Affiliates' substantial investment of resources in its business, operations, technology, services, customers and customer prospects, Executive acknowledges that certain of his future activities could cause material harm to the Company and its Affiliates. Additionally, Executive acknowledges that the Confidential Information was obtained through his Employment with the Company and involvement with its Affiliates, that the Company's and its Affiliates' business is of a world-wide scope, and that at the time entering into this Agreement, Executive's covenant not to compete with the Company and its Affiliates was a material part of the negotiated terms and conditions of this Agreement. Accordingly, Executive agrees that in the event his employment is terminated, the specific restrictions set forth in this Section 9 are fair, reasonable and necessary and are not overly burdensome on Executive's future activities. The covenants contained in this Section 9 shall continue until one (1) year after termination of Executive's employment for any reason whatsoever (the "Covenant Period"). 9.1. Until the Covenant Period expires, Executive shall not without the Company's prior written consent, which consent shall not be unreasonably withheld, directly or indirectly, own, manage, operate, control, be employed by, assist or participate in the ownership, management, operation or control of a company operating in Canada or the United States engaged in any of the following or related products, services and activities: 9.1.1. paging and communication services, personal communications services ("PCS"), mobile telecommunications services, wireless local loop ("WLL") products, polling, monitoring and controlling remote devices such as electrical meters and burglar alarms, data collection, acquisition and distribution, and meter reading (collectively, the "Activities"); 9.1.2. the provision of necessary infrastructure components to deploy the Activities and/or WLL capabilities; 9.1.3. the utilization of the discoveries, concepts and ideas, processes, methods, formulas, and techniques underlying the technology known as the T3000 System, including any updated versions thereto ("T3000 System") and/or WLL for any application including, without limitation, voice communications, data transmission, automatic utility meter reading, home security, home health, and vending replenishment; 9.1.4. marketing and sale of T3000 System-competitive equipment and/or components. 9.2. Until the Covenant Period expires, Executive shall not directly or indirectly: 9.2.1. induce any employee of the Company and its Affiliates to leave the employ of the Company or its Affiliates; 9.2.2. interfere with the relationship between the Company or its Affiliates and any employee of the Company or its Affiliates; 5 9.2.3. hire any Company employee or Affiliate employee to work for any organization of which Executive is an officer, director, employee, consultant, independent contractor or owner of an equity or other financial interest; or 9.2.4. interfere or attempt to interfere with any transaction involving the Company or its Affiliates. 10. Securities Matters. Since the Executive will have access to Confidential Information, his ability to engage in securities transactions will be limited. Executive agrees to: 10.1. not engage in any transactions that violate all applicable federal and state securities laws; 10.2. file all reports required by securities regulatory authorities; 10.3. provide information about securities transactions when requested by the Company; 10.4. follow written Company policies concerning securities transactions; 10.5. execute any "lock-up" agreements or other restrictions on transactions when requested by the Company; 10.6. comply with applicable federal and state securities law requirements for all transactions. While Executive may request Board permission for proposed securities transactions, Executive is still responsible for compliance with legal requirements. 11. Injunctive Relief. Upon a material breach or threatened material breach by Executive of any of the provisions of Sections 3, 4, 5, 9 and 10 of this Agreement, the Company or its Affiliate, as the case may be, shall be entitled to an injunction restraining Executive from such breach, together with any other relief or remedy available, for such breach or threatened breach, including the recovery of damages. Nothing herein shall be construed as prohibiting the Company or its Affiliates from pursuing any other remedies for such breach or threatened breach. If the Company or its Affiliate take legal action to enforce the provisions of this Agreement or to enjoin Executive from violating this Agreement, the prevailing party, as part of its damages, shall be entitled to recover its legal fees and expenses incurred in such action from the losing party. 12. Severability. It is the desire and intent of the parties that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision or portion of this Agreement shall be adjudicated to be invalid or unenforceable, this Agreement shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of such section in the particular jurisdiction in which such adjudication is made. 13. Notices. All communications, requests, consents and other notices under this Agreement shall be given in writing and delivered by facsimile, courier, registered or certified mail (postage prepaid) to the receiving party at the recipient's last known address. Notice shall be deemed given on the date of delivery as shown by the facsimile confirmation or delivery receipt. 14. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Nebraska. 6 15. Arbitration of Disputes. Except for injunctive relief pursuant to Section 11, all disputes concerning this Agreement will be submitted to binding arbitration in Denver, Colorado in accordance with the American Arbitrations Act. The Arbitrator's decisions must be delivered in writing accompanied by written findings of fact and conclusions of law. Any competent court may enter judgment upon the Arbitrator's awards. The prevailing party, as part of its damages, shall be entitled to recover its legal fees and expenses incurred in such action from the losing party. 16. Assignment. The Company may assign its rights and obligations under this Agreement to any Affiliate, any successor corporation or to any acquirer of substantially all of the business and assets of the Company, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by or against any such assignee. Neither this Agreement nor any rights or duties hereunder may be assigned or delegated by Executive. 17. General Provisions. This Agreement may be executed in multiple counterparts, no one of which needs to be executed by all of the parties; provided, however, that this Agreement shall not become binding upon any of the parties unless and until a counterpart is executed by all parties. Each such counterpart shall be considered an original. Facsimile signatures will have the same effect as original signatures. This Agreement only be modified by a written amendment signed by the Company and Executive. A waiver by the Company of a breach of any provision of this Agreement by Executive shall not operate or be construed as a waiver of any subsequent or other breach by Executive. Except as otherwise provided herein, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, heirs, successors and assigns. This Agreement sets forth the entire agreement and understanding of the parties with respect to the subject matter herein and supersedes all prior understandings, agreements or representations by or between the parties, whether written or oral. [Remainder of this page intentionally left blank.] 7 IN WITNESS WHEREOF, the parties have executed this Employment Agreement to be effective as of the Effective Date. COMPANY: TELEMETRIX INC., a Delaware corporation By: /s/ Michael J. Tracy ------------------------------------- Michael J. Tracy President and Chief Executive Officer EXECUTIVE: JOSEPH G. SCHON By: /s/ Joseph G. Schon ------------------------------------- Joseph G. Schon, an individual 8 EXHIBIT A DUTIES TO BE PERFORMED Early Stage o Understand call center - customer car service operations as they apply to the support that we will need, so that can be either (a) contracted out or (b) developed in house. This will deal with hardware software support as well as NOC operations. o Get products through test houses such as Microcell and Pac Bell Wireless and PG&E o Development migration - supervise the orderly determination of new design features, development of updates to manufacturing design and software design etc. o Produce a staffing plan for different levels of operation. o Development scheduling - In coordination with Marguarite determine a schedule for R&D and manufacturing based on our current cash situation. o Development of sales strategy - Identify prospects, research prospects needs, make joint sales calls o Coordinate Ericsson Contract - Design and implement operational strategies required by the Ericsson and other contracts, coordinate manufacturing scheduling with Ericsson and their required needs. o Determine best source of assembly and shipping for product, involvement in inventory management, manufacturing scheduling. o Capital equipment planning - Assist in timing of the acquisition of equipment. Middle Stage o Develop marketing strategy - Marketing strategy includes sales strategy, advertising campaigns, trade shows, and public relations. o Coordinate manufacturing scheduling - determine manufacturing volumes based on sales forecast, determine inventory par levels. o Create a department and appropriate staffing to coordinate product installation and implementation - Responsible for timing of installations, coordinating with customers on timing etc., development of NOC's to meet customers demands, coordinate and implement customers data requirements. The four general areas of responsibility are: 1. Sales/Marketing Strategy 2. Manufacturing scheduling 3. (Ericsson) contract implementation and coordination Development of customer installation and implementation strategy and plan. EXHIBIT B STOCK OPTIONS Stock options totaling 100,000 shares vested on the following schedule: Year 1 - 15,000 shares Year 2 - 15,000 shares Year 3 - 20,000 shares Year 4 - 25,000 shares Year 5 - 25,000 shares The exercise price will be the closing price of Telemetrix shares on the date of execution of your employment contract. The specific terms of the stock options are under the Company's Stock Option Plan 2000, which would be granted to you by the Company in a Certificate after you have executed your employment agreement. EX-27 6 0006.txt FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-2000 SEP-30-2000 160,000 562,000 135,000 0 0 903,000 2,448,000 777,000 11,111,000 3,672,000 1,844,000 0 0 16,000 4,632,000 11,051,000 213,000 513,000 143,000 7,435,000 (10,000) 0 380,000 (7,435,000) 0 0 0 0 0 (7,435,000) (.53) (.53)
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