I have read the press release with regards to the dearly departed. What is very important is to remember that most of what is in the release is past history as far as the antics go, and here we are today the winner of the Macworld award. The really important event is that THW has stepped up to the plate to prevent any loss of our technological edge over our competitors. They could have kept this very quiet - instead they are looking out for the interests of all even if it means some short term pain. - Have at it kids !
By the way here is the release off Stock-watch - the best service for Canadian companies.
Totally Hip Software Inc
THW
Shares issued 13,500,000
1998-07-15 close $0.94
Wednesday Jul 15 1998
LITANY OF TROUBLES BLAMED ON TOP SOFTWARE DESIGNER
AND HIS WIFE
by Brent Mudry
Totally Hip Software has launched a broad and highly personal lawsuit against
former president and chief technology officer Rajiv Aggarwal and his wife Abha,
blaming the pair for a litany of problems, including software development delays
and its troubles with Revenue Canada, prospective investors and the Science
Council of British Columbia. In a statement of claim filed June 30 in the Supreme
Court of British Columbia, Totally Hip, chairman and chief executive Randall
McCallum and several other co-founders claim the couple misappropriated the
company's proprietary technology and Mr Aggarwal refuses to surrender 1.89
million performance escrow shares.
In statements of defence filed Tuesday, Rajiv and Abha Aggarwal deny the suit's
numerous allegations and claim a number of the events described were
mischaracterized. In attached counterclaims, the couple assert they were
dismissed in spring 1997 without cause. The couple also deny misappropriating or
misusing any of Totally Hip's trade secrets or confidential information.
Totally Hip filed the comprehensive suit the day after it suddenly discovered that
Mr Aggarwal now works as software engineer at Daikin U.S. Comtec
Laboratories, a Silicon Valley software developer. Totally Hip claims it is
threatened as one of its key rivals, Macromedia of San Francisco, has a joint
venture with Daikin, the world leader in DVD authoring tools and solutions. Mr
Aggarwal denies that any of his Daikin work places him in breach of his
confidentiality and ownership agreement with Totally Hip.
The 36-page statement of claim traces an in-depth and intriguing
behind-the-scenes look at Totally Hip, including allegations of numerous internal
conflicts with Mr McCallum during much of Mr Aggarwal's two-year tenure as
president, from the company's founding in 1995. The suit claims that Mr Aggarwal
was "verbally reprimanded" in January, 1996, by Mr McCallum after he claimed
he developed the Sizzler plug-in streaming playback technology during the
Christmas holidays. Mr Aggarwal's next big verbal reprimand came two months
later in March, when Mr McCallum and chief financial officer David Csumrik
chided him for his "obstructive and reckless interference towards the company's
new business focus." In his response, Mr Aggarwal claims that as president, he
had a responsibility to ensure that Totally Hip was "proceeding in a sensible and
logical direction."
Totally Hip also claims Mr Aggarwal was formally reprimanded in November,
1996, by Mr McCallum and the board for his "continued breach of his assigned
duties and responsibilities" as president, chief technology officer and a director. By
coincidence, this same month Mr Aggarwal allegedly tried to rally four of his
fellow co-founders to oust Mr McCallum, who found out about the plot when he
returned from a trip to California. The foursome, Steve Israelson, Selwyn Wan,
Chris Large and Benny Au-Young, also allege Mr Aggarwal was "scheming to be
fired" to force a rich compensation package, because he expressed considerable
concern about the company's financial condition and its continued existence.
Mr Aggarwal denies plotting to oust Mr McCallum, and he claims he merely tried
to convince of his colleagues of his concerns about Totally Hip's "upper level
management" and lack of marketing expertise. (Ironically, Mr McCallum founded
Totally Hip after he was ousted in a boardroom coup from Motion Works Group
in July, 1994, in favour of John Hickman, a big-talking, cigar-smoking blueblood
financier from upstate New York. Motion Works' decline accelerated under Mr
Hickman's helm and he was forced to resign in March, 1996, when revelations of
his murky financial past were exposed. He committed suicide a year later in his
Rolls Royce, in a garage with the engine running.)
Mr Aggarwal was terminated by Totally Hip in March, 1997, when he returned
from a sudden trip to India to attend to a death in the family, a trip Totally Hip
claims was completely unauthorized. Mr McCallum and his fellow co-founders
claim Mr Aggarwal "did not provide a satisfactory explanation for this
unauthorized leave."
The suit reveals that Revenue Canada attached Totally Hip's bank account after
imposing "penalties and severe restrictions" due to the non-remittance of the
proper amount of employee source deductions for periods in 1995 and 1996.
Totally Hip blames the situation on Ms Aggarwal, who served as its controller and
accounting assistant to Mr Csumrik, and claims it did not discover the problem
until after she was terminated. Ms Aggarwal denies she was negligent and claims
her work had nothing to do with the interest and penalties levied by Revenue
Canada.
Totally Hip also claims that Mr Aggarwal, acting as president and chief technology
officer, "dishonestly falsified quarterly reports" to the Science Council of B.C.,
substantiating research and development work performed as a condition of
financing by the agency. The company claims that after making this "discovery," its
senior management informed the Science Council of the details of the false
information. The suit does not note how the company discovered the problem,
and whether anyone besides Mr Aggarwal vetted the agency filings. "The plaintiff
company has incurred financial loss and loss of reputation and goodwill as a result
of the defendant's dishonest actions," states the suit. In his defence, Mr Aggarwal
strongly denies dishonestly falsifying any quarterly reports to the agency.
The suit also blames Mr Aggarwal for a failed $3-million private placement
financing in December, 1996. Mr McCallum claims Mr Aggarwal stretched out a
sudden trip to India in November, to join his wife and her gravely ill mother, from
an agreed-upon ten days to 16 days. Totally Hip claims its credibility was
considerably damaged, as the potential investors were demanding to meet Mr
Aggarwal as part of their due diligence. In his response, Mr Aggarwal notes he
was available for any telephone conference call required and the company failed
to notify him of any need for meetings with prospective investors.
Totally Hip claims that in January, 1997, management decided to scrap plans to
attract new financing groups for a major private placement, based on
"considerable concern" over Mr Aggarwal's work ethic and continuing breach of
fiduciary duty over the previous year. Mr McCallum notes that he decided instead
to approach some close business associates and major shareholders for a bridge
financing. The suit claims that the investors knew of the past problems with Mr
Aggarwal and considered further investment to be a "significant business risk," so
the $657,000 bridge financing was conditional on a share pooling agreement
managed by Mr McCallum. Totally Hip claims all the co-founders, including Mr
Aggarwal, agreed to work diligently for the company for the next three years and
to refrain from selling any shares until a $3-million financing was achieved.
According to the suit, the final straw came in February, 1997, when Mr Aggarwal
made the second trip to India, attending to a death in the family. Totally Hip claims
an April 15 release of its WebPainter 2 Macintosh product was critical to pursue
the $3-million financing, but the schedule slipped badly and the release was
delayed five months, once again blamed on Mr Aggarwal. Mr Aggarwal claims he
contacted the company from India during his trip, which was less than a month
long, and he was advised that everything was fine. He was terminated on his return
on March 19.
Much of Totally Hip's financial claims centre on Mr Aggarwal's escrow shares.
The termination agreement called for him to surrender his 1.49 million
performance escrow shares for a penny each. Mr Aggarwal also had 288,000
timed release escrow shares, set for release in 96,000-share instalments in
October of 1996, 1997 and 1998, and a further 143,000 timed release escrow
shares. Totally Hip claims that Mr Aggarwal "wrongfully" sold 47,667 of these
shares in late May, in contravention of the pooling agreement. Totally Hip claims it
will suffer "irreparable harm" if Mr Aggarwal sells his shares. In a court order on
July 3, Georgia Pacific Securities agreed to freeze the Aggarwals' accounts.
Totally Hip also claims it sent Mr Aggarwal a certified cheque for $14,880 in
November for his 1.49 million performance escrow shares, but he demanded to
increase the price to 40 cents a share, for a total of $595,200. In his defence, Mr
Aggarwal claims the surrender agreement is void because Totally Hip reneged on
$25,000 in severance payments and an agreement to release 96,000 of his timed
release shares. Mr Aggarwal could not be reached for comment at Daikin, where
he has been on leave for the past week.
(c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch.com |
