UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g)
Of the Securities Exchange Act of 1934
Purchase Point Media Corporation
--------------------------------
(Name of Small Business Issuer in its Charter)
Minnesota 41-1853993
- ------------------------------- --------------------
State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
141 Fifth Avenue,
New York, New York 10010
- ---------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Issuer's Telephone number: 212-539-6104
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
---------------------------
(Title of Class)
<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS
Purchase Point Media Corporation ("PPMC" or the "Company"),
with offices located at 141 Fifth Avenue, New York, New York 10010, was
organized under the laws of the State of Minnesota on June 29, 1996. PPMC owns a
patented grocery cart advertising display device called "THE LAST WORD"(R) that
attaches to supermarket shopping carts. At this time, patents have been granted
in the United States, Canada, France, Germany and the United Kingdom. "THE LAST
WORD"(R) is a registered trademark owned by PPMC.
"THE LAST WORD"(R) is a clear plastic, weatherproof, highly
durable, state of the art, point-of-purchase ("POP") display panel that encloses
a glossy color photo insert. The panel is 1/4 inch thick, 7 inches high and 16
inches wide. "THE LAST WORD"(R) insert contains 10 three by three inch
advertisement frames. "THE LAST WORD"(R) attaches to the back of the child's
seat section in grocery carts, so that it is directly in front of the shopper's
eyes. Management believes that "THE LAST WORD"(R) has powerful advantages over
competing POP advertising media.
The development of "THE LAST WORD"(R) began in 1991 when the
inventor, Albert Folsom, applied for patent protection. Subsequent to that,
Amtel Communications Inc. ("Amtel") invested over $1,000,000 in the development
of "THE LAST WORD"(R), which included applying for and receiving the registered
trademark for "THE LAST WORD"(R). In June 1994, a Nevada corporation also called
Purchase Point Media Corporation, acquired the patents and the exclusive
marketing rights and trademark. In April 1997, a public Minnesota corporation
acquired the assets of Purchase Point Media Corporation, leaving PPMC
(Minnesota) as the surviving company.
During the last five years, work has been ongoing in the
development of "THE LAST WORD"(R). The development work consisted primarily of
studying the feasibility of "THE LAST WORD"(R), seeking patent protection in
additional countries and setting the stage to launch a global point of purchase
advertisement company.
MARKETING, SALES AND OPERATIONS
PPMC will rent the child seat locations on grocery carts from
supermarkets for a rental rate equal to 10% of the gross advertising revenues
that the Company receives. PPMC will sell the advertising for each of the ten
positions on "THE LAST WORD"(R) to manufacturers of leading national brand
products sold in supermarkets. Each position is priced at $2.25 per month per
thousand customer checkouts at the grocery store. Advertising agencies will
receive a 15% commission for all advertisements placed on behalf of their
clients. This advertising will be replaced in quarterly cycles to coincide with
the seasons.
MARKETING
PPMC has contracted with Culver Associates Ltd. ("Culver") for
its marketing program. Culver is a New York agency, which specializes in helping
companies achieve rapid growth. In addition to an advertising trade campaign,
Culver will create sales and marketing materials for presentation to grocery
chains, advertisers and their ad agencies. Based upon
<PAGE>
2
Culver's past success in the development of new and innovative media sources,
advertisers are expected to include some of the most recognizable brand names in
the world.
ADVERTISEMENT SALES
PPMC has contracted with Last Word Management, Inc. ("LWM") to
conduct its sales effort. For over two decades, LWM personnel has been selling
various types of media to packaged food manufacturers and their ad agencies.
Based on LWM's relationships, the Company believes that within a relatively
short period of time, there will be a backlog of advertisers waiting for
available space on "THE LAST WORD"(R).
GROCERY STORE OPERATIONS
PPMC's store operations (signing up chain stores, installing
"THE LAST WORD"(R), maintenance and changing the ad inserts) has been contracted
with ITG Retail Services Group, LLC ("ITG"). PPMC has entered into a ten year
agreement with ITG, which has strong business relationships with grocery store
chains in the United States. They service over 27,000 stores with the sourcing
and stocking of "store-branded" products.
THE POINT OF PURCHASE (POP) MARKET
Point of purchase advertising is the fastest growing segment
of the advertising industry. While the United States advertising industry is
experiencing only minimal growth, Point of purchase advertising has been
expanding at approximately 14% annually since 1985, resulting in record sales of
$15.7 billion in 1992 and over $17 billion in 1997.
The basis of the growth of POP advertising is its capacity to
influence the buying decisions of shoppers after they enter a store. The Point
Of Purchase Advertising Institute, Inc. (POPAI), based in Englewood, New Jersey,
has determined that average shoppers make the decisions for choosing two thirds
of their supermarket purchases after they enter a store. Other marketing
professionals concur with these findings.
POPAI's research has shown that 70 manufacturer displays and
160 signs are found in an average supermarket. In addition, advertisements are
found on product shelves and on shopping carts. According to research reported
in Marketing Magazine which covers marketing and sales promotion advertising,
gross sales are 12% higher in stores with advertisements on product shelves than
in stores without shelf advertisements. In addition, advertising panels on the
front of shopping carts increase the average sales of those products by 11.5%.
Other surveys show that a product advertised on a grocery cart will cause a
decrease in sales of the competing product equal to 50% of the increase of the
advertised product.
In-store POP advertising is effective because there are
thousands of competing products. The average supermarket carries over 15,000
items and larger stores over 30,000. Each month a thousand new products fight
for shelf space and the customer's attention.
The majority of shoppers are impulse buyers. Every year fewer
wives stay at home and read newspaper ads to plan their grocery shopping. The
increase of two-household
<PAGE>
3
earners means considerably less time for planning. Consequently, more and more
people do their grocery shopping without a list and are more susceptible to
in-store advertising.
In 1986, grocery store sales topped $300 billion. By the year
2000, supermarket customers will spend about half a trillion dollars. These
figures are based on a conservative 6% annual growth rate during the 1990's.
Packaged food companies are now entering over one thousand new
products into the marketplace each month. In 1970, the average supermarket
featured 7,800 items. By 1990, that number had reached approximately 15,000 and
some carry more than 30,000 items.
In 1965, the average trip to the grocery store lasted 28
minutes and the average weekly spending in supermarkets was $28.49. By 1990,
shoppers made slightly more than two trips to the supermarket each week,
spending more than $72.00 per trip. The major shopping trip now lasts nearly 50
minutes as the hurried shoppers are attempting to wrap up all of their required
shopping in one trip.
The majority of shoppers are working outside of the home and
have little time to plan their shopping trip, making them much more vulnerable
to influence and factors that promote their purchasing decisions while shopping.
COMPETITION
A number of companies compete in the point of purchase grocery
cart advertising industry. The two most significant competitors are Actmedia
Inc. ("Actmedia") and ADDvantage Media Group, Inc. ("ADDvantage").
Actmedia Inc. of Darien, Connecticut, is a large company which
competes in several categories of point of purchase supermarket advertising in
North America, including using grocery carts as the location for its advertising
message. Actmedia pioneered grocery cart advertising and has proven that a
single POP advertisement on a grocery cart can be effective and profitable. In
1993, Actmedia was acquired by Heritage Media Corp., which, in turn, was
acquired in 1997 by News Corp.
Actmedia attaches an 8 inch by 9 inch by 9 inch single
advertisement panel to the front inside and front outside of shopping carts.
According to Actmedia promotional literature, its clients have commissioned the
research company A.C. Nielsen to conduct over 600 independent surveys on
Actmedia's ad program. Nielsen's findings concluded that Actmedia's grocery cart
advertising increases average sales of the advertised products by 12.6%.
ADDvantage is a relatively new company headquartered in Tulsa,
Oklahoma. ADDvantage features a calculator bolted to the handle bar of a
shopping cart and having a single advertisement display directly adjacent which
measures two by 2 and 7/8 inches.
In addition to Actmedia and ADDvantage, there are a number of
other competitors in the industry. VideOcart is a shopping cart equipped with a
black and white battery operated video screen which imparts information as well
as advertisements. Other competitors include shelf and aisle displays as well as
a number of newer hi-tech POP displays.
<PAGE>
4
Various electronic in-store displays and coupon systems exist including: Aisle
Vision to straddle the aisle; Market Vision, an electronic message board crawl
screen; POPNET, a computerized in-store system displaying animated sequences and
price promotions; Actmedia's Instant Coupon Machine, an on-shelf electronic
dispensing device; and Shelf Vision, another electronic display system.
In Store Advertising has a backlit display unit with an LED
read out placed above the aisle in grocery stores. Other displays include motion
activated units designed to heighten product visibility. Camtalker's sensory
equipment triggers a taped message whenever a customer comes within range.
Soundtron also triggers a message to potential customers as does Voice Vendor.
The Company believes that since "THE LAST WORD"(R) will be in
continuous communication with each and every shopper in the store, it will be
more effective than the products of its competitors.
PATENT
The patent invention is a waterproof advertising display
device. Broadly stated, the patent covers the combination of a telescopingly
nestable shopping cart of the standard type, having a top-hinged rear gate and a
rear receptacle, and an advertising holding mounted facing a user on the front
wall of the rear receptacle, including a rear display plate over the advertising
and a watertight seal such that liquids may not enter the advertising area.
Also protected is the above combination wherein the cover
plate is attached with a quick release hinge. It also includes an optional
calculator assembly supporting the calculator at an upward angle for viewing by
the user.
PRODUCTION AND MANUFACTURING
The early stage manufacturing of "THE LAST WORD"(R) has been
undertaken by Lesair, Inc. in San Diego, California. The manufacturer of the
final production runs has not been determined. Competitive bids are being
tendered at this time.
EMPLOYEES
As of December 31, 1998, PPMC had four full-time employees,
all of whom are members of management.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PPMC has sub-contracted out many of the "front-end" operations
to major companies that are specialists in their fields. Culver is providing the
marketing effort, LWM will deal with the sales of advertising and ITG will
handle the grocery chains (stores) for the contracting, installing and
maintenance of "THE LAST WORD"(R). The primary function for management will be
to monitor, evaluate, supervise and direct these companies in providing these
services to PPMC. PPMC is planning to warehouse "THE LAST WORD"(R) adholders at
a location near the manufacturer of "THE LAST WORD"(R). The printed ad inserts
will also be shipped
<PAGE>
5
to this centralized warehouse. The adholders will be assembled at this location
with the ad inserts installed. The assembled "THE LAST WORD"(R) adholders will
then be rewrapped and packaged for shipment to centralized locations throughout
the United States as directed by ITG. An office will be located at this
centralized warehouse with systems to track progress of the operations from
manufacturing to installation and maintenance of "THE LAST WORD"(R) throughout
the life of the contract with the stores and the advertisers.
ITEM 3. DESCRIPTION OF PROPERTY
At present, the Company does not own or lease any real
property.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
the beneficial ownership of the Company's Common Stock as of December 31, 1998
by (a) each person known by the Company to own beneficially more than 5% of the
Company's Common Stock, (b) each director of the Company who beneficially owns
Common Stock, (c) each of the persons named in the Summary Compensation Table
who beneficially owns Common Stock and (d) all officers and directors of the
Company as a group. Each named beneficial owner has sole voting and investment
power with respect to the shares owned.
Common Stock Percent of
Name and Address Beneficially Owned Common Stock
- ---------------- ------------------ ------------
John W. Hemmer 100,000 *
Jay Walker 50,000 *
Ethel W. Arnold 200,000 1.8%
Albert P. Folsom 3,337,500(1,2) 29.3%
All officers and directors as
a group (4 persons) 3,687,500(2,3) 32.4%
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following sets forth certain information with respect to
the directors and executive officers of PPMC:
Name Age Position
- ---- --- --------
Albert P. Folsom 59 President and Director
John W. Hemmer 71 Director
Jay Walker 76 Director
- ------------------------------
*less than 1%
1 Consists of shares held by Folsom Family Holdings. Mr. Folsom has a 10%
interest in such entity.
2 Does not include 3,337,500 shares owned by Amtel. Mr. Folsom is an officer of
Amtel.
3 Includes 3,337,500 shares owned by Folsom Family Holdings. See Footnote 1.
<PAGE>
6
Name Age Position
- ---- --- --------
Ethel V. Arnold 52 Controller
The Company's directors are elected at the annual meeting of
stockholders and hold office until their successors are elected and qualified.
The Company's officers are appointed annually by the Board of Directors and
serve at the pleasure of the Board. There is no family relationship among any of
PPMC's directors and executive officers.
The following is a brief summary of the business experience of
each of the directors and executive officers of PPMC:
ALBERT P. FOLSOM, PRESIDENT & DIRECTOR
Mr. Folsom is the inventor of the "THE LAST WORD"(R). He has
previous experience in other startup companies and the reorganization and
management of numerous private and public companies. Previously, he amalgamated
several companies that became Aricana Resources, a public company. He directed
Aricana's activities in research, development and marketing of medicinal
products. During this time, he also started a publishing company for medicinal
books and founded The American Health Research Association, a not-for-profit
California corporation.
JOHN W. HEMMER, DIRECTOR
Mr. Hemmer began his professional career at Chase Manhattan
Bank as an Investment Officer before joining Lazard Freres & Company as a Senior
Analyst, and then moved to Dempsey, Tegler & Company as Vice President of
Corporate Finance. He joined Bankers Trust as Vice President in charge of
venture capital and was a member of the research and investment management
committee. In 1987, he started his own broker/dealer firm, John W. Hemmer Inc.,
subsequently the name was changed to Westfalia Investments Inc. He maintained
his registered representative status until March 1995. Over the years Mr. Hemmer
has served as a Director and Senior Officer of a number of companies, including
Giant Portland Cement, Data Dimensions, Inc., Westrans, Inc., Camsco, Inc. and
Island Gem Enterprises Ltd. Since October 1989, he has been a Director and
Consultant for Sea Pride Industries, Inc. and since February 1996 as a Director
and Chief Financial Officer of Paradigm Medical Industries, Inc. and a Director
of International Heritage, Inc. since March 1997. Mr. Hemmer received a Bachelor
of Arts degree in Economics from Queen's College in 1951 and a Master of Science
degree in Banking and Finance from Columbia University Graduate School of
Business in 1952.
JAY WALKER, DIRECTOR
Mr. Walker has owned and operated many businesses, such as ADT
and an ad agency. He was appointed a Director of the National Youth Development
Foundation and is President of US Medical Research in Washington, DC.
<PAGE>
7
ETHEL V. ARNOLD CPA, COMPTROLLER
Mrs. Arnold has an extensive background in accounting for both
private and public companies. After graduating from San Diego State University
with honors and a B.S. degree in accounting, she joined the County of San Diego
where she reviewed the budgets of governmental agencies and apportioned funds to
same. In 1974, Mrs. Arnold joined Arthur Young and Company where she specialized
in tax and small business accounting. In 1979, Mrs. Arnold joined AeroJet
General as Assistant Tax Manager and then went to Travelodge International as
Vice-President and Controller. Duties at Travelodge included tax compliance,
general ledger and cash management. Since 1988, Mrs. Arnold has operated her own
accounting firm.
The following is a brief summary of the business experience of
the key personnel of Last Word Management Inc., which provides management
services to PPMC (see "Item 1. Description of Business--Marketing").
JOHN HALL, DIRECTOR AND PRESIDENT
Mr. Hall is originally from Indiana, where he attended Purdue
University as a Psychology Major. Immediately thereafter he spent four years of
active duty in the U.S. Army as a front-line Medical Technician. His
professional life has always revolved around the advertising industry in one
facet or another. He started with Columbia Broadcasting (CBS) Retail Division in
1976, having the position of Vice-President, Director of Marketing. In 1983, he
took on the position of Vice-President/Director of Transit for New York Subways
(until taken over by Gannett Outdoor). Those responsibilities included community
relations and promoting advertiser interest in their various products, from the
East Coast to the West Coast. At Gannett, his responsibilities increased from
senior account executive/major accounts, to national accounts manager and then
director of transit. While there he developed and maintained national and local
advertiser interests for the ultimate purchase of all Gannett products. On a
personal level, he sits on various fund raising committees such as the Orange
County Chapter of the March of Dimes, L.A. County Museum of Art, Huntington
Memorial Hospital, National Child Abuse Prevention and others.
ROGER JUNG, VICE-PRESIDENT OPERATIONS
Mr. Jung is President of MBA Management Corp., a firm
providing management, financial and property consulting to a variety of clients.
He obtained his Masters of Business Administration from Simon Fraser University
in British Columbia. His experience over the years includes being President of a
wholly owned subsidiary of Bow Valley Industries in
<PAGE>
8
Alberta, President of a laser manufacturing company and Engineering Manager for
Canadian Westinghouse Co. Ltd.
JOHN H. MATTICE, VICE-PRESIDENT.
Mr. Mattice is the Owner and President of Comcor Industries, a
company specializing in backlit aisle marker display systems with electronic
read outs for point of purchase advertising in supermarkets and drug stores.
Previously, he managed the electronic billboard system for Bank of America.
DAL BRICKENDEN, MARKETING CONSULTANT
Mr. Brickenden has devoted twenty-five years to a successful
career in marketing, advertising, new product development and management. He was
New Product manager at Canada Starch Best Foods in Montreal, Quebec, an
international division of International Multifoods of Minneapolis, Minnesota. He
headed up the Colgate Palmolive account in Canada as Account Supervisor with the
ad agency now known as FCB/Ronalds Reynolds Ltd., Toronto. Mr. Brickenden moved
to Vancouver, British Columbia in the 1970's as Director of Marketing for a
coating company and then joined with two partners to build one of Vancouver's
top ad agencies.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth information for the years ended
December 31, 1998, 1997 and 1996 concerning the compensation paid or awarded to
the Chief Executive Officer of PPMC. None of PPMC's executive officers earned
more than $100,000 during the years ended December 31, 1998, 1997 and 1996.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------- --------------- All Other
Name and Principal Position Year Salary Bonus Other Awards Compensation
- --------------------------- ---- ------ ----- ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Albert P. Folsom 1998 $72,000 0 0 0 0
President and Chief Executive 1997 $72,000 0 0 0 0
Officer 1996 $72,000 0 0 0 0
Officer
</TABLE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has no stated policy towards entering into
transactions with related parties. However, the Company's intention is that any
transactions with related parties in the future will be on terms no less
favorable to the Company than those obtainable from unrelated parties.
During the past two years, the Company has not entered into,
and does not propose to enter into, any transaction with a value in excess of
$60,000 with a director, executive officer, beneficial owner of 5% or more of
the Company's Common Stock, or members of any of such persons' immediate family.
<PAGE>
9
ITEM 8. LEGAL PROCEEDINGS
PPMC is not a party to (nor is its property the subject of)
any pending legal proceeding.
ITEM 9. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
The Company's Common Stock trades on the OTC Bulletin Board of
the National Association of Securities Dealers, Inc. ("NASD") under the symbol
"PPMC." The bid prices per share of the Common Stock for the period from June 9,
1998 (the first day the Common Stock was publicly traded) through June 30, 1998
ranged from a low of $4.50 per share to a high of $5.25 per share. During the
quarter ended September 30, 1998, the bid prices per share ranged from a low of
$1.50 per share to a high of $5.75 per share. During the quarter ended December
31, 1998, the bid prices per share ranged from a low of $1.00 per share to a
high of $5.00 per share. These quotations represent prices between dealers, do
not include retail mark ups, mark downs or commissions and do not necessarily
represent actual transactions.
The Company has never paid a cash dividend on its Common Stock
and does not anticipate paying dividends in the foreseeable future. It is the
present policy of the Company's Board of Directors to retain earnings, if any,
to finance the expansion of the Company's business. The payment of dividends in
the future will depend on the results of operations, financial condition,
capital expenditure plans and other cash obligations of the Company and will be
at the sole discretion of the Board of Directors.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
In July 1996, the Company (then known as Leghorn, Inc.) issued
an aggregate of 4,700,000 shares of Common Stock to 12 individuals for an
aggregate consideration of $10,000.
On July 16, 1997, the Company merged with Purchase Point Media
Corporation, a Nevada corporation ("PPMC (Nevada)"). In connection with such
merger, the Company issued 6,675,000 shares of Common Stock to the two
stockholders of PPMC (Nevada), both of whom were accredited investors as defined
in Rule 501 of Regulation D under the Securities Act of 1933, as amended (the
"Securities Act").
The Company relied upon the exemption from registration
contained in Rule 504 of Regulation D under the Securities Act in issuing all of
the foregoing shares.
On August 12, 1998, the Company entered into an agreement with
Dorian Capital Corp. ("Dorian") pursuant to which Dorian subscribed for 500,000
units, each consisting of one share of Common Stock and one five-year warrant to
purchase Common Stock at an exercise price of $7.00 per share, for a
subscription price of $7.00 per unit. Dorian had a 90-day period to pay the
subscription price , which period has been extended for an additional 90 days.
To date, Dorian has paid $150,000 of the subscription price.
The Company is relying upon the exemption contained in Rule
506 of Regulation D under the Securities Act in issuing the foregoing securities
to Dorian.
<PAGE>
10
ITEM 11. DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 100,000,000
shares of Common Stock, no par value. At August 15, 1998, there were 11,375,000
shares of Common Stock outstanding.
The following description of certain matters relating to the
Company's Common Stock is a summary and reference should be made to the
Company's Articles of Incorporation and By-laws, copies of which have been filed
as exhibits to this Form 10-SB.
Each holder of record of Common Stock is entitled to one vote
for each outstanding share of Common Stock owned by such holder, and is not
entitled to cumulative voting for the election of directors and does not have
preemptive rights. The issued and outstanding shares of Common Stock are validly
issued, fully paid and nonassessable. All shares of Common Stock have equal
rights and are entitled to receive ratably such dividends, if any, as the Board
of Directors may declare from time to time out of funds legally available
therefor. Upon liquidation of the Company, and after payment or provision for
payment of all of the Company's debts and obligations, the holders of the Common
Stock will share ratably in the net assets, if any, available for distribution
to holders of Common Stock upon liquidation.
The transfer agent for the Common Stock is Signature Stock
Transfer, Inc., Dallas, Texas.
The Company is governed by the provisions of Sections 302A.671
and 302A.673 of the Minnesota Business Corporation Act. These anti-takeover
provisions may eventually operate to deny stockholders the receipt of a premium
for their Common Stock. Section 302A.671 basically provides that shares of a
corporation acquired in a "control share acquisition" have no voting rights
unless voting rights are approved by the stockholders in a prescribed manner. A
"control share acquisition" is generally defined as an acquisition of beneficial
ownership of shares that would, when added to all other shares beneficially
owned by the acquiring person, entitle the acquiring person to have voting power
of 20% or more in the election of directors. Section 302A.673 prohibits a public
corporation from engaging in a "business combination" with an "interested
shareholder" for a period of four years after the date of the transaction in
which the person became an "interested shareholder," unless the "business
combination" is approved in a prescribed manner. A "business combination"
includes mergers, asset sales and other transactions. An "interested
shareholder" is a person who is the beneficial owner of 10% or more of the
corporation's voting stock. Reference is made to the detailed terms of Sections
302A.671 and 302A.673 of the Minnesota Business Corporation Act.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Minnesota Statutes, Section 302A.521, contain an extensive
indemnification provision which requires mandatory indemnification by a
corporation of any officer, director and affiliated person who was or is a
party, or who is threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a member, director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a
<PAGE>
11
member, director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including attorneys' fees, and against judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted, or failed to act, in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. In some instances a court
must approve such indemnification.
ITEM 13. FINANCIAL STATEMENTS
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
JUNE 30, 1998
<PAGE>
PURCHASE POINT MEDIA CORPORATION
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Independent Auditors' Report 1
Financial Statements:
Balance Sheets 2
Statement of Operations 3
Statement of Stockholders' Equity
(Deficiency) 4 - 5
Statement of Cash Flows 6 - 7
Notes to Financial Statements 8 - 14
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Purchase Point Media Corporation
We have audited the accompanying balance sheet of Purchase Point Media
Corporation (a development stage company) (the "Company") as of June 30, 1998
and 1997, and the related statements of operations, stockholders' deficiency and
cash flows for each of the three years ended June 30, 1998 and for the period
June 28, 1996 (Date of Formation) through June 30, 1998 (not presented herein).
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An Audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements referred to above present fairly, in
all material respects, the financial position of Purchase Point Media
Corporation at June 30, 1998 and 1997, and the results of their operations and
their cash flows for each of the years ended June 30, 1996 and for the period
June 28, 1996 (Date of Formation) through June 30, 1998, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The company is a development stage enterprise
engaged in development of selling of advertising space to national advertisers
on grocery cart advertising displays. As more fully explained in Note 1 of the
financial statements, the Company needs to obtain additional financing to
fulfill its developmental activities and achieve a level of sales adequate to
support its cost structure. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans are also
described in Note 1. The accompanying financial statements do not include any
adjustments that might result from the outcome of these uncertainties should the
Company be unable to continue as a going concern.
WIENER, PENTA & GOODMAN, P.C.
Certified Public Accountants
November 30, 1998 except for Note 1
which is as of January 25, 1999
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
------
<TABLE>
<CAPTION>
June 30, December 31, 1998
1998 1997 (Unaudited)
---- ----
<S> <C> <C> <C>
Current Assets:
Cash $ 0 $ 140 $ 1,327
Prepaid expenses 11,305 -- --
------- ------- -------
Total Current Assets 11,305 140 1,327
Other Assets 28,439 31,543 26,887
Patents and trademarks
Other -- 10,000 --
------- ------- -------
Total Other Assets 28,439 41,543 26,887
------- ------- -------
TOTAL ASSETS $39,744 $41,683 $28,214
------- ------- -------
</TABLE>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
<TABLE>
Current Liabilities:
<S> <C> <C> <C>
Accounts payable and accrued expenses $ 81,687 $ 68,616 $ 102,226
Deposit -- -- 182,000
Due to officer/shareholder 79,624 78,414 68,266
Due to related parties 440,592 314,093 483,681
--------- --------- ---------
Total Liabilities 601,903 461,123 836,173
--------- --------- ---------
Stockholders' Deficiency:
Preferred stock; no par value - authorized
50,000,000 shares outstanding 2,000 shares,
at redemption value 170 170 170
Common stock, no par value - authorized,
100,000,000 shares, issued and outstanding
11,375,000 shares 18,500 18,500 18,500
Deficit accumulated during development stage (580,829) (438,110) (826,629)
--------- --------- ---------
Total Stockholders' Deficiency (562,159) (419,440) (807,959)
--------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY $ 39,744 $ 41,683 $ 28,214
--------- --------- ---------
</TABLE>
See notes to financial statements.
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Period June
28, 1996
For the Six (Date of
Months ended Formation)
For the Years Ended June 30, December 31, through
---------------------------- ------------ December 31,
1998 1997 1996 1998 1997 1998
---- ---- ---- ---- ---- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Costs and Expenses:
General and administrative expenses $ 110,389 $ 79,575 $ 332,760 $ 225,410 451,089 $ 748,134
Interest expense 29,226 19,775 6,000 18,838 10,977 73,839
Amortization 3,104 -- -- 1,552 -- 4,657
----------- ----------- ----------- ----------- ----------- -----------
Net loss $ 142,719 $ 99,350 $ 338,760 $ 245,800 $ 62,066 $ 826,629
=========== =========== =========== =========== =========== ===========
Loss per common share - basic $ .01 $ .01 $ .03 $ .02 $ -- $ --
=========== =========== =========== =========== =========== ===========
Loss per common share -diluted $ .01 $ .01 $ .03 $ .02 $ -- $ --
=========== =========== =========== =========== =========== ===========
Weighted average number of common shares
equivalents outstanding - basic 11,375,000 11,375,000 11,375,000 11,375,000 11,375,000 --
=========== =========== =========== =========== =========== ===========
Weighted average number of common shares
and equivalents outstanding - diluted 11,375,000 11,375,000 11,375,000 11,375,000 11,375,000 --
=========== =========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIENCY
PERIOD JUNE 28, 1996 (DATE OF FORMATION) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
Deficit
Accumulated
During the
Preferred Shares Common Stock Development
---------------- ------------ Stage
Shares Amount Shares Amount (Deficit) Total
---------- ---------- ---------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 28, 1996
(Date of Formation) -- $ -- -- $ -- $ -- $ --
Issuance of common stock at
June 28, 1996 (at $.009 per share) -- -- 1,175,000 10,000 -- 10,000
Retroactive effect of pooling of
interest acquisition (valued at
$.005 per share) -- -- 1,668,750 8,500 -- 8,500
Four-for-one stock split -- -- 8,531,250 -- -- --
Issuance of stock at June 30, 1996
for consulting services (valued at
$.09 per share) 1,000 85 -- -- -- 85
Issuance of stock at June 30, 1996
for transfer agent services
(valued at $.09 per share) 1,000 85 -- -- -- 85
Net loss, from June 28, 1996 (Date of
Formation) through June 30, 1996 -- -- -- -- (338,760) 338,760
---------- ---------- ---------- ---------- ---------- ----------
Balance, June 30, 1996 2,000 170 11,375,000 18,500 (338,760) 320,090
</TABLE>
See notes to financial statements
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIENCY
PERIOD JUNE 28, 1996 (DATE OF FORMATION) THROUGH DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
Deficit
Accumulated
Preferred Shares Common Stock During the
---------------- ------------ Development
Shares Amount Shares Amount Stage Total
---------- ---------- ---------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net loss year ended June 30, 1997 -- -- -- -- (99,350) (99,350)
------- -------- ---------- ------- -------- --------
Balance, June 30, 1997 2,000 170 11,375,000 18,500 (438,100) (419,440)
------- -------- ---------- ------- -------- --------
Net loss year ended June 30, 1997 -- -- -- (142,719) (142,719)
------- -------- ---------- ------- -------- --------
Balance, June 30, 1997t 2,000 170 11,375,000 18,500 (580,829) (562,159)
------- -------- ---------- ------- -------- --------
Net loss, six months ended June 30, 1998 -- -- -- (245,800) (245,800)
------- -------- ---------- ------- -------- --------
Balance, December 31, 1998 (unaudited) 2,000 $ 170 11,375,000 $18,500 $(826,629) $807,959
======= ======== ========== ======= ========= ========
</TABLE>
See notes to financial statements
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
For the Six
Months ended
For the Years Ended June 30, December 31,
---------------------------- ------------
Period June 28,
1996 (Date of
Formation)
through
December 31,
1998 1997 1996 1998 1997 1998
---- ---- ---- ---- ---- --------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Costs flows from operating activities:
Net (loss) $(142,719) $(99,350) $(338,760) $(245,800) $(62,066) $(826,629)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Amortization 3,104 -- -- 1,552 -- 4,656
Changes in operating assets and liabilities:
(Increase) decrease in other assets 10,000 (14,900) (8,143) -- -- (13,043)
(Increase) decrease in prepaid expenses (11,305) -- -- 11,305 -- --
Increase in accounts payable and accrued
expenses 13,071 5,000 63,616 20,539 10,977 102,226
------ ----- ------ ------ ------ -------
Net Cash (Used in) Operating Activities (127,849) (109,250) (283,287) (212,404) (51,089) (732,790)
--------- --------- --------- --------- -------- ---------
Cash flows from financing activities:
Proceeds from related party 126,499 117,170 178,423 168,348 51,089 590,440
Proceeds from officer/stockholder 1,210 -- 86,334 4,038 -- 91,582
Payments to officer/stockholder -- (7,920) -- (15,396) -- (23,316)
Payments to related parties -- -- -- (125,259) (125,259)
Deposit received for issuance of shares 182,000 -- 182,000
</TABLE>
See notes to financial statements.
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOW (CONTINUED)
<TABLE>
<CAPTION>
For the Six
Months ended
For the Years Ended June 30, December 31,
---------------------------- ------------
Period June 28,
1996 (Date of
Formation)
through
December 31,
1998 1997 1996 1998 1997 1998
---- ---- ---- ---- ---- --------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Proceeds from sale of common stock -- -- 18,500 -- -- 18,500
Proceeds from sale of preferred stock $ -- $ -- 170 $ -- $ -- 170
======== ======== -------- ======== ======== -------
Net Cash Provided by Financing
Activities 127,709 109,250 283,427 213,731 51,089 734,117
-------- -------- -------- -------- --------- -------
Net increase (decrease) in cash (140) -- 140 1,327 -- 1,327
Cash - beginning of period 140 140 $ -- $ -- $ -- $ --
-------- -------- ======== ======== ========= =======
Cash - end of period $ -- $ 140 $ 140 $ 1,327 $ -- $ 1,327
======== ======== ======== ======== ========= =======
Supplementary Information:
Cash paid during the year for:
Interest $ 259 $ -- $ -- $ 551 $ -- --
======== ======== ======== ======== ========= ========
Income taxes $ -- $ -- $ -- $ -- $ -- --
======== ======== ======== ======== ========= ========
Non-cash investing activities:
Acquisition of business
Fair value of assets acquired $ -- $ - $ -- $ -- $ -- $ --
======== ======== ======== ======== ========= ========
Forgiveness of liability $ 25,000 $ - $ -- $ 25,000 $ -- $ --
======== ======== ======== ======== ========= ========
</TABLE>
See notes to financial statements.
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998, 1997 AND 1996
AND PERIOD JUNE 28, 1996 (DATE OF FORMATION)
THROUGH JUNE 30, 1998
(INFORMATION FOR DECEMBER 31, 1998
AND 1997 IS UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - Purchase Point Media Corporation (the "Company")
formerly Leghorn, Inc., was incorporated on June 28, 1996 in the State
of Minnesota. The Company's primary planned activities are the selling
of advertising space to national advertisers on grocery cart
advertising displays. At December 31, 1998, operations had not yet
commenced and no revenue has been derived; accordingly, the Company is
considered a development stage enterprise. There is no assurance that
the selling of advertising space to national advertisers will be
developed or that the Company will achieve a profitable level of
operation.
In July 1997, the Company merged with Purchase Point Media Corporation,
with the issuance of 6,675,000 of 144 restricted common stock shares.
The Company owns a patented grocery cart advertising display device and
plans to sell the advertising space to national advertisers.
The development activities of the Company are being financed through
advances by a major shareholder. The Company's continued existence is
dependent upon its ability to obtain needed working capital through
additional equity and/or debt financing, and the commencement of its
planned principal operations. Management is actively seeking additional
capital to ensure the continuation of its development activities.
However, there is no assurance that additional capital will be
obtained. These matters raise substantial doubt about the ability of
the Company to continue as a going concern.
ESTIMATES AND ASSUMPTIONS - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period.
Significant estimates include the valuation of stock issued to acquire
companies. Actual results could differ in these estimates.
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998, 1997 AND 1996
AND PERIOD JUNE 28, 1996 (DATE OF FORMATION)
THROUGH JUNE 30, 1998
(INFORMATION FOR DECEMBER 31, 1998
AND 1997 IS UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
PATENTS AND TRADEMARKS - Patent and trademark costs are stated at cost
less accumulated amortization and amortized using the straight-line
method over their 17 and 10-year lives, respectively, when obtained or
expensed if not obtained. The carrying value of intangible assets will
be periodically reviewed by the Company to ensure that impairments are
recognized when the future operating cash flows expected to be derived
from such intangible assets are less than carrying value.
DEVELOPMENT COSTS - Development costs are expensed as incurred.
EARNINGS PER COMMON SHARE - In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
(SFAS) No. 128 "Earnings Per Share," which requires companies to
present basic earnings per share (EPS) and diluted earnings per share,
instead of the primary and fully diluted EPS that was required. The new
standard requires additional informational disclosures, and also makes
certain modifications to the currently applicable EPS calculations
defined in Accounting Principles Board No. 15.
Basic loss per common share is computed by dividing net earnings by the
weighted average number of common shares outstanding during the year.
Diluted earnings per common share are computed by dividing net earnings
by the weighted average number of common and common stock equivalent
shares outstanding during the year. The Company does not have any
common stock equivalents at June 30, 1998, but they would be excluded
from the loss per share calculation because their effect would be
anti-dilutive.
FAIR VALUE OF FINANCIAL INSTRUMENTS - For financial instruments
including cash, accrued expenses and short-term debt, it was assumed
that the carrying amount approximated fair value because of the short
maturities of such instruments.
UNAUDITED INTERIM FINANCIAL STATEMENTS - The financial statements as of
December 31, 1998 and for the six months ended December 31, 1998 and
1997 include, in the opinion of management, all adjustments consisting
only of normal recurring adjustments, necessary for a fair presentation
of the financial position and results of operations for
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998, 1997 AND 1996
AND PERIOD JUNE 28, 1996 (DATE OF FORMATION)
THROUGH JUNE 30, 1998
(INFORMATION FOR DECEMBER 31, 1998
AND 1997 IS UNAUDITED)
these periods. The results for the interim period ended December 31,
1998 are not necessarily indicative of the results that may be expected
for the entire year.
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
RECLASSIFICATION - Certain reclassifications have been made to prior
year balances in order to conform with the current year's presentation.
2. MERGER
On and effective July 16, 1997 the Company merged with Purchase Point
Media Corporation with the issuance of 6,675,000 of 144 restricted
common shares in exchange for all of the common.
The merger constituted a tax-free reorganization and has been accounted
for as a pooling of interests under Accounting Principles Board Opinion
No. 16. Accordingly, all prior period financial statements presented
have been restated to include the results of operations, financial
position and cash flows of Purchase Point Media Corporation as though
it had always been a part of the Company.
3. OTHER ASSETS
June 30, December 31,
-------- ------------
1998 1997 1998
---- ---- ----
Patent and trademark cost $31,543 $31,543 $31,543
Less accumulated amortization 3,104 -- 4,656
------- ------- -------
$28,439 $31,543 $26,887
======= ======= =======
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998, 1997 AND 1996
AND PERIOD JUNE 28, 1996 (DATE OF FORMATION)
THROUGH JUNE 30, 1998
(INFORMATION FOR DECEMBER 31, 1998
AND 1997 IS UNAUDITED)
4. INCOME TAXES
At December 31, 1998 the Company has a net operating loss ("NOL")
carryforward of approximately $827,000 for financial reporting purposes
and $686,000 for tax reporting purposes. The Company has not reflected
any benefit of such net operating loss carryforward in the accompanying
financial statements in accordance with Financial Accounting Standards
Board Statement No. 109 as the realization of this deferred tax benefit
is not more than likely. The NOL carryforward for tax purposes expires
in the year 2014. The difference between financial reporting and tax
purposes results from temporary differences caused by certain expenses
for tax purposes as required by the Internal Revenue Code Section 195.
The Tax Reform Act of 1986 provided for a limitation on the use of NOL
carryforwards, following certain ownership changes. As a result of
transactions in the Company's common stock during 1997 a change in
ownership of greater than fifty (50%) percent as defined, may have
occurred. In addition, the Company is contemplating a proposed equity
financing of common stock. Under such circumstances, the potential
benefits from utilization of tax carryforward may be substantially
limited or reduced on an annual basis.
5. ACQUISITION
On and effective August 16, 1996, the Company purchased Runestone
Manufacturing of Kensington, Inc. for 1,200,000 of 144 restricted
common shares. By mutual agreement of both companies, the purchase was
rescinded effective as of the same date.
6. PREFERRED STOCK
The authorized number of preferred shares is 50,000,000, of which 2,000
shares are issued and outstanding as of December 31, 1998. The
preferred stock was issued on June 14, 1996. Preferred stock is
convertible into ten common shares. The preferred shares are stated at
a liquidated value. The preferred shares do not have a priority to
common shares on a liquidation of the Company and, thus, are stated at
a liquidated value based on total equivalent common shares outstanding.
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998, 1997 AND 1996
AND PERIOD JUNE 28, 1996 (DATE OF FORMATION)
THROUGH JUNE 30, 1998
(INFORMATION FOR DECEMBER 31, 1998
AND 1997 IS UNAUDITED)
7. RELATED PARTY TRANSACTIONS
Short-term debt includes advances from Amtel Communications, Inc.
("Amtel"). Amtel owns 29% of the common stock of the Company. The
Company owed Amtel $483,681, $440,592 and $314,093 at December 31,
1998, June 30, 1998 and 1997, respectively. Interest expense on the
short-term debt was $15,454, $24,455, $14,775 and $0 for the three
months ended December 31, 1998 and years ended June 30, 1998, 1997 and
1996, respectively, and $54,684 for the period June 28, 1996 (Date of
Formation) through December 31, 1998.
The Company entered into an agreement with Albert Folsom ("Folsom"),
the Company's President and Chief Executive Officer, for consulting
services to be performed on behalf of the Company. Folsom received
consulting fees in the amount of $36,000 and $72,000 for the period and
per year for the period ending December 31, 1998 and the years ending
June 30, 1998, 1997 and 1996 and $252,000 for the period June 28, 1996
(Date of Formation) through December 31, 1998, respectively. Interest
expense was $2,751, $5,000, $5,000 and $6,000 for the period ended
December 31, 1998 and the years ended June 30, 1998, 1997 and 1996,
respectively, and $18,751 for the period June 28, 1996 (Date of
Formation) through December 31, 1998.
8. COMMITMENTS AND CONTINGENCIES
LEGAL RETAINER
a) On July 1, 1997, (an officer/stockholder of the Company) exchanged
5,000 shares of Purchase Point Media Corporation common stock owned by
the officer/stockholder for legal service valued at $25,000. If such
shares are sold for less than $25,000, Purchase Point Media Corporation
will pay any difference to the law firm, provided that such shares are
sold through Westminster Securities Corporation.
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998, 1997 AND 1996
AND PERIOD JUNE 28, 1996 (DATE OF FORMATION)
THROUGH JUNE 30, 1998
(INFORMATION FOR DECEMBER 31, 1998
AND 1997 IS UNAUDITED)
8. COMMITMENTS AND CONTINGENCIES (continued)
b) On September 15, 1998, the Company entered into an agreement with
International Trade Group, L.L.C. ("ITG") to sell 27,000 stores on the
concept of installing advertising on their grocery carts.
Compensation for services will be on a per cart basis. The Company will
pay ITG a sales commission of $1.00 per cart for each contract signed
and approved, an installation fee of $2.00 per cart, and an advertising
maintenance fee of $0.50 per cart. On an annual basis, the Company will
pay ITG a sales maintenance commission of $0.50 per cart.
The Company will issue ITG 300,000 shares of the Company's common stock
at $5.00 per share. In addition, a shareholder of the Company will
issue an option to ITG for 300,000 shares at $1.00 per share,
exercisable within a three (3) year period. Each of the options will be
issued in three equal 100,000 share blocks, with one bock being
exercisable in whole or in part after each of the first, second and
third years of this agreement, subject to ITG having met its
installation targets.
Commissions will be payable on all installed and serviced carts during
the duration of the contract. In the event of a premature termination,
ITG wants a one (1) year termination fee which would be the greater of
(a) fees and commissions due for a year or (b) $1,000,000 as full and
final compensation.
The Company will be fully responsible for the payment of the quarterly
rental to the stores for the use of their carts. The amount payable to
the stores will be ten (10%) percent of gross advertising revenues.
c) On August 14, 1998, the Company entered into an agreement with
Culver Associates, Ltd.("Culver"). Culver will study the Purchase Point
Media business, provide plans and place advertising and related
material as needed to execute marketing plans. Compensation to Culver
is a monthly fee of $25,000 for the first three (3) months. Culver will
also receive the standard fifteen (15%) percent agency commission for
purchases of media time and space.
<PAGE>
PURCHASE POINT MEDIA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998, 1997 AND 1996
AND PERIOD JUNE 28, 1996 (DATE OF FORMATION)
THROUGH JUNE 30, 1998
(INFORMATION FOR DECEMBER 31, 1998
AND 1997 IS UNAUDITED)
d) On August 12, 1998 the Company entered into an agreement for the
private sale of its common stock with Dorian Capital Corp. ("Dorian").
Dorian has subscribed for 500,000 shares of common stock at $7.00 per
share and 500,000 redeemable common stock purchase warrants at $7.00
per share issued by the Company. The expiration date of the warrants
shall be the earlier of (1) the date which is the last day of the
five-year period commencing on the Initial Warrant Exercise date or (2)
such later date as the Company may at its option determine. The
subscriber shall have ninety (90) days from the date first above
written to provide the Company with the proceeds of the subscription
funds. On November 12, 1998 the period was mutually extended for an
additional ninety (90) days. At the end of the subscription period, the
Company will issue to the subscriber a stock and warrant certificate
representing those units that have been fully paid for. As of January
25, 1999, the Company has received $237,000.
<PAGE>
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not applicable.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) The following financial statements are filed with this
Form 10-SB:
Independent Auditors' Report
Balance Sheets, June 30, 1998 and 1997 and December 31,
1998 (Unaudited)
Statement of Operations, years ended June 30, 1998, 1997,
1996, the Period June 28, 1996 (Date of Formation)
through June 30, 1998 and the six months ended December
31, 1998 (Unaudited) and 1997 (Unaudited)
Statement of Stockholders' Equity (Deficiency), years ended
June 30, 1998, 1997, 1996, the Period June 28, 1996
(Date of Formation) through June 30, 1998 and the six
months ended December 31, 1998 (Unaudited)
Statement of Cash Flows, years ended June 30, 1998, 1997,
1996, the Period June 28, 1996 (Date of Formation)
through June 30, 1998 and the six months ended December
31, 1998 (Unaudited) and 1997 (Unaudited)
Notes to Financial Statements
(b) The following exhibits are filed with this Form 10-SB:
3(a) Certificate of Incorporation
3(b) By-laws
10(a) Agreement dated September 15, 1998 between
International Trade Group, L.L.C. and the
Registrant
10(b) Agreement dated August 14, 1998 between Culver
Associates, Ltd. and the Registrant
10(c) Agreement dated August 12, 1998 between Dorian
Capital Corp. and the Registrant
10(d) Agreement dated April 25, 1997 between Roger Jung
(assigned to Last Word Management, Inc.) and the
Registrant
27 Financial Data Schedule
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: February 1, 1999
PURCHASE POINT MEDIA CORPORATION
By /s/ Albert P. Folsom
-----------------------------------
Albert P. Folsom
President and Chief Executive Officer
<PAGE>
ARTICLES OF INCORPORATION
OF
LEGHORN, INC.
The undersigned incorporator, being a natural person, 18 years of age or
older, in order to form a corporate entity under Minnesota Statutes, Chapter
302A, hereby adopts the following Articles of Incorporation.
ARTICLE I
The name of the corporation is Leghorn, Inc.
ARTICLE II
The registered office of the corporation is located at 320 E. Main St.,
Anoka, Minnesota 55503, and the registered agent at that address is Carla Wirth.
ARTICLE III
The name and address of the incorporator is Gary A. Larvinson, 11409 91st
Street, Clear Lake, Minnesota.
ARTICLE IV
The corporation is authorized to issue and aggregate total of 150,000,000
shares.
ARTICLE V
In addition to the powers granted to the Board of Directors by Minnesota
Statutes, Chapter 302A, the Board of Directors of this corporation shall have
the
<PAGE>
power and authority to fix by resolution any designation, class, series, voting
power, preference, right, qualification, limitation, restriction, dividend, time
and place of redemption, and conversion right with respect to any stock of the
corporation.
ARTICLE VI
Any action required or permitted to be taken at any meeting of the Board of
Directors may be taken without a meeting by written action signed by a majority
of the Board of Directors then in office, except as to those matters which
require shareholder approval, in which case the written action shall be signed
by all members of the Board of Directors then in office.
ARTICLE VII
No holder of stock of this corporation shall be entitled to any cumulative
voting rights.
ARTICLE VIII
No holder of stock of the corporation shall have any preferential,
pre-emptive, or other rights of subscription to any shares of any class or
series of stock of this corporation allotted or sold or to be allotted or sold
and now or hereafter authorized, or to any obligations or securities convertible
into any class or series of stock of this corporation, nor any right of
subscription to any part thereof.
IN WITNESS WHEREOF, the Incorporator has executed these Articles of
Incorporation, this 13th day of June, 1996.
/s/ Gary A. Larvinson
----------------------------------
Gary A. Larvinson
STATE OF MINNESOTA )
)
COUNTY OF HENNEPIN )
Subscribed and sworn to before me
this 13th day of June, 1996.
/s/ Connie I. Krinke
- -------------------------------
Notary Public
ARTICLES OF AMENDMENT
OF
LEGHORN, INC.
The undersigned corporation hereby adopt the following Articles of
Amendment, which replace the following Articles:
ARTICLE I
The name of the corporation is Purchase Point Media Corporation
ARTICLE IX
Minnesota Statutes sections 302A.671 (Control share acquisitions), 302A.673
(Business combinations) and 302A.675 (Takeover offer; fair price) shall not
apply to this corporation.
IN WITNESS WHEREOF, this amendment to the Articles of Incorporation is
executed this 25th day of April 1997.
---------------------------------------------
The amendment was adopted by the shareholders, on the 25th day of April,
1997.
---------------------------------------------
BY-LAWS
OF
PURCHASE POINT MEDIA CORPORATION
ARTICLE I
MEETINGS OF SHAREHOLDERS
1.1 REGULAR MEETINGS. Regular meetings of shareholders may be called by the
Chief Executive Officer, the Secretary, the Board of Directors, or by
shareholder demanded in accordance with Minnesota Statutes Section
302A.431, subdivision 2. No meeting shall be designated a regular meeting
unless specifically described as such in the notice of meeting or unless
all the shareholders are present in person or by proxy, and none of them
objects to this designation.
1.2 SPECIAL MEETINGS. Special meetings of the shareholders may be called for
any purpose or purposes at any time by the Chief Executive Officer, Chief
Financial Officer, two or more directors, or by shareholder demand in
accordance with Minnesota Statutes, Section 203A.433, subdivision 2.
1.3 TIME AND PLACE OF SHAREHOLDER MEETING. Except as otherwise provided by
statute, any meeting of shareholders shall be held on the date and at the
time and place fixed by the Chief Executive Officer or the Board of
Directors of the corporation.
1.4 NOTICE OF SHAREHOLDER MEETING. Except as otherwise provided by statute,
written notice of the date, time, and place of any meeting of shareholders
shall be given to every holder of voting shares at such address as appears
on the stock book of the corporation at least five days prior to the
meeting if by mail, or two days prior to the meeting if by telex,
telegram, or in person.
1.5 VOTING. Except where a greater percentage is required by statute, the
shareholders shall take action by the affirmative vote of the holders of a
majority of the votes of the shares present.
<PAGE>
ARTICLE II
DIRECTORS
2.1 NUMBER, TERM OF OFFICE. The number of directors of the coporation shall be
as determined from time to time by the shareholders. Directors need not be
shareholders. Each director shall hold office for an indefinite term, not
to exceed five years, that expires at the regular meeting of shareholders
next held after the director's election and until a successor is elected
and has qualified, or until the earlier death, resignation, removal, or
disqualification of the director.
2.2 REMOVAL. The Board of Directors or the shareholders may remove any
director of the corporation at any time, for cause or without cause. New
directors may be elected at a meeting at which directors are removed.
2.3 BOARD MEETINGS, NOTICE. The Chief Executive Officer (if a director), the
Chairman of the Board of Directors (if one is elected) of Directors
comprising at least one third of the number of directors then in office
may call a Board meeting by giving five days notice if by mail, or two
days notice if by telephone, telex, telegram, or in person, to all
directors of the day or date and time of the meeting. Meetings of the
Board of Directors may be held at the day or date, time, and place have
been announced at a previous meeting of the Board, or if a meeting
schedule is adopted by the Board, no notice is required. In absence of a
designation by the Board of Directors, Board meetings shall be held at the
principal executive offices of the corporation.
2.4 (a) ADVANCE WRITTEN CONSENT OR OPPOSITION. Any member of the Board or a
committee thereof, as the case may be, may give advance written consent or
opposition to a proposal to be acted on at a Board or committee meeting.
If a director or committee member is not present at the meeting, advance
written consent or opposition to a proposal does not constitute presence
for the purpose of determining whether a quorum exists, but such advance
written consent or opposition shall be a vote in favor of or against the
proposal or resolution acted upon at the meeting is substantially the same
or has substantially the same effect as the proposal or resolution to
which the member of the Board or committee has consented, or objected.
(b) ACTION WITHOUT MEETING. Any action, other than an action requiring
shareholder approval, may be taken by written action signed by the number
of directors that would be required to take the same action at a meeting
of the Board at which all directors were present. An action
<PAGE>
requiring shareholder approval required or permitted to be taken at a Board
meeting may be taken by written action signed by all the directors. Any such
written action is effective when signed by the required number of directors,
unless a different effective time is provided in the written action. When
written action is taken by less than all directors, all directors shall be
notified immediately of its text and effective date. Failure to provide the
notice does not invalidate the written action. A director who dares not sign or
consent to the written action has no liability for the action or actions taken.
ARTICLE III
OFFICERS
3.1 ELECTION; TERMS OF OFFICE; REMOVAL. The Board of Directors shall elect a
Chief Executive Officer and Chief Financial Officer, and may elect such
other officers as it may deem necessary for the operation and management
of the corporation, each of whom shall have the duties and
responsibilities incident to the offices which they hold or as determined
by the Board. Officers need not be directors or shareholders. Without
limiting the foregoing, the Board may elect a Chairman of the Board,
President, one or more Vice Presidents, a Treasurer, a Secretary and such
assistant officers as it may designate with titles to describe their
duties, functions or special responsibilities. Officers shall hold office
at the will of the Board for an indefinite term until their successors are
elected and qualified. Any officer elected or appointed by the Board of
Directors may be removed by the Board at any time with or without cause.
ARTICLE IV
AMENDMENTS
4.1 Subject to the power of shareholders to adopt, amend, or repeal these
Bylaws as provided in Minnesota Statutes, Section 302A.181, Subdivision 3,
any Bylaw may be amended or repealed by the Board of Directors at any
meeting, provided that, after adoption of the initial Bylaws, the Board
shall not adopt, amend, or repeal a Bylaw fixing a quorum for meetings of
shareholders, prescribing procedures for removing directors for meetings
of shareholders, prescribing procedures for removing directors of filling
vacancies in the Board, or fixing the number of directors or their
classifications, qualifications, or terms of office. The Board may adopt
or amend a Bylaw to increase the number of directors.
<PAGE>
ARTICLE V
INDEMNIFICATION
S.1 The corporation shall indemnify persons for such expenses and liabilities
in such manner, under such circumstances, and to the extent required by
Minnesota Statutes, Section 302A.521.
AGREEMENT
AGREEMENT dated as of September 15, 1998 between (but effective upon
the first payment hereunder) Purchase Point Media Corporation, a Minnesota
corporation having its principal office at 2832 Bellevue Avenue, West Vancouver,
BC V7V 1E8, Canada (the "Company"), and ITG, LLC, an Oregon limited liability
company having its principal office at 670.3 S.W. Sandburg Road, Tigard, Oregon,
97223, U.S.A. (the "Contractor").
WITNESSETH
WHEREAS, the Company owns a patented grocery cart display unit
("display unit") called "The Last Word"(R) and comprised of the Display panel
mid Advertising insert (each as hereinafter defined) that attaches to the back
of the baby seat on store shopping carts, and it is the Company's intention to
have display units installed in store shopping carts nationwide as expeditiously
as possible; and
WHEREAS, the Contractor is a facilitator of direct and indirect
services to stores throughout the United States and is desirous of utilizing its
existing direct and indirect infrastructure to provide the services being sought
by the Company.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.01. The term "Display panel" means a patented, plastic,
weatherproof, highly durable, Point of Purchase (POP) assembly, consisting of a
clear plastic front and an opaque solid white back, which when assembled
together, form a 7 inches high x 16 inches wide x 1/4 inch thick panel.
1.02. The term "Advertising insert" means a ! 5 inch by 6 inch four
color printing consisting of 10, 3 inch by 3 inch {approximately) advertisements
displayed in two rows of five, sized for tilting snugly inside the Display
panel.
1.03. The term "Store" refers to one of the 27,000 stores,
supermarkets, superstores, shopping clubs and the like capable of being serviced
by the Contractor on a direct and/or indirect basis.
1.04. The term "opener" means the proprietary hand tool fabricated for
the Company and required for the opening of the display units.
<PAGE>
1.05. The term "Phase One" refers to the first six months following
the date of this Agreement. During Phase One, the Company and the Contractor
will evaluate developmental, execution and financial requirements of the
Company's project. It is agreed that regular communication will be maintained
between the Company and the Contractor during Phase One. At the culmination of
Phase One, the Company and the Contractor agree to meet for the purpose of
discussing all relevant information pertaining to the results of Phase One, with
the understood goal being the development of mutually agreeable performance
measuring criteria, the purpose of which will be to establish all target data
for the duration of this Agreement based on known data,
1.06. The term "Carts per Store" is understood To mean an average of
200 cans per retail Store serviced. It is further understood that the nature of
an average is to fluctuate.
ARTICLE II
ACTIVITIES OF THE PARTIES
2.01. The Contractor shall, for an agreed upon incremental fee, survey
all Stores as promptly as reasonably practicable to determine whether a given
store's shopping carts are appropriate for the installation of the display
units. The Contractor, based upon predetermined and agreed to templates received
from the Company, for the purpose of securing my and all measurements and
whereby measurements will be secured, shall also provide the Company with the
measurements for each Store necessary to manufacture the components to attach
the display units to the baby seats of the shopping carts and to manufacture the
tools used to open the display units.
2.02. The Contractor will promptly assemble a sales organization and
use its best efforts to sell in as short a time as possible as many of the
27,000 Stores as practicable on the use of the display units. The Company shall
prepare and provide the Contractor with a standard form contract for the purpose
of obtaining installation approval from Stores. Such contract shall not be
modified or amended in any material respect by the Contractor without the prior
written consent of the Company (which consent shall not be unreasonably
withheld). Written approval authorizing the Company and the Contractor to
proceed with the installation and maintenance of the display units shall be
obtained from the chain, the original of which approval shall be forwarded to
the Company. In the case where approvals for installation and maintenance: may
have to be obtained from individual Stores in a chain, the Contractor shall also
obtain such written approvals. The original of these approvals shall also be
forwarded to the Company.
2.03. The Company will deliver display units to the Contractor, f.o.b.
the Contractor's central warehouse and regional offices throughout the United
States, from where the Contractor will forward them to the Contractor's
individual Store installers, or directly
<PAGE>
to the Stores, as directed by the Contractor. This procedure shall be continued
until all Stores seeking installation of the display unit have been fitted out.
2.04. The Contractor shall carry out the installation of the display
units in compliance with the Company's installation procedures as notified by
the Company to the Contractor. All modifications to installation instructions
will be communicated to the Contractor by The Company at least 45 working days
prior to taking effect in the retail installation environment. The Contractor
shall be held harmless for any display unit failures.
2.05. On a quarterly basis, the Contractor shall receive from the
Company a supply of replacement advertising inserts. The Company will deliver
the advertising inserts, in palletized form, f.o.b. the Contractor's central
warehouse and regional offices throughout the United States, from - where the
Contractor shall forward them its individual Store installers, who shall
change the inserts, or directly to the Stores, as directed by the Contractor.
2.06. The Contractor will subcontract (at no additional charge to the
Company) the following services to its parent company, International Trade
Group, LLC: (i) electronic data interchange with stores (EDI), (ii) accounting
services / , (i/i) electronic links with field service representatives for
instant data transfer, (iv) design of computer systems to support field
operations and reporting and (v) West Coast operations office.
ARTICLE III
NON-COMPETE
The Company recognizes that among the Contractor's assets are its
contacts and ability to deliver national distribution quickly. To safeguard
these assets of the Contractor, the Company agrees to execute non-compete
agreements covering:
o non-circumvention agreement preventing the Company from doing business,
directly or indirectly, with any of the Contractor's installation service
companies, employees, agents or individuals including but not limited to in
the retail environment.
o A no-hiring agreement preventing the Company from hiring any of the
Contractor's services providers, employees, sales representatives or field
personnel for a period of three years after they have left the Contractor's
employ or terminated the Contractor's service contract for any reason.
ARTICLE W
TERMS OF PAYMENT
The Company shall pay the Contractor for its work in both cash and
stock options as detailed below:
CASH PAYMENTS
<PAGE>
1) MONTHLY RETAINER. The Company will pay the Contractor a retainer
of $85,000 per month for the first six months of operations known as Phase One.
Following the execution of this Agreement, the Company shall cause to be placed
into an escrow account, designated by the Contractor, the full six-month
equivalent retainer value (i.e., $510,000). Starting the seventh month, the
Company may deduct up to, but no more than, $20,000 per month for the purpose of
the repayment of the Contractor's amortized start-up expenses during Phase One.
Such amortization will be applied up to a maximum of $5,000 against sales
commissions and $15,000 against installation fees.
2) SALES COMMISSION. The Company will pay the Contractor a sales
commission or S1.00 per cart for each Store contract signed and approve& The
Company will pay this commission ten days prior to the shipment of the units,
provided that the Contractor shall have submitted the following:
i. invoice
ii. a brief report covering the Contractor's survey of the chain
or the Store
iii. the original copy of the Store's executive officer's letter of
approval.
While the Company and the Contractor both recognize the benefit and need to make
sales presentations to as many food chains as possible in as short a period of
time as possible in order to neutralize competitor reaction, the amount of this
payment is open to review during Phase One as the C. company's cash flow builds
up. Upon subsequent agreement between the parties, should sales commissions
exceed the Company's cash flow position during Phase One, then such sales
commissions may be accrued, in whole or in part, for no more than 30 days.
Additional terms of exclusions relative to payment to the Contractor for
services rendered in light of the Company's cash flow position may be discussed
and modified during Phase One at the discretion of the parties. This commission
applies only to the first year following installation of the display units in a
given Store, at which time the sales maintenance commission will become
effective.
3) SALES MAINTENANCE COMMISSION. The Company will pay the Contractor a
sales maintenance commission of $0.50 per cart per annum (annuity) ten days
after each Store contract anniversary date.
4) INSTALLATION FEE. The Company will pay the Contractor an
installation fee on of $2.00 per can to cover the cost of the Contractor's
installers (field service representatives).
Terms: 60% of total projected earls ten days prior to the shipment of the
units
40% on receipt of the installation audit signed by the Contractor's
installer certifying the exact number of in-Stow carts installed.
During Phase One as the Company's cash flow builds up, and upon subsequent
agreement between the parties, such installation fees may be accrue& in whole or
in pan, for no more than 30 days. Additional terms or exclusions relative to
payment to the Contractor for services
<PAGE>
rendered in light of the Company's cash flow position may be discussed and
modified during Phase One at the discretion of the parties.
5) ADVERTISING MAINTENANCE FEE. The Company will pay the Contractor an
advertising maintenance fee of $0.50 per cart to cover the cost of the
Contractor's installers (field service representatives) changing `advertising
inserts once every quarter or more frequently as agreed to between the Company
and the Contractor.
Terms: 50% payable ten days prior to the scheduled ad change date
50% within five working days following receipt of the audit cards
received from the Contractor's installers.
The Company will be fully responsible for the payment of the quarterly rental to
the Stores for the use of their carts. The amount payable to the Stores will be
10% of gross advertising revenues. Under no condition shall any transaction
occur which involves payment between the Stores and the Contractor or its
installers, in regard to the matters contemplated by this Agreement, without the
Company's written approval.
STOCK OPTIONS
The Company will cause stock options to be issued in favor of the Contractor, or
individuals designated by the Contractor, as follows:
300,000 free trading shares of the Company's Common Stock at $5.00 per
share and 300,000 free trading shares at $1.00 per share, exercisable
within a three year period. Each of the options will be issued in three
equal 100,000 share blocks, with one block being exercisable in whole or in
part after each of the first, second and third year of this Agreement,
subject to the Contractor having met its installation targets (inclusive of
signed-up stores or accounts which may be pending installation). Targets
will be developed and agreed to based on data derived from mutual
information developed during the Phase One initiative. In the event that
the Contractor does not meet the mutually agreed to target installations,
the exercisability of such options shall be reduced on a pro rata basis.
ARTICLE V
TERM AND MISCELLANEOUS
5.01. Subject to the Contractor meeting installation targets
(inclusive of signed up stores or accounts which may be pending installation)
developed and agreed to based on data derived from mutual information developed
during the Phase One initiative, as well as satisfactory and timely handling of
the quarterly (or more frequent as agreed to by the Company and the Contractor)
advertising insert changes, the Company will give the Contractor an exclusive
contract for the services covered herein, in the United States for a ten year
period, renewable by mutual consent at least one year in advance.
Notwithstanding the foregoing, if the Company terminates this Agreement prior to
the expiration of the agreed to term of ten years for
<PAGE>
any reason whatsoever (except for a material breach by the Contractor of this
Agreement), the Company shall promptly pay the Contractor as liquidated damages
the greater of (a) fees and commissions due for one year based on the number of
installed carts then outstanding or (b) $1,000,000.
5.02. Notice of termination shall be given. by either party, one year
in advance. Since the Company will have become very dependent on the systems and
services provided by the Contractor, the Contractor agrees that it, and to the
extent necessary its parent company, immediately following notice of
termination, will, providing termination of this Agreement by the Contractor was
without cause, provide the Company with copies of all systems and software
programs and files pertinent thereto, to permit the Company To continue to
provide the service to the Stores, provided such systems, software and files are
not proprietary in nature to the Contractor, its parent company or independent
contractors.
5.03. Time is of the essence in order to neutralize any competitive
reaction to the Company entering the advertising market with its display unit.
To this end, the Company and the Contractor will hold regular monthly meetings
to review the efficiency of the previous month's work and also to examine the
possibility of increasing the monthly installation rate.
5.04. All information which either party designates as confidential
will be treated as confidential by the pasty receiving the information, unless
(a) it is frightfully possessed by the receiving party prior to disclosure from
the other party; (b) it is independently developed by the receiving party; (c)
it was furnished to others without restrictions similar to those imposed herein
on the fight of the receiving party to use or disclose; (d) it becomes
rightfully known to the receiving party, without confidential restriction, from
a source other than the other party; or (e) disclosure to a third party is
approved in writing.
Each party agrees (a) to exercise reasonable care not to divulge any
confidential information to any third party, such care to be commensurate with
the care exercised with respect to the protection of its own confidential
information; (b) to restrict the use of such information to matters related to
the parties' relationship as established by the terms and conditions of this
Agreement; and (e) to restrict access to such information to employees whose
access is necessary to the implementation of this Agreement and to the provision
of services in accordance with the terms and conditions of this Agreement.
5.05. Neither party shall be liable for any delay or failure in its
performance of any of the acts required by this Agreement when such delay or
failure arises beyond the control and without the fault or negligence of such
party. Such causes may include, without limitation, acts o/God or public
enemies, labor disputes, material or component shortages, embargoes, rationing,
acts of local, state or national governments or public agencies, utility or
communication failures or delays, fire, flood, epidemics, riots or strikes. The
time for performance of troy act delayed by such events shall be postponed for a
period equal to the delay. 5.06. Each of the parties represents and warrants to
the other that its computer systems and computer software are year 2000
compliant. 5.07. The validity of this Agreement and of any of its terms or
provisions, as well as the rights and duties of the parties under this
Agreement, shall be construed pursuant to and in accordance with the laws of the
State of Oregon, without regard to its conflict of laws principles.
5.06. Each of the parties represents and warrants to the other that
its computer systems and computer software are year 2000 compliant.
<PAGE>
5.07 The validity of this Agreement and of any of its terms or
provisions, as well as the rights and duties of the parties under this
Agreement, shall be construed pursuant to and in accordance with the laws of the
State of Oregon without regard to its conflict of laws principles.
5.08. The Contractor reserves the fight to transfer its fights and
obligations under this Agreement, in whole or in pan, to a newly formed company
whose objective will be to provide the services set forth in this Agreement.
5.09. This Agreement supersedes all prior offers, proposals, written
and oral exchanges.
5.10. The Company agrees to service and provide the Contractor with
reasonable evidence of a product liability insurance policy in the amount of at
least $1,000,000 and furthermore agrees to hold the Contractor and any parent
company harmless from any and all liability, except for any such liability
arising from their gross negligence or willful misconduct.
5.11. The Company will develop target performance data retailed to the
sale of advertising space. With the sale of advertising space being the primary
source of the revenues from which the Contractor will be paid, it is appropriate
to develop "failure to perform" criteria for sales of advertising space with
such criteria being similar in nature to the target criteria developed for
display installations and advertising transfers performed by the Contractor.
5.12. The Company shall provide the necessary funds to facilitate any
and all "Uninstall" operations related to The Last Word advertising display
panels. These funds will be held in reserve for the sole purpose of facilitating
the removal of any and all advertising display panels as stipulated in
agreements with the retail customer. It is further understood That the
"Uninstall!" feature may become a necessity to sales negotiations and closing of
one or more accounts.
IN WITNESS WHEREOF, the panics hereto, intending to be legally bound,
have executed this Agreement.
PURCHASE POINT MEDIA CORPORATION
By _____________________________________
Albert Folsom
President
ITG, LLC
By _____________________________________
[LOGO]
PURCHASE POINT MEDIA CORPORATION
AGENCY AGREEMENT
This is an agreement between Purchase Point Media Corporation 10905 Promesa
Drive, San Diego, California (hereinafter referred to as Purchase Point) and
Culver Associates, Ltd., 141 Fifth Avenue, New York, NY 10010 (hereinafter
referred to as Culver) for advertising and other marketing services in the
United States.
The following points serve as the key terms and conditions of this agreement.
SERVICES
o Culver will serve Purchase Point for one year 8/17/98 through 8/15/99.
o Specifically, Culver will study the Purchase Point business, provide plans
and recommendations related to marketing communications, create, produce and
place advertising and related materials needed to execute marketing plans.
o In return, Purchase Point will compensate Culver as outlined below.
AGENCY COMPENSATION
o Purchase Point will pay Culver a monthly fee of $25,000 for the first 3
months to cover start up project costs.
o For purchases from outside vendors of media time and space, Culver shall
charge gross cost with standard 16% agency commission based on projected
spending of $1,200,000.
o Culver shall bill Purchase Point studio fees for mechanicals, typesetting
and retouching, etc., according to the cost schedule mutually agreed to by
Purchase Point and Culver.
o For purchases from outside vendors of all production, research and
presentation materials and expenses, as well as other non-media purchases,
Purchase Point will pay Culver for out-of-pocket cost plus 15%.
o These fees shall be paid within 30 days from date of invoice for the term of
this agreement.
o If, however, there is a significant change in the scope of work (outlined in
exhibit 1) required of Culver by Purchase Point during the course of the
year, a review of Culver's compensation shall occur at such time.
o For additional work not covered by this agreement, Culver agrees to first
submit estimates for approval for art direction, graphic design, copy,
layout, trafficking of
<PAGE>
AGENCY COMPENSATION (cont'd)
materials, and account management related to the development and production
of advertising creative.
BILLING PROCEDURES
o Purchase Point will pay for all media costs thirty (30) days from the date
of invoice with written approval of media authorization by Purchase Point.
o Final adjustment billing for both media and production will occur within
(80) days after project closure and receipt of vendor interests.
TERM
o This agreement shall become effective as of August 17, 1998.
o This agreement may be terminated by ninety days written notice given by
either party to the other.
AGREED:
By: /s/ Albert Folsom By: /s/ Christopher Culver
--------------------------- --------------------------
Date: May 14, 1998 Date: 8/14/98
--------------------------- --------------------------
Christopher Culver
Culver Associates Ltd.
Purchase Point Media Corp.
3133 Congress Las Vegas,
Nevada 89121
Dear Sirs:
The undersigned (the "Subscriber") has hereby subscribed for Five
Hundred (500) units of Purchase Point Media Corp., (the "Company"), a Minnesota
Corporation in a private sale of certain units (the "Units") each consisting of
one thousand shares at $7.00 per share of common stock and one redeemable common
stock purchase warrant (the "Warrants) issued by the Company, as set out and
described in the Warrant Agreement dated/4/-re"/', /2,1998 (the "Warrant
Agreement"),. The undersigned hereby certifies and agrees on behalf of the
Subscriber:
1. If the Subscriber is other than an individual, the Subscriber is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it was formed and is authorized to invest in the Units
being purchased hereby. The person executing this letter on behalf of the
Subscriber is duly authorized to do so on the Subscriber's behalf.
2. The Subscriber is acquiring the Units for its own account or for
accounts for which it exercises sole investment discretion and not with a view
to or for sale in connection with and distribution thereof, subject nevertheless
to any requirement of law that the disposition of the Subscriber's property
shall at all times be and remain within its control.
3. The Subscriber has received a Business Plan, relating to the
Company. The Subscriber has reviewed and understands the material to which a
reference is made in this paragraph 3 and understands that substantial risks are
involved in an investment in the Units. The Subscriber represents that in making
its investment decision to acquire the Units, the Subscriber has not relied on
representations, warranties, opinions, projections, financial or other
information or analyses, if any, supplied to it by any person, the Company or
any of its affiliates, except as expressly contained in the Business Plan. The
Subscriber has had an opportunity, within a reasonable period of time prior to
purchasing the Units to ask questions concerning the Units and has received
satisfactory answers to such questions.
4. The Subscriber has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Units and the Subscriber (or any account referred to above) is
able to bear the economic risks of such an investment.
5. The Subscriber is an "accredited investor" as defined in Rule 501
promulgated pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), and all applicable state securities laws.
6. The Subscriber will comply with all applicable federal and state
securities laws, rules and regulations in connection with any subsequent resale
of the Units by the Subscriber.
7. The Subscriber understands that the Units have not been and will
not be registered under the Securities Act or any state securities act or any
other federal or state laws, that the Company is not required so to register the
Units, and that the Units may be resold only if registered pursuant to the
<PAGE>
provisions of the Securities Act, and other applicable federal and state
securities laws, or if an exemption from any requirement of registration is
available.
8. The Subscriber is not an employee benefit plan, trust or account,
including an individual retirement account, subject to Section 406 of the
Employee Retirement Income Security Act of 1974, as amended or subject to
Section 4975 of the Internal Revenue Code of 1986, as amended, or comparable
provisions of any subsequent enactment (any such plan, trust or account being
referred to as a "Plan"), a trustee of any Plan, or any entity whose underlying
assets include the assets of any Plan by reason of such Plan's investment in the
entity.
9. Before the Subscriber sells all or any part of the Units, the
Subscriber will (i) obtain from each subscriber of Units an investment letter
containing the same representations, warranties and agreements contained in
paragraphs 1 through 8 above and in this paragraph 9, and (ii) if requested by
the Company, deliver an opinion of counsel, satisfactory in form and substance
to the Company, to the effect that such sale is in compliance with the
Securities Act and all other applicable federal and state securities laws.
10. The Subscriber shall have ninety (90) days from the date first
above written to provide the Company with the proceeds of the subscription funds
unless extended an additional ninety (90) days by the Company (the Subscription
period). At the end of the Subscription period the Company will issue to the
Subscriber, a stock and Warrant Certificate representing those Units that have
been fully paid for.
11. Subscriber acknowledges that compliance with the requirements of
paragraph 9 and 10 is a condition to registration of the transfer of the Units
on the books of the Company. Very truly yours,
Dorian Capital Corp.
---------------------------
[Name of Purchaser]
By: /s/ Leticia Montoya
-----------------------
Name: Leticia Montoya
----------------------
Title: Secretary
----------------------
50,000
---------------------------
Number of Units Subscribed
<PAGE>
RESOLUTION TO TRANSFER SECURITIES
RESOLVED THAT:
Leticia Montoya be and is hereby authorized on behalf of the Company
to accept and convey, assign, transfer or otherwise dispose of all or
any shares, stock, bonds, debenture stock and other securities of
every description now or hereafter registered in the name of the
Company or held or owned by the Company and to sign and execute on
behalf of the Company all and any instruments of acceptance and
transfer and other documents whenever necessary or proper to
effectuate the same with full power to appoint any attorney or
attorneys with full power of substitution therein, and that any and
all instruments of acceptance and transfer and other documents in
connection therewith heretofore signed and executed on behalf of the
Company in accordance with the authority set out above are hereby
ratified and confirmed.
CERTIFICATE
I hereby certify that the foregoing is a true and correct copy of a resolution
duly passed at a meeting of the Directors of DORIAN CAPITAL CORP. regularly held
on ___________________________________________, and that the said resolution is
now in full force and effect. I further certify that the following ]is a list
o(pound) all directors, officers and employees of the Company authorized by this
resolution to do any act or thing:
LETICIA MONTOYA
I further certify that the Company has no corporate seal.
/s/ Leticia Montoya
- ----------------------------
Secretary
<PAGE>
RESOLUTION TO TRANSFER SECURITIES
RESOLVED THAT:
Leticia Montoya be and is hereby authorized on behalf of the Company
to accept and convey, assign, transfer or otherwise dispose of all or
any shares, stock, bonds, debenture stock and other securities ties
o(pound) every description now or hereafter registered in the name of
the Company or held or owned by the Company and to sign and execute on
behalf of the Company all and any instruments of acceptance and
transfer and other documents whenever necessary or proper to
effectuate the same with full power to appoint any attorney or
attorneys with full power of substitution therein, and that any and
all instruments of acceptance and transfer and other documents in
connection therewith heretofore signed and executed on behalf of the
Company in accordance with the authority set out above are hereby
ratified(pound) and confirmed.
CERTIFICATE
I hereby certify that the foregoing is a true and correct copy of a resolution
duly passed at a meeting of the Directors of DORIAN CAPITAL CORP. regularly
held on __________________________________________, and that the said resolution
is now in full force and effect. I further certify that the following is a list
of all directors, officers and employees of the Company authorized by this
resolution to do any act or thing:
LETICIA MONTOYA
I further certify that the Company has no corporate seal.
/s/ Leticia Montoya
- ----------------------------
Secretary
<PAGE>
[FORM OF ELECTION TO PURCHASE]
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right. represented by
this Warrant Certificate. to purchase __________ Shares and herewith tenders in
payment for such Shares cash or a certified or official bank check payable to
the order of Purchase Point Media Corp. in the amount of $ __________ , all in
accordance with the terms hereof.. The undersigned requests that a certificate
for such Shares be registered in the name of ______________________ whose
address is ____________________________________, and that such certificate be
delivered to , whose address is . If said number of Shares is less than all of
the Shares purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of the Shares be registered in
the name of ___________________________, whose address is , and that such
Certificate be delivered to ________________________________, whose address is
_____________________________________
Dated
_____________________________________
DORIAN CAPITAL CORP. Per:
Signature
/s/ Leticia Montoya
(Signature must conform (Y) all respects
to name of holder as specified on the face
of the Warrant Certificate)
(Insert Social Security or Other Identifying Number of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificate)
FOR VALUE RECEIVED. ______________________________________________
hereby sells. assigns and transfers unto _______________________________________
__________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate. together with all right. title and interest therein,
and does hereby irrevocably constitute and appoint __________________________
Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company. with full power of substitution.
Dated: Signature:
________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant
Certificate)
(Insert Social Security or Other Identifying Number of Holder)
<PAGE>
[FORM OF ELECTION TO PURCHASE]
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right. represented by
this Warrant Certificate. to purchase __________ Shares and herewith tenders in
payment for such Shares cash or a certified or official bank check payable to
the order of Purchase Point Media Corp. in the amount of $ __________ , all in
accordance with the terms hereof.. The undersigned requests that a certificate
for such Shares be registered in the name of ______________________ whose
address is ____________________________________, and that such certificate be
delivered to , whose address is . If said number of Shares is less than all of
the Shares purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of the Shares be registered in
the name of ___________________________, whose address is , and that such
Certificate be delivered to ________________________________, whose address is
_____________________________________
Dated
_____________________________________
DORIAN CAPITAL CORP. Per:
Signature
/s/ Leticia Montoya
(Signature must conform (Y) all respects
to name of holder as specified on the face
of the Warrant Certificate)
(Insert Social Security or Other Identifying Number of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificate)
FOR VALUE RECEIVED. ______________________________________________
hereby sells. assigns and transfers unto _______________________________________
__________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate. together with all right. title and interest therein,
and does hereby irrevocably constitute and appoint __________________________
Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company. with full power of substitution.
Dated: Signature:
________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant
Certificate)
(Insert Social Security or Other Identifying Number of Holder)
AGREEMENT
THIS AGREEMENT is entered into this Twenty fifth day of April, 1997,
BETWEEN:
PURCHASE POINT MEDIA CORPORATION,
141 Fifth Avenue, New York, New York, 10010,
USA
(herein the "Client")
- and -
Roger Jung,
18882 Vista Potola
Trabuco Canyon, California, 92679
(herein the "Contractor")
WHEREAS, the Client owns a patented grocery cart display panel (called
"The Last Word"(R) which contains a color insert for ten, three inch by three
inch advertisement frames, it is the Company's intention to have display panels
installed in shopping carts nationwide as soon as possible and to have each of
the ten frames sold to advertisers; and
WHEREAS, the Client desires to have the contractor on behalf of the
Client, sell to advertisers each of the advertisement frames at a rate of $2.25
per thousand customer check outs at the grocery store.
WHEREAS, the Contractor has. through his organization, the experience
and ability to sell the ten advertisement frames to advertisers either directly
to advertisers and or to advertisers through their respective ad agency; and
WHEREAS, the Contractor has available to him the services of John
Hall, E.V. Arnold CPA, Rick Bolton and others to assist him in carrying out the
intent of this agreement; and
WHEREAS, the Contractor desires to incorporate a Company called "Last
Word Management Inc." and to assign this agreement to said Company.
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties herein contained, the parties hereto agree as
follows:
1. The Contractor will incorporate and staff a Company called Last Word
Management Inc. (LWM) and then attempt to negotiate an agreement with John Hall
to be President of LWM, E.V. Arnold CPA to be Director and Comptroller of LWM
and also attempt to negotiate an agreement with Rick Bolton to be a sales person
for LWM.
2. In the event that the Contractor is unable to negotiate a favorable agreement
with either of the parties mentioned in "1" above he will then negotiate with
others of equal talent to fill the need for the spot in LWM that would have been
filled by the said party or parties.
<PAGE>
3. The Contractor will assign this contract to LWM as soon as LWM is
incorporated.
4. The Client shall pay the Contractor for services rendered under the terms of
this agreement in the form of cash and will cause certain shareholders of the
client to grant (incentive options) up to one million (1,000,000) common shares
of the common shares of the Client's Company, in stock options, to the
Contractor (optionee) as follows:
a. After the Company has collected two million five hundred thousand
dollars (USD), the optionee shall subject to the terms thereof (see option
agreement, attachment A), have the fight to exercise the Option from time to
time in whole or in part during a term commencing on the execution of the option
agreement (the "Commencement Date") and terminating at the end of sixty months
after that date ( At the close of business on the Expiry Date, or the Optionee
resigns or ceases to be an employee of Last Word Management Inc., the Option
shall expire and terminate and be of no further force or effect whatsoever. The
said options shall contain these further conditions, 1) The Optionee is an
employee of Last Word Management Inc., 2) The option price is one dollar ($1.00)
U.S. 3) As to one third (1/3) of the Optioned shares, provided the Client is
operational with a minimum of twelve hundred grocery stores and having
advertisement sales of at least eighty five percent of capacity of the display
panel. 4) The next one third are exercisable anytime during the second year (or
after) provided the Company is operational with a minimum of three thousand
(3,000) grocery stores and having advertisement sales of at least eighty five
percent of capacity of the display panel. 5) The final one third are exercisable
anytime in the third year (or after) provided the Company is operational with a
minimum of seven thousand five hundred (7,500) grocery stores and having
advertisement sales of at least eighty five percent of capacity of the display
panel.
b. As a show of good faith, the client will have the same shareholders
cause the issuance of(one half of the 1,000,000 optioned shares) five hundred
thousand (500,000) common shares (of the Client's Company) that the shareholders
are entitled to, to the following, John Hall 250,000 shares, E.V. Arnold CPA
200,000 shares and Rick Bolton 50,000 shares. These shares will be held in trust
until exercised pursuant to "4.a." above. The trustee will have the fight to
cancel the said 500,000 shares and have them reissued in the event that `T'
above is not accomplished within a reasonable period of time or, the shares are
not exercised pursuant to 4.a. above or, in the event the Contractor is unable
to satisfactorily accomplish "2" above, the Contractor may have the trustee
cancel the shares and have them reissued in the name of the replacement/s, as
provided for in "2" above. In order for the trustee to release the shares that
are in the name of John Hall, John Hall must, in addition to meeting the
provisions of 4.a above, deliver a cashiers check in favor of New Hope Community
Church for the amount of the shares being exercised. In order for the trustee to
release the shares to the other party or parties, the party or parties must,
deliver a cashier check in favor of Shiloah Springs Bible Retreat for the amount
of the shares being exercised. In the event that less than the full amount of
shares in the name of party on the share certificate are being exercised, the
respective party must also supply the trustee with a stock power of attorney
signed by the party and having a national bank signature guarantee in order for
the Client's transfer agent to breakdown the stock certificate.
<PAGE>
5. DUTIES OF THE PARTIES
The Client will provide the Contractor with sales/marketing tools in
the way of Media kits for both ad agencies and potential advertisers and run
advertisements in trade journals to reach same. The Contractor will sell the ten
advertisement frames to advertisers either directly or through their ad agencies
on behalf of the client. The price that the contractor will charge the
advertisers on behalf of the Client is $2.25 per thousand customer checks outs
per month (for each of the ten advertisement frames) at the store. Contractor
will work with the client in preparing the advertisers contract. The Contractor
represents that he is able to and will perform and provide such services
pursuant to the terms of this agreement.
6. TERM
Except as otherwise provided in this Agreement, the Client agrees to
engage the Contractor to provide the Services for a term commencing April 25,
1997 and ending April 25, 2007. Should the Contractor provide services beyond
the end of the initial term of the Agreement (or the end of any automatic
renewals thereof), the term of this Agreement shall be automatically renewed for
an additional term of 1 year.
7. FEE
The Client agrees to pay the Contractor a fee for the Services provided
by the Contractor under the Agreement, based on Commissions on Total Net Sales.
Total Net Sales are equal to the Gross Sales less the advertising agency
commission of 15%. Commissions will be paid on the Consultants performance to
the Sales Goals.
A 1% Commission will be paid on 85% of Sales goal.
A 2% Commission will be paid on 95% of Sales goal.
A 3% Commission will be paid on 100% of Sales goal. less in the amount
or S0.00 per this agreement. Payments to Last Word Management will be in
accordance with the Pro forma Budget attached Schedule "B". Funds will be
advanced as required. Any expenses not allowed for in the Budget must be
approved in writing by the President of PPMC or their nominee.
8. EXPENSES
The Client shall advance the Contractor $420,000 to pay for the
expenses in accordance with the Pro forma Budget, attached Schedule B. Any
expenses not in the budget must first be approved by Client. Any other expenses
that are submitted for reimbursement to the Contractor will require pre-approval
of the Client prior to its expenditure. Each quarter, Client and Contractor will
review the proceeding quarter expenses and prepare a new budget for the
following quarter.
9. INDEPENDENT CONTRACTOR
The Consultant's relationship with the Client as created by this
Agreement is that of an independent contractor for the purposes of the Income
Tax Act and any similar provincial or state taxing legislation. It is intended
that the Contractor shall have general control and direction over the manner in
which its services are to be provided to the Client under this Agreement.
Nothing contained in this Agreement shall be regarded or construed as creating
any
<PAGE>
relationship (whether by way of employer/employee, agency, joint venture,
association, or partnership) between the parties other than as an independent
contractor as set forth herein.
10. TIME AND EFFORT
The Contractor shall be free to devote such portion of the Contractors time,
energy, effort and skill to efficiently perform its duties in a manner to
achieve the agreed goals of the Client. The Contractor shall perform the
Services, as set out in this Agreement, in a timely and professional fashion.
11. AUTHORITY
The Contractor acknowledges that it is being retained as a Contractor to the
Client and that as such it does not have the authority and cannot commit or bind
the Client to any matter, contract or negotiation without the prior written
authorization of the Client.
12. COMPLIANCE
A. The Client and Contractor shall comply with all applicable federal,
provincial, state and municipal laws, rules and regulations arising out of or
connected with the performance of the Services under this Agreement.
B. The Contractor shall be responsible for all Employee deductions,
such as, Social Security contributions, tax deductions, or any other compulsory
employee benefits/contributions as required, relating to or arising out of the
fees paid to the Contractor under this Agreement and the Services performed by
the Contractor or its employees. Payments relating to any of the above shall be
the responsibility of the Contractor and shall be forwarded by the Contractor as
appropriate, directly to the government agencies involved. Proof of compliance
with this requirement shall be available to the Client upon request.
13. KEY PERSON
The parties acknowledge that Roger Jung and John Hall will be a key employee of
LWM, the Contractor to be and they will be an integral part to the successful
performance of the Services conducted by the Contractor under this Agreement. It
is acknowledged by the Contractor that Roger Jung and John Hall will take full
responsibility for the Services, unless the Client otherwise consents in
writing.
14. CONFIDENTIAL INFORMATION
A. The Contractor acknowledges that certain sensitive material and
information made available to the Contractor by the Client in the performance of
the Services (the "Confidential Information") will be of a confidential nature.
The Contractor recognizes that the Confidential Information is the sole and
exclusive property of the Client, and the Contractor shall use its best efforts
and exercise utmost diligence to protect and maintain the confidentiality of the
Confidential Information. The Contractor shall not, directly or indirectly, use
the Confidential Information for its own benefit, or disclose to another, any
Confidential Information, whether or not acquired, learned, obtained or
developed by the Contractor alone or in conjunction with
<PAGE>
others, except as such disclosure or use may be required in connection with the
performance of the Services or as may be consented to in writing by the Client.
B. The Confidential Information is and shall remain the sole and
exclusive property of the Client regardless of whether such information was
generated by the Contractor or by others, and the Contractor agrees that upon
termination of this Agreement it shall deliver promptly to the Client all such
tangible parts of the Confidential Information including records, data, notes,
reports, proposals, client lists, correspondence, materials, marketing or sales
tonnation, computer programs, equipment, or other documents or properly which
are in the possession or under the control of the Contractor without retaining
copies thereof.
C. Each of the foregoing obligations of the Contractor in this clause
shall also apply to any confidential information of customers, joint venture
parties, contractors and other entities, of any nature whatsoever, with whom the
Client or any associate or affiliate of the Client has business relations.
D. Not withstanding the foregoing provisions of this clause, the
Contractor shall not be liable for the disclosure or use of any of the
Confidential Information to the extent that: (a) the Confidential Information is
or becomes available to the public from a source other than the Contractor and
through no fault of the Contractor;
E. The covenants and agreements contained in this clause shall survive
the termination of this Agreement.
15. NONCOMPETITION
A. The Contractor acknowledges that, by reason of performing the
Services, it will receive the value and advantage of special training, sicills
and expert knowledge and experience of the Client and the clients and employees
of the Client. It is the expressed intent and agreement of the Contractor and
the Client that such training, skills, knowledge and experience be used solely
and exclusively in the best interests of the Client. The Contractor therefore
agrees that for a period of 3 years from the date of termination of this
Agreement, however caused, it will not, for any reason, directly or indirectly,
either as an individual or as a partner or as part of a joint venture, or as an
employee, or in any other capacity, be engaged or employed in a business which
is in direct or indirect competition with the Client involving the specific
activities performed by the Contractor on behalf of the Client within the World,
unless prior written permission to such activity is given by the Client.
B. The Contractor agrees that, during the term of this Agreement, and
for a period of 3 years following termination of this Agreement, however caused,
it will not hire or take away, or cause to be hired or taken away any employee
of the Client. The Client also agrees that under the same terms and conditions
it will not hire or take away any employee of the Contractor with out the
approval of the contractor.
C. The Contractor hereby agrees that all restrictions in this clause
are reasonable, valid and do not go beyond what is necessary to protect the
interests of the Client, and all defenses to the strict enforcement thereof by
the Client are hereby waived by the Contractor. The provisions of this clause
are only intended to safeguard against the Contractor participating in
<PAGE>
competitive endeavors against the Client and shall not in any way restrict or
limit the Contractor from engaging in subsequent businesses which are not in
competition with the Client.
D. The parties agree that if any covenant or provision in this clause
is determined to be void or unenforceable at law due to period of time,
geographical area, or otherwise, then such covenant or provision shall be
reduced in scope or mended, as to term, geographical area or otherwise, to the
extent required so that the covenant or provision, as so reduced or mended, is
enforceable at law and the unenforceable part shall be deemed to be severed from
the balance, which balance shall survive and be of full force and effect.
E. The covenants and agreements contained in this clause shall survive
the termination of this Agreement.
16. TERMINATION
A. In the event that the Contractor breaches this Agreement, or
otherwise fails to perform the Services in accordance with the terms of this
Agreement, the Client may terminate this Agreement immediately and without
notice for cause. In the event that the Client should effect premature
termination of this contract without cause, the Client will pay the Contractor a
termination fee of six months fees The intent is to cover the cost of
dismantling the company and the termination of employee contracts.
B. Upon termination of this Agreement:
(a) the Client's obligations to the Contractor under this Agreement
shall terminate except for the Client's obligation to pay any fees and
expenses in accordance with the terms of this Agreement as stated
above in A, to the date of termination; and
b) the Consultant's obligations to the Client under this Agreement
shall terminate except those obligations which are specifically
expressed to survive the termination of this Agreement.
17. INDEMNIFICATION
A. The Contractor hereby undertakes to, and does hereby agree to, indemnify the
Client and its directors, officers and employees against any and all actions,
suits, claims, costs, demands, losses, damages and expenses which may be brought
against or suffered by them or which they may sustain, pay or incur by reason of
the breach by the Contractor of any of the provisions of this Agreement.
18. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Delaware.
19. SEVERABILITY
If any provision of this Agreement, or the application of such provision to any
person or in any circumstance, shall be determined to be invalid, illegal or
unenforceable, the remaining provisions of this Agreement, and the application
of such provision to any person or in any circumstance
<PAGE>
other than that to which it is held to be invalid, illegal or unenforceable,
shall not be affected thereby.
21. AMENDMENTS
Any amendment to this Agreement must be in writing and signed by both parties
hereto.
22. TIME OF ESSENCE
Time shall be of the essence in this Agreement.
23. INDEMNIFICATION
This is the entire Agreement between the Client and the Contractor with respect
to the consulting services to be provided by the Contractor to the Client and
supersedes any prior agreements with respect to such services whether written or
oral.
24. NOTICES
Notices hereunder shall be in writing and must be either personally delivered or
sent by double registered mail to the address(e8) set forth above. A party may
change the address set forth above by proper notice to the other.
25. NO WAIVER
The failure of any party to insist upon the strict performance of a covenant or
obligation hereunder, irrespective of the length of time for which such failure
continues, shall not be a waiver of such party's right to demand strict
performance in the future. No consent or waiver, express or implied, to or of
any breach or default in the performance of any covenant or obligation hereunder
shall constitute a consent or waiver to or of any other breach or default in the
performance of the same or of any other obligation hereunder.
22. ASSIGNMENT
This Agreement is personal in nature and may not be assigned by either party
hereto unless there is written mutual consent of both parties, except as
provided for herein.
23. ENUREMENT
This Agreement shall be binding upon and shall enure to the benefit of each of
the parties hereto and their respective employees and permitted receivers,
successors and assigns.
IN WITNESS HEREOF, the parties hereto have entered into this Agreement as of the
day and year first above written.
Purchase Point Media Corporation Roger Jung
Per: /s/ Albert Folsom /s/ Roger Jung
--------------------------- ----------------------------
Albert Folsom Roger Jung
President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Purchase
Proof Media Corp. Financial statements at June 30, 1998 and the six months then
ended is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001001065
<NAME> Purchase Point Media Corporation
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1998
<CASH> 1327
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1327
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 28214
<CURRENT-LIABILITIES> 836173
<BONDS> 0
0
170
<COMMON> 18500
<OTHER-SE> (826629)
<TOTAL-LIABILITY-AND-EQUITY> 28214
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 245800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18838
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (245800)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (245800)
<EPS-PRIMARY> (2)
<EPS-DILUTED> (2)
</TABLE>
