U.S. 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
INTERACTIVE PROCESSING, INC.
(Name of Small Business Issuer in its charter)
NEVADA 88-0355407
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
#1738 - 609 GRANVILLE STREET, VANCOUVER, BRITISH COLUMBIA V7Y 1G5 CANADA
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (604) 689-4060
Securities to be registered under Section 12(b) of the Act: NONE
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK, $.001 PAR VALUE
(Title of class)
Exhibit index on page 19 Page 1 of 140 pages
1
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Interactive Processing, Inc. (the "Company") was incorporated under the
laws of the State of Nevada on September 15, 1995, for the purposes of engaging
in sales of consumer electronic products.
On April 17, 1996, the Company entered into a Patent and Trademark
License Agreement with Amoeba Corporation ("Amoeba") to obtain the exclusive
license to develop, manufacture, market, distribute, and sell an electronic
device known as the TV Terminator ("TVT") in the United States, Canada, and
Mexico. The TVT is an interactive universal remote control device, invented and
patented by Amoeba, that is believed by management of the Company to be the
first remote control with sound effects and a trigger-operated channel changer.
Amoeba was issued United States Patent number 5,253,068 and Canadian Patent
number 2,107,736. As consideration for the license, the Company issued 2,900,000
shares of its Common Stock to Amoeba and agreed to pay a royalty of $1.50 per
unit sold by the Company. The agreement has no specified term.
Also on April 17, 1996, the Company entered into Patent and Trademark
Sublicense agreements with three licensees of Amoeba to obtain the exclusive
rights to the TV Terminator in other territories. All of the agreements are
similar to the agreement with Amoeba and differ only with respect to the
territory and the number of shares issued to the sublicensor. The agreements are
summarized below.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
LICENSOR/SUBLICENSOR TERRITORY ISSUED
<S> <C> <C>
Amoeba Corporation United States; Canada; and Mexico 2,900,000
But Sup But International Inc. Asia, excluding Russia and all republics which 900,000
were part of the former Soviet Union; India;
Australia; and New Zealand
Aurora Marketing Inc. All of Europe, including the United Kingdom; 900,000
Russia; and all republics which were part of the
former Soviet Union
Measca Corporation Western hemisphere, excluding the United 900,000
States, Canada, and Mexico; Africa; and the
Middle East
</TABLE>
The TVT was demonstrated by Amoeba at the Consumer Electronics Show in
Las Vegas, Nevada, in January 1996. Other distributors of the TVT have sold
small quantities of the product since January 1996 through catalogs and as a
result of newspaper articles and radio announcements.
On July 16, 1996, the Company entered into a Merchandising License
Agreement with ELP Communications for the exclusive license in the United States
and Canada to use the trademarks of the "Married With Children" television
series to promote the Company's Bundy Sport Remote product. As consideration for
the license, the Company agreed to pay a royalty equal to 10% of Net Sales (12%
of Net Sales for sales made on an F.O.B. basis), and paid an advance of $25,000
to the licensor upon execution of the agreement. The initial term of the
agreement commenced on April 11, 1996 and will expire on June 30, 1998, unless
sooner terminated pursuant to the terms of the agreement. So long as the Company
has paid the licensor minimum royalties of $75,000 during this initial term and
notified
2
<PAGE>
the licensor of its intention to extend the term of the agreement by May 1,
1998, the Company shall have an option to extend the agreement for an additional
period ending June 30, 2000. In addition, subject to the Company performing
fully under the terms of the agreement, the Company has the option of extending
the territory to encompass worldwide rights by so notifying the licensor by May
12, 1997 and paying an option fee of $25,000 by July 12, 1997.
MARKETING AND DISTRIBUTION
The Company intends to market the TVT through home television shopping
channels, catalogs, and clubs, utilizing an 800 number ordering system.
Management has contacted over five home shopping networks, together reaching
over 90 million households per day. If negotiations with these shopping networks
are successful, the TVT will have its own infomercial and separate 800 number
for direct purchases. The Company also intends to advertise the TVT on the
Internet.
The Company is currently awaiting a shipment of approximately 2,500
units for shipment to catalog companies and shopping networks. Depending upon
consumer acceptance of the TVT, the Company may have repeat orders and/or
agreements for distribution of the product.
MANUFACTURING
The Company currently has its products manufactured overseas by a
non-affiliated company and pays for orders in advance. No formal manufacturing
contracts will be entered into until the Company has larger orders. The Company
does not anticipate any difficulties in obtaining raw materials or arranging for
the manufacture of its products.
COMPETITION
There are many companies which manufacture universal remote controls.
However, management believes that the TVT is unique enough, through its sound
effects and unusual shapes, to have a niche in the market.
GOVERNMENTAL REGULATION
No governmental approval of the Company's products is needed. The
Company is subject to laws and regulations pertaining to the import of goods
manufactured overseas. Compliance with governmental regulations is not expected
to have a material adverse effect on the Company.
EMPLOYEES
As of June 30, 1996, the Company had 4 employees, all of whom were
full-time.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATION
During the current fiscal year, which ends April 30, 1997, the Company
plans to add two or three employees and staff a full-time office in Las Vegas.
The Company also plans to continue its research and development efforts on the
TVT. Management of the Company believes that it has sufficient cash to satisfy
its needs until February 1997. It is currently engaging in a private placement
of its Common Stock which will result in proceeds to the Company of $400,000 if
successful.
The Company plans to finance future purchases of inventory through
financing provided by the manufacturer. Interest of 10% per annum would be
charged on such financing.
3
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES. Since the Company's inception in
September 1995, the Company has been engaged primarily in raising its initial
capitalization and obtaining license agreements critical to its business plan.
Through April 30, 1996, gross proceeds of $225,700 were obtained through the
sale of the Company's Common Stock. In August 1996, an additional $170,000 in
gross proceeds were obtained.
The Company's working capital was $19,663 at April 30, 1996, and
increased to $79,317 at July 31, 1996. The increase was due primarily to the
receipt of the offering proceeds described above prior to July 31, 1996, in
contemplation of the private placement being completed in August 1996.
RESULTS OF OPERATIONS. The Company has not yet generated significant
revenues. Since inception revenues of only $4,747 have been generated. Expenses
incurred since inception through April 30, 1996 of $173,817 were primarily for
marketing and product development. Management anticipates that most of its
expenses will be incurred for marketing and product development in the near
future.
Expenses for the three months ended July 31, 1996 in the amount of
$83,071 were incurred primarily for consulting fees ($30,858), investor
relations ($12,384), office ($10,458), and marketing and product development
($10,267).
GOING CONCERN. As a result of its operations through July 31, 1996, the
Company has an accumulated deficit as of July 31, 1996 of $253,783. Note 1 of
the Notes to Financial Statements included herein states that substantial doubt
has been raised about the Company's ability to continue as a going concern. The
ability of the Company to continue as a going concern is dependent on its
ability to generate profitable operations in the future and obtain additional
financing. Although management plans to raise the funds necessary to finance
ongoing operations and commitments until sufficient cash flow from operations is
generated, there can be no assurance that the Company will be able to do so.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company's leases approximately 600 square feet of office space at a
cost of $750 per month, at #1738 - 609 Granville Street, Vancouver, British
Columbia. See Part I, Item 7. Certain Relationships and Related Transactions.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table provides certain information as to the officers and
directors individually and as a group, and the holders of more than 5% of the
Common Stock of the Company, as of August 21, 1996:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF OWNER NUMBER OF SHARES OWNED PERCENT OF CLASS (1)
<S> <C> <C>
Amoeba Corporation 2,900,000 30.8%
21 East Drive Garston
Watford, Herts
England WD2 6AH
Philadep & Co. 1,832,500 19.5%
1900 Market St. 2nd Floor
Philadelphia, PA 19103
4
<PAGE>
<CAPTION>
NAME AND ADDRESS OF OWNER NUMBER OF SHARES OWNED PERCENT OF CLASS (1)<F1>
<S> <C> <C>
But Sup But International Inc. 900,000 9.6%
Flat 1906, Blk Q
Luk Yeung Sun Chuen
Twuen Wan
N.T. Hong Kong
Aurora Marketing Inc. 900,000 9.6%
21 Godolphin House
76 Fellows Road
London, England
NW3 3LG
Measca Corporation 900,000 9.6%
P.O. Box N. 7521
94 Dowdeswell St.
Nassau, Bahamas
CT Securities Services Inc. 822,500 8.7%
70 York St. 8th Floor
Toronto, Ontario
Canada M5J 1S9
Sheldon Silverman 300,000 (2)<F2> 3.1%
Keith Balderson 200,000 (3)<F3> 2.1%
Officers and Directors as a 500,000 5.0%
group (2 persons)
*Less than 0.1%
<FN>
<F1>
(1) Based on 9,419,000 shares of Common Stock outstanding on August 21,
1996. Where the persons listed on this table have the right to obtain
additional shares of common stock within 60 days from August 21, 1996,
these additional shares are deemed to be outstanding for the purpose of
computing the percentage of class owned by such persons, but are not
deemed to be outstanding for the purpose of computing the percentage of
any other person.
<F2>
(2) Includes 300,000 shares of Common Stock issuable upon exercise of
certain options. See "Executive Compensation."
<F3>
(3) Includes 200,000 shares of Common Stock issuable upon exercise of
certain options. See "Executive Compensation."
</FN>
</TABLE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
OFFICERS AND DIRECTORS
The officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Sheldon Silverman 35 President, Chief Executive Officer
and Director
5
<PAGE>
<CAPTION>
<S> <C> <C>
Keith Balderson 52 Vice President, Secretary, Treasurer
and Director
</TABLE>
The term of office of each director of the Company ends at the next
annual meeting of the Company's stockholders or when such director's successor
is elected and qualifies. No date for the next annual meeting of stockholders is
specified in the Company's Bylaws or has been fixed by the Board of Directors.
The term of office of each officer of the Company ends at the next annual
meeting of the Company's Board of Directors, expected to take place immediately
after the next annual meeting of stockholders, or when such officer's successor
is elected and qualifies.
SHELDON SILVERMAN has been the President, Chief Executive Officer, and
a director of the Company since May 1996. He managed a jewelry store in
Vancouver, British Columbia, from 1982 to 1984. In 1986, Mr. Silverman received
a real estate license and worked at Re/Max Realty in Vancouver, from 1986 to
1994, specializing in land development, as well as residential and commercial
real estate. He received awards as a real estate broker. From 1991 to 1996, he
was the president of Golden Treasures Dist. Ltd., a distributor of consumer
electronic products. Mr. Silverman was one of the founders of the TVT products
and assisted in locating engineers, manufacturers, and designers.
KEITH BALDERSON has been a director of the Company since its inception
and has served as Vice President since May 1996 and Secretary and Treasurer
since July 1996. He served as the President of the Company from its inception to
May 1996. Mr. Balderson attended sales and marketing courses at the University
of British Columbia from 1963 to 1965. From 1965 to 1982, he was a director of
Margetson-Lee, Ltd., a private retail clothing company in Vancouver, British
Columbia. He was the president of Silk Fashion Canada, Ltd., Toronto, Ontario, a
company which imported Jack Mulgreen dresses and blouses, from 1980 to 1984.
From 1984 to 1988, he was the marketing director for Louis Feraud Paris, a
private fashion import company in New York. He was the vice president for Quadra
Lodgic Technologies, Inc., a medical research and biotechnology company in
Vancouver, British Columbia, from 1988 to 1992. From 1992 to 1996, Mr. Balderson
was the president of Cryocon Containers Inc., a publicly-held company in
Vancouver, British Columbia, engaged in refrigeration technology.
ITEM 6. EXECUTIVE COMPENSATION.
The following table sets forth information for the Chief Executive
Officer ("CEO") of the Company, Keith Balderson, from inception (September 15,
1995) through April 30, 1996. No disclosure need be provided for any executive
officer, other than the CEO, whose total annual salary and bonus for the last
completed fiscal year did not exceed $100,000. Accordingly, no other executive
officers of the Company are included in the table.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
OTHER RESTRICTED
NAME AND ANNUAL STOCK OP- LTIP ALL OTHER
PRINCIPAL COMPEN- AWARD(S) TIONS/SAR PAYOUTS COMPEN-
POSITION YEAR SALARY BONUS SATION ($) ($) S ($) ($) SATION ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Keith 1996 $ 14,400 -0- -0- -0- -0- -0- -0-
Balderson,
President
</TABLE>
There are no employment agreements with any of the Company's executive
officers. The Company's current executive officers, Sheldon Silverman and Keith
Balderson, are paid through consulting fees paid to their respective companies.
The consulting fees are currently $4,000 and
6
<PAGE>
$1,200 per month for Messrs. Silverman and Balderson, respectively. For period
ended April 30, 1996, consulting fees of $8,000 and $10,301 were paid to Messrs.
Silverman and Balderson through their companies. For the three months ended July
31, 1996, consulting fees of $7,508 and $10,000 were paid to Messrs. Silverman
and Balderson through their companies.
The Company does not pay non-officer directors for their services as
such nor does it pay any director's fees for attendance at meetings. Directors
are reimbursed for any expenses incurred by them in their performance as
directors.
STOCK OPTIONS
On July 26, 1996, the Company's Board of Directors adopted a 1996 Stock
Option Plan under which a total of 941,900 shares are available for grant to
provide incentive compensation to officers and key employees of the Company.
The Plan is administered by the Board of Directors. Options may be
granted for up to 10 years at not less than the fair market value at the time of
grant, except that the term may not exceed five years and the price must be 110%
of fair market value for any person who at the time of grant owns more than 10%
of the total voting power of the Company. Unless otherwise specified in an
optionee's agreement, options granted under the Plan to officers,
officer/directors, and employees will become vested with the optionee under the
following schedule: 50% upon the first anniversary of the option grant and 12.5%
upon each of the four three-month periods following the first anniversary. The
Plan will remain in effect until it is terminated by the Board of Directors,
except that no Incentive Stock Option (as defined in Section 422 of the Internal
Revenue Code) may be granted after July 26, 2006.
Options may be exercised by payment of the option price (i) in cash,
(ii) by tender of shares of Common Stock of the Company and which have a fair
market value equal to the option price, or (iii) by such other consideration as
the Board of Directors may approve at the time the option is granted.
On August 16, 1996, options to purchase 300,000 shares and 200,000
shares at $.656 per share were granted to Sheldon Silverman and Keith Balderson,
respectively.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
From time to time, the Company has engaged in transactions with Golden
Treasures Dist. Ltd. ("Golden Treasures"), a distributor of consumer electronic
products owned and controlled by Sheldon Silverman, the President, Chief
Executive Officer, and a director of the Company. During the period ended April
30, 1996, the Company purchased 60 units of the TVT from Golden Treasures at
cost ($18 per unit). Also during this period, the Company incurred $57,095 in
marketing expenses paid to Golden Treasures. The marketing expenses were related
to the Company's involvement in the Consumer Electronics Show in Las Vegas in
January 1996, for exhibit space, advertising, and prototype samples. The Company
leases office space from Golden Treasures at the rate of $750 per month. During
the period ended April 30, 1996, rent of $3,500 was paid. At April 30, $7,933
was owed to Keith Balderson's company and $12,580 was owed to Golden Treasures
for marketing, public relations, investor relations, and office expenses. During
the three months ended July 31, 1996, rent of $700 was paid. At July 31, 1996
$12,580 was still owed to Golden Treasures. Mr. Balderson's company was paid
during the quarter ended July 31, 1996.
ITEM 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of the Company consists of 20,000,000
shares of Common Stock, $.001 par value per share, and 5,000,000 shares of
Preferred Stock, $.001 par value per share.
7
<PAGE>
COMMON STOCK
Each share of Common Stock has one vote with respect to all matters
voted upon by the shareholders. The shares of Common Stock do not have
cumulative voting rights.
Holders of Common Stock are entitled to receive dividends, when and if
declared by the Board of Directors, out of funds of the Company legally
available therefor. The Company has never declared a dividend on its Common
Stock and has no present intention of declaring any dividends in the future.
Holders of Common Stock do not have any preemptive rights or other
rights to subscribe for additional shares, or any conversion rights. Upon a
liquidation, dissolution, or winding up of the affairs of the Company, holders
of the Common Stock will be entitled to share ratably in the assets available
for distribution to such stockholders after the payment of all liabilities.
The outstanding shares of the Common Stock of the Company are fully
paid and non-assessable.
The registrar and transfer agent for the Company's Common Stock is
Silver State Transfer & Registrar, 8180 Clover Springs Lane, Salt Lake City,
Utah 84121.
PREFERRED STOCK
The Articles of Incorporation permit the Board of Directors, without
further shareholder authorization, to issue Preferred Stock in one or more
series and to fix the price and the terms and provisions of each series,
including dividend rights and preferences, conversion rights, voting rights,
redemption rights, and rights on liquidation, including preferences over the
Common Stock, all of which could adversely affect the rights of the holders of
the Common Stock.
The Board of Directors established a Series A Preferred Stock
consisting of 2,000,000 shares; however, it has withdrawn its plans to sell such
shares privately.
8
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
The Company's Common Stock has traded on the OTC Bulletin Board under
the symbol "IAPI" since April 29, 1996. The range of high and low bid prices for
each fiscal quarter for 1996, as reported by the OTC Bulletin Board, is as
follows:
BID PRICES
1996 FISCAL YEAR HIGH LOW
Quarter Ending 07/31/96............ $ 1.63 $ .343
The last reported high and low bid prices for the Company's Common
Stock were $.6875 and $.4375, respectively, as of September 26, 1996, as
reported by the OTC Bulletin Board.
The above quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commission and may not necessarily represent actual
transactions.
As of August 21,1996 there 47 record holders of the Company's Common
Stock.
Since the Company's inception, no cash dividends have been declared on
the Company's Common Stock.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not a party to any pending legal proceedings and no such
proceedings are known to be contemplated.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Since the Company's inception, it has sold shares of its Common Stock,
which sales were not registered under the Securities Act of 1933, as amended, as
follows:
From October 1, 1995 to December 5, 1995, a total of 3,124,000 shares
of Common Stock were sold for an aggregate of $156,200 in cash. From March 28,
1996 to May 6, 1996, a total of 695,000 shares of Common Stock were sold for an
aggregate of $69,500 in cash. No underwriting discounts or commissions were
paid. With respect to these sales of securities, the Company relied on the
provisions of Rule 504 of Regulation D promulgated under the Securities Act of
1933, as amended (the "Act"). Aggregate sales were less than $1,000,000.
On April 17, 1996, the Company issued a total of 5,600,000 shares of
Common Stock as consideration for various licenses to four parties. See Part I,
Item 1. Description of Business. With respect to the issuance of these shares,
the Company relied on the provisions of Section 4(2) of the Securities Act of
1933, as amended, in that such transactions did not involve any public offering.
9
<PAGE>
On August 28, 1996, a total of 607,143 shares of Common Stock were sold
for an aggregate of $170,000 in cash. No underwriting discounts or commissions
were paid. With respect to these sales of securities, the Company relied on the
provisions of Rule 504 of Regulation D promulgated under the Securities Act of
1933, as amended (the "Act"). Aggregate sales were less than $1,000,000.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of the General Corporation Law of Nevada and Article X
of the Company's Articles of Incorporation permit the Company to indemnify its
officers and directors and certain other persons against expenses in defense of
a suit to which they are parties by reason of such office, so long as the
persons conducted themselves in good faith and the persons reasonably believed
that their conduct was in the corporation's best interests or not opposed to the
corporation's best interests, and with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
Indemnification is not permitted in connection with a proceeding by or in the
right of the corporation in which the officer or director was adjudged liable to
the corporation or in connection with any other proceeding charging that the
officer or director derived an improper personal benefit, whether or not
involving action in an official capacity.
10
<PAGE>
[letterhead of Staley, Okada, Chandler & Scott]
AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Shareholders of Interactive Processing, Inc.:
We have audited the balance sheet of Interactive Processing, Inc. (a Development
Stage Company) as at 30 April 1996 and the statements of loss and deficit and
cash flow for the period then ended. 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 an audit to obtain reasonable
assurance 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.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at 30 April 1996 and the
results of its operations and the changes in its financial position for the
period then ended in accordance with accounting principles generally accepted in
the United States.
/s/Staley, Okada, Chandler & Scott
Burnaby, B.C. STALEY, OKADA, CHANDLER & SCOTT
28 August 1996 CHARTERED ACCOUNTANTS
- --------------------------------------------------------------------------------
COMMENTS BY AUDITORS FOR U.S. READERS ON
CANADA-U.S. REPORTING CONFLICT
- --------------------------------------------------------------------------------
To the Directors of Interactive Processing, Inc.:
In the United States, reporting standards for auditors require the expression of
a qualified opinion when financial statements are affected by significant
uncertainties such as those referred to in Note 1 to these financial statements.
The above opinion on our report to the shareholders dated 28 August 1996 for the
period ended 30 April 1996 is not qualified with respect to, and provides no
reference to these uncertainties since such an opinion would not be in
accordance with Canadian reporting standards for auditors when the uncertainties
are adequately disclosed in the financial statements.
/s/Staley, Okada, Chandler & Scott
Burnaby, B.C. STALEY, OKADA, CHANDLER & SCOTT
28 August 1996 CHARTERED ACCOUNTANTS
- --------------------------------------------------------------------------------
[Members of Institute of Chartered Accountants of British Columbia logo]
11
<PAGE>
<TABLE>
INTERACTIVE PROCESSING, INC. STATEMENT 1
(A Development Stage Company)
BALANCE SHEET
U.S. Funds
<CAPTION>
31 July 30 April
ASSETS 1996 1996
(UNAUDITED -
PREPARED BY MANAGEMENT)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT Cash $ 17,071 $ 38,889
Accounts receivable 224 -
Work in progress 38,684 -
Inventory 36,916 1,080
Prepaid expenses 5,150 6,216
-------------------------------
98,045 46,185
CAPITAL ASSETS, NET OF AMORTIZATION 5,180 -
LICENSE COSTS (NOTE 4) 5,600 5,600
PREPAID ROYALTY COSTS (NOTE 8B) 25,000 -
----------------------------------------------------------------------------
$ 133,825 $ 51,785
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
LIABILITIES
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT Accounts payable $ 18,728 $ 26,522
---------------------------------------------------------------------------
DUE TO A RELATED PARTY (NOTE 5) 12,580 12,580
---------------------------------------------------------------------------
CONTINUED OPERATIONS (NOTE 1)
SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------
SHARE CAPITAL (Notes 6 and 8a) 356,300 186,300
DEFICIT - STATEMENT 2 (253,783) (173,617)
-------------------------------
102,517 12,683
---------------------------------------------------------------------------
$ 133,825 $ 51,785
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
ON BEHALF OF THE BOARD:
___________________________, Director
___________________________, Director
- See Accompanying Notes -
12
<PAGE>
<TABLE>
INTERACTIVE PROCESSING, INC. STATEMENT 2
(A Development Stage Company)
STATEMENT OF LOSS AND DEFICIT
U.S. Funds
<CAPTION>
Three Months Period
Cumulative Ended Ended
from 31 July 30 April
Inception 1996 1996
(UNAUDITED - (UNAUDITED -
PREPARED BY PREPARED BY
MANAGEMENT) Management)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE Sales $ 4,747 $ 4,747 $ -
COST OF GOODS SOLD 1,842 1,842 -
---------------------------------------------------------------------------
GROSS PROFIT 2,905 2,905 -
---------------------------------------------------------------------------
EXPENSES Marketing and product development 114,979 10,267 104,712
Consulting fees 57,509 30,858 26,651
Legal 12,410 2,910 9,500
Travel 13,918 5,019 8,899
Investor relations 18,990 12,384 6,606
Accounting and audit 7,908 2,258 5,650
Office 16,088 10,458 5,630
Filing fees 6,655 2,500 4,155
Amortization 420 420 -
Rent 4,695 4,695 -
Salaries 679 679 -
Director fees 1,000 - 1,000
Transfer agent 1,000 400 600
Bank charges and interest 437 223 214
-------------------------------------
256,688 83,071 173,617
---------------------------------------------------------------------------
LOSS FOR THE PERIOD 253,783 80,166 173,617
Deficit - Beginning of period - 173,617 -
---------------------------------------------------------------------------
DEFICIT - END OF PERIOD $ 253,783 $ 253,783 $ 173,617
- -------------------------------------------------------------------------------------------------------------------
LOSS PER SHARE - BASIC $ 0.05 $ 0.01 $ 0.07
- -------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 5,074,000 9,149,000 2,666,000
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- See Accompanying Notes -
13
<PAGE>
<TABLE>
INTERACTIVE PROCESSING, INC. STATEMENT 3
(A Development Stage Company)
STATEMENT OF CASH FLOW
U.S. Funds
<CAPTION>
Three Months Period
Cumulative Ended Ended
from 31 July 30 April
CASH RESOURCES PROVIDED BY (USED IN) Inception 1996 1996
(UNAUDITED - (UNAUDITED -
PREPARED BY PREPARED BY
MANAGEMENT) Management)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES Loss for the year $ (253,783) $ (80,166) $ (173,617)
Amortization 420 420 -
Change in non-cash working capital (62,246) (81,472) 19,226
-------------------------------------
(315,609) (161,218) (154,391)
---------------------------------------------------------------------------
FINANCING ACTIVITIES Share capital issued 225,700 - 225,700
Obligations to issue share capital 170,000 170,000 -
Due from related party 12,580 - 12,580
Share issuance costs (45,000) - (45,000)
-------------------------------------
363,280 170,000 193,280
---------------------------------------------------------------------------
INVESTING ACTIVITIES Capital assets purchased (5,600) (5,600) -
License rights (25,000) (25,000) -
-------------------------------------
(30,600) (30,600) -
---------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 17,071 (21,818) 38,889
Cash position - Beginning of period - 38,889 -
---------------------------------------------------------------------------
CASH POSITION - END OF PERIOD $ 17,071 $ 17,071 $ 38,889
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
SUPPLEMENTARY SCHEDULE OF NON-CASH TRANSACTION SCHEDULE
FOR THE PERIODS ENDED 31 JULY AND 30 APRIL 1996
U.S. Funds
- --------------------------------------------------------------------------------
The following non-cash transaction occurred during the period ended 30 April
1996:
- Issued 5,600,000 common shares at $0.01 per share to purchase electronic
product licenses (Note 4).
No non-cash transactions occurred during the period ended 31 July 1996
(Unaudited - Prepared by Management).
- --------------------------------------------------------------------------------
- See Accompanying Notes -
14
<PAGE>
INTERACTIVE PROCESSING, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
31 JULY 1996 (UNAUDITED - PREPARED BY MANAGEMENT)
AND 30 APRIL 1996
U.S. Funds
- --------------------------------------------------------------------------------
1. CONTINUED OPERATIONS These financial statements are prepared
on a going concern basis which assumes
that the company will be able to realize
assets and discharge liabilities in the
normal course of business. As at 30
April 1996 the company had a deficit of
$173,617 (31 July 1996 - $253,783 -
UNAUDITED - PREPARED BY MANAGEMENT). The
company is not yet generating
significant sales revenue and does not
have sufficient cash flow to finance
obligations for marketing rights,
administrative and overhead expenses.
These factors raise substantial doubt
about the company's ability to continue
as a going concern. These financial
statements do not include any
adjustments that might result from the
outcome of these uncertainties. The
ability to continue as a going concern
is dependent on its ability to:
a) Generate profitable operations in the
future.
b) Obtain additional financing.
Management plans to raise funds through
issuance of treasury shares to finance
ongoing operations and commitments until
sufficient cash flow from operations is
generated.
- --------------------------------------------------------------------------------
2. NATURE OF OPERATIONS The company was
incorporated on 15 September 1995 under
the laws of the State of Nevada. The
business purpose of the company is to
engage in the marketing and sale of high
tech consumer electronics.
The company began active operations in
December 1995 by issuing seed stock for
cash and investigating the potential
market for a consumer electronic
product.
On 17 April 1996, the company purchased
the manufacturing and marketing rights
to an electronic product (NOTE 4).
On 16 July 1996, the company purchased
the licensing rights to promote a second
product (NOTE 8B).
These financial statements present the
results of the company's operations in
the 229 day period since inception to 30
April 1996 and the three month period
ended 31 July 1996 (UNAUDITED - PREPARED
BY MANAGEMENT).
- --------------------------------------------------------------------------------
3. SIGNIFICANT ACCOUNTING
POLICIES a) INVENTORY
Inventory is valued at lower of cost
and net realizable value.
b) LICENSE COSTS
License costs are deferred and
amortized over three years beginning
with commercial production.
c) PREPAID ROYALTY COSTS
Prepaid royalty costs are deferred
and amortized at the greater of: i)
straight line over the 23 month term
of the contract, or ii) the royalty
rate under the terms of the
contract.
- --------------------------------------------------------------------------------
15
<PAGE>
INTERACTIVE PROCESSING, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
31 JULY 1996 (UNAUDITED - PREPARED BY MANAGEMENT)
AND 30 APRIL 1996
U.S. Funds
- --------------------------------------------------------------------------------
4. LICENSE AGREEMENTS Under the terms of
four agreements dated 17 April 1996, the
company purchased the non-exclusive
rights to develop, manufacture, market,
distribute and sell a patented product
known as the "TV Terminator" in most
countries around the world.
The company agreed to pay consideration
to the licensors as follows:
a) 5,600,000 common shares (issued).
b) Royalties of $1.50 for each unit
sold by the company or any sub-
licensee of the company due on a
quarterly basis.
- --------------------------------------------------------------------------------
5. DUE TO RELATED PARTY Amounts due to a company controlled by a
director are non-interest bearing,
unsecured, and have no specific terms of
repayment.
- --------------------------------------------------------------------------------
<TABLE>
6. SHARE CAPITAL a) Details are as follows:
31 July 1996 30 April 1996
(UNAUDITED - PREPARED
BY MANAGEMENT)
--------------------- ---------------------
Number Amount Number Amount
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Authorized:
i) As at 30 April 1996
25,000,000 common shares with a par value of $0.001
ii) As at 31 July 1996 (UNAUDITED - PREPARED BY MANAGEMENT)
20,000,000 common shares with a par value of $0.001
5,000,000 cumulative, convertible, preferred shares
Issued and fully paid:
Opening balance 9,419,000 $ 186,300 - $ -
- private placements - - 3,819,000 225,700
- for license costs - - 5,600,000 5,600
- share issuance costs - - - (45,000)
---------------------------------------------------------------------------
9,419,000 186,300 9,419,000 186,300
Allotted 607,143 170,000 - -
---------------------------------------------------------------------------
10,026,143 $ 356,300 9,419,000 $ 186,300
---------------------------------------------------------------------------
</TABLE>
b) Of the total issued and outstanding
common shares of the company,
5,600,000 are restricted from
trading until 17 April 1998.
c) There are no share purchase options
or warrants outstanding as 31 July
1996 (UNAUDITED - PREPARED BY
MANAGEMENT) or at 30 April 1996.
d) On 29 April 1996, the company began
trading its shares on the National
Association of Security Dealers
("NASD") over-the-counter market.
e) Subsequent to the period ended 30
April 1996, the authorized share
capital was amended to 20,000,000
common shares and 5,000,000
cumulative, convertible, preferred
shares. The preferred shares are
redeemable after 31 December 1997 at
$0.50 per share and carry a 10%
dividend rate. No preferred shares
are outstanding at 31 July 1996
(UNAUDITED - PREPARED BY
MANAGEMENT).
- --------------------------------------------------------------------------------
16
<PAGE>
INTERACTIVE PROCESSING, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
31 JULY 1996 (UNAUDITED - PREPARED BY MANAGEMENT)
and 30 APRIL 1996
U.S. Funds
- --------------------------------------------------------------------------------
7. RELATED PARTY TRANSACTIONS The following related party transactions
are at fair market value as estimated by
management:
a) During the period ended 30 April
1996:
i) INVENTORY
The company purchased 60 units
of a consumer electronics
product at cost from a company
controlled by a director for
$18 per unit.
ii) ACCOUNTS PAYABLE
Included in accounts payable is
$7,933 owing to a company
controlled by a director.
iii) MARKETING AND PRODUCT
DEVELOPMENT
Included in marketing expense
are fees of $57,095 paid to a
company controlled by a
director.
iv) CONSULTING FEES EXPENSE
Included in consulting fees
expense is $10,301 paid to a
company controlled by a
director. An additional $8,000
of consulting fees were paid to
a company controlled by a
second director.
v) OFFICE EXPENSE
Included in office expense is
$3,500 in rent paid to a
company controlled by a
director.
b) During the period ended 31 July 1996
(UNAUDITED - PREPARED BY
MANAGEMENT):
i) CONSULTING FEES EXPENSE
Included in consulting fees
expense is $7,508 paid to a
company controlled by a
director. An additional $10,000
of consulting fees were paid to
a company controlled by a
second director.
ii) OFFICE EXPENSE
Included in office expense is
$700 in rent paid to a company
controlled by a director.
- --------------------------------------------------------------------------------
8. SUBSEQUENT EVENTS a) SHARE CAPITAL ISSUED
On 28 August 1996, the company
agreed to issue 607,143 treasury
shares for cash consideration of
$0.28 per share for a total of
$170,000.
As at 31 July 1996, the proceeds of
this private placement were received
in contemplation of completing the
private placement.
17
<PAGE>
INTERACTIVE PROCESSING, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
31 JULY 1996 (UNAUDITED - PREPARED BY MANAGEMENT)
and 30 APRIL 1996
U.S. Funds
- --------------------------------------------------------------------------------
8. SUBSEQUENT EVENTS - CONTINUED b) LICENSE AGREEMENT
Under the terms of an agreement
dated 16 July 1996, the company
purchased the exclusive licensing
rights in the United States and
Canada for the use of the trademarks
of the "Married ... with Children"
television series to promote the
company's "The Bundy Sport Remote"
product.
The licensing rights expire on 30
June 1998 but can be terminated by
the licensor under certain
conditions.
The company will pay a royalty of
10% to 12% of net sales depending
upon the terms of the product sale.
The company has guaranteed a minimum
of $75,000 in total royalties during
this term. The first $25,000 of the
total guaranteed minimum was due as
an advance upon signing the
agreement (paid).
Until 12 July 1997, the company has
an option to extend the agreement to
exclusively worldwide by paying an
additional $25,000. In addition, if
the company has paid the guaranteed
minimum royalty and met certain
sales targets, it can extend the
term of the agreement to 30 June
2000 by providing written notice by
1 May 1998.
c) STOCK OPTIONS ISSUED
On 16 August 1996, the company
granted incentive stock options to
Sheldon Silverman (300,000 shares)
and Keith Balderson (200,000 shares)
exercisable at $0.656 per share
until 16 August 2006. Both are
directors of the company.
- --------------------------------------------------------------------------------
18
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
<TABLE>
<CAPTION>
REGULATION SEQUENTIAL
S-B NUMBER EXHIBIT PAGE NUMBER
<S> <C>
3.1 Articles of Incorporation 21
3.2 Bylaws 43
10.1 Patent and Trademark License Agreement between Amoeba 65
Corporation and Interactive Processing, Inc. dated April 17, 1996
10.2 Patent and Trademark Sublicense Agreement between But Sup 77
But International, Inc. and Interactive Processing, Inc. dated April
17, 1996
10.3 Patent and Trademark Sublicense Agreement between Aurora 89
Marketing Inc. and Interactive Processing, Inc. dated April 17,
1996
10.4 Patent and Trademark Sublicense Agreement between Measca 101
Corporation and Interactive Processing, Inc. dated April 17, 1996
10.5 1996 Stock Option Plan 113
10.6 1996 Restricted Stock Plan 124
10.7 Merchandising License Agreement between ELP Communications 134
and Interactive Processing, Inc. dated April 17, 1996
27 Financial Data Schedule 139
</TABLE>
ITEM 2. DESCRIPTION OF EXHIBITS.
19
<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.
INTERACTIVE PROCESSING, INC.
Date:November 25, 1996 By:/s/Sheldon Silverman
Sheldon Silverman, President
20
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
<PAGE>
[Stamp and notation from Nevada
Secretary of State's Office]
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
FOR
INTERACTIVE PROCESSING, INC.
We, the undersigned President and Secretary of Interactive Processing,
Inc. do hereby certify pursuant to NRS 78.395 and 78.390.
That the Board of Directors of said Corporation unanimously agreed at a
meeting duly convened, held on the 1st day of May, 1996 to adopt a resolution to
amend the original article as follows; which amendment was also approved by a
majority of the shareholders in a written consent in lieu of a Special Meeting,
there being 3,819,000 shares authorized to vote and 2,895,000 shares having
voted in favor of the amended articles.
Article VI is hereby amended to read as follows:
Section 1. AUTHORIZED SHARES. The total number of shares which this
Corporation is authorized to issue is 25,000,000 shares of Common Stock at $.001
par value per share.
(a) The total number of shares of Common Stock which this
Corporation is authorized to issue is 20,000,000 shares at
$.001 par value per share.
(b) The total number of shares of Preferred Stock which this
Corporation is authorized to issue is 5,000,000 shares at
$.001 par value per share, which Preferred Stock may contain
special preferences as determined by the Board of Directors of
the Corporation, including, but not limited to, the bearing of
interest and convertibility into shares of Common Stock of the
Corporation.
/s/Keith Balderson
------------------------------
Keith Balderson
/s/Mont Tanner
------------------------------
Mont Tanner, Secretary/Treasurer
PROVINCE OF B.C. )
) ss.
CITY OF VANCOUVER )
On this 23rd day of May, 1996, personally appeared before me, a Notary
Public, Keith Balderson, President of the above-mentioned Corporation, who
acknowledged that he excecuted the above instrument.
/s/Richard Raibmon
------------------------------
Notary Public
(Notary stamp or seal) A Notary Public in and for the
Province of British Columbia
MY COMMISSION IS FOR LIFE
<PAGE>
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
On this 1st day of May, 1996, personally appeared before me, a Notary
Public, Mont Tanner, Secretary/Treasurer of the above-mentioned Corporation, who
acknowledged that he excecuted the above instrument.
/s/Trisha M. Chapman
------------------------------
Notary Public
[Notary Stamp]
(Notary stamp or seal)
<PAGE>
[STAMP AND NOTATIONS FROM
THE OFFICE OF THE SECRETARY OF
STATE OF THE STATE OF NEVADA]
CERTIFICATE OF DESIGNATIONS OF SERIES A PREFERRED STOCK
OF
INTERACTIVE PROCESSING, INC.
Pursuant to Section 78.195 of the Nevada Revised Statutes, we the
undersigned officers of Interactive Processing, Inc., a Nevada Corporation (the
"Company"), do hereby certify that 2,000,000 shares of the 5,000,000 Shares of
Preferred Stock, $.001 par value per Share, authorized by the Amended Articles
of Incorporation which shall be filed with the Nevada Secretary of State which
shall be designated Series A Preferred Stock (the "Shares") and shall contain
the following designations and preferences:
SERIES A PREFERRED STOCK
The Preferred Stock has been authorized by the Board of Directors of
the Company as a new series of Preferred Stock. So long as any Preferred Stock
is outstanding, the Company is prohibited from issuing any series of stock
having rights senior to the Preferred Stock ("Senior Stock") without the
approval of the holders of 66 2/3% of the outstanding Preferred Stock.
Additionally, so long as any Preferred Stock is outstanding, the Company may
not, without the approval of the holders of at least 50% of the outstanding
Preferred Stock, issue any series of stock ranking on parity with the Preferred
Stock ("Parity Stock") as to dividend or liquidation rights, or having a right
to vote on matters as to which the Preferred Stock is not entitled to vote, or
if the Company's stockholder equity (as defined) is less than the total
liquidation preferences of all outstanding Preferred Stock.
DIVIDENDS. Holders of shares of Preferred Stock will be entitled to
receive, when, as, and if declared by the Board of Directors out of funds at the
time legally available therefor, cash dividends at an annual rate of 10% and no
more, payable quarterly in arrears, commencing at the end of the first calendar
quarter ending after closing of this offering, except that if such date is a
Saturday, Sunday or a legal holiday, then such dividend shall be payable on the
next day that is not a Saturday, Sunday or legal holiday. Dividends will accrue
and be cumulative from the date of first issuance of the Preferred Stock and
will be payable to holders of record as they appear on the stock books of the
Company on such record dates as are fixed by the Board of Directors.
<PAGE>
Unless a class or series of Senior Stock or Parity Stock is authorized
as described above, the Preferred Stock will be senior as to dividends to any
series or class of the Company's stock hereafter issued, and if at any time the
Company has failed to pay or declare and set apart for payment accrued and
unpaid dividends on the Preferred Stock, the Company may not pay any other
dividends. The Preferred Stock will have priority as to dividends over the
Common Stock and any series or class of the Company's stock hereafter issued,
and no dividend (other than dividends payable solely in Common Stock or any
other series or class of the Company's stock hereafter issued that ranks junior
as to dividends to the Preferred Stock) may be declared, paid or set apart for
payment on, and no purchase, redemption or other acquisition may be made by the
Company of, any Common Stock or other stock unless all accrued and unpaid
dividends on the Preferred Stock have been paid or declared and set apart for
payment, or contemporaneously pays or declares and sets apart for payment, all
accrued and unpaid dividends for all prior periods on the Preferred Stock; and
the Company may not pay dividends on the Preferred Stock unless it has paid or
declared and set apart for payment, or contemporaneously pays or declares and
sets apart for payment, all accrued and unpaid dividends for all prior periods
on any outstanding Parity Stock. Whenever all accrued dividends are not paid in
full on the Preferred Stock or any Parity Stock, all dividends declared on the
Preferred Stock and any such Parity Stock will be declared or made pro rata so
that the amount of dividends declared per share on the Preferred Stock and any
such Parity Stock will bear the same ratio amount of dividends declared per
share on the Preferred Stock and any such Parity Stock will bear the same ratio
that accrued and unpaid dividends per share on the Preferred Stock and such
Parity Stock bear to each other.
The amount of dividends payable per share of Preferred Stock for each
quarterly dividend period will be computed by dividing the annual dividend
amount by four. The amount of dividends payable for the initial dividend period
and any period shorter than a full dividend period will be computed on the basis
of a 360 day year. No interest will be payable in respect of any dividend
payment on the Preferred Stock which may be in arrears.
PREFERENCE
On the dissolution, liquidation, or winding up of the Company, the
holders of the Series A Preferred Stock shall be entitled to
2
<PAGE>
receive, before any payment shall be made to the holders of Common Stock, the
sum of fifty cents ($.50) per share together with, in all cases, all past
accumulated and unpaid dividends. The consolidation or merger of the Company at
any time, or from time to time, with any other corporation or corporations, or a
sale of all or substantially all of the assets of the Company, shall not be
construed as a dissolution, liquidation, or winding up of the Company within the
meaning of these provisions.
After payment of the full preferential amounts previously mentioned,
the holders of the Series A Preferred Stock shall not be entitled to any further
participation in any distribution of the assets or funds of the Company, and the
remaining assets and funds of the Company shall be divided and distributed among
the holders of the Common Shares then outstanding according to their respective
interest.
REDEMPTION CLAUSE
The Company, at the option of the Board of Directors, may at any time
after December 31, 1997 redeem the whole or any part, of the Series A Preferred
Shares outstanding by paying in cash the sum of $.50 per Share, plus all
dividends accrued, unpaid, and accumulated as provided in these provisions to
and including the date of redemption ("redemption price") and by giving to each
Series A Preferred shareholder of record at his or her last known address, as
shown on the records of the Company, at least thirty but not more than fifty
days prior notice personally or in writing, by mail, postage prepaid, stating
the class or series or part of any class or series of shares to be redeemed and
the date and plan of redemption, the redemption price, and the place where each
shareholder may obtain payment of the redemption price on surrender of his or
her respective Share certificates ("redemption notice"). Should only a part of
the outstanding Series A Preferred Shares be redeemed, the redemption shall be
affected by lot, or pro rata, as prescribed by the Board of Directors. On or
after the date fixed for redemption, each holder of Shares called for redemption
shall surrender his or her certificate for those Shares to the Company at the
place designated in the redemption notice and shall then be entitled to receive
payment of the redemption price. Should less than all the Shares represented by
any surrender certificate be redeemed, a new certificate for the unredeemed
Shares shall be issued. If the redemption notice is duly given and if sufficient
funds for the redemption are available on the date fixed for
3
<PAGE>
redemption, then, whether or not the certificates that evidence the Shares to be
redeemed are surrendered, all rights with respect to the Shares shall terminate
on the date fixed for redemption, except for the right of the holders to receive
the redemption price, without interest, on surrender of their certificate for
the Shares.
If, on or prior to any date fixed for redemption of Series A Preferred
Shares as provided in this provision, the Company deposits with an escrow agent
of its choice to and as transfer agent for the Company, as a trust fund, a sum
sufficient to redeem, on the date fixed for redemption of Series A Preferred
Shares, the Shares called for redemption, with irrevocable instructions and
authority to the bank or trust company to publish the notice of redemption of
Series A Preferred Shares, or to complete the publication if previously
commenced, and to pay, or and after the date fixed for redemption or prior to
that date, the redemption price of the Shares to their respective holders on
surrender of their Share certificates, then from and after the date of the
deposit, even though that date may be prior to the date fixed for redemption,
the Shares so called be deemed to be redeemed and dividends on those Shares
shall cease to accrue after the date fixed for redemption. The deposit shall be
deemed to constitute full payment of the Shares to their holders and from and
after the date of the deposit the Shares shall be deemed to be no longer
outstanding, and the holders of those Shares shall cease to be shareholders with
respect to those Shares and shall have no rights with respect to them, except
the right to receive from the bank or trust company payment of the redemption
price of the Shares, without interest, on surrender of their certificates for
the Shares.
LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding up of the Company, holders of shares of Preferred Stock are entitled to
receive the liquidation preference of $.50 per share, plus an amount equal to
any accrued and unpaid dividends to the payment date, and no more, before any
payment or distribution is made to the holders of Common Stock, or any series or
class of the Company's stock hereafter issued that ranks junior as to
liquidation rights to the Preferred Stock. The holders of Preferred Stock and
any Parity Stock hereafter issued that rank on a parity as to liquidation rights
with the Preferred Stock will be entitled to share ratably, in accordance with
the respective
4
<PAGE>
preferential amounts payable on such stock, in any distribution which is not
sufficient to pay in full the aggregate of the amounts payable thereon. After
payment in full of the liquidation preference of the shares of Preferred Stock,
the holders of such shares will not be entitled to any further participation in
any distribution of assets by the Company. Neither a consolidation, merger or
other business combination of the Company with or into another corporation or
other entity nor a sale or transfer of all or part of the Company's assets for
cash, securities or other property will be considered a liquidation, dissolution
or winding up of the Company.
CONVERSION RIGHTS OF PREFERRED STOCK.
AUTOMATIC CONVERSION. If at any time after the initial issuance
thereof the closing price of the Preferred Stock is reported on the NASD
Bulletin Board (or the closing sale price as report on any national securities
exchange on which the Preferred Stock is then listed), shall, for a period of 10
consecutive trading days, exceed $5.00, then effective as of the closing of
business on the tenth such trading day, all shares of Preferred Stock then
outstanding and all accrued and undeclared dividends thereon shall immediately
and automatically without further notice be converted into five shares of Common
Stock which Conversion Price may be decreased as described below.
OPTIONAL CONVERSION. At any time after the initial issuance of the
Preferred Stock and prior to the redemption thereof, the holder of any shares of
Preferred Stock will have the right, at the holder's option, to convert any or
all such shares and all accrued and undeclared dividends thereon into five
shares of Common Stock which Conversion Price may be decreased as described
below. The amount which shall be convertible at the Conversion Price shall be
the total of the liquidation preference ($.50 per share of Preferred Stock) plus
all accrued and undeclared dividends through the end of the calendar quarter in
which the conversion is effected. If the Preferred Stock has been called for
redemption, the conversion right shall terminate at the close of business on the
last business day prior to the date fixed for redemption (unless the Company
defaults in the payment of the redemption price.)
5
<PAGE>
Fractional shares of common stock will be rounded to the nearest full
share upon conversion. The Conversion Price will be subject to adjustment in
certain events, including: subdivisions or combinations of the Common Stock; or
the distribution to all holders of Common Stock of evidences of indebtedness of
the Company, cash (excluding ordinary cash dividends), other assets or rights or
Warrants to subscribe for or purchase any securities. No adjustment in the
Conversion Price will be required to be made until cumulative adjustments amount
to 1% or more of the Conversion Price as last adjusted; however, any adjustment
not made shall be carried forward.
The Company from time to time may decrease the Conversion Price by any
amount for any period of at least 20 days, in which case the Company shall give
at least 15 days notice of such decrease. The Company may, at its option, make
such decreases in the Conversion Price, in addition to those set forth above, as
the Board of Directors of the Company deems advisable to avoid or diminish any
income tax to holders of Common Stock resulting from any dividend or
distribution of stock or issuance of rights or warrants to purchase or subscribe
for Common Stock or from any event treated as such for income tax purposes.
In case of any reclassification of the Common Stock, any consolidation
of the Company with, or merger of the Company into, any other person, any merger
of any person into the Company (other than a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock), any sale or transfer of all or substantially all of the assets of
the Company or any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or other properties, then provisions shall
be made that the holder of such share of Preferred Stock then outstanding shall
have the right thereafter, during the period such share of Preferred Stock shall
be convertible, to convert such share into the kind and amount of securities,
cash or other property receivable upon such reclassification, consolidation,
merger, sale, transfer or share exchange by a holder of the number of shares of
Common Stock into which such share of Preferred Stock might have been converted
immediately prior to such reclassification, consolidation, merger, sale transfer
or share exchange.
6
<PAGE>
OTHER PROVISIONS. The shares of Preferred Stock, when issued as
described in this Memorandum will be duly and validly issued, fully paid and
nonassessable.
VOTING RIGHTS. The holders of the Preferred Stock will have no voting
rights except as described below or as required by law. In exercising any such
vote, each outstanding share of Preferred Stock will be entitled to one vote,
excluding shares held by the Company or any entity controlled by the Company,
which shares shall have no voting rights.
Whenever dividends on the Preferred Stock or any outstanding shares of
Parity Stock have not been paid in an aggregate amount equal to at least six
quarterly dividends on such shares (whether or not consecutive), the number of
directors of the Company will be increased by two, and the holders of the
Preferred Stock, voting separately as a class with the holders of any Parity
Stock on which any like voting rights have been conferred and are exercisable,
will be entitled to elect such two additional directors to the Board of
Directors at any meeting of stockholders of the Company at which directors are
to be elected held during the period such dividends remain in arrears. Such
voting rights will terminate when all such dividends accrued and in default have
been paid in full or set apart for payment. The term of office of all directors
so elected will terminate immediately upon such payment or setting apart for
payment.
So long as any Preferred Stock is outstanding, the Company shall not,
without the affirmative vote of the holders of at least 66 2/3% of all
outstanding shares of Preferred Stock, voting separately as a class, (i) amend,
alter or repeal any provision of the Certificate or the Bylaws of the Company so
as to adversely affect the relative rights, preferences, qualifications,
limitations or restrictions of the Preferred Stock, (ii) authorize or issue, or
increase the authorized amount of, any additional class or series of stock, or
any security convertible into stock of such class or series, ranking senior to
the Preferred Stock as to dividends or upon liquidation, dissolution or winding
up of the Company or (iii) effect any reclassification of the Preferred Stock.
7
<PAGE>
So long as any Preferred Stock is outstanding, the Company shall not,
without the affirmative vote of the holders of at least 50% of all outstanding
shares of Preferred Stock, voting separately as a class, (i) authorize, issue,
or increase the authorized amount of any additional class or series of stock, or
any security convertible into stock of such class or series, ranking on parity
with the Preferred Stock as to dividends or liquidation and having superior
voting rights, or (ii) incur indebtedness or authorize or issue, or increase the
authorized amount of, any additional class or series of stock, or any security
convertible into stock of such class or series, ranking on parity with the
Preferred Stock as to dividend or liquidation rights if, immediately following
such event, Adjusted Stockholder's Equity is less than the aggregate liquidation
preferences of all Preferred Stock and stock ranking senior to or on parity with
the Preferred Stock as to liquidation. Adjusted Stockholder's Equity is the
Company's stockholder's equity as shown on its most recent balance sheet,
increased by (a) any amount of any liability or other reduction in stockholder's
equity attributable to the Preferred Stock and each series of stock senior to or
on with parity with the Preferred Stock as to liquidation and (b) the net
proceeds of any equity financing since the date of the balance sheet, reduced by
any reduction in stockholder's equity resulting from certain dispositions of
assets since the date of the balance sheet.
/s/Keith Balderson
------------------------------
Keith Balderson, President
/s/Mont E. Tanner
------------------------------
Mont Tanner, Secretary
8
<PAGE>
ACKNOWLEDGMENT
PROVINCE OF B.C. )
) ss.
CITY OF VANCOUVER )
On this the 23rd day of May 1996, before me, the undersigned Notary
Public, personally appeared Keith Balderson, known to me to be the President of
Interactive Processing, Inc., a Nevada Corporation, the corporation which
executed the attached instrument, and who executed same on behalf of said
corporation, freely and voluntarily and for the uses and purposes therein
mentioned.
/s/Richard Raibmon
------------------------------
Notary Public
A Notary Public in and for the
Province of British Columbia
MY COMMISSION IS FOR LIFE
9
[Stamp from Secretary of
State's Office]
<PAGE>
[Stamp from Nevada
Secretary of State]
ARTICLES OF INCORPORATION
OF
INTERACTIVE PROCESSING,INC.
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated
ourselves together for the purpose of forming a Corporation under and pursuant
to the laws of the State of Nevada, and we do hereby certify that:
ARTICLE I - NAME: The exact name of this Corporation is:
INTERACTIVE PROCESSING, INC.
ARTICLE II - RESIDENT AGENT:
The Resident Agent of the Corporation is Max C. Tanner, Esq., The Law
Offices of Max C. Tanner, 2950 East Flamingo Road, Suite G, Las Vegas, Nevada
89121.
ARTICLE III - DURATION: The Corporation shall have perpetual existence.
ARTICLE IV - PURPOSES: The purpose, object and nature of the business for which
this Corporation is organized are:
(a) To engage in any lawful activity;
(b) To carry on such business as may be necessary, convenient, or
desirable to accomplish the above purposes, and to do all
other things incidental thereto which are not forbidden by law
or by these Articles of Incorporation.
ARTICLE V - POWERS: The powers of the Corporation shall be those powers granted
by 78.060 and 78.070 of the Nevada Revised Statutes under which this corporation
is formed. In addition, the Corporation shall have the following specific
powers:
(a) To elect or appoint officers and agents of the Corporation and
to fix their compensation;
<PAGE>
(b) To act as an agent for any individual, association,
partnership, corporation or other legal entity;
(c) To receive, acquire, hold, exercise rights arising out of the
ownership or possession thereof, sell, or otherwise dispose
of, shares or other interests in, or obligations of,
individuals, associations, partnerships, corporations, or
governments;
(d) To receive, acquire, hold, pledge, transfer, or otherwise
dispose of shares of the corporation, but such shares may only
be purchased, directly or indirectly, out of earned surplus;
(e) To make gifts or contributions for the public welfare or for
charitable, scientific or educational purposes, and in time of
war, to make donations in aid of war activities.
ARTICLE VI - CAPITAL STOCK:
Section 1. AUTHORIZED SHARES. The total number of shares which this
Corporation is authorized to issue is 25,000,000 shares of Common Stock
at $.001 par value per share.
Section 2. VOTING RIGHTS OF SHAREHOLDERS. Each holder of the Common
Stock shall be entitled to one vote for each share of stock standing in
his name on the books of the Corporation.
Section 3. CONSIDERATION FOR SHARES. The Common Stock shall be issued
for such consideration, as shall be fixed from time to time by the
Board of Directors. In the absence of fraud, the judgment of the
Directors as to the value of any property for shares shall be
conclusive. When shares are issued upon payment of the consideration
fixed by the Board of Directors, such shares shall be taken to be fully
paid stock and shall be non-assessable. The Articles shall not be
amended in this particular.
Section 4. PRE-EMPTIVE RIGHTS. Except as may otherwise be provided by
the Board of Directors, no holder of any shares of the stock of the
Corporation, shall have any preemptive right to purchase, subscribe
for, or otherwise acquire any shares of stock of the Corporation of any
class now or hereafter authorized, or any securities exchangeable for
or convertible into such shares, or any warrants or other instruments
evidencing rights or options to subscribe for, purchase, or otherwise
acquire such shares.
2
<PAGE>
Section 5. STOCK RIGHTS AND OPTIONS. The Corporation shall have the
power to create and issue rights, warrants, or options entitling the
holders thereof to purchase from the corporation any shares of its
capital stock of any class or classes, upon such terms and conditions
and at such times and prices as the Board of Directors may provide,
which terms and conditions shall be incorporated in an instrument or
instruments evidencing such rights. In the absence of fraud, the
judgment of the Directors as to the adequacy of consideration for the
issuance of such rights or options and the sufficiency thereof shall be
conclusive.
ARTICLE VII - ASSESSMENT OF STOCK: The capital stock of this Corporation, after
the amount of the subscription price has been fully paid in, shall not be
assessable for any purpose, and no stock issued as fully paid up shall ever be
assessable or assessed. The holders of such stock shall not be individually
responsible for the debts, contracts, or liabilities of the Corporation and
shall not be liable for assessments to restore impairments in the capital of the
Corporation.
ARTICLE VIII - DIRECTORS: For the management of the business,and for the conduct
of the affairs of the Corporation, and for the future definition, limitation,
and regulation of the powers of the Corporation and its directors and
shareholders, it is further provided:
Section 1. SIZE OF BOARD. The members of the governing board of the
Corporation shall be styled directors. The number of directors of the
Corporation, their qualifications, terms of office, manner of election,
time and place of meeting, and powers and duties shall be such as are
prescribed by statute and in the by-laws of the Corporation. The name
and post office address of the directors constituting the first board
of directors, which shall be one (1) in number are:
NAME ADDRESS
MAX C. TANNER 2950 E. Flamingo, Suite G
Las Vegas, Nevada 89121
Section 2. POWERS OF BOARD. In furtherance and not in limitation of the
powers conferred by the laws of the State of Nevada, the Board of
Directors is expressly authorized and empowered:
3
<PAGE>
(a) To make, alter, amend, and repeal the By-Laws subject to the
power of the shareholders to alter or repeal the By-Laws made
by the Board of Directors.
(b) Subject to the applicable provisions of the ByLaws then in
effect, to determine, from time to time, whether and to what
extent, and at what times and places, and under what
conditions and regulations, the accounts and books of the
Corporation, or any of them, shall be open to shareholder
inspection. No shareholder shall have any right to inspect any
of the accounts, books or documents of the Corporation, except
as permitted by law, unless and until authorized to do so by
resolution of the Board of Directors or of the Shareholders of
the Corporation;
(c) To issue stock of the Corporation for money, property,services
rendered, labor performed, cash advanced, acquisitions for
other corporations or for any other assets of value in
accordance with the action of the board of directors without
vote or consent of the shareholders and the judgment of the
board of directors as to value received and in return
therefore shall be conclusive and said stock, when issued,
shall be fully-paid and non-assessable.
(d) To authorize and issue, without shareholder consent,
obligations of the Corporation, secured and unsecured, under
such terms and conditions as the Board, in its sole
discretion, may determine, and to pledge or mortgage, as
security therefore, any real or personal property of the
Corporation, including after-acquired property;
(e) To determine whether any and, if so, what part, of the earned
surplus of the Corporation shall be paid in dividends to the
shareholders, and to direct and determine other use and
disposition of any such earned surplus;
(f) To fix, from time to time, the amount of the profits of
the Corporation to be reserved as working capital or for
any other lawful purpose;
(g) To establish bonus, profit-sharing, stock option, or other
types of incentive compensation plans for the employees,
including officers and directors, of the Corporation, and to
fix the amount of profits to be shared or distributed, and to
determine the persons to participate in any such plans and the
amount of their respective participations.
4
<PAGE>
(h) To designate, by resolution or resolutions passed by a
majority of the whole Board, one or more committees, each
consisting of two or more directors, which, to the extent
permitted by law and authorized by the resolution or the
By-Laws, shall have and may exercise the powers of the Board;
(i) To provide for the reasonable compensation of its own members
by By-Law, and to fix the terms and conditions upon which such
compensation will be paid;
(j) In addition to the powers and authority herein before, or by
statute, expressly conferred upon it, the Board of Directors
may exercise all such powers and do all such acts and things
as may be exercised or done by the corporation, subject,
nevertheless, to the provisions of the laws of the State of
Nevada, of these Articles of Incorporation, and of the By-Laws
of the Corporation.
Section 3. INTERESTED DIRECTORS. No contract or transaction between
this Corporation and any of its directors, or between this Corporation
and any other corporation, firm, association, or other legal entity
shall be invalidated by reason of the fact that the director of the
Corporation has a direct or indirect interest, pecuniary or otherwise,
in such corporation, firm, association, or legal entity, or because the
interested director was present at the meeting of the Board of
Directors which acted upon or in reference to such contract or
transaction, or because he participated in such action, provided that:
(1) the interest of each such director shall have been disclosed to or
known by the Board and a disinterested majority of the Board shall have
nonetheless ratified and approved such contract or transaction (such
interested director or directors may be counted in determining whether
a quorum is present for the meeting at which such ratification or
approval is given); or (2) the conditions of N.R.S. 78.140 are met.
ARTICLE IX - LIMITATION OF LIABILITY OF OFFICERS OR DIRECTORS: The personal
liability of a director or officer of the corporation to the corporation or the
Shareholders for damages for breach of fiduciary duty as a director or officer
shall be limited to acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law.
ARTICLE X - INDEMNIFICATION: Each director and each officer of the
corporation may be indemnified by the corporation as follows:
(a) The corporation may indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or
5
<PAGE>
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation), by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, actually and reasonably incurred
by him in connection with the action, suit or proceeding, if
he acted in good faith and in a manner which 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. The termination of any action, suite or proceeding,
by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent, does not of itself create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and that, with respect
to any criminal action or proceeding, he had reasonable cause
to believe that his conduct was unlawful.
(b) The corporation may indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened,
pending or completed action or suit by or in the right of the
corporation, to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or
other enterprise against expenses including amounts paid in
settlement and attorneys' fees actually and reasonably
incurred by him in connection with the defense or settlement
of the action or suit, if he acted in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the corporation. Indemnification may not
be made for any claim, issue or matter as to which such a
person has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals there from, to be liable to
the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in
which the action or suit was brought or other court of
competent jurisdiction determines upon application that in
view of all the circumstances of the case the person is fairly
and reasonably entitled to indemnity for such expenses as the
court deems proper.
6
<PAGE>
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
subsections (a) and (b) of this Article, or in defense of any
claim, issue or matter therein, he must be indemnified by the
corporation against expenses, including attorney's fees,
actually and reasonably incurred by him in connection with the
defense.
(d) Any indemnification under subsections (a) and (b) unless
ordered by a court or advanced pursuant to subsection (e),
must be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(i) By the stockholders;
(ii) By the board of directors by majority vote of a
quorum consisting of directors who were not parties
to the act, suit or proceeding;
(iii) If a majority vote of a quorum consisting of
directors who were not parties to the act, suit or
proceeding so orders, by independent legal counsel in
a written opinion; or
(iv) If a quorum consisting of directors who were not
parties to the act, suit or proceeding cannot be
obtained, by independent legal counsel in a written
opinion.
(e) Expenses of officers and directors incurred in defending a
civil or criminal action, suit or proceeding must be paid by
the corporation as they are incurred and in advance of the
final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by
a court of competent jurisdiction that he is not entitled to
be indemnified by the corporation. The provisions of this
subsection do not affect any rights to advancement of expenses
to which corporate personnel other than directors or officers
may be entitled under any contract or otherwise by law.
(f) The indemnification and advancement of expenses authorized in
or ordered by a court pursuant to this section:
7
<PAGE>
(i) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses
may be entitled under the certificate or articles of
incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise,
for either an action in his official capacity or an
action in another capacity while holding his office,
except that indemnification, unless ordered by a
court pursuant to subsection (b) or for the
advancement of expenses made pursuant to subsection
(e) may not be made to or on behalf of any director
or officer if a final adjudication establishes that
his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law
and was material to the cause of action.
(ii) Continues for a person who has ceased to be a
director, officer, employee or agent and inures to
the benefit of the heirs, executors and
administrators of such a person.
ARTICLE XI - PLACE OF MEETING; CORPORATE BOOKS: Subject to the laws of the State
of Nevada, the shareholders and the Directors shall have power to hold their
meetings, and the Directors shall have power to have an office or offices and to
maintain the books of the Corporation outside the State of Nevada, at such place
or places as may from time to time be designated in the By-Laws or by
appropriate resolution.
ARTICLE XII - AMENDMENT OF ARTICLES: The provisions of these Articles of
Incorporation may be amended, altered or repealed from time to time to the
extent and in the manner prescribed by the laws of the State of Nevada, and
additional provisions authorized by such laws as are then in force may be added.
All rights herein conferred on the directors, officers and shareholders are
granted subject to this reservation.
ARTICLE XIII - INCORPORATOR: The name and address of the sole
incorporator signing these Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
1. Max C. Tanner 2950 East Flamingo Road, Suite G
Las Vegas, Nevada 89121
8
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 15th day of September, 1995.
/s/Max C. Tanner
-----------------------------
Max C. Tanner
STATE OF NEVADA )
)SS:
COUNTY OF CLARK )
On September 15, 1995, personally appeared before me, a Notary Public, Max
C. Tanner, who acknowledged to me that he executed the foregoing Articles of
Incorporation for Interactive Processing, Inc., a Nevada corporation.
/s/Patricia Perkins
[Notary Stamp] -----------------------------
Notary Public
9
<PAGE>
[Stamp from Nevada
Secretary of State]
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
IN THE MATTER OF INTERACTIVE PROCESSING, INC.
We, The Law Offices of Max C. Tanner, do hereby certify that on the
15th day of September, 1995, we accepted the appointment as Resident Agent of
the above-entitled corporation in accordance with Sec. 78.090, NRS 1957.
Furthermore, that the principal office in this state is located at The
Law Offices of Max C. Tanner, 2950 East Flamingo Road, Suite G, City of Las
Vegas 89121, County of Clark, State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of
September, 1995.
THE LAW OFFICES OF MAX C. TANNER
By: /s/Max C. Tanner
------------------------------
Max C. Tanner, Esq.
Resident Agent
10
<PAGE>
EXHIBIT 3.2
BYLAWS
<PAGE>
BY-LAWS OF
INTERACTIVE PROCESSING, INC.
ARTICLE I
SHAREHOLDERS
Section 1.01 ANNUAL MEETING. The annual meeting of the shareholders
shall be held at such date and time as shall be designated by the board of
directors and stated in the notice of the meeting or in a duly-executed waiver
of notice thereof. If the corporation shall fail to provide notice of the annual
meeting of the shareholders as set forth above, the annual meeting of the
shareholders of the corporation shall be held during the month of November or
December of each year as determined by the Board of Directors, for the purpose
of electing directors of the corporation to serve during the ensuing year and
for the transaction of such other business as may properly come before the
meeting. If the election of the directors is not held on the day designated
herein for any annual meeting of the shareholders, or at any adjournment
thereof, the president shall cause the election to be held at a special meeting
of the shareholders as soon thereafter as is convenient.
Section 1.02 SPECIAL MEETINGS. Special meetings of the shareholders may
be called by the president or the Board of Directors and shall be called by the
president at the written request of the holders of not less than 51% of the
issued and outstanding shares of capital stock of the corporation.
All business lawfully to be transacted by the shareholders may be
transacted at any special meeting at any adjournment thereof. However, no
business shall be acted upon at a special meeting, except that referred to in
the notice calling the meeting, unless all of the outstanding capital stock of
the corporation is represented either in person or by proxy. Where all of the
capital stock is represented, any lawful business may be transacted and the
meeting shall be valid for all purposes.
Section 1.03 PLACE OF MEETINGS. Any meeting of the shareholders of the
corporation may be held at its principal office in the State of Nevada or such
other place in or out of the United States as the Board of Directors may
designate. A waiver of notice signed by the shareholders entitled to vote may
designate any place for the holding of such meeting.
<PAGE>
Section 1.04 NOTICE OF MEETINGS.
(a) The secretary shall sign and deliver to all shareholders
of record written or printed notice of any meeting at least ten (10)
days, but not more than sixty (60) days, before the date of such
meeting; which notice shall state the place, date and time of the
meeting, the general nature of the business to be transacted, and, in
the case of any meeting at which directors are to be elected, the names
of nominees, if any, to be presented for election.
(b) In the case of any meeting, any proper business may be
presented for action, except that the following items shall be valid
only if the general nature of the proposal is stated in the notice or
written waiver of notice:
(1) Action with respect to any contract or
transaction between the corporation and one or more of its
directors or another firm, association, or corporation in
which one or more of its directors has a material financial
interest;
(2) Adoption of amendments to the Articles of
Incorporation; or
(3) Action with respect to the merger, consolidation,
reorganization, partial or complete liquidation, or
dissolution of the corporation.
(c) The notice shall be personally delivered or mailed by
first class mail to each shareholder of record at the last known
address thereof, as the same appears on the books of the corporation,
and the giving of such notice shall be deemed delivered the date the
same is deposited in the United States mail, postage prepaid. If the
address of any shareholder does not appear upon the books of the
corporation, it will be sufficient to address any notice to such
shareholder at the principal office of the corporation.
(d) The written certificate of the person calling any meeting,
duly sworn, setting forth the substance of the notice, the time and
place the notice was mailed or personally delivered to the several
shareholders, and the addresses to which the notice was mailed shall be
prima facie evidence of the manner and fact of giving such notice.
Section 1.05 WAIVER OF NOTICE. If all of the shareholders of the
corporation shall waive notice of a meeting, no notice shall be required, and,
whenever all of the shareholders shall meet in
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<PAGE>
person or by proxy, such meeting shall be valid for all purposes without call or
notice, and at such meeting any corporate action may be taken.
Section 1.06 DETERMINATION OF SHAREHOLDERS OF RECORD.
(a) The Board of Directors may at any time fix a future date
as a record date for the determination of the shareholders entitled to
notice of any meeting or to vote or entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled
to exercise any rights in respect of any other lawful action. The
record date so fixed shall not be more than sixty (60) days prior to
the date of such meeting nor more than sixty (60) days prior to any
other action. When a record date is so fixed, only shareholders of
record on that date are entitled to notice of and to vote at the
meeting or to receive the dividend, distribution or allotment of
rights, or to exercise their rights, as the case may be,
notwithstanding any transfer of any shares on the books of the
corporation after the record date.
(b) If no record date is fixed by the Board of Directors, then
(1) the record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is
given or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held; (2) the record date for
determining shareholders entitled to give consent to corporate action
in writing without a meeting, when no prior action by the Board of
Directors is necessary, shall be the day on which written consent is
given; and (3) the record date for determining shareholders for any
other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto, or the
sixtieth (60th) day prior to the date of such other action, whichever
is later.
Section 1.07 QUORUM: ADJOURNED MEETINGS.
(a) At any meeting of the shareholders, a majority of the
issued and outstanding shares of the corporation represented in person
or by proxy, shall constitute a quorum.
(b) If less than a majority of the issued and outstanding
shares are represented, a majority of shares so represented may adjourn
from time to time at the meeting, until holders of the amount of stock
required to constitute a quorum shall be in attendance. At any such
adjourned meeting
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<PAGE>
at which a quorum shall be present, any business may be transacted
which might have been transacted as originally called. When a
shareholders' meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken,
unless the adjournment is for more than ten (10) days in which event
notice thereof shall be given.
Section 1.08 VOTING.
(a) Each shareholder of record, such shareholder's duly
authorized proxy or attorney-in-fact shall be entitled to one (1) vote
for each share of stock standing registered in such shareholder's name
on the books of the corporation on the record date.
(b) Except as otherwise provided herein, all votes with
respect to shares standing in the name of an individual on the record
date (included pledged shares) shall be cast only by that individual or
such individual's duly authorized proxy or attorney-in-fact. With
respect to shares held by a representative of the estate of a deceased
shareholder, guardian, conservator, custodian or trustee, votes may be
cast by such holder upon proof of capacity, even though the shares do
not stand in the name of such holder. In the case of shares under the
control of a receiver, the receiver may cast votes carried by such
shares even though the shares do not stand in the name of the receiver
provided that the order of the court of competent jurisdiction which
appoints the receiver contains the authority to cast votes carried by
such shares. If shares stand in the name of a minor, votes may be cast
only by the duly-appointed guardian of the estate of such minor if such
guardian has provided the corporation with written notice and proof of
such appointment.
(c) With respect to shares standing in the name of a
corporation on the record date, votes may be cast by such officer or
agents as the by-laws of such corporation prescribe or, in the absence
of an applicable by-law provision, by such person as may be appointed
by resolution of the Board of Directors of such corporation. In the
event no person is so appointed, such votes of the corporation may be
cast by any person (including the officer making the authorization)
authorized to do so by the Chairman of the Board of Directors,
President or any Vice President of such corporation.
(d) Notwithstanding anything to the contrary herein contained,
no votes may be cast by shares owned by this corporation or its
subsidiaries, if any. If shares are held by this corporation or its
subsidiaries, if any, in a
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<PAGE>
fiduciary capacity, no votes shall be cast with respect thereto on any
matter except to the extent that the beneficial owner thereof possesses
and exercises either a right to vote or to give the corporation holding
the same binding instructions on how to vote.
(e) With respect to shares standing in the name of two or more
persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, husband and wife as community property, tenants by
the entirety, voting trustees, persons entitled to vote under a
shareholder voting agreement or otherwise and shares held by two or
more persons (including proxy holders) having the same fiduciary
relationship respect in the same shares, votes may be cast in the
following manner:
(1) If only one such person votes, the votes of
such person binds all.
(2) If more than one person casts votes, the act
of the majority so voting binds all.
(3) If more than one person casts votes, but the vote
is evenly split on a particular matter, the votes shall be
deemed cast proportionately as split.
(f) Any holder of shares entitled to vote on any matter may
cast a portion of the votes in favor of such matter and refrain from
casting the remaining votes or cast the same against the proposal,
except in the case of elections of directors. If such holder entitled
to vote fails to specify the number of affirmative votes, it will be
conclusively presumed that the holder is casting affirmative votes with
respect to all shares held.
(g) If a quorum is present, the affirmative vote of holders of
a majority of the shares represented at the meeting and entitled to
vote on any matter shall be the act of the shareholders, unless a vote
of greater number or voting by classes is required by the laws of the
State of Nevada, the Articles of Incorporation and these By-Laws.
Section 1.09 PROXIES. At any meeting of shareholders, any holder of
shares entitled to vote may authorize another person or persons to vote by proxy
with respect to the shares held by an instrument in writing and subscribed to by
the holder of such shares entitled to vote. No proxy shall be valid after the
expiration of six (6) months from the date of execution thereof, unless coupled
with an interest or unless otherwise specified in the proxy. In no event shall
the term of a proxy exceed seven (7) years from the date of its execution. Every
proxy shall continue
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<PAGE>
in full force and effect until its expiration or revocation. Revocation may be
effected by filing an instrument revoking the same or a duly-executed proxy
bearing a later date with the secretary of the corporation.
Section 1.10 ORDER OF BUSINESS. At the annual shareholders meeting, the
regular order of business shall be as follows:
(1) Determination of shareholders present and
existence of quorum;
(2) Reading and approval of the minutes of the
previous meeting or meetings;
(3) Reports of the Board of Directors, the president,
treasurer and secretary of the corporation, in the order
named;
(4) Reports of committee;
(5) Election of directors;
(6) Unfinished business;
(7) New business;
(8) Adjournment.
Section 1.11 ABSENTEES CONSENT TO MEETINGS. Transactions of any meeting
of the shareholders are as valid as though had at a meeting duly-held after
regular call and notice if a quorum is present, either in person or by proxy,
and if, either before or after the meeting, each of the persons entitled to
vote, not present in person or by proxy (and those who, although present, either
object at the beginning of the meeting to the transaction of any business
because the meeting has not been lawfully called or convened or expressly object
at the meeting to the consideration of matters not included in the notice which
are legally required to be included therein), signs a written waiver of notice
and/or consent to the holding of the meeting or an approval of the minutes
thereof. All such waivers, consents, and approvals shall be filed with the
corporate records and made a part of the minutes of the meeting. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person objects at the beginning of the meeting to the transaction of
any business because the meeting is not lawfully called or convened and except
that attendance at a meeting is not a waiver of any right to object to the
consideration of matters not included in the notice if such objection is
expressly made at the beginning. Neither the business to be transacted at nor
the purpose of any regular or special
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meeting of shareholders need be specified in any written waiver of notice,
except as otherwise provided in Section 1.04(b) of these By-Laws.
Section 1.12 ACTION WITHOUT MEETING. Any action which may be taken by
the vote of the shareholders at a meeting may be taken without a meeting if
consented to by the holders of a majority of the shares entitled to vote or such
greater proportion as may be required by the laws of the State of Nevada, the
Articles of Incorporation, or these ByLaws. Whenever action is taken by written
consent, a meeting of shareholders needs not be called or noticed.
ARTICLE II
DIRECTORS
Section 2.01 NUMBER, TENURE AND QUALIFICATION. Except as otherwise
provided herein, the Board of Directors of the corporation shall consist of at
least one (1) but no more than nine (9) persons, who shall be elected at the
annual meeting of the shareholders of the corporation and who shall hold office
for one (1) year or until their successors are elected and qualify.
Section 2.02 RESIGNATION. Any director may resign effective upon giving
written notice to the chairman of the Board of Directors, the president, or the
secretary of the corporation, unless the notice specifies a later time for
effectiveness of such resignation. If the Board of Directors accepts the
resignation of a director tendered to take effect at a future date, the Board or
the shareholders may elect a successor to take office when the resignation
becomes effective.
Section 2.03 REDUCTION IN NUMBER. No reduction of the number of
directors shall have the effect of removing any director prior to the expiration
of his term of office.
Section 2.04 REMOVAL.
(a) The Board of Directors or the shareholders of the
corporation, by a majority vote, may declare vacant the office of a
director who has been declared incompetent by an order of a court of
competent jurisdiction or convicted of a felony.
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Section 2.05 VACANCIES.
(a) A vacancy in the Board of Directors because of death,
resignation, removal, change in number of directors, or otherwise may
be filled by the shareholders at any regular or special meeting or any
adjourned meeting thereof or the remaining director(s) by the
affirmative vote of a majority thereof. A Board of Directors consisting
of less than the maximum number authorized in Section 2.01 of ARTICLE
II constitutes vacancies on the Board of Directors for purposes of this
paragraph and may be filled as set forth above including by the
election of a majority of the remaining directors. Each successor so
elected shall hold office until the next annual meeting of shareholders
or until a successor shall have been duly-elected and qualified.
(b) If, after the filling of any vacancy by the directors, the
directors then in office who have been elected by the shareholders
shall constitute less than a majority of the directors then in office,
any holder or holders of an aggregate of five percent (5%) or more of
the total number of shares entitled to vote may call a special meeting
of shareholders to be held to elect the entire Board of Directors. The
term of office of any director shall terminate upon such election of a
successor.
Section 2.06 REGULAR MEETINGS. Immediately following the adjournment
of, and at the same place as, the annual meeting of the shareholders, the Board
of Directors, including directors newly elected, shall hold its annual meeting
without notice, other than this provision, to elect officers of the corporation
and to transact such further business as may be necessary or appropriate. The
Board of Directors may provide by resolution the place, date and hour for
holding additional regular meetings.
Section 2.07 SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the chairman and shall be called by the chairman upon
the request of any two (2) directors or the president of the corporation.
Section 2.08 PLACE OF MEETINGS. Any meeting of the directors of the
corporation may be held at its principal office in the State of Nevada, or at
such other place in or out of the United States as the Board of Directors may
designate. A waiver or notice signed by the directors may designate any place
for the holding of such meeting.
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Section 2.09 NOTICE OF MEETINGS. Except as otherwise provided in
Section 2.06, the chairman shall deliver to all directors written or printed
notice of any special meeting, at least three (3) days before the date of such
meeting, by delivery of such notice personally or mailing such notice first
class mail, or by telegram. If mailed, the notice shall be deemed delivered two
(2) business days following the date the same is deposited in the United States
mail, postage prepaid. Any director may waive notice of any meeting, and the
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, unless such attendance is for the express purpose of objecting to
the transaction of business threat because the meeting is not properly called or
convened.
Section 2.10 QUORUM: ADJOURNED MEETINGS.
(a) A majority of the Board of Directors in office shall
constitute a quorum.
(b) At any meeting of the Board of Directors where a quorum is
not present, a majority of those present may adjourn, from time to
time, until a quorum is present, and no notice of such adjournment
shall be required. At any adjourned meeting where a quorum is present,
any business may be transacted which could have been transacted at the
meeting originally called.
Section 2.11 ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting if a written consent thereto is signed by all of
the members of the Board of Directors or of such committee. Such written consent
or consents shall be filed with the minutes of the proceedings of the Board of
Directors or committee. Such action by written consent shall have the same force
and effect as the unanimous vote of the Board of Directors or committee.
Section 2.12 TELEPHONIC MEETINGS. Meetings of the Board of Directors
may be held through the use of a conference telephone or similar communications
equipment so long as all members participating in such meeting can hear one
another at the time of such meeting. Participation in such a meeting constitutes
presence in person at such meeting.
Section 2.13 BOARD DECISIONS. The affirmative vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
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Section 2.14 POWERS AND DUTIES.
(a) Except as otherwise provided in the Articles of
Incorporation or the laws of the State of Nevada, the Board of
Directors is invested with the complete and unrestrained authority to
manage the affairs of the corporation, and is authorized to exercise
for such purpose as the general agent of the corporation, its entire
corporate authority in such manner as it sees fit. The Board of
Directors may delegate any of its authority to manage, control or
conduct the current business of the corporation to any standing or
special committee or to any officer or agent and to appoint any persons
to be agents of the corporation with such powers, including the power
to sub-delegate, and upon such terms as may be deemed fit.
(b) The Board of Directors shall present to the shareholders
at annual meetings of the shareholders, and when called for by a
majority vote of the shareholders at a special meeting of the
shareholders, a full and clear statement of the condition of the
corporation, and shall, at request, furnish each of the shareholders
with a true copy thereof.
(c) The Board of Directors, in its discretion, may submit any
contract or act for approval or ratification at any annual meeting of
the shareholders or any special meeting properly called for the purpose
of considering any such contract or act, provided a quorum is present.
The contract or act shall be valid and binding upon the corporation and
upon all the shareholders thereof, if approved and ratified by the
affirmative vote of a majority of the shareholders at such meeting.
(d) In furtherance and not in limitation of the powers
conferred by the laws of the State of Nevada, the Board of Directors is
expressly authorized and empowered to issue stock of the Corporation
for money, property, services rendered, labor performed, cash advanced,
acquisitions for other corporations or for any other assets of value in
accordance with the action of the Board of Directors without vote or
consent of the shareholders and the judgment of the Board of Directors
as to the value received and in return therefore shall be conclusive
and said stock, when issued, shall be fully-paid and non-assessable.
Section 2.15 COMPENSATION. The directors shall be allowed and paid all
necessary expenses incurred in attending any meetings of the Board, but shall
not receive any compensation for their services as directors until such time as
the corporation is able to declare and pay dividends on its capital stock.
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Section 2.16 BOARD OFFICERS.
(a) At its annual meeting, the Board of Directors shall elect,
from among its members, a chairman to preside at the meetings of the
Board of Directors. The Board of Directors may also elect such other
board officers and for such term as it may, from time to time,
determine advisable.
(b) Any vacancy in any board office because of death,
resignation, removal or otherwise may be filled by the Board of
Directors for the unexpired portion of the term of such office.
Section 2.17 ORDER OF BUSINESS. The order of business at any meeting of
the Board of Directors shall be as follows:
(1) Determination of members present and existence of
quorum;
(2) Reading and approval of the minutes of any
previous meeting or meetings;
(3) Reports of officers and committeemen;
(4) Election of officers;
(5) Unfinished business;
(6) New business;
(7) Adjournment.
ARTICLE III
OFFICERS
Section 3.01 ELECTION. The Board of Directors, at its first meeting
following the annual meeting of shareholders, shall elect a president, a
secretary and a treasurer to hold office for one (1) year next coming and until
their successors are elected and qualify. Any person may hold two or more
offices. The Board of Directors may, from time to time, by resolution, appoint
one or more vice presidents, assistant secretaries, assistant treasurers and
transfer agents of the corporation as it may deem advisable; prescribe their
duties; and fix their compensation.
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Section 3.02 REMOVAL; RESIGNATION. Any officer or agent elected or
appointed by the Board of Directors may be removed by it whenever, in its
judgment, the best interest of the corporation would be served thereby. Any
officer may resign at any time upon written notice to the corporation without
prejudice to the rights, if any, of the corporation under any contract to which
the resigning officer is a party.
Section 3.03 VACANCIES. Any vacancy in any office because of death,
resignation, removal, or otherwise may be filled by the Board of Directors for
the unexpired portion of the term of such office.
Section 3.04 PRESIDENT. The president shall be the general manager and
executive officer of the corporation, subject to the supervision and control of
the Board of Directors, and shall direct the corporate affairs, with full power
to execute all resolutions and orders of the Board of Directors not especially
entrusted to some other officer of the corporation. The president shall preside
at all meetings of the shareholders and shall sign the certificates of stock
issued by the corporation, and shall perform such other duties as shall be
prescribed by the Board of Directors.
Unless otherwise ordered by the Board of Directors, the president shall
have full power and authority on behalf of the corporation to attend and to act
and to vote at any meetings of the shareholders of any corporation in which the
corporation may hold stock and, at any such meetings, shall possess and may
exercise any and all rights and powers incident to the ownership of such stock.
The Board of Directors, by resolution from time to time, may confer like powers
on any person or persons in place of the president to represent the corporation
for these purposes.
Section 3.05 VICE PRESIDENT. The Board of Directors may elect one or
more vice presidents who shall be vested with all the powers and perform all the
duties of the president whenever the president is absent or unable to act,
including the signing of the certificates of stock issued by the corporation,
and the vice president shall perform such other duties as shall be prescribed by
the Board of Directors.
Section 3.06 SECRETARY. The secretary shall keep the minutes of all
meetings of the shareholders and the Board of Directors in books provided for
that purpose. The secretary shall attend to the giving and service of all
notices of the corporation, may sign with the president in the name of the
corporation all contracts authorized by the Board of Directors or appropriate
committee, shall have the custody of the corporate seal, shall affix the
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corporate seal to all certificates of stock duly issued by the corporation,
shall have charge of stock certificate books, transfer books and stock ledgers,
and such other books and papers as the Board of Directors or appropriate
committee may direct, and shall, in general perform all duties incident to the
office of the secretary. All corporate books kept by the secretary shall be open
for examination by any director at any reasonable time.
Section 3.07 ASSISTANT SECRETARY. The Board of Directors may appoint an
assistant secretary who shall have such powers and perform such duties as may be
prescribed for him by the secretary of the corporation or by the Board of
Directors.
Section 3.08 TREASURER. The treasurer shall be the chief financial
officer of the corporation, subject to the supervision and control of the Board
of Directors, and shall have custody of all the funds and securities of the
corporation. When necessary or proper, the treasurer shall endorse on behalf of
the corporation for collection checks, notes and other obligations, and shall
deposit all monies to the credit of the corporation in such bank or banks or
other depository as the Board of Directors may designate, and shall sign all
receipts and vouchers for payments made by the corporation. Unless otherwise
specified by the Board of Directors, the treasurer shall sign with the president
all bills of exchange and promissory notes of the corporation, shall also have
the care and custody of the stocks, bonds, certificates, vouchers, evidence of
debts, securities and such other property belonging to the corporation as the
Board of Directors shall designate, and shall sign all papers required by law,
by these By-laws or by the Board of Directors to be signed by the treasurer. The
treasurer shall enter regularly in the books of the corporation, to be kept for
that purpose, full and accurate accounts of all monies received and paid on
account of the corporation and whenever required by the Board of Directors, the
treasurer shall render a statement of any or all accounts. The treasurer shall
at all reasonable times exhibit the books of account to any directors of the
corporation and shall perform all acts incident to the position of treasurer
subject to the control of the Board of Directors. The treasurer shall, if
required by the Board of Directors,give a bond to the corporation in such sum
and with such security as shall be approved by the Board of Directors for the
faithful performance of all the duties of the treasurer and for restoration to
the corporation in the event of the treasurer's death, resignation, retirement,
or removal from office, of all books, records, papers, vouchers, money and other
property belonging to the corporation. The expense of such bond shall be borne
by the corporation.
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Section 3.09 ASSISTANT TREASURER. The Board of Directors may appoint an
assistant treasurer who shall have such powers and perform such duties as may be
prescribed by the treasurer of the corporation or by the Board of Directors, and
the Board of Directors may require the assistant treasurer to give a bond to the
corporation in such sum and with such security as it may approve,for the
faithful performance of the duties of assistant treasurer, and for the
restoration to the corporation, in the event of the assistant treasurer's death,
resignation, retirement or removal from office, of all books, records, papers,
vouchers, money and other property belonging to the corporation. The expense of
such bond shall be borne by the corporation.
ARTICLE IV
CAPITAL STOCK
Section 4.01 ISSUANCE. Shares of capital stock of the corporation shall
be issued in such manner and at such times and upon such conditions as shall be
prescribed by the Board of Directors.
Section 4.02 CERTIFICATES. Ownership in the corporation shall be
evidenced by certificates for shares of stock in such form as shall be
prescribed by the Board of Directors, shall be under the seal of the corporation
and shall be signed by the president or the vice president and also by the
secretary or an assistant secretary. Each certificate shall contain the name of
the record holder, the number, designation, if any, class or series of shares
represented, a statement of summary of any applicable rights, preferences,
privileges, or restrictions thereon, and a statement that the shares are
assessable, if applicable. All certificates shall be consecutively numbered. The
name and address of the shareholder, the number of shares, and the date of issue
shall be entered on the stock transfer books of the corporation.
Section 4.03 SURRENDER: LOST OR DESTROYED CERTIFICATES. All
certificates surrendered to the corporation, except those representing shares of
treasury stock, shall be canceled and no new certificates shall be issued until
the former certificate for a like number of shares shall have been canceled,
except that in case of a lost, stolen, destroyed or mutilated certificate, a new
one may be issued therefor. However, any shareholder applying for the issuance
of a stock certificate in lieu of one alleged to have been lost, stolen,
destroyed or mutilated shall, prior to the issuance of a replacement, provide
the corporation with his, her or its affidavit of the facts surrounding the
loss, theft, destruction or mutilation and an indemnity bond in an amount and
upon such terms
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as the treasurer, or the Board of Directors, shall require. In no case shall the
bond be in amount less than twice the current market value of the stock and it
shall indemnify the corporation against any loss, damage, cost or inconvenience
arising as a consequence of the issuance of a replacement certificate.
Section 4.04 REPLACEMENT CERTIFICATE. When the Articles of
Incorporation are amended in any way affecting the statements contained in the
certificates for outstanding shares of capital stock of the corporation or it
becomes desirable for any reason, including, without limitation, the merger or
consolidation of the corporation with another corporation or the reorganization
of the corporation, to cancel any outstanding certificate for shares and issue a
new certificate therefor conforming to the rights of the holder, the Board of
Directors may order any holders of outstanding certificates for shares to
surrender and exchange the same for new certificates within a reasonable time to
be fixed by the Board of Directors. The order may provide that a holder of any
certificate(s) ordered to be surrendered shall not be entitled to vote, receive
dividends or exercise any other rights of shareholders until the holder has
complied with the order provided that such order operates to suspend such rights
only after notice and until compliance.
Section 4.05 TRANSFER OF SHARES. No transfer of stock shall be valid as
against the corporation except on surrender and cancellation by the certificate
therefor, accompanied by an assignment or transfer by the registered owner made
either in person or under assignment. Whenever any transfer shall be expressly
made for collateral security and not absolutely, the collateral nature of the
transfer shall be reflected in the entry of transfer on the books of the
corporation.
Section 4.06 TRANSFER AGENT. The Board of Directors may appoint one or
more transfer agents and registrars of transfer and may require all certificates
for shares of stock to bear the signature of such transfer agent and such
registrar of transfer.
Section 4.07 STOCK TRANSFER BOOKS. The stock transfer books shall be
closed for a period of ten (10) days prior to all meetings of the shareholders
and shall be closed for the payment of dividends as provided in Article V hereof
and during such periods as, from time to time, may be fixed by the Board of
Directors, and, during such periods, no stock shall be transferable.
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Section 4.08 MISCELLANEOUS. The Board of Directors shall have the power
and authority to make such rules and regulations not inconsistent herewith as it
may deem expedient concerning the issue, transfer and registration of
certificates for shares of the capital stock of the corporation.
ARTICLE V
DIVIDENDS
Section 5.01 Dividends may be declared, subject to the provisions of
the laws of the State of Nevada and the Articles of Incorporation, by the Board
of Directors at any regular or special meeting and may be paid in cash,
property, shares of corporate stock, or any other medium. The Board of Directors
may fix in advance a record date, as provided in Section 1.06 of these By-laws,
prior to the dividend payment for the purpose of determining shareholders
entitled to receive payment of any dividend. The Board of Directors may close
the stock transfer books for such purpose for a period of not more than ten (10)
days prior to the payment date of such dividend.
ARTICLE VI
OFFICES; RECORDS; REPORTS; SEAL AND FINANCIAL MATTERS
Section 6.01 PRINCIPAL OFFICE. The principal office of the corporation
in the State of Nevada shall be the Law Offices of Max C. Tanner, 2950 East
Flamingo Road, Suite G, Las Vegas, Nevada 89121, and the corporation may have an
office in any other state or territory as the Board of Directors may designate.
Section 6.02 RECORDS. The stock transfer books and a certified copy of
the By-laws, Articles of Incorporation, any amendments thereto, and the minutes
of the proceedings of the shareholders, the Board of Directors, and committees
of the Board of Directors shall be kept at the principal office of the
corporation for the inspection of all who have the right to see the same and for
the transfer of stock. All other books of the corporation shall be kept at such
places as may be prescribed by the Board of Directors.
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Section 6.03 FINANCIAL REPORT ON REQUEST. Any shareholder or
shareholders holding at least five percent (5%) of the outstanding shares of any
class of stock may make a written request for an income statement of the
corporation for the three (3) month, six (6) month, or nine (9) month period of
the current fiscal year ended more than thirty (30) days prior to the date of
the request and a balance sheet of the corporation as of the end of such period.
In addition, if no annual report for the last fiscal year has been sent to
shareholders, such shareholder or shareholders may make a request for a balance
sheet as of the end of such fiscal year and an income statement and statement of
changes in financial position for such fiscal year. The statement shall be
delivered or mailed to the person making the request within thirty (30) days
thereafter. A copy of the statements shall be kept on file in the principal
office of the corporation for twelve (12) months, and such copies shall be
exhibited at all reasonable times to any shareholder demanding an examination of
them or a copy shall be mailed to each shareholder. Upon request by any
shareholder, there shall be mailed to the shareholder a copy of the last annual,
semiannual or quarterly income statement which it has prepared and a balance
sheet as of the end of the period. The financial statements referred to in this
Section 6.03 shall be accompanied by the report thereon, if any, of any
independent accountants engaged by the corporation or the certificate of an
authorized officer of the corporation that such financial statements were
prepared without audit from the books and records of the corporation.
Section 6.04 RIGHT OF INSPECTION.
(a) The accounting books and records and minutes of
proceedings of the shareholders and the Board of Directors and
committees of the Board of Directors shall be open to inspection upon
the written demand of any shareholder or holder of a voting trust
certificate at any reasonable time during usual business hours for a
purpose reasonably related to such holder's interest as a shareholder
or as the holder of such voting trust certificate. This right of
inspection shall extend to the records of the subsidiaries, if any, of
the corporation. Such inspection may be made in person or by agent or
attorney, and the right of inspection includes the right to copy and
make extracts.
(b) Every director shall have the absolute right at any
reasonable time to inspect and copy all books, records and documents of
every kind and to inspect the physical properties of the corporation
and/or its subsidiary corporations. Such inspection may be made in
person or by agent or attorney, and the right of inspection includes
the right to copy and make extracts.
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Section 6.05 CORPORATE SEAL. The Board of Directors may, by resolution,
authorize a seal, and the seal may be used by causing it, or a facsimile, to be
impressed or affixed or reproduced or otherwise. Except when otherwise
specifically provided herein, any officer of the corporation shall have the
authority to affix the seal to any document requiring it.
Section 6.06 FISCAL YEAR. The fiscal year-end of the corporation shall
be the calendar year or such other term as may be fixed by resolution of the
Board of Directors.
Section 6.07 RESERVES. The Board of Directors may create, by resolution,
out of the earned surplus of the corporation such reserves as the directors may,
from time to time, in their discretion, think proper to provide for
contingencies, or to equalize dividends or to repair or maintain any property of
the corporation, or for such other purpose as the Board of Directors may deem
beneficial to the corporation, and the directors may modify or abolish any such
reserves in the manner in which they were created.
ARTICLE VII
INDEMNIFICATION
Section 7.01 INDEMNIFICATION. The corporation shall, unless prohibited
by Nevada Law, indemnify any person (an "Indemnitee") who is or was involved in
any manner (including, without limitation, as a party or a witness) or is
threatened to be so involved in any threatened, pending or completed action suit
or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, including without limitation, any action, suit or proceeding
brought by or in the right of the corporation to procure a judgment in its favor
(collectively, a "Proceeding") by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other entity or enterprise, against all Expenses and Liabilities actually and
reasonably incurred by him in connection with such Proceeding. The right to
indemnification conferred in this Article shall be presumed to have been relied
upon by the directors, officers, employees and agents of the corporation and
shall be enforceable as a contract right and inure to the benefit of heirs,
executors and administrators of such individuals.
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Section 7.02 INDEMNIFICATION CONTRACTS. The Board of Directors is
authorized on behalf of the corporation, to enter into, deliver and perform
agreements or other arrangements to provide any Indemnitee with specific rights
of indemnification in addition to the rights provided hereunder to the fullest
extent permitted by Nevada Law. Such agreements or arrangements may provide (i)
that the Expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding, must be paid by the corporation as they are
incurred and in advance of the final disposition of any such action, suit or
proceeding provided that, if required by Nevada Law at the time of such advance,
the officer or director provides an undertaking to repay such amounts if it is
ultimately determined by a court of competent jurisdiction that such individual
is not entitled to be indemnified against such expenses, (iii) that the
Indemnitee shall be presumed to be entitled to indemnification under this
Article or such agreement or arrangement and the corporation shall have the
burden of proof to overcome that presumption, (iii) for procedures to be
followed by the corporation and the Indemnitee in making any determination of
entitlement to indemnification or for appeals therefrom and (iv) for insurance
or such other Financial Arrangements described in Paragraph 7.02 of this
Article, all as may be deemed appropriate by the Board of Directors at the time
of execution of such agreement or arrangement.
Section 7.03 INSURANCE AND FINANCIAL ARRANGEMENTS. The corporation may,
unless prohibited by Nevada Law, purchase and maintain insurance or make other
financial arrangements ("Financial Arrangements") on behalf of any Indemnitee
for any liability asserted against him and liability and expenses incurred by
him in his capacity as a director, officer, employee or agent, or arising out of
his status as such, whether or not the corporation has the authority to
indemnify him against such liability and expenses. Such other Financial
Arrangements may include (i) the creation of a trust fund, (ii) the
establishment of a program of self-insurance, (iii) the securing of the
corporation's obligation of indemnification by granting a security interest or
other lien on any assets of the corporation, or (iv) the establishment of a
letter of credit, guaranty or surety.
Section 7.04 DEFINITIONS. For purposes of this Article:
EXPENSES. The word "EXPENSES" shall be broadly construed and,
without limitation, means (i) all direct and indirect costs incurred,
paid or accrued, (ii) all attorneys' fees, retainers, court costs,
transcripts, fees of experts, witness fees, travel expenses, food and
lodging expenses while traveling, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service, freight or
other transportation fees and expenses, (iii) all other
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disbursements and out-of-pocket expenses, (iv) amounts paid in
settlement, to the extent permitted by Nevada Law, and (v) reasonable
compensation for time spent by the Indemnitee for which he is otherwise
not compensated by the corporation or any third party, actually and
reasonably incurred in connection with either the appearance at or
investigation, defense, settlement or appeal of a Proceeding or
establishing or enforcing a right to indemnification under any
agreement or arrangement, this Article, the Nevada Law or otherwise;
provided, however, that "Expenses" shall not include any judgments or
fines or excise taxes or penalties imposed under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or other
excise taxes or penalties.
LIABILITIES. "Liabilities" means liabilities of any type
whatsoever, including, but not limited to, judgments or fines, ERISA or
other excise taxes and penalties, and amounts paid in settlement.
NEVADA LAW. "NEVADA LAW" means Chapter 78 of the Nevada
Revised Statutes as amended and in effect from time to time or any
successor or other statutes of Nevada having similar import and effect.
THIS ARTICLE. "THIS ARTICLE" means Paragraphs 7.01 through
7.04 of these bylaws or any portion of them.
POWER OF STOCKHOLDERS. Paragraphs 7.01 through 7.04, including
this Paragraph, of these Bylaws may be amended by the stockholders only
by vote of the holders of sixty-six and two-thirds percent (66 2/3%) of
the entire number of shares of each class, voting separately, of the
outstanding capital stock of the corporation (even though the right of
any class to vote is otherwise restricted or denied); provided,
however, no amendment or repeal of this Article shall adversely affect
any right of any Indemnitee existing at the time such amendment or
repeal becomes effective.
POWER OF DIRECTORS. Paragraphs 7.01 through 7.04 and this
Paragraph of these Bylaws may be amended or repealed by the Board of
Directors only by vote of eighty percent (80%) of the total number of
Directors and the holders of sixty-six and two-thirds percent (66 2/3)
of the entire number of shares of each class, voting separately, of the
outstanding capital stock of the corporation (even though the right of
any class to vote is otherwise restricted or denied); provided,
however, no amendment or repeal of this Article shall adversely affect
any right of any Indemnitee existing at the time such amendment or
repeal becomes effective.
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ARTICLE VIII
BY-LAWS
Section 8.01 AMENDMENT. Amendments and changes of these By-Laws may be
made at any regular or special meeting of the Board of Directors by a vote of
not less than all of the entire Board, or may be made by a vote of, or a consent
in writing signed by the holders of a majority of the issued and outstanding
capital stock.
Section 8.02 ADDITIONAL BY-LAWS. Additional by-laws not inconsistent
herewith may be adopted by the Board of Directors at any meeting of the Board of
Directors at which a quorum is present by an affirmative vote of a majority of
the directors present or by the unanimous consent of the Board of Directors in
accordance with Section 2.11 of these By-laws.
CERTIFICATION
I, the undersigned, being the duly elected secretary of the
Corporation, do hereby certify that the foregoing By-laws were adopted by the
Board of Directors on the 17th day of September, 1995.
/s/Mont Tanner
------------------------------
Mont Tanner, Secretary
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<PAGE>
EXHIBIT 10.1
PATENT AND TRADEMARK LICENSE AGREEMENT BETWEEN AMOEBA CORPORATION
AND INTERACTIVE PROCESSING, INC. DATED APRIL 17, 1996
<PAGE>
PATENT AND TRADEMARK LICENSE
THIS LICENSE is made this __17__ day of __April___, 1996, by and
between AMOEBA CORPORATION, an Irish corporation ("Licensor") and INTERACTIVE
PROCESSING, INC., a Nevada corporation ("Licensee").
RECITALS
A. Licensor is the owner of, and has the right to grant a license with
respect to an invention entitled TV Terminator, described generally as an
interactive universal remote control, including United States Patent Number
5,253,068 and Canadian patent number 2,107,736, and under any divisions,
continuations, and continuations-in-part thereof, and under any patents that may
issue thereon or any reissues or extensions thereof ("Amoeba Patent").
B. Licensor is or will be utilizing the marks TV Terminator, TVT and
The Fazer, and other marks that may be developed, in connection with the Amoeba
Patent ("Trademarks").
C. Licensee is desirous of securing and Licensor is willing to grant, a
non-exclusive license for the development, manufacture, marketing, distribution,
and sale of products based in whole or in part on the Amoeba Patent and all
improvements and developments pertaining thereto ("Licensed Products") to
Licensor, or its affiliates, subject to the terms and conditions contained
herein.
D. Licensee is desirous of securing and Licensor is willing to grant, a
license for use of the Trademarks in connection with the Licensed Products only,
subject to the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
1. GRANT OF LICENSE.
A. GRANT. Licensor hereby grants to Licensee an exclusive
license within the territory identified in subparagraph 1.c to develop, make,
have made, use, modify, market, manufacture, distribute, and sell Licensed
Products; and to use the Trademarks and any trade names, trademarks, service
marks and the like utilized by Licensor in the manufacture, sale and
distribution of Licensed Products ("Intellectual Property"). This grant shall
include all rights of Licensor, whether presently existing or hereafter arising,
and whether scheduled in this Agreement or not. Licensee may use the Trademarks
in product labels, tags, containers, displays, publicity, advertising, telephone
listings, electronic data interchange (including on-line services), business
0072600.03
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names, signs or in any other manner whatsoever without the prior written
approval of Licensor.
B. NEW INVENTION PRODUCTS. The parties acknowledge that new or
modified versions of the Licensed Products ("New Invention Products") other than
as defined herein are anticipated. Any New Invention Products shall be the
exclusive property of Licensor, whether or not developed by Licensor and whether
or not Licensor's trade secrets are used to develop the New Invention Products;
provided that such New Invention Products shall be deemed to be within the
license granted hereunder.
C. REGION. The territory within which this exclusive
license is valid is: United States, Canada and Mexico.
2. PAYMENT AND ROYALTY. In consideration for the grant of the
license hereunder Licensee shall:
a. Issue to Licensor Two Million Nine Hundred Thousand
(2,900,000) shares of the common stock of Licensee (the "Shares"), free and
clear of all liens and encumbrances, representing Thirty One and 10/100ths
percent (31.10%) of the issued and outstanding and reserved common stock of
Licensee; and
b. Pay Licensor royalties on gross sales of the Licensed
Products and any New Invention Products during the term of this license. Such
royalties shall be paid quarterly within thirty (30) days after the first days
of January, April, July, and October of each year during the continuance of this
Agreement for the prior three (3) calendar months (except that the first such
report shall cover only the portion of the quarter between the date of this
Agreement and the end of the quarter), and shall be equal to One and 50/100
Dollars ($1.50) per unit of Licensed Products sold; and
c. In the event of a sublicense granted in accordance with the
terms of this Agreement Licensor shall be paid a royalty of One and 50/100
Dollars ($1.50) per unit of Licensed Products sold by or through such
sublicensee (or other arrangement), unless agreed otherwise by Licensor in
writing in connection with the sublicense.
3. TITLE; WARRANTY. This Agreement shall not act to transfer title or
ownership of the Amoeba Patent, Trademarks or Intellectual Property. Licensor
warrants it has good title to the Amoeba Patent, Trademarks and Intellectual
Property, no knowledge of conflicting claims to the Amoeba Patent, Trademarks
and Intellectual Property and that the Amoeba Patent, Trademarks and
Intellectual Property do not infringe the rights of any other person.
4. RECORDS. Licensee shall keep full and accurate records and books of
account showing the manufacture, inventory and sale quantities and the selling
prices of the Licensed Products. Any
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accountant authorized in writing by Licensor shall be given access to such
records and books at all reasonable times. Any inspection or audit of the
records by Licensor or its agent shall be at the expense of Licensor unless such
shall disclose a discrepancy of two percent (2%) or more. Quarterly, within
thirty (30) days after the first days of January, April, July, and October of
each year during the continuance of this Agreement, Licensee shall render
written reports to Licensor stating in each such report the quantities and net
selling prices of all Licensed Products sold and manufactured by Licensee during
the preceding three (3) calendar months, except that the first such report shall
cover only the portion of the quarter between the date of this Agreement and the
end of the quarter. Each such report shall be accompanied by remittance in full
covering the royalties shown thereby to be due Licensor. Licensed Products shall
be considered sold when billed out; if Licensed Products are not billed out,
they shall be considered sold when delivered, shipped or when paid for, in part
or full, whichever occurs first. Royalties paid on Licensed Products that are
returned by customers may be credited against future royalty payments, provided
royalties are paid on any such returned Licensed Products that are later sold.
No royalties need be paid on Licensed Products furnished to customers without
charge to replace returned Licensed Products on which royalties had previously
been paid, provided no credit is taken against royalty payments for such
returned Licensed Products. Licensed Products shall not be given free to any
third party without Licensor's written permission or used internally by
Licensee, without commission being paid.
5. REPRESENTATIONS AND WARRANTIES OF LICENSEE. Licensee represents and
warrants to Licensor as of the date hereof, and as of the date of consummation
of each and every element of this Agreement, as follows:
a. ORGANIZATION AND STANDING: POWER AND AUTHORITY. Licensee is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has the full corporate power and corporate
authority to carry on its business, as it is now being conducted, and to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby and thereby. Licensee is qualified as a foreign corporation in all
jurisdictions in which the failure so to qualify would have a material adverse
effect on Licensee. Licensee has no subsidiaries or equity or other interest in
any entity.
b. CAPITALIZATION. The authorized capital of Licensee consists
of 25,000,000 shares of Common Stock, par value $.001 per share, of which
3,124,000 shares have been validly issued and are outstanding, fully paid and
nonassessable on the date hereof. Licensee has reserved 2,900,000 shares of
capital stock for issuance in connection with the acquisition of product
licenses. There are no other reserved shares and no outstanding options,
restricted stock awards, warrants, calls, commitments or rights of any character
to purchase or otherwise to acquire from Licensee
0072600.03
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<PAGE>
shares of capital stock of any class, no outstanding securities of Licensee that
are convertible into shares of capital stock of Licensee of any class, and no
options, warrants or rights to purchase from the Company any of such convertible
securities.
c. CORPORATE APPROVAL. Licensee has the necessary corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement by Licensee, the performance by Licensee of its obligations hereunder
and thereunder, and the consummation by Licensee of the transactions
contemplated hereby and thereby, have been duly authorized by the Board of
Directors of Licensee, which authorization has not been modified and is in full
force and effect, and no other corporate proceeding on the part of Licensee is
necessary for the execution and delivery of this Agreement by Licensee and the
performance by Licensee of its obligations hereunder and the consummation by
Licensee of the transactions contemplated hereby, does not violate any provision
of the Articles of Incorporation or the By-Laws of Licensee.
d. GOVERNMENTAL FILINGS AND AUTHORIZATIONS. No filing,
authorization or approval, governmental or otherwise, is necessary to enable
Licensee to enter into, and to perform each of its obligations under, this
Agreement except for such filings as may be required to comply with federal and
state securities laws which filings, if any, have been made prior to the date
hereof.
e. LICENSEE COMMON STOCK - VALID ISSUANCE. The shares of the
Licensee's common stock to be issued to Licensor hereunder will be duly
authorized, validly issued, fully paid and nonassessable and will be issued in
compliance with the Act and any appropriate state securities laws.
f. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by Licensee. This Agreement and each document and
instrument to be executed by Licensee pursuant hereto constitutes a legal, valid
and binding obligation of Licensee, enforceable in accordance with its terms,
except to the extent that its enforceability may be subject to limitations
imposed by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity) and to the
effect of applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws of general application relating to or affecting creditors' rights,
including, without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers.
g. CONSENTS. Licensee is not subject to any law, ordinance,
regulation, rule, order, judgment, injunction, decree, charter or bylaw,
contract, commitment, lease, agreement, instrument or other restriction that
would prevent the consummation of this Agreement or any of the transactions
contemplated hereby and thereby without the consent of any third party, that
would
0072600.03
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<PAGE>
require the consent of any third party to the consummation of this Agreement or
of the transactions contemplated hereby or thereby or, to the knowledge of
Licensee, that would result in any penalty, forfeiture or termination which
would be materially adverse to Licensee as a result of such consummation.
h. OBLIGATIONS: ABSENCE OF VIOLATION. Neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby and thereby constitutes a violation or default under, or
conflicts with, any term or provision of the Articles of Incorporation or Bylaws
of Licensee, or any material agreement, including, without limitation, any
material contract, license, commitment, lease, instrument, arrangement or
understanding to which Licensee is a party or to which Licensee or any of its
property is subject, or by which Licensee or any of its property is bound, where
such encumbrance would be materially adverse to the Licensor.
i. DISCLOSURE. No representation or warranty by Licensee,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
j. 504 OFFERING. Licensee sold 3,124,000 shares of its common
stock at $.05 per share in an offering pursuant to an exemption from
registration provided by Rule 504 of Regulation D promulgated under the
Securities Act of 1933, as amended, and applicable state law.
6. REPRESENTATIONS AND WARRANTIES OF LICENSOR. Licensor represents and
warrants to Licensee as of the date hereof, and as of the date of consummation
of each and every element of this Agreement, as follows:
a. ORGANIZATION AND STANDING: POWER AND AUTHORITY.
Licensor is a corporation duly organized, validly existing and in
good standing under the laws of Ireland and has the full corporate
power and corporate authority to carry on its business, as it is
now being conducted, and to execute and deliver this Agreement and
to consummate the transactions contemplated hereby and thereby.
b. CORPORATE APPROVAL. Licensor has the necessary corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement by Licensor, the performance by Licensor of its obligations hereunder
and thereunder, and the consummation by Licensor of the transactions
contemplated hereby and thereby, have been duly authorized by the Licensor,
which authorization has not been modified and is in full force and effect, and
no other corporate proceeding on the part of Licensor is necessary for the
execution and delivery of this Agreement by
0072600.03
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<PAGE>
Licensor and the performance by Licensor of its obligations hereunder and the
consummation by Licensor of the transactions contemplated hereby, does not
violate any provision of the constituting articles of Licensor.
c. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by Licensor. This Agreement and each document and
instrument to be executed by Licensor pursuant hereto constitutes a legal, valid
and binding obligation of Licensor, enforceable in accordance with its terms,
except to the extent that its enforceability may be subject to limitations
imposed by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity) and to the
effect of applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws of general application relating to or affecting creditors' rights,
including, without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers.
7. NO SUBLICENSES. Licensee shall not have the right to grant
sublicenses hereunder or to transfer any rights to manufacture, modify, develop,
make, have made, market or sell the Amoeba Patent or Licensed Products, or use
the Trademarks or Intellectual Property, without the prior written consent of
Licensor. In the event of any approved sublicense or other transfer to third
parties, Licensee shall take reasonable steps to preclude the further sublicense
or transfer of the Amoeba Patent or Licensed Products.
8. BEST EFFORTS. Licensee agrees to utilize its best efforts to promote
and exploit the Licensed Products, subject to the restrictions of this
Agreement.
9. PROSECUTION OF APPLICATIONS. Licensor shall have full and complete
control over the prosecution of any patent or trademark applications, or any
reissue of such licensed patents and of any disclaimer proceedings in connection
therewith. Licensor shall keep Licensee fully and promptly informed of such
prosecution, and shall give Licensee reasonable opportunity to make suggestions
with regard to such prosecution. Licensor shall be under no obligation to accept
any such suggestion, or to continue such prosecution beyond the point that it
considers desirable. Each party shall bear the cost of its own activities in
connection with the foregoing.
10. MARKING.
a. PRODUCTS. Licensee shall mark all Licensed Products sold by
it under this Agreement with the number of any patent that is applicable thereto
and under which it is hereby licensed.
0072600.03
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<PAGE>
b. TRADEMARKS. Licensee agrees to mark all Trademarks with
either a (R) (for registered trademark) or "TM" (for unregistered trademarks)
and to designate Licensor as owner.
11. INFRINGEMENT. In the event that any infringement of the
Licensed Products comes to the attention of Licensee, Licensee
shall promptly notify Licensor of the infringement. Licensor shall
control the prosecution of any such action.
If the use of the Amoeba Patent, Trademark, or Intellectual Property,
or any information or material furnished hereunder is enjoined, Licensor shall
have the right and option to:
a. procure for Licensee the right to continue such
further use;
b. modify such so they no longer infringe any such
rights;
c. obtain for Licensee similar products or marks which
do not infringe any marks; or
d. terminate the agreement and pay Licensee liquidated damages
of the lesser of actual damages or the amount of royalties actually received by
Licensor for the previous six-month period immediately preceding such injunction
for that specific property.
This paragraph 12 states the entire obligation and liability of Licensor with
respect to infringement or violation of any proprietary interest of another or
claims thereof.
12. INVALIDITY OF PATENT. If any claim of any patent under which this
license is granted shall be declared invalid by a final decision of a court of
competent jurisdiction, whether an appellate court or a lower court whose
decision becomes final by failure to appeal therefrom, or if, as a result of a
final decision, any such claim shall be hereafter awarded to another, Licensee
shall not be relieved of any obligations hereunder. In the event that any claim
of any patent application under which this license is granted shall be finally
rejected, such claim shall thenceforth be treated as if it did not exist, unless
and until such final rejection shall be withdrawn or reversed and such claim
allowed, and this license shall be deemed to be of trade secrets and know how of
Licensor.
13. NON-USE. In the event that Licensee makes no substantial use of the
Amoeba Patent or Licensed Products or of any claims of an issued patent under
which it is hereby licensed for any six (6) month period after the date hereof,
Licensor shall have the right to cancel this license, in part or in full, on
thirty (30) days' written notice to Licensee.
14. ATTORNEYS' FEES. In the event either party shall enforce
this Agreement by legal means, the prevailing party shall be
0072600.03
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<PAGE>
entitled to reasonable attorneys' fees, experts' fees and costs whether in
pretrial, trial, arbitration or appeal or in any bankruptcy proceeding. Venue
shall be in King County, Washington. This Agreement shall be construed in
accordance with the laws of the State of Washington.
15. NOTICE. Any written notice necessary or appropriate under this
Agreement shall be deemed to be properly given if delivered or sent by United
States Registered Mail or the Canadian equivalent to the party to be notified at
the address set forth below or at such other address as either party may
hereafter designate in writing. The date of service of any notice so sent by
registered mail shall be deemed to be three (3) days after the mailing thereof.
16. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding on and
inure to the benefit of the successors of the parties, and Licensee shall not
have any right to assign this Agreement without the consent in writing of
Licensor. Licensor shall be free to assign its interest herein upon written
notice to Licensee.
17. QUALITY CONTROL. Licensee acknowledges that the quality of the
Licensed Products and any advertising or promotional materials used in
connection with the Trademarks and Intellectual Property is of utmost importance
to Licensor and that any use of unauthorized products or materials will damage
Licensor's goodwill and name. Therefore, Licensee agrees to maintain the quality
of the Licensed Products and Trademarks and all advertising and promotional
materials used at a high level. The Licensed Products and Trademarks and
advertising and promotional materials shall be subject to prior written approval
of Licensor. Licensor may withhold approval for any use or proposed use which
may disparage or bring into disrepute Licensor's name in Licensor's sole
discretion. For each and every type of Licensed Product or New Invention Product
and for each material change to a Trademark, Licensee shall provide Licensor a
randomly selected example for inspection before such is marketed and on a
quarterly basis thereafter.
18. WARRANTY. The parties recognize that Licensor is the owner and
developer of the Amoeba Patent, Licensed Products, Trademarks and Intellectual
Property and that nothing herein shall give Licensee any continuing interest in
and to such Amoeba Patent, Licensed Products, New Invention Products, or
Trademarks or any derivatives therefrom. Further, Licensee understands that
Licensor has developed the Amoeba Patent on its own but that Licensor is not in
the business of manufacturing or selling products. Licensee therefore agrees to
hold harmless, defend and indemnify Licensor from any and all damages and claims
arising out of Licensor's, Licensee's or any third party's use of the Amoeba
Patent or Licensed Products. In addition, Licensee shall be responsible to
0072600.03
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<PAGE>
meet any requirements of any law or regulating agency in connection therewith,
including warning requirements.
19. CONFIDENTIAL INFORMATION. Licensee shall keep confidential and
otherwise protect from disclosure all information and property obtained from
Licensor in connection with this Agreement and identified as confidential or
proprietary. Licensee agrees, unless otherwise expressly authorized herein or by
Licensor, Licensee shall use such information and property, and the features
thereof, only in the performance and for the purpose of this Agreement. Upon
Licensor's request, and in any event upon the completion, termination or
cancellation of this Agreement, the Licensee shall return all such information
and property to the Licensor or make such other disposition thereof as is
directed by Licensor. In all lower tier subcontracts and purchase contracts
issued by Licensee and involving subcontractor receipt of such information or
property, Licensee shall provide to Licensor the same rights and protection as
contained in this clause. This provision shall survive termination of this
Agreement. Information shall not be confidential or proprietary for the purposes
of this provision, if
a. Known to the receiving party without restriction when
received, or thereafter is developed independently by the receiving party
without reference to proprietary information of the originating party; or
b. Obtained from a source other than the originating party
through no breach of confidence by the receiving party; or
c. In the public domain when received, or thereafter enters
the public domain through no fault of the receiving party; or
d. Disclosed by the originating party to a third party without
restriction; or
e. Required by applicable law or regulation, provided the
receiving party notifies the originating party of the requirement promptly, and
cooperates with the originating party (at the request and expense of the
originating party) in contesting the requirement.
20. DEFAULT. Any payment due from Licensee to Licensor shall bear
interest at the rate of the lesser of 1-1/2% per month or the highest rate
permitted by law. In addition, if Licensee shall be in arrears in the payment of
any such amount, Licensor shall have the right to cancel this Agreement upon
giving Licensee thirty (30) days' written notice with an opportunity to cure. If
Licensee violates or fails to keep or perform any other obligation, term or
condition hereof, or if Licensee shall be adjudged a bankrupt or become
insolvent or makes an assignment for the benefit of creditors, or is placed in
the hands of a receiver or trustee in
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bankruptcy, then Licensor may, at its option, cancel and terminate this
Agreement by giving thirty (30) days' written notice, specifying the default
complained of; provided, however, that if Licensee shall, within such thirty
(30) days, cure the default complained of, then the notice shall cease to be
operative and this License Agreement shall continue in full force and effect as
though such default had not occurred. These remedies are in addition to any and
all remedies available at law or in equity to Licensor.
21. RIGHTS UPON TERMINATION. Upon termination of this Agreement, by
expiration or otherwise, all use of Licensor's Licensed Products, New Invention
Products, Trademarks and Intellectual Property shall immediately cease except
that termination shall not release Licensee from any monetary obligations,
continuing warranties or restrictive covenants herein. Licensee shall have no
future rights to the Licensed Products, New Invention Products, Trademarks,
Intellectual Property or confidential information and Licensee agrees to return
all Intellectual Properties to Licensor. Upon termination, no future
manufacturing shall occur for or on behalf of Licensee. Existing stock shall be
offered at wholesale first to Licensor and if Licensor decides not to purchase
such in ten days, then such may be sold for an additional 60 days at not less
than standard wholesale prices. No extensions will be granted.
The rights of termination herein are absolute, and Licensee
acknowledges it has considered such in making expenditures of money and time in
preparing for the performance of this Agreement and further the possible losses
of or damages on account of the loss of prospective profits or anticipated sales
or on account of expenditures, investments, leases, property improvements, or
commitments in connection with the goodwill or business of Licensee resulting
for the termination hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
"LICENSOR" AMOEBA CORPORATION
By/s/Isaac Collie
Its Director
21 East Drive Garston
Watford, Herts
ENGLAND WD2 6AH
"LICENSEE" INTERACTIVE PROCESSING, INC.
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By/s/Keith Balderson
Its President/Director
1738 - 609 Granville St.
Vancouver, B.C.
CANADA V7Y 1G5
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EXHIBIT 10.2
PATENT AND TRADEMARK SUBLICENSE AGREEMENT BETWEEN BUT SUP BUT
INTERNATIONAL, INC. AND INTERACTIVE PROCESSING, INC. DATED APRIL 17, 1996
<PAGE>
PATENT AND TRADEMARK SUBLICENSE
THIS SUBLICENSE is made this __17__ day of __April___, 1996, by and
between BUT SUP BUT INTERNATIONAL INC., a Virgin Island corporation
("Sublicensor") and INTERACTIVE PROCESSING, INC., a Nevada corporation
("Sublicensee").
RECITALS
A. Sublicensor is the licensee of Amoeba Corporation ("Licensor"), and
has the right to grant a sublicense with respect to an invention entitled TV
Terminator, described generally as an interactive universal remote control,
including United States Patent Number 5,253,068 and Canadian patent number
2,107,736, and under any divisions, continuations, and continuations-in-part
thereof, and under any patents that may issue thereon or any reissues or
extensions thereof ("Amoeba Patent").
B. Sublicensor is or will be utilizing the marks TV Terminator, TVT and
The Fazer, and other marks that may be developed, in connection with the Amoeba
Patent ("Trademarks").
C. Sublicensee is desirous of securing and Sublicensor is willing to
grant, a non-exclusive license for the development, manufacture, marketing,
distribution, and sale of products based in whole or in part on the Amoeba
Patent and all improvements and developments pertaining thereto ("Licensed
Products") to Sublicensor, or its affiliates, subject to the terms and
conditions contained herein.
D. Sublicensee is desirous of securing and Sublicensor is willing to
grant, a license for use of the Trademarks in connection with the Licensed
Products only, subject to the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
1. GRANT OF LICENSE.
A. GRANT. Sublicensor hereby grants to Sublicensee an
exclusive license within the territory identified in subparagraph 1.c to
develop, make, have made, use, modify, market, manufacture, distribute, and sell
Licensed Products; and to use the Trademarks and any trade names, trademarks,
service marks and the like utilized by Sublicensor in the manufacture, sale and
distribution of Licensed Products ("Intellectual Property"). This grant shall
include all rights of Sublicensor, whether presently existing or hereafter
arising, and whether scheduled in this Agreement or not. Sublicensee may use the
Trademarks in product labels, tags, containers, displays, publicity,
advertising, telephone listings,
0088271.01
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<PAGE>
electronic data interchange (including on-line services), business names, signs
or in any other manner whatsoever without the prior written approval of
Sublicensor.
B. NEW INVENTION PRODUCTS. The parties acknowledge that new or
modified versions of the Licensed Products ("New Invention Products") other than
as defined herein are anticipated. Any New Invention Products shall be the
exclusive property of Licensor, whether or not developed by Licensor and whether
or not Licensor's trade secrets are used to develop the New Invention Products;
provided that such New Invention Products shall be deemed to be within the
license granted hereunder.
C. REGION. The territory within which this exclusive license
is valid is: Asia, excluding Russia and all republics which were part of the
former Soviet Union; India; Australia; and New Zealand.
2. PAYMENT AND ROYALTY. In consideration for the grant of the
license hereunder Sublicensee shall:
a. Issue to Sublicensor Nine Hundred Thousand (900,000) shares
of the common stock of Sublicensee (the "Shares"), free and clear of all liens
and encumbrances, representing Nine and 65/100ths percent (9.65%) of the issued
and outstanding and reserved common stock of Sublicensee; and
b. Pay Sublicensor royalties on gross sales of the Licensed
Products and any New Invention Products during the term of this license. Such
royalties shall be paid quarterly within thirty (30) days after the first days
of January, April, July, and October of each year during the continuance of this
Agreement for the prior three (3) calendar months (except that the first such
report shall cover only the portion of the quarter between the date of this
Agreement and the end of the quarter), and shall be equal to One and 50/100
Dollars ($1.50) per unit of Licensed Products sold; and
c. In the event of a sublicense granted in accordance with the
terms of this Agreement Sublicensor shall be paid a royalty of One and 50/100
Dollars ($1.50) per unit of Licensed Products sold by or through such
sublicensee (or other arrangement), unless agreed otherwise by Sublicensor in
writing in connection with the sublicense.
3. TITLE; WARRANTY. This Agreement shall not act to transfer title or
ownership of the Amoeba Patent, Trademarks or Intellectual Property. Sublicensor
warrants it has a valid license to use and sublicense, with Licensor's
permission, the Amoeba Patent, Trademarks and Intellectual Property, no
knowledge of conflicting claims to the Amoeba Patent, Trademarks and
Intellectual Property and that the Amoeba Patent, Trademarks and Intellectual
Property do not infringe the rights of any other person.
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4. RECORDS. Sublicensee shall keep full and accurate records and books
of account showing the manufacture, inventory and sale quantities and the
selling prices of the Licensed Products. Any accountant authorized in writing by
Sublicensor shall be given access to such records and books at all reasonable
times. Any inspection or audit of the records by Sublicensor or its agent shall
be at the expense of Sublicensor unless such shall disclose a discrepancy of two
percent (2%) or more. Quarterly, within thirty (30) days after the first days of
January, April, July, and October of each year during the continuance of this
Agreement, Sublicensee shall render written reports to Sublicensor stating in
each such report the quantities and net selling prices of all Licensed Products
sold and manufactured by Sublicensee during the preceding three (3) calendar
months, except that the first such report shall cover only the portion of the
quarter between the date of this Agreement and the end of the quarter. Each such
report shall be accompanied by remittance in full covering the royalties shown
thereby to be due Sublicensor. Licensed Products shall be considered sold when
billed out; if Licensed Products are not billed out, they shall be considered
sold when delivered, shipped or when paid for, in part or full, whichever occurs
first. Royalties paid on Licensed Products that are returned by customers may be
credited against future royalty payments, provided royalties are paid on any
such returned Licensed Products that are later sold. No royalties need be paid
on Licensed Products furnished to customers without charge to replace returned
Licensed Products on which royalties had previously been paid, provided no
credit is taken against royalty payments for such returned Licensed Products.
Licensed Products shall not be given free to any third party without
Sublicensor's written permission or used internally by Sublicensee, without
commission being paid.
5. REPRESENTATIONS AND WARRANTIES OF SUBLICENSEE. Sublicensee
represents and warrants to Sublicensor as of the date hereof, and as of the date
of consummation of each and every element of this Agreement, as follows:
a. ORGANIZATION AND STANDING: POWER AND AUTHORITY. Sublicensee
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has the full corporate power and corporate
authority to carry on its business, as it is now being conducted, and to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby and thereby. Sublicensee is qualified as a foreign corporation in all
jurisdictions in which the failure so to qualify would have a material adverse
effect on Sublicensee. Sublicensee has no subsidiaries or equity or other
interest in any entity.
b. CAPITALIZATION. The authorized capital of Sublicensee
consists of 25,000,000 shares of Common Stock, par value $.001 per share, of
which 3,124,000 shares have been validly issued and are outstanding, fully paid
and nonassessable on the date hereof. Sublicensee has reserved 900,000 shares of
capital
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stock for issuance to Sublicensor in connection with the acquisition of product
licenses. There are no other reserved shares and no outstanding options,
restricted stock awards, warrants, calls, commitments or rights of any character
to purchase or otherwise to acquire from Sublicensee shares of capital stock of
any class, no outstanding securities of Sublicensee that are convertible into
shares of capital stock of Sublicensee of any class, and no options, warrants or
rights to purchase from the Company any of such convertible securities.
c. CORPORATE APPROVAL. Sublicensee has the necessary corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement by Sublicensee, the performance by Sublicensee of its obligations
hereunder and thereunder, and the consummation by Sublicensee of the
transactions contemplated hereby and thereby, have been duly authorized by the
Board of Directors of Sublicensee, which authorization has not been modified and
is in full force and effect, and no other corporate proceeding on the part of
Sublicensee is necessary for the execution and delivery of this Agreement by
Sublicensee and the performance by Sublicensee of its obligations hereunder and
the consummation by Sublicensee of the transactions contemplated hereby, does
not violate any provision of the Articles of Incorporation or the By-Laws of
Sublicensee.
d. GOVERNMENTAL FILINGS AND AUTHORIZATIONS. No filing,
authorization or approval, governmental or otherwise, is necessary to enable
Sublicensee to enter into, and to perform each of its obligations under, this
Agreement except for such filings as may be required to comply with federal and
state securities laws which filings, if any, have been made prior to the date
hereof.
e. SUBLICENSEE COMMON STOCK - VALID ISSUANCE. The shares of
the Sublicensee's common stock to be issued to Sublicensor hereunder will be
duly authorized, validly issued, fully paid and nonassessable and will be issued
in compliance with the Act and any appropriate state securities laws.
f. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by Sublicensee. This Agreement and each document
and instrument to be executed by Sublicensee pursuant hereto constitutes a
legal, valid and binding obligation of Sublicensee, enforceable in accordance
with its terms, except to the extent that its enforceability may be subject to
limitations imposed by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity) and to the
effect of applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws of general application relating to or affecting creditors' rights,
including, without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers.
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g. CONSENTS. Sublicensee is not subject to any law, ordinance,
regulation, rule, order, judgment, injunction, decree, charter or bylaw,
contract, commitment, lease, agreement, instrument or other restriction that
would prevent the consummation of this Agreement or any of the transactions
contemplated hereby and thereby without the consent of any third party, that
would require the consent of any third party to the consummation of this
Agreement or of the transactions contemplated hereby or thereby or, to the
knowledge of Sublicensee, that would result in any penalty, forfeiture or
termination which would be materially adverse to Sublicensee as a result of such
consummation.
h. OBLIGATIONS: ABSENCE OF VIOLATION. Neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby and thereby constitutes a violation or default under, or
conflicts with, any term or provision of the Articles of Incorporation or Bylaws
of Sublicensee, or any material agreement, including, without limitation, any
material contract, license, commitment, lease, instrument, arrangement or
understanding to which Sublicensee is a party or to which Sublicensee or any of
its property is subject, or by which Sublicensee or any of its property is
bound, where such encumbrance would be materially adverse to the Sublicensor.
i. DISCLOSURE. No representation or warranty by Sublicensee,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
j. 504 OFFERING. Sublicensee sold 3,725,000 shares of its
common stock at $.05 per share in an offering pursuant to an exemption from
registration provided by Rule 504 of Regulation D promulgated under the
Securities Act of 1933, as amended, and applicable state law.
6. REPRESENTATIONS AND WARRANTIES OF SUBLICENSOR. Sublicensor
represents and warrants to Sublicensee as of the date hereof, and as of the date
of consummation of each and every element of this Agreement, as follows:
a. ORGANIZATION AND STANDING: POWER AND AUTHORITY. Sublicensor
is a corporation duly organized, validly existing and in good standing under the
laws of the Bahamas and has the full corporate power and corporate authority to
carry on its business, as it is now being conducted, and to execute and deliver
this Agreement and to consummate the transactions contemplated hereby and
thereby.
b. CORPORATE APPROVAL. Sublicensor has the necessary corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder and thereunder. The execution
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and delivery of this Agreement by Sublicensor, the performance by Sublicensor of
its obligations hereunder and thereunder, and the consummation by Sublicensor of
the transactions contemplated hereby and thereby, have been duly authorized by
the Sublicensor, which authorization has not been modified and is in full force
and effect, and no other corporate proceeding on the part of Sublicensor is
necessary for the execution and delivery of this Agreement by Sublicensor and
the performance by Sublicensor of its obligations hereunder and the consummation
by Sublicensor of the transactions contemplated hereby, does not violate any
provision of the constituting articles of Sublicensor.
c. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by Sublicensor. This Agreement and each document
and instrument to be executed by Sublicensor pursuant hereto constitutes a
legal, valid and binding obligation of Sublicensor, enforceable in accordance
with its terms, except to the extent that its enforceability may be subject to
limitations imposed by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity) and to the
effect of applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws of general application relating to or affecting creditors' rights,
including, without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers.
7. NO SUBLICENSES. Sublicensee shall not have the right to grant
sublicenses hereunder or to transfer any rights to manufacture, modify, develop,
make, have made, market or sell the Amoeba Patent or Licensed Products, or use
the Trademarks or Intellectual Property, without the prior written consent of
Sublicensor. In the event of any approved sublicense or other transfer to third
parties, Sublicensee shall take reasonable steps to preclude the further
sublicense or transfer of the Amoeba Patent or Licensed Products.
8. BEST EFFORTS. Sublicensee agrees to utilize its best efforts to
promote and exploit the Licensed Products, subject to the restrictions of this
Agreement.
9. PROSECUTION OF APPLICATIONS. Licensor shall have full and complete
control over the prosecution of any patent or trademark applications, or any
reissue of such licensed patents and of any disclaimer proceedings in connection
therewith. Licensor shall keep Sublicensee fully and promptly informed of such
prosecution, and shall give Sublicensee reasonable opportunity to make
suggestions with regard to such prosecution. Licensor shall be under no
obligation to accept any such suggestion, or to continue such prosecution beyond
the point that it considers desirable. Each party shall bear the cost of its own
activities in connection with the foregoing.
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10. MARKING.
a. PRODUCTS. Sublicensee shall mark all Licensed Products sold
by it under this Agreement with the number of any patent that is applicable
thereto and under which it is hereby licensed.
b. TRADEMARKS. Sublicensee agrees to mark all Trademarks with
either a (R) (for registered trademark) or "TM" (for unregistered trademarks)
and to designate Sublicensor as owner.
11. INFRINGEMENT. In the event that any infringement of the Licensed
Products comes to the attention of Sublicensee, Sublicensee shall promptly
notify Sublicensor of the infringement. Sublicensor shall control the
prosecution of any such action.
If the use of the Amoeba Patent, Trademark, or Intellectual Property,
or any information or material furnished hereunder is enjoined, Sublicensor
shall have the right and option to:
a. procure for Sublicensee the right to continue such further
use;
b. modify such so they no longer infringe any such rights;
c. obtain for Sublicensee similar products or marks which do
not infringe any marks; or
d. terminate the agreement and pay Sublicensee liquidated
damages of the lesser of actual damages or the amount of royalties actually
received by Sublicensor for the previous six-month period immediately preceding
such injunction for that specific property.
This paragraph 12 states the entire obligation and liability of Sublicensor with
respect to infringement or violation of any proprietary interest of another or
claims thereof.
12. INVALIDITY OF PATENT. If any claim of any patent under which this
license is granted shall be declared invalid by a final decision of a court of
competent jurisdiction, whether an appellate court or a lower court whose
decision becomes final by failure to appeal therefrom, or if, as a result of a
final decision, any such claim shall be hereafter awarded to another,
Sublicensee shall not be relieved of any obligations hereunder. In the event
that any claim of any patent application under which this license is granted
shall be finally rejected, such claim shall thenceforth be treated as if it did
not exist, unless and until such final rejection shall be withdrawn or reversed
and such claim allowed, and this license shall be deemed to be of trade secrets
and know how of Sublicensor.
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13. NON-USE. In the event that Sublicensee makes no substantial use of
the Amoeba Patent or Licensed Products or of any claims of an issued patent
under which it is hereby licensed for any six (6) month period after the date
hereof, Sublicensor shall have the right to cancel this license, in part or in
full, on thirty (30) days' written notice to Sublicensee.
14. ATTORNEYS' FEES. In the event either party shall enforce this
Agreement by legal means, the prevailing party shall be entitled to reasonable
attorneys' fees, experts' fees and costs whether in pretrial, trial, arbitration
or appeal or in any bankruptcy proceeding. Venue shall be in King County,
Washington. This Agreement shall be construed in accordance with the laws of the
State of Washington.
15. NOTICE. Any written notice necessary or appropriate under this
Agreement shall be deemed to be properly given if delivered or sent by United
States Registered Mail or the Canadian equivalent to the party to be notified at
the address set forth below or at such other address as either party may
hereafter designate in writing. The date of service of any notice so sent by
registered mail shall be deemed to be three (3) days after the mailing thereof.
16. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding on and
inure to the benefit of the successors of the parties, and Sublicensee shall not
have any right to assign this Agreement without the consent in writing of
Sublicensor. Sublicensor shall be free to assign its interest herein upon
written notice to Sublicensee.
17. QUALITY CONTROL. Sublicensee acknowledges that the quality of the
Licensed Products and any advertising or promotional materials used in
connection with the Trademarks and Intellectual Property is of utmost importance
to Sublicensor and that any use of unauthorized products or materials will
damage Sublicensor's goodwill and name. Therefore, Sublicensee agrees to
maintain the quality of the Licensed Products and Trademarks and all advertising
and promotional materials used at a high level. The Licensed Products and
Trademarks and advertising and promotional materials shall be subject to prior
written approval of Sublicensor. Sublicensor may withhold approval for any use
or proposed use which may disparage or bring into disrepute Sublicensor's name
in Sublicensor's sole discretion. For each and every type of Licensed Product or
New Invention Product and for each material change to a Trademark, Sublicensee
shall provide Sublicensor a randomly selected example for inspection before such
is marketed and on a quarterly basis thereafter.
18. WARRANTY. The parties recognize that Sublicensor is the Licensee of
the Amoeba Patent, Licensed Products, Trademarks and Intellectual Property and
that nothing herein shall give Sublicensee any continuing interest in and to
such Amoeba Patent,
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Licensed Products, New Invention Products, or Trademarks or any derivatives
therefrom. Further, Sublicensee understands that Sublicensor is not in the
business of manufacturing or selling products. Sublicensee therefore agrees to
hold harmless, defend and indemnify Sublicensor and Licensor from any and all
damages and claims arising out of Sublicensor's, Sublicensee's or any third
party's use of the Amoeba Patent or Licensed Products. In addition, Sublicensee
shall be responsible to meet any requirements of any law or regulating agency in
connection therewith, including warning requirements.
19. CONFIDENTIAL INFORMATION. Sublicensee shall keep confidential and
otherwise protect from disclosure all information and property obtained from
Licensor and Sublicensor in connection with this Agreement and identified as
confidential or proprietary. Sublicensee agrees, unless otherwise expressly
authorized herein or by Sublicensor, Sublicensee shall use such information and
property, and the features thereof, only in the performance and for the purpose
of this Agreement. Upon Sublicensor's request, and in any event upon the
completion, termination or cancellation of this Agreement, the Sublicensee shall
return all such information and property to the Sublicensor or make such other
disposition thereof as is directed by Sublicensor. In all lower tier
subcontracts and purchase contracts issued by Sublicensee and involving
subcontractor receipt of such information or property, Sublicensee shall provide
to Sublicensor the same rights and protection as contained in this clause. This
provision shall survive termination of this Agreement. Information shall not be
confidential or proprietary for the purposes of this provision, if
a. Known to the receiving party without restriction when
received, or thereafter is developed independently by the receiving party
without reference to proprietary information of the originating party; or
b. Obtained from a source other than the originating party
through no breach of confidence by the receiving party; or
c. In the public domain when received, or thereafter enters
the public domain through no fault of the receiving party; or
d. Disclosed by the originating party to a third party without
restriction; or
e. Required by applicable law or regulation, provided the
receiving party notifies the originating party of the requirement promptly, and
cooperates with the originating party (at the request and expense of the
originating party) in contesting the requirement.
20. DEFAULT. Any payment due from Sublicensee to Sublicensor shall bear
interest at the rate of the lesser of 1-1/2% per month
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or the highest rate permitted by law. In addition, if Sublicensee shall be in
arrears in the payment of any such amount, Sublicensor shall have the right to
cancel this Agreement upon giving Sublicensee thirty (30) days' written notice
with an opportunity to cure. If Sublicensee violates or fails to keep or perform
any other obligation, term or condition hereof, or if Sublicensee shall be
adjudged a bankrupt or become insolvent or makes an assignment for the benefit
of creditors, or is placed in the hands of a receiver or trustee in bankruptcy,
then Sublicensor may, at its option, cancel and terminate this Agreement by
giving thirty (30) days' written notice, specifying the default complained of;
provided, however, that if Sublicensee shall, within such thirty (30) days, cure
the default complained of, then the notice shall cease to be operative and this
License Agreement shall continue in full force and effect as though such default
had not occurred. These remedies are in addition to any and all remedies
available at law or in equity to Sublicensor.
21. RIGHTS UPON TERMINATION. Upon termination of this Agreement, by
expiration or otherwise, all use of Sublicensor's Licensed Products, New
Invention Products, Trademarks and Intellectual Property shall immediately cease
except that termination shall not release Sublicensee from any monetary
obligations, continuing warranties or restrictive covenants herein. Sublicensee
shall have no future rights to the Licensed Products, New Invention Products,
Trademarks, Intellectual Property or confidential information and Sublicensee
agrees to return all Intellectual Properties to Sublicensor. Upon termination,
no future manufacturing shall occur for or on behalf of Sublicensee. Existing
stock shall be offered at wholesale first to Sublicensor and if Sublicensor
decides not to purchase such in ten days, then such may be sold for an
additional 60 days at not less than standard wholesale prices. No extensions
will be granted.
The rights of termination herein are absolute, and Sublicensee
acknowledges it has considered such in making expenditures of money and time in
preparing for the performance of this Agreement and further the possible losses
of or damages on account of the loss of prospective profits or anticipated sales
or on account of expenditures, investments, leases, property improvements, or
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commitments in connection with the goodwill or business of Sublicensee resulting
for the termination hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
"SUBLICENSOR" BUT SUP BUT INTERNATIONAL INC.
By/s/Janeen Curtis
Its Director
Flat 1906
BLK Q
Luk Yeung Sun Chuen
Tsuen Wan
N.T. Hong Kong
"SUBLICENSEE" INTERACTIVE PROCESSING, INC.
By/s/Keith Balderson
Its President/Director
1738 - 609 Granville St.
Vancouver, B.C.
CANADA V7Y 1G5
By executing this Agreement, Amoeba Corporation expressly consents to
the Sublicense granted herein.
"LICENSOR" AMOEBA CORPORATION
By/s/Isaac Collie
Its Director
21 East Drive Garston
Watford, Herts
ENGLAND WD2 6AH
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EXHIBIT 10.3
PATENT AND TRADEMARK SUBLICENSE AGREEMENT BETWEEN AURORA
MARKETING INC. AND INTERACTIVE PROCESSING, INC. DATED APRIL 17, 1996
<PAGE>
PATENT AND TRADEMARK SUBLICENSE
THIS SUBLICENSE is made this __17__ day of __April___, 1996, by and
between AURORA MARKETING INC., an Irish corporation ("Sublicensor") and
INTERACTIVE PROCESSING, INC., a Nevada corporation ("Sublicensee").
RECITALS
A. Sublicensor is the licensee of Amoeba Corporation ("Licensor"), and
has the right to grant a sublicense with respect to an invention entitled TV
Terminator, described generally as an interactive universal remote control,
including United States Patent Number 5,253,068 and Canadian patent number
2,107,736, and under any divisions, continuations, and continuations-in-part
thereof, and under any patents that may issue thereon or any reissues or
extensions thereof ("Amoeba Patent").
B. Sublicensor is or will be utilizing the marks TV Terminator, TVT and
The Fazer, and other marks that may be developed, in connection with the Amoeba
Patent ("Trademarks").
C. Sublicensee is desirous of securing and Sublicensor is willing to
grant, a non-exclusive license for the development, manufacture, marketing,
distribution, and sale of products based in whole or in part on the Amoeba
Patent and all improvements and developments pertaining thereto ("Licensed
Products") to Sublicensor, or its affiliates, subject to the terms and
conditions contained herein.
D. Sublicensee is desirous of securing and Sublicensor is willing to
grant, a license for use of the Trademarks in connection with the Licensed
Products only, subject to the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
1. GRANT OF LICENSE.
A. GRANT. Sublicensor hereby grants to Sublicensee an
exclusive license within the territory identified in subparagraph 1.c to
develop, make, have made, use, modify, market, manufacture, distribute, and sell
Licensed Products; and to use the Trademarks and any trade names, trademarks,
service marks and the like utilized by Sublicensor in the manufacture, sale and
distribution of Licensed Products ("Intellectual Property"). This grant shall
include all rights of Sublicensor, whether presently existing or hereafter
arising, and whether scheduled in this Agreement or not. Sublicensee may use the
Trademarks in product labels, tags, containers, displays, publicity,
advertising, telephone listings,
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electronic data interchange (including on-line services), business names, signs
or in any other manner whatsoever without the prior written approval of
Sublicensor.
B. NEW INVENTION PRODUCTS. The parties acknowledge that new or
modified versions of the Licensed Products ("New Invention Products") other than
as defined herein are anticipated. Any New Invention Products shall be the
exclusive property of Licensor, whether or not developed by Licensor and whether
or not Licensor's trade secrets are used to develop the New Invention Products;
provided that such New Invention Products shall be deemed to be within the
license granted hereunder.
C. REGION. The territory within which this exclusive license
is valid is: All of Europe, including the United Kingdom; Russia; and all
republics which were part of the former Soviet Union.
2. PAYMENT AND ROYALTY. In consideration for the grant of the
license hereunder Sublicensee shall:
a. Issue to Sublicensor Nine Hundred Thousand (900,000) shares
of the common stock of Sublicensee (the "Shares"), free and clear of all liens
and encumbrances, representing Nine and 65/100ths percent (9.65%) of the issued
and outstanding and reserved common stock of Sublicensee; and
b. Pay Sublicensor royalties on gross sales of the Licensed
Products and any New Invention Products during the term of this license. Such
royalties shall be paid quarterly within thirty (30) days after the first days
of January, April, July, and October of each year during the continuance of this
Agreement for the prior three (3) calendar months (except that the first such
report shall cover only the portion of the quarter between the date of this
Agreement and the end of the quarter), and shall be equal to One and 50/100
Dollars ($1.50) per unit of Licensed Products sold; and
c. In the event of a sublicense granted in accordance with the
terms of this Agreement Sublicensor shall be paid a royalty of One and 50/100
Dollars ($1.50) per unit of Licensed Products sold by or through such
sublicensee (or other arrangement), unless agreed otherwise by Sublicensor in
writing in connection with the sublicense.
3. TITLE; WARRANTY. This Agreement shall not act to transfer title or
ownership of the Amoeba Patent, Trademarks or Intellectual Property. Sublicensor
warrants it has a valid license to use and sublicense, with Licensor's
permission, the Amoeba Patent, Trademarks and Intellectual Property, no
knowledge of conflicting claims to the Amoeba Patent, Trademarks and
Intellectual Property and that the Amoeba Patent, Trademarks and Intellectual
Property do not infringe the rights of any other person.
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4. RECORDS. Sublicensee shall keep full and accurate records and books
of account showing the manufacture, inventory and sale quantities and the
selling prices of the Licensed Products. Any accountant authorized in writing by
Sublicensor shall be given access to such records and books at all reasonable
times. Any inspection or audit of the records by Sublicensor or its agent shall
be at the expense of Sublicensor unless such shall disclose a discrepancy of two
percent (2%) or more. Quarterly, within thirty (30) days after the first days of
January, April, July, and October of each year during the continuance of this
Agreement, Sublicensee shall render written reports to Sublicensor stating in
each such report the quantities and net selling prices of all Licensed Products
sold and manufactured by Sublicensee during the preceding three (3) calendar
months, except that the first such report shall cover only the portion of the
quarter between the date of this Agreement and the end of the quarter. Each such
report shall be accompanied by remittance in full covering the royalties shown
thereby to be due Sublicensor. Licensed Products shall be considered sold when
billed out; if Licensed Products are not billed out, they shall be considered
sold when delivered, shipped or when paid for, in part or full, whichever occurs
first. Royalties paid on Licensed Products that are returned by customers may be
credited against future royalty payments, provided royalties are paid on any
such returned Licensed Products that are later sold. No royalties need be paid
on Licensed Products furnished to customers without charge to replace returned
Licensed Products on which royalties had previously been paid, provided no
credit is taken against royalty payments for such returned Licensed Products.
Licensed Products shall not be given free to any third party without
Sublicensor's written permission or used internally by Sublicensee, without
commission being paid.
5. REPRESENTATIONS AND WARRANTIES OF SUBLICENSEE. Sublicensee
represents and warrants to Sublicensor as of the date hereof, and as of the date
of consummation of each and every element of this Agreement, as follows:
a. ORGANIZATION AND STANDING: POWER AND AUTHORITY. Sublicensee
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has the full corporate power and corporate
authority to carry on its business, as it is now being conducted, and to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby and thereby. Sublicensee is qualified as a foreign corporation in all
jurisdictions in which the failure so to qualify would have a material adverse
effect on Sublicensee. Sublicensee has no subsidiaries or equity or other
interest in any entity.
b. CAPITALIZATION. The authorized capital of Sublicensee
consists of 25,000,000 shares of Common Stock, par value $.001 per share, of
which 3,124,000 shares have been validly issued and are outstanding, fully paid
and nonassessable on the date hereof. Sublicensee has reserved 900,000 shares of
capital
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stock for issuance to Sublicensor in connection with the acquisition of product
licenses. There are no other reserved shares and no outstanding options,
restricted stock awards, warrants, calls, commitments or rights of any character
to purchase or otherwise to acquire from Sublicensee shares of capital stock of
any class, no outstanding securities of Sublicensee that are convertible into
shares of capital stock of Sublicensee of any class, and no options, warrants or
rights to purchase from the Company any of such convertible securities.
c. CORPORATE APPROVAL. Sublicensee has the necessary corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement by Sublicensee, the performance by Sublicensee of its obligations
hereunder and thereunder, and the consummation by Sublicensee of the
transactions contemplated hereby and thereby, have been duly authorized by the
Board of Directors of Sublicensee, which authorization has not been modified and
is in full force and effect, and no other corporate proceeding on the part of
Sublicensee is necessary for the execution and delivery of this Agreement by
Sublicensee and the performance by Sublicensee of its obligations hereunder and
the consummation by Sublicensee of the transactions contemplated hereby, does
not violate any provision of the Articles of Incorporation or the By-Laws of
Sublicensee.
d. GOVERNMENTAL FILINGS AND AUTHORIZATIONS. No filing,
authorization or approval, governmental or otherwise, is necessary to enable
Sublicensee to enter into, and to perform each of its obligations under, this
Agreement except for such filings as may be required to comply with federal and
state securities laws which filings, if any, have been made prior to the date
hereof.
e. SUBLICENSEE COMMON STOCK - VALID ISSUANCE. The shares of
the Sublicensee's common stock to be issued to Sublicensor hereunder will be
duly authorized, validly issued, fully paid and nonassessable and will be issued
in compliance with the Act and any appropriate state securities laws.
f. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by Sublicensee. This Agreement and each document
and instrument to be executed by Sublicensee pursuant hereto constitutes a
legal, valid and binding obligation of Sublicensee, enforceable in accordance
with its terms, except to the extent that its enforceability may be subject to
limitations imposed by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity) and to the
effect of applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws of general application relating to or affecting creditors' rights,
including, without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers.
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g. CONSENTS. Sublicensee is not subject to any law, ordinance,
regulation, rule, order, judgment, injunction, decree, charter or bylaw,
contract, commitment, lease, agreement, instrument or other restriction that
would prevent the consummation of this Agreement or any of the transactions
contemplated hereby and thereby without the consent of any third party, that
would require the consent of any third party to the consummation of this
Agreement or of the transactions contemplated hereby or thereby or, to the
knowledge of Sublicensee, that would result in any penalty, forfeiture or
termination which would be materially adverse to Sublicensee as a result of such
consummation.
h. OBLIGATIONS: ABSENCE OF VIOLATION. Neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby and thereby constitutes a violation or default under, or
conflicts with, any term or provision of the Articles of Incorporation or Bylaws
of Sublicensee, or any material agreement, including, without limitation, any
material contract, license, commitment, lease, instrument, arrangement or
understanding to which Sublicensee is a party or to which Sublicensee or any of
its property is subject, or by which Sublicensee or any of its property is
bound, where such encumbrance would be materially adverse to the Sublicensor.
i. DISCLOSURE. No representation or warranty by Sublicensee,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
j. 504 OFFERING. Sublicensee sold 3,725,000 shares of its
common stock at $.05 per share in an offering pursuant to an exemption from
registration provided by Rule 504 of Regulation D promulgated under the
Securities Act of 1933, as amended, and applicable state law.
6. REPRESENTATIONS AND WARRANTIES OF SUBLICENSOR. Sublicensor
represents and warrants to Sublicensee as of the date hereof, and as of the date
of consummation of each and every element of this Agreement, as follows:
a. ORGANIZATION AND STANDING: POWER AND AUTHORITY. Sublicensor
is a corporation duly organized, validly existing and in good standing under the
laws of the Bahamas and has the full corporate power and corporate authority to
carry on its business, as it is now being conducted, and to execute and deliver
this Agreement and to consummate the transactions contemplated hereby and
thereby.
b. CORPORATE APPROVAL. Sublicensor has the necessary corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder and thereunder. The execution
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and delivery of this Agreement by Sublicensor, the performance by Sublicensor of
its obligations hereunder and thereunder, and the consummation by Sublicensor of
the transactions contemplated hereby and thereby, have been duly authorized by
the Sublicensor, which authorization has not been modified and is in full force
and effect, and no other corporate proceeding on the part of Sublicensor is
necessary for the execution and delivery of this Agreement by Sublicensor and
the performance by Sublicensor of its obligations hereunder and the consummation
by Sublicensor of the transactions contemplated hereby, does not violate any
provision of the constituting articles of Sublicensor.
c. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by Sublicensor. This Agreement and each document
and instrument to be executed by Sublicensor pursuant hereto constitutes a
legal, valid and binding obligation of Sublicensor, enforceable in accordance
with its terms, except to the extent that its enforceability may be subject to
limitations imposed by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity) and to the
effect of applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws of general application relating to or affecting creditors' rights,
including, without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers.
7. NO SUBLICENSES. Sublicensee shall not have the right to grant
sublicenses hereunder or to transfer any rights to manufacture, modify, develop,
make, have made, market or sell the Amoeba Patent or Licensed Products, or use
the Trademarks or Intellectual Property, without the prior written consent of
Sublicensor. In the event of any approved sublicense or other transfer to third
parties, Sublicensee shall take reasonable steps to preclude the further
sublicense or transfer of the Amoeba Patent or Licensed Products.
8. BEST EFFORTS. Sublicensee agrees to utilize its best
efforts to promote and exploit the Licensed Products, subject to the
restrictions of this Agreement.
9. PROSECUTION OF APPLICATIONS. Licensor shall have full and complete
control over the prosecution of any patent or trademark applications, or any
reissue of such licensed patents and of any disclaimer proceedings in connection
therewith. Licensor shall keep Sublicensee fully and promptly informed of such
prosecution, and shall give Sublicensee reasonable opportunity to make
suggestions with regard to such prosecution. Licensor shall be under no
obligation to accept any such suggestion, or to continue such prosecution beyond
the point that it considers desirable. Each party shall bear the cost of its own
activities in connection with the foregoing.
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10. MARKING.
a. PRODUCTS. Sublicensee shall mark all Licensed Products sold
by it under this Agreement with the number of any patent that is applicable
thereto and under which it is hereby licensed.
b. TRADEMARKS. Sublicensee agrees to mark all Trademarks with
either a (R) (for registered trademark) or "TM" (for unregistered trademarks)
and to designate Sublicensor as owner.
11. INFRINGEMENT. In the event that any infringement of the Licensed
Products comes to the attention of Sublicensee, Sublicensee shall promptly
notify Sublicensor of the infringement. Sublicensor shall control the
prosecution of any such action.
If the use of the Amoeba Patent, Trademark, or Intellectual Property,
or any information or material furnished hereunder is enjoined, Sublicensor
shall have the right and option to:
a. procure for Sublicensee the right to continue such further
use;
b. modify such so they no longer infringe any such rights;
c. obtain for Sublicensee similar products or marks which do
not infringe any marks; or
d. terminate the agreement and pay Sublicensee liquidated
damages of the lesser of actual damages or the amount of royalties actually
received by Sublicensor for the previous six-month period immediately preceding
such injunction for that specific property.
This paragraph 12 states the entire obligation and liability of Sublicensor with
respect to infringement or violation of any proprietary interest of another or
claims thereof.
12. INVALIDITY OF PATENT. If any claim of any patent under which this
license is granted shall be declared invalid by a final decision of a court of
competent jurisdiction, whether an appellate court or a lower court whose
decision becomes final by failure to appeal therefrom, or if, as a result of a
final decision, any such claim shall be hereafter awarded to another,
Sublicensee shall not be relieved of any obligations hereunder. In the event
that any claim of any patent application under which this license is granted
shall be finally rejected, such claim shall thenceforth be treated as if it did
not exist, unless and until such final rejection shall be withdrawn or reversed
and such claim allowed, and this license shall be deemed to be of trade secrets
and know how of Sublicensor.
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13. NON-USE. In the event that Sublicensee makes no substantial use of
the Amoeba Patent or Licensed Products or of any claims of an issued patent
under which it is hereby licensed for any six (6) month period after the date
hereof, Sublicensor shall have the right to cancel this license, in part or in
full, on thirty (30) days' written notice to Sublicensee.
14. ATTORNEYS' FEES. In the event either party shall enforce this
Agreement by legal means, the prevailing party shall be entitled to reasonable
attorneys' fees, experts' fees and costs whether in pretrial, trial, arbitration
or appeal or in any bankruptcy proceeding. Venue shall be in King County,
Washington. This Agreement shall be construed in accordance with the laws of the
State of Washington.
15. NOTICE. Any written notice necessary or appropriate under this
Agreement shall be deemed to be properly given if delivered or sent by United
States Registered Mail or the Canadian equivalent to the party to be notified at
the address set forth below or at such other address as either party may
hereafter designate in writing. The date of service of any notice so sent by
registered mail shall be deemed to be three (3) days after the mailing thereof.
16. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding on and
inure to the benefit of the successors of the parties, and Sublicensee shall not
have any right to assign this Agreement without the consent in writing of
Sublicensor. Sublicensor shall be free to assign its interest herein upon
written notice to Sublicensee.
17. QUALITY CONTROL. Sublicensee acknowledges that the quality of the
Licensed Products and any advertising or promotional materials used in
connection with the Trademarks and Intellectual Property is of utmost importance
to Sublicensor and that any use of unauthorized products or materials will
damage Sublicensor's goodwill and name. Therefore, Sublicensee agrees to
maintain the quality of the Licensed Products and Trademarks and all advertising
and promotional materials used at a high level. The Licensed Products and
Trademarks and advertising and promotional materials shall be subject to prior
written approval of Sublicensor. Sublicensor may withhold approval for any use
or proposed use which may disparage or bring into disrepute Sublicensor's name
in Sublicensor's sole discretion. For each and every type of Licensed Product or
New Invention Product and for each material change to a Trademark, Sublicensee
shall provide Sublicensor a randomly selected example for inspection before such
is marketed and on a quarterly basis thereafter.
18. WARRANTY. The parties recognize that Sublicensor is the Licensee of
the Amoeba Patent, Licensed Products, Trademarks and Intellectual Property and
that nothing herein shall give Sublicensee any continuing interest in and to
such Amoeba Patent,
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Licensed Products, New Invention Products, or Trademarks or any derivatives
therefrom. Further, Sublicensee understands that Sublicensor is not in the
business of manufacturing or selling products. Sublicensee therefore agrees to
hold harmless, defend and indemnify Sublicensor and Licensor from any and all
damages and claims arising out of Sublicensor's, Sublicensee's or any third
party's use of the Amoeba Patent or Licensed Products. In addition, Sublicensee
shall be responsible to meet any requirements of any law or regulating agency in
connection therewith, including warning requirements.
19. CONFIDENTIAL INFORMATION. Sublicensee shall keep confidential and
otherwise protect from disclosure all information and property obtained from
Licensor and Sublicensor in connection with this Agreement and identified as
confidential or proprietary. Sublicensee agrees, unless otherwise expressly
authorized herein or by Sublicensor, Sublicensee shall use such information and
property, and the features thereof, only in the performance and for the purpose
of this Agreement. Upon Sublicensor's request, and in any event upon the
completion, termination or cancellation of this Agreement, the Sublicensee shall
return all such information and property to the Sublicensor or make such other
disposition thereof as is directed by Sublicensor. In all lower tier
subcontracts and purchase contracts issued by Sublicensee and involving
subcontractor receipt of such information or property, Sublicensee shall provide
to Sublicensor the same rights and protection as contained in this clause. This
provision shall survive termination of this Agreement. Information shall not be
confidential or proprietary for the purposes of this provision, if
a. Known to the receiving party without restriction when
received, or thereafter is developed independently by the receiving party
without reference to proprietary information of the originating party; or
b. Obtained from a source other than the originating party
through no breach of confidence by the receiving party; or
c. In the public domain when received, or thereafter enters
the public domain through no fault of the receiving party; or
d. Disclosed by the originating party to a third party without
restriction; or
e. Required by applicable law or regulation, provided the
receiving party notifies the originating party of the requirement promptly, and
cooperates with the originating party (at the request and expense of the
originating party) in contesting the requirement.
20. DEFAULT. Any payment due from Sublicensee to Sublicensor shall bear
interest at the rate of the lesser of 1-1/2% per month
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or the highest rate permitted by law. In addition, if Sublicensee shall be in
arrears in the payment of any such amount, Sublicensor shall have the right to
cancel this Agreement upon giving Sublicensee thirty (30) days' written notice
with an opportunity to cure. If Sublicensee violates or fails to keep or perform
any other obligation, term or condition hereof, or if Sublicensee shall be
adjudged a bankrupt or become insolvent or makes an assignment for the benefit
of creditors, or is placed in the hands of a receiver or trustee in bankruptcy,
then Sublicensor may, at its option, cancel and terminate this Agreement by
giving thirty (30) days' written notice, specifying the default complained of;
provided, however, that if Sublicensee shall, within such thirty (30) days, cure
the default complained of, then the notice shall cease to be operative and this
License Agreement shall continue in full force and effect as though such default
had not occurred. These remedies are in addition to any and all remedies
available at law or in equity to Sublicensor.
21. RIGHTS UPON TERMINATION. Upon termination of this Agreement, by
expiration or otherwise, all use of Sublicensor's Licensed Products, New
Invention Products, Trademarks and Intellectual Property shall immediately cease
except that termination shall not release Sublicensee from any monetary
obligations, continuing warranties or restrictive covenants herein. Sublicensee
shall have no future rights to the Licensed Products, New Invention Products,
Trademarks, Intellectual Property or confidential information and Sublicensee
agrees to return all Intellectual Properties to Sublicensor. Upon termination,
no future manufacturing shall occur for or on behalf of Sublicensee. Existing
stock shall be offered at wholesale first to Sublicensor and if Sublicensor
decides not to purchase such in ten days, then such may be sold for an
additional 60 days at not less than standard wholesale prices. No extensions
will be granted.
The rights of termination herein are absolute, and Sublicensee
acknowledges it has considered such in making expenditures of money and time in
preparing for the performance of this Agreement and further the possible losses
of or damages on account of the loss of prospective profits or anticipated sales
or on account of expenditures, investments, leases, property improvements, or
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commitments in connection with the goodwill or business of Sublicensee resulting
for the termination hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
"SUBLICENSOR" AURORA MARKETING INC.
By/s/Ella Collie
Its Director
21 Godolphin House
76 Fellows Road
London, England
NW3 3LG
"SUBLICENSEE" INTERACTIVE PROCESSING, INC.
By/s/Keith Balderson
Its President/Director
1738 - 609 Granville St.
Vancouver, B.C.
CANADA V7Y 1G5
By executing this Agreement, Amoeba Corporation expressly consents to
the Sublicense granted herein.
"LICENSOR" AMOEBA CORPORATION
By/s/Shaniqua McPhee
Its Director
21 East Drive Garston
Watford, Herts
ENGLAND WD2 6AH
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EXHIBIT 10.4
PATENT AND TRADEMARK SUBLICENSE AGREEMENT BETWEEN MEASCA
CORPORATION AND INTERACTIVE PROCESSING, INC. DATED APRIL 17, 1996
<PAGE>
PATENT AND TRADEMARK SUBLICENSE
THIS SUBLICENSE is made this __17__ day of __April___, 1996, by and
between MEASCA CORPORATION, a Bahamian corporation ("Sublicensor") and
INTERACTIVE PROCESSING, INC., a Nevada corporation ("Sublicensee").
RECITALS
A. Sublicensor is the licensee of Amoeba Corporation ("Licensor"), and
has the right to grant a sublicense with respect to an invention entitled TV
Terminator, described generally as an interactive universal remote control,
including United States Patent Number 5,253,068 and Canadian patent number
2,107,736, and under any divisions, continuations, and continuations-in-part
thereof, and under any patents that may issue thereon or any reissues or
extensions thereof ("Amoeba Patent").
B. Sublicensor is or will be utilizing the marks TV Terminator, TVT and
The Fazer, and other marks that may be developed, in connection with the Amoeba
Patent ("Trademarks").
C. Sublicensee is desirous of securing and Sublicensor is willing to
grant, a non-exclusive license for the development, manufacture, marketing,
distribution, and sale of products based in whole or in part on the Amoeba
Patent and all improvements and developments pertaining thereto ("Licensed
Products") to Sublicensor, or its affiliates, subject to the terms and
conditions contained herein.
D. Sublicensee is desirous of securing and Sublicensor is willing to
grant, a license for use of the Trademarks in connection with the Licensed
Products only, subject to the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
1. GRANT OF LICENSE.
A. GRANT. Sublicensor hereby grants to Sublicensee an
exclusive license within the territory identified in subparagraph 1.c to
develop, make, have made, use, modify, market, manufacture, distribute, and sell
Licensed Products; and to use the Trademarks and any trade names, trademarks,
service marks and the like utilized by Sublicensor in the manufacture, sale and
distribution of Licensed Products ("Intellectual Property"). This grant shall
include all rights of Sublicensor, whether presently existing or hereafter
arising, and whether scheduled in this Agreement or not. Sublicensee may use the
Trademarks in product labels, tags, containers, displays, publicity,
advertising, telephone listings,
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electronic data interchange (including on-line services), business names, signs
or in any other manner whatsoever without the prior written approval of
Sublicensor.
B. NEW INVENTION PRODUCTS. The parties acknowledge that new or
modified versions of the Licensed Products ("New Invention Products") other than
as defined herein are anticipated. Any New Invention Products shall be the
exclusive property of Licensor, whether or not developed by Licensor and whether
or not Licensor's trade secrets are used to develop the New Invention Products;
provided that such New Invention Products shall be deemed to be within the
license granted hereunder.
C. REGION. The territory within which this exclusive
license is valid is: the Western hemisphere, excluding the United States,
Canada and Mexicao; Africa; and the Middle East.
2. PAYMENT AND ROYALTY. In consideration for the grant of the
license hereunder Sublicensee shall:
a. Issue to Sublicensor Nine Hundred Thousand (900,000) shares
of the common stock of Sublicensee (the "Shares"), free and clear of all liens
and encumbrances, representing Nine and 65/100ths percent (9.65%) of the issued
and outstanding and reserved common stock of Sublicensee; and
b. Pay Sublicensor royalties on gross sales of the Licensed
Products and any New Invention Products during the term of this license. Such
royalties shall be paid quarterly within thirty (30) days after the first days
of January, April, July, and October of each year during the continuance of this
Agreement for the prior three (3) calendar months (except that the first such
report shall cover only the portion of the quarter between the date of this
Agreement and the end of the quarter), and shall be equal to One and 50/100
Dollars ($1.50) per unit of Licensed Products sold; and
c. In the event of a sublicense granted in accordance with the
terms of this Agreement Sublicensor shall be paid a royalty of One and 50/100
Dollars ($1.50) per unit of Licensed Products sold by or through such
sublicensee (or other arrangement), unless agreed otherwise by Sublicensor in
writing in connection with the sublicense.
3. TITLE; WARRANTY. This Agreement shall not act to transfer title or
ownership of the Amoeba Patent, Trademarks or Intellectual Property. Sublicensor
warrants it has a valid license to use and sublicense, with Licensor's
permission, the Amoeba Patent, Trademarks and Intellectual Property, no
knowledge of conflicting claims to the Amoeba Patent, Trademarks and
Intellectual Property and that the Amoeba Patent, Trademarks and Intellectual
Property do not infringe the rights of any other person.
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4. RECORDS. Sublicensee shall keep full and accurate records and books
of account showing the manufacture, inventory and sale quantities and the
selling prices of the Licensed Products. Any accountant authorized in writing by
Sublicensor shall be given access to such records and books at all reasonable
times. Any inspection or audit of the records by Sublicensor or its agent shall
be at the expense of Sublicensor unless such shall disclose a discrepancy of two
percent (2%) or more. Quarterly, within thirty (30) days after the first days of
January, April, July, and October of each year during the continuance of this
Agreement, Sublicensee shall render written reports to Sublicensor stating in
each such report the quantities and net selling prices of all Licensed Products
sold and manufactured by Sublicensee during the preceding three (3) calendar
months, except that the first such report shall cover only the portion of the
quarter between the date of this Agreement and the end of the quarter. Each such
report shall be accompanied by remittance in full covering the royalties shown
thereby to be due Sublicensor. Licensed Products shall be considered sold when
billed out; if Licensed Products are not billed out, they shall be considered
sold when delivered, shipped or when paid for, in part or full, whichever occurs
first. Royalties paid on Licensed Products that are returned by customers may be
credited against future royalty payments, provided royalties are paid on any
such returned Licensed Products that are later sold. No royalties need be paid
on Licensed Products furnished to customers without charge to replace returned
Licensed Products on which royalties had previously been paid, provided no
credit is taken against royalty payments for such returned Licensed Products.
Licensed Products shall not be given free to any third party without
Sublicensor's written permission or used internally by Sublicensee, without
commission being paid.
5. REPRESENTATIONS AND WARRANTIES OF SUBLICENSEE. Sublicensee
represents and warrants to Sublicensor as of the date hereof, and as of the date
of consummation of each and every element of this Agreement, as follows:
a. ORGANIZATION AND STANDING: POWER AND AUTHORITY. Sublicensee
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has the full corporate power and corporate
authority to carry on its business, as it is now being conducted, and to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby and thereby. Sublicensee is qualified as a foreign corporation in all
jurisdictions in which the failure so to qualify would have a material adverse
effect on Sublicensee. Sublicensee has no subsidiaries or equity or other
interest in any entity.
b. CAPITALIZATION. The authorized capital of Sublicensee
consists of 25,000,000 shares of Common Stock, par value $.001 per share, of
which 3,124,000 shares have been validly issued and are outstanding, fully paid
and nonassessable on the date hereof. Sublicensee has reserved 900,000 shares of
capital
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stock for issuance to Sublicensor in connection with the acquisition of product
licenses. There are no other reserved shares and no outstanding options,
restricted stock awards, warrants, calls, commitments or rights of any character
to purchase or otherwise to acquire from Sublicensee shares of capital stock of
any class, no outstanding securities of Sublicensee that are convertible into
shares of capital stock of Sublicensee of any class, and no options, warrants or
rights to purchase from the Company any of such convertible securities.
c. CORPORATE APPROVAL. Sublicensee has the necessary corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement by Sublicensee, the performance by Sublicensee of its obligations
hereunder and thereunder, and the consummation by Sublicensee of the
transactions contemplated hereby and thereby, have been duly authorized by the
Board of Directors of Sublicensee, which authorization has not been modified and
is in full force and effect, and no other corporate proceeding on the part of
Sublicensee is necessary for the execution and delivery of this Agreement by
Sublicensee and the performance by Sublicensee of its obligations hereunder and
the consummation by Sublicensee of the transactions contemplated hereby, does
not violate any provision of the Articles of Incorporation or the By-Laws of
Sublicensee.
d. GOVERNMENTAL FILINGS AND AUTHORIZATIONS. No filing,
authorization or approval, governmental or otherwise, is necessary to enable
Sublicensee to enter into, and to perform each of its obligations under, this
Agreement except for such filings as may be required to comply with federal and
state securities laws which filings, if any, have been made prior to the date
hereof.
e. SUBLICENSEE COMMON STOCK - VALID ISSUANCE. The shares of
the Sublicensee's common stock to be issued to Sublicensor hereunder will be
duly authorized, validly issued, fully paid and nonassessable and will be issued
in compliance with the Act and any appropriate state securities laws.
f. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by Sublicensee. This Agreement and each document
and instrument to be executed by Sublicensee pursuant hereto constitutes a
legal, valid and binding obligation of Sublicensee, enforceable in accordance
with its terms, except to the extent that its enforceability may be subject to
limitations imposed by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity) and to the
effect of applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws of general application relating to or affecting creditors' rights,
including, without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers.
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g. CONSENTS. Sublicensee is not subject to any law, ordinance,
regulation, rule, order, judgment, injunction, decree, charter or bylaw,
contract, commitment, lease, agreement, instrument or other restriction that
would prevent the consummation of this Agreement or any of the transactions
contemplated hereby and thereby without the consent of any third party, that
would require the consent of any third party to the consummation of this
Agreement or of the transactions contemplated hereby or thereby or, to the
knowledge of Sublicensee, that would result in any penalty, forfeiture or
termination which would be materially adverse to Sublicensee as a result of such
consummation.
h. OBLIGATIONS: ABSENCE OF VIOLATION. Neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby and thereby constitutes a violation or default under, or
conflicts with, any term or provision of the Articles of Incorporation or Bylaws
of Sublicensee, or any material agreement, including, without limitation, any
material contract, license, commitment, lease, instrument, arrangement or
understanding to which Sublicensee is a party or to which Sublicensee or any of
its property is subject, or by which Sublicensee or any of its property is
bound, where such encumbrance would be materially adverse to the Sublicensor.
i. DISCLOSURE. No representation or warranty by Sublicensee,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
j. 504 OFFERING. Sublicensee sold 3,725,000 shares of its
common stock at $.05 per share in an offering pursuant to an exemption from
registration provided by Rule 504 of Regulation D promulgated under the
Securities Act of 1933, as amended, and applicable state law.
6. REPRESENTATIONS AND WARRANTIES OF SUBLICENSOR. Sublicensor
represents and warrants to Sublicensee as of the date hereof, and as of the date
of consummation of each and every element of this Agreement, as follows:
a. ORGANIZATION AND STANDING: POWER AND AUTHORITY. Sublicensor
is a corporation duly organized, validly existing and in good standing under the
laws of the Bahamas and has the full corporate power and corporate authority to
carry on its business, as it is now being conducted, and to execute and deliver
this Agreement and to consummate the transactions contemplated hereby and
thereby.
b. CORPORATE APPROVAL. Sublicensor has the necessary corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder and thereunder. The execution
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and delivery of this Agreement by Sublicensor, the performance by Sublicensor of
its obligations hereunder and thereunder, and the consummation by Sublicensor of
the transactions contemplated hereby and thereby, have been duly authorized by
the Sublicensor, which authorization has not been modified and is in full force
and effect, and no other corporate proceeding on the part of Sublicensor is
necessary for the execution and delivery of this Agreement by Sublicensor and
the performance by Sublicensor of its obligations hereunder and the consummation
by Sublicensor of the transactions contemplated hereby, does not violate any
provision of the constituting articles of Sublicensor.
c. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by Sublicensor. This Agreement and each document
and instrument to be executed by Sublicensor pursuant hereto constitutes a
legal, valid and binding obligation of Sublicensor, enforceable in accordance
with its terms, except to the extent that its enforceability may be subject to
limitations imposed by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity) and to the
effect of applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws of general application relating to or affecting creditors' rights,
including, without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers.
7. NO SUBLICENSES. Sublicensee shall not have the right to grant
sublicenses hereunder or to transfer any rights to manufacture, modify, develop,
make, have made, market or sell the Amoeba Patent or Licensed Products, or use
the Trademarks or Intellectual Property, without the prior written consent of
Sublicensor. In the event of any approved sublicense or other transfer to third
parties, Sublicensee shall take reasonable steps to preclude the further
sublicense or transfer of the Amoeba Patent or Licensed Products.
8. BEST EFFORTS. Sublicensee agrees to utilize its best efforts to
promote and exploit the Licensed Products, subject to the restrictions of this
Agreement.
9. PROSECUTION OF APPLICATIONS. Licensor shall have full and complete
control over the prosecution of any patent or trademark applications, or any
reissue of such licensed patents and of any disclaimer proceedings in connection
therewith. Licensor shall keep Sublicensee fully and promptly informed of such
prosecution, and shall give Sublicensee reasonable opportunity to make
suggestions with regard to such prosecution. Licensor shall be under no
obligation to accept any such suggestion, or to continue such prosecution beyond
the point that it considers desirable. Each party shall bear the cost of its own
activities in connection with the foregoing.
0087968.02
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10. MARKING.
a. PRODUCTS. Sublicensee shall mark all Licensed Products sold
by it under this Agreement with the number of any patent that is applicable
thereto and under which it is hereby licensed.
b. TRADEMARKS. Sublicensee agrees to mark all Trademarks with
either a (R) (for registered trademark) or "TM" (for unregistered trademarks)
and to designate Sublicensor as owner.
11. INFRINGEMENT. In the event that any infringement of the Licensed
Products comes to the attention of Sublicensee, Sublicensee shall promptly
notify Sublicensor of the infringement. Sublicensor shall control the
prosecution of any such action.
If the use of the Amoeba Patent, Trademark, or Intellectual Property,
or any information or material furnished hereunder is enjoined, Sublicensor
shall have the right and option to:
a. procure for Sublicensee the right to continue such
further use;
b. modify such so they no longer infringe any such
rights;
c. obtain for Sublicensee similar products or marks
which do not infringe any marks; or
d. terminate the agreement and pay Sublicensee liquidated
damages of the lesser of actual damages or the amount of royalties actually
received by Sublicensor for the previous six-month period immediately preceding
such injunction for that specific property.
This paragraph 12 states the entire obligation and liability of Sublicensor with
respect to infringement or violation of any proprietary interest of another or
claims thereof.
12. INVALIDITY OF PATENT. If any claim of any patent under which this
license is granted shall be declared invalid by a final decision of a court of
competent jurisdiction, whether an appellate court or a lower court whose
decision becomes final by failure to appeal therefrom, or if, as a result of a
final decision, any such claim shall be hereafter awarded to another,
Sublicensee shall not be relieved of any obligations hereunder. In the event
that any claim of any patent application under which this license is granted
shall be finally rejected, such claim shall thenceforth be treated as if it did
not exist, unless and until such final rejection shall be withdrawn or reversed
and such claim allowed, and this license shall be deemed to be of trade secrets
and know how of Sublicensor.
0087968.02
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13. NON-USE. In the event that Sublicensee makes no substantial use of
the Amoeba Patent or Licensed Products or of any claims of an issued patent
under which it is hereby licensed for any six (6) month period after the date
hereof, Sublicensor shall have the right to cancel this license, in part or in
full, on thirty (30) days' written notice to Sublicensee.
14. ATTORNEYS' FEES. In the event either party shall enforce this
Agreement by legal means, the prevailing party shall be entitled to reasonable
attorneys' fees, experts' fees and costs whether in pretrial, trial, arbitration
or appeal or in any bankruptcy proceeding. Venue shall be in King County,
Washington. This Agreement shall be construed in accordance with the laws of the
State of Washington.
15. NOTICE. Any written notice necessary or appropriate under this
Agreement shall be deemed to be properly given if delivered or sent by United
States Registered Mail or the Canadian equivalent to the party to be notified at
the address set forth below or at such other address as either party may
hereafter designate in writing. The date of service of any notice so sent by
registered mail shall be deemed to be three (3) days after the mailing thereof.
16. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding on and
inure to the benefit of the successors of the parties, and Sublicensee shall not
have any right to assign this Agreement without the consent in writing of
Sublicensor. Sublicensor shall be free to assign its interest herein upon
written notice to Sublicensee.
17. QUALITY CONTROL. Sublicensee acknowledges that the quality of the
Licensed Products and any advertising or promotional materials used in
connection with the Trademarks and Intellectual Property is of utmost importance
to Sublicensor and that any use of unauthorized products or materials will
damage Sublicensor's goodwill and name. Therefore, Sublicensee agrees to
maintain the quality of the Licensed Products and Trademarks and all advertising
and promotional materials used at a high level. The Licensed Products and
Trademarks and advertising and promotional materials shall be subject to prior
written approval of Sublicensor. Sublicensor may withhold approval for any use
or proposed use which may disparage or bring into disrepute Sublicensor's name
in Sublicensor's sole discretion. For each and every type of Licensed Product or
New Invention Product and for each material change to a Trademark, Sublicensee
shall provide Sublicensor a randomly selected example for inspection before such
is marketed and on a quarterly basis thereafter.
18. WARRANTY. The parties recognize that Sublicensor is the Licensee of
the Amoeba Patent, Licensed Products, Trademarks and Intellectual Property and
that nothing herein shall give Sublicensee any continuing interest in and to
such Amoeba Patent,
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Licensed Products, New Invention Products, or Trademarks or any derivatives
therefrom. Further, Sublicensee understands that Sublicensor is not in the
business of manufacturing or selling products. Sublicensee therefore agrees to
hold harmless, defend and indemnify Sublicensor and Licensor from any and all
damages and claims arising out of Sublicensor's, Sublicensee's or any third
party's use of the Amoeba Patent or Licensed Products. In addition, Sublicensee
shall be responsible to meet any requirements of any law or regulating agency in
connection therewith, including warning requirements.
19. CONFIDENTIAL INFORMATION. Sublicensee shall keep confidential and
otherwise protect from disclosure all information and property obtained from
Licensor and Sublicensor in connection with this Agreement and identified as
confidential or proprietary. Sublicensee agrees, unless otherwise expressly
authorized herein or by Sublicensor, Sublicensee shall use such information and
property, and the features thereof, only in the performance and for the purpose
of this Agreement. Upon Sublicensor's request, and in any event upon the
completion, termination or cancellation of this Agreement, the Sublicensee shall
return all such information and property to the Sublicensor or make such other
disposition thereof as is directed by Sublicensor. In all lower tier
subcontracts and purchase contracts issued by Sublicensee and involving
subcontractor receipt of such information or property, Sublicensee shall provide
to Sublicensor the same rights and protection as contained in this clause. This
provision shall survive termination of this Agreement. Information shall not be
confidential or proprietary for the purposes of this provision, if
a. Known to the receiving party without restriction when
received, or thereafter is developed independently by the receiving party
without reference to proprietary information of the originating party; or
b. Obtained from a source other than the originating
party through no breach of confidence by the receiving party; or
c. In the public domain when received, or thereafter
enters the public domain through no fault of the receiving party;
or
d. Disclosed by the originating party to a third party
without restriction; or
e. Required by applicable law or regulation, provided the
receiving party notifies the originating party of the requirement promptly, and
cooperates with the originating party (at the request and expense of the
originating party) in contesting the requirement.
20. DEFAULT. Any payment due from Sublicensee to Sublicensor shall bear
interest at the rate of the lesser of 1-1/2% per month
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or the highest rate permitted by law. In addition, if Sublicensee shall be in
arrears in the payment of any such amount, Sublicensor shall have the right to
cancel this Agreement upon giving Sublicensee thirty (30) days' written notice
with an opportunity to cure. If Sublicensee violates or fails to keep or perform
any other obligation, term or condition hereof, or if Sublicensee shall be
adjudged a bankrupt or become insolvent or makes an assignment for the benefit
of creditors, or is placed in the hands of a receiver or trustee in bankruptcy,
then Sublicensor may, at its option, cancel and terminate this Agreement by
giving thirty (30) days' written notice, specifying the default complained of;
provided, however, that if Sublicensee shall, within such thirty (30) days, cure
the default complained of, then the notice shall cease to be operative and this
License Agreement shall continue in full force and effect as though such default
had not occurred. These remedies are in addition to any and all remedies
available at law or in equity to Sublicensor.
21. RIGHTS UPON TERMINATION. Upon termination of this Agreement, by
expiration or otherwise, all use of Sublicensor's Licensed Products, New
Invention Products, Trademarks and Intellectual Property shall immediately cease
except that termination shall not release Sublicensee from any monetary
obligations, continuing warranties or restrictive covenants herein. Sublicensee
shall have no future rights to the Licensed Products, New Invention Products,
Trademarks, Intellectual Property or confidential information and Sublicensee
agrees to return all Intellectual Properties to Sublicensor. Upon termination,
no future manufacturing shall occur for or on behalf of Sublicensee. Existing
stock shall be offered at wholesale first to Sublicensor and if Sublicensor
decides not to purchase such in ten days, then such may be sold for an
additional 60 days at not less than standard wholesale prices. No extensions
will be granted.
The rights of termination herein are absolute, and Sublicensee
acknowledges it has considered such in making expenditures of money and time in
preparing for the performance of this Agreement and further the possible losses
of or damages on account of the loss of prospective profits or anticipated sales
or on account of expenditures, investments, leases, property improvements, or
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commitments in connection with the goodwill or business of Sublicensee resulting
for the termination hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
"SUBLICENSOR" MEASCA CORPORATION
By/s/Shelly Johnson
Its Director
P.O. Box N. 7521
94 Dowdeswell St.
Nassau, Bahamas
"SUBLICENSEE" INTERACTIVE PROCESSING, INC.
By /s/Keith Balderson
Its President/Director
1738 - 609 Granville St.
Vancouver, B.C.
CANADA V7Y 1G5
By executing this Agreement, Amoeba Corporation expressly consents to
the Sublicense granted herein.
"LICENSOR" AMOEBA CORPORATION
By/s/Isaac Collie
Its Director
21 East Drive Garston
Watford, Herts
ENGLAND WD2 6AH
0087968.02
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EXHIBIT 10.5
1996 STOCK OPTION PLAN
<PAGE>
INTERACTIVE PROCESSING, INC. 1996 STOCK OPTION PLAN
1. PURPOSE; EFFECTIVENESS OF THE PLAN.
(a) The purpose of this Plan is to advance the interests of the
Company and its stockholders by helping the Company obtain and
retain the services of employees, officers, consultants, and
directors, upon whose judgment, initiative and efforts the
Company is substantially dependent, and to provide those
persons with further incentives to advance the interests of
the Company.
(b) This Plan will become effective on the date of its adoption by
the Board, provided the Plan is approved by the stockholders
of the Company (excluding holders of shares of Stock issued by
the Company pursuant to the exercise of options granted under
this Plan) within twelve months before or after that date. If
the Plan is not so approved by the stockholders of the
Company, any options granted under this Plan will be rescinded
and will be void. This Plan will remain in effect until it is
terminated by the Board or the Committee (as defined
hereafter) under section 9 hereof, except that no ISO (as
defined herein) will be granted after the tenth anniversary of
the date of this Plan's adoption by the Board. This Plan will
be governed by, and construed in accordance with, the laws of
the State of Nevada.
2. CERTAIN DEFINITIONS.
Unless the context otherwise requires, the following defined terms
(together with other capitalized terms defined elsewhere in this Plan)
will govern the construction of this Plan, and of any stock option
agreements entered into pursuant to this Plan:
(a) "10% Stockholder" means a person who owns, either directly or
indirectly by virtue of the ownership attribution provisions
set forth in Section 424(d) of the Code at the time he or she
is granted an Option, stock possessing more than ten percent
(10%) of the total combined voting power or value of all
classes of stock of the Company and/or of its subsidiaries;
(b) "1933 Act" means the federal Securities Act of 1933, as
amended;
(c) "Board" means the Board of Directors of the Company;
(d) "Called for under an Option," or words to similar effect,
means issuable pursuant to the exercise of an Option;
(e) "Code" means the Internal Revenue Code of 1986, as amended
(references herein to Sections of the Code are intended to
refer to Sections of the Code as enacted at the time of this
Plan's adoption by the Board and as subsequently amended, or
to any substantially similar successor provisions of the Code
resulting from recodification, renumbering or otherwise);
(f) "Committee" means a committee, known as the Compensation
Committee, of two or more Disinterested Directors, appointed
by the Board, to administer and interpret this Plan; provided
that the term "Committee" will refer to the Board during such
times as no Committee is appointed by the Board;
(g) "Company" means Interactive Processing, Inc., a Nevada
corporation;
<PAGE>
(h) "Disability" has the same meaning as "permanent and total
disability," as defined in Section 22(e)(3) of the Code;
(i) "Disinterested Director" means a member of the Board who is
not during the period of one year prior to his or her service
as an administrator of the Plan, or during the period of such
service, granted or awarded Stock, options to acquire Stock,
or similar equity securities of the Company under this Plan or
any similar plan of the Company, other than the grant of a
Formula Option pursuant to section 6(m) of this Plan;
(j) "Eligible Participants" means persons who, at a particular
time, are employees, officers, consultants, or directors of
the Company or its subsidiaries;
(k) "Fair Market Value" means, with respect to the Stock and as of
the date an ISO or a Formula Option is granted hereunder, the
market price per share of such Stock determined by the
Committee, consistent with the requirements of Section 422 of
the Code and to the extent consistent therewith, as follows:
(i) If the Stock was traded on a stock exchange on the
date in question, then the Fair Market Value will be
equal to the closing price reported by the applicable
composite-transactions report for such date;
(ii) If the Stock was traded over-the-counter on the date
in question and was classified as a national market
issue, then the Fair Market Value will be equal to
the last-transaction price quoted by the NASDAQ
system for such date;
(iii) If the Stock was traded over-the-counter on the date
in question but was not classified as a national
market issue, then the Fair Market Value will be
equal to the average of the last reported
representative bid and asked prices quoted by the
NASDAQ system for such date; and
(iv) If none of the foregoing provisions is applicable,
then the Fair Market Value will be determined by the
Committee in good faith on such basis as it deems
appropriate.
(l) "Formula Option" means an NSO granted to members of the
Committee pursuant to section 6(m) hereof;
(m) "ISO" has the same meaning as "incentive stock option," as
defined in Section 422 of the Code;
(n) "Just Cause Termination" means a termination by the Company of
an Optionee's employment by and/or service to the Company (or
if the Optionee is a director, removal of the Optionee from
the Board by action of the stockholders or, if permitted by
applicable law and the bylaws of the Company, the other
directors), in connection with the good faith determination of
the Company's board of directors (or of the Company's
stockholders if the Optionee is a director and the removal of
the Optionee from the Board is by action of the stockholders,
but in either case excluding the vote of the Optionee if he or
she is a director or a stockholder) that the Optionee has
engaged in any acts involving dishonesty or moral turpitude or
in any acts that materially and adversely affect the business,
affairs or reputation of the Company or its subsidiaries;
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(o) "NSO" means any option granted under this Plan whether
designated by the Committee as a "non-qualified stock option,"
a "non-statutory stock option" or otherwise, other than an
option designated by the Committee as an ISO, or any option so
designated but which, for any reason, fails to qualify as an
ISO pursuant to Section 422 of the Code and the rules and
regulations thereunder;
(p) "Option" means an option granted pursuant to this Plan
entitling the option holder to acquire shares of Stock issued
by the Company pursuant to the valid exercise of the option;
(q) "Option Agreement" means an agreement between the Company and
an Optionee, in form and substance satisfactory to the
Committee in its sole discretion, consistent with this Plan;
(r) "Option Price" with respect to any particular Option means the
exercise price at which the Optionee may acquire each share of
the Option Stock called for under such Option;
(s) "Option Stock" means Stock issued or issuable by the Company
pursuant to the valid exercise of an Option;
(t) "Optionee" means an Eligible Participant to whom Options are
granted hereunder, and any transferee thereof pursuant to a
Transfer authorized under this Plan;
(u) "Plan" means this 1996 Stock Option Plan of the Company;
(v) "QDRO" has the same meaning as "qualified domestic relations
order" as defined in Section 414(p) of the Code;
(w) "Stock" means shares of the Company's Common Stock, $.10 par
value;
(x) "Subsidiary" has the same meaning as "Subsidiary Corporation"
as defined in Section 424(f) of the Code;
(y) "Transfer," with respect to Option Stock, includes, without
limitation, a voluntary or involuntary sale, assignment,
transfer, conveyance, pledge, hypothecation, encumbrance,
disposal, loan, gift, attachment or levy of such Option Stock,
including without limitation an assignment for the benefit of
creditors of the Optionee, a transfer by operation of law,
such as a transfer by will or under the laws of descent and
distribution, an execution of judgment against the Option
Stock or the acquisition of record or beneficial ownership
thereof by a lender or creditor, a transfer pursuant to a
QDRO, or to any decree of divorce, dissolution or separate
maintenance, any property settlement, any separation agreement
or any other agreement with a spouse (except for estate
planning purposes) under which a part or all of the shares of
Option Stock are transferred or awarded to the spouse of the
Optionee or are required to be sold; or a transfer resulting
from the filing by the Optionee of a petition for relief, or
the filing of an involuntary petition against such Optionee,
under the bankruptcy laws of the United States or of any other
nation.
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<PAGE>
3. ELIGIBILITY.
The Company may grant Options under this Plan only to persons who are
Eligible Participants as of the time of such grant. Subject to the
provisions of sections 4(d), 5 and 6 hereof, there is no limitation on
the number of Options that may be granted to an Eligible Participant.
4. ADMINISTRATION.
(a) COMMITTEE. The Committee, if appointed by the Board, will
administer this Plan. If the Board, in its discretion, does
not appoint such a Committee, the Board itself will administer
this Plan and take such other actions as the Committee is
authorized to take hereunder; provided that the Board may take
such actions hereunder in the same manner as the Board may
take other actions under the Company's Articles of
incorporation and bylaws generally.
(b) AUTHORITY AND DISCRETION OF COMMITTEE. The Committee will have
full and final authority in its discretion, at any time and
from time to time, subject only to the express terms,
conditions and other provisions of the Company's Articles of
incorporation, bylaws and this Plan, and the specific
limitations on such discretion set forth herein:
(i) to select and approve the persons who will be granted
Options under this Plan from among the Eligible
Participants, and to grant to any person so selected
one or more Options to purchase such number of shares
of Option Stock as the Committee may determine;
(ii) to determine the period or periods of time during
which Options may be exercised, the Option Price and
the duration of such Options, and other matters to be
determined by the Committee in connection with
specific Option grants and Options Agreements as
specified under this Plan;
(iii) to interpret this Plan, to prescribe, amend and
rescind rules and regulations relating to this Plan,
and to make all other determinations necessary or
advisable for the operation and administration of
this Plan; and
(iv) to delegate all or a portion of its authority under
subsections (i) and (ii) of this section 4(b) to one
or more directors of the Company who are executive
officers of the Company, but only in connection with
Options granted to Eligible Participants who are not
subject to the reporting and liability provisions of
Section 16 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder,
and subject to such restrictions and limitations
(such as the aggregate number of shares of Option
Stock called for by such Options that may be granted)
as the Committee may decide to impose on such
delegate directors.
(c) LIMITATION ON AUTHORITY. Notwithstanding the foregoing, or any
other provision of this Plan, the Committee will have no
authority:
(i) to grant Options to any of its members, whether or
not approved by the Board; and
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<PAGE>
(ii) to determine any matters, or exercise any discretion,
in connection with the Formula Options under section
6(m) hereof, to the extent that the power to make
such determinations or to exercise such discretion
would cause one or more members of the Committee no
longer to be "Disinterested Directors" within the
meaning of section 2(i) above.
(d) DESIGNATION OF OPTIONS. Except as otherwise provided herein,
the Committee will designate any Option granted hereunder
either as an ISO or as an NSO. To the extent that the Fair
Market Value (determined at the time the Option is granted) of
Stock with respect to which all ISOs are exercisable for the
first time by any individual during any calendar year
(pursuant to this Plan and all other plans of the Company
and/or its subsidiaries) exceeds $100,000, such option will be
treated as an NSO. Notwithstanding the general eligibility
provisions of section 3 hereof, the Committee may grant ISOs
only to persons who are employees of the Company and/or its
subsidiaries.
(e) OPTION AGREEMENTS. Options will be deemed granted hereunder
only upon the execution and delivery of an Option Agreement by
the Optionee and a duly authorized officer of the Company.
Options will not be deemed granted hereunder merely upon the
authorization of such grant by the Committee.
5. SHARES RESERVED FOR OPTIONS.
(a) OPTION POOL. The aggregate number of shares of Option Stock
that may be issued pursuant to the exercise of Options granted
under this Plan initially will not exceed Nine Hundred
Forty-One Thousand Nine Hundred (941,900) (the "Option Pool"),
provided that such number automatically shall be adjusted
annually on the first day of the Company's fiscal year to a
number equal to 10% of the number of shares of Stock of the
Company outstanding at the end of its immediately preceding
fiscal year, or 941,900 shares, whichever is greater, and
provided further that such number will be increased by the
number of shares of Option Stock that the Company subsequently
may reacquire through repurchase or otherwise. Shares of
Option Stock that would have been issuable pursuant to
Options, but that are no longer issuable because all or part
of those Options have terminated or expired, will be deemed
not to have been issued for purposes of computing the number
of shares of Option Stock remaining in the Option Pool and
available for issuance.
(b) ADJUSTMENTS UPON CHANGES IN STOCK. In the event of any change
in the outstanding Stock of the Company as a result of a stock
split, reverse stock split, stock dividend, recapitalization,
combination or reclassification, appropriate proportionate
adjustments will be made in:
(i) the aggregate number of shares of Option Stock in the
Option Pool that may be issued pursuant to the
exercise of Options granted hereunder;
(ii) the Option Price and the number of shares of Option
Stock called for in each outstanding Option granted
hereunder; and
(iii) other rights and matters determined on a per share
basis under this Plan or any Option Agreement
hereunder. Any such adjustments will be made only by
the Board, and when so made will be effective,
conclusive and binding for all purposes with respect
to this Plan and all Options then outstanding. No
such
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<PAGE>
adjustments will be required by reason of the
issuance or sale by the Company for cash or other
consideration of additional shares of its Stock or
securities convertible into or exchangeable for
shares of its Stock.
6. TERMS OF STOCK OPTION AGREEMENTS.
Each Option granted pursuant to this Plan will be evidenced by an
agreement (an "Option Agreement") between the Company and the person to
whom such Option is granted, in form and substance satisfactory to the
Committee in its sole discretion, consistent with this Plan. Without
limiting the foregoing, each Option Agreement (unless otherwise stated
therein) will be deemed to include the following terms and conditions:
(a) COVENANTS OF OPTIONEE. At the discretion of the Committee, the
person to whom an Option is granted hereunder, as a condition
to the granting of the Option, must execute and deliver to the
Company a confidential information agreement approved by the
Committee. Nothing contained in this Plan, any Option
Agreement or in any other agreement executed in connection
with the granting of an Option under this Plan will confer
upon any Optionee any right with respect to the continuation
of his or her status as an employee of, consultant or
independent contractor to, or director of, the Company or its
subsidiaries.
(b) VESTING PERIODS. Unless the Option Agreement executed by an
Optionee expressly otherwise provides and except as set forth
herein, the right to exercise an Option granted hereunder will
be subject to the following Vesting Periods, subject to the
Optionee continuing to be an Eligible Participant and the
occurrence of any other event (including the passage of time)
that would result in the cancellation or termination of the
Option:
(i) no portion of the Option will be exercisable prior to
the first anniversary of the date of grant set forth
in the Option Agreement;
(ii) upon and after such first anniversary of such date of
grant, the Optionee may purchase up to fifty percent
(50%) of the Total Award Option Stock; and
(iii) the Option will become exercisable on a cumulative
basis as to twelve and one-half (12.5%) of the Total
Award Option Stock, at the end of every period of
three (3) months that elapses after such first
anniversary, so that the Option will have become
fully exercisable, subject to the Optionee's
remaining an Eligible Participant, on the second
anniversary of such date of grant.
(c) EXERCISE OF THE OPTION.
(i) MECHANICS AND NOTICE. An Option may be exercised to
the extent exercisable (1) by giving written notice
of exercise to the Company, specifying the number of
full shares of Option Stock to be purchased and
accompanied by full payment of the Option Price
thereof and the amount of withholding taxes pursuant
to subsection 6(c)(ii) below; and (2) by giving
assurances satisfactory to the Company that the
shares of Option Stock to be purchased upon such
exercise are being purchased for investment and not
with a view to resale in connection with any
distribution of such shares in violation of the 1933
Act; provided, however, that in the event the Option
Stock called for under the Option is registered under
the 1933 Act, or in the event resale of such Option
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<PAGE>
Stock without such registration would otherwise be
permissible, this second condition will be
inoperative if, in the opinion of counsel for the
Company, such condition is not required under the
1933 Act, or any other applicable law, regulation or
rule of any governmental agency.
(ii) WITHHOLDING TAXES. As a condition to the issuance of
the shares of Option Stock upon full or partial
exercise of an NSO granted under this Plan, the
Optionee will pay to the Company in cash, or in such
other form as the Committee may determine in its
discretion, the amount of the Company's tax
withholding liability required in connection with
such exercise. For purposes of this subsection
6(c)(ii), "tax withholding liability" will mean all
federal and state income taxes, social security tax,
and any other taxes applicable to the compensation
income arising from the transaction required by
applicable law to be withheld by the Company.
(d) PAYMENT OF OPTION PRICE. Each Option Agreement will specify
the Option Price with respect to the exercise of Option Stock
thereunder, to be fixed by the Committee in its discretion,
but in no event will the Option Price for an ISO granted
hereunder be less than the Fair Market Value (or, in case the
Optionee is a 10% Stockholder, one hundred ten percent (110%)
of such Fair Market Value) of the Option Stock at the time
such ISO is granted, and in no event will the Option Price for
an NSO granted hereunder be less than the 85% of Fair Market
Value. The Option Price will be payable to the Company in
United States dollars in cash or by check or, such other legal
consideration as may be approved by the Committee, in its
discretion.
(i) For example, the Committee, in its discretion, may
permit a particular Optionee to pay all or a portion
of the Option Price, and/or the tax withholding
liability set forth in subsection 6(c)(ii) above,
with respect to the exercise of an Option either by
surrendering shares of Stock already owned by such
Optionee or by withholding shares of Option Stock,
provided that the Committee determines that the fair
market value of such surrendered Stock or withheld
Option Stock is equal to the corresponding portion of
such Option Price and/or tax withholding liability,
as the case may be, to be paid for therewith.
(ii) If the Committee permits an Optionee to pay any
portion of the Option Price and/or tax withholding
liability with shares of Stock with respect to the
exercise of an Option (the "Underlying Option") as
provided in subsection 6(d)(i) above, then the
Committee, in its discretion, may grant to such
Optionee (but only if Optionee remains an Eligible
Participant at that time) additional NSOs, the number
of shares of Option Stock called for thereunder to be
equal to all or a portion of the Stock so surrendered
or withheld (a "Replacement Option"). Each
Replacement Option will be evidenced by an Option
Agreement. Unless otherwise set forth therein, each
Replacement Option will be immediately exercisable
upon such grant (without any Vesting Period) and will
be coterminous with the Underlying Option. The
Committee, in its sole discretion, may establish such
other terms and conditions for Replacement Options as
it deems appropriate.
(e) TERMINATION OF THE OPTION. Except as otherwise provided
herein, each Option Agreement will specify the period of time,
to be fixed by the Committee in its discretion, during which
the Option granted therein will be exercisable, not to exceed
ten years from the date of grant (the "Option Period");
provided that the Option Period
7
<PAGE>
will not exceed five years from the date of grant in the case
of an ISO granted to a 10% Stockholder. To the extent not
previously exercised, each Option will terminate upon the
expiration of the Option Period specified in the Option
Agreement; provided, however, that each such Option will
terminate, if earlier:
(i) three months after the date that the Optionee ceases
to be an Eligible Participant for any reason, other
than by reason of death or disability or a Just Cause
Termination;
(ii) twelve months after the date that the Optionee ceases
to be an Eligible Participant by reason of such
person's death or disability; or
(iii) immediately as of the date that the Optionee ceases
to be an Eligible Participant by reason of a Just
Cause Termination.
In the event of a sale or all or substantially all of the
assets of the Company, or a merger or consolidation or other
reorganization in which the Company is not the surviving
corporation, or in which the Company becomes a subsidiary of
another corporation (any of the foregoing events, a "Corporate
Transaction"), then notwithstanding anything else herein, the
right to exercise all then outstanding Options will vest
immediately prior to such Corporate Transaction and will
terminate immediately after such Corporate Transaction;
provided, however, that if the Board, in its sole discretion,
determines that such immediate vesting of the right to
exercise outstanding Options is not in the best interests of
the Company, then the successor corporation must agree to
assume the outstanding Options or substitute therefor
comparable options of such successor corporation or a parent
or subsidiary of such successor corporation.
(f) OPTIONS NONTRANSFERABLE. No Option will be transferable by the
Optionee otherwise than by will or the laws of descent and
distribution, or in the case of an NSO, pursuant to a QDRO.
During the lifetime of the Optionee, the Option will be
exercisable only by him or her, or the transferee of an NSO if
it was transferred pursuant to a QDRO.
(g) QUALIFICATION OF STOCK. The right to exercise an Option will
be further subject to the requirement that if at any time the
Board determines, in its discretion, that the listing,
registration or qualification of the shares of Option Stock
called for thereunder upon any securities exchange or under
any state or federal law, or the consent or approval of any
governmental regulatory authority, is necessary or desirable
as a condition of or in connection with the granting of such
Option or the purchase of shares of Option Stock thereunder,
the Option may not be exercised, in whole or in part, unless
and until such listing, registration, qualification, consent
or approval is effected or obtained free of any conditions not
acceptable to the Board, in its discretion.
(h) ADDITIONAL RESTRICTIONS ON TRANSFER. By accepting Options
and/or Option Stock under this Plan, the Optionee will be
deemed to represent, warrant and agree as follows:
(i) SECURITIES ACT OF 1933. The Optionee understands that
the shares of Option Stock have not been registered
under the 1933 Act, and that such shares are not
freely tradeable and must be held indefinitely unless
such shares are either registered under the 1933 Act
or an exemption from such registration is available.
The Optionee understands that the Company is under no
obligation to register the shares of Option Stock.
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<PAGE>
(ii) OTHER APPLICABLE LAWS. The Optionee further
understands that Transfer of the Option Stock
requires full compliance with the provisions of all
applicable laws.
(iii) INVESTMENT INTENT. Unless a registration statement is
in effect with respect to the sale of Option Stock
obtained through exercise of Options granted
hereunder: (1) Upon exercise of any Option, the
Optionee will purchase the Option Stock for his or
her own account and not with a view to distribution
within the meaning of the 1933 Act, other than as may
be effected in compliance with the 1933 Act and the
rules and regulations promulgated thereunder; (2) no
one else will have any beneficial interest in the
Option Stock; and (3) he or she has no present
intention of disposing of the Option Stock at any
particular time.
(i) COMPLIANCE WITH LAW. Notwithstanding any other provision of
this Plan, Options may be granted pursuant to this Plan, and
Option Stock may be issued pursuant to the exercise thereof by
an Optionee, only after there has been compliance with all
applicable federal and state securities laws, and all of the
same will be subject to this overriding condition. The Company
will not be required to register or qualify Option Stock with
the Securities and Exchange Commission or any State agency,
except that the Company will register with, or as required by
local law, file for and secure an exemption from such
registration requirements from, the applicable securities
administrator and other officials of each jurisdiction in
which an Eligible Participant would be granted an Option
hereunder prior to such grant.
(j) STOCK CERTIFICATES. Certificates representing the Option Stock
issued pursuant to the exercise of Options will bear all
legends required by law and necessary to effectuate this
Plan's provisions. The Company may place a "stop transfer"
order against shares of the Option Stock until all
restrictions and conditions set forth in this Plan and in the
legends referred to in this section 6(k) have been complied
with.
(k) NOTICES. Any notice to be given to the Company under the terms
of an Option Agreement will be addressed to the Company at its
principal executive office, Attention: Corporate Secretary, or
at such other address as the Company may designate in writing.
Any notice to be given to an Optionee will be addressed to the
Optionee at the address provided to the Company by the
Optionee. Any such notice will be deemed to have been duly
given if and when enclosed in a properly sealed envelope,
addressed as aforesaid, registered and deposited, postage and
registry fee prepaid, in a post office or branch post office
regularly maintained
(l) OTHER PROVISIONS. The Option Agreement may contain such other
terms, provisions and conditions, including such special
forfeiture conditions, rights of repurchase, rights of first
refusal and other restrictions on Transfer of Option Stock
issued upon exercise of any Options granted hereunder, not
inconsistent with this Plan, as may be determined by the
Committee in its sole discretion.
(m) FORMULA OPTIONS. On the date on which the Board appoints, or
the stockholders of the Company elect, a person who is not an
employee of the Company as a member of the Board for the first
time, such director will be granted a Formula Option to
purchase _______ shares of Stock. Immediately after the
completion of each annual meeting of the stockholders of the
Company, each member of the Board who is not an employee of
the Company will be awarded a Formula Option to purchase
_______ shares of Stock. Formula Options will have an Option
Price equal to the Fair Market Value of the Stock
9
<PAGE>
as of the date of such grant. Formula Options shall vest in
33-1/3% increments on each one year anniversary of the date of
grant, until a Formula Option becomes exercisable in full on
the third anniversary of the date of grant. Except as
otherwise specifically provided in this section 6(m), all
other terms of this Plan will apply to all Formula Options
granted pursuant to this section 6(m).
7. PROCEEDS FROM SALE OF STOCK.
Cash proceeds from the sale of shares of Option Stock issued from time
to time upon the exercise of Options granted pursuant to this Plan will
be added to the general funds of the Company and as such will be used
from time to time for general corporate purposes.
8. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS.
Subject to the terms and conditions and within the limitations of this
Plan, and except with respect to Formula Options, the Committee may
modify, extend or renew outstanding Options granted under this Plan, or
accept the surrender of outstanding Options (to the extent not
theretofore exercised) and authorize the granting of new Options in
substitution therefor (to the extent not theretofore exercised).
Notwithstanding the foregoing, however, no modification of any Option
will, without the consent of the holder of the Option, alter or impair
any rights or obligations under any Option theretofore granted under
this Plan.
9. AMENDMENT AND DISCONTINUANCE.
The Board or the Committee may amend, suspend or discontinue this Plan
at any time or from time to time; provided that no action of the Board
or the Committee will cause ISOs granted under this Plan not to comply
with Section 422 of the Code unless the Board or the Committee
specifically declares such action to be made for that purpose and
provided further, that the provisions of section 6(m) hereof may not be
amended more often than once during any six (6) month period, other
than to comport with changes in the Code, the Employee Retirement
Income Security Act, or the rules and regulations thereunder. Moreover,
no such action may alter or impair any Option previously granted under
this Plan without the consent of the holder of such Option. The Board
or the Committee may amend the Plan without shareholder approval where
such approval is not required to satisfy any statutory or regulatory
requirements.
10. PLAN COMPLIANCE WITH RULE 16B-3.
With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934, transactions under this plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors
under the 1934 Act. To the extent any provision of the plan or action
by the plan administrators fails so to comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the
plan administrators.
11. COPIES OF PLAN.
A copy of this Plan will be delivered to each Optionee at or before the
time he or she executes an Option Agreement.
***
Date Plan Adopted by Board of Directors: July 26, 1996
Date Plan Approved by Stockholders: , 1996
10
<PAGE>
EXHIBIT 10.6
1996 RESTRICTED STOCK PLAN
<PAGE>
INTERACTIVE PROCESSING, INC. 1996 RESTRICTED STOCK PLAN
1. PURPOSE; EFFECTIVENESS OF THE PLAN.
(a) The purpose of this Plan is to advance the interests of the
Company and its stockholders by helping the Company obtain and
retain the services of employees, officers, consultants, and
directors, upon whose judgment, initiative and efforts the
Company is substantially dependent, and to provide those
persons with further incentives to advance the interests of
the Company.
(b) This Plan will become effective on the date of its adoption by
the Board, provided this Plan is approved by the stockholders
of the Company (excluding shares of Stock issued by the
Company pursuant to this Plan) within twelve (12) months
before or after that date. If this Plan is not so approved by
the stockholders of the Company within such period of time,
any agreements entered into under this Plan, and any issuances
of Stock thereunder, will be rescinded and will be void. This
Plan will remain in effect until it is terminated by the Board
or the Committee under section 8 hereof. This Plan will be
governed by, and construed in accordance with, the laws of the
State of Nevada.
2. CERTAIN DEFINITIONS.
Unless the context otherwise requires, the following defined terms
(together with other capitalized terms defined elsewhere in this Plan)
will govern the construction of this Plan, and of any agreements
entered into pursuant to this Plan:
(a) "1933 Act" means the federal Securities Act of 1933, as
amended;
(b) "1934 Act" means the federal Securities Exchange Act of 1934,
as amended;
(c) "Board" means the Board of Directors of the Company;
(d) "Code" means the Internal Revenue Code of 1986, as amended
(references herein to Sections of the Code are intended to
refer to Sections of the Code as enacted at the time of this
Plan's adoption by the Board and as subsequently amended, or
to any substantially similar successor provisions of the Code
resulting from recodification, renumbering or otherwise);
(e) "Committee" means a committee, known as the Compensation
Committee, of two or more Disinterested Directors, appointed
by the Board, to administer and interpret this Plan; provided
that the term "Committee" will refer to the Board during such
times as no Committee is appointed by the Board;
(f) "Company" means Interactive Processing, Inc., a Nevada
corporation;
(g) "Disinterested Director" means a member of the Board who is
not during the period of one year prior to his or her service
as an administrator of the Plan, or during the period of such
service, granted or awarded Stock, options to acquire Stock,
or similar equity securities of the Company under this Plan or
any similar plan of the Company, other than a Formula Award
pursuant to section 6(j) of this Plan or as otherwise
permitted by Rule 16b-3(c)(ii) under the 1934 Act;
(h) "Eligible Participants" means persons who, at a particular
time, are employees, officers, consultants or directors of the
Company or its subsidiaries;
<PAGE>
(i) "Formula Award" means an issuance of Restricted Stock to
members of the Committee pursuant to section 6(j) hereof;
(j) "Holder" means an Eligible Participant to whom any Restricted
Stock is issued hereunder, and any transferee thereof pursuant
to a Transfer authorized under this Plan;
(k) "Plan" means this 1996 Restricted Stock Plan of the Company;
(l) "Purchase Price" means the price per share at which an
Eligible Participant may purchase Restricted Stock hereunder,
pursuant to an Restricted Stock Purchase Agreement.
(m) "Restricted Stock" means Stock issued or issuable by the
Company pursuant to this Plan;
(n) "Restricted Stock Purchase Agreement" means an agreement
between the Company and an Eligible Participant to evidence
the terms and conditions of the issuance of Restricted Stock
hereunder;
(o) "Stock" means shares of the Company's Common Stock, $.10 par
value;
(p) "subsidiary" has the same meaning as "Subsidiary Corporation"
as defined in Section 424(f) of the Code;
(q) "Termination Event" means, with respect to any Holder of
Restricted Stock, any event that results in such Holder no
longer being an Eligible Participant hereunder for any reason
whatsoever (whether by reason of such Holder's death,
disability, voluntary resignation, involuntary termination, or
any other reason).
(r) "Transfer," with respect to Restricted Stock, includes,
without limitation, a voluntary or involuntary sale,
assignment, transfer, conveyance, pledge, hypothecation,
encumbrance, disposal, loan, gift, attachment or levy of such
Restricted Stock, including without limitation an assignment
for the benefit of creditors of the Holder, a transfer by
operation of law, such as a transfer by will or under the laws
of descent and distribution, an execution of judgment against
the Restricted Stock or the acquisition of record or
beneficial ownership thereof by a lender or creditor, a
transfer pursuant to a qualified domestic relations order, or
to any decree of divorce, dissolution or separate maintenance,
any property settlement, any separation agreement or any other
agreement with a spouse (except for estate planning purposes)
under which a part or all of the shares of Restricted Stock
are transferred or awarded to the spouse of the Holder or are
required to be sold; or a transfer resulting from the filing
by the Holder of a petition for relief, or the filing of an
involuntary petition against such Holder, under the bankruptcy
laws of the United States or of any other nation.
3. ELIGIBILITY.
The Company may issue Restricted Stock under this Plan only to persons
who are Eligible Participants as of the time of such issuance. Subject
to the provisions of section 5, there is no limitation on the amount of
Restricted Stock that may be issued to an Eligible Participant.
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<PAGE>
4. ADMINISTRATION.
(a) COMMITTEE. The Committee, if appointed by the Board, will
administer this Plan. If the Board, in its discretion, does
not appoint such a Committee, the Board itself will administer
this Plan and take such other actions as the Committee is
authorized to take hereunder; provided that the Board may take
such actions hereunder in the same manner as the Board may
take other actions under the Company's Articles of
incorporation and bylaws generally.
(b) AUTHORITY AND DISCRETION OF COMMITTEE. The Committee will have
full and final authority in its discretion, at any time and
from time to time, subject only to the express terms,
conditions and other provisions of the Company's Articles of
incorporation, bylaws and this Plan:
(i) to select and approve the persons to whom Restricted
Stock will be issued under this Plan from among the
Eligible Participants, including the number of shares
of Restricted Stock so issued to each such person;
(ii) to determine the Purchase Price of Restricted Stock
issued under this Plan, the period or periods of time
during which the Company will have a right to
repurchase such Restricted Stock and the terms and
conditions of such repurchase, and other matters to
be determined by the Committee in connection with
specific issuances of Restricted Stock and Restricted
Stock Purchase Agreements as provided in this Plan;
(iii) to interpret this Plan, to prescribe, amend and
rescind rules and regulations relating to this Plan,
and to make all other determinations necessary or
advisable for the operation and administration of
this Plan; and
(iv) to delegate all or a portion of its authority under
subsections (i) and (ii) of this section 4(b) to one
or more directors of the Company who are executive
officers of the Company, but only in connection with
the issuance of Restricted Stock to Eligible
Participants who are not subject to the reporting and
liability provisions of Section 16 of the 1934 Act
and the rules and regulations thereunder, and subject
to such restrictions and limitations (such as the
aggregate number of shares of Restricted Stock that
may be issued) as the Committee may decide to impose
on such delegate directors.
(c) LIMITATION ON AUTHORITY. Notwithstanding the foregoing, or any
other provision of this Plan, the Committee will have no
authority:
(i) to approve the issuance of Restricted Stock to any of
its members, whether or not approved by the Board;
and
(ii) to determine any matters, or exercise any discretion,
in connection with the Formula Awards under section
6(j) hereof, to the extent that the power to make
such determinations or to exercise such discretion
would cause one or more members of the Committee no
longer to be "Disinterested Directors".
(d) RESTRICTED STOCK PURCHASE AGREEMENTS. Restricted Stock will be
issued hereunder only upon the execution and delivery of an
Restricted Stock Purchase Agreement by the
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<PAGE>
Holder and a duly authorized officer of the Company.
Restricted Stock will not be deemed issued merely upon the
authorization of such issuance by the Committee.
5. SHARES RESERVED FOR RESTRICTED STOCK.
(a) RESTRICTED STOCK POOL. The aggregate number of shares of
Restricted Stock that may be issued pursuant to this Plan
initially will not exceed Nine Hundred Forty-One Thousand Nine
Hundred (941,900) (the "Restricted Stock Pool"), provided that
such number automatically shall be adjusted annually on the
first day of the Company's fiscal year to a number equal to
10% of the number of shares of Stock of the Company
outstanding at the end of its immediately preceding year, or
941,900 shares, whichever is greater, and provided further
that such number will be increased by the number of shares of
Restricted Stock that the Company subsequently may reacquire
through repurchase or otherwise.
(b) ADJUSTMENTS UPON CHANGES IN STOCK. In the event of any change
in the outstanding Stock of the Company as a result of a stock
split, reverse stock split, stock dividend, recapitalization,
combination or reclassification, appropriate proportionate
adjustments will be made in:
(i) the aggregate number of shares of Restricted Stock in
the Restricted Stock Pool that may be issued pursuant
to this Plan;
(ii) the exercise price of any rights of repurchase or of
first refusal under this Plan; and
(iii) other rights and matters determined on a per share
basis under this Plan or any Restricted Stock
Purchase Agreement hereunder.
Any such adjustments will be made only by the Board, and when
so made will be effective, conclusive and binding for all
purposes with respect to this Plan. If there is any other
change in the number or kind of the outstanding shares of
Stock of the Company, or of any other security into which that
Stock has been changed or for which it has been exchanged, and
if the Board, in its sole discretion, determines that this
change requires any adjustment in the restrictions on
Transfer, rights of repurchase, or rights of first refusal in
Restricted Stock then subject to this Plan, such an adjustment
will be made in accordance with the determination of the
Board. No such adjustments will be required by reason of the
issuance or sale by the Company for cash or other
consideration of additional shares of its Stock or securities
convertible into or exchangeable for shares of its Stock.
6. TERMS OF RESTRICTED STOCK PURCHASE AGREEMENTS.
Each issuance of Restricted Stock pursuant to this Plan will be
evidenced by an Restricted Stock Purchase Agreement between the Company
and the Eligible Participant to whom such Restricted Stock is to be
issued, in form and substance satisfactory to the Committee in its sole
discretion, consistent with this Plan. Each Restricted Stock Purchase
Agreement will specify the Purchase Price with respect to the
Restricted Stock to be sold to the Holder thereunder, to be fixed by
the Committee in its discretion. The Purchase Price will be payable to
the Company in United States dollars in cash or by check or, such other
legal consideration as may be approved by the Committee, in its
discretion. Without limiting the foregoing, each
4
<PAGE>
Restricted Stock Purchase Agreement (unless otherwise stated therein)
will be deemed to include the following terms and conditions:
(a) COVENANTS OF HOLDER. At the discretion of the Committee, the
person to whom Restricted Stock is issued hereunder, as a
condition to such issuance, must execute and deliver to the
Company, a confidential information agreement approved by the
Committee. Nothing contained in this Plan, any Restricted
Stock Purchase Agreement or in any other agreement executed in
connection with the issuance of Restricted Stock under this
Plan will confer upon any Holder any right with respect to the
continuation of his or her status as an employee of,
consultant or independent contractor to, or director of the
Company, and its subsidiaries.
(b) VESTING PERIODS; COMPANY REPURCHASE RIGHT.
(i) Unless the Restricted Stock Purchase Agreement
executed by a Holder expressly otherwise provides and
except as set forth herein, as of the date issued,
all of the shares of Restricted Stock issued pursuant
to the agreement (the "Total Award Shares") will be
deemed "Unvested" and will become "Vested" for
purposes of subsection 6(b)(ii) according to the
following schedule:
(1) no portion of the Total Award Shares will be
deemed "Vested" prior to the first
anniversary of the date on which the
Restricted Stock was issued to the Holder
(the "Issue Date");
(2) upon and after such first anniversary of the
Issue Date, fifty percent (50%) of the Total
Award Shares will be have become fully
"Vested," subject to the Holder's remaining
an Eligible Participant; and
(3) the remaining Restricted Stock will become
"Vested" on a cumulative basis as to twelve
and one-half (12.5%) of the Total Award
Shares, at the end of every period of three
(3) months that elapses after such first
anniversary of the Issue Date, so that the
Total Award Shares will have become fully
"Vested," subject to the Holder's remaining
an Eligible Participant, on the second
anniversary of such Issue Date.
(ii) SCOPE OF REPURCHASE RIGHT. Upon the occurrence of any
Termination Event with respect to any Holder of
Restricted Stock, the Company will have an assignable
right (but not an obligation), to repurchase any
Unvested shares of Restricted Stock owned by such
Holder at the time of such Termination Event for a
repurchase price per share equal to the Holder's (or
in the case of Restricted Stock that has been
Transferred, the original Holder's) original cost per
share, subject to appropriate adjustment pursuant to
section 5(b).
(iii) MECHANICS AND NOTICE. Within thirty (30) days after
any such Termination Event, the Holder of any
Unvested Restricted Stock will provide to the Company
a notice of the occurrence of such Termination Event.
Within ninety (90) days of the receipt of such
notice, the Company will exercise its right, if at
all, by informing the Holder in writing of the
Company's intention to do so, and specifying a
closing date within such ninety (90) day period. The
Unvested Stock will be repurchased at the Company's
principal executive offices on that date. The
repurchase price will be paid in cash or cancellation
of indebtedness
5
<PAGE>
(if any) at that time. If the Company (or its
assignee) fails to exercise its purchase rights as
provided under this section 6(b), then at the end of
the ninety (90) day period referred to herein, all
Unvested Restricted Stock of the Holder immediately
will become Vested Restricted Stock for all purposes
hereunder.
(c) RESTRICTIONS ON TRANSFER OF RESTRICTED STOCK.
(i) GENERAL RULE ON PERMISSIBLE TRANSFER OF RESTRICTED
STOCK. Restricted Stock may be Transferred only in
accordance with the specific limitations on the
Transfer of Restricted Stock imposed by applicable
state or federal securities laws and set forth below,
and subject to certain undertakings of the transferee
(subsection 6(c)(iii)). All Transfers of Restricted
Stock not meeting the conditions set forth in this
section 6(c) are expressly prohibited.
(ii) EFFECT OF PROHIBITED TRANSFER. Any prohibited
Transfer of Restricted Stock is void and of no
effect. Should such a Transfer purport to occur, the
Company may refuse to carry out the Transfer on its
books, attempt to set aside the Transfer, enforce any
undertaking or right under this subsection 6(c), or
exercise any other legal or equitable remedy.
(iii) REQUIRED UNDERTAKING. Any Transfer that would
otherwise be permitted under the terms of this Plan
is prohibited unless the transferee executes such
documents as the Company may reasonably require to
ensure that the Company's rights under an Restricted
Stock Purchase Agreement and this Plan are adequately
protected with respect to the Restricted Stock so
Transferred. Such documents may include, without
limitation, an agreement by the transferee to be
bound by all of the terms of this Plan, and of the
applicable Restricted Stock Purchase Agreement, as if
the transferee were the original Holder of such
Restricted Stock.
(iv) ESCROW. To facilitate the enforcement of the
restrictions on Transfer set forth in this Plan, the
Committee may, at its discretion, require the Holder
of shares of Restricted Stock to deliver the
certificate(s) for such shares with a stock power
executed in blank by Holder and Holder's spouse, to
the Secretary of the Company or his or her designee,
to hold said certificate(s) and stock power(s) in
escrow and to take all such actions and to effectuate
all such Transfers and/or releases as are in
accordance with the terms of this Plan. The
certificates may be held in escrow so long as the
shares of Restricted Stock whose ownership they
evidence are subject to any right of repurchase or of
first refusal under this Plan or under an Restricted
Stock Purchase Agreement. Each Holder acknowledges
that the Secretary of the Company (or his or her
designee) is so appointed as the escrow holder with
the foregoing authorities as a material inducement to
the issuance of shares of Restricted Stock under this
Plan, that the appointment is coupled with an
interest, and that it accordingly will be
irrevocable. The escrow holder will not be liable to
any party to an Restricted Stock Purchase Agreement
(or to any other party) for any actions or omissions
unless the escrow holder is grossly negligent
relative thereto. The escrow holder may rely upon any
letter, notice or other document executed by any
signature purported to be genuine.
6
<PAGE>
(d) ADDITIONAL RESTRICTIONS ON TRANSFER. By accepting Restricted
Stock under this Plan, the Holder will be deemed to represent,
warrant and agree as follows:
(i) SECURITIES ACT OF 1933. The Holder understands that
the shares of Restricted Stock have not been
registered under the 1933 Act, and that such shares
are not freely tradeable and must be held
indefinitely unless such shares are either registered
under the 1933 Act or an exemption from such
registration is available.
(ii) OTHER APPLICABLE LAWS. The Holder further understands
that each Transfer of the Restricted Stock requires
full compliance with the provisions of all applicable
laws.
(iii) INVESTMENT INTENT. Unless a registration statement is
in effect with respect to the sale and issuance of
the Restricted Stock to the Holder hereunder: (1) the
Holder is purchasing the Restricted Stock for his or
her own account and not with a view to distribution
within the meaning of the 1933 Act, other than as may
be effected in compliance with the 1933 Act and the
rules and regulations promulgated thereunder; (2) no
one else will have any beneficial interest in the
Restricted Stock; and (3) Holder has no present
intention of disposing of the Restricted Stock at any
particular time.
(e) COMPLIANCE WITH LAW. Notwithstanding any other provision of
this Plan, Restricted Stock may be issued pursuant to this
Plan only after there has been compliance with all applicable
federal and state securities laws, and such issuance will be
subject to this overriding condition. The Company will not be
required to register or qualify Restricted Stock with the
Securities and Exchange Commission or any State agency, except
that the Company will register with, or as required by local
law, file for and secure an exemption from such registration
requirements from, the applicable securities administrator and
other officials of each jurisdiction in which an Eligible
Participant would be issued Restricted Stock hereunder prior
to such issuance.
(f) STOCK CERTIFICATES. Certificates representing the Restricted
Stock issued pursuant to this Plan will bear all legends
required by law and necessary to effectuate this Plan's
provisions. The Company may place a "stop transfer" order
against shares of the Restricted Stock until all restrictions
and conditions set forth in this Plan and in the legends
referred to in this section 6(f) have been complied with.
(g) MARKET STANDOFF. To the extent requested by the Company and
any underwriter of securities of the Company in connection
with a firm commitment underwriting, no Holder of any shares
of Restricted Stock will sell or otherwise Transfer any such
shares not included in such underwriting, or not previously
registered pursuant to a registration statement filed under
the 1933 Act, during the one hundred twenty (120) day period
following the effective date of the registration statement
filed with the Securities and Exchange Commission in
connection with such offering.
(h) NOTICES. Any notice to be given to the Company under the terms
of an Restricted Stock Purchase Agreement will be addressed to
the Company at its principal executive office, Attention:
Corporate Secretary, or at such other address as the Company
may designate in writing. Any notice to be given to a Holder
will be addressed to the Holder at the address provided to the
Company by the Holder. Any such notice will be deemed to have
been duly given if and when enclosed in a properly sealed
envelope, addressed
7
<PAGE>
as aforesaid, registered and deposited, postage and registry
fee prepaid, in a post office or branch post office regularly
maintained by the United States Postal Service.
(i) OTHER PROVISIONS. The Restricted Stock Purchase Agreement may
contain such other terms, provisions and conditions, including
such special forfeiture conditions, rights of repurchase,
rights of first refusal and other restrictions on Transfer of
Restricted Stock issued hereunder, not inconsistent with this
Plan, as may be determined by the Committee in its sole
discretion.
(j) FORMULA AWARDS. On the date on which the Board appoints, or
the stockholders of the Company elect, a person who is not an
employee of the Company as a member of the Board for the first
time, such director will be issued _______ shares of
Restricted Stock. Immediately after the completion of each
annual meeting of the stockholders of the Company, each member
of the Board who is not an employee of the Company will be
issued _____________ shares of Restricted Stock. Such
Restricted Stock (the issuance of which will be referred to
herein as a "Formula Award") will have a Purchase Price equal
to the Fair Market Value of the Stock as of the date of such
issuance. Formula Awards shall vest in 33-1/3% increments on
each one year anniversary of the date of issue, until a
Formula Award becomes exercisable in full on the third
anniversary of the date of issue. Except as otherwise
specifically provided in this section 6(j), all other terms of
this Plan will apply to all Formula Awards made pursuant to
this section 6(j). For purposes of this section 6(j), "Fair
Market Value" means, with respect to the Restricted Stock
issued under a Formula Award, the market price per share of
the Company's Stock as follows:
(i) if the Stock was traded on a stock exchange on the
date in question, then the Fair Market Value will be
equal to the closing price reported by the applicable
composite-transactions report for such date;
(ii) if the Stock was traded over-the-counter on the date
in question and was classified as a national market
issue, then the Fair Market Value will be equal to
the last-transaction price quoted by the NASDAQ
system for such date;
(iii) if the Stock was traded over-the-counter on the date
in question but was not classified as a national
market issue, then the Fair Market Value will be
equal to the average of the last reported
representative bid and asked prices quoted by the
NASDAQ system for such date; and
(iv) if none of the foregoing provisions is applicable,
then the Fair Market Value will be determined by the
Committee in good faith on such basis as it deems
appropriate.
7. PROCEEDS FROM SALE OF STOCK.
Cash proceeds from the sale of shares of Restricted Stock issued from
time to time pursuant to this Plan will be added to the general funds
of the Company and as such will be used from time to time for general
corporate purposes.
8. AMENDMENT AND DISCONTINUANCE.
The Board or the Committee may amend, suspend or discontinue this Plan
at any time or from time to time; provided that no such action of the
Board or the Committee shall alter or impair
8
<PAGE>
any rights previously granted to Holders under the Plan without the
consent of such affected Holders (or their successors or assignees);
and provided further that the provisions of section 6(j) hereof may not
be amended more often than once during any six (6) month period, other
than to comport with changes in the Code, the Employee Retirement
Income Security Act, or the rules and regulations thereunder. The Board
or the Committee may amend the Plan without shareholder approval where
such approval is not required to satisfy any statutory or regulatory
requirements.
9. PLAN COMPLIANCE WITH RULE 16B-3.
With respect to persons subject to the liability and reporting
requirements of Section 16 of 1934 Act, transactions under this Plan
are intended to comply with all applicable conditions of Rule 16b-3 or
its successors under the 1934 Act. To the extent any provision of this
Plan or action by the Plan administrators fails so to comply, it shall
be deemed null and void, to the extent permitted by law and deemed
advisable by the Plan administrators.
10. COPIES OF PLAN.
A copy of this Plan will be delivered to each Holder at or before the
time he or she executes an Restricted Stock Purchase Agreement.
***
Date Plan Adopted by Board of Directors: July 26, 1996
Date Plan Approved by Stockholders: , 1996
9
<PAGE>
EXHIBIT 10.7
MERCHANDISING LICENSE AGREEMENT BETWEEN ELP COMMUNICATIONS
AND INTERACTIVE PROCESSING, INC. DATED APRIL 17, 1996
<PAGE>
MERCHANDISING LICENSE AGREEMENT
Dated April 17, 1996
1. LICENSOR: Sony Signatures Inc. ("Signatures"),
as agent for ELP Communications ("Licensor")
10202 W. Washington Blvd.
Cohn Building, Second Floor
Culver City, CA 90232
Attention: Director of Licensing
Phone: (310) 280-7788; Fax (310) 280-5563
LICENSEE: Interactive Processing, Inc. ("Licensee"),
a Nevada corporation
609 Granville Street, Suite 1738
Vancouver, B.C. V7Y 1G5
Attention: Keith Balderson, President
Phone: (604) 657-6030; Fax: (604) 687-1858
2. PROPERTY: The television series entitled
"Married With Children" ("Property").
3. PROPRIETARY SUBJECT MATTER: shall mean: (i) The title, symbols,
trademarks, copyrights, designs, advertising,
artwork, and logo of the Property, and (ii) the
names, approved images and approved likenesses of the
performers, set forth below, as such performers are
portrayed in the Property, subject to the terms and
conditions upon which the rights thereto are owned or
controlled by Licensor. Unless the name of a
performer appearing in the Property is set forth in
the immediately succeeding sentence, then it is
specifically acknowledged by Licensee that such
performer's name, image, and likeness shall not be
included in the definition of Proprietary Subject
Matter and the use thereof is not licensed herein.
The names, approved images and approved likenesses of
the following performers as they appear in-character
may be used in connection with the Articles: Katey
Sagal, Ed O'Neill, Christina Applegate, David
Faustino, Amanda Bearse, Ted McGinley and David
Garrison. ("Proprietary Subject Matter").
4. ARTICLES: The following products utilizing, bearing, or
otherwise relating to the Proprietary Subject Matter:
The Bundy Sport Remote - Universal remote control in
the shape of a football with sound effects and stand
("Articles").
#960001 Execution Copy
Dated: July 11, 1996
<PAGE>
5. TERRITORY: United States, its territories & possessions and
Canada ("Territory").
Subject to Licensee fully performing all of the terms
and conditions of this Agreement and remitting
payment of an additional U.S. $25,000.00 (the "Option
Fee") by July 12, 1997 Licensee shall have an option
(the "Option") to extend the Territory to worldwide.
In order to exercise the Option, Licensee must
provide Licensor with written notice of its intention
to exercise such Option no later than May 12, 1997
and forward the Option Fee no later than July 12,
1997.
6. TERM: The Initial Term shall commence on April 11, 1996 and
expire on June 30, 1998, unless sooner terminated as
provided in Exhibit "A" hereto (the "Initial Term").
Subject to Licensee fully performing all of the terms
and conditions of this Agreement and remitting full
payment of the Initial Term Guarantee to Licensor on
a timely basis, and having sold a sufficient number
of Articles during the Initial Term so as to have
paid Licensor Royalties of at least Seventy-Five
Thousand Dollars ($75,000.00) (the "Minimum Earned
Royalties") during the Initial Term, Licensee shall
have an option (the "Option") to extend the Initial
Term for an additional period commencing as of the
end of the Initial Term and ending on June 30, 2000
(the "Extended Term"). In order to exercise the
Option, Licensee must provide Licensor with written
notice of its intention to exercise such Option no
later than sixty (60) days prior to the expiration of
the Initial Term. Licensee's performance during the
Extended Term shall be governed by the same terms and
conditions recited in this Agreement for the Initial
Term.
For purposes of this Agreement, "Term" shall mean the
Initial Term and, if the Option is exercised, the
Extended Term.
7. EXCLUSIVITY (CHECK ONE): __ Non-exclusive license _X_ Exclusive license
8. ROYALTY RATE: (i) 10% of Net Sales; and
(ii) 12% of Net Sales for sales made on an
F.O.B. basis. (collectively, "Royalty
Rate").
9. ADVANCE: U.S. $25,000.00 ("Advance"). The Advance is payable
upon execution of this Agreement by Licensee.
10. GUARANTEE: U.S. $50,000.00 ("Guarantee").
#960001 Execution Copy
2 Dated: July 11, 1996
<PAGE>
11. CHANNELS OF DISTRIBUTION: shall mean the sale of Articles to (i) jobbers,
wholesalers, and distributors for sale and
distribution to retail stores and merchants; (ii)
retail stores and merchants directly for sale and
distribution to the public; and (iii) the public
directly, or to the public through third parties,
through advertisements or programs appearing in or on
publications, home shopping channels, television
commercials, C.D. Rom catalogues, electronic on-line
services or other electronic mediums, statement
stuffers or brochures. ("Channels of Distribution").
12. EARLIEST IN-STORE DATE: Not Applicable.
13. SHIPPING DATE: November 1, 1996 ("Shipping Date")
14. COPYRIGHT AND TRADEMARK NOTICES:
Copyright: Copyright 199x ELP Communications
All Rights Reserved
Trademark: MARRIED...WITH CHILDRENtrademark
15. APPROVALS: All Articles and any related packaging and
advertising must be approved by Licensor in writing
before distribution or sale by Licensee. Such
approvals or disapprovals are within Licensor's sole
discretion, pursuant to Paragraph 26.3 herein.
16. INSURANCE AMOUNT: $5,000,000.00
#960001 Execution Copy
3 Dated: July 11, 1996
<PAGE>
17. SAMPLES: 24
18. ADDITIONAL TERMS: The attached Exhibit "A" (Standard Terms and
Conditions) and Rider to Agreement is
incorporated herein by this reference.
By signing below, Licensee affirms that it is in agreement with the foregoing
and, that it has read and understands and agrees to be bound by Exhibit "A"
(Standard Terms and Conditions) and the Rider to Agreement attached hereto and
forming a part hereof. Licensee further agrees that this Agreement shall also
serve as an invoice to Licensee with respect to the amounts payable as set forth
above and Licensee agrees to pay such amounts to Licensor as and when specified
above. This Agreement shall not be binding upon Licensor until fully executed
and delivered.
ACCEPTED AND AGREED TO:
SONY SIGNATURES INC., INTERACTIVE PROCESSING, INC.
as agent for ELP Communications
By:/S/KIMBERLY SCARDINO By:/S/SHELDON SILVERMAN
Print Name: KIMBERLY SCARDINO Print Name:SHELDON SILVERMAN
Title:SR. VICE PRESIDENT MERCHANDISING Title:PRESIDENT + CEO
& LICENSING
Date: 7/ Date: July 16, 96
#960001 Execution Copy
4 Dated: July 11, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET, STATEMENT OF LOSS AND DEFICIT, STATEMENT OF CASH FLOW, AND THE NOTES
THERETO, FOUND ON PAGES 11 THROUGH 18 OF COMPANY'S FORM 10-SB, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 3-MOS OTHER
<FISCAL-YEAR-END> APR-30-1996 APR-30-1996
<PERIOD-START> MAY-01-1996 SEP-15-1995
<PERIOD-END> JUL-31-1996 APR-30-1996
<EXCHANGE-RATE> 1 1
<CASH> 17,071 38,889
<SECURITIES> 0 0
<RECEIVABLES> 224 0
<ALLOWANCES> 0 0
<INVENTORY> 75,600 1,080
<CURRENT-ASSETS> 98,045 46,185
<PP&E> 5,600 0
<DEPRECIATION> 420 0
<TOTAL-ASSETS> 133,825 51,785
<CURRENT-LIABILITIES> 18,728 26,522
<BONDS> 0 0
0 0
0 0
<COMMON> 356,300 186,300
<OTHER-SE> (253,783) (173,617)
<TOTAL-LIABILITY-AND-EQUITY> 133,825 51,785
<SALES> 4,747 0
<TOTAL-REVENUES> 4,747 0
<CGS> 1,842 0
<TOTAL-COSTS> 1,842 0
<OTHER-EXPENSES> 83,071 173,617
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 223 214
<INCOME-PRETAX> (80,166) (173,617)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (80,166) (173,617)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (80,166) (173,617)
<EPS-PRIMARY> (0.01) (0.07)
<EPS-DILUTED> (0.01) (0.07)
</TABLE>
