FORM 10
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
iMALL, INC.
(Exact name of registrant as specified in its charter)
NEVADA
59-2544687B
(State or other jurisdiction of
(I.R.S.
Employer
incorporation or organization)
Identification
No.)
1185 South Mike Jense Circle, Provo, Utah
84601
(Address of principal executive offices)
(Zip
Code)
Registrant's telephone number, including area code: (801) 373-
1717
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of
each exchange
on which
to be so registered each
class is to
be registered
________________
_______________________
________________
_______________________
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
$.001 par value
(Titlee of class)
_________________________________________________________________
_____________ (Title of class)<PAGE>
Item
1. BUSINESS
iMall, Inc., a Nevada corporation (the Company ), owns
a popular location on the Internet called the iMall which is a
site on the World Wide Web where large and small businesses and
individual entrepreneurs can make their products, goods, and
services available to the Internet browser and shopping customer.
The Company uses marketing methods perfected by its management
team over the last several years to generate potential clients
who are interested in Internet marketing. After a group of
interested participants is gathered, the Company outlines its
sales program and its benefits to the participants, after which
it takes on as clients those individuals and businesses which are
serious about increasing their exposure and revenue through
marketing their products or services on the Internet.
These clients then pay the Company $3,000 to attend an
intensive day long seminar in which all applicable aspects of the
Internet are specifically taught using a live on-line tour
conducted by various experts in the areas of on-line marketing,
copywriting, and web site design. These seminars also provide
outstanding increased awareness and free publicity for the iMall.
Clients are also given Internet services and products worth in
excess of $3,000.
The Internet is comprised of the interconnection of
computers via
national and international electronic transmissions. The Company
intends to
focus its business operations
on the emerging Internet. By accessing this system through a
personal computer an
individual can communicate with other users. By connecting world
wide transmission
systems, the Internet has created an alternative world wide
electronic communication system.
Recently, individuals and companies have recognized that the
audio-visual capacities of the
Internet will result in the presentation and sale of goods and
services through this electronic
medium.
The phenomenal growth of the Internet should provide
large, expanded markets
for products and services. An estimated 40 million people now
use the Internet in the United
States, with an additional estimated two million joining every
month. By the year 2000, it is
expected that 100 million people will use the Internet with
annual sales over the Internet
potentially reaching $200 billion.
The Company believes that the use of the Internet for
commercial purposes
represents a unique business opportunity. To take advantage of
that opportunity, the
Company operates a location or "web site" on the Internet. This
site which consists of a
collection of information and products that can be accessed by
users of the Internet is called
the iMall and constitutes a "virtual" shopping center created
electronically on the Internet.
The Company is striving to become the biggest player in Internet
commerce.
The cost of marketing on the Internet is significantly
lower than catalog, direct
mail or television marketing. Marketing on the Internet can be
especially advantageous for
smaller companies because the customer only sees the Internet
"storefront" which will be
schematically identical to a larger company's "storefront."
By accessing the information contained in the iMall
site, an Internet user is
made aware of a number of products that are being offered for
sale by the merchandisers. At
the present time, these merchandisers include Big Dog Sportswear,
Positive Response and
HealthRider. Through accessing the iMall site ("hit") the
potential customer may move
through this virtual shopping center and browse, purchase or
simply obtain information.
In addition to well known merchandisers, several radio
stations including
KABC talk radio (the second largest radio station in the country)
and KMPC radio maintain
locations in the iMall. Other informative groups including the
Super Bowl Host Committee,
and the Committee to Draft Rush Limbaugh for President.
The iMall is the Internet shopping mall with the best
"hit" rate, currently
receiving up to 200,000 "hits" per day which account for over
five million visitors per month.
The iMall Directory lists several hundred sites where
viewers can shop.
Viewers who are looking for particular items can use the Power
Shopping function to see if
the item they are looking for is available on the iMall. A
viewer who wants to purchase
items offered on the iMall can do so immediately by submitting
their order online and
entering a credit card number. Viewers do not need to worry
about the security of their
credit card numbers because the iMall runs on a Netscape secure
server. The iMall also
provides classified and display advertising with a consistent
base of almost 10,000 individual
classified advertisements, and display advertising with a
consistent base of over 500
storefronts.
Another popular feature is the iMall Deals of the Day.
This is set up as a free
service to entice viewers to continually return to the iMall by
offering new deals every day.
iMall viewers can take advantage of incredible buys on first
quality name brand merchandise.
The iMall homepage and directory use sophisticated and
creative graphics to
attract visitors. These pages, as well as the Super Bowl
homepage, were designed by Michael
Hilliard. Mr. Hilliard is one of the top designers in the field
and has worked on various
projects for Microsoft Chairman and Chief Executive Officer Bill
Gates.
Internet consulting was at the top of the list of the
15 hottest businesses for
1996 as rated by Entrepreneur Magazine in their December 1995
issue cover story.
Entrepreneur stated that the number of Internet users is
increasing by 10% each month and
that Internet consultants who help businesses set up interactive
advertising or store fronts on
the World Wide Web are in high demand. Forward-thinking
companies of today see the
Internet as the medium of tomorrow.
The Company anticipates that its long term revenues
will be largely derived
from renting sites on the iMall and from its percentage cut of
purchases made on the iMall,
and by continuing to educate the public about Internet marketing
opportunities through its
seminar business. The Company also plans to become the merchant
banker for sales on the
iMall and the Internet generally.
Within the past twelve months, commercial web sites on
the Internet have more
than tripled and the number of new commercial sites grows daily.
This surge is being led by
companies seeking to boost sales and better serve their customers
through increased customer
awareness, support and interaction. By anticipating the colossal
growth of Internet users and
businesses which will use the Internet as a marketing,
advertising, information and sales
arena, the Company and its subsidiaries have established
themselves at the forefront of the
Internet consulting industry. From this position, the Company
hopes to capitalize on the
tremendous future opportunities in Internet marketing and
consulting services.
The Company was incorporated under the laws of the
State of Utah on
February 9, 1984 as Brickland, Corporation. The Company changed
its name to Natures Gift,
Inc. on May 23, 1991. Other than this change of name, the
Company did not transact any
significant business prior to its present business operations.
The Company's principal executive office is located at
1185 South Mike Jense
Circle, Provo, Utah 84601. The Company also has an affiliate
office in Studio City,
California. The Company's common stock is traded on the NASDAQ
Bulletin Board under
the symbol "IIML."
Subsidiaries
On January 15, 1996, the Company entered into share
exchange agreements
with Madison York, Inc., a Utah corporation which has
subsequently changed its name to
iMall Consulting, Inc. ( ICI ), Cabot, Richards & Reed, Inc., a
Utah corporation ("Cabot")
and R&R Advertising, Inc., a California corporation ("R&R"). In
addition, on March 5, 1996,
the Company entered into a share exchange agreement with
Inter-Active Marketing Group,
Inc., a Utah corporation ( IMG ). Madison, Cabot, R&R and IMG
are sometimes collectively
referred to herein as the Subsidiaries. A description of the
share exchange with each
Subsidiary is set forth herein under Certain Transactions . A
description of the business of
each respective Subsidiary is set forth below. All share numbers
hereafter in this Prospectus
have been adjusted to account for the four for one stock split of
the Company effected on
May 22, 1996.
The Company and the Subsidiaries provide consulting
services for businesses
interested in marketing their products and services on the
Internet. Each Subsidiary
specializes in specific aspects of Internet marketing and
consulting. The Company and the
Subsidiaries actively interrelate, producing a synergy of ideas
and strategies which has been
instrumental in the success and growth of the iMall and its web
sites and the Company's
Internet consulting programs.
Cabot was incorporated in December 1992 and is one of
the largest and well
known educational seminar companies in the world. The marketing
and training techniques
developed by Cabot are used today by ICI in the Internet seminar
business discussed below.
ICI was incorporated in 1994 and commenced business in
1995 providing
consulting services to Internet entrepreneurs. The Company is
one of the largest Internet
consulting companies in the nation. ICI conducts educational
workshops on Internet
applications in every medium and large market in the country.
The Internet education
training workshops are conducted by some of the nation's leading
Internet experts who teach
people how to market products or services on the Internet, design
web sites, write effective
and engaging advertising copy and make money selling Internet
products and services. ICI
acquired the iMall Internet site in October 1995.
ICI provides full technical support for their Internet
consultants and continues
to enlist and train entrepreneurs who recognize the tremendous
income opportunity in
satisfying the demand for Internet consulting services. ICI is
currently executing plans for
expansion into Canada and Europe.
Richard Rosenblatt formed R&R in January 1991 in
California. R&R was an
advertising agency that caters to small businesses. Services
include commercial and
infomercial production, art and graphics design, as well as
print, television and radio. The
television department placed its clients' advertisements on
hundreds of network, cable, and
independent stations throughout the United States. R&R has
contributed to iMall Services,
Inc. ( iMall Services ), a wholly owned subsidiary of the
Company, its computer advertising
department which designs and creates web sites and offers
placement in Internet malls,
postings on electronic bulletin board systems, and display
advertising on popular web sites.
iMall Services plays an integral role in the structuring and
design of the iMall and in
developing the advertising campaigns that assist the iMall in
maintaining its recognition as the
premier place to shop for and advertise goods and services on the
Internet.
IMG, which recently changed its name to Internet
Yellow Pages, is an
Internet marketing company which provides tracking reports for
companies, Internet "search
engines" for Internet users and consumers, a secure server for
transactions over the Internet,
web page design services and Internet yellow pages. The Internet
yellow pages are similar to
regular yellow pages and also allow for different types of
sponsorships which businesses can
purchase for greater exposure.
Recent Developments
On April 26, 1996 the Company acquired all of the
issued and outstanding
stock of PhysiComp Corporation in exchange for 1,600,000 shares
of the Company s common
stock. None of the information contained in this Prospectus
gives effect to this transaction.
PhysiComp was formed by three individuals who worked on
Department of
Defense and NASA contracts using the latest state-of-the-art
computer and Internet
technology. The founders were involved with the Internet since
its infancy, and the
e.m.a.N.a.t.e. Division of PhysiComp was formed to focus on
generating revenue from the
Internet. Thus, while PhysiComp currently has contracts with
Lockheed-Martin, United
Defense, and NASA, most of the personnel are involved with
creating Internet web pages and
programming advanced features such as Java, Shockwave and Virtual
Reality applications for
customers.
On June 24, 1996, the Company entered into a software
license and distribution
agreement with AT & T Corp. to distribute access software for AT
& T World Net Service
through the iMall marketing program.
On May 22, 1996, the Company effected a four for one
forward stock split.
All references in this Prospectus take such split into effect
when referring to the number of
shares of the Company s common stock or per share data.
Employees
As of August 8, 1996, the Company and its subsidiaries
had a total of
approximately 150 full-time employees. None of the Company s
employees are covered by
an ongoing collective bargaining agreement and the Company
believes that its relationship
with its employees is very good.
Item 2: FINANCIAL INFORMATION
SELECTED FINANCIAL DATA
The following table presents historical and pro forma data
of the Company and its predecessors for the two years ended
December 31,
1995 and 1994,
and for the three months ended March
31, 1996, which have been derived from the Company s audited
financial statements included elsewhere in this Prospectus, and
unaudited historical and pro forma financial statements included
elsewhere in this Prospectus. The information should be read in
conjunction with Management s Discussion and Analysis of
Financial Condition and Results of Operations and the Financial
Statements and related notes thereto.
March 31, 1996 December
31
1995
1994
<TABLE>
<CAPTION>
<S> <C> <C>
<C>
Balance Sheet Data
Working capital (deficit) $ 472,575 $59,395
$123,536
Total assets 1,686,896 791,484
804,309
Total liabilities 809,700 381,767
510,118
Shareholders equity (deficit) 877,196 309,946
294,191
</TABLE>
Three Months Ended March 31 Years
Ended December 31
1996 1995
1994
<TABLE>
<CAPTION>
<S> <C> <C>
<C>
Income Statement Data
Net Sales $4,179,150 $13,012,458
$10,479,226
Cost of goods sold 2,357,216 7,967,908
6,598,576
Gross profit 1,821,934 5,044,550
3,880,650
Operating expenses 1,092,370 3,770,772
2,975,384
Income (loss) from operations 729,564 1,273,778
905,266
Net income (loss) 439,478 1,333,793
860,252
Weighted average
number of common 13,643,176 (1)
(1)
shares outstanding
</TABLE>
___________________
(1) Not applicable because all of the operating
predecessors of the Company were private companies at that time.
MANAGEMENT S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following analysis of the Company s and the
Company s predecessors financial condition as of March 31, 1996
and December 31, 1995 and the Company s and the Company s
predecessors results of operations for the three month periods
ended March 31, 1996 and 1995 and the years ended December 31,
1995 and 1994 should be read in conjunction with the Company s
financial statements and notes thereto included elsewhere in this
Prospectus.
Results of Operations
Comparison of Three-Month Periods Ended March 31, 1996 and 1995
During the first quarter of 1995, the Company did not exist in
its present form. ICI had not yet begun operations. ICI, along
with Cabot, Richards & Reed, Inc. ( Cabot ) and R&R Advertising,
Inc. ( R&R ) are all predecessors to the Company.
Revenue March 31, 1995 March 31, 1996 %Change
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Workshop Revenue $2,311,231 $3,498,394 51%
Advertising Services $1,351,126 $447,791 -67%
Support Services Revenue $n/a $179,704 n/a
TOTAL $3,662,357 $4,125,889 13%
</TABLE>
Revenues. Revenues from the first quarter of 1996
increased $1,187,163 (51%) over the first quarter of 1995, due in
great measure to increased workshop attendance at ICI internet
seminars. Personnel and assets were shifted from the Cabot
workshop effort to Madison in order to support the increasing
demand for the internet-related seminars. R&R saw a shift in its
efforts as well, from advertising support services to back-end
support services for the internet seminar clients. These
services include website design and upgrades, homestudy package
sales, and general consulting services.
Cost of Sales. Direct cost of sales decreased $118,983
(6%) from the first quarter of 1995, to the first quarter of
1996. Given that revenues increased, this reflects a shift of
expenses from those which relate directly to sales to expenses
related to general and administrative expenses and operations.
Certain fixed direct costs exist which are required for the
production of preview seminars and workshops. However, as the
number of workshop attendees increases, a decreasing amount of
direct expense is required to support those attendee clients as a
percentage of sales. In addition, a shift took place from R&R
and that entity s direct expenses, to expenses that were more
appropriately categorized as general and administrative expenses.
General and Administrative Expenses. General and
administrative expense increased $391,888 (65%) from the first
quarter of 1995, to the first quarter of 1996. As explained
above, this was mainly due to a shift in the type of expenses
being incurred from those of a direct nature, to those of an
administrative nature. The support staff required to maintain
normal operations increased due to a rise in the number of
preview and workshop teams, workshop clients, and the need for an
internet-related technical staff.
Financing
Other than a capital lease arrangement by Cabot, there
were no financing activities during the first quarter of 1995 or
1996. Consequently, no long-term debt was incurred or reported.
Growth was funded from internal cash flow within the entities.
Comparison of Fiscal 1995 and 1994
Revenue December 31, 1994 December 31, 1995 %Change
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Cabot Workshop $5,994,022 $ 6,603,988 10.2%
Revenue
Advertising Services $4,485,204 $5,404,505 20.5%
ICI Workshop Revenue $n/a $1,003,965 n/a
TOTAL $10,479,226 $13,012,458 24.2%
</TABLE>
Revenues. During 1995, revenues increased $2,533,232
(24%) over 1994. This increase was due to increased workshop
attendance generated by Cabot and increased client base provided
for R&R -- given that increases in Cabot sales provide additional
clients and revenue for R&R. Also, the addition of another
seminar division -- ICI -- contributed to the increased revenue
stream of the combined entities. (The operations of ICI are
explained in greater detail below under the heading Factors
Affecting Operating Results. )
Cost of Sales. Cost of sales represents the costs
directly attributable to providing workshop education to clients,
as well as providing advertising resources to theses clients.
Such direct costs include workshop speakers wages, hotel &
banquet facilities, materials and travel costs. During 1995
these costs increased by $1,369,332 (21%) over 1994. This
increase corresponds directly with revenues and would be expected
given the increase in revenues of 22%.
General and Administrative Expenses. General and
Administrative expenses increased $767,327 (25%) in 1995 over
those incurred during 1994. This increase would be expected
given that additional operations, administrative, travel and
advertising costs are required to support increased numbers of
previews, workshops and clients.
Depreciation and Amortization. Depreciation and
amortization costs increased $13,833 from 1994 to 1995. Fixed
asset and capital expenditures for and on behalf of ICI as well
as conservative increases in fixed assets required for operations
within Cabot and R&R contributed to this increase in
depreciation. Computer equipment and office fixtures were
required to support internal operations as well as the production
of outside preview seminars and workshops.
Factors Affecting Operating Results
The operations of Cabot and R&R remained constant
between 1994 and 1995. The entities focused on providing quality
education in a workshop environment to interested clients. R&R
then supported those clients by offering advertising packages and
expertise. The companies both operate in a unique accounting
situation. Little to no accounts receivable are incurred, thus
eliminating both bad debts and collections processes. Little to
no debt financing is required due to the cash rich nature of
the business -- growth was funded internally.
ICI began operations in July, 1995, as an Internet
Education Seminar Company. Revenues for Madison totaled
$1,003,965 in fiscal 1995, with cost of sales of $437,035,
general and administrative expenses of $588,454, and depreciation
of $2,853.
Financing
Other than a capital lease arrangement by Cabot, there
were no financing activities during fiscal 1995 or 1994.
Consequently, no long-term debt was incurred or reported. As
mentioned above, growth was funded from internally generated cash
flow within ICI, Cabot and R&R.
Liquidity and Capital Resources
The Company has funded its cash requirements through
cash flows from its operating activities. The Company has no
lines of credit or other financing arrangements or agreements
with a bank or lending source. The Company believes its current
funds, along with the proceeds from this Offering, will be
sufficient to finance its cash requirements for at least the next
twelve months.
Item 3. PROPERTIES
The Company leases its executive offices in Provo, Utah on a
month-to-month basis for $9,076 per month. The Company leases
office space at 22020 Clarendon, Suite 200, Woodland Hills,
California 91367 for $4,290 per month, which lease expires in
April 1999. The Company also leases office space at 4400
Coldwater Canyon Blvd., Studio City, California 91604 for $6,258,
which lease expires in December 1996.
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information as
of August 8, 1996 with respect to the beneficial ownership of the
outstanding shares of the Common Stock by (i) any shareholder
known by the Company to beneficially own more than five percent
of such outstanding shares, (ii) the company s directors and
executive officers and (iii) the directors and executive officers
of the Company as a group.
Name and Address of Number of Percentage
Beneficial Owner Shares
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
Craig R. Pickering 12,000,000 19.8%
1185 South Mike
Jense Circle
Provo, Utah 84601
Richard Rosenblatt 12,000,000 19.8%
4400 Coldwater
Canyon Blvd.
Suite 200
Studio City,
California 91604
Mark R. Comer 12,000,000 19.8%
1185 South Mike
Jense Circle
Provo, Utah 84601
Martin Rosenblatt 1,353,333 2.2%
22020 Clarendon
Suite 200
Woodland Hills,
California
91367
Craig Lewis 14,000 0.1%
1185 South Mike
Jense Circle
Provo, Utah 84601
David M. Rees 0 0.0%
215 South State
Street
Suite 1100
Salt Lake City,
Utah 84111
Total of Directors
and Executive Officers
as a group: 37,367,333 61.8%
</TABLE>
The Company is aware of the following stockholder who beneficially owns
over five percent of the outstanding shares.
John Clayton 7,200,000 11.9%
870 East 9400 South,
Suite 203
Sandy, Utah 84054
Item 5. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names, ages and
positions with the Company as of the date of this
Prospectus of all of the officers and directors of the Company.
Also set forth below is information as to the principal
occupation and background for each person in the table.
NAME AGE POSITION
<TABLE>
<CAPTION>
<C> <C> <C>
<S>
Craig R. 37 President; Chairman of
Pickering the Board of Directors
Richard 27 Senior Vice President;
Rosenblatt Director
Mark R. Comer 29 Senior Vice President;
Director
Martin 53 Vice President; Director
Rosenblatt
Craig Lewis 31 Secretary/Treasurer
David M. Rees 29 Director
</TABLE>
Craig R. Pickering. Mr. Pickering has over 16 years of business
experience including work in venture capital, sales, mergers and
acquisitions and as a seminar speaker for American Business
Seminars. In 1992 he formed Cabot, Richards & Reed, Inc., a
business education consulting firm. He founded Madison, York,
Inc. in 1994 to provide Internet consulting services.
Richard Rosenblatt. Mr. Rosenblatt received his Bachelor of Arts
degree in political science from the University of California at
Los Angeles. He received his Juris Doctorate from the University
of Southern California where he graduated with honors. In 1991,
he formed R&R Advertising, Inc. which specializes in advertising
for small businesses. Mr. Rosenblatt is the son of Martin
Rosenblatt.
Mark R. Comer. Mr. Comer attended Brigham Young University in
1984 and 1985 as a business major. Mr. Comer has over seven
years experience in marketing and in the business seminar
industry. In 1992 he formed Cabot, Richards & Reed, Inc., a
business education consulting firm.
Martin Rosenblatt. Mr. Rosenblatt received a Bachelor of Arts
degree in engineering from the University of California in 1978.
In 1979 he obtained a masters degree in thermal engineering from
the University of California. Mr. Rosenblatt also has a Ph.D.
from the University of California. Mr. Rosenblatt has
successfully managed a group of 20 scientists in developing and
applying complex and sophisticated physics based computer
programs. He has been using the Internet regularly since its
infancy, as a communications tool to reach and remotely operate
the most advanced government computers in the country. Since
1994 Mr. Rosenblatt has served as Chief Executive Officer and
Senior Staff Scientist of PhysiComp Corporation. Mr. Rosenblatt
is the father of Richard Rosenblatt.
Craig Lewis. Mr. Lewis received his Bachelor of Science degree
in accounting in 1988 and his Master of Accounting degree in
1989, each from Brigham Young University. Mr. Lewis worked for
the accounting firm of Deloitte & Touche in St. Louis from 1989
through 1991. He became the Controller for AeroTrans Corporation
in Salt Lake City in 1991 and in 1992 became the Controller and
Corporate Secretary/Treasurer for Mountainland Support
Corporation in Provo, Utah. Mr. Lewis joined the Company in
1995
as the Secretary/Treasurer.
David M. Rees. Mr. Rees received his Bachelor of Arts degree in
history from Weber State University in 1990 and his Juris
Doctorate from New York University in 1993. From 1993 through
1995 he was an associate in the Mergers and Acquisitions and
Corporate Finance departments at the law firm of Skadden, Arps,
Slate, Meagher & Flom in New York. Mr. Rees is an attorney with
Jackson & Associates, which is the Company s regular outside
counsel.
Item 6. EXECUTIVE COMPENSATION
The following table sets forth certain information as to
each of the Company s (and the Company s predecessors) five
highest paid officers and directors for the fiscal year ended
December 31, 1995.
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C>
Name Capacities Other Restricted
All
of Which Cash Annual Stock
Other
individual Served Compensation Bonus($) Compensations($) Awards($)
Options Compensation
Craig R.
Pickering $105,000 0 0 0 0
0
Richard Rosenblatt $67,000 0 0 0 0
0
Mark R. Comer $105,000 0 0 0 0
0
Lisa Rosenblatt $67,000 0 0 0 0
0
Kyle R. Carter $80,000 0 0 0 0
0
</TABLE>
The aggregate amount of compensation paid to all executive
officers and directors as a group for services performed in all
capacities for the Company and its predecessors as a group was
$484,000.
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 8, 1996 the Company merged with and into
iMall, Inc., a Nevada
corporation, for the purpose of changing the Company s domicile
from Utah to Nevada, and
the Company also effected a 19 for one reverse split of its
common stock.
Cabot, Richards & Reed, Inc. On January 15, 1996 the
Company's
shareholders consented to an Agreement and Plan of Reorganization
with Cabot in which the
Company acquired all the issued and outstanding stock of Cabot in
exchange for 11,200,000
shares of the Company s common stock.
iMall Consulting, Inc. On January 15, 1996 the
Company's shareholders
consented to an Agreement and Plan of Reorganization with ICI in
which the Company
acquired all of the issued and outstanding common shares of ICI
in exchange for 16,400,000
shares of the Company s common stock.
R&R Advertising, Inc. On January 15, 1996 the
Company's shareholders
consented to an Agreement and Plan of Reorganization with R&R in
which the Company
acquired all of the issued and outstanding stock of R&R in
exchange for 4,800,000 shares of
the Company s common stock.
Internet Yellow Pages. On March 5, 1996 the Company
acquired all of the
issued and outstanding stock of IMG in exchange for 420,500
shares of and up to 1,200,000
shares of the Company s common stock based upon the performance
of IMG through
February 28, 1999.
PhisiComp. On April 26, 1996 the Company acquired all
of the issued and
outstanding stock of PhysiComp Corporation in exchange for
1,600,000 shares of the
Company s
common stock. None of the information contained in this
Prospectus gives effect
to this transaction.
On May 22, 1996, the Company effected a four for one
forward stock split.
All references in this Prospectus take such split into effect
when referring to the number of
shares of the Company s common stock or per share data.
Item 8. LEGAL PROCEEDINGS
ICI filed a complaint in the United States District
Court for the Central District of California on June 26, 1996
against Guthry-Renker Corp. alleging certain copyright and trade
infringements along with breach of oral contract. In the
complaint ICI alleges that Guthry-Renker has been using the
Company s materials in putting on Internet seminars. The
complaint seeks unspecified monetary damages and injunctive
relief to prevent
Guthry-Renker
from continuing this conduct.
The Company is aware that the Securities and Exchange
Commission is conducting an informal investigation with respect
to certain transactions in the Company s common stock.
The
Company is aware of no other legal proceedings
which may have a material impact on its business.
Item 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company s common stock is traded on the NASDAQ over
the counter
market under the symbol IIML. The following table sets forth
on a per share basis, for the
periods indicated, the high and low sales prices of the Company s
common stock as reported
on the NASDAQ over the counter market. No dividends have been
declared on the
Company s common stock, nor does the Company intend to pay any
dividends on the
Company s common stock in the near future. All sales prices are
set forth taking into effect
all stock splits. As of August 8, 1996, there were approximately
446 shareholders
of record
of the Company s common stock. The Company did not exist in its
present form prior to
January 1996, therefore stock prices prior to that time are not
applicable.
Price Range
High Low
1996:
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
First Quarter $ 3.25 $2.25
Second Quarter 14.00 2.19
Third Quarter 12.00 6.88
(through August 7, 1996)
</TABLE>
Item 10. RECENT SALES OF UNREGISTERED SECURITIES
The following list shows all sales of unregistered
securities of the Company in the past
three years. All such sales were of common stock, and take into
account all stock splits,
including
the four for one forward split of May 22, 1996.
Share
Exchange with Madsion York & Associates, Inc. January 15, 1996
Amount of shares issued 16,400,000
Share Exchange with Cabot Richards & Reed, Inc. January 15, 1996
Amount of shares issued 11,200,000
Share Exchange with R & R Advertising, Inc. January 15, 1996
Amount of shares issued 4,800,000
Madison York & Associates, Inc. Private Placement April 16, 1996
Amount of shares issued 232,900
<TABLE>
<CAPTION>
<S>
<C> <C>
Erica Schiller 400
Evelyn Oder 1,000
Martin Rosenblatt 20,000
Jennifer Rosenblatt 2,000
Anil Raikhy 3,500
Jack Tannenbaum 5,000
Steve Winters 1,000
Amy Friedlander 10,000
William Rosen 2,000
Al Rosenblatt 2,000
James Sniechowski 10,000
Judith Sherven 10,000
David Nadell 500
Tamar Shapiro 500
Barry Nadell 7,000
Stanley Leiken 10,000
Fred Rubin 20,000
Stephanie Rubin 2,000
Joel Fishman 1,000
Mark Fishman 1,000
Ashley Silverberg 1,000
Eric Goldman 5,000
Jerry Goldman 10,000
Brian Ross 30,000
Richard Ross 50,000
Edward Sheanin 2,000
John Beck 1,000
Kevin Hall 5,000
Ella Lou Potter 12,500
Corwin Hair 7,500
</TABLE>
Share Exchange with Physicomp, Inc. April 26, 1996
Amount of shares issued 1,600,000
Inter-Active Marketing Group, Inc. Private Placement April 29,
1996
Amount of shares issued 434,800
<TABLE>
<CAPTION>
<S>
<C> <C>
W. Craig Nielson 300
Deni Crockett-Nielson 500
Kylie M. Wayment 11,000
Shane N. Misrasi 1,200
Sterling Roberts 1,000
Carlos Tipeoni 10,000
John S. Wilson 3,500
Paul D. Galvin 1,000
Mamman Sadiq 1,000
Richard K. Merryweather 1,000
Mary Lopes 10,000
Thomas J. Hessler 10,000
Riley N. Lewis & 10,000
Vision Ventures 10,000
Michael B. Callahan
& Deena K. Callahan, J.T. 2,000
Callahan Family Trust 20,000
Jared D. Callahan 100
Kelli M. Callahan 100
Erin M. Callahan 100
Jessica D. Callahan 100
Tom Guzzie 10,000
Franklin T. Hoskins and
Susan J. Hoskins, J.T. 10,000
Gail C. Leetzow, Trustee 10,000
Christopher Kelly Crosby 400
Dave Young 2,500
Dan Young 7,500
Christopher T. Hoskins 100,000
Benjamin Hoskins 100,000
Brett Nielson 100,000
Susan E. Hahn 1,000
Janet Sanford 500
</TABLE>
International Marketing Associates July 17, 1996
Amount of shares issued 4,000
Item 11. DESCRIPTION OF SECURITIES
The Company s Articles of Incorporation, as amended,
authorize the issuance of 300,000,000 shares of common stock,
$.001 par value per share, of which
60,493,827 shares
were
outstanding as of August 8, 1996, and held by
446 shareholders
of
record. Holders of shares of the Company s common stock are
entitled to one vote for each share on all matters to be voted on
by the stockholders. There are no provisions in the Company s
Articles of Incorporation, as amended, or the Company s Bylaws
which would delay, defer or prevent a change in control of the
Company. Holders of the Company s common stock have no
cumulative voting rights. Holders of shares of the Company s
common stock are entitled to share ratably in dividends, if any,
as from funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, the
holders of shares of the Company s common stock are entitled to
share pro rata all assets remaining after payment in full of all
liabilities. Holders of the Company s common stock have no
preemptive rights to purchase the Company s common stock. There
are no conversion rights or redemption or sinking fund provisions
with respect to the Company s common stock. All of the
outstanding shares of the Company s common stock are fully paid
and non-assessable.
Item 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As authorized by Section 78.751 of the Nevada General
Corporation Law, the Company may indemnify its officers and
directors against expenses incurred by such persons in connection
with any threatened, pending or completed action, suit or
proceedings, whether civil, criminal, administrative or
investigative involving such persons in their capacities as
officers and directors, so long as such persons acted in good
faith and in a manner which they reasonably believed to be in the
best interests of the Company. If the legal proceeding, however,
is by or in the right of the Company, the director or officer may
not be indemnified in respect of any claim, issue or matter as to
which he shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Company unless a
court determines otherwise.
Article 6.E of the Articles of Incorporation of the
Company and Article 5 of the Bylaws of the Company provide that,
to the fullest extent permitted by law, directors of the Company
will not be liable for monetary damages to the Company or its
stockholders for breaches of their fiduciary duties.
Item 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
All required financial statements are set forth under
Item 15
below.<PAGE>
Item 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Smith & Company was the independent auditor for mall,
Inc. for the year
ended December 31, 1995 and all years prior thereto. As of the
date hereof, Crouch,
Bierwolf & Chisholm is the independent auditor of the Company.
Item 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) List of Financial Statements filed herewith:
Audited Financial Statements of mall, Inc. as of March 31, 1996,
and December 31, 1995,
1994 and 1993:
Balance Sheets
Statements of Operations
Statements of Stockholders Equity
Statements of Cash Flows
Unaudited Pro Forma Financial Statements of mall, Inc. and
subsidiaries as of December 31,
1995, 1994 and 1993:
Balance Sheets
Statement of Operations
Audited Financial Statements of Madison, York & Associates, Inc.
as of Decemberr 31, 1996:
Balance Sheets
Statements of Operations
Statements of Stockholders Equity
Statements of Cash Flows
Audited Financial Statements of Cabot, Richards & Reed, Inc. as
of October 31, 1995 and
December 31, 1994 and 1993:
Balance Sheets
Statements of Operations
Statements of Stockholders Equity
Statements of Cash Flows
Audited Financial Statements of R & R Advertising, Inc. as of
October 31, 1995 and
December 31, 1994 and 1993:
Balance Sheets
Statements of Operations
Statements of Stockholders Equity
Statements of Cash Flows
Audited Financial Statements of Natures Gift, Inc. (now mall,
Inc.) as of December 31, 1994,
1993 and 1992:
Balance Sheets
Statements of Operations
Statements of Stockholders Equity
Statements of Cash Flows
(b) INDEX TO EXHIBITS
3.1 Articles of Incorporation, as amended
3.2 By-Laws
10.1 Online Expo Sponsorship Agreement
10.2 AT & T Software License and Distribution
Agreement
21
Subsidiaries
27 Financial Data Schedule
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized.
iMALL, INC.
August
12,
1996
By: /s/ Craig R. Pickering
Craig R. Pickering
Chairman of Board and
President
By: /s/ Richard Rosenblatt
Richard Rosenblatt
Director and Senior Vice
President
By: /s/ Mark R. Comer
Mark R. Comer
Director and Senior Vice
President
mall\form10.cor
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion of all of the audited financial
statements which we
prepared of Madison, York & Associates, Inc., Cabot Richards &
Reed, Inc., R & R
Advertising, Inc. and iMall, Inc. (the Company ), in the
Company s registration on Form 10
to be filed with the Securities and Exchange Commission.
Salt Lake City, Utah
August 8, 1996
/S/
Crouch, Bierwolf & Chisholm
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion of the audited financial
statements which we prepared of
Natures Gift, Inc., which has subsequently changed its name to
iMall, Inc. (the Company ),
for the years ended December 31, 1992, 1993 and 1994 in the
Company s registration on
Form 10 to be filed with the Securities and Exchange Commission.
Salt Lake City, Utah
August 5, 1996
/S/
Smith & Company
<PAGE>
iMall, Inc.
(Formerly Natures Gift, Inc.)
Financial Statements
March 31, 1996, December 31, 1995 and 1994
C O N T E N T S
Accountants' Report . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets . . . . . . . . . . . . . . . .
4
Consolidated Statements of Operations . . . . . . . . . . . 6
Consolidated Statements of Stockholders' Equity. . . . . . . 7
Consolidated Statements of Cash Flows . . . . . . . . . . . 8
Notes to the Consolidated Financial Statements . . . . . . . 9
Supplemental Information . . . . . . . . . . . . . . . . . .13
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of iMall, Inc.:
We have audited the accompanying consolidated balance sheet of
iMall, Inc. as
of March
31, 1996 and the related consolidated statements of operations,
stockholders'
equity and
cash flows for three months then ended. These financial
statements are the
responsibility
of the Company's management. Our responsibility is to express an
opinion on
these
consolidated financial statements based on our audit. The
financial statements
of iMall, Inc.
as of December 31, 1995, 1994 and 1993 were audited by other
auditors whose
report dated
January 19, 1996, expressed an unqualified opinion on those
statements.
We conducted our audit in accordance with generally accepted
auditing
standards. Those
standards require that we plan and perform the audit to obtain
reasonable
assurance about
whether the financial statements are free of material
misstatement. An audit
includes
examining, on a test basis, evidence supporting the amounts and
disclosures in
the financial
statements. An audit also includes assessing the accounting
principles used
and significant
estimates made by management, as well as evaluating the overall
financial
statement
presentation. We believe that our audit provides a reasonable
basis for our
opinion.
In our opinion, the consolidated financial statements referred to
above
present fairly, in all
material respects, the financial position of iMall, Inc. as of
March 31, 1996
and the results
of its operations and cash flows for the three months then ended
in conformity
with
generally accepted accounting principles.
Salt Lake City, Utah
June 28, 1996
<PAGE>
iMall Inc.
Consolidated Balance Sheets
ASSETS
March 31, December 31,
December 31,
1996 1995
1994
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
<C>
CURRENT ASSETS
Cash $377,644 $ -
$ -
Accounts receivable
(net of allowance of
$33,835, $0, $0,
respectively) 662,915 -
-
Inventory (Note 1) 109,173 -
-
Prepaid Expenses 95,640 -
-
Total Current Assets 1,245,372 -
-
PROPERTY &
EQUIPMENT (Note 1)
Office equipment 198,413 -
-
Furniture & fixtures 59,279 -
-
Computer hardware 46,135 -
-
Computer software 57,823 -
-
Leased equipment 65,005 -
-
Leasehold improvements 116,226 -
-
542,881 -
-
Less:
Accumulated depreciation (111,609) -
-
Accumulated depreciation
leased equipment (6,303 ) -
-
Total Property & Equipment 424,969 -
-
OTHER ASSETS
Deposits 15,506 -
-
Organization costs (Note 1)1,049 -
-
Total Other Assets 16,555 -
- -
TOTAL ASSETS $1,686,896 $-
- -
</TABLE>
iMall, Inc.
Consolidated Balance Sheets continued
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
December 31,
CURRENT LIABILITIES 1996 1995
1994
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
<C>
Accounts payable $143,951 $2,107
$-
Accrued expenses 299,139 240
1,124
Tax liability-current
(Note 1) 275,756 -
- -
Tax liability-deferred
(Note 1) 1,367 -
Accrued payroll 39,852 -
- -
Current portion of
long-term liabilities
(Note 3) 12,732 -
- -
Total Current
Liabilities 772,797 2,347
1,124
LONG TERM LIABILITIES
Capital lease obligations
(Note 3) 49,635 -
- -
Less current portion (12,732) -
- -
Total long term
Liabilities 36,903 -
- -
TOTAL LIABILITIES 809,700 2,347
1,124
STOCKHOLDERS' EQUITY
Common stock par
value $.001 shares
authorized; 14,335,882
shares issued
(5,429,308 and
1,218,781 in 1995
and 1994 respectively 14,335 5,429 1,219
Paid-in-capital 303,617 57,219
56,429
Retained earning
(deficit) 559,244 (64,995)
(58,772)
Total Stockholders'
Equity 877,196 (2,347)
(1,124)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,686,896 $ - $ -
</TABLE>
iMall, Inc.
Consolidated Statements of Operations
March 31, For the years ended
December 31
1996 1995 1994
1993
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
<C>
REVENUES $ 4,179,150 $ - $ -
$ -
COST OF GOODS SOLD 2,357,216 - -
-
GROSS PROFIT 1,821,934 - -
-
GENERAL &
ADMINISTRATIVE
EXPENSES 1,092,370 6,083 -
-
Operating Income 729,564 (6,083) -
-
OTHER INCOME
AND (EXPENSES)
Miscellaneous
income 40,170 - -
-
Interest income 60 - -
-
Depreciation (21,969) - -
-
Bad debt (28,835) - -
-
Interest (2,324) - -
-
Amortization (65) - -
-
Total other income
and expenses (12,963) - -
-
Income before
income taxes 716,601 (6,083) -
-
Provision for
income taxes 277,123 140 144
152
Net income $439,478 $(6,223) $(144)
$(152)
Net income (loss)
per share $.03 $(0.00) $(0.00)
$(0.00)
Weighted average
of common shares
outstanding 13,643,176 1,569,658 1,218,781
1,218,781
</TABLE>
iMall, Inc.
Consolidated Statements of Stockholders' Equity
From December 31, 1992 through March 31, 1996
Additional
Retained
Common Stock Paid-in
Earnings
Shares Amount Capital
(Deficit)
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
<C>
Balances at
December 31, 1992 23,156,843 23,157 34,491
(58,476)
Reverse stock split (21,938,062)(21,938) 21,938
- -
Net loss for year - - -
(152)
Balances at
December 31, 1993 1,218,781 1,219 56,429
(58,628)
Net loss for year - - -
(144)
Balances at
December 31, 1994 1,218,781 1,219 56,429
(58,772)
Stock issued for loan
repayment at
$.001 per share 4,210,527 4,210 790
-
Net loss for year - - -
(6,223)
Balances at
December 31, 1995 5,429,308 5,429 57,219
(64,995)
Adjustment for
fractional share
on stock split
(Note 2) 349 - -
-
Shares issued for
acquisition of
Cabot, Richards &
Reed, Inc. (Note 2) 2,800,000 2,800 (730)
(122,086)
Shares issued for
acquisition of
R&R Advertising, Inc.
(Note 2) 1,200,000 1,200 24,217
262,383
Shares issued for
acquisition of
Madison, York &
Associates, Inc.
(Note 2) 4,206,225 4,206 260,606
(20,531)
Shares issued for
services (Note 2) 700,000 700 27,300
- -
Reorganization of
retained earnings
due to reverse
acquisition (Note 2) - - (64,995)
64,995
Net loss for three
months ended
March 31, 1996 - - -
439,478
14,335,882 $14,335 $303,617
$559,244
</TABLE>
iMall, Inc.
Consolidated Statements of Cash Flows
For the
three months
ended March 31, For the years ended
December 31
1996 1995 1994
1993
Cash Flows From Operating Activities
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
<C>
Net gain (loss) $439,478 $(6,223) $(144)
$(152)
Non-cash items:
Depreciation &
amortization 22,034 - -
- -
Bad debt 28,835 - -
- -
Stock issued for
services 28,000 - -
- -
Changes in current
assets and liabilities:
Accounts receivable (597,382) - -
- -
Prepaid Expenses 54,447 - -
- -
Inventory (29,883) - -
- -
Accounts payable (151,436) 2,107 -
- -
Accrued liabilities 295,653 (884) 144
152
Tax liability -
current 275,516 - -
- -
Tax liability -
deferred 1,367 - -
- -
Net Cash
Provided (Used)by
Operating Activities 366,659 (5,000 ) -
- -
Cash Flows from Investing Activities
Cash received on
acquisition of
subsidiaries 117,389
Purchase of property
and equipment (103,110) - - -
Net Cash Provided (Used)
by Investing
Activities 14,279 85,156 - -
Cash Flows from Financing Activities
Loans from officer - 5,000 - -
Cash paid on long
term debt (3,294 ) - - -
Net Cash Provided (Used)
by Financing
Activities (3,294 ) 5,000 - -
Increase in Cash 377,644 - - -
Cash and Cash Equivalents
at Beginning of Period - - - -
Cash and Cash Equivalents
at End of Period $377,644 $ - $ - $-
Supplemental Cash
Flow Information:
Cash paid for interest $2,324 $ - $- $
- -
Cash paid for income
taxes $ - $ - $- $
- -
Non-cash financing transaction:
Purchase of equipment with
lease obligations $10,126 $ - $ - $
- -
</TABLE>
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
The financial statements presented are those of iMall,
Inc. (formerly
Natures Gift, Inc.)
(the Company). The Company was incorporated under the laws
of the State
of Utah on
February
9, 1984 as Brickland Corporation. On May 31, 1991 the
Company changed its
name to
Nature's
Gift, Inc., but remained inactive. On January 8, 1996 the
Company entered
an agreement
to acquire
several corporations through a reverse acquisition. The
companies
acquired were Cabot,
Richards
& Reed, Inc. (a Utah Corporation), R&R Advertising, Inc. (a
California
Corporation) and
Madison
York Associates, Inc. (a Utah Corporation). The Company
issued 8,206,225
shares for all
the
outstanding stock of the subsidiaries and changed it's name
to iMall, Inc.
The Companies
acquired
are in the seminar, advertising and internet business. Their
main focus
is on building the
"iMall"
which is an electric shopping mall on the internet. During
the first
quarter, the Company
changed
the name of its subsidiary Madison York & Associates to iMall
Consulting,
Inc and
organized a
corporation in Nevada on January 17, 1996 named iMall
Services, Inc. to
provide
customer services
for iMall Consulting.
The Company's headquarters are in Provo, Utah with
offices in Studio
City, California
and Woodland Hills, California.
b. Recognition of Revenue
The Company recognizes income and expense on the accrual
basis of
accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is
based on the
weighted
average
number of shares outstanding at the date of the financial
statements.
d. Provision for Income Taxes
The Company files a consolidated income tax return for
iMall, Inc.
and its
subsidiaries.
The provision for income taxes includes a deferred and
current portion.
Deferred income taxes arise from timing differences
resulting from
income and
expense
items reported for financial accounting and tax purposes in
different
periods. Deferred
taxes are
classified as current or noncurrent, depending on the
classification of
the assets and
liabilities to
which they relate. Deferred taxes arising from timing
differences that
are not related to an
asset or
liability are classified as current or noncurrent, depending
on the
periods in which the
timing
differences are expected to reverse.
The principal source of timing differences are due to
different
depreciation methods
used
for financial accounting and tax reporting.
NOTE 1- Summary of Significant Accounting Policies (Continued)
The deferred tax liability and the provision for income taxes
is calculated as follows at March 31, 1996 and December 31, 1995
and 1994:
1996 1995 1994
Current provision for income taxes:
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Federal $226,726 $ - $ -
State 49,030 - -
Deferred 1,367 - -
Total provision for
income taxes $277,123 $ - $ -
Deferred tax liability arising from:
Excess of tax over
financial accounting
depreciation $1,367 $ - $ -
</TABLE>
e. Cash and Cash Equivalents
The Company considers all highly liquid investments with
maturities
of three months
or
less to be cash equivalents.
f. Property and Equipment
Expenditures for property and equipment and for renewals
and
betterments, which
extend
the originally estimated economic life of assets or convert
the assets to
a new use, are
capitalized at
cost. Expenditures for maintenance, repairs and other
renewals of items
are charged to
expense.
When items are disposed of, the cost and accumulated
depreciation are
eliminated from
the
accounts, and any gain or loss is included in the results of
operations.
The provision for depreciation is calculated using the
straight-line
method over a five
to
seven year life. The leasehold improvements are depreciated
over thirty
years.
g. Inventory
Inventory consists of pre-produced commercials, seminar
literature
and computer
equipment. Pre-produced commercials are regularly sold to
the Company's
clients with
minor
editing. Seminar literature is the materials used in
conjunction with
seminar presentation
and home-
study courses. Computer equipment is available to sell to
customers or to
employees.
Inventory is
stated at the lower of cost or market.
h. Organization Costs
Costs incurred to organized the Company have been
capitalized and
will be amortized
over a 60 month period.
NOTE 1- Summary of Significant Accounting Policies (Continued)
i. Consolidation policy
These consolidated financial statements include the
books of iMall,
Inc., Cabot,
Richards
& Reed, Inc., R&R Advertising, Inc. iMall consulting, Inc.
and iMall
services, Inc. All
intercompany
accounts and transactions have been eliminated in the
consolidation.
NOTE 2 - Stock Transactions
On January 8, 1996 the Company effected a reverse split
of 1 for 19
shares. All per
share
amounts for 1993 through 1996 have been retroactively
restated to reflect
the reverse split.
The
Company also changed its authorized common stock to
40,000,000 shares with
a par value
of $.001.
Per the stock exchange agreement and merger previously
mentioned, the
Company
issued
1,200,000 shares to R&R Advertising, 2,800,000 shares to
Cabot, Richards &
Reed and
4,206,225
shares to Madison, York Associates. The Company also issued
700,000
shares to an
investment
banking firm for services rendered in connection with the
acquisition.
Subsequent to the acquisition, the retained earnings of
iMall, Inc.
were cleared and the
history of the subsidiaries were recorded. The merger was
treated as a
reverse acquisition
and
reorganization.
NOTE 3 - Long-Term Liabilities
Capital lease obligations are detailed in the following
schedule as of March 31, 1996, December 31, 1995 and 1994:
March 31, December 31,
December 31,
1996 1995
1994
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
<C>
Capital lease
obligations to a
corporation for
computer equipment,
lease payments due
monthly of $632 through
June 1999, bears interest
at18% secured by computer
equipment $9,281 $ - $
- -
Capital lease
obligation to a
corporation for
copy machines,lease
payments due monthly
of $1,166 through
August 1999, bears
interest at 10%, secured
by copy machines. 40,354 - -
Total long term
liabilities $49,635 $ - $-
Less current portion of:
Capital lease
obligations (12,732) -
- -
Net Long Term
Liabilities $36,903 $ - $-
Future minimum lease payments are as follows:
1997 $17,785
1998 17,785
1999 17,785
2000 6,778
60,133
Less portion representing interest (10,498)
Total $49,635
</TABLE>
NOTE 4 - Commitments and Contingencies
During August 1995, the Company entered a lease
agreement with RDR
Properties to
lease office space. The terms of the lease are on a month to
month basis,
and rent
payments are
$8,720 per month.
The Company leases office space in its California
offices for $2,294
and $6,446 per
month.
The lease started May of 1995 and ends November 30, 1996.
The future
minimum lease
payment
for 1997 total $69,920.
The Company entered into a consulting agreement with an
individual.
The agreement
states $5,000 will be paid per month as long as the
consultant provides
twenty hours of
service per
month. No ending date of the agreement is stated.
NOTE 5 - Subsequent Events
The Company entered into a share exchange agreement with
Physicomp,
Inc.
(EmaNate),
a Company specializing in information systems, internet
consulting and
front-page creators
for web
sites on the internet. Physicomp exchanged all outstanding
shares of
common stock for
shares in
the Company. The merge will be effective May 1, 1996 for
accounting and
bookkeeping
purposes.
The Company entered into a share exchange agreement with
Inter-Active
Marketing
Group, Inc. A Company specializing in yellow-page
advertising on the
internet. The
merge will be
effective April 1, 1996 for accounting and bookkeeping
purposes.
NOTE 6 - Related Party Transactions
The Company paid various related parties for
advertising, rent and
computer graphic
design. Sierra Advertising received $923,399 for advertising
expenses and
is owned by
officers of the
Company.
The Company has a lease agreement for office space with
RDR
Properties (RDR)
which
is also owned by officers/directors of the Company. The
Company pays
$8,720 per month
to RDR.
EmaNate, Inc. received $167,200 for computer graphic
design work.
This company is
partially owned by a relative of an officer/director of
the Company.<PAGE>
SUPPLEMENTAL INFORMATION
FOR
iMALL, INC.<PAGE>
INDEPENDENT AUDITOR'S REPORT
ON SUPPLEMENTAL INFORMATION
To the Board of Directors and Shareholders
of iMall, Inc.
Our report on our audit of the basic financial statements of
iMall, Inc. for
March 31, 1996
appears on page
3. This audit was conducted for the purpose of forming an
opinion on the
basic financial
statements taken
as a whole. The pro forma balance sheets and statement of
operations for
iMall, Inc. are
presented for
purposes of additional analysis and are not a required part of
the basic
financial statements.
Such
information has not been subjected to the auditing procedures
applied in the
audit of the basic
financial
statements, and accordingly, we express no opinion on it.
Salt Lake City, Utah
June 28, 1996
IMALL, INC.
PROFORMA UNAUDITED CONSOLIDATED BALANCE
SHEET
DECEMBER 31, 1994
PROFORMA
R&R CABOT, RICHARDS
PROFORMA CONSOLIDATED
IMALL ADVERTISING & REED
ADJUSTMENTS TOTALS
12/31/94 12/31/94 12/31/94 DR
CR 12/31/94
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
<C> <C>
CASH-GENERAL 184,153 0
184,153
ACCOUNTS RECEIVABLE 97,285 700
97,985
ALLOW. FOR DOUBTFUL ACCOUNTS 0
0
A/R-INTERCOMPANY
0
INVENTORY 15,900
15,900
PREPAID EXPENSES2 28,716
28,716
NOTES RECEIVABLE 306,900
306,900
NOTES REC.-INTERCOMPANY
0
TOTAL CURRENT ASSETS 0 326,054 307,600
633,654
FURNITURE & EQUIPMENT 10,125 21,869
31,994
AD-FURNITURE & EQUIPMENT (1,153) (7,973)
(9,126)
LEASEHOLD IMPROVEMENTS 2,200
2,200
AD-LEASEHOLD IMPROVEMENTS (880)
(880)
LEASED EQUIPMENT 54,878
54,878
AD-LEASED EQUIPMENT (3,659)
(3,659)
OFFICE EQUIPMENT 31,660 83,711
115,371
AD-OFFICE EQUIPMENT (4,524) (29,051)
(33,575)
TOTAL FIXED ASSETS 0 36,108 121,095
157,203
ORGANIZATION COSTS 300
300
AA-ORGANIZATION COSTS (60)
(60)
DEPOSITS 13,212
13,212
TOTAL OTHER ASSETS 0 13,452 0
13,452
TOTAL ASSETS 0 375,614 428,695
804,309
ACCOUNTS PAYABLE 47,599 14,061
61,660
BANK OVERDRAFTS 321,206
321,206
A/P-INTERCOMPANY
0
L/P-RELATED PARTY
0
ACCRUED PAYROLL 10,209
10,209
ACCRUED PAYROLL TAX 6,101
6,101
INCOME TAXES PAYABLE 1,124
1,124
LEASE PAYABLE 52,008
52,008
DEFERRED INCOME 57,810
57,810
TOTAL LIABILITIES 1,124 121,719 387,275
510,118
COMMON STOCK, $.001 par value, 1,219 25,417 1,000
26,417 a
40,000,000 shares authorized, 1,218,781
shares issued and outstanding
1,219
PAID IN CAPITAL 56,429 1,070
58,628 b 26,417 a
25,288
RETAINED EARNINGS-PRIOR (58,628) 0 32,719
58,628 b 32,719
DIVIDENDS PAID (352,125) (273,162)
(625,287)
CURRENT EARNINGS (144) 580,603 279,793
860,252
TOTAL EQUITY (1,124) 253,895 41,420
294,191
TOTAL LIAB & EQUITY 0 375,614 428,695
804,309
REVENUES
SALES 4,578,890 6,068,878
10,647,768
REFUNDS 93,686 74,856
168,542
TOTAL REVENUES 0 4,485,204 5,994,022
10,479,226
COST OF SALES 3,103,168 3,495,408
6,598,576
GROSS PROFIT 0 1,382,036 2,498,614
3,880,650
GENERAL & ADMINISTRATIVE 796,590 2,178,794
2,975,384
OPERATING INCOME 0 585,446 319,820
905,266
OTHER EXPENSES:
AMORTIZATION 60
60
INTEREST 2,168
2,168
DEPRECIATION 4,783 36,116
40,899
LOSS ON DISPOSAL OF ASSETS 1,743
1,743
OTHER 144
144
TOTAL OTHER EXPENSES 144 4,843 40,027
45,014
OTHER INCOME:
INTEREST INCOME
0
MISCELLANEOUS
0
TOTAL OTHER INCOME 0 0 0
0
NET INCOME (144) 580,603 279,793
860,252
</TABLE>
<PAGE>
IMALL, INC.
PROFORMA UNAUDITED CONSOLIDATED BALANCE
SHEET
DECEMBER 31, 1993
PROFORMA
R&R CABOT, RICHARDS
PROFORMA
CONSOLIDATED
IMALL ADVERTISING & REED
ADJUSTMENTS
TOTALS
12/31/93 12/31/93 12/31/93 DR
CR
12/31/93
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
<C> <C>
REVENUES
SALES 1797196 3278152
5075348
REFUNDS 87046 42367
129413
TOTAL REVENUES 0 1710150 3235785
4945935
COST OF SALES 1412703 1708537
3121240
GROSS PROFIT 0 297447 1527248
1824695
GENERAL & ADMINISTRATIVE 209107 1483586
1692693
OPERATING INCOME 0 88340 43662
132002
OTHER EXPENSES:
AMORTIZATION
0
INTEREST 3147
3147
DEPRECIATION 894 7796
8690
LOSS ON DISPOSAL OF ASSETS
0
OTHER 152
152
TOTAL OTHER EXPENSES 152 894 10943
11989
OTHER INCOME:
INTEREST INCOME
0
MISCELLANEOUS
0
TOTAL OTHER INCOME 0 0 0
0
NET INCOME -152 87446 32719
120013
/TABLE
<PAGE>
IMALL, INC.
PROFORMA UNAUDITED CONSOLIDATED BALANCE
SHEET
DECEMBER 31, 1995
PROFORMA
R&R CABOT, RICHARDS
MADISON, YORK & PROFORMA
CONSOLIDATED
IMALL ADVERTISING & REED
ASSOCIATE ADJUSTMENTS
TOTALS
12/31/95 12/31/95 12/31/95
12/31/95 DR
CR 12/31/95
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
<C> <C>
REVENUES
SALES 5,597,898 6,168,494
1,034,952
12,801,344
REFUNDS 193,393 (435,494)
30,987
(211,114)
TOTAL REVENUES 0 5,404,505 6,603,988
1,003,965
13,012,458
COST OF SALES 3,754,110 3,776,763
437,035
7,967,908
GROSS PROFIT 0 1,650,395 2,827,225
5,044,550
GENERAL & ADMINISTRATIVE 6,083 1,138,926 2,009,309
588,454 28,000 e
3,770,772
OPERATING INCOME (6,083) 511,469 817,916
(21,524)
1,273,778
OTHER EXPENSES:
AMORTIZATION 70
66
136
INTEREST 4,786
4,786
DEPRECIATION 9,419 37,677
2,853
49,949
OTHER 140 953
1,093
TOTAL OTHER EXPENSES 140 9,489 43,416
2,919
55,964
OTHER INCOME:
INTEREST INCOME 87
87
MISCELLANEOUS 111,980
3,912
115,892
TOTAL OTHER INCOME 0 87 111,980
3,912
115,979
NET INCOME (6,223) 02,067 886,480
(20,531)
1,333,793
</TABLE>
iMall, Inc.
PROFORMA UNAUDITED CONSOLIDATED BALANCE SHEET
DECEMEBER 31, 1995
R&R CABOT, RICHARDS MADISON, YORK & PROFORMA
CONSOLIDATED
IMALL ADVERTISING &REED ASSOCIATES ADJUSTMENTS
TOTALS
12/31/95 12/31/95 12/31/95 12/31/95 DR
CR 12/31/95
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
<C> <C>
CASH GENERAL 115,863 (40,170) 41,696
117,389
ACCOUNTS
RECEIVABLE 99,368
99,368
ALLOW FOR (5,000)
(5,000)
DOUBTFUL
ACCOUNTS
A/R-INTERCOMPANY 22,375
22,375a 0
TOTAL
CURRENT ASSETS 0 359,664 10,270 307,643
441,162
FURNITURE & 15,735 25,434
41,169
EQUIPMENT
AD-FURNITURE &
EQUIPMENT (3,000)
(3,000)
LEASEHOLD
IMPROVMENTS 109,906
109,906
LEASED
EQUIPMENT 54,878
54,878
AD-LEASED
EQUIPMENT (14,635)
(14,635)
OFFICE EQUIPMENT 44,073 117,531 62,088
223,692
AD-OFFICE EQUIPMENT (12,097) (63,358) (2,853)
(78,308)
TOTAL FIXED ASSETS 0 44,711 229,756 59,235
333,702
ORGANIZATION COSTS 300 1,000
1,300
AA-ORGANIZATION COSTS (120) (66)
(186)
DEPOSITS 15,506
15,506
TOTAL OTHER
ASSESTS 0 15,686 0 934
16,620
TOTAL ASSETS 0 420,061 240,026 367,812
791,484
ACCOUNTS 2,106 78,066 149,925 65,290
295,387
PAYABLE
A/P-INTERCOMPANY 22,375 52,420 74,795a
0
L/P-RELATED PARTY 161,620 161,620a
0
ACCRUED PAYROLL 6,649
6,649
ACCRUED PAYROLL TAX 0 5,696 5,821
11,517
INCOME TAXES
PAYABLE 240
240
LEASE PAYABLE 42,802
42,802
DEFERRED INCOME 25,172
25,172
TOTAL
LIABILITIES 2,346 132,262 360,043 123,531
381,767
COMMON STOCK,
$.001
PAR VALUE, 5,430 25,417 1,000 264,812 291,229b
8,100b
40,000,000 SHARES
AUTHORIZED, 14,335,882
SHARES ISSUED &
OUTSTANDING
700e 14,230
PAID IN CAPITAL 57,219 1,070 58,772c
283,129b
27,300e 309,946
RETAINED EARNINGS-
PRIOR (58,772) 228,478 39,350
58,772c 267,828
DIVIDENDS PAID (468,163) (1,047,917)
1,516,080
CURRENT EARNINGS (6,223) 502,067 886,480 (20,531)
1,333,793
TOTAL EQUITY (2,346) 287,799 (120,017) 244,281
409,717
TOTAL LIAB &
EQUITY 0 420,061 240,026 367,812
791,484
</TABLE>
<PAGE>
iMALL, INC. (formerly Nature's Gift, Inc.)
NOTES TO PRO FORMA UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
December 31, 1995
NOTE 1 - Management Assumptions
The pro forma consolidated balance sheet assumes that
all of the
entities were
combined
as of December 31, 1995. The balance sheets of the
individual entities
have been
consolidated and
adjusted for the following: (a) elimination of receivables
and payables
between the entities,
(b)
acquisition and elimination of the stock of the subsidiaries,
(c) the
clearing of the retained
earnings
of the parent (iMall) due to the reorganization and reverse
acquisition,
(d) the issuance of
700,000
shares to an investment banking form for services performed.
The pro
forma statement of
operations assumes that the entities were together as of the
beginning of
1995. Prior to
the above
transaction, iMall had 5,429,657 shares issued and
outstanding.
NOTE 2 - Income Taxes
Madison, C, R & R and R & R were taxed as "S"
corporations at
December 31, 1995,
whereby the tax liabilities were the responsibilities of the
shareholders
for 1995. If a
consolidated
income tax return had been filed as a "C" corporation for
1995, total
federal and state
income taxes
would have been approximately $463,000.
Madison, York & Associates, Inc.
Financial Statements
December 31, 1995
<PAGE>
C O N T E N T S
Accountants' Report . . . . . . . . . . . . . . . . . . . . 3
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . .
4
Statement of Operations . . . . . . . . . . . . . . . . . . 5
Statement of Stockholders' Equity. . . . . . . . . . . . . . 6
Statement of Cash Flows . . . . . . . . . . . . . . . . . . 7
Notes to the Financial Statements . . . . . . . . . . . . . 9
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Madison, York & Associates, Inc.:
We have audited the accompanying balance sheet of Madison, York &
Associates,
Inc. as
of December 31, 1995, and the related statements of operations,
stockholders'
equity and
cash flows from inception of operations on September 1, 1995
through the four
months
ended December 31, 1995. These financial statements are the
responsibility of
the
Company's management. Our responsibility is to express an
opinion on these
financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing
standards. Those
standards require that we plan and perform the audit to obtain
reasonable
assurance about
whether the financial statements are free of material
misstatement. An audit
includes
examining, on a test basis, evidence supporting the amounts and
disclosures in
the financial
statements. An audit also includes assessing the accounting
principles used
and significant
estimates made by management, as well as evaluating the overall
financial
statement
presentation. We believe that our audit provides a reasonable
basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in
all material
respects, the financial position of Madison, York & Associates,
Inc. as of
December 31, 1995
and the results of its operations and cash flows from inception
of operations
on September
1, 1995 through December 31, 1995 in conformity with generally
accepted
accounting
principles.
Salt Lake City, Utah
February 23, 1996
<PAGE>
Madison, York & Associates, Inc.
Balance Sheet
December 31, 1995
Assets
<TABLE>
<CAPTION>
<S>
<C> <C>
Current Assets
Cash
$41,696
Accounts receivable - related party (Note 4)
22,375
Prepaid expenses
81,952
Notes receivable - related party (Note 4)
161,620
Total Current Assets
307,643
Property and Equipment (Net) (Note 2)
59,235
Other Assets
Organization costs (Note 1) 934
Total Assets $
367,812
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $
65,290
Accrued expenses 5,821
Notes payable - related parties (Note 4) 52,420
Total Current Liabilities
123,531
Total Liabilities
123,531
Stockholders' Equity
Common stock, no par value;
10,000 shares authorized;
203,750 shares issued and outstanding 264,812
Retained deficit
(20,531)
Total Stockholders' Equity 244,281
Total Liabilities and Stockholders' Equity $
367,812
/TABLE
<PAGE>
Madison, York & Associates, Inc.
Statement of Operations
From Inception of Operations on September 1, 1995 through
December 31, 1995
For the year
ended
December 31,
1995
<TABLE>
<CAPTION>
<S>
<C> <C>
REVENUES $1,003,965
COST OF SALES 437,035
GROSS PROFIT 566,930
GENERAL & ADMINISTRATIVE EXPENSES 588,454
Operating Income (Loss) (21,524)
OTHER INCOME AND (EXPENSES)
Depreciation (2,853)
Amortization (66)
Miscellaneous income 3,912
Total Other Income and (Expenses) 993
LOSS BEFORE INCOME TAXES (20,531)
PROVISION FOR INCOME TAXES -
NET LOSS $ (20,531)
NET LOSS PER SHARE $ (6.09)
WEIGHTED AVERAGE OUTSTANDING SHARES $ 3,375
/TABLE
<PAGE>
Madison, York & Associates, Inc.
Statement of Stockholders' Equity
December 31, 1995
Common Stock
Retained
Shares Amount
Earnings
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Balance at November 4, 1994 - $ - $ -
Stock issued for cash 3,000 2,000 -
Stock issued in acquisition of
EMS, Inc. (Note 3) 750 12,812 -
Stock issued in private placement 200,000 250,000 -
(Note 6)
Net loss from inception of operations
on September 1, 1995 through
December 31, 1995 - -
(20,531)
Balances - December 31, 1995 203,750 $264,812
$(20,531)
</TABLE>
<PAGE>
Madison, York & Associates, Inc.
Statement of Cashflows
From Inception of Operations on September 1, 1995 through
December 31, 1995
Cash Flows From Operating Activities:
<TABLE>
<CAPTION>
<S>
<C> <C>
Net loss $(20,530)
Less non-cash items:
Depreciation & amortization 2,919
Decrease/(Increase) in assets:
Accounts receivable-related party (22,375)
Prepaid expenses (81,952)
Increase/(decrease) in liabilities:
Accounts payable & accrued expenses 124,908
Net cash provided by operating activities 2,969
Cash Flows From Investing Activities:
Purchase of property & equipment (49,279)
Cash paid for other assets (1,000)
Cash paid for notes receivable (250,000)
Net cash used by investing activities (300,275)
Cash Flows From Financing Activities:
Contribution by shareholders 252,000
Cash paid on long-term debt (50,000)
Proceeds from debt financing 137,002
Net cash provided by financing activities 339,002
Increase in Cash 41,696
Cash and Cash Equivalents at Beginning of Period -
Cash and Cash Equivalents at End of Period $41,696
/TABLE
<PAGE>
Madison, York & Associates, Inc.
Statement of Cashflows
From Inception of Operations on September 1, 1995 through
December 31, 1995
(Continued)
Additional Cash-flow information:
Net Cash Paid For:
<TABLE>
<CAPTION>
<S>
<C> <C>
Income Taxes $ -
Interest $ -
Non-cash financing transaction:
Stock issued for equipment (Note 3) $ 12,812
/TABLE
<PAGE>
Note 1 - Summary of Significant Accounting Policies
Organization
Madison, York & Associates, Inc. (The Company) was
incorporated
under the laws
of the state of Utah on November 4, 1994. However, the
Company did
not begin
operations until September 1, 1995. The Company
currently operates
three
divisions; a division which provides seminars to
businesses and
individuals on how
to get set up on the Internet, a world wide web
computer network, to
advertise
their products and services, a division which assists
businesses and
individuals place
advertisements on the Internet, and a division that
operates a web
site called the
"I-MALL", where businesses can advertise and sell their
products or
services by
renting space in the electronic shopping mall. The
Company's
headquarters is
located in Provo, Utah with an office in Studio City,
California.
Cash and Cash Equivalents
Cash equivalents include short-term highly liquid
investments with
maturities of
three months or less at the time of acquisition.
Income Per Share of Common Stock
The income per share of common stock is based on the
weighted
average number
of shares issued and outstanding at the date of the
financial
statements.
Provision for Taxes
Madison, York & Associates, Inc. has elected to file
federal and
state income taxes
under corporation subchapter S. Therefore no state or
federal income
tax liability
exists for the Company.
Organization Costs
The Company has capitalized costs related to the
organization of the
Company.
These costs are being amortized over a period of 60
months on the
straight-line
basis.
<PAGE>
Note 2 - Property and Equipment
Property and equipment consist of the following at
December 31,
1995:
<TABLE>
<CAPTION>
<S>
<C> <C>
Office Equipment $62,088
Less Accumulated Depreciation (2,853)
Total Property & Equipment $59,235
</TABLE>
Depreciation expense is computed on the straight-line
method over
the estimated
useful lives of the assets. Depreciation expense for
the period
ended December
31,1995 is $2,853.
Note 3 - Acquisition of EMS, Inc./Stock Issuance
The Company entered into an agreement on September 27,
1995 with
EMS, Inc.
and its principals to acquire the assets of EMS, Inc.
which consists
of computer
equipment, software and a web site on the Internet. The
Company
issued 750
shares of common stock in exchange for 100% of the
stock of EMS,
Inc. The
acquisition was valued at $12,812, which was the
predecessor cost of
the equipment.
Note 4 - Related Parties
R&R Advertising, Inc. is an advertising company owned
by Richard
Rosenblatt, one
of the principal owners of the Company. Currently,
Richard
Rosenblatt serves on
the Board of Directors and as vice-president of the
Company. The
Company had
a payable of $52,420 as of December 31, 1995.
R&R Advertising paid various expenses and advertising
expenses of
$15,616 and
$12,488 during 1995. No balance is due for the paid
expenses.
R&R Advertising received sales for the Company on some
credit card
sales. The
Company has a receivable of $22,375 at the end of
December 31, 1995
for
uncollected credit card sales.
Note 4 - Related Parties (Continued)
Cabot, Richards, & Reed, Inc. is a seminar company
owned by Mark
Comer and
Craig Pickering, two of the six principal owners of the
Company's
common stock.
Currently, Craig Pickering serves as President and
member of the
Board of
Directors for the Company. Mark Comer serves as the
Treasurer/Secretary and
member of the Board of Directors for the Company. The
Company
received
$84,583 in cash for operating expenses. By the end of
December 31,
1995, the
Company paid the loan and advanced $250,000 to Cabot,
Richards &
Reed for
operating expenses. The balance at December 31, 1995
was $161,620.
Note 5 - Contingencies and Commitments
The Company leases property in its California office
for $2,294 per
month. The
lease started May of 1995 and ends November 30, 1996.
The minimal
payments for
1996 equal $25,229.
Note 6 - Stock Issuances
The Company issued 750 shares of common stock on
September 27, 1995
to EMS,
Inc.. The Company acquired all of the assets valued at
$12,812.
Note 3 contains
the details of the transactions.
The Company issued 200,000 shares of common stock on
December 31,
1995 in a
private placement to qualified investors. The proceeds
from the
sale was $250,000.
Note 7 - Subsequent Events
CABOT, RICHARDS & REED, INC.
Financial Statements
October 31, 1995 and December 31, 1994 and 1993
C O N T E N T S
Accountants' Report . . . . . . . . . . . . . . . . . . . . 3
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . .
4
Statements of Operations . . . . . . . . . . . . . . . . . . 6
Statements of Stockholders' Equity . . . . . . . . . . . . . 7
Statements of Cash Flows . . . . . . . . . . . . . . . . . . 8
Notes to the Financial Statements . . . . . . . . . . . . . 9
<PAGE>
INDEPENDENT AUDITOR'S
REPORT
To the Board of Directors and Stockholders
of Cabot, Richards & Reed, Inc.:
We have audited the accompanying balance sheets of Cabot,
Richards & Reed,
Inc. as of
October 31, 1995 and December 31, 1994, and the related
statements of
operations,
stockholders' equity and cash flows for the ten months ended
October 31, 1995
and years
ended December 31, 1994 and 1993. 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 audits.
We conducted our audits in accordance with generally accepted
auditing
standards.
Those standards require that we plan and perform the audits to
obtain
reasonable
assurance about whether the financial statements are free of
material
misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and
disclosures in the financial statements. An audit also includes
assessing the
accounting
principles used and significant estimates made by management, as
well as
evaluating the
overall financial statement presentation. We believe that our
audits provide
a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in
all material
respects, the financial position of Cabot, Richards & Reed, Inc.
as of October
31, 1995
and December 31, 1994, and the results of its operations and cash
flows for
the ten
months ended October 31, 1995, and the years ended December 31,
1994 and 1993
in
conformity with generally accepted accounting principles.
Salt Lake City, Utah
December 22, 1995
Cabot, Richards & Reed, Inc.
Balance Sheets
ASSETS
October 31
December 31
CURRENT ASSETS 1995
1994
<TABLE>
<CAPTION>
<S>
<C> <C>
<C>
Cash $ - $
-
Accounts receivable -
700
Notes receivable-related party (Note 3) 84,583
306,900
Total Current Assets 84,583
307,600
PROPERTY & EQUIPMENT (Note 1)
Furniture & fixtures 21,869
21,869
Leasehold improvements 109,906
2,200
Leased equipment 54,878
54,878
Office equipment 104,443
83,711
291,096
162,658
Less: accumulated depreciation 76,922
41,563
Total Property & Equipment 214,174
121,095
TOTAL ASSETS $298,757
$428,695
</TABLE>
<PAGE>
Cabot, Richards & Reed, Inc.
Balance Sheets continued
LIABILITIES AND STOCKHOLDERS' EQUITY
October 31
December 31
CURRENT LIABILITIES 1995
1994
<TABLE>
<CAPTION>
<S>
<C> <C>
<C>
Bank overdrafts $5,735
$321,206
Accounts payable 286,705
14,061
Accrued expenses 31,843
-
Total Current Liabilities 324,283
335,267
LONG TERM LIABILITIES (Note 4) 44,401
52,008
TOTAL LIABILITIES 368,684
387,275
STOCKHOLDERS' EQUITY
Common stock, authorized 10,000 shares
issued and outstanding 2,000 shares
respectively 2,070
2,070
Retained earnings (71,997)
39,350
Total Stockholders' Equity (69,927)
41,420
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $298,757
$428,695
</TABLE>
Cabot, Richards &
Reed, Inc.
Statements of Operations
For the
ten months
ended For the
Years Ended
October 31 December
31
1995 1994
1993
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
<C>
REVENUES $6,099,467 $5,994,022
$3,235,785
COST OF SALES 3,483,715 3,495,408
1,708,537
GROSS PROFIT 2,615,752 2,498,614
1,527,248
GENERAL & ADMINISTRATIVE
EXPENSES 1,740,577 2,178,795
1,483,586
Operating Income 875,175 319,819
43,662
OTHER INCOME AND (EXPENSES)
Miscellaneous workshop income 104,051 -
-
Interest expense (4,053) (2,168)
(3,147)
Loss on disposal of assets (953) (1,743)
-
Depreciation (37,650) (36,116)
(7,796)
Total Other Income and
(Expenses) 61,395 (40,027)
(10,943)
INCOME BEFORE INCOME TAXES 936,570 279,792
32,719
PROVISION FOR INCOME TAXES - -
-
NET INCOME $936,570 $279,792
$32,719
NET INCOME PER SHARE $468.25 $139.89
$16.36
WEIGHTED AVERAGE OUTSTANDING
SHARES 2,000 2,000
2,000
</TABLE>
<PAGE>
Cabot, Richards & Reed, Inc.
Statements of Stockholders' Equity
From January 1, 1993 through October 31, 1995
Retained
Common Stock
Earnings
Shares Amount
(Deficit)
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
<C>
Balance on January 1, 1993 - $ - $
- -
Issuance of stock for cash 2,000 2,070
32,719
Net income for the year ended
December 31, 1993 - - -
Balance on December 31, 1993 2,000 2,070
32,719
Dividends paid during 1994
(273,162)
Net income (loss) for the year
ended December 31, 1994 - -
279,793
Balance on December 31, 1994 2,000 2,070
39,350
Dividends paid during 1995
(1,047,917)
Net income (loss) for the ten months
ended October 31, 1995 - -
936,570
Balance on October 31, 1995 2,000 $2,070
$(71,997)
/TABLE
<PAGE>
Cabot, Richards & Reed, Inc.
Statements of Cash Flows
For the
ten months
ended For
the years ended
October 31,
December31,
1995 1994
1993
Cash Flows From Operating Activities
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
<C>
Net gain (loss) $936,570
$279,792 $32,719
Less non-cash items:
Depreciation & amortization 37,650 36,116
7,796
Changes in current assets and liabilities:
Accounts receivable 700 (700)
-
Accounts payable (109,149) 224,565
108,354
Accrued liabilities 31,843 -
-
Net Cash Provided (Used) by Operating Activities
897,614 539,773
148,869
Cash Flows from Investing Activities
Purchase of property and equipment (64,407) (34,511)
(73,269)
Proceeds from notes receivable 306,900 -
-
Cash paid for notes receivable (84,583) (229,230)
(77,670)
Net Cash Provided (Used) by
Investing Activities 157,910
(263,741) (150,939)
Cash Flows from Financing Activities
Dividends paid (1,047,917) (273,162)
-
Cash paid on long term debt (7,607) (2,870)
-
Issuance of common stock - -
2,070
Net Cash Provided (Used) by
Financing Activities (1,055,524) (276,032)
2,070
Increase in Cash - -
-
Cash and Cash Equivalents at
Beginning of Period - -
-
Cash and Cash Equivalents at
End of Period $ - $ -
$ -
Supplemental Cash Flow Information:
Cash paid for interest $4,053 $2,168
$3,147
Cash paid for income taxes $ - $ -
$ -
Non-cash financing transaction:
Purchase of equipment with lease
obligations $ - $54,878
$7,830
</TABLE>
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
The financial statements presented are those of Cabot,
Richards &
Reed,
Inc. (The Company). The Company was incorporated under the
laws of the
State
of Utah on December 21, 1992. The Company provides workshops
for
businesses
and individuals on 900 telephone services. The Company's
headquarters are
located in Provo, Utah.
b. Recognition of Revenue
The Company recognizes income and expense on the accrual
basis of
accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is
based on the
weighted average number of shares outstanding at the date of
the financial
statements.
d. Provision for Income Taxes
The Company has elected to be taxed under the provisions
of
Subchapter
S of the Internal Revenue Code. Under those provisions, the
Company does
not
pay corporate income taxes on its taxable income. Instead,
the
stockholders are
liable for individual income taxes on their respective shares
of the
Company's net
operating income in their individual income tax returns.
Therefore, no
income tax
expense appears on these financial statements.
e. Cash and Cash Equivalents
The company considers all highly liquid investments with
maturities of three
months or less to be cash equivalents.
f. Property and Equipment
Expenditures for property and equipment and for renewals
and
NOTE 1 - Summary of Significant Accounting Policies (Continued)
betterments, which extend the originally estimated economic
life of assets
or
convert the assets to a new use, are capitalized at cost.
Expenditures for
maintenance, repairs and other renewals of items are charged
to expense.
When
items are disposed of, the cost and accumulated depreciation
are
eliminated from
the accounts, and any gain or loss is included in the results
of
operations.
The provision for depreciation is calculated using the
straight-line
method
over a five to seven year life.
NOTE 2 - Related Party Transactions
During 1993 and 1994, the Company paid various companies
for
telemarketing, consulting, rent, and advertising services
performed. These
companies were owned by the owners of the Company. Sierra
Advertising
received $239,649 in 1993 and $877,138 in 1994. Ambridge
Holding Company
received $131,500 in 1993 and $761,619 in 1994. Answer Now,
Inc. received
$114,653 in 1993 and $599,957 in 1994. Success Systems, Inc.
received
$37,869 in
1993. SCM, Inc. received $177,735 in 1994, and Ambridge
Report received
$50,010 in 1994.
During 1995, the Company entered a lease agreement for
office space
with
RDR Properties, L.L.C. (RDR). RDR is also owned by the owners
of the
Company. The Company will pay $8,720 per month to RDR
beginning in
November 1995.
During 1995, the Company advanced $84,583 in loans to
Madison York
Associates which is a company with common ownership. The loan
is
non-interest
bearing and is due on demand.
<PAGE>
NOTE 3 - Notes Receivable - Related Party
Notes receivable at October 31 1995 and December 31,
1994 consist of the following:
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
1995 1994
Note receivable from various
employees, non-interest
bearing, payable on demand,
unsecured. $ -
$6,900
Note receivable from
Ambridge Holding,
Short-term, non-interest
bearing, payable in 30
days, unsecured. -
300,000
Note receivable from Madison,
York & Associates, non-interest
bearing, payable
upon demand, unsecured. 84,583 -
84,583
306,900
Less current portion (84,583)
(306,900)
Notes receivable - long term $ - $
- -
</TABLE>
NOTE 4 - Capital Lease Obligations
Capital lease obligations are detailed in the following
schedule as of October 31, 1995 and December 31, 1994:
October 31,
December 31,
1995
1994
<TABLE>
<CAPTION>
<S>
<C> <C>
<C>
Capital lease obligation to a
corporation for copy machines,
lease payments due monthly of
$1,166 through August 1999, bears
interest at 10%, secured by copy
machines. $44,401
$52,008
Total Lease Obligations $44,401
$52,008
/TABLE
<PAGE>
NOTE 4 - Capital Lease Obligations (Continued)
Future minimum lease payments are as follows:
<TABLE>
<CAPTION>
<S>
<C> <C>
1996 $ 13,992
1997 13,992
1998 13,992
1999 11,660
53,636
Less portion representing
interest (9,235)
Total $44,401
</TABLE>
NOTE 5 - Commitments and Contingencies
During October 1995, the Company entered a lease
agreement with RDR
Properties to lease office space. The terms of the lease are
on a month to
month
basis, and rent payments are $8,720 per month.
R&R ADVERTISING, INC.
Financial Statements
October 31, 1995 and December 31, 1994 and 1993
C O N T E N T S
Accountants' Report . . . . . . . . . . . . . . . . . . . . 3
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . .
4
Statements of Operations . . . . . . . . . . . . . . . . . . 6
Statements of Stockholders' Equity . . . . . . . . . . . . . 7
Statements of Cash Flows . . . . . . . . . . . . . . . . . . 8
Notes to the Financial Statements . . . . . . . . . . . . . 9
<PAGE>
INDEPENDENT AUDITOR'S
REPORT
To the Board of Directors and Stockholders
of R&R Advertising, Inc.:
We have audited the accompanying balance sheets of R&R
Advertising, Inc. as of
October 31, 1995 and December 31, 1994, and the related
statements of
operations,
stockholders' equity and cash flows for the ten months ended
October 31, 1995
and the
years ended December 31, 1994 and 1993. 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 audits.
We conducted our audits in accordance with generally accepted
auditing
standards.
Those standards require that we plan and perform the audits to
obtain
reasonable
assurance about whether the financial statements are free of
material
misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and
disclosures in the financial statements. An audit also includes
assessing the
accounting
principles used and significant estimates made by management, as
well as
evaluating the
overall financial statement presentation. We believe that our
audits provide
a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in
all material
respects, the financial position of R&R Advertising, Inc. as of
October 31,
1995 and
December 31, 1994, and the results of its operations and cash
flows for the
ten months
ended October 31, 1995, and the years ended December 31, 1994 and
1993 in
conformity
with generally accepted accounting principles.
Salt Lake City, Utah
December 22, 1995
R&R
Advertising, Inc.
Balance Sheets
ASSETS
October 31
December 31
CURRENT ASSETS 1995
1994
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
Cash $104,166
$184,153
Accounts receivable 159,771 97,285
Prepaid expenses 20,712 28,716
Inventory (Note 1) 79,290 15,900
Notes receivable -
related party (Note 2) 52,420 -
Total Current Assets 416,359
326,054
PROPERTY & EQUIPMENT (Note 1)
Furniture & fixtures 15,735 10,125
Office equipment 44,073 31,660
59,808 41,785
Less: accumulated depreciation 13,527 5,677
Total Property & Equipment 46,281 36,108
OTHER ASSETS
Deposits 15,506 13,212
Organization costs (net) (Note 1) 190 240
Total Other Assets 15,696 13,452
TOTAL ASSETS $478,336
$375,614
</TABLE>
<PAGE>
R&R Advertising, Inc.
Balance Sheets continued
LIABILITIES AND STOCKHOLDERS' EQUITY
October 31
December 31
CURRENT LIABILITIES 1995
1994
<TABLE>
<CAPTION>
<S>
<C> <C>
<C>
Accounts payable $30,623
$47,599
Accounts payable - related party (Note 2) 20,80
- -
Accrued expenses 13,283
16,310
Deferred income (Note 1) 45,674
57,810
Total Current Liabilities 110,386
121,719
LONG TERM LIABILITIES -
- -
TOTAL LIABILITIES 110,386
121,719
STOCKHOLDERS' EQUITY
Common stock, authorized 1,000 shares;
issued and outstanding 200 shares
respectively 25,417
25,417
Retained earnings 342,533
228,478
Total Stockholders' Equity 367,950
253,895
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $478,336
$375,614
</TABLE>
<PAGE>
R&R Advertising, Inc.
Statements of Operations
For the
ten months
ended For the Years
Ended
October 31 December
31
1995 1994
1993
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
<C>
REVENUES $5,063,358 $4,485,204
$1,710,150
COST OF SALES 3,528,275 3,103,168
1,412,703
GROSS PROFIT 1,535,083 1,382,036
297,447
GENERAL & ADMINISTRATIVE EXPENSES 1,025,015 796,650
209,107
Operating Income 510,068 585,386
88,340
OTHER INCOME AND (EXPENSES)
Interest expense - -
-
Depreciation (7,850) (4,783)
(894)
Total Other Income and
(Expenses) (7,850) (4,783)
(894)
INCOME (LOSS) BEFORE INCOME TAXES 502,218 580,603
87,446
PROVISION FOR INCOME TAXES - -
-
NET INCOME $502,218 $580,603
$87,446
NET INCOME PER SHARE $2,551.09 $2,903.02
$437.23
AVERAGE OUTSTANDING SHARES $200 $200
$200
/TABLE
<PAGE>
R&R Advertising, Inc.
Statements of Stockholders' Equity
From January 1, 1993 through October 31, 1995
Retained
Common Stock
Earnings
Shares Amount
(Deficit)
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Balance on January 1, 1993 - $4,000
$83,090
Unrealized holding gain
(loss) on securites
available for sale - - -
Distributions to proprietor
(149,118)
Net income (loss) for
the year ended
December 31, 1993 - -
87,446
Balance on March 31, 1993 - 4,000
21,418
Issuance of common stock for
cash and assets of sole
proprietorship 200 21,417
(21,418)
Dividends paid - -
(352,125)
Net income for the year
ended December 31, 1994 - -
580,603
Balance on December
31, 1994 200 25,417
228,478
Dividends paid - -
(388,163)
Net income (loss) for the ten
months ended
October 31, 1995 - -
502,218
Balance on
October 31, 1995 200 $25,417
$342,533
/TABLE
<PAGE>
R&R Advertising, Inc.
Statements of Cash Flows
For the ten
months ended For the
years ended
October 31,
December 31,
1995 1994
1993
Cash Flows from Operating Activities
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
<C>
Net gain (loss) $502,218 $580,603
$87,446
Less non-cash items:
Depreciation &
amortization 7,850 4,783
894
Changes in current assets and
liabilities:
Accounts and accrued interest
receivable (62,486) (97,285)
-
Prepaid expenses 8,004 (28,716)
-
Accounts payable & accrued
expenses (11,284) 121,780
-
Inventory (63,390) (3,900)
(12,000)
Net Cash Provided (Used)
by Operating Activities 380,912 577,265
76,340
Cash Flows from Investing Activities
Cash paid for notes
receivable (52,420) -
-
Purchase of property and
equipment (18,022) (31,992)
(8,898)
Deposits (2,294) (9,387)
(3,825)
Organization costs - -
(300)
Net Cash Provided (Used)
by Investing Activities (72,736) (41,379)
(13,023)
Cash Flows from Financing Activities
Dividends paid (388,163) (352,125)
(149,118)
Net Cash Provided (Used)
by Financing Activities (388,163) (352,125)
(149,118)
Increase (Decrease) in Cash (79,987) 183,761
(85,801)
Cash and Cash Equivalents at
Beginning of Period 184,153 392
86,193
Cash and Cash Equivalents at
End of Period $104,166 $184,153
$392
Supplemental Cash Flow Information:
Cash paid for interest $ - $ - $
-
Cash paid for income taxes $ - $ - $
-
</TABLE> <PAGE>
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
The financial statements presented are those of R&R
Advertising, Inc.
(The
Company). The Company was incorporated under the laws of the
State of
California on January 5, 1994. The Company is engaged in
advertising
activities,
providing advertising in newspaper, TV, radio and magazines
around the
country.
b. Recognition of Revenue
The Company recognizes income and expense on the accrual
basis of
accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is
based on the
weighted average number of shares outstanding at the date of
the financial
statements.
d. Provision for Income Taxes
The Company has elected to be taxed under the provisions
of
Subchapter
S of the Internal Revenue Code. Under those provisions, the
Company does
not
pay corporate income taxes on its taxable income. Instead,
the
stockholders are
liable for individual income taxes on their respective shares
of the
Company's net
operating income in their individual income tax returns.
Therefore, no
income tax
expense appears on these financial statements.
e. Cash and Cash Equivalents
The company considers all highly liquid investments with
maturities of three
months or less to be cash equivalents.
f. Property and Equipment
Expenditures for property and equipment and for renewals
and
betterments, which extend the originally estimated economic
life of assets
or
convert the assets to a new use, are capitalized at cost.
Expenditures
for
maintenance, repairs and other renewals of items are charged
to expense.
When
items are disposed of, the cost and<PAGE>
NOTE 1 - Summary of Significant Accounting Policies (Continued)
accumulated depreciation are eliminated from the accounts,
and any gain or
loss
is included in the results of operations.
The provision for depreciation is calculated using the
straight-line
method
over a five to seven year life.
g. Inventories
Inventory consists of pre-produced commercials which are
regularly
resold
to the Company's clients with minor editing. Inventory is
stated at the
lower of
cost or market.
h. Deferred Revenues/Revenue Recognition
Various customers place deposits with the Company before
their
advertising
has run. The Company records the deposits as deferred revenue
until the
advertisements have been booked and paid, at such time the
Company records
the
revenue.
i. Organization Costs
Costs incurred to organize the Company have been
capitalized and will
be
amortized over a 60 month period.
NOTE 2 - Related Party Transactions
The Company paid various operating expenses and placed
advertising
for
Madison, York and Associates, Inc., a company under common
ownership. The
expenses paid total $15,616 and advertising sales total
$12,488. No
receivable
balance exists at October 31, 1995.
During 1995, the Company advanced $52,420 to Madison,
York and
Associates, Inc. for the purchase of equipment and operating
capital. The
note is
non-interest bearing, unsecured, and is due upon demand.
NOTE 2 - Related Party Transactions (Continued)
During 1995, Liaison Customer Services, a company under
common
control,
provided services to the Company valued at $20,806. A related
party
payable in
this amount has been recorded on the books of the Company
NOTE 3 - Commitments and Contingencies
During 1994 the Company entered into a lease agreement
for office
space.
The Company pays monthly lease payments of $6,446 through
November 30,
1996. Future minimum lease payments are as follows at
October 31, 1995:
1995 October - December $ 12,892
1996 Calendar Year 70,906
Total $ 83,798
NOTE 4 - Stockholder Equity
For the years prior to 1994, the Company was operating
as a sole
proprietorship. At January 5, 1994, the Company incorporated
and the net
equity
of the Company at that time was recorded as the consideration
received for
the
common stock issued. Retained earnings were reclassed at that
time to
common
stock having a zero balance for the newly organized
corporation.
NATURES GIFT, INC.
FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
NATURES GIFT, INC.
FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
<PAGE>
CONTENTS
PAGE
INDEPENDENT AUDITOR S REPORT . . . . . . . . . . . . . . . . . .
. . F-2
BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . . . . . .
. . F-3
STATEMENTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . .
. . F-4
STATEMENTS OF SHAREHOLDERS DEFICIT. . . . . . . . . . . . . . .
. . F-5
STATEMENTS OF CASH FLOWS . . . . . . . . . . . . . . . . . . . .
. . . F-6
NOTES TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . .
. . . F-7<PAGE>
SMITH & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
Members of:
American Institute of 10 West 100 South,
Suite #700
Certified Public Accountants Salt Lake City,
Utah 84101
Utah Association of Telephone:
(801) 575-8297
Certified Public Accountants Telefax:
(801) 575-8306
INDEPENDENT AUDITOR S REPORT
The Board of Directors and Shareholders
Natures Gift, Inc.
Salt Lake City, Utah
We have audited the accompanying balance sheets of Natures Gift,
Inc. (a
development stage company) as of December 31, 1994, 1993 and 1992
and the
related statements of operations, shareholders deficit and cash
flows for the
years ended December 31, 1994, 1993 and 1992 and for the period
of February 9,
1984 (date of inception) to December 31, 1994. 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
audits.
We conducted our audits in accordance with generally accepted
auditing
standards. Those standards require that we plan and perform the
audit to
obtain reasonable assurance about whether the financial
statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit
also includes assessing the accounting principles used and
significant
estimates made by management, as well as evaluating the overall
financial
statement
presentation. We believe that our audits provide a reasonable
basis
for our opinion.
In our opinion, the financial statements referred to above
present fairly, in
all material respects, the financial position of Natures Gift,
Inc. (a
development stage company) as of December 31, 1994, 1993 and 1992
and the
results of its operations, shareholder s deficit, and cash flows
for the years
ended December 31, 1994, 1993 and 1992, and for the period of
February 9, 1984
(date of inception) to December 31, 1994, in conformity with
generally
accepted
accounting principles.
The accompanying financial statements have been prepared assuming
that the
Company will continue as a going concern. As shown in the
financial
statements, the Company has a working capital deficiency of
$1,124 at December
31, 1994. The Company has suffered losses from operations and
has a
substantial need for working capital. This raises substantial
doubt about its
ability to continue as a going concern. Management s plans in
regard to these
matters are described in Note 1 to the financial statements. The
accompanying
financial
statements
do
not include any adjustments that may result from the
outcome of this uncertainty.
/S/
CERTIFICATE PUBLIC ACCOUNTANTS
Salt Lake City, Utah
March 23, 1995, except Note 6 which is dated August 31, 1995
NATURES GIFT, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
December 31, 1994, 1993 and 1992
ASSETS
1994 1993 1992
CURRENT ASSETS
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Cash $-0- $ -0- $-0-
TOTAL CURRENT ASSETS $-0- $ -0- $-0-
$-0- $ -0- $-0-
LIABILITIES AND
SHAREHOLDERS DEFICIT
CURRENT LIABILITIES
Income taxes payable
(Note 3) $1,124 $980 $828
TOTAL CURRENT LIABILITIES 1,124 980 828
Contingent liabilities
(Note 4) $-0- $-0- $-0-
TOTAL LIABILITIES 1,124 980 828
SHAREHOLDERS DEFICIT
Common stock par value $.001:
105,000,000 share authorized;
23,156,843 shares issued
23,157 23,157 23,157
Additional paid-in capital 34,491 34,491 34,491
(Deficit) accumulated
during development stage (58,772) (58,628)
(58,476)
TOTAL SHAREHOLDERS
DEFICIT (1,124) (980) (828)
$ -0- $ -0- $ -0-
</TABLE>
See notes to financial statements.
NATURES GIFT,
INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Period
from
2/9/84
Year Year Year
(date of
ended ended ended
inception) to
12/31/94 12/31/93 12/31/92
12/31/94
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
<C>
Income $-0- $-0- $-0-
$-0-
Expenses:
Amortization -0- -0- -0-
50
General and
Administrative
expenses -0- -0- 200
57,198
-0- -0- 200
57,248
(LOSS) BEFORE TAXES -0- -0- (200)
(57,248)
PROVISION FOR
INCOME TAXES 144 152 164
1,524
NET (LOSS) $(144) $(152) $(364)
$(58,772)
(LOSS) PER COMMON SHARE
Net (loss) per weighted
average common share
outstanding $(.00) $(.00) $(.00)
Weighted average
number of common
shares outstanding
(Note 2) 23,156,843 23,156,843 23,156,843
</TABLE>
See notes to the financial statements.
NATURES GIFT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF SHAREHOLDERS DEFICIT
Period from February 9, 1984 (date of inception) to December
31, 1994
Deficit
Accumulated
Additional
During
Common Stock Paid-In
Development
Shares Amount Capital
Stage
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
<C>
Balances At February 9, 1994 -0- $-0- $-0-
$-0-
Issuance of stock to Officers
and Directors for cash 1,950,000 1,950 2,050
Issuance of stock to the
public for cash at
$.01 per share 2,100,000 2,100 18,900
Costs associated with stock
sale to public (3,559)
Net loss for the period
____________________________
(156)
Balances At December 31, 1984 4,050,000 4,050 17,391
(156)
Issuance of stock to the
public for cash at $.01
per share 1,900,000 1,900 17,100
Stock issued for
investment 12,000,000 12,000 63,000
Net loss for year
(40,055)
Balances At December 31, 1985 17,950,000 17,950 97,491
(40,211)
Stock canceled (12,000,000) (12,000) (63,000)
Net loss for year
(110)
Balances At December 31, 1986 5,950,000 5,950 34,491
(40,321)
Net loss for year
(110)
Balances At December 31, 1987 5,950,000 5,950 34,491
(40,431)
Net loss for year
(110)
Balances At December 31, 1988 5,950,000 5,950 34,491
(40,541)
Net loss for year
(200)
Balances At December 31, 1989 5,950,000 5,950 34,491
(40,741)
Net loss for year
(188)
Balances At December 31, 1990 5,950,000 5,950 34,491
(40,929)
Stock issued for services at
$.001 per share
17,006,843 17,007
Net loss for year
(17,183)
Balances At December 31, 1991 22,956,843 22,957 34,491
(58,112)
Stock issued for services at
$.001 per share
200,000 200
Net loss for year
(364)
Balances At December 31, 192 23,156,843 23,157 34,491
(58,476)
Net loss for year
(152)
Balances At December 31, 1993 23,156,843 23,157 34,491
(58,628)
Net loss for year
(144)
Balances At December 31, 1994 23,156,843 $23,157 $34,491
$(58,772)
</TABLE>
See notes to the financial statements.
NATURES GIFT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Period from February 9, 1984 (date of inception) to December
31, 1994
Period
from
2/9/84
Year Year Year
(date of
ended ended ended
inception) to
12/31/94 12/31/93 12/31/92
12/31/94
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
<C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net (loss) $(144) $(152) $(364)
$(58,772)
Adjustments to
reconcile net
(loss) to net cash
required by operating
activities:
Amortization -0- -0- -0-
50
Stock issued
for expenses -0- -0- 200
17,207
-0- -0- 200
17,257
Increase in:
Income taxes payable 144 152 164
1,124
Adjustments 144 152 164
1,124
NET CASH REQUIRED
BY OPERATING
ACTIVITIES -0- -0- -0-
(40,391)
CASH FLOWS FROM INVESTING
ACTIVITIES
Organization cost -0- -0- -0-
(50)
NET CASH USED BY
FINANCING
ACTIVITIES -0- -0- -0-
(50)
CASH FLOWS FROM
FINANCING
ACTIVITIES
Stock sold -0- -0- -0-
40,441
NET CASH PROVIDED
BY FINANCING
ACTIVITIES -0- -0- -0-
40,441
NET INCREASE
IN CASH -0- -0- -0-
- -0-
CASH AT BEGINNING
OF YEAR -0- -0- -0-
- -0-
CASH AT END
OF YEAR $-0- $ -0- $ -0-
$-0-
CASH PAID FOR
TAXES $-0- $-0- $-0-
$400
</TABLE>
See notes to the financial statements.
NATURES GIFT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
NOTE 1: ORGANIZATION AND HISTORY
Nature of Operations
Natures Gift, Inc. (the Company ) was incorporated in the State
of Utah on
February 9, 1984 as Brickland Corporation. On May 23, 1991 the
name was
changed to Natures Gift, Inc.
Development Stage Company
The financial statements present the Company as a development
stage company
because of its short operating history. The Company is looking
for business
opportunities.
Going Concern Items
The Company s financial statements have been presented on the
basis that it
is a going concern, which contemplates the realization of assets
and
satisfaction of liabilities in the normal course of business. At
December
31, 1994, the Company s current liabilities exceeded its current
assets by
$1,124.
The Company s continued existence is dependent on its ability to
generate
sufficient cash flow to cover operating expenses, to repay its
obligations
and to invest in future operations. Management has prepared the
following
plan to address the Company s ability to continue as a going
concern:
The Company intends to have a public stock offering. If
the
stock offering is not successful, the Company will look to
related parties to fund continuing operations.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income (Loss) Per Common Share
Income (Loss) per common share is computed using the weighted
average number
of common shares outstanding.
NOTE 3: INCOME TAXES
At December 31, 1994, the Company has a net operating loss
carryover of
approximately $58,000 which expires between December 31, 1999 and
December
31, 2009. However, due to the fact that the Company will most
likely enter
a new line of business and have a change in control, the loss
will most
likely never be utilized.
Income taxes payable are amounts due for franchise taxes to the
State of
Utah and include penalties and interest.
In February 1992, the Financial Accounting Standards Board
adopted Financial
Accounting Standards No. 109, Accounting for Income Taxes, which
required
deferred tax balances to be adjusted to reflect the tax rates in
effect when
those amounts are expected to become payable or refundable. Due
to the
Company s history of losses, there is not a sufficient basis for
making an
estimate of the Company s future income.
At December 31, 1994, the Company has a deferred tax asset in the
amount of
$-0-. There may be a deferred tax asset, but the amount, if any,
cannot be
determined at this time. In any event, the amount has been
reserved 100%
due to the Company s history of losses. There is not sufficient
basis for
recognition of any deferred tax asset at this time.
NATURES GIFT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1994, 1993 and 1992
NOTE 4: COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS
Management of the Company has conducted a diligent search of the
prior
periods of inactivity and concluded that there were no
commitments,
contingencies, legal matters pending, assets or liabilities at
December 31,
1994, 1993 or 1992 other than past-due franchise taxes. There
were no
contingencies or legal matters pending as of December 31, 1994,
1993 or
1992.
NOTE 5: PRIOR ACQUIRED BUSINESS
During 1991, the Company issued stock to acquire a private
company.
However, plans did not materialize and the acquisition was
abandoned. No
operations were conducted as the public company although stock
was issued
for services. The Company agreed to allow the various
individuals to keep
the stock even though the private company was not acquired. The
management
of the private company has represented that the private company
never
operated as a subsidiary of the Company. These financial
statements do not
include any activities of the private company.
NOTE 6: REISSUANCE OF FINANCIAL STATEMENTS
Audited financial statements were originally issued under the
assumption
that the Company had a January 31 fiscal year end. The Company s
year end
is December 31. When the error was discovered, the financial
statement
dates were changed.
Articles of Incorporation
of
Brickland Corp.
We the undersigned, natural persons over the age of eighteen (18)
years, acting as incorporators of a corporation under the Utah
Business Corporation Act adopt the following Articles of
Incorporation for such corporation.
ARTICLE I
CORPORATE NAME
The name of the Corporation is BRICKLAND CORP.
ARTICLE II
DURATION
The duration of the Corporation shall be perpetual.
ARTICLE III
GENERAL PURPOSES
This Corporation is organized for the following purposes
A. To purchase, sell and deal in products and technologies.
B. To acquire or merge into existing business.
C. To buy, sell, mortgage, exchange, lease hold for
investment or otherwise operate and personal property of all
kinds and any interest therein.
D. For any other purpose allowed by law.
E. The provisions of this Article shall be construed as
purposes and powers and each as an independent purpose and Power.
The enumeration of specific purposes and powers shall not be held
to limit or restrict in any manner the purposes and powers of the
Corporation and the purposes and powers therein specified shall
not be limited or restricted by reference to,or inference from,
the terms of any provision of this or any other article hereof.
ARTICLE IV
AUTHORIZED SHARES
The aggregate number of shares the Corporation shall
have authority to issue is FIFTY MILLION (50,000,000) shares with
a par value of ONE OF ONE CENT ($0.001) per share. All stock of
this Corporation shall be of the same class which shall be
designated common stock.
ARTICLE V
COMMENCEMENT OF BUSINESS
The Corporation will not commence business until at least
ONE THOUSAND DOLLARS ($1,000) in cash or property has been
received by it as consideration for the issuance of its shares.
ARTICLE VI
REGISTERED OFFICE AND AGENT
The post office address of the Corporation=s initial
registered office is 1944 Cecelia Circle, Slat Lake City, Utah
84121 and the name of its initial registered agent at such
address is Michael C. Brown.
ARTICLE VII
PRE-EMPTIVE RIGHTS
The shareholders shall nave no pre-emptive rights to acquire
any securities of this Corporation.
ARTICLE VIII
DIRECTORS
The number of directors constituting the initial Board of
Directors of the Corporation are three (3) and the names and
addresses of the persons who are to serve as directors until
their successors are elected and qualified are:
Michael C. Brown 1944 Cecelia Circle
Salt Lake City, Utah 84121
Ken Maylor 1423 South Pearce Drive
West Valley City, Utah 84109
Kenneth Kotoku 12122 South Millridge Road
Sandy, Utah 84070
ARTICLE IX
INCORPORATORS
The names and addresses of the Incorporators are:
Michael C. Brown 1944 Cecelia Circle
Salt Lake City, Utah 84121
Ken Maylor 1423 South Pearce Drive
West Valley City, Utah 84109
Kenneth Kotoku 12122 South Millridge Road
Sandy, Utah 84070
ARTICLE X
NON-ASSESSABILITY
Shares of the corporation shall not be subject to assessment
for payment of debts of the Corporation.
ARTICLE XI
EXEMPTION FROM CORPORATE POWER
The private property of the shareholders shall not be
subject to the payment of any corporate debts to any extent
whatsoever.
DATED this 9th day of February, 1984.
/S/ Michael C. Brown
Incorporator
/S/ Ken Maylor
Incorporator
/S/ Kenneth Kotoku
Incorporator
<Notary block for Michael C. Brown>
<Notary block for Ken Maylor>
<Notary block for Kenneth Kotoku>
ARTICLES OF AMENDMENT
TO ARTICLES OF INCORPORATION
OF
BRICKLAND CORP.
Pursuant to the provisions of the Utah Business Act, the
undersigned Corporation hereby adopts the following Articles of
Amendment to its Articles of Incorporation:
FIRST: The name of the Corporation is BRICKLAND
CORPORATION.
SECOND: The following amendment was adopted by the
Shareholders of the Corporation an July 15, 1986, in the manner
prescribed the Utah Business Act.
THIRD: The date of the adoption of the amendment by
the Shareholders is July 15, 1986.
FOURTH: The number of shares outstanding at the time
of such adoption was 20,334,000, and the number of shares
entitled to vote thereon was 10,749,783. No shares of any class
were entitled to vote thereon as a class.
FIFTH: The number of shares which voted for such
amendment was 10,695,783, the number of shares which voted
against such amendment was 48,000, and the number of shares
which abstained from voting was 6,000. No shares of any class
were entitled to vote thereon as a class.
RESOLVED: that the Articles of Incorporation
shall be amended by the adoption of a new Article IV to read as
follows:
"Article IV: The Corporation shall have the
authority to issue 105,000,000 (one hundred-five million) shares
of stock each having a par value of one-tenth of one cent
($0.001). All stock of the Corporation shall be of the
same class and shall have the same rights and preferences.
Fully paid stock of this Corporation shall not be liable for
further call or assessment. The authorized trading
shares shall be issued at the discretion of the Directors."
SIXTH: The manner, if not set forth in such
amendment, in which an exchange, reclassification, or
cancellation of issued shares provided for in the amendment
shall be affected is as follows: None.
Dated this 15th day of July, 1986.
BRICKLAND CORPORATION
By: /S/ Joseph L. Flood, President
By: /S/ Sharron K. Flood, Secretary
<Notary block for Joseph L. Flood>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
John Jones and Donney Jones certify that:
1. They are the president and the secretary, respectively,
of Brickland Corporation, a corporation organized under the laws
of Utah on February 9, 1984.
2. Article I of the articles of incorporation of this
corporation is amended to read as follows:
The name of this corporation is NATURES GIFT, INC.
3. On May 15, 1991 a Special Meeting of the Shareholders was
held to vote on the aforementioned amendment.
4. The foregoing amendment of articles of incorporation has
been duly approved by the required vote of shareholders in
accordance with Section 16-10-55 of the Corporations Code. The
total number of shares of outstanding shares of the corporation
is 18,416,713. The number of share voting in favor the
amendment equaled or exceeded the vote required. The percentage
vote required was more than 50%.
5. The number of votes either by proxy or in person were
12,560,886. Those people that did not return proxies,
automatically voted for the amendment as stated in the proxy
statement. The total number for the amendment was 18,415,783.
400 voted against the amendment and 530 abstained.
6. The procedure for shareholders to exchange their
certificates will be set forth in the transmittal letter, which
will be sent within 10 days from today's date.
We further declare under penalty of perjury of Utah the
matters set forth in this certificate are true and correct to the
best of our knowledge.
DATE: 5-23-91
/S/ John Jones, President
/S/ Donney Jones, Secretary
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
NATURES GIFT, INC.
We the undersigned as President and Secretary of Natures
Gift, Inc. do hereby certify:
That the Board of Directors of said Corporation at a
meeting duly convened and held by telephone on the 28th day of
December, 1995 adopted a Resolution to amend the original
Articles as follows:
A. Delete Article I in its entirety and substitute
in its place the following:
Article One. The name of the
Corporation is iMall, Inc.
B. Delete Article IV in its entirety and substitute
in its place the following:
Article Four. (Capital Stock). The Corporation
shall have authority to issue five million five hundred twenty
six thousand three hundred fifteen (5,526,315) shares of common
stock, par value $0.001 per share.
The holders of shares of capital stock of the
Corporation shall not be entitled to preemptive or preferential
rights to subscribe to any unissued stock or any other securities
which the Corporation may now or hereafter be authorized to
issue.
The Corporation's capital stock may be issued
and sold from time to time for such consideration as may be fixed
by the board of directors.
The stockholders shall not possess cumulative
voting rights at all shareholder meetings called for the purpose
of electing a board of directors.
Said Amendment has been approved by the affirmative
vote of shareholders owning 90,000,000 of the 103,156,843 issued
and outstanding shares of common stock at a special meeting of
shareholders held on January 8, 1996 and thereby approved by the
owners of a majority of the duly issued and outstanding shares of
common stock which represent a majority of the sole class of
common stock outstanding and entitled to vote thereon. The
change is effective immediately upon the filing of this
Certificate.
/S/ Rob Kropf, President
/S/ Tammy Kropf, Secretary
<Notary block for Rob kropf>
<Notary block for Tammy Kropf>
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
NATURES GIFT, INC.
We the undersigned as President and Secretary of Natures
Gift, Inc. do hereby certify:
That the Board of Directors of said Corporation at a
meeting duly convened and held by telephone on the 28th day of
December, 1995 adopted a Resolution to amend the original
Articles as follows:
A. Delete Article I in its entirety and
substitute in its place the following:
Article One. The name of the
Corporation is iMall, Inc.
B. Delete Article IV in its entirety and
substitute in its place the following:
Article Four. (Capital Stock). The Corporation
shall have authority to issue five million five hundred twenty
six thousand three hundred fifteen (5,526,315) shares of common
stock, par value $0.001 per share.
The holders of shares of capital stock of the
Corporation shall not be entitled to preemptive or preferential
rights to subscribe to any unissued stock or any other securities
which the Corporation may now or hereafter be authorized to
issue.
The Corporation's capital stock may be issued
and sold from time to time for such consideration as may be fixed
by the board of directors.
The stockholders shall not possess cumulative
voting rights at all shareholder meetings called for the purpose
of electing a board of directors.
Said Amendment has been approved by the
affirmative vote of shareholders owning 90,000,000 of the
103,156,843 issued and outstanding shares of common stock at a
special meeting of shareholders held on January 8, 1996 and
thereby approved by the owners of a majority of the duly issued
and outstanding shares of common stock which represent a majority
of the sole class of common stock outstanding and entitled to
vote thereon. The change is effective immediately upon the filing
of this Certificate.
/S/ Rob Kropf, President
/S/ Tammy Kropf, Secretary
<Notary block for Rob Kropf>
<Notary block for Tammy Kropf>
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
iMALL, INC.
We the undersigned as President and secretary of iMall,
Inc. do hereby certify:
That the Board of Directors of said Corporation
at a meeting duly convened and held on May 14, 1996 via telephone
adopted a Resolution to amend the original Articles as follows:
A. Delete Article IV in its entirety and
substitute in its place the following:
ARTICLE IV.
The total authorized capitalization of this Corporation shall be
and is the sum of 300,000,000 shares of Common Stock par
value of $.001 per share. Said stock to carry full voting power,
and the said shares shall be issued fully paid at such times as
the Board of Directors may designate in exchange for cash,
property or services, the stock of the other corporation or
other values, rights or things, and the judgment of the Board of
Directors as to the value thereof shall be conclusive.
Before this Amendment, 50,000,000 shares of Common
Stock with a par value of $.001 per share were authorized and of
those authorized 15,722,107 were issued and outstanding. After
this amendment 300,000,000 shares of Common Stock with a par
value of $.001 per share will be authorized.
The said Amendment and forward split have been
consented to and approved by a majority of the stockholders
holding at least a majority of the sole class of Common Stock
outstanding and entitled to vote thereon at a special meeting of
shareholders held on May 14, 1996. The change is effective
immediately.
/S/ Craig R. Pickering, President
/S/ John S. Clayton, Secretary
<Notary block for Craig R. Pickering and John S. Clayton>
BYLAWS
FOR
BRICKLAND CORP.
ARTICLE I
OFFICES BOOKS AND RECORDS
Section 1.1 Offices. The office of the
Corporation and its principal place of business is 1944 Cecelia
Circle, Salt Lake City, Utah 84121.
Section 1.2 Registered Agent. The initial
registered agent of the Corporation is Michael C. Brown.
Section 1.3 Books and Records. The
Corporation shall keep at its registered office the following
books and records and any shareholder of record, upon written
demand stating the purpose thereof, shall have the right to
examine, in person, or by agent or attorney, at any reasonable
time or times, for any proper purpose, the same and to make
extracts therefrom:
(a) Its books and records of account.
(b) Its minutes of meetings of the Board of
Directors and any committees thereof.
(c) Its minutes of meetings of the shareholders.
(d) Its record-of shareholders which shall give
their names and addresses and the number and class of the shares
held by each.
(e) Copies of its Articles of incorporation and
Bylaws as originally executed and adopted together with all
subsequent amendments thereto.
Section 1.4 Financial Statements. Upon the
written request of any shareholder of the Corporation, the
Corporation shall mail to such shareholder its most recent annual
or quarterly financial statements showing in reasonable detail
its assets and liabilities and the results of its operation
unless the Bylaws shareholder has already received the same.
Neither the Corporation nor any director, or officer, employee or
agent of the Corporation shall be liable to the shareholder or
anyone to whom the shareholder discloses the financial statement
or any information contained therein for any error or omission
therein whether caused without fault, by negligence or by gross
negligence, unless (1) the error or omission is material, (2)the
director, officer, employee or agent in question knew of the
error or omission and intended for the shareholder or other
person to rely thereon to his detriment,(3) the shareholder
or other persons did reasonably rely thereon, and in addition,
4) he is otherwise liable under applicable law.
ARTICLE II
BYLAWS
Section 2.1 Amendments. These Bylaws may be
altered, amended or repealed and new Bylaws adopted by the Board
of Directors. Any such action shall be subject to repeal or
change by action of the shareholders, but the alteration,
amendment, repeal, change or new Bylaw (and the repeal of the old
Bylaw) shall be valid and effective and no director, officer,
shareholder, employee or agent of the Corporation shall incur
any liability by reason of any action taken or omitted in
reliance of the same. The power of the shareholders to repeal or
change any alteration, amendment, repeal or new Bylaw shall not
extend to any original Bylaw of the Corporation so long as it is
not altered, amended or repealed, but only to action by the Board
thereafter. There shall be no time limit on its exercise.
Section 2.2 Bylaw Provisions Additional and
Supplemental to Provisions of Law. All restrictions,
limitations, requirements and other provisions of these Bylaws
shall be construed, insofar as possible, as supplemental and
additional to alter provisions of law applicable to the subject
matter thereof and shall be full complied with in addition to the
said provisions of law unless such compliance shall be illegal.
Section 2.3 Bylaw Provisions Contrary to or
Inconsistent with provisions of law. Any article, section,
subsection, subdivision, sentence, clause or phrase of these
Bylaws which, upon being construed in the manner provided in
Section 2.2 hereof, shall be contrary to or inconsistent with any
applicable provision of law, shall not apply so long as said
provisions of law shall remain in effect, but such result shall
not affect, validity or applicability of any other portions of
these Bylaws, it being hereby declared that these Bylaws would
have been adopted and each article, section, subsection,
subdivision, sentence, clause or phrase thereof, irrespective of
the fact that any or more articles, sections, subsections,
subdivisions, sentences, clauses or phrases is or are illegal.
ARTICLE III
MEETING OF SHAREHOLDERS
Section 3.1 Place of Meetings. All
meetings of the shareholders, annual or special, however called,
shall be held at the registered office of the Corporation unless
the Board of Directors designates another place. The Board of
Directors may designate any place for any meeting, either within
or without the State of Utah.
Section 3.2 Annual Meeting. An annual meeting
of the shareholders shall be held on the first Monday in the
month of the commencement of the fiscal year (unless that day is
a legal holiday, and then on the next succeeding day, that is not
a legal holiday) at 10:00 a.m., the local time of the place of
the meeting in effect on the day of the meeting.
Section 3.3 Special Meetings. Special meetings of
the shareholders may be called by the Chairman of the Board, the
President, the Board of Directors or the holders of not less
than one vote with of all the shares entitled to vote to the
meeting.
Section 3.4 Notice of Shareholders' Meetings.
Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not
less than ten (l0) nor more than fifty (50) days before the date
of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary or the officer or
persons calling such meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail
addressed to the shareholder at his address as it appears on the
stock transfer books of the Corporation with postage thereon
prepaid.
Section 3.5 Waiver of Notice. Any shareholder may
waive notice of any meeting of shareholders (however called or
noticed, whether or not called or noticed and whether before,
during after the meeting by signing a written waiver of notice or
a consent to the holding of such meeting, or in approval of the
minutes thereof. Attendance at a meeting, in person or by
proxy, shall constitute waiver of all defects of call or notice
regardless of whether waiver, consent or approval is signed or
any objections are made. All such waivers, consents, or approvals
shall be made a part of the minutes of the meeting.
Section 3.6 Fixing Record Date for Meeting. The
stock transfer books of the Corporation shall not be closed for
the purpose of determining shareholders entitled to notice of or
to vote at a meeting of the shareholders but, in lieu thereof,
the date on which notice is given in accordance with Section
3.4 above shall be the record date for those purposes. Such
date shall not be more than fifty (50) nor less than ten (10)
days before the date of the meeting. When a determination of
shareholders entitled to vote at any meeting of shareholders
has been made under this section, such determination shall apply
in any adjournment thereof.
Section 3.7 Voting List. The officer or
agent having charge of the stock transfer books for shares of
the Corporation shall make, at least ten (10) days before each
meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the
number of shares held by each, which list, for a period of ten
(10) days prior to the meeting, shall be kept on file a, the
registered office of the Corporation and shall be subject to
inspection by any shareholder at any time during usual business
hours. Such list shall also be produced and kept open at the
time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the
meeting. The original stock transfer books shall be prima facie
evidence as to who are the shareholders entitled to examine such
list or transfer books or to vote at any meeting of shareholders.
Failure to comply with the requirements of
this section shall not affect the validity of any action taken at
such meeting.
Section 3.8 Quorum of Shareholders, Vote.
A majority of the shares entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of
shareholders. If a quorum is present, the affirmative vote of
the majority of the shares represented at the meeting and
entitled to vote on the subject shall be the act of the
shareholders, unless the vote of a greater number or voting by
classes is required by the Utah Business Corporations act or the
Articles of Incorporation. Shares shall not be counted to make up
a quorum for a meeting if voting of them at the meeting has been
enjoined or for any reason they cannot be lawfully voted at the
meeting.
The shareholders present at a duly called or
held meeting at which a quorum is present may continue to do
business until adjournment notwithstanding the withdrawal of
enough shareholders to leave less than quorum.
Section 3.9 Voting of Shares. Each
outstanding share regardless of class shall be entitled to one
vote on each matter submitted to vote at a meeting of
shareholders, except to the extent that the voting rights of the
shares of any class or classes are limited or denied by the
Articles of Incorporation.
Neither treasury shares nor shares held by
another Corporation if a majority of the shares entitled to vote
for the election of directors of such other Corporation is held
by the Corporation, shall be voted at any meeting or counted in
determining the total number of outstanding shares at any given
time.
Section 3.10 Proxies. A shareholder may vote
either in person or by proxy executed in writing by the
shareholder or by his duly authorized attorney-in-fact. No
proxy shall be valid after eleven (11) months from the date of
its execution, unless otherwise provided in the proxy,
specifically providing a longer length of time for which the
proxy is to continue in force, which in no case shall exceed
seven (7) years from the date of execution. Any shareholder
giving a written consent, or his proxy, or his transferee or
personal representative, or their respective proxies, may revoke
the same prior to the time that written consents of the number
of shares required to authorize the proposed action have been
filed with the Secretary of the Corporation, but may not do so
thereafter.
Section 3.11 Elections of Directors. At
each election for directors every shareholder entitled to vote
at such election shall have the right to vote, in person or by
proxy, the number of shares owned by him for an many persons as
there are directors to be elected and for whose election he has
a right to vote. The candidates receiving the highest number of
vote up to the number of directors to be elected shall be
declared elected. Elections for directors need not be by ballot
except upon demand made by a shareholder at the election and
before the voting begins.
Section 3.12 Adjournments. Any
shareholders meeting, whether or not a quorum is present, may be
adjourned from time to time by the vote of a majority of the
shares, the holders of which are either present in person or
represented by proxy thereat, but, except as provided in Section
3.8 hereof, in the absence of a quorum no other business may be
transacted at such meeting. When a meeting is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall
be given as in the case of an original special meeting. Same as
aforesaid, it shall not be necessary to give any notice of the
time and place of the adjourned meeting or of the business to be
transacted thereat other than by announcement at the meeting at
which such adjournment is taken.
ARTICLE IV
DIRECTORS
Section 4.1 Exercise of Corporate Power. The
business and affairs of the Corporation shall be managed by the
Board of Directors.
Section 4.2 Qualifications. Directors need
not be residents of Utah or shareholders of the Corporation. They
need have no other qualifications.
Section 4.3 Compensation. The Board of
Directors shall have authority to fix the compensation of
directors. Such compensation so fixed shall be reported to the
shareholders. Any compensation so fixed shall be for services
as a Director only, and a Director who serves the Corporation in
any other capacity may receive a separate compensation therefor.
Section 4.4 Number. The number of Directors
of the Corporation is three (3).
Section 4.5 Term. The term of each Director
shall begin immediately on his election and shall continue until
the date set under these Bylaws for the next annual meeting of
the shareholders. Each Director shall hold office for the term
for which he is elected and until his successor shall have be
elected and qualified.
Section 4.6 Elections. At each annual
meeting the shareholders shall elect Directors, provided that
if for any reason said annual meeting or an adjournment thereof
is not held or the Directors are not elected thereat, then the
Directors may be elected at any special meeting of the
shareholders called and held for that purpose.
Section 4.7 Vacancies. A vacancy or
vacancies in the Board of Directors shall exist in case of the
death, resignation or removal of any Directors, or if the
authorized number of Directors is increased, or if the
shareholders fail, at any annual or special meeting at which
any Director is elected, to elect the full authorized number of
Directors to be voted for at that meeting. Also, the Board of
Directors may declare vacant the office of a Director if he is
found to be of unsound mind by an order of a court of competent
jurisdiction or convected of a felony or misdemeanor involving
moral turpitude or if, within sixty (60) days after notice of his
elections, he does not accept the of office either in writing or
by attending a meeting of the Board of Directors. Any vacancy
occurring may be filled by the affirmative vote of a majority of
the remaining Directors (or a sole remaining Director) although
less than a quorum. A Director elected to fill a vacancy shall
be elected for the unexpired term of his predecessor in office,
or if there was no predecessor, until the date set under these
Bylaws for the next annual meeting and until his successor is
elected. Any vacancy created by reason of the removal of one or
more Directors by the shareholders may be filled by election of
the shareholders at the meeting to which the Director or
Directors are removed.
Section 4.8 Removal. At a meeting
expressly called for that purpose, one or more Directors may be
removed by a vote of a majority of the shares entitled to vote
at an election of Directors.
Section 4.9 Regular Meetings. A regular
meeting of the Board of Directors shall be held without further
notice than this Bylaw immediately after, and at the same place
as, the annual meeting of shareholders. The Board of Directors
may provide, by resolution, the time and place, either within or
without the State of Utah, for the holding of additional regular
meetings without other notice than such resolution.
Section 4.10 Special Meetings. Special
meetings of the Board of Directors may be called by or at the
request of the President or any two Directors. The person or
persons authorized to call special meetings of the Board of
Directors may fix any place, either within or without the State
of Utah as the place for holding any special meeting of the Board
of Directors called by them.
Section 4.11 Notice of Special meeting.
Notice of any special meeting shall be given at least three (3)
days previously thereto by written notice delivered personally
or mailed to each Director at his business address, or by
telegram. If mailed, such notice shall be deemed to be
delivered to the Post Office. Any Director may waive notice of
any meeting. The attendance of a Director at a meeting shall
constitute a waive of notice of such meeting, except where a
Director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
Section 4.12 Quorum. A majority of the
number of Directors fixed by these Bylaws shall constitute a
quorum for the transaction of business at any meeting of the
Board of Directors, but if less than such majority is present at
a meeting, a majority of the Directors present may adjourn the
meeting from time to time without further notice.
Section 4.13 Manner of Action. The act of
the majority of the Directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors.
Section 4.14 Presumption of Assent. A
Director of the Corporation who is present at a meeting of the
Board of Directors at which action on any corporate matter is
taken shall be presumed to have assented to the action taken
unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting
before the adjournment thereof or shall forward such dissent by
certified or registered mail to the secretary of the Corporation
immediately after the adjournment of the meeting. Such right of
dissent shall not apply to a Director who voted in favor of such
action.
Section 4.15 Committees. The Board of
Directors by resolution adopted by the majority of the number
of Directors fixed by the Bylaws may designate a committee or
committees consisting of not less than two (2) directors which
committee or committees, to the extent provided in such
resolution, shall have and may exercise all the authority
therein provided; but the designation of such committee or
committees and the delegation thereto of authority shall not
operate to relieve the Board of Directors, or any member
thereof, of any responsibility imposed upon it or him by law.
ARTICLE V
OFFICERS
Section 5.1 Election and Qualifications.
The officers of this Corporation shall consist of a president,
one or more vice presidents, a secretary and a treasurer, each of
whom shall be elected by the Board of Directors at the meeting of
the Board of Directors next following the annual meeting of the
shareholders (or at any meeting if an office is vacant) and such
other officers, including a Chairman of the Board of Directors,
and assistant officers and agents, as the Board of Directors
shall deem necessary, who shall be elected and shall hold their
offices for such terms as the Board of Directors may prescribe.
Any two or more offices may be held by the same person except
those of president and secretary. Any vice president, assistant
treasurer or assistant secretary, respectively, may exercise any
of the powers of the president, the treasurer, or the secretary,
respectively, as directed by the Board of Directors and shall
perform such other duties as are imposed upon him by the Bylaws
or the Board of Directors.
Section 5.2 Term of Office and Compensation.
The term of office and salary of each of said officers and the
manner and time of the payment of such salaries shall be fixed
and determined by the Board of Directors and may be altered by
said Board from time to time at its pleasure.
Section 5.3 Removal and Vacancies. Any
officer of the Corporation may be removed by the Board of
Directors at any meeting whenever in its judgment the best
interests of the Corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if
any, of the person so removed. Election or appointment of an
officer or agent shall not of itself create contract rights. If
any vacancy occurs in any office of the Corporation, the Board
of Directors may elect a successor to fill such vacancy for the
remainder of the unexpired tern and until his successor is fully
chosen and qualified.
ARTICLE VI
CHAIRMAN OF THE BOARD
Section 6.1 Powers and Duties. The
Chairman of the Board of Directors, if there be one, shall have
the power to preside at all meetings of the Board of Directors
and shall have such other powers and shall be subject to such
other duties as the Board of Directors may from time to time
prescribe.
ARTICLE VI
PRESIDENT
Section 7.1 Powers and Duties. The powers
and duties of the president are:
(a) To act as the chief executive officer
of the Corporation and, subject to the control of the Board of
Directors, to have general supervision, direction and control
of the business and affairs of the Corporation.
(b) To preside all meetings of the
shareholders and, in the absence of the Chairman of the Board,
or if there be none, at all meetings of the Board of Directors.
(c) To call meetings of the shareholders
and also of the Board of Directors to be held at such times and,
subject to the limitations prescribed by law or by these Bylaws,
at such places as he shall deem proper.
(d) To affix the signature of the
Corporation to all deeds, conveyances, mortgages, leases,
obligations, bonds, certificates and other papers and
instruments in writing which having been authorized by the Board
of Directors or which, in the judgement of the President, should
be executed on behalf of the Corporation and do not require such
authorization, to sign certificates for shares of stock of the
Corporation and, subject to the direction of the Board of
Directors, to have general charge of the property of the
Corporation and to supervise and control all officers, agents
and employees of the Corporation.
Section 7.2 President pro tem. If neither the
Chairman of the Board, the president, nor the vice president is
present at any meeting of the Board of Directors, a president
pro tem may be chosen to preside and act at such meeting. If
neither the president nor the vice president is present at any
meeting of the shareholders, a president pro tem may be chosen to
preside at such meeting.
ARTICLE VIII
VICE PRESIDENT
Section 8.1 Powers and Duties. In case
of the absence, disability or death of the president, the vice
president, or one of the vice presidents, shall exercise all his
powers and perform all his duties. If there is more than one
vice president, the order in which the vice presidents shall
succeed to the powers and duties of the president shall be as
fixed by the Board of Directors. The vice president or vice
presidents shall have such other powers and perform such other
duties as may be granted or prescribed by the Board of Directors.
ARTICLE IX
SECRETARY
Section 9.1 Powers and Duties. The
powers and duties of the secretary are:
(a) To keep a book of minutes at the
principal office of the Corporation or such other place as the
Board of Directors may order, or all meetings of its Directors
and shareholders with the time and place of holding, whether
regular or special, and, if special, how authorized, the notice
thereof given, the names of those present at Directors'
meetings, the number of shares present or represented at
shareholders meetings and the proceedings thereof.
(b) To keep the seal of the Corporation and
to affix the same to all instruments which may require it
(c) To keep or cause to be kept at the
principal office of the Corporation, or at the office of the
transfer agent or agents, a share register, or duplicate share
register, showing the names of the shareholders and their
addresses, the number and classes of shares held by each, the
number and date of certificates issued for shares, and the
number and date of cancellation of every certificate surrendered
for cancellation.
(d) To keep or cause to be kept at the
registered office of the Corporation the books and records
required by Section 1.3(b),(c),(d) and (e) above.
(e) To keep a supply of certificates for
shares of the Corporation, to fill in all certificates issued,
and to make a proper record of each such issuance; provided,
that so long as the Corporation shall have one or more duly
appointed and acting transfer agents of the shares, or any class
or series of shares of the Corporation, such duties with respect
to such shares shall be performed by such transfer agent or
transfer agents.
(f) To transfer upon the share books of
the Corporation any and all shares of the Corporation provided,
that so long as the Corporation shall have one or more duly
appointed and acting transfer agents of the shares, or any class
or series of shares, of the Corporation, such duties with
respect to such shares shall be performed by such transfer agent
or transfer agents, and the method of transfer of each
certificate shall be subject to the reasonable regulations of
the transfer agent to which the certificate is presented for
transfer, and also if the Corporation there has one or more duly
appointed and acting registrars, to the reasonable regulations
of the registrar to which the new certificate is presented for
registration; and provided, further, that no certificate for
shares of stock shall be issued or delivered or, if issued or
delivered, shall have any validity whatsoever until and unless
it has been signed or authenticated in the manner provided in
Section, 11.4 hereof.
(g) To make service and publication of
all notices that may be necessary or proper, and without command
or direction from anyone. In case of the absence, disability,
refusal or neglect of the secretary to make service or
publication of any notices, then such notices may be served
and/or published by the president or a vice president, or by any
person thereunto authorized by either of them or by the Board of
Directors or by the holders of a majority of the outstanding
shares of the Corporation.
(h) To prepare the voting lists required
by Section 3.7 above.
(i) Generally to do and perform all
such duties as pertain to his office and as may be required by
the Board of Directors.
ARTICLE X
TREASURER
Section 10.1 Powers and Duties. The powers
and duties of the treasurer are:
(a) To supervise and control the
keeping and maintaining of adequate and correct accounts of the
Corporation's properties and business transactions, including
accounts of its assets, liabilities, receipts, disbursements,
gains, losses capital, surplus and shares. Any surplus,
including earned surplus, paid-in surplus and surplus arising
from a reduction of stated capital, shall be classified
according to source and shown in a separate account. The books
of account shall at all reasonable times be open to inspection by
any Director and by any shareholder as provided in Section 1.3
above.
(b) To keep or cause to be kept at a
registered office of the Corporation the books and records
required by Section 1.3(a) above.
(c) To have the custody of all funds,
securities, evidences of indebtedness and other valuable
documents of the Corporation and, at his discretion, to cause any
or all thereof to be deposited for the account of the
Corporation with such depository as may be designated from time
to time by the Board of Directors.
(d) To receive or cause to be received,
and to give or cause to be given, receipts and acquittances for
monies paid in for the account of the Corporation.
(e) To disburse, or cause to be disbursed,
all funds of the Corporation as may be directed by the Board of
Directors, taking proper vouchers for such disbursements.
(f) To render to the president and to
the Board of Directors, whenever they may require, accounts of
all transactions as treasurer and of the financial condition of
the Corporation.
(g) Generally to do and perform all such
duties as pertain to his office and as may be required by the
Board of Directors.
ARTICLE XI
SUNDRY PROVISIONS
Section 11.1 Instruments in Writing. All checks,
drafts, demands for money and notes of the Corporation, and all
written contracts of the Corporation, shall be signed by such
Officer or officers, agent or agents, as the Board of Directors
may from time to time by resolution designate. No officer,
agent: or employee of the Corporation shall have power to bind
the Corporation by contract or otherwise unless authorized to do
so by these Bylaws or by the Board of Directors.
Section 11.2 Fiscal Year: The fiscal year
of this Corporation shall be January 1 to December 31.
Section 11.3 Shares Held by the Corporation.
Shares in other corporations standing in the name of this
corporation may be voted or represented and all rights incident
thereto may exercised on behalf of this Corporation by any
officer of this Corporation authorized so to do by resolution of
the Board of Directors.
Section 11.4 Certificates of Stock.
There shall be issued to each holder of fully paid shares of the
capital stock of the Corporation a certificate or certificates
for such shares. Every such certificate shall be either (a)
signed by the president or a vice president and the secretary or
an assistant secretary of the Corporation and countersigned by a
transfer agent of the Corporation (if the Corporation shall then
have a transfer agent) and registered by the registrar of the
shares of capital stock of the Corporation (if the Corporation
shall then have a registrar) or (b) authenticated by facsimiles
of the signature of the president and secretary of the
Corporation or by facsimile of the signature of the president and
the written signature of the secretary or an assistant secretary
and countersigned by a transfer agent of the Corporation and
registered by a registrar of the shares of the capital stock of
the Corporation.
Section 11.5 Lost Certificates. Where the
owner of any certificate for shares of the capital stock of the
Corporation claims that the certificate @as been lost, destroyed
or wrongfully taken, a new certificate shall be issued in place
of the original certificate if the owner (a) so requests, before
the Corporation, has notice that the original certificate has
been acquired by a bona fide purchaser, and (b) files with the
Corporation an indemnity bond in such form and in such amount as
shall be approved by the president or a vice president of the
Corporation, and (c) satisfies any other reasonable requirements
imposed by the Corporation. The Board of Directors may adopt
such other provisions and restrictions with reference to lost
certificates, not inconsistent with applicable law, as it shall
in its discretion deem appropriate.
ADOPTED this 7th day of April, 1984.
CHAIRMAN OF THE BOARD
/S/ Mike C. Brown
SECRETARY
/S/ Bret Van Leeuwen
CERTIFICATE OF SECRETARY
KNOW ALL MEN BY THESE PRESENTS: That the
undersigned does hereby certify that the undersigned is the
secretary of the aforesaid Corporation, duly organized and
existing under and by virtue of the laws of the State of Utah;
that the above and foregoing Bylaws of said Corporation were
duly and regularly adopted as such by the Board of Directors of
said Corporation by unanimous consent.
DATED this 3rd day of April, 1984.
/S/ Bret Van Leeuwen
SECRETARY
SOFTWARE LICENSE
AND
DISTRIBUTION AGREEMENT
between
iMALL, INCORPORATED
and
AT&T CORP.
dated as of June 26, 1996
SOFTWARE LICENSE AND
DISTRIBUTION AGREEMENT
In this Software License and Distribution Agreement ("Agreement")
dated 1996 ("Effective Date") iMall Incorporated,("iMALL"), with
offices at 4400 Coldwater Canyon Boulevard, Suite 200, Studio
City, California 91604, and AT&T Corp., on behalf of itself and
its Affiliates ("AT&T"), with offices at 295 North Maple Avenue,
Basking Ridge, New Jersey 07920, agree as follows:
I. BACKGROUND
AT&T provides an Internet service called AT&T WorldNet <service
mark> Service which is accessed using AT&T-provided client
software.
iMALL develops, manufactures and markets software. On the terms
of this Agreement, iMALL will distribute AT&T WorldNet Service
client software in conjunction with certain of its own software
2. DEFINITIONS
As used in this Agreement:
"Affiliate" means a corporation or other entity that controls, is
controlled by or is under common control with another corporation
or entity, where "control" means the direct or indirect ownership
or control of more than 50% of the stock or other equity interest
entitled to vote for the election of directors or equivalent
governing body.
"AT&T Compatibility Specification" means functional, technical,
performance and other requirements applicable to client software
products that are to be certified as compatible with the Services
under this Agreement, including user interface, quality, and
customer support requirements as set forth in Appendix D, as
such requirements may be amended by AT&T from time to time. AT&T
may update such requirements from time to time.
"AT&T Mark" means a trademark, service mark, logo, trade name,
or other insignia or symbol owned by AT&T and used in connection
with the Service, including but not limited to the AT&T WORLDNET
mark.
"AT&T WorldNet Software" means the executable version (but not
the source code version) of the client software used for access
to the Service.
"Certification Date" means the date on which iMALL certifies
under Section 5 that an Integrated iMALL Product complies with
the AT&T Compatibility Specification.
"Content" means pre-approved marketing language about AT&T
WorldNet Service, AT&T WorldNet Software, or other related
offering or other related offering provided by AT&T.
"Delivered Member" means a person or entity who (i) has
registered, and has been billed, for the Service using an
Integrated iMALL Product(a "iMALL Member'); (ii) has provided a
unique identifying affinity code to identify the person or
entity as a iMALL Member in the course of registering for the
Service; and (iii) has accrued at least $19.95 of Member Revenue
to AT&T using the Service during the first three months after
registering for the Service.
"Derivative Work" means a revision, modification, translation,
abridgment, condensation or expansion of the AT&T WorldNet
Software or any form in which the AT&T WorldNet Software may be
recast, transferred, transformed, or adapted, which, if prepared
without the consent of AT&T would be a copyright infringement.
TABLE OF CONTENTS
1 BACKGROUND
2 DEFINITIONS
3 GRANT OF LICENSES AND RIGHTS
4 MARKETING, DISTRIBUTION AND CUSTOMER CARE
5 PRODUCTION AND DEVELOPMENT
6 CERTIFICATION AND TESTING
7 PAYMENTS
8 DELIVERABLES AND UPDATES
9 TRADEMARKS, SERVICE MARKS AND TRADE NAMES
10 PROPRIETARY RIGHTS
11 CONFIDENTIAL INFORMATION AND DISCLOSURE
12 REPRESENTATIONS AND WARRANTIES
13 INDEMNIFICATION
14 LIMITATION OF LIABILITY
15 TERM AND TERMINATION
16 GENERAL PROVISIONS
Attachment A - iMALL Products
Attachment B - Trademark and Service Mark
Guidelines
Attachment C - Customer Care Requirements
Attachment D - Performance Specification
Requirements
Attachment E - iMALL Icon
Attachment F - Long Distance Reward Agreement
"Developer Marks" means a trademark, service mark, logo, trade
name, or other insignia or symbol owned by an entity and used in
connection with a iMALL Product for which such entity has
developed, in whole or in part, a substantial portion of such
iMALL Product.
"Distribute' means any third party which acquires possession of a
iMALL Product from iMALL and distributes such iMALL Product on
tangible media, along with an End User License Agreement.
"Documentation" means those software user manuals, reference
manuals and installation guides, or portions thereof, and any
other material made generally available in connection with
Integrated iMALL Products or the Service, as the same may be
updated from time to time "AT&T Documentation" refers only to
Documentation made available in connection with the AT&T WorldNet
Software or the Service, and "iMALL Documentation" refers only
to Documentation made available in connection with the Integrated
iMALL Products.
"Effective Date" means the date specified in the preamble to this
Agreement.
"End User" means any third party licensed by iMALL or a
Distributor to use the AT&T WorldNet Software.
"iMALL Integration Software" means the software developed and
tested by the iMALL to integrate each Integrated iMALL Product
with the AT&T WorldNet Software (including any and all Updates
to the AT&T WorldNet Software issued during the Term of this
Agreement.
"iMALL Mark" means a trademark, service mark, logo, trade name,
or other insignia or symbol owned by iMALL and used in connection
with iMALL Products, including but not limited to 1MALL, iMALL
logo.
"iMALL Products" means collectively Integrated iMALL Products
and Unintegrated iMALL Products.
"Integrated iMALL Product" means a product listed in Attachment A
together with its Documentation integrated with AT&T WorldNet
Software "Unintegrated iMALL Product" means a product listed in
Attachment A that is not integrated with AT&T WorldNet Software.
"Information" means information of any type, including
descriptions of all inventions, creations, ideas, know-how,
specifications, designs, software, simulations, test results,
reports, drawings, manufacturing processes, algorithms,
improvements, and other developments, whether or not fixed in a
tangible, reproducible medium, and whether or not protected or
protectable by patents, copyrights, mask work rights, trade
secret rights, or other intellectual property rights.
"Inserts" means marketing collateral as AT&T shall specify.
"Member Revenue" means any revenue derived from the Service that
is received by AT&T or an Affiliate, as the case may be, from a
Delivered Member, less rebates and refunds, and less any federal,
state or local taxes based on such fees (except taxes based on
AT&T's net income). In no event shall Member Revenue be deemed
to include unbundled charges for transport, tariffed services not
bundled with the Service, or value added Internet-related
services (e.g., hosting, security, directory, content services,
products, etc.)
"Service" means the AT&T WorldNet Service (or any successor
service) that has dial-up Internet access.
"Switched AT&T LD Customer@ means a person or entity who (I) has
provided a unique identifying code to identify the person or
entity as a iMALL customer and (ii) has switched to AT&T Dial I
long distance service from another interexchange carrier.
"Term" means the period of time from the Effective Date through
the termination of this Agreement as provided in Section 15.
"Territory" means the world.
"Third PartV Mark" means a trademark, service mark, logo, trade
name, or other insignia or symbol owned by an individual or
entity other than iMALL, AT&T or their respective Affiliates.
"Updates" means updates, revisions or other modifications or
enhancements to the AT&T WorldNet Software or iMALL Products.
"Virus" means a time bomb, worm, virus, lock, drop-dead device,
trojan horse or other similar component of software or
electronically stored or transmitted information that, contrary
to the expectation of a user of that software or information, is
intended in any manner to (I) damage, destroy, alter, or
adversely affect the operation of software, firmware, or
hardware, (ii) reveal, damage, destroy, or alter any data or
other information or (iii) permit unauthorized access.
3. GRANT OF LICENSES AND RIGHTS
3.1 Software License Beginning on the Certification
Date, AT&T grants to iMALL a nonexclusive, nontransferable
license to reproduce and distribute, but not electronically, the
AT&T WorldNet Software to Distributors and End Users throughout
the Territory by all means and media now known or hereafter
developed or discovered, subject to the following:
3.1.1 iMALL may reproduce and distribute the AT&T
WorldNet Software only as a component of an Integrated iMALL
Product for use in conjunction with the Service within the
United States.
3.1.2 iMALL and its Distributors may not transmit
the AT&T WorldNet Software to any third party electronically.
3.1.3 iMALL and its Distributors are expressly
prohibited from (I) modifying the AT&T WorldNet Software in any
way except as provided in Section 5.2; and from (ii) marketing or
distributing of the AT&T WorldNet Software other than as a
component of an Integrated iMALL Product.
3.1.4 iMALL may grant its Distributors the right to
grant further sublicenses to reproduce and distribute (but not
transmit electronically) copies of the AT&T WorldNet Software as
a component of an Integrated iMALL Product to other Distributors
in accordance with the provisions herein; and
3.1.5 iMALL, itself or through any Distributor,
shall have the right to grant to End Users the right to use the
AT&T WorldNet Software as a component of an Integrated iMALL
Product for use in conjunction with the Service within the United
States.
3.1.6 iMALL shall have no right to distribute the
AT&T WorldNet Software or Updates thereto on a standalone basis.
3.1.7 This license grant is conditional upon
marketing and integrating the AT&T WorldNet Software as required
herein and all other terms and conditions of this Agreement.
3.2 Documentation License. Commencing on the Certification
Date and subject to the terms and conditions of this Agreement,
AT&T hereby grants and iMALL and its Distributors hereby accepts
a nonexclusive license throughout the Territory to reproduce the
AT&T Documentation as specified in Section 4.4 and, to distribute
copies of the AT&T documentation and modifications thereof as
specified in Section 4.4 to Distributors and End Users solely in
conjunction with the permitted distribution and use of the AT&T
WorldNet Software.
3.3 Non-exclusivity. The parties' rights set forth herein are
non-exclusive. AT&T reserves the right to grant the rights
granted herein to others, and iMALL reserves the right to
integrate third parties' software into any iMALL Products.
3.4 Source Code Restrictions. iMALL agrees (I) not to
decompile, disassemble, or otherwise determine or attempt to
determine source code for the executable code of the AT&T
WorldNet Software or any other software included in the Service
or to create any Derivative Works based upon the AT&T WorldNet
Software, the Service or AT&T Documentation (except as may be
expressly authorized in this Agreement),(ii) that it will
prohibit iMALL Distributors from any of the foregoing actions and
(iii) not to authorize anyone else to do so. iMALL agrees that
no software included in the Integrated iMALL Product shall rely
upon, cooperate with, or share in any way any component of, or
the entirety of, the AT&T WorldNet Software or the Service
without the prior written consent of AT&T or except as provided
in Section 5.2.
3.5 Unintegrated Products. Commencing on the Certification
Date and throughout the remainder of the Term of this Agreement,
iMALL shall not market, distribute, or offer for sale within the
Territory any iMALL Product listed on Attachment A including any
successor products or versions thereof, without integrating the
AT&T WorldNet Software. Notwithstanding the foregoing, nothing
herein shall be construed to require iMALL to destroy any
inventory which is not in compliance with the obligations set
forth herein and which is in existence before the Certification
Date.
3.6 Patents, Audio-Visual Effects. It is understood that the
licenses granted under Section 3.1 and 3.2 above include without
limitation, subject to the same rights and limitations as
provided therein and elsewhere in this Agreement: (I) a
nonexclusive license under any patents, copyrights, trade secret
rights and other intellectual property rights (to the extent such
rights are necessary to exercise the rights granted elsewhere in
this Agreement) of AT&T owned by or licensed to AT&T at any time
during the Term; and (ii) a nonexclusive license (including the
right to publicly perform and publicly display) to pictorial,
graphic and audio-visual works, including, without limitation
icons, screens, text and characters, that are included in, or
result from execution of, the AT&T WorldNet Software (to the
extent such rights are necessary to exercise the rights granted
elsewhere in this Agreement). The foregoing license expressly
excludes any rights to any works obtained from the Internet.
4. MARKETING, DISTRIBUTION, AND CUSTOMER CARE
4.1 Cooperative Promotion. At such times as the parties deem
it mutually beneficial, they shall cooperatively market, sell and
support the Service and Integrated iMALL Products. The parties
shall synchronize their respective marketing plans and efforts,
review schedules and offerings, and take such other actions as
each party deems appropriate to achieve the goals of this
Agreement.
4.2 Co-marketing Activities.
4.2.1 Promotional Offers. AT&T shall offer to all
iMALL Members any and all promotional offers as are made
generally available by AT&T to other Customers through
Integrated iMALL Products during the Term. Such promotional
offers may include terms, conditions and qualifications with
differential pricing based on the customers status as a customer
of other AT&T products and services (such as AT&T Long Distance
Service or AT&T Universal Card).
4.2.2 Future Promotional Activities. Although they are
not obligated to undertake all such activities, the parties
expect, that their co-marketing activities may include, without
limitation, the following: (a) promotions or demonstrations of
the Service and Integrated iMALL Products; (b) endorsements of
the Service and Integrated iMALL Products; (c) joint or
coordinated participation in trade shows, open houses,
conventions and conferences;(d) joint or coordinated
participation in customer information events (such as user group
meetings, seminars); (e) sales support activities (such as
communications, guides, training, videos, tools); (f) joint
promotional offers; (g) advertising; (h) providing each party the
opportunity to establish appropriate relationships with the
other party's sales channels; and (I) public relations
activities (such as press/analyst events, releases, executive
speeches, testimonials, pro-active story development in target
publications). The content of all of the foregoing promotional
materials and activities shall be subject to the prior, written
approval of both parties.
4.3 Service Collateral. iMALL shall insert with all
Integrated iMALL Products sold or offered for sale, such AT&T
Documentation and "Inserts" as AT&T and iMALL shall mutually
agree upon from time to time in accordance with Section 4.4
below. If AT&T provides Inserts, such Inserts shall remain in
their original packaging, as provided by AT&T to iMALL, up to and
including the time of distribution to purchasers of Integrated
iMALL Products.
4.4 Reproduction of Inserts For each different Integrated
iMALL Product:
4.4.1 After an Integrated iMALL Product has
satisfactorily completed the testing and certification procedures
pursuant to Section 6, AT&T shall provide iMALL with Content
iMALL shall use the Content to prepare Inserts, at iMALL's
expense, for inclusion with the Integrated iMALL Product. iMALL
shall supply AT&T with a master copy of such Inserts.
4.4.2 AT&T may request iMALL to revise the Inserts
at any time provided AT&T gives iMALL 30 days notice prior to
such revision appearing in the Integrated iMALL Product.
4.4.3 If iMALL wishes to include marketing language
which is not pre-approved by AT&T in any Insert, such Insert
and/or marketing language must be reviewed and approved by AT&T
before an initial run of actual copies of such Inserts. If AT&T
has not approved such Insert and/or marketing language and iMALL
prepares such Inserts, iMALL shall be liable to AT&T for any
losses, damages, claims, liabilities, which may result from such
Inserts.
4.5 Required Product Packaging Consistent with Attachment B,
iMALL shall be required to identify the AT&T WorldNet Software
and the Service on its product packaging as follows:
4.5.1 the AT&T WorldNet mark solely as depicted in
an AT&T approved representation to be provided by AT&T must
appear on the outside front of the Integrated iMALL Product
package, such depiction may be via a sticker;
4.5.2 the AT&T WorldNet mark solely
as depicted in an AT&T approved representation to be provided by
AT&T must appear in the operating system Program Group or
functional equivalent; and
4.5.3 the AT&T WorldNet mark must not appear any
less prominently than any other Third Party Mark (excepting
Developer Marks) used on the Integrated iMALL Product or its
packaging.
4.6 Icons. iMALL shall integrate the AT&T WorldNet Software
as a component of each different Integrated iMALL Product in such
a manner as to cause the AT&T WorldNet icon to appear as a
minimized program group icon on the applicable operating systems
in conformity with the Service specification to be provided by
AT&T.
4.7 Customer Care. AT&T will provide all technical support
and customer care functions for End Users of the Service and the
AT&T WorldNet Software and iMALL will provide all technical
support and customer care for users of Integrated iMALL Products.
iMALL agrees to participate with AT&T to develop a cooperative
customer support program to provide seamless customer care
enabling hot transfers between AT&T and iMALL for prompt delivery
of customer care. The cooperative customer support program shall
be continuously updated and revised throughout the Term of this
Agreement in order to deliver support competitive with the
leading providers of comparable services and products. The
cooperative customer support program shall include at least
those program elements set forth in Attachment C.
4.8 Public Announcements and Promotional Materials. AT&T and
iMALL shall cooperate so that each party may issue press releases
concerning this Agreement, provided that each party must approve
any press release prior to its release. The parties shall
cooperate in their development of marketing and sales materials
used to promote the distribution of Integrated iMALL Products.
4.9 First Announcement. The first cooperative marketing
activity under this Agreement shall commence upon the Effective
Date and shall be the development of the announcement of this
Agreement and the plan for associated promotional materials under
this Agreement. AT&T and iMALL shall cooperate to make an
announcement about the execution of this Agreement. Each party
must approve in writing the final content and form of that
announcement. Neither party may make any earlier public
statements or announcements relating to this Agreement. After
the initial announcement is made under this Section 4.9, iMALL
and AT&T shall communicate and cooperate with respect to
advertising and publicity regarding this Agreement and their
relationship, and, subject to Sections 4.8, 10.1 and 10.2, shall
obtain the written consent of the other party before publishing
or releasing any such advertising or publicity. In addition,
iMALL shall obtain the prior written consent of AT&T before
publishing or releasing any advertising or publicity concerning
the Service generally. In promoting the Service and Integrated
iMALL Products, each party shall only make representations
concerning the products and services of the other party based
upon information supplied by such other party.
4.10 Fair Dealing by iMALL. In conducting activities relating
to the Service, iMALL shall, except to the extent any of the
following may be based on information provided by AT&T for
1MALL's use, (I) conduct business in a manner that reflects
favorably at all times on the Service and the good name, goodwill
and reputation of AT&T; (ii) not employ deceptive, misleading or
unethical practices that are or might be detrimental to AT&T or
the Service, including disparagement of AT&T of the Service;
(iii) not make any false or misleading representations with
regard to iMALL or the Service, (iv) not publish or employ, or
cooperate in the publication or employment of, any misleading or
deceptive advertising material; (v) not make any representations,
warranties or guaranties to anyone with respect to the
specifications, features or capabilities of the Service that are
inconsistent with the literature distributed by AT&T, including
all warranties and disclaimers contained in such literature, and
(vi) not engage in illegal or deceptive trade practices with
respect to the Service, such as bait and switch techniques, or
any other practices proscribed under this Section 4.1.0.
4.11 Fair Dealing by AT&T. In conducting activities relating
to iMALL Products, AT&T shall, except to the extent any of the
following may be based on information provided by iMALL for
AT&T's use: (I) conduct business in a manner that reflects
favorably at all times on iMALL Products and the good name,
goodwill and reputation of iMALL, (ii) not employ deceptive,
misleading or unethical practices that are or might be
detrimental to iMALL or iMALL Products, including disparagement
of iMALL or iMALL Products; (iii) not make any false or
misleading representations with regard to iMALL or iMALL
Products; (iv) not publish or employ, or cooperate in the
publication or employment of, any misleading or deceptive
advertising material; (v) not make any representations,
warranties or guaranties to anyone with respect to the
specifications, features or capabilities of iMALL Products that
are inconsistent with the literature distributed by iMALL,
including all warranties and disclaimers contained in such
literature; and (vi) not engage in illegal or deceptive trade
practices with respect to iMALL Products, such as bait and
switch techniques, or any other practices proscribed under this
Section 4.11.
4.12 Terms Relating to Distribution. iMALL agrees to comply
with and shall require its Distributors to comply with all
applicable laws, rules and regulations to preclude the
acquisition of unlimited rights to technical data, software and
documentation provided with the Service to a governmental agency,
and ensure the inclusion of the appropriate "Restricted Right" or
"Limited Rights" notices required by the U.S. Government
agencies.
4.13 No Modification of End User Agreements. iMALL and its
Distributors shall not remove, alter or otherwise interfere with
the distribution and delivery of any End User license agreements
packaged, distributed, or otherwise associated with the AT&T
WorldNet Software and/or Service.
5. PRODUCTION AND DEVELOPMENT
5.1 Integration Development Commencing on the Effective Date
of this Agreement and throughout its Term, iMALL agrees to
develop, test, and integrate as a component of each different
Integrated iMALL Product (iMALL Integration Software) to enable
users of Integrated iMALL Products to access and register for the
Service using the AT&T WorldNet Software contained as a component
of each different Integrated iMALL Product.
5.2 Icon Development. AT&T permits iMALL to develop a iMALL
icon as described in Attachment E, to appear in iMALL's desktop
application software which will take an End User directly to
iMALL's home page using the Service. Such icon shall be labeled
"iMALL Home Page" and shall solely be promoted and used by iMALL
to enable End Users to gain "one-button" access to iMALL's home
page. In no event shall iMALL be permitted to market, promote or
label such icon as a means for obtaining Internet access
generally or in association with the AT&T brand or the AT&T
globe. Nothing herein shall be deemed to authorize iMALL to make
any Derivative Works of the AT&T WorldNet Software or the
Service.
5.3 Compliance with Specification. From the Certification Date
and throughout the Term of this Agreement, iMALL shall cause each
different Integrated iMALL Product to continuously comply with
the AT&T Compatibility Specification Requirements. If at any
time an Integrated iMALL Product is not in compliance with the
AT&T Compatibility Specification Requirements, iMALL shall
promptly use all commercially reasonable efforts to remedy the
noncompliance.
5.4 Cross-License of Information and Materials. To enable
iMALL to perform the development work necessary to successfully
integrate the AT&T WorldNet Software as a component of the
Integrated iMALL Products, the parties agree to provide each
other such information and assistance as may be necessary to
accomplish such integration. Commencing on the Effective
Date of this Agreement and throughout its Term, iMALL hereby
grants to AT&T and AT&T hereby grants to iMALL a nonexclusive,
nontransferable license to use internally only at its own
facilities or the facilities of its third party contractors and
make a reasonable number of copies of the information and
materials furnished solely for the purpose of performing the
parties' obligations under this Agreement. The parties shall
maintain, reproduce and apply the copyright, trademark
and other proprietary rights notices, legends, symbols or labels
of each other and of any suppliers on all copies of such
information and materials furnished to enable integration of the
AT&T WorldNet Software as a component of the Integrated iMALL
Products.
5.5 Inspection. iMALL shall permit AT&T or its agents access
for on-site inspection of each production run of each different
Integrated iMALL Product upon the reasonable discretion of and
notice from AT&T at a mutually convenient time.
6. PERFORMANCE SPECIFICATION
6.1 Requirement for Testing (AT&T WorldNet Software). Within
30 days of receipt of a golden master copy of the initial version
of the AT&T WorldNet Software or any Update thereto, iMALL shall
(I) cause each Integrated iMALL Product to comply in all respects
with the AT&T Compatibility Specification Requirements;:(ii)
complete the preparation of such records required by the AT&T
Compatibility Specification Requirements to document such
compliance; and (iii) certify to AT&T in writing that it has
completed the requirements set forth in clauses (I) and (ii)
herein.
6.2 Requirement for Testing (iMALL Updates) Within 120 days
of the commencement of beta testing of any Update to an
Integrated iMALL Product, but not later than the date on which
iMALL makes Update generally available to Customers. iMALL
shall (I) cause each Integrated 1MALL Product to which the
Update pertains to comply in all respects with the AT&T
Compatibility Specification Requirements; (ii) complete the
preparation of such records required by the AT&T Compatibility
Specification Requirements necessary to document such
compliance; (iii) certify to AT&T in writing that it has
completed the requirements set forth in clauses (I) and (ii)
herein.
6.3 Testing Representations Warranties. Upon submission of
the written notices specified in Sections 6.1(iii) and 6.2(iii)
herein, iMALL represents and warrants that the Integrated iMALL
Product referenced in such notice: (I) is ready for release for
general distribution; (ii) has been adequately and extensively
tested; (iii) has been fixed to correct any major errors
affecting its functionality which have been detected by iMALL or
its customers; (iv) is subject to ongoing support, error
detection and correction; and (v) complies in all respects with
the AT&T Compatibility Specification Requirements. AT&T shall
have the right, but not the obligation, to participate in any
such testing with iMALL.
6.4 Product Shipment. Upon request by AT&T, iMALL will
provide to AT&T for inspection (1) records as specified in
Sections 6.1(ii) and 6.2(ii) and (2) prototype Integrated iMALL
Products iMALL shall provide 5 copies of Integrated iMALL
Products which are in good condition and working order, with
separate copies provided for each medium of reproduction in
which the Integrated iMALL Product is sold. iMALL shall also
provide AT&T with any other documentation or information
reasonably requested by AT&T relating to the operation of the
Integrated iMALL Products and/or the conduct of the activities.
6.5 AT&T Testing. AT&T may randomly test the Integrated
iMALL Products for compliance with the AT&T Compatibility
Specification Requirements. If an Integrated iMALL Product
fails to satisfy the applicable certification and testing
requirements, AT&T will specify the reasons for the failure.
iMALL shall use all commercially reasonable efforts to cause any
Integrated iMALL Product which fails AT&T random testing to
comply with the AT&T Compatibility Specification Requirements,
and iMALL shall promptly re-submit such failed Integrated iMALL
Product for re-testing pursuant to Section 6.1 or 6.2, as
appropriate.
6.6 Successful Completion of Certification Testing.
Notwithstanding any other provision in this Agreement, only upon
certification by iMALL pursuant to Sections 6.1 or 6.2, as
appropriate, that the tested version of the Integrated iMALL
Product is compatible with the Service may iMALL (I) offer an
Integrated iMALL Product for sale; (ii) market an Integrated
iMALL Product; or (iii) state in advertising in a form consistent
with the requirements set forth in Attachment B and on product
packaging that the particular version of an Integrated iMALL
Product includes AT&T WorldNet Software.
6.7 Product Changes. Compatibility certification shall be
valid only for the specific version of an Integrated iMALL
Product and the specific version of the AT&T WorldNet Software
for which such Integrated iMALL Product was tested.
6.7.1 AT&T WorldNet Software Updates. AT&T shall provide
iMALL with at least 30 days notice of the issuance of any Updates
to the AT&T WorldNet Software. Upon receipt by iMALL of a
golden master copy of an Update to the AT&T WorldNet Software,
subject to iMALL=s right to exhaust portions of its existing
inventory pursuant to Section 6.8, (I) iMALL's rights under
Sections 3.1, 3.2, 3.6, and 6.6 for each of the Integrated iMALL
Products shall be void; and (ii) iMALL must remove any AT&T Mark
from all product packaging, labeling, advertising and marketing
materials for each of the Integrated iMALL Products, unless and
until the Integrated iMALL Product(s) incorporating any and all
Updates have successfully completed the AT&T Compatibility
Specification Requirements.
6.7.2 iMALL Product Updates. Upon the release for
general availability of an Update to a iMALL Integrated Product,
subject to iMALL's right to exhaust portions of its existing
inventory pursuant to Section 6.8, (I) iMALL's rights under
Sections 3.1, 3.2, 3.6, and 6.6 for the Integrated iMALL Product
to which such Update pertains shall be void; and (ii) iMALL must
remove any AT&T Mark from all product packaging, labeling,
advertising and marketing materials for the Integrated iMALL
Product to which such Update pertains, unless and until the
Integrated iMALL Product to which such Update pertains has
successfully completed the AT&T Compatibility Specification
Requirements.
6.8 Exhaustion of Inventory Upon the delivery of any Update
of the AT&T WorldNet Software to iMALL, iMALL shall no longer be
permitted to reproduce and iMALL and its Distributors shall no
longer be permitted to distribute pursuant to Section 3.1, 3.2
and 3.6 versions of any Integrated iMALL Product not integrated
with the most current Update ("Outdated Product"), excepting
that upon delivery of such Update to iMALL, iMALL shall be
permitted to exhaust existing inventory of Outdated Product for a
period of 120 days In no event shall AT&T have any obligations
with respect to Updates under this Agreement following the 30
days notice period set forth in Section 6.7. 1, except that after
expiration of such notice period, AT&T will make available to
customers all Updates issued between the expiration of such 30
days notice period and the date of the customer's initial
registration for the Service.
6.9 Notice of iMALL Updates. iMALL agrees to give AT&T
written notice of the commencement of development of any Updates
to any Integrated iMALL Products no later than 30 days prior to
the commencement of beta testing of such Update. iMALL shall
indicate, in the notice to AT&T, the expected completion and
commercial release dates for such Updates. iMALL shall
cooperate with AT&T to provide timely reports as to product
development product release schedules.
7. PAYMENTS
7.1 Accrue of Payments. On the date an individual becomes a
Delivered Member, a credit of $5.00 shall accrue to iMALL. Within
ninety (90) days following the end of each calendar quarter,
AT&T shall provide to iMALL a quarterly report specifying the
amounts of credits accrued for new Delivered Members during that
quarter.
7.2 Payments. Accrued payments under Section 7.1 shall be paid
to iMALL within ninety (90) days following the end of each
calendar quarter.
7.3 Accrual of CCS Payments. Subject to execution of the
Long Distance Reward Agreement and iMall providing AT&T with a
list of all of its clients, on the date an individual becomes a
switch AT&T LD Customer, credits of $5.00 per Switch AT&T LD
Customer shall accrue to iMall. Within fifteen (15) days
following the end of each calendar quarter, AT&T shall provide to
iMall a quarterly statement specifying the amount of credits
accrued for Switch AT&T LD Customer who becomes Switch AT&T LD
Customer during the quarter. IMall shall invoice AT&T for such
an amount appearing in the quarterly statement.
7.4 Payments. Accrued payments under Section 7.3 shall be paid
to iMall within forty-five (45) days following the receipt of an
invoice from IMall.
7.5 Taxes. Each party agrees to pay for any taxes, charges or
fees arising out of its obligations or acts hereunder.
8. DELIVERABLES AND UPDATES
8.1 Alliance Managers. Each party shall appoint an Alliance
Manager, who will be charged with primary responsibility for
coordinating, managing and scheduling the collaborative efforts
described in this Agreement
8.2 Delivery of Software and Updates. Promptly after the
Effective Date, AT&T shall provide iMALL with a golden master
copy of the AT&T WorldNet Software AT&T shall provide to iMALL
and iMALL shall provide to AT&T a golden master of any Updates
to the AT&T WorldNet Software and any Integrated iMALL Products,
respectively, upon the commencement of beta testing of such
Updates Such beta versions shall be Confidential Information of
AT&T or iMALL, as the case may be, and shall be treated in
accordance with Section 1.1.
8.3 Test Accounts. AT&T shall provide iMALL with 2 test
accounts for the purpose of testing Integrated iMALL Products in
conjunction with the Service iMALL shall be responsible for all
local, long distance or 800 facility access charges to reach the
Service, and any additional access charges or taxes that may be
imposed on Members or on the Service.
8.4 Updates/Service Changes. Nothing in this Agreement shall
limit AT&T=s right to change the functionality or pricing of the
Service or AT&T's and its suppliers' rights to change the
functionality of the AT&T WorldNet Software at any time. AT&T's
or its suppliers' exercise of such rights shall not be grounds
for termination of this Agreement by iMALL, provided that the
exercise of such rights does not adversely impact the
compatibility of the AT&T WorldNet Software and the Integrated
iMALL Products.
8.5 End User Warranties. iMALL shall offer each End User of
Integrated iMALL Products the same warranty as it offers to End
Users of like products.
8.6 Internal Use. iMALL grants to AT&T a royalty-free,
nonexclusive license during the Term of this Agreement to use
internally, solely for purposes of marketing, promotion,
demonstration, testing and technical support, at least 50 copies
of each different Integrated iMALL Product, or such greater
number of copies as the parties shall mutually agree upon. All
such copies of Integrated iMALL Products shall contain all
appropriate and customary proprietary rights notices provided by
iMALL with such Integrated iMALL Products. The license granted
under this Section 8.7 expressly excludes the right to distribute
Integrated iMALL Products. Nothing in this Agreement shall be
construed as giving AT&T any right to manufacture or otherwise
make or distribute copies of Integrated iMALL Products.
9. TRADEMARKS AND TRADE NAMES
9.1 License to AT&T Marks. Commencing on the Certification
Date and subject to the terms and conditions of this Agreement,
iMALL is hereby granted for the remainder of the Term of this
Agreement a nontransferable, nonexclusive, royalty-free
restricted license extending to the Territory to market each
version of each of the Integrated iMALL Products as including
the AT&T WorldNet Software and otherwise solely use on the
Integrated iMALL Products and in advertising and marketing
materials thereof any AT&T Marks provided by AT&T to iMALL
expressly for use with Integrated iMALL Products which are
distributed by iMALL or its Distributors in connection with this
Agreement, provided that AT&T shall have given iMALL written
confirmation that iMALL has, in form, met the requirements set
forth in Attachment B with respect to such version of the
Integrated iMALL Product, and provided further that such grant
shall be conditioned on and subject to iMALL's compliance with
the requirements of Sections 6 and 8 at all times. All such
usage of AT&T Marks shall inure solely to the benefit of AT&T and
shall not create any rights, title or interest for iMALL in
and to the AT&T Marks. iMALL may use Third Party Marks on the
Integrated iMALL Products and in advertising and marketing
materials thereof in connection with the permitted marketing and
distribution of iMALL Products under this Agreement, provided
that the AT&T Marks are used at least as prominently as the Third
Party Marks of any service provider or product manufacturer
other than iMALL, excepting Developer Marks, whose goods or
services are integrated with or packaged with iMALL. Upon AT&T's
request from time to time iMALL agrees to provide AT&T with
copies of iMALL Products bearing AT&T Marks so that AT&T can
verify their adequate quality. iMALL shall suspend use of AT&T
Marks if such quality is reasonably deemed inferior by AT&T
until iMALL has taken such steps as AT&T may reasonably require
to solve the quality deficiencies, but any such suspension of
AT&T Marks usage will not result in suspension of the license to
use, reproduce and distribute the AT&T WorldNet Software granted
to iMALL hereunder provided that iMALL is diligently taking the
required steps to solve the quality deficiencies.
9.2 License to iMALL Marks. Commencing on the Effective Date
and subject to the terms and conditions of this Agreement, iMALL
hereby grants to AT&T for the Term of this Agreement a
nontransferable, nonexclusive, royalty-free, restricted license
extending to the Territory to use the iMALL Marks solely to
promote, advertise, and market the Service and the Integrated
iMALL Products and in advertising and marketing materials
thereof and on promotional, advertising, and marketing materials
in connection with the Service AT&T shall use such iMALL Marks
in accordance with the guidelines set forth in Attachment B. All
such usage of iMALL Marks shall be subject to iMALL's prior
written approvals, shall inure solely to the benefit of iMALL
and shall not create any rights, title or interest for AT&T in
and to the iMALL Marks. AT&T agrees to cooperate with iMALL in
facilitating iMALL's monitoring and control of the use of the
1MALL Marks and to supply iMALL with samples of use of the iMALL
Marks Except for the iMALL Marks, AT&T will be the owner of all
marks used solely to distribute, promote, advertise and market
the Service and the goodwill related thereto and all uses thereof
shall inure solely to the benefit of AT&T.
10. PROPRIETARY RIGHTS
10.1 Proprietary Rights. Title to and ownership of all copies
of AT&T WorldNet Software and AT&T Documentation, whether in
machine-readable or printed form, and including, without
limitation, Derivative Works, compilations, or collective works
thereof prepared by AT&T and all related technical know-how and
all rights therein (including without limitation rights in
patents, copyrights, and trade secrets applicable thereto), are
and shall remain the exclusive property of AT&T and its
suppliers. iMALL shall not take any action to jeopardize, limit
or interfere in any manner with AT&T's ownership of and rights
with respect to the AT&T WorldNet Software and AT&T
Documentation iMALL shall have only those rights in or to the
AT&T WorldNet Software and AT&T Documentation granted to it
pursuant to this Agreement. Nothing herein shall be deemed to
affect iMALL's ownership of or rights in or to any information
developed or owned by, or made available by third parties to,
iMALL.
10.2 Proprietary Notices.
10.2.1 No Alteration of Notices. iMALL and its employees and
agents shall not remove or alter any proper trademark, service
mark, trade name, copyright, or other proprietary notices
appearing on or in copies of the AT&T WorldNet Software and AT&T
Documentation delivered to iMALL by AT&T and shall use the same
notices in and on copies of iMALL Products and AT&T Documentation
made pursuant to Section 3.1, 3.2 and 4.4 as are contained in and
on such copies of the AT&T WorldNet Software and AT&T
Documentation.
10.2.2 Notice. Each portion of the AT&T WorldNet Software
and AT&T Documentation reproduced by iMALL or its Distributors
shall include the intellectual property notice or notices
appearing in or on the corresponding portion of such materials
as delivered by AT&T hereunder. iMALL further agrees that, to
the extent that iMALL prepares any Derivative Works of iMALL
Products incorporating, in whole or in part, the AT&T WorldNet
Software as permitted by this Agreement it will include an
appropriate copyright notice of AT&T.
11. CONFIDENTIAL INFORMATION AND DISCLOSURE
11.1 Confidential Information. Each party agrees to maintain
all Confidential Information in confidence to the same extent
that it protects its own similar Confidential Information and to
use such Confidential Information only as permitted under this
Agreement. For purposes of this Agreement "Confidential
Information" shall mean confidential or proprietary technical or
business Information given by the discloser of the Information to
the recipient of the Information All Information which is
disclosed by one party to the other in connection with this
Agreement(whether orally, in writing, or by any other means or
media) shall automatically be deemed proprietary to the
discloser of the Information and subject to this Agreement,
unless otherwise confirmed in writing by the discloser of the
Information. Each party agrees to take all reasonable
precautions to prevent any unauthorized disclosure or use of
confidential Information including, without limitation,
disclosing Confidential Information only to its employees and in
the case of AT&T its Affiliates and in the case of iMALL its
Distributors (a) with a need to know to further permitted uses
of such information and (b) who are parties to appropriate
agreements sufficient to comply with this Section 11, and (c) who
are informed of the nondisclosure/non-use obligations imposed by
this Section 11, and both parties shall take appropriate steps
to implement and enforce such non-disclosure/non-use obligations
The foregoing restrictions on disclosure and use shall survive
for 3 years following termination of this Agreement but shall not
apply with respect to any Confidential Information which (I) was
or becomes publicly known through no fault of the receiving
party, (ii) was rightfully known or becomes rightfully known to
the receiving party without confidential or proprietary
restriction from a source other than the disclosing party; (iii)
is independently developed by the receiving party without the
participation of individuals who have had access to the
Confidential Information; (iv) is approved by the disclosing
party for disclosure without restriction in a written document
which is signed by a duly authorized officer of such disclosing
party, and (v) the receiving party is legally compelled to
disclose, provided, however, that prior to any such compelled
disclosure, the receiving party will (a) assert the
privileged and confidential nature of the Confidential
Information against the third party seeking disclosure and (b)
cooperate fully with the disclosing party in protecting
against any such disclosure and/or obtaining a protective
order narrowing the scope of such disclosure and/or
use of the Confidential Information In the event that such
protection against disclosure is not obtained, the receiving
party will be entitled to disclose the Confidential Information,
but only as and to the extent necessary to legally comply with
such compelled disclosure.
11.2 Member Information iMALL agrees that all information
concerning customers who subscribe to the Service and who switch
long distance service (including quantities or percentages of
such Members who sign up through iMALL Products) is the
Confidential Information of AT&T. AT&T shall include in its
quarterly reports pursuant to Section 7 the number of Delivered
Members registered for the Service.
12. REPRESENTATIONS AND WARRANTIES
12.1 No Warranty. EXCEPT AS MAY BE PROVIDED IN THE AT&T
MEMBER AGREEMENT OR ANY END USER LICENSE AGREEMENT ASSOCIATED
WITH THE AT&T SOFTWARE, AT&T MAKES NO REPRESENTATIONS OR
WARRANTY OF ANY KIND WHETHER EXPRESS OR IMPLIED (EITHER IN FACT
OR BY OPERATION OF LAW) WITH RESPECT TO THE AT&T WORLDNET
SOFTWARE OR ANY OTHER PRODUCT OR SERVICE RELATED THERETO AT&T
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. AT&T DOES NOT WARRANT, FOR
EXAMPLE, THAT THE AT&T WORLDNET SOFTWARE OR ANY OTHER PRODUCT
OR SERVICE RELATED THERETO IS ERROR-FREE OR THAT OPERATION OF
THE AT&T WORLDNET SOFTWARE OR ANY PRODUCTS OR SERVICES
RELATED THERETO WILL BE SECURE OR UNINTERRUPTED THERE IS ALSO
NO IMPLIED WARRANTY OF NONINFRINGEMENT, THE SOLE REMEDY FOR
INFRINGEMENT IS PROVIDED IN SECTION 13.
12.2 AT&T Representations and Warranties AT&T warrants and
represents to iMALL that (I) AT&T owns or has licensed, and will
own or have licensed, the AT&T WorldNet Software and all
necessary intellectual property right therein, and has and will
have the full power and authority to license and deliver copies
of the AT&T WorldNet Software to iMALL as contemplated
hereunder; and (ii) AT&T has not incorporated in the AT&T
WorldNet Software, and, to AT&T's knowledge, the AT&T WorldNet
Software does not contain viruses.
12.3 Netscape Representations and Warranties. iMALL
acknowledges that (I) the AT&T WorldNet Software contains, as a
critical component thereof, a Netscape Navigator <Trade Mark>
brand browser; (ii) representations and warranties are made by
Netscape Communications Corp. ("Netscape") to AT&T in an
agreement between Netscape and AT&T (the "AT&T/Netscape
Agreement"); and (iii) AT&T has the right to fulfill any and all
of its obligations to iMALL under this Agreement by exercising
its rights under the AT&T/Netscape Agreement and securing
performance of such obligations by Netscape.
12.4 iMALL Representations and Warranties iMALL further
warrants and represents to AT&T that: iMALL owns or has
licensed, and will own or have licensed, the iMALL Products and
all necessary intellectual property right therein, and has and
will have the full power and authority to license and deliver
copies of the iMALL Products to customers as contemplated
hereunder; and (ii) iMALL has not incorporated in iMALL Products
and, to iMALL's knowledge, iMALL Products do not contain viruses.
13. INDEMNIFICATION
13.1 AT&T Indemnity
13.1.1 Obligation AT&T shall defend iMALL and its directors,
officers, agents, employees and representatives, in any third
party action for infringement by, or alleged infringement by,
the AT&T WorldNet Software of any U.S. trademark or service
mark, or any U.S. patent issued as of the Effective Date, any
U.S. patent issued after the Effective Date or any U.S.
copyright, or misappropriation of any trade secret by the AT&T
WorldNet Software, and to pay any final judgments awarded or
settlements entered into in any such action. iMALL agrees that
it shall notify AT&T of all threats, claims and proceedings
related to any such suit promptly after such threat, claim or
proceeding comes to the attention of iMALL. AT&T shall have
sole control of the defense and/or settlement of any such suit,
and iMALL shall furnish to AT&T, upon request, information
available to iMALL for such defense, and shall provide AT&T with
such assistance in defending such suits as is requested by AT&T.
13.1.2 Options. If iMALL's use of the AT&T WorldNet Software
under the terms of this Agreement is, or in AT&T's opinion is
likely to be, enjoined due to the type of infringement or
misappropriation specified above, then AT&T may, at its sole
option and expense, either (I) procure for iMALL the right to
continue using such the AT&T WorldNet Software under the terms
of this Agreement, or (ii) replace or modify the AT&T WorldNet
Software so that it is noninfringing and substantially equivalent
in function to the enjoined AT&T WorldNet Software.
13.1.3 Exceptions. The foregoing obligation of AT&T does
not apply (I) with respect to versions of the AT&T WorldNet
Software or portions or components thereof: (a) which are
modified after shipment, if the alleged infringement relates to
such modification, and if such modification was not authorized,
expressly permitted or performed by AT&T; (b) which are combined
with other products, processes or materials, if the alleged
infringement relates to such combination and if AT&T did not
authorize or expressly permit the combination; or (c) where
iMALL's use of the AT&T WorldNet Software is incident to an
infringement not resulting primarily from the AT&T WorldNet
Software or is not in accordance with the license granted under
this Agreement; or (ii) for use or distribution of AT&T WorldNet
Software or the Service or the use of any AT&T Marks by iMALL,
outside the Territory or otherwise not in accordance with the
terms and conditions of this Agreement.
13.1.4 Netscape Indemnity. iMALL acknowledges that (I)
the AT&T WorldNet Software contains, as a critical component
thereof, a Netscape Navigator <trade mark> Internet browser,
(ii) certain indemnity obligations are made by Netscape to AT&T
in the AT&T/Netscape Agreement; and (iii) AT&T has the right to
fulfill any and all of its indemnity obligations to iMALL under
this Agreement by exercising its rights under the AT&T/Netscape
Agreement and securing performance by Netscape.
13.1.5 Sole Liability. THE FOREGOING IS IMALL'S SOLE AND
EXCLUSIVE REMEDY WITH RESPECT TO INFRINGEMENT OR ALLEGED
INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS BY THE AT&T
WORLDNET SOFTWARE, THE SERVICE OR ANY AT&T MARKS, WHETHER UNDER
THEORY OF INDEMNITY, WARRANTY OR OTHERWISE.
13.2 iMALL Indemnity
13.2.1 Obligation iMALL shall defend AT&T, its Affiliates,
and their respective directors, officers, agents, employees and
representatives, in any third party action for infringement by,
or alleged infringement by, iMALL Products, iMALL Marks, or any
modification of the AT&T WorldNet Software by iMALL (when the
infringement or alleged infringement would not be present in the
AT&T WorldNet Software standing alone, as provided by AT&T), of
any U.S. Third Party Mark, or any U.S. patent issued as of the
Effective Date, any U.S. patent issued after the Effective Date
or any copyright, or misappropriation of any trade secret by the
iMALL Products, and any action based on a claim related to
defective disks or defective duplication in copies of iMALL
Products distributed by iMALL and to pay any final judgments
awarded or settlements entered into in any such action AT&T
agrees that it shall notify iMALL of all threats, claims and
proceedings related to any such suit promptly after such threat,
claim or proceeding comes to the attention of AT&T. iMALL shall
have sole control of the defense and/or settlement of any such
suit, and AT&T shall furnish to iMALL upon request, information
available to AT&T for such defense, and shall provide iMALL with
reasonable assistance.
13.2.2 Sole Liability. THE FOREGOING IS AT&T'S SOLE
AND EXCLUSIVE REMEDY WITH RESPECT TO INFRINGEMENT OR ALLEGED
INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS BY OR RELATED
TO THE IMALL PRODUCTS, THE IMALL MARKS, OR ANY MODIFICATION OF
THE AT&T WORLDNET SOFTWARE BY IMALL AND ANY PRODUCTS OR
SERVICES RELATED THERETO, WHETHER UNDER THEORY OF INDEMNITY,
WARRANTY OR OTHERWISE.
14. LIMITATION OF LIABILITY
IN NO EVENT SHALL EITHER PARTY (OR ITS RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, SUPPLIERS, AGENTS, REPRESENTATIVES OR
DISTRIBUTORS) BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF
BUSINESS, LOSS OF USE OR DATA, INTERRUPTION OF BUSINESS, OR
FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF
ANY KIND, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES (AND NOT\WITHSTANDING ANY FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY), OR FOR ANY CLAIM AGAINST THE
OTHER PARTY BY ANY THIRD PARTY, EXCEPT AS PROVIDED IN SECTION
14 ENTITLED "INDEMNIFICATION" IN NO EVENT WILL EITHER PARTY
(OR ITS RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, SUPPLIERS,
AGENTS, REPRESENTATIVES OR DISTRIBUTORS) BE LIABLE FOR (a) ANY
REPRESENTATION OR WARRANTY MADE TO ANY THIRD PARTY BY THE
OTHER PARTY (OR ITS RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES,
SUPPLIERS, AGENTS, REPRESENTATIVES OR DISTRIBUTORS); (b) IN THE
CASE OF AT&T, (I) FAILURE OF THE AT&T WORLDNET SOFTWARE OR ANY
PRODUCTS OR SERVICES RELATED THERETO TO PERFORM AS SPECIFIED
HEREIN EXCEPT AS, AND TO THE EXTENT, OTHERWISE EXPRESSLY
PROVIDED HEREIN, (ii) FAILURE OF THE AT&T WORLDNET SOFTWARE
AND ANY PRODUCTS OR SERVICES RELATED THERETO TO PROVIDE
SECURITY, OR (iii) ANY USE OF THE AT&T WORLDNET SOFTWARE OR
ANY PRODUCTS OR SERVICES RELATED THERETO OR THE DOCUMENTATION
FOR SAME OR THE RESULTS OR INFORMATION OBTAINED OR DECISIONS
MADE BY END USERS OF THE AT&T WORLDNET SOFTWARE OR ANY PRODUCTS
OR SERVICES RELATED THERETO OR THE DOCUMENTATION FOR SAME.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY,
EACH PARTY'S ENTIRE LIABILITY TO THE OTHER PARTY FOR DAMAGES
CONCERNING PERFORMANCE OR NONPERFORMANCE BY SUCH PARTY OR IN
ANY WAY RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT, AND
REGARDLESS OF WHETHER THE CLAIM FOR SUCH DAMAGES IS BASED IN
CONTRACT OR IN TORT (INCLUDING NEGLIGENCE), SHALL NOT EXCEED
AN AMOUNT EQUAL TO THE AMOUNT PAID (AND OBLIGATED TO BE PAID)
BY AT&T UNDER THIS AGREEMENT NOTHING IN THIS SECTION 14 SHALL
BE DEEMED TO LIMIT OR EXPAND EITHER PARTY'S RIGHTS OR LIABILITY
(I) UNDER SECTION 13,(ii) FOR INTELLECTUAL PROPERTY INFRINGEMENT
OR MISAPPROPRIATION OF TRADE SECRETS BY EITHER PARTY OR (iii)
FOR BREACH OF SECTION 11 BY EITHER PARTY. IN ADDITION, THE
FOREGOING PROVISIONS OF THIS SECTION 14 WILL NOT AFFECT EITHER
PARTY'S LIABILITY, IF ANY, WITH RESPECT TO CONTRIBUTION OR
INDEMNITY FOR THIRD PARTY CLAIMS FOR PERSONAL INJURY, DEATH, OR
PHYSICAL DAMAGE TO PROPERTY.
15. TERM AND TERMINATION
15.1 Term. Unless sooner terminated under the provisions of
Section 15, or otherwise rightfully terminated, this Agreement
shall remain in effect for a period of one year from the
Effective Date Such term shall be automatically extended for
another one year provided neither party gives the other party 30
days notice prior to the end of the initial period of their
desire to terminate this Agreement.
15.2 Termination for Default. If either party defaults in
any of its obligations under this Agreement, the non-defaulting
party, at its option, shall have the right to terminate this
Agreement by written notice unless, within 30 calendar days after
receipt of written notice of such default, the defaulting party
remedies the default, or, in the case of a default which cannot
with due diligence be cured within a period of 30 calendar days,
the defaulting party institutes within the 30 calendar days steps
necessary to remedy the default and thereafter diligently
prosecutes the same to completion.
15.3 Bankruptcy. Either party shall have the right to
terminate this Agreement if the other party ceases to do business
in the normal course, becomes or is declared insolvent or
bankrupt, is the subject of any proceeding relating to its
liquidation or insolvency which is not dismissed within 90
calendar days, or makes an assignment for the benefit of its
creditors.
15.4 Termination of Browser or Service. AT&T may terminate
this Agreement on 6O days' notice upon termination (1) of AT&T's
browser agreements with its supplier for any reason, including
whether due to lapse of time or to a notice of termination based
on the conduct or status of AT&T or supplier or (2) in the event
AT&T determines to substantially terminate offering the Service.
15.5 Effect on Rights.
15.5.1 Termination of this Agreement by either party shall
not act as a waiver of any breach of this Agreement and shall not
act as a release of either party from any liability for breach of
such party's obligations under this Agreement.
15.5.2 Except as specified in Sections 15.6 and 15.7 below,
upon termination or expiration of this Agreement, all licenses
for AT&T WorldNet Software and its Documentation granted under
this Agreement shall terminate.
15.5.3 Except where otherwise specified, the rights and
remedies granted to a party under this Agreement are cumulative
and in addition to, and not in lieu of, any other rights or
remedies which the party may possess at law or in equity,
including without limitation rights or remedies under applicable
patent, copyright, trade secrets, or proprietary rights laws,
rules or regulations.
15.6 Effect of Termination. Within 30 calendar days after
termination of this Agreement, each party shall, on request by
the other party, either deliver to the other party or destroy all
copies of the requesting party's Confidential Information,
including (in the case of iMALL) AT&T WorldNet Software and
Documentation (except as provided in Section 15.7) and any other
materials provided by the requesting party to the other party
hereunder in its possession or under its control, and shall
furnish to the requesting party a certificate signed by an
officer of the other party certifying that, to the best of its
knowledge, such delivery or destruction has been fully effected.
Notwithstanding the foregoing, and provided iMALL fulfills its
obligations specified in this Agreement with respect to such
items, iMALL may continue to use and retain copies of the AT&T
WorldNet Software and Documentation to the extent, but only to
the extent, necessary to support and maintain iMALL Products
rightfully distributed to End Users by iMALL prior to termination
of this Agreement.
15.7 Continuing Obligations.
15.7.1 Continuance of Sublicenses Notwithstanding the
termination of this Agreement, all End User sublicenses which
have been granted by iMALL and its Distributors pursuant to
this Agreement prior to its termination shall survive, provided
any such licensee or sublicensee continues to comply with the
terms of the applicable license agreement.
15.7.2 Other Continuing Obligations. In addition to the
foregoing, all other respective rights and obligations of AT&T
and iMALL which by their nature survive termination of this
Agreement (including without limitation under the provisions of
Sections 3.4, 4.13, 7, 10.1, 11, 12, 13, 14 and 16) shall survive
termination of this Agreement.
15.7.3 Injunctive Relief Consistent with the protection of
the rights of the party seeking injunctive relief as permitted
hereunder, any injunctive relief sought by either party to
enforce the obligations of the other party under this Agreement
shall be structured, to the greatest extent possible, in a manner
that will maintain the business operations of the party on which
any such relief is imposed.
16. GENERAL PROVISIONS
16.1 Notices. Any notice required or permitted hereunder
shall be in writing and shall be deemed to be properly given upon
the earlier of (a) actual receipt by the addressee or (b) five
business days after deposit in the U.S. mail, postage prepaid,
when mailed by registered or certified U.S. mail, return receipt
requested, or two (2) business days after being sent via
overnight courier to the respective parties at the addresses
first set forth above or to such other person or address as the
parties may from time to time designate in writing delivered
pursuant to this Section 16.1 Notices to AT&T shall be sent to
the address set forth in the introductory paragraph to this
Agreement, attention. Vice President, Law-Multimedia Services
Notices to iMALL shall be sent to the address set forth in the
introductory paragraph to this Agreement, attention: Richard
Rosenblatt.
16.2 Waiver and Amendment. The waiver by either party of a
breach of or a default under any provision of this Agreement,
shall not be construed as a waiver of any subsequent breach of
the same or any other provision of the Agreement, nor shall any
delay or omission on the part of either party to exercise or
avail itself of any right or remedy that it has or may have
hereunder operate as a waiver of any right or remedy. No
amendment or modification of any provision of this Agreement
shall be effective unless in writing and signed by a duly
authorized signatory of AT&T and iMALL.
16.3 Assignment.
16.3.1 No Assignment. Except as expressly provided herein,
neither party may assign this Agreement without the prior written
consent of the other party provided that either party may assign
this agreement to any person or entity that acquires all or
substantially all of that party's business. Such consent shall be
in the sole discretion of the party requested to give consent.
Any attempt to sublicense, assign or transfer (except as
expressly provided herein) any of the rights, duties or
obligations under this Agreement in derogation hereof shall be
null and void.
16.3.2 AT&T Restructuring. By the provision of notice in
accordance with this Agreement, AT&T shall have the right to
assign this Agreement and to assign its rights and delegate its
obligations and liabilities under this Agreement, either in whole
or in part (an "Assignment") to any entity that is, or that was
immediately preceding such Assignment: (I) a current or former
subsidiary, business unit, or division of AT&T, or (ii) an entity
in which AT&T had an ownership interest. The notice of
Assignment shall state the effective date thereof. Upon the
effective date and to the extent of the Assignment, AT&T shall be
released and discharged from all obligations and liabilities
under this Agreement. Such Assignment, release and discharge
shall be complete and shall not be altered by the termination of
the affiliation between AT&T and the entity assigned rights or
delegated obligations and liabilities under this Agreement.
16.4 Governing Law, Dispute Resolution. This Agreement and
all disputes hereunder shall be governed by the substantive law
of the State of New York, without regard to the conflicts of law
provisions therein, and the parties hereby expressly consent to
be subject to the jurisdiction of the courts of the State of New
York. In the event of a dispute regarding any matter under this
Agreement which cannot be resolved by the parties, the dispute
shall be referred to a Vice President of AT&T and a Vice
President of iMALL, who will attempt to resolve the dispute
within 10 business days of such referral date. If such officers
resolve the dispute they shall set forth in writing the
resolution. If such officers are unable to resolve the dispute
within such 10 business day period, the parties shall further
seek to resolve the dispute pursuant to arbitration as set forth
below. All disputes hereunder which cannot be amicably resolved
by the parties as described above, except those solely concerned
with AT&T's intellectual property rights in the AT&T WorldNet
Software, shall be settled exclusively by binding arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association. The arbitration shall be held in New
York City, New York and shall be conducted by a single
arbitrator who shall be a lawyer familiar with computer software
development and license agreements. The decision of the
arbitrator shall be final and binding upon the parties and may be
enforced by either party in any court of competent jurisdiction.
Each party shall bear the cost of preparing and presenting its
case. The costs of the arbitration, including the fees and
expenses of the arbitrator, will be shared equally by the
parties unless the award otherwise provides. This provision
shall not be construed to prohibit either party from seeking
preliminary or permanent injunctive relief in any court of
competent jurisdiction to the extent not prohibited by this
Agreement.
16.5 Regulatory Compliance. The parties recognize that the
Service may be subject to regulation by the Federal
Communications Commission and/or state regulatory agencies. If
any applicable regulation, whether now existing or hereafter
enacted, requires a modification of this Agreement or the waiver
of any right hereunder in order to market and offer iMALL
Products, and/or the Service as contemplated hereunder, the
parties agree to take such reasonable actions as are required
under the circumstances in order to accomplish the purposes of
this Agreement. Each party shall comply with all requirements of
applicable laws, ordinances, administrative rules and regulations
in the performance of this Agreement, and shall take prompt
action to remove or remedy any violation that occurs or is
discovered during the Term of this Agreement.
16.6 Relationship of the Parties. No agency, partnership,
franchise, joint venture, or employment is created as a result
of this Agreement and neither iMALL nor its agents have any
authority of any kind to bind AT&T in any respect whatsoever.
16.7 Severability. If the application of any provision or
provisions of this Agreement to any particular facts of
circumstances shall be held to be invalid or unenforceable by
any court of competent jurisdiction, then (a) the validity and
enforceability of such provision or provisions as applied to any
other particular facts or circumstances and the validity of
other provisions of this Agreement shall not in any way be
affected or impaired thereby and (b) such provision or
provisions shall be reformed without further action by the
parties hereto to and only to the extent necessary to make such
provision or provisions valid and enforceable when applied to
such particular facts and circumstances.
16.8 Force Majeure. Either party shall be excused from any
delay or failure in performance hereunder caused by reason of
any occurrence or contingency beyond its reasonable control,
including but not limited to, acts of God, earthquake, labor
disputes and strikes, riots, war, novelty of product manufacture
or other unanticipated product development problems, and
governmental requirements. The obligations and rights of the
party so excused shall be extended on a day-to-day basis for the
period of time equal to that of the underlying cause of the
delay.
16.9 Expenses. Each party shall bear its own costs and
expenses in connection with this Agreement, except as expressly
provided herein.
16.10 Compliance with all Laws. Each party shall comply fully
with all requirements of applicable laws, ordinances,
administrative rules and regulations, including but not limited
to those relating to the export of technical data, those of the
United States Departments of State and Commerce and other
applicable governmental agencies, and each party acknowledges
that by virtue of certain security technology embedded in the
AT&T WorldNet Software, the export of such software may not be
legal. Further, each party agrees to comply with and require
its Distributors to comply with rules and regulations to preclude
the acquisition of unlimited rights to technical data, software
and documentation provided with the AT&T WorldNet Software and
Integrated iMALL Products to a governmental agency, and ensure
the inclusion of appropriate "Restricted Rights" or "Limited
Rights" notices required by the U.S. Government agencies.
16.11 Entire Agreement. This Agreement, including the
Attachments hereto, constitutes the entire agreement between
the parties concerning the subject matter hereof and supersedes
all proposals or prior agreements whether oral or written, and
all communications between the parties relating to the subject
matter of this Agreement and all past courses of dealing or
industry custom. The terms and conditions of this Agreement
shall prevail, notwithstanding any variance with any purchase
order or other written instrument submitted by iMALL, unless
specifically agreed in writing by AT&T.
AUTHORIZED SIGNATURES
In order to bind the parties to this Agreement, their duly
authorized representatives have signed their names below on the
dates indicated. This Agreement shall be binding on both parties
when signed on behalf of each party and delivered to the other
party (which delivery may be accomplished by facsimile
transmission of the signature pages hereto).
iMALL, INCORPORATED AT&T CORP.
By: By:
/S/ Richard Rosenblatt /S/??
Title: Senior Vice President Marketing Vice President
Date: 6/13/96 Date: 6/24/96
Attachment A - iMALL Products
iMALL Software Starter Kit
Attachment B - Trademark and Service Mark Guidelines
GUIDELINES FOR USE OF THE AT&T CORPORATE SIGNATURE
Components
The AT&T corporate signature is comprised of two parts the globe
and the logotype (AT&T).
The globe is comprised of a series of 8 or 12 horizontal black
lines depending on the size of the corporate signature. The
8-fine design is used for globe diameters of 3/8" or less The
12-line design is used for globe diameters over 3/8". The globe
also contains a "hot spot" which is the highlighted area in the
upper left hand area of the globe sphere. This hot spot is
always the color of the background which supports the globe,
except when the background is a dark color and the globe is
printed in a light color, the lightest color of the globe always
prevails in the hot spot. The globe must never be used as part
of graphic design, and never without the logotype.
The print specifications for the logotype is "AT&T Garamond" The
distance between the logotype and the globe should never be
altered.
Positioning
The AT&T corporate signature should be positioned in a prominent
area of the material being supported. On printed material, it is
usually used as a "sign off" in the lower right hand corner, or
as a sign on in the upper left hand corner. If the material is
co-logged with one of AT&T's Business Alliances, then both logos
carry equal weight at the beginning or at the end of the
material.
Orientation
Two different orientations of the corporate signature have been
developed to support different layouts:
Horizontal configuration - The logotype is located to the
immediate right of the globe. The horizontal configuration is
usually used flush left in the upper left hand corner of the
page/item or, as in advertising, flush left or flush right with
the last line of copy This configuration is seldom centered"
except on business cards.
Centered configuration - The logotype is located centered
under the globe. The centered configuration is used whenever the
corporate signature is centered on a page/item.
Clear Space
The minimum clear area around the signature is the diameter of
the globe. This is required for proper staging of visual impact
regardless of the size of the globe.
Corporate Signature with Organization Name AT&T WorldNet <service
mark> Services Signatures combined with organization names
should not be used on the primary surface (front cover) of a
printed piece, only the corporate signature may appear on the
front cover. The organization name is typeset in Helvetica
Light, initial capitals and lower case letters. The distance
of the organization name from the bottom of the globe is the
globe diameter, and is flush left with the logotype in the
horizontal configuration), or centered below the logotype (in
the centered configuration).
Color
When used on light-colored backgrounds up to 30% black or
equivalent value, the preferred color of the corporate signature
is Process Blue (globe) and Black (logotype). The two
alternates are, both globe and logotype in Black, or both in
Process Blue. If the background color does not permit
sufficient contrast with either of the three preferred color
treatments, then the globe and logotype may be printed in any
one color that will permit sufficient contrast with the
background.
Using Black or Dark Backgrounds
A "Reverse Logo" has been developed for use on dark backgrounds
with more than 30% of black or equivalent value. This version is
not an exact photographic opposite of the positive version. It's
design ensures that the "hot spot" always remains the lightest
color of the globe. When using the reverse version, the globe
symbol may be reproduced in Process Cyan or 80% screen of AT&T
Process Blue, the logotype is always white.
Background Control
For optimum visibility, the corporate signature must be
reproduced on backgrounds that present continuous, even color
values as well as sufficient contrast.
Approval
All material displaying the AT&T corporate signature must be
approved by AT&T WorldNet <service mark> Marketing Communications
and Advertising before developing. It will be evaluated for
compliance to AT&T graphic standards and brand positioning.
Approval Process
Please send a copy of the proposed layout to Gayle Jones-Jackson
Please include the diameter and measurements you are requesting
of the logo.
Fax number 908-658-2631
Voice number 908-658-7292
Email [email protected]
With approval, she will sign and fax back and send a repro logo
or sheet for your use.
Attachment C - Customer Care Requirements
Coordination and Interface
The coordination of customer service processes and interfaces
between iMALL and AT&T will provide both AT&T and iMALL with an
outline of how to work together to resolve any problems
associated with AT&T WorldNet Services access and the use of
iMALL products.
Single Contact
iMALL will provide AT&T with a single point of contact from their
customer service organization, for purposes of coordinating
process interfaces and comparing service results. Where there
is an Integrated iMALL Product, AT&T and iMALL will work to
develop an integration test plan that evaluates that integration
and allows both organizations to support the integration.
Quality Control Metrics
iMALL will provide automated tracking of customer service
performance associated with AT&T WorldNet Services software
concerns. A monthly (or as mutually agreed) review of customer
problems and resolution as well as performance metrics related
to AT&T WorldNet Services software will be set up between AT&T
and iMALL. Reporting and tracking will be defined and
implemented in order to achieve continuous improvement to the
customer's on line experience and seamless use of the AT&T
WorldNet Services enhanced product.
AT&T WorldNet Services Support Material
AT&T will provide the AT&T WorldNet Services support material
content to iMALL's Services Team that will handle any calls
associated with the Integrated iMALL Product. Training of iMALL
Services team will be at iMALL's expense.
Tier One Support
iMALL will be responsible for tier one customer support, either
on iMALL Website or by phone, fax or other means of an end user
seeking customer support iMALL will provide to their end users
the same level of support (for Integrated iMALL Product) that is
offered to customers of any iMALL product at a similar cost.
iMALL's current customer care model will apply to the new
products.
On-line Support and Reference to WorldNet Services
If support is introduced on iMALL home page and there is mention
of or any references to AT&T or AT&T WorldNet Services, AT&T has
the right to approve the content that mentions AT&T or AT&T
WorldNet Service. Referral of end users to AT&T's 800 number
must be approved by AT&T, from a process perspective before any
initiation of this activity Publishing of AT&T Customer Care 800
number without prior written consent from the AT&T Customer Care
single point of contact, is prohibited.
Attachment D - AT&T WORLDNET PERFORMANCE SPECIFICATION
AT&T Compatibility Specification apply to all Integrated iMALL
Products that are to be certified as compatible with AT&T
WorldNet Services or which include AT&T WorldNet Registration
Software.
General
The integration test schedule provides reasonable turnaround
times for the test activities, but vendor manufacturing deadlines
are the highest priority. Thus, anything that can be done to
meet these deadlines within acceptable risk will be done.
The test suites and their scope are detailed in the "Integration
Test Suites" section. Each test suite will be run with two
hardware configurations (See equipment list), and the
appropriate operating system of Windows 3.1 or Windows-95,
depending if it's the 16-bit product (for Windows 3.1) or the
32-bit product (for Windows-95) New (or modified) test suites
will incorporated as necessary.
Quality
Quality of the integrated product will be tracked by monitoring
the following quality objectives:
0 If available at the time of testing, the packaging must
clearly state the system requirements for the integrated product.
0 The integrated setup and install scripts must contain all the
functionality required to get a user "up-and-running" with AT&T
WorldNet Services.
0 For both Win 3 x and Win 95 systems, Setup Wizard/WorldNet
connection must work with stated minimum system requirements
(Usually 8MB RAM)
0 When system resources are insufficient, it should recommend
actions to the user to correct the problem and exit gracefully.
0 Any new program group icons that are created during the
installation process must work and correctly identify any AT&T
WorldNet software or functionality.
0 Any new "bookmarks" that were added must exist and not point
to any site that contains links or references that may be illegal
or contrary to AT&T policy.
INTEGRATION TEST SUITES
General Guidelines
Basic guidelines will be to check for a complete copy of all
files from the source (floppy or our Internet site's zipped
files) to the integrated CD, verify end-to-end installation,
registration and use, and lastly make sure the registration code
works (pulls down the correct home page, allows registration, and
correct pricing)
Test I - File Compare
Create a batch file that will compare all the files on each
floppy to the directories on the integrated CD, using Exhibit A
as a guide. If the files have been retrieved via our Internet
server, use the CRC numbers to verify that all files have been
copies over successfully (refer to the download instructions for
more information) The exception to this of course would be if
they have modified any setup scripts or the bookmark file (e.g.
to incorporate a home page URL).
Test 2 - End-to-End Installation
A. Integrated Products that launch the AT&T WorldNet
Software as an independent application must:
1. properly load the AT&T WorldNet browser program into
Windows 3.1 and Windows 95 program environments.
2. properly launch and render fully operational all
executable files from the AT&T WorldNet Service Program Group,
The executable files from the AT&T WorldNet Service Program Group
currently contains the following executable files:
I. AT&T WorldNet Service executable
ii. AT&T WorldNet Customer Care executable
iii. The Registration Wizard executable
iv. The AT&T WorldNet Service Read Me executable
3. operate free of memory conflicts between the AT&T
WorldNet Software and any other software contained in the
Integrated iMALL Products.
Integrated iMALL Products that launch the AT&T WorldNet Software
both as an independent application and within another
iMALL
application must:
1. fulfill all of the functional requirements specified in
part A.1 above, plus:
2. [to be specified upon the development of Integrated
Products failing within this category]
Install the integrated application, including the WorldNet Dial
software, and register using the assigned registration code(s)
During the installation, check for the following:
0 Check the registration code(s) for validity. Some plans will
have two or more codes These codes are validated during the
registration process.
0 Check for the appropriate pricing plan to be presented,
based upon the registration code. The pricing plans are also
presented during the registration process.
Test 3 - Browser Execution
After the installation, make sure the browser is invoked
successfully from the following:
0 For Windows-95, from all shortcuts, program icons, and
"start button" locations.
0 For Windows 3.1, from all program icons.
0 Any execution from within the application itself.
Test 4 - Adherence to Contact Guidelines
After the application is installed, make sure all shortcuts,
icons, and invocations of the browser have the correct wording
and icon representation Use the following guidelines.
Any Program icon that invokes the browser and uses the
default WorldNet home page, must display the correct AT&T
WorldNet globe icon.
0 Any shortcut, start button, or program icon that invokes
anything other than the default WorldNet home page must NOT have
the AT&T WorldNet globe icon, unless approved by AT&T legal
beforehand.
Test 5 - Bookmarks
It is possible that the default bookmarks have been changed to
contain the vendor's home page(s). The general guideline here is
that:
They all work (the site exists)
They don't point to any site that is in obvious violation of the
contract
Test 6 - Minimum Resources
Test the installation using the minimum recommended hardware
requirements. The issue here is if the browser is invoked from
within the vendor application, will they work together. Note
that the recommended minimum requirements might not be the same
as it is for the AT&T WorldNet Service software.
RISKS
Equipment Availability
Equipment availability and use as planned (see Test Equipment
section) is necessary and should be sufficient for testing both
Windows 3.1 and Windows-95. Should needed test components not be
available, we will consider deleting them from coverage
objectives or postponing coverage until available without
slipping the test completion dates.
Delays and Schedule Sensitivity
Testing intervals are short in comparison to the overall
integration effort, the risk is that with a one week test
interval, the project is sensitive to delays that consume
calendar time to resolve. Should a critical or road-blocking
problem take more than a couple of days to resolve, a large
portion of the interval is lost and recovery is more difficult
Plans to address such delays include.
Lowering release quality objectives
Postponing scheduled manufacturing
TEST EQUIPMENT
Integration testing expects to use the following two
hardware/software configurations.
1. A 8MB (or minimally recommended configuration) machine
running Windows 3.1. Internal or external 2X or above CDROM, 14
4kb or higher modem Hard disk space of adequate size to handle
the disk space required for the operating system, the
application, and the WorldNet software (usually 300MB or higher)
2. A 16MB or above configured machine running Windows 95.
Internal or external 2X or above CDROM, 14.4kb or higher modem.
Hard disk space of adequate size to handle the disk space
required for the operating system, the application, and the
WorldNet software (usually 500MB or higher).
AUDIT
AT&T is authorized to audit the testing documentation to
validate certification of any Integrated Product and/or AT&T
WorldNet Software release.
DOCUMENTATION
The testing and certification process must be complete in order
to support the rights to use AT&T Marks and certification
affiliation The documentation required to support this process
are:
must provide AT&T with written notification of compliance
with testing.
must include all testing notes and re-test notes associated
with testing.
SCOPE OF TESTING
The testing must be complete for all releases of an Integrated
iMALL Product and/or the AT&T WorldNet Software. In addition,
the testing cycle must comply with the following guidelines:
must use associates who are not the developers of the
software and were not involved in any previous test cycles.
EXHIBIT A
<TESTING COMMANDS>
ATTACHMENT E - iMALL ICON
Option 1.
Windows 3.lx using AT&T WorldNet Software version 1.22
iMALL may add bookmarks to sites of their own choosing by adding
them to the default'bookmark.htm' provided on the distribution
disks.
The iMALL's end-users will then have the ability to have a
single-click access to iMALL's home-page, the support-page etc
Option 2.
Windows 3.lx using iMALL launcher
iMALL may choose to write their own application launcher that
launches the AT&T WorldNet software and communicates with it to
go to the URL of their choosing.
The icon representing the launcher will be developed by the iMALL
and shall not be the AT&T globe or other AT&T Mark.
Such an application launcher would test whether AT&T WorldNet has
been installed, and use standard Netscape 1.22 PE defined methods
(DDE/OLE2)to make it invoke the iMALL chosen URLs.
Option 3.
Windows 95 using iMALL launcher
iMALL may choose to write their own application launcher that
invokes the AT&T WorldNet Service and points it to the chosen
URL. Such an application launcher would test whether AT&T
WorldNet Software has been installed using the standard Win95
registry API - upon finding that it is NOT, the launcher would
give some appropriate error message such as "AT&T WorldNet is not
yet installed Install it using the CD and then try and reach AT&T
Tech-Support On-line . ." or substantially similar language.
ATTACHMENT F - LONG DISTANCE REWARD AGREEMENT
AGREEMENT
BETWEEN
AT&T COMMUNICATIONS, INC.
AND
iMALL, INCORPORATED
This Agreement is made and entered into effective as of
1996, by and iMall Incorporated, a Nevada corporation with
offices located at 4400 Coldwater Canyon Boulevard, Suite 200,
Studio City, California 91604 ("iMALL"), and AT&T Communications,
Inc, a Delaware corporation, with offices located at 295 North
Maple Avenue, Basking Ridge, New Jersey 07920, for itself and
its affiliated companies (collectively "AT&T")
RECITALS
WHEREAS, AT&T operates a telecommunications network in the
United States and around the world, through which customers may
obtain telecommunication services including residential long
distance telephone service, interstate and/or intrastate
interLATA and/or intraLATA telecommunications service, and
interexchange or intraexchange telecommunications service
("AT&T Service"), and
WHEREAS, iMALL markets and sells various software products in the
United States; and
WHEREAS, iMALL and AT&T desire to engage in marketing efforts to
their respective customers.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth herein, AT&T and iMALL agree as
follows,
1. TERM OF AGREEMENT AND RENEWAL.
This Agreement shall commence on the date first set forth above
(the "Effective Date") and shall expire one year after the
Effective Date (the "Initial Term"), unless sooner terminated by
either party pursuant to this Agreement. No later than sixty
(60) days prior to the expiration date, the Parties shall
initiate negotiations concerning the renewal of this Agreement.
Such negotiations may include the modification of any and all
terms of this Agreement. In the event that either Party
concludes, in its sole discretion, not to renew this Agreement,
then this Agreement shall terminate pursuant to this Article.
2. MARKETING PROGRAMS.
A. Subject to Article 4, and for the period to AT&T
will provide iMALL customers who switch their Dial-1 residential
long distance telecommunications service from another
interexchange carrier to AT&T with (I) a iMALL Gift Certificate,
which may be used to and (ii) Long Distance Certificates or a
check for any fee charged by the customer's local telephone
company for switching to AT&T as an Interexchange carrier,
provided, however, that AT&T will provide such offer only to
iMALL customers who are not currently subscribed to AT&T as the
customer's long distance carrier AT&T will distribute iMALL
Gift Certificates and AT&T Long Distance Certificates to its
customers in its Welcome Package to new customers AT&T shall
promote and market the offer described above via direct mail
marketing materials and telemarketing activities.
B. iMALL, at its expense, shall design, develop and print
iMALL Gift Certificates. iMALL agrees to accept iMALL Gift
Certificate as payment for goods and services at any iMALL
retail stores until Such date shall be printed on the
certificate. Upon AT&T's request, iMALL shall send to AT&T the
number of iMALL Gift Certificates requested by AT&T.
C. On or before iMALL shall provide AT&T with a list of
approximately million of its customers, including their names,
addresses and telephone numbers. AT&T shall only use iMALL
customer list for the purpose of making the offer set forth in
Section 2A above to selected names on such list. Following
completion of the marketing activities set forth in Section
2A above, AT&T shall return the list to iMALL and shall not
retain a copy of such list. AT&T shall not disclose or transfer
such customer list to any third party. iMALL acknowledges that
some names on iMALL customer list may be existing AT&T customers
or will become AT&T customers and AT&T intends to continue to
contact and market to its customers AT&T shall provide iMALL
with a list of names, addresses and phones numbers of customers
that have accepted the offer set forth in Section 2A above;
provided that the customer consents to the disclosure of such
information.
D. AT&T will be responsible for installing and
maintaining the AT&T Service ordered by iMALL customers in
accordance with AT&T's then current standard practices and
tariffs iMALL customers will be eligible to participate in any
AT&T tariffed offers, for which they otherwise qualify. Existing
AT&T credit policies and practices shall apply, including but
not limited to, AT&T's right to refuse to accept or cancel
orders for the AT&T Services Termination or expiration of this
Agreement shall not affect the AT&T Service provided to iMALL
customers. All AT&T Services, ordered by iMALL customers shall
be provided in accordance with the rules, regulations, and rates
in applicable federal and state tariffs.
3. REGULATORY APPROVALS.
AT&T agrees to use its reasonable business efforts to obtain and
maintain all necessary federal and state regulatory authority
approvals in a timely manner, which may be required for AT&T
activities and/or obligations under this Agreement.
4. COSTS.
A. AT&T shall pay iMALL, on a monthly basis, dollars ($_)
for each iMALL Gift Certificate delivered to an AT&T customer as
a result of the offer set forth in this Agreement.
B. Other than as specifically stated to the contrary in
this Agreement, each party shall bear all costs and expenses in
connection with the performance of its obligations under this
Agreement, including the cost of any additional marketing efforts
either party wishes to undertake.
5. MARKETING.
A. AT&T may make reasonable use of the name, logo,
trademark and trade name (hereinafter the "Marks") of iMALL in
connection with AT&T's obligations under this Agreement AT&T
understands and agrees, however, that all AT&T marketing efforts
which contain any iMALL Mark, or any reference to iMALL, are
subject to prior review and written approval by IMALL. iMALL
agrees that it will review all such AT&T marketing materials in
a timely fashion and shall notify AT&T in writing of the results
of such review within five (5) business days after AT&T confirms
(verbally or in writing) that the marketing materials were
received by iMALL. iMALL agrees that approval of the marketing
materials shall not be unreasonably withheld Notwithstanding the
foregoing, in the event that iMALL fails to provide such written
notice within five (5) days of receipt, iMALL agrees that such
failure may be interpreted by AT&T as approval of such marketing
materials by iMALL.
B. iMALL shall not use the Marks of AT&T or any reference to
AT&T without the prior written approval of AT&T. AT&T agrees
that it will review all such iMALL marketing materials in a
timely fashion and shall notify iMALL in writing of the results
of such review within five (5) business days after iMALL confirms
(verbally or in writing) that the marketing materials were
received by AT&T AT&T agrees that approval of the marketing
materials shall not be unreasonably withheld. Notwithstanding
the foregoing, in the event that AT&T fails to provide such
written notice within five(5) days of receipt, AT&T agrees that
such failure may be interpreted by iMALL as approval of such
marketing materials by AT&T.
C. The Parties understand and agree that nothing in this
Agreement creates any right, title or interest in the Marks of
the other Party Any use of the other Party's Marks shall inure to
the benefit of the owner of such Marks Upon termination of this
Agreement, any and all rights or privileges of either party to
use the other's Marks shall expire, and each party shall
discontinue use of the other's Marks unless otherwise
specifically agreed in writing.
D. iMALL and AT&T may seek to establish such additional
marketing opportunities as are mutually agreeable AT&T and iMALL
each agree to use good faith efforts to identify and implement
such opportunities Once identified, the terms and conditions of
such opportunities will be included as an amendment to this
Agreement.
6. CONFIDENTIALITY.
A. Except as otherwise provided in this Agreement, any
Confidential Information that is furnished, made available, or
otherwise disclosed by one Party (Disclosing Party) to the other
Party (Receiving Party) in consequence of the existence of this
Agreement, shall be deemed and remain the property of the
Disclosing Party
B. Unless Confidential Information was previously known
to the Receiving Party free of any obligation to keep it
confidential, or has been or is subsequently made public by any
act not attributable to the Receiving Party, or has been agreed
by the Disclosing Party in writing not to be regarded as
confidential, and if the Information is marked as "confidential"
or "proprietary" by an appropriate stamp, mark, or label
thereon, or if orally disclosed, summarized in writing by the
Disclosing Party, stamped or marked as "confidential" or
"proprietary" and delivered to the Receiving Party within ten
(10) business days after such disclosure, it shall be deemed
Confidential Information of the Disclosing Party and shall be
held in confidence by the Receiving Party, and shall
be disclosed by the Receiving Party only to those of its
employees who have a need for such confidential Information to
carry out this Agreement. For the purpose of this Agreement,
Confidential Information shall be deemed to include the customer
list provided by iMALL and the AT&T list of names of the
customers that have accepted the AT&T offer set forth in Section
2A Except as the Parties may otherwise agree in writing,
Confidential Information: (a) shall be used only for the purpose
of performing under this Agreement, (b) shall not be reproduced
or copied, in whole or in part, except as necessary for use as
authorized herein, and (c) shall, together with any copies
thereof, be returned or destroyed when no longer needed or upon
termination of this Agreement, whichever occurs first.
C. Confidential Information may be provided to third
parties only upon written authorization of the Disclosing Party
Any third party to whom Confidential Information is provided
pursuant to such authorization of the Disclosing Party must agree
in writing (a copy of which writing will be furnished to the
Disclosing Party at its request) to the conditions respecting
use of Confidential Information contained in Section 6(A) through
(F) of this Agreement.
D. The Receiving Party shall give prompt notice to the
Disclosing Party of any demand by any third party to provide
Confidential Information under lawful process prior to
furnishing Confidential Information, and shall cooperate in
seeking reasonable protective arrangements requested by the
Disclosing Party. In addition, the Receiving Party may provide
Confidential Information of the Disclosing Party requested by a
government agency having jurisdiction over the Receiving Party,
provided prompt notice of such request is given to the Disclosing
Party and that the Receiving Party uses reasonable business
efforts to obtain protective arrangements satisfactory to the
Disclosing Party, and provided further that the Disclosing Party
may not unreasonably withhold approval of the protective
arrangements.
E. The Disclosing Party shall have the right to demand,
upon unauthorized disclosure of any Confidential Information by
the Receiving Party to a third party, the return of all
Confidential Information disclosed to the Receiving Party, and
that the Receiving Party uses reasonable business efforts to
obtain the return from the third party of all Confidential
Information improperly disclosed, in addition to any other
remedies the Disclosing Party may have.
F. The Parties acknowledge that the terms of this
Agreement constitute Confidential Information that may be
considered proprietary by either or both Parties, and agree to
limit distribution of this Agreement to those individuals in
their respective organizations with a need to know the contents
of this Agreement.
7. TERMINATION.
This Agreement may be terminated upon thirty (30) days' prior
written notice by either party without any liability of any kind
on the part of the terminating party. Either party may
immediately terminate this Agreement by written notice, if the
other party breaches a material provision of this Agreement
Notwithstanding the foregoing, all rights and obligations of the
parties that by their nature should continue after the expiration
or termination of this Agreement shall survive the expiration or
termination of this Agreement; including, without limitation,
iMALL's obligation to honor iMALL Gift Certificate and AT&T's
obligation to pay for all such Gift Certificates sent to AT&T.
8. INDEMNIFICATION.
A. iMALL shall indemnify, defend, and hold harmless
AT&T and its directors, officers, employees, agents, parent,
subsidiaries, successors, and assigns from and against any and
all third party claims, suits, and liabilities (including
reasonable attorneys' fees) arising out of or resulting
from, in whole or in part, any actual or alleged acts or
omissions of iMALL, its employees, agents or contractors in
connection with the performance of or failure to perform its
obligations under this Agreement.
B. AT&T shall indemnify, defend, and hold harmless
iMALL and its directors, officers, employees, agents, parent,
subsidiaries, successors, and assigns from and against any and
all third party claims, suits, and liabilities (including
reasonable attorneys' fees) arising out of or resulting from, in
whole or in part, any actual or alleged acts or omissions of
AT&T, its employees, agents or contractors in connection with the
performance of or failure to perform its obligations under this
Agreement.
9. LIMITATION OF LIABILITY.
EITHER PARTY'S SOLE REMEDY AGAINST THE OTHER FOR LOSS OR
DAMAGE ARISING OUT OF THE PERFORMANCE OR NON-PERFORMANCE
UNDER THIS AGREEMENT SHALL BE PROVEN DIRECT, ACTUAL DAMAGES
NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
RELIANCE, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF
ITS PERFORMANCE OR NON-PERFORMANCE UNDER THIS AGREEMENT,
WHETHER OR NOT SUCH PARTY HAD BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES.
10. NO THIRD PARTY BENEFICIARIES.
This Agreement shall not provide any person not a party to the
Agreement with any remedy, claim, liability, reimbursement,
commission, cause of action or other right in excess of those
existing without reference to this Agreement.
11. INDEPENDENT CONTRACTOR.
A. iMALL is not, and shall not directly or indirectly
hold itself out as, an agent, partner, franchisee or joint
venturer of AT&T. Further, iMALL shall not directly or indirectly
hold itself out as having any relationship to AT&T other than
that arising from this Agreement or other agreement between the
parties. iMALL is an independent contractor with respect to the
services it provides under this Agreement and shall have no
authority to bind AT&T to any contract or otherwise make
representations as to the policies or procedures of AT&T other
than those expressly permitted by AT&T in writing or stated in
this Agreement, AT&T's tariffs, or current, official literature
or price lists given to iMALL by AT&T.
B. AT&T is not, and shall not directly or indirectly hold
itself out as, an agent, partner, franchisee or joint venturer of
iMALL. Further, AT&T shall not directly or indirectly hold itself
out as having any relationship to iMALL other than that arising
from this Agreement or other agreement between the parties AT&T
is an independent contractor with respect to the services it
provides under this Agreement and shall have no authority to
bind iMALL to any contract or otherwise make representations as
to the policies or procedures of iMALL other than those expressly
permitted by iMALL in writing or stated in this Agreement.
12. ASSIGNMENT.
No assignment of this Agreement shall be made by either party
without the written consent of the other party; provided,
however, that such consent is not required when the proposed
assignment is to be made to any parent, subsidiary or parent,
affiliate or successor of AT&T. In the event of an assignment to
a parent, subsidiary, affiliate or successor of AT&T, AT&T shall
remain fully liable for the assignee's performance and breach of
any provisions hereof applicable to AT&T. In the event of any
other assignment made with the written consent of the other
party, the assignee shall assume all liability of the assignor.
13. AGENTS.
Any party may engage one or more agents or affiliates to perform
portions of its responsibilities under this Agreement, provided,
however, that the party engaging an agent or affiliate will
remain responsible to the other party for performance under this
Agreement, including the performance of its agent or affiliate.
14. FORCE MAJEURE.
A party's delay in, or failure of, performance under this
Agreement shall be excused where the delay or failure is caused
by an act of God, fire or other catastrophe, electrical,
computer or mechanical failure, work stoppage, delays or failure
to act of any carrier or carrier's agent or any other cause
beyond a party's direct control.
15. SURVIVAL OF OBLIGATION.
The obligations of the parties under Articles 6, 8 and 9 of this
Agreement shall survive any termination or cancellation of this
Agreement for the maximum period permitted by law or such shorter
period as provided for by this Agreement.
16. CHOICE OF LAW.
The construction, interpretation and performance of this
Agreement shall be governed by the laws of the State of New York.
If any provision of this Agreement is held contrary to law, the
remaining provisions shall remain valid.
17. NO WAIVER.
The failure of any party at any time to enforce any right or
remedy available to it under this Agreement with respect to any
breach or failure by the other party shall not be construed to
be a waiver of such right or remedy.
18. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements, oral or written
representations, statements, negotiations, proposals and
undertakings with respect to the subject matter hereof This
Agreement shall not be modified or amended except by a writing
signed by an authorized agent of the party to be charged. Should
any provision of this Agreement be deemed by a court of competent
jurisdiction to be void, invalid or inoperative, the remainder of
the Agreement shall be effective as though such void, invalid or
inoperative provision had not been contained herein.
19. HEADINGS AND CAPTIONS.
The headings and captions contained in this Agreement are
inserted for convenience only and shall not constitute a part
hereof.
20. DUPLICATE ORIGINALS.
This Agreement may be signed in any number of counterparts with
the same effect as if the signatures were on the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first written above.
AT&T COMMUNICATIONS, INC. iMALL, INC.
CORPORATE
By: /S/ David Hood By: Richard Rosenblatt
Title: Product Marketing Title: Senior Vice
Vice President President
Online Expo 96
window to the world
SPONSORSHIP AGREEMENT
International Marketing Associates (hereinafter referred to as
IMA),
producers of Online Expo 96 and iMall, Inc. (hereinafter
referred to as
iMall) agree to enter into a National Sponsorship arrangement
according to
the following terms and conditions:
IMA will provide the following:
a 20' x 30' booth space in a prominent space on the event floor
with T-1
connection
your company logo/ID on all of our print media advertising and
show
collateral material, on signage and banners at the Expo sites,
and
identification in press releases and calendar listings
iMall would be the exclusive sponsor in your industry
classification, and
in fact would be guaranteed that specified competitors would be
locked out
of exhibition at Online Expo 96. The branding opportunities at
our events
would be yours to own.
an on-air radio campaign in each market. This would be a
minimum of 50
live or produced spots during the 10-14 days leading up to each
event in Los
Angeles, San Francisco, New York, and again in Los Angeles.
However, we
expect to negotiate for an additional 40-50 spots that the
station will
provide us out of their promotional inventory . Of course,
these spots
will be used to further brand iMall as a national sponsor of
Online Expo.
In addition, live appearances by radio talent, station contesting
and
discounting to attend the event, interviews on-air of iMall
founders, and
cross-promotions on each station s web site will all be on the
table as we
negotiate for the highest profile possible in promoting our event
and
iMall s sponsorship.
an iMall representative as a featured speaker at our Conference
series on
site
a full page ad in each of our Online Expo Program and Reference
Guides
our data base of attendees after each event for iMall s use in
marketing
its products and services: we could even identify a question that
iMall
would want answered on our attendee registration form. This data
base would
be for use by iMall only and not to resale to third parties.
iMall would be selected as an official presenter of the 1996
online
Entrepreneur Awards at each of our events and showcased as such
on our
corresponding Awards site as a part of the Online Expo Virtual
Trade Show
on the Web
inclusion of either your collateral material or disc/software
in the bag
that we give to every attendee coming through the doors
use of our Online Expo presentation stage area for a special
iMall
Services Showcase presentation
a prominent link form our Virtual Trade Show site on the web to
iMall,
perhaps with a contesting twist through your site and KABC
cont...page 2
...page 2
iMall will provide the following:
a direct mail campaign to its mailing list in each city prior
to the
Online Expo events. This would not only drive additional traffic
to the
events, but would then showcase iMall s prominence and
professionalism at
the site itself. We would allow the mailing piece to discount
admission on
attendance, courtesy of iMall and subsequently share in the
revenue that
this attendance produced by paying iMall $2 back on each attendee
driven to
the Expo through this mail piece.
provide an iMall home page icon or other graphic of Online Expo
to focus
attention on iMall s sponsorship of our events, with content
primarily about
the iMall opportunity and its presentations at Online Expo, the
co-
promotions/contesting through KABC, and of course a link to our
web site,
where additional info about iMall as a national sponsor would be
highlighted.
1,000
shares
of stock in iMall, Inc. thereby further providing us even
more incentive for insuring the success of iMall at Online Expo
and beyond.
a co-promotional radio campaign that mentions iMall s
participation in
Online Expo, by date and location, in the cities in which
correspond to such
participation
$100,000 with payment terms as follows: 50% on April 5, 1996
and the
balance paid on June 15, 1996.
International Marketing Associates iMall, Inc.
by:_____/s/_______________ date 4/3/96
by:____/s/__________________ date
4/3/96
title: Principal
title: President
EXHIBIT 21
The subsidiaries of the Company and their respective
states of organization are listed below.
iMall Consulting, Inc., a Utah corporation
iMall Services, Inc., a Nevada corporation
The Internet Yellow Pages, Inc., a Utah
corporation
PhysiComp, Inc., a California corporation
Cabot, Richards & Reed, Inc., a Utah corporation
R&R Advertising, Inc., a California corporation
<PAGE>
Exhibit 27
FINANCIAL DATA SCHEDULE
Period-Type 3 Months
Period-End March 31, 1996
Cash and Cash Items 377,835
Marketable Securities 0
Notes and Accounts Receivable-Trade 696,750
Allowances for Doubtful Accounts 33,835
Inventory 109,173
Total Current Assets 1,245,372
Property, Plant and Equipment 542,881
Accumulated Depreciation 117,912
Total Assets 1,686,896
Total Current Liabilities 772,797
Bonds, Mortgages and Similar Debt 49,635
Preferred Stock-Mandatory Redemption 0
Preferred Stock-No Mandatory Redemption 0
Common Stock 14,335
Other Stockholders Equity 862,861
Total Liabilities and Stockholders Equity
1,686,896
Net Sales of Tangible Products 4,179,150
Total Revenues 4,179,150
Cost of Tangible Goods Sold 2,357,216
Total Costs and Expenses Applicable to Sales and Revenues
3,449,586
Other Costs and Expenses 53,193
Provision for Doubtful Accounts and Notes
28,835
Interest and Amortization of Debt Discount 0
Income Before Taxes and Other Items 716,601
Income Tax Expense 277,123
Income/Loss Continuing Operations 439,478
Discontinued Operations 0
Extraordinary Items 0
Cumulative Effect - Changes in Accounting Principles 0
Net Income or Loss 439,478
Earnings Per Share - Primary .03
Earnings Per Share - Fully Diluted .03
